CONSOLIDATED FINANCIAL
STATEMENTS
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 2
TABLE OF CONTENTS
CONSOLIDATED COMPREHENSIVE INCOME STATEMENT 3
CONSOLIDATED STATEMENT OF FINANCIAL POSITION 4
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 5
CONSOLIDATED CASH FLOW STATEMENT 7
ADDITIONAL EXPLANATORY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 8
1. Information about the Parent Company and composition of the Group 8
2. Basis for drafting the financial statements 11
3. Professional judgement 13
4. Adopted accounting principles 15
5. Operating income 28
6. Salaries and employee benefits 29
7. Marketing 29
8. Costs of maintenance and lease of buildings 29
9. Other external services 30
10. Commission expenses 30
11. Other expenses 30
12. Finance income and costs 30
13. Segment information 31
14. Cash and cash equivalents 36
15. Financial assets at fair value through P&L 36
16. Financial assets at amortised cost 36
17. Prepayments and deferred costs 37
18. Intangible assets 38
19. Property, plant and equipment 40
20. Amounts due to customers 42
21. Financial liabilities held for trading 42
22. Other liabilities 42
23. Liabilities due to lease 43
24. Provisions for liabilities and contingent liabilities 43
25. Equity 44
26. Profit distribution and dividend 45
27. Earnings per share 45
28. Current income tax and deferred income tax 46
29. Related party transactions 49
30. Remuneration of the audit companies 50
31. Employment 50
32. Supplementary information and explanations to the cash flow statement 51
33. Post balance sheet events 51
34. Off-balance sheet items 51
35. Items regarding the compensation scheme 52
36. Capital management 52
37. Risk management 54
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 3
CONSOLIDATED COMPREHENSIVE INCOME STATEMENT
(IN PLN’000)
NOTE
TWELVE-MONTH
PERIOD ENDED
31.12.2020
TWELVE-MONTH
PERIOD ENDED
31.12.2019
Result of operations on financial instruments
5.1
792 788
233 106
Income from fees and charges
5.2
4 839
5 629
Other income
123
569
Total operating income
5
797 750
239 304
Salaries and employee benefits
6
(119 141)
(86 024)
Marketing
7
(87 731)
(37 716)
Other external services
(29 443)
(24 638)
Costs of maintenance and lease of buildings
8
(3 788)
(3 158)
Amortisation and depreciation
18,19
(7 753)
(6 753)
Taxes and fees
(3 723)
(2 950)
Commission expenses
10
(22 539)
(8 329)
Other costs
11
(7 886)
(4 324)
Total operating expenses
(282 004)
(173 892)
Profit on operating activities
515 746
65 412
Finance income
12
5 857
5 901
Finance costs
12
(22 906)
(1 877)
Profit before tax
498 697
69 436
Income tax
28
(96 610)
(11 735)
Net profit
402 087
57 701
Other comprehensive income
23 646
(2 158)
Other comprehensive income net of tax
24 250
(2 257)
Items which may be reclassified to profit (loss) after meeting specific
conditions, net of tax
24 250
(2 257)
Foreign exchange differences on translation of foreign operations
24 250
(2 257)
- items which were reclassified to profit (loss)- foreign exchange
differences on the translation of a subsidiary in Turkey
21 880
- items which will be reclassified to profit (loss)- foreign exchange
differences on translation of foreign operations
(810)
(1 736)
- items which will be reclassified to profit (loss)- foreign exchange
differences on valuation of separated equity
3 180
(521)
Deferred income tax
(604)
99
Total comprehensive income
425 733
55 543
Net profit attributable to shareholders of the Parent Company
402 087
57 701
Total comprehensive income attributable to shareholders of the Parent
Company
425 733
55 543
Earnings per share:
(IN PLN’000)
NOTE
TWELVE-MONTH
PERIOD ENDED
31.12.2020
TWELVE-MONTH
PERIOD ENDED
31.12.2019
- basic profit per year attributable to shareholders of the Parent
Company (in PLN)
27
3,43
0,49
- basic profit from continued operations per year attributable to
shareholders of the Parent Company (in PLN)
27
3,43
0,49
- diluted profit of the year attributable to shareholders of the Parent
Company (in PLN)
27
3,43
0,49
- diluted profit from continued operations of the year attributable to
shareholders of the Parent Company (in PLN)
27
3,43
0,49
The consolidated comprehensive income statement should be read together with the supplementary notes to the consolidated
financial statements, which are an integral part of these consolidated financial statements.
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 4
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(IN PLN’000)
NOTE
31.12.2020
31.12.2019
ASSETS
Cash and cash equivalents
14
1 575 807
955 196
Financial assets at fair value through P&L
15
663 133
149 318
Income tax receivables
2 593
71
Financial assets at amortised cost
16
13 310
6 474
Prepayments and deferred costs
17
5 397
4 073
Intangible assets
18
639
572
Property, plant and equipment
19
13 260
14 193
Deferred income tax assets
28
9 387
9 003
Total assets
2 283 526
1 138 900
EQUITY AND LIABILITIES
Liabilities
Amounts due to customers
20
1 203 243
573 792
Financial liabilities held for trading
21
96 632
23 529
Income tax liabilities
1 329
1 697
Liabilities due to lease
8 654
10 772
Other liabilities
22
54 167
19 676
Provisions for liabilities
25
7 939
3 129
Deferred income tax provision
28
23 257
15 561
Total liabilities
1 395 221
648 156
Equity
Share capital
25
5 869
5 869
Supplementary capital
25
71 608
71 608
Other reserves
25
390 730
364 757
Foreign exchange differences on translation
25
9
(23 637)
Retained earnings
420 089
72 147
Equity attributable to the owners of the Parent Company
888 305
490 744
Total equity
888 305
490 744
Total equity and liabilities
2 283 526
1 138 900
The consolidated statement of financial position should be read together with the supplementary notes to the consolidated
financial statements, which are an integral part of these consolidated financial statements.
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 7
CONSOLIDATED CASH FLOW STATEMENT
(IN PLN’000)
NOTE
TWELVE-MONTH
PERIOD ENDED
31.12.2020
TWELVE-MONTH
PERIOD ENDED
31.12.2019
Cash flows from operating activities
Profit before tax
498 697
69 436
Adjustments:
62 320
(5 222)
(Profit) Loss on investment activity
(3 747)
(100)
Amortization and depreciation
18,19
7 753
6 753
Foreign exchange (gains) losses from translation of own cash
(5 790)
1 179
Other adjustments
32.2
23 264
(2 181)
Changes
Change in provisions
4 810
1 149
Change in balance of financial assets at fair value through P&L and
financial liabilities held for trading
(56 995)
(24 838)
Change in balance of restricted cash
(562 757)
(106 937)
Change in financial assets at amortised cost
(6 836)
(1 469)
Change in balance of prepayments and accruals
(1 324)
(1 024)
Change in balance of amounts due to customers
629 451
125 951
Change in balance of other liabilities
32.1
34 491
(3 705)
Cash from operating activities
561 017
64 214
Income tax paid
(92 188)
(4 027)
Interests
306
397
Net cash from operating activities
469 135
60 584
Cash flow from investing activities
Proceeds from sale of items of property, plant and equipment
1
16
Expenses relating to payments for property, plant and equipment
19
(4 353)
(3 196)
Expenses relating to payments for intangible assets
18
(324)
(99)
Expenses relating purchase of bonds
(668 567)
(26 268)
Proceeds from sale of bonds
286 545
11 304
Interests on bonds
2 473
101
Net cash from investing activities
(384 225)
(18 142)
Cash flow from financing activities
Payments of liabilities under finance lease agreements
32.1
(4 369)
(4 547)
Interest paid under lease
(306)
(397)
Dividend paid to owners
(28 172)
(19 955)
Net cash from financing activities
(32 847)
(24 899)
Increase (Decrease) in net cash and cash equivalents
52 063
17 543
Cash and cash equivalents – opening balance
484 351
467 987
Effect of FX rates fluctuations on balance of cash in foreign currencies
5 791
(1 179)
Cash and cash equivalents – closing balance
14
542 205
484 351
The consolidated cash flow statement should be read together with the supplementary notes to the consolidated financial
statements, which are an integral part of these consolidated financial statements.
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 8
ADDITIONAL EXPLANATORY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Information about the Parent Company and composition of the Group
The Parent Company in the X–Trade Brokers Dom Maklerski S.A. Group (the “Group”) is X–Trade Brokers Dom Maklerski S.A.
(hereinafter: the “Parent Entity”, “Parent Company”, “Brokerage”) with its headquarters located in Warsaw, at Ogrodowa street
58, 00–876 Warsaw, Poland.
The name of the reporting entity was not changed in the reporting period.
X–Trade Brokers Dom Maklerski S.A. is entered in the Commercial Register of the National Court Register by the District Court
for the Capital City of Warsaw, Poland, XII Commercial Division of the National Court Register, under No. KRS 0000217580. The
Parent Company was granted a statistical REGON number and a tax identification (NIP) number 5272443955.
The Parent Company’s operations consist of conducting brokerage activities on the stock exchange and OTC markets (currency
derivatives, commodities, indices, stocks and bonds). The Parent Company is supervised by the Polish Financial Supervision
Authority and conducts regulated activities pursuant to a permit dated 8 November 2005, No. DDM–M–4021–57–1/2005.
1.1 Information on the reporting entities in the Parent Company’s organisational
structure
The consolidated financial statements cover the following foreign branches which form the Parent Company:
• X–Trade Brokers Dom Maklerski Spółka Akcyjna, organizačni složka – a branch established on 7 March 2007 in the Czech
Republic. The branch was registered in the commercial register maintained by the City Court in Prague under No. 56720
and was granted the following tax identification number: CZK 27867102.
• X–Trade Brokers Dom Maklerski Spółka Akcyjna, Sucursal en Espana – a branch established on 19 December 2007 in
Spain. On 16 January 2008, the branch was registered by the Spanish authorities and was granted the tax identification
number ES W0601162A.
• X–Trade Brokers Dom Maklerski Spółka Akcyjna, organizačna zložka – a branch established on 1 July 2008 in the Slovak
Republic. On 6 August 2008, the branch was registered in the commercial register maintained by the City Court in Bratislava
under No. 36859699 and was granted the following tax identification number: SK4020230324.
• X–Trade Brokers Dom Maklerski S.A. Sucursala Bucuresti Romania (branch in Romania) – a branch established on 31 July
2008 in Romania. On 4 August 2008, the branch was registered in the Commercial Register under No. 402030 and was
granted the following tax identification number: RO27187343.
• X–Trade Brokers Dom Maklerski S.A., German Branch (branch in Germany) – a branch established on 5 September 2008
in the Federal Republic of Germany. On 24 October 2008, the branch was registered in the Commercial Register under No.
HRB 84148 and was granted the following tax identification number: DE266307947.
• X–Trade Brokers Dom Maklerski Spółka Akcyjna a branch in France – a branch established on 21 April 2010 in the Republic
of France. On 31 May 2010, the branch was registered in the Commercial Register under No. 522758689 and was granted
the following tax identification number FR61522758689.
• X–Trade Brokers Dom Maklerski S.A., Sucursal Portugesa – a branch established on 7 July 2010 in Portugal. On 7 July
2010, the branch was registered in the Commercial Register and as tax identification number under No. PT980436613.
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 9
1.2 Composition of the Group
The X–Trade Brokers Dom Maklerski S.A. Group is composed of X–Trade Brokers Dom Maklerski S.A. as the Parent Company
and the following subsidiaries:
NAZWA JEDNOSTKI
METODA
KONSOLIDACJI
KRAJ SIEDZIBY
UDZIAŁ W
KAPITALE %
31.12.2020
UDZIAŁ W
KAPITALE %
31.12.2019
XTB Limited (UK)
full
Great Britain
100%
100%
X Open Hub Sp. z o.o.
full
Poland
100%
100%
XTB Limited (CY)
full
Cyprus
100%
100%
Tasfiye Halinde XTB Yönetim Danışmanlığı A.Ş.
full
Turkey
100%
100%
XTB International Limited
full
Belize
100%
100%
XTB Chile SpA
full
Chile
100%
100%
XTB Services Limited
full
Cyprus
100%
100%
Lirsar S.A. en liquidacion
full
Uruguay
100%
100%
X Trading Technologies Sp. z o.o. in liquidation
full
Poland
−
100%
XTB Africa (PTY) Ltd.
full
South Africa
100%
100%
XTB Services Asia Pte. Ltd
full
Singapore
−
100%
On 17 April and on 16 May 2014 the Parent Company acquired 100% shares in X Trade Brokers Menkul Değerler A.Ş. with its
registered office in Turkey, as a result of which on 30 April 2014 it took control over the company. The acquisition of 100% of
the shares led to taking up control by the Parent Company. 12 999 996 shares were taken up against the loan granted to Jakub
Zabłocki for the purchase of the entity; as at the moment of settlement, the loan was PLN 27 591 thousand. The remaining four
shares were purchased with cash. The value of shares taken up by way of settlement against the loan amounted to PLN 28
081 thousand, the shares purchased with cash amounted to PLN 8,88. The fair value of the consideration paid was PLN 28 081
thousand and it was determined on the basis of a third–party valuation. The Group accounted for the transaction under the
acquisition method, in accordance with the accounting policy adopted for transactions under joint control. As at the acquisition
date particular net assets of the acquired company X Trade Brokers Menkul Değerler A.Ş. were measured at fair value.
On 19 April 2018 the Management Board of Parent Company decided to resume an action to terminate the activities on Turkish
market and liquidation of the subsidiary X Trade Brokers Menkul Değerler A.S. The decision of the Parent Company was made
after analysing the situation of the subsidiary and in the absence of the expected relaxation of the restrictions introduced by
the Capital Markets Board of Turkey (CMB).
X Trade Brokers Menkul Değerler A.S. does not have an active license to operate from December 2019 and has started the
process of capital redemption.
On 3 March 2020 general meeting of the company X Trade Brokers Menkul Değerler A.S. with its seat in Turkey took decision
to reduce the company’s share capital from TRY 22 500 thousand to TRY 100 thousand. Due to that fact in the first quarter of
2020 X- Trade Brokers Dom Maklerski S.A. Group reclassified part of foreign exchange differences arising from the translation
in amount of PLN 21 880 thousand of the subsidiary’s equity from the position Foreign exchange differences on translation in
equity to income statement.
On 12 March 2020 subsidiary changed its name to XTB Yönetim Danışmanlığı Anonim Şirketi.
On 30 September 2020, amount of negative foreign exchange differences on translation of balances in foreign currencies of
Turkish company amounted PLN (3 065) thousand (ref note 23). Exchange differences will be recognized in consolidated
financial statement at the date of liquidation of the company.
On 15 September 2020, the liquidation process of the company in Turkey has begun. The name of the company was changed
to Tasfiye Halinde XTB Yönetim Danışmanlığı A.Ş.
As at the 31 December 2020, amount of negative foreign exchange differences on translation of balances in foreign currencies
of Turkish company amounted PLN (3 022) thousand (ref note 25). Exchange differences will be recognized in consolidated
financial statement at the date of liquidation of the company.
In January 2018 the Parent Company established X Trading Technologies Sp. z o.o. with its seat in Poland. The Parent Company
owns 100% of shares in subsidiary. X Trading Technologies Sp. z o.o. provides activity concerning software. The company’s
results are consolidated under the full method from the date of its establishment. On 30 January 2018 the Parent Company
took up 3 900 shares in increased capital of the subsidiary keeping up its 100% share in the capital of the subsidiary. On 14 May
2018 Extraordinary General Meeting of Shareholders of X Trading Technologies Sp. z o.o. decided to liquidate the company.
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 10
The liquidation of the subsidiary will not have material impact to the Group’s consolidated financial statements. The capital
from the subsidiary was returned to the Company on 31 October 2019. . At 10 January 2020 decision regarding deletion of X
Trading Technologies sp. z o.o in liquidation from National Court Register was legalized.
On 10 July 2018 the Parent Company established XTB Africa (PTY) Ltd. with its seat in South Africa. The Parent Company owns
100% of shares in subsidiary. As at the date of publication of this report the company did not conduct any operating activities.
On 14 October 2019 the Company acquired 100 shares in the increased capital of subsidiary. As a result of the above
transaction the Company kept 100% share in subsidiary’s capital. As at the date of these financial statements the company has
not conduct its operations.
On 19 August 2019 the Company established XTB Services Asia Pte. Ltd. with its seat in Singapore in which it owns 100% of
shares. As at the date of these financial statements the company has not conduct its operations On April 2020 the Parent
Company has started liquidation of XTB Services Asia Pte. Ltd. with its seat in Singapore by Accounting and Corporate
Regulatory Authority and on 23 September 2020 decision regarding deletion of XTB Services Asia Pte. Ltd from ACRA was
legalized.
In September 2020 the Company established XTB Foundation. On 23 December 2020 foundation was entered into the National
Court Register. As at the date of these financial statements the foundation has not conduct its statutory activity.
1.3 Composition of the Management Board
In the period covered by the consolidated financial statements and in the comparative period, the Management Board was
composed of the following persons:
NAME AND
SURNAME
FUNCTION
DATE OF FIRST
APPOINTMENT
TERM OF OFFICE
Omar Arnaout
Chairman of the
Management
Board
23.03.2017
from the 23 March 2017 appointed for the position of the
Chairman of the Management Board; term of office ends on
29 June 2019
Paweł Szejko
Board Member
28.01.2015
from the 30 June 2019 appointed for the 3-years term of
office ending 30 June 2022
Filip Kaczmarzyk
Board Member
10.01.2017
from the 30 June 2019 appointed for the 3-years term of
office ending 30 June 2022
Jakub Kubacki
Board Member
10.07.2018
from the 30 June 2019 appointed for the 3-years term of
office ending 30 June 2022
Andrzej Przybylski
Board Member
01.05.2019
from the 30 June 2019 appointed for the 3-years term of
office ending 30 June 2022
1.4 Public support
In 2020 the company received financial support in the form of de minimis aid in the total amount of PLN 28 thousand from the
KFS training fund.
In 2019 the company received financial support in the form of de minimis aid in the total amount of PLN 20 thousand from the
KFS training fund
1.5 Rate of return on assets
The rate of return on assets, calculated as the quotient of net profit and total assets, as of 31 December 2020 amounted to
17,61% and as of 31 December 2019 amounted to 5,07%.
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 11
1.6 Activities of the brokerage house outside the territory of the Republic of Poland
Information about the activities of the brokerage house outside the territory of the Republic of Poland, broken down into member
states and third countries in which the brokerage house has its subsidiaries, on a consolidated basis within the meaning of
Article 4(1)(48) of the Regulation of the European Parliament and of the Council (EU) No 575/2013 on prudential requirements
for credit institutions and investment firms are presented below.
AREAS OF ACTIVITIES
REVENUE
FOR 2020
NUMBER OF EMPLOYEES IN
TERMS OF FTSs
PROFIT BEFORE
TAX FOR 2019
INCOME TAX
FOR 2020
Poland
803 506
419
513 814
(96 061)
Great Britain
732
29
1 000
16
Cyprus
71
9
138
−
Belize
248
−
3 451
(60)
Turkey
57
1
(21 804)
(62)
AREAS OF ACTIVITIES
REVENUE
FOR 2019
NUMBER OF EMPLOYEES IN
TERMS OF FTSs
PROFIT BEFORE
TAX FOR 2019
INCOME TAX
FOR 2019
Poland
239 884
365
63 741
(10 664)
Great Britain
323
30
406
(166)
Cyprus
3
9
110
(7)
Belize
15
−
1 737
−
Turkey
42
2
2 113
(553)
2. Basis for drafting the financial statements
2.1 Compliance statement
These consolidated financial statements were prepared based on International Financial Reporting Standards (IFRS), which
were endorsed by the European Union.
The consolidated financial statements of the X–Trade Brokers Dom Maklerski S.A. Group prepared for the period from 1
January 2020 to 31 December 2020 with comparative data for the year ended 31 December 2019 cover the Parent Company’s
financial data and financial data of the subsidiaries comprising the “Group”.
These consolidated financial statements have been prepared on the historical cost basis, with the exception of financial assets
at fair value through P&L and financial liabilities held for trading which are measured at fair value. The Group’s assets are
presented in the statement of financial position according to their liquidity, and its liabilities according to their maturities.
The Group companies maintain their accounting records in accordance with the accounting principles generally accepted in
the countries in which these companies are established. The consolidated financial statements include adjustments not
recognised in the Group companies’ accounting records, made in order to reconcile their financial statements with the IFRS.
The consolidated financial statements were approved by the Management Board of the Parent Company on 9 March 2021.
Drafting this consolidated financial statements, the Parent Company decided that none of the Standards would be applied
retrospectively.
The IFRS comprise standards and interpretations approved by the International Accounting Standards Board (“IASB”) and the
International Financial Reporting Interpretations Committee (“IFRIC”).
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 12
2.2 Functional currency and reporting currency
The functional currency and the presentation currency of these consolidated financial statements is the Polish zloty (“PLN”),
and unless stated otherwise, all amounts are shown in thousands of zloty (PLN’000).
2.3 Going concern
The consolidated financial statements were prepared based on the assumption that the Group would continue as a going
concern in the foreseeable future. At the date of preparation of these consolidated financial statements, the Management Board
of X–Trade Brokers Dom Maklerski S.A. does not state any circumstances that would threaten the Group companies’ continued
operations with the exception of subsidiary Tasfiye Halinde XTB Yönetim Danışmanlığı A.Ş. in Turkey described in note 1.2.
2.4 Comparability of data and consistency of the policies applied
Data presented in the consolidated financial statements is comparable and prepared under the same principles for all periods
covered by the consolidated financial statements.
2.5 The impact of COVID-19 on the Company’s results
In March 2020 the World Health Organization determined that COVID disease can be treated as a pandemic. Due to significant
increase of this disease all over the world, countries take numerous action to limit or delay it’s spread. Undertaken measures
have increasing impact on global economy. This situation has influence on the above average volatility in the financial and
commodity markets which resulted in high transaction activity of customers and converted to growth of Group’s revenues and
customer base
2.6 Changes in the accounting policies
The accounting policies applied in the preparation of the interim condensed consolidated financial statements are consistent
with those applied in the preparation of the consolidated financial statements of the Group for the year ended 31 December
2019, except for the application of new or amended standards and interpretations applicable to annual periods beginning on or
after 1 January 2020.
Other new or amended standards and interpretations that apply for the first time in 2020 have no material impact on Company’s
financial statements.
• Changes to IFRS conceptual framework
The IASB published the Conceptual Framework in March 2018, which describes a wide range of financial reporting concepts,
normalizing concepts, advice for people preparing financial statements for the purposes of creating consistent and unified
accounting policy as well as the support for other entities in the process of learning and interpreting standards. The Framework
includes some new concepts, the updates of the definitions and criteria for recognizing assets and liabilities and it also clarifies
some important concepts.
• Amendments to IFRS 3 “Business combinations”
The IASB issued amendments to the definition of a business in IFRS 3 Business Combinations to help entities determine
whether an acquired set of activities and assets is a business or not. The amendments define the minimum requirements of
being a business, remove the assessment of a market participant’s ability to replace missing elements, add guidance to assess
whether an acquired process is substantive, narrow the definitions and introduce an optional concentration test. New illustrative
examples were presented.
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 13
• Amendments to IAS 1 and IAS 8: Definition of material
In October 2018, the IASB issued amendments to IAS 1 and IAS 8 to clarify and align the definition of ‘material’ in the context
of applying IFRS. Due to the new definition “Information is material if omitting, misstating or obscuring it could reasonably be
expected to influence the decisions that the primary users of general purpose financial statements make on the basis of those
financial statements, which provide financial information about a specific reporting entity.” Introduced amendments clarify that
decisive factor for the significance may be the size and nature of the item or a combination of both. An entity will need to
assess if the item ( individually or in combination) is material in the context of the financial statements.
• Amendments to IFRS 9, IAS 39 and IFRS 7- Annual reference interest rate
In September 2019, the IASB issued amendments to IFRS 9, IAS 39 and IFRS 7, which ended the first phase of the processes
which were realized as a response of impact of interest rate benchmark reform to financial reporting. The proposed
amendments contain temporary reliefs that allow hedge accounting to continue during a period of uncertainty before changing
the current interest rate benchmark to an alternative interest rate close to risk-free ("RFR").
The Group has not decided to apply earlier any Standard, Interpretation or Amendment that has been issued, but has not yet
become effective in light of the EU regulations.
2.7 New standards and interpretations which have been published but are not yet binding
The following standards and interpretations have been published by the International Accounting Standards Board but are not
yet binding:
• Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets Between an Investor and its Associate or Joint Venture
(issued on 11 September 2014) - the endorsement process of these Amendments has been postponed by EU - the effective
date was deferred indefinitely by IASB;
• IFRS 17 “Insurance contracts” (issued on 18 May 2017) – not yet endorsed by EU at the date of approval of these financial
statements – effective for financial years beginning on or after 1 January 2023;
• Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Reform of reference interest rate – stage 2– not yet endorsed
by EU at the date of approval of these financial statements – effective for financial years beginning on or after 1 January
2021;
• Amendments to IFRS 16– COVID-19 - Related Rent Concessions - not yet endorsed by EU at the date of approval of these
financial statements –effective for financial years beginning on or after 1 June 2020;
• Amendments to IFRS 3 – Reference to the Conceptual Framework– not yet endorsed by EU at the date of approval of these
financial statements – effective for financial years beginning on or after 1 January 2022;
• Amendments to IAS 16 - Property, Plant and Equipment — Proceeds before Intended Use– not yet endorsed by EU at the
date of approval of these financial statements – effective for financial years beginning on or after 1 January 2022;
• Amendments to IAS 37 - Onerous Contracts—Cost of Fulfilling a Contract– not yet endorsed by EU at the date of approval
of these financial statements – effective for financial years beginning on or after 1 January 2022;
• Amendments to IAS 1 – Classification of liabilities as current or non- current - not yet endorsed by EU at the date of approval
of these financial statements –effective for financial years beginning on or after 1 January 2023.
3. Professional judgement
In the process of applying the accounting principles (policy), the Management Board of the Parent Company made the following
judgements that have the greatest impact on the reported carrying amounts of assets and liabilities.
Amortisation periods of intangible assets
Amortisation period of the isolated intangible asset in the form of the licence for conducting brokerage activities on the Turkish
market is assessed based on the expected economic useful life of this asset. The amortisation period was determined
according to the expected useful life of the asset on the Turkish market no shorter than 10 years. Should the circumstances
leading to a change in the expected useful life change, the amortisation rates also would change, which will have an impact on
the value of amortisation charges and the net book value of intangible assets.
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 14
Revenue recognition
Transaction price is determined at fair value which is described in details in notes 4.13 and 4.14. Variable remuneration, liabilities
due to reimbursements and other in the case of the Group do not occur.
3.1 Material estimates and valuations
In order to prepare its financial statements in accordance with the IFRS, the Group has to make certain estimates and
assumptions that affect the amounts disclosed in the financial statements. Estimates and assumptions subject to day-to-day
evaluation by the Group’s management are based on experience and other factors, including expectations as to future events
that seem justified in the given situation. The results are a basis for estimates of carrying amounts of assets and liabilities.
Although the estimates are based on best knowledge regarding the current conditions and actions taken by the Group, actual
results may differ from the estimates. Adjustments to estimates are recognised during the reporting period in which the
adjustment was made provided that such adjustment refers only to the given period or in subsequent periods if the adjustment
affects both the current period and subsequent periods. The most important areas for which the Group makes estimates are
presented below.
3.2 Impairment of assets
As at each balance sheet date, the Group determines whether there are any indications of impairment of a given financial asset
or group of financial assets. In particular, the Group tests its past due receivables for impairment and writes down the estimated
amount of doubtful and uncollectible receivables.
At each balance sheet date, the Group assesses whether there are objective indications of impairment of other assets, including
intangible assets. Impairment is recognised when it is highly likely that all or a significant part of the respective assets will not
bring about the expected economic benefits, e.g. as a result of expiry of licences or decommissioning.
Deferred income tax assets
At each balance sheet date, the Parent Company assesses the likelihood of settlement of unused tax credits with the estimated
future taxable profit, and recognises the deferred tax asset only to the extent that it is probable that future taxable profit will be
available against which the unused tax credits can be utilised.
Period for settlement of the deferred tax asset
The Group recognises a deferred tax asset based on the assumption that a tax profit will be generated in the future enabling its
utilisation. Deterioration in tax results in the future might result in the assumption becoming unjustified. The deferred tax asset
relates mainly to the losses generated by foreign operations and subsidiaries in the initial period of their operation recognised
in the balance sheet. The Group analyses the possibility of recognising such assets, taking into consideration local tax
regulations, and analyses future tax budgets assessing the possibility of recovering these assets.
3.3 Fair value measurement
Information on estimates relative to fair value measurement is presented in note 37 – Risk management.
3.4 Other estimates
Provisions for liabilities connected with retirement, pension and death benefits are calculated using the actuarial method by an
independent actuary as the current value of the Group’s future amounts due to employees, based on their employment and
salaries as at the balance sheet date. The calculation of the provision amount is based on a number of assumptions, regarding
both macroeconomic conditions and employee turnover, risk of death, and others.
Provision for unused holidays is calculated on the basis of the estimated payment of holiday benefits, based on the number of
unused holidays, and remuneration as at the balance sheet date. Provisions for legal risk are calculated on the basis of the
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 15
estimated amount of outflow of cash in the case in which it is probable that such outflow will occur, if the given case ends
unsuccessfully.
Provisions for disputes is determined individually based on the circumstances of a given case. The Company assesses the
chance of winning particular case and consequently assesses the need of establishment of provision in case of a loss in
relations to all court cases.
4. Adopted accounting principles
4.1 Rules of consolidation
The consolidated financial statements contain the financial information of the Parent Company and subsidiaries as at 31
December 2020 and 31 December 2019. The financial statements of subsidiaries, after adjustments made to ensure
compliance with the IFRS, are prepared for the same reporting period as the financial statements of their parent companies,
with the application of consistent accounting principles, based on uniform accounting policies applied to transactions and
economic events of a similar nature. Adjustments are made in order to eliminate any discrepancies in the accounting methods.
4.1.1 Business combinations
Acquisitions of entities and organised parts of the business are recognised under the acquisition method. Each payment made
as a result of a business combination is measured at the aggregate fair value (as at the date of payment) of transferred assets,
liabilities incurred or acquired and capital investments issued in exchange for taking over the target. Costs directly related to
the business combination are recognised in profit or loss at the time they were incurred.
In some cases, the payment transferred also includes assets or liabilities arising under contingent payment, measured at fair
value at the date of acquisition. Changes in the fair value of a contingent payment over subsequent periods are recognised as
changes in the cost of the combination only if they can be classified as changes over the measurement period. All other changes
are settled in accordance with applicable IFRS regulations. Changes in the fair value of a contingent payment classified as an
equity component are not disclosed.
Identifiable assets, liabilities and contingent liabilities of the target that meet the criteria for disclosure under IFRS 3 Business
combinations are recognised at fair value as at the acquisition date, taking into account the exceptions set out in IFRS 3.
In settling transactions under joint control, the Group applies the acquisition method.
Where control is acquired as a consequence of several subsequent transactions, interests held as at the date of takeover are
measured at fair value and their results are recognised in income or expenses for the period. Amounts accrued under shares in
that entity, previously recognised under comprehensive income, are carried over to income or expenses for the period.
4.1.2 Investments in subsidiaries
Subsidiaries are understood as entities controlled by the Parent Company (inclusive of special purpose entities). It is assumed
that the Group controls another entity in which the investment was made, when due to its involvement in this unit it is exposed
to changing financial results, or when it has rights to variable financial results and the ability to affect the amount of these
financial results through the exercise of power over the entity.
Financial results of subsidiaries acquired or sold in the course of the year are recognised in the consolidated financial
statements from/until the time of their effective acquisition or disposal.
Any transactions, balances, income and expenses between the entities consolidated within the Group are subject to full
consolidation elimination.
Non–controlling interests are presented separately from equity attributable to the owners of the Parent Company. Non–
controlling interests may initially be measured at fair value or in proportion to the fair value share of acquired net assets. One
of the above methods may be selected by any business combination. In subsequent periods, the value of non–controlling
interests comprises the value initially recognised, adjusted for changes in the value of the entity’s equity in relation to the shares
held. Comprehensive income is allocated to non–controlling interests even if it results in a negative value for these interests.
Changes in the share in a subsidiary not resulting in a loss of control are recognised as equity transactions. The book values of
the share of the Parent Company’s owners and of the non–controlling interests are modified accordingly to reflect any changes
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
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in the interest structure. The difference between the value by which the value of non–controlling interests is adjusted and the
fair value of the payment received or made is recognised directly in equity.
In the event of a loss of control over a subsidiary, the gain or loss on the disposal is calculated as the difference between: (i) the
total fair value of the payment received and the fair value of the entity’s shares remaining with the Parent Company, and (ii) the
book value of assets (together with goodwill), liabilities and non–controlling interests. Amounts recognised for the entity being
sold under other items of comprehensive income are reclassified to the income or expense for the period. The fair value of
assets in the entity remaining with the Parent Company following the disposal is treated as the initial fair value for the purpose
of their subsequent disclosure under IAS 39, or initial cost of shares in associates or joint ventures.
4.1.3 Goodwill
Goodwill occurring at acquisition results from a surplus, as at the date of acquisition, of the sum of the payment made, the
value of non–controlling interests and the fair value of previously held shares in the target over the Parent Company’s share in
the net fair value of identifiable assets, liabilities and contingent liabilities of the entity, recognised as at the date of acquisition.
If a negative value occurs, another review is performed of the fair value calculations for each net asset being acquired. If the
value remains negative after the review, it is promptly disclosed under profit or loss.
Goodwill is initially disclosed as an asset at purchase price being the amount of the above–mentioned surplus, and then
measured at purchase price less accumulated impairment loss.
For the purpose of testing for impairment, goodwill is allocated to individual cash–generating units that should benefit from
synergies resulting from the combination. Cash–generating units to which goodwill is allocated are tested for impairment once
a year or more often, if there are reasonable grounds to suspect that impairment has occurred. If the recoverable amount of a
cash–generating unit is lower than its carrying amount, impairment loss is first allocated to reduce the carrying amount of
goodwill allocated to that unit, and then to other assets of that unit in proportion to the carrying amount of that entity’s assets.
Impairment loss entered for goodwill cannot be reversed in the next period.
At the time of disposal of a subsidiary or a jointly–controlled entity, the portion of goodwill allocated thereto is taken into account
in calculating the profit/loss on disposal.
Goodwill resulting from acquisition of an entity located overseas is treated as an asset of the entity located overseas and is
translated at the exchange rate in effect on the balance sheet date.
4.2 Functional currency and reporting currency
Transactions executed in currencies other than the functional currency are entered on the basis of the exchange rate as at the
transaction date. As at the balance sheet date, the monetary assets and liabilities in foreign currencies are translated using the
average NBP rate as at that date. Non–cash items are carried based on historical cost.
The Parent Company’s functional currency is the Polish zloty, which is also the functional currency of these consolidated
financial statements.
Foreign exchange differences are reported under revenue or expenses of the period in which they occur, except for:
• foreign exchange differences regarding construction–in–progress which are included in expenses connected with such
construction–in–progress and treated as adjustments of interest expenses on loans in foreign currencies;
• foreign exchange differences arising from cash items of receivables or amounts due to foreign operations with whom no
settlements are planned, or such settlements are improbable, representing a portion of net investments into a foreign
operation and recognised under capital reserve on the translation of foreign operations and profit/loss on the disposal of a
net investment.
The following exchange rates were adopted for the purpose of measuring assets and liabilities as at the balance sheet date and
for converting items of the comprehensive income statement:
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 17
CURRENCY
CONSOLIDATED
STATEMENT
OF FINANCIAL POSITION
31.12.2020
CONSOLIDATED
STATEMENT
OF FINANCIAL POSITION
31.12.2019
CONSOLIDATED
STATEMENT
OF COMPREHENSIVE
INCOME
31.12.2020
CONSOLIDATED
STATEMENT
OF COMPREHENSIVE
INCOME
31.12.2020
USD
3,7584
3,7977
3,9045
3,8440
EUR
4,6148
4,2585
4,4742
4,3018
CZK
0,1753
0,1676
0,1687
0,1676
RON
0,9479
0,8901
0,9239
0,9053
HUF
0,0126
0,0129
−
−
GBP
5,1327
4,9971
5,0240
4,9106
TRY
0,5029
0,6380
0,5556
0,6766
CLP
0,0053
0,0050
0,0049
0,0054
4.3 Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and bank deposits on demand. Other monetary assets are short–term, highly
liquid investments that are readily convertible to specific amounts of cash and which are subject to an insignificant risk of
changes in value. The Group classifies as cash equivalent investments which are readily convertible to a specific amount of
cash, are subject to an insignificant risk of changes in value, and with payment terms of up to three months as of the date of
acquisition.
Cash flows are inflows and outflows of cash and other monetary assets. The Group discloses cash flows from operating
activities using the indirect method, whereby profit or loss is adjusted for the effects of non–cash transactions, any deferrals
or accruals of past or future operating cash receipts or payments, and items of income or expense associated with investing
or financing cash flows and items of income or expense associated with investing or financing cash flows. Income from interest
received on cash and other monetary assets and expenses from interest paid to customers are classified under operating
activities, while expenses from interest paid under finance lease are classified under financing activities.
Cash comprises the Group’s own cash and customers’ cash. Customers’ cash is deposited in bank accounts separately from
the Group’s cash. Customers’ cash and cash equivalents are not analysed in the consolidated cash flow statements.
4.4 Financial assets and liabilities
Investments are entered as at the date of purchase and derecognised from the financial statements as at the date of sale
(transactions are recognised as on the date of conclusion) if the agreement requires their delivery on a specific date set forth
by the market, and their initial value is measured at fair value. Transaction costs of the acquisition of financial assets and
liabilities at fair value through profit or loss are entered under costs for the period, while the transaction costs of other types of
assets and liabilities are recognised at the initial value of these assets and liabilities.
Financial assets are classified as
• debt instruments at amortised cost;
• debt instruments at fair value through other comprehensive income;
• equity instruments at fair value through other comprehensive income, and
• financial assets at fair value through P&L.
Financial liabilities are classified as:
• financial liabilities at fair value through P&L and
• other financial liabilities.
Financial assets classification
Financial assets are classified to the following categories:
• measured at amortised cost,
• measured at fair value through P&L,
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
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• measured at fair value through other comprehensive income.
The Group classifies a financial asset based on the entity's business model for the management of financial assets and
characteristics of the cash flows arising from the contract for a financial asset (the so-called "SPPI criterion"). The entity
reclassifies investments in debt instruments if, and only if, the management model for those assets changes.
Initial measurement
Except for certain trade receivables, at initial recognition, an entity measures a financial asset at its fair value plus or minus, in
the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the
acquisition or issue of the financial asset.
Derecognition
Financial assets are derecognised when:
• the contractual rights to the cash flows from the financial asset expired, or
• the contractual rights to the cash flows from the financial asset were transferred and the Company transferred all risks and
rewards of ownership of the financial asset.
Subsequent measurement of financial assets
After initial recognition financial assets are classified to one of the below categories:
• debt instruments at amortised cost;
• debt instruments at fair value through other comprehensive income;
• equity instruments at fair value through other comprehensive income;
• financial assets at fair value through P&L.
4.4.1 Debt instruments measured at amortised cost
Financial asset is measured at amortised cost if both of the following conditions are met:
• the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual
cash flows;
• the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
4.4.2 Debt instruments measured at fair value through other comprehensive income
Financial asset is measured at fair value through other comprehensive income if both of the following conditions are met:
• the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows
and selling financial assets and
• the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
Interest revenue, exchange rate differences and impairment gains or losses for a financial asset are recognized in profit or loss
and calculated in the same way as in case of financial assets measured in amortised cost. Other changes in fair value are
recognized in other comprehensive income. On derecognition of a financial asset its entirety profit or loss previously recognized
in other comprehensive income is reclassified from equity to profit or loss.
Interest revenue is calculated by using the effective interest method and recognized in profit or loss in position “Finance
income”.
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 19
4.4.3 Equity instruments – financial assets measured at fair value through other
comprehensive income
At initial recognition, an entity may make an irrevocable election to present in other comprehensive income subsequent changes
in the fair value of an investment in an equity instrument that is neither held for trading nor contingent consideration recognised
by an acquirer in a business combination to which IFRS 3 applies. Such election is made separately for each equity instrument.
The cumulative gain or loss previously recognised in other comprehensive income is not subject to reclassification to profit or
loss. Dividends are recognised in profit or loss when the entity's right to receive payment of the dividend is established, unless
the dividend clearly represents a recovery of part of the cost of the investment.
4.4.4 Financial assets measured at fair value through profit or loss
Financial assets items which do not meet the criteria of measurement at amortised cost or at fair value through other
comprehensive income are measured at fair value through profit or loss.
Profit or loss form measurement of debt investments at fair value is recognized in profit or loss.
Dividends are recognized in profit or loss when the entity's right to receive payment of the dividend is established.
The Group falls into this category mainly OTC derivatives and stocks.
4.4.5 Fair value measurement
Fair value is the price that can be obtained at the date of valuation from the sale of an asset or can be paid for the transfer of
liability in an ordinary transaction between market participants.
For financial instruments available on an active market, the fair value is measured based on quoted market prices. A market is
considered to be active if the quoted prices are generally and directly available and represent current and actual transactions
concluded between unrelated parties.
For instruments for which there is no active market, the fair value is determined on the basis of valuation models.
The fair value of a financial instrument at initial recognition is the transaction price, i.e. fair value of the price paid or received.
Pursuant to IFRS 13 “Fair Value Measurement”, the Group uses valuation techniques that are appropriate in the circumstances
and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and
minimizing the use of unobservable inputs, namely:
1. valuation based on the data fully observable (active market quotations);
2. valuation models using information which does not constitute the data from Level 1, but observable, either directly or
indirectly;
3. valuation models using unobservable data (not derived from an active market).
Valuation techniques used to determine fair value are applied consistently. Change in valuation techniques resulting in a
transfer between these methods occurs when:
• transfer from Method 1 to 2 takes place when, for financial instruments measured using Method 1, quoted prices from an
active market are not available at the balance sheet date (and they used to be);
• transfer from Method 2 to 3 takes place when, for financial instruments measured using Method 2, the value of parameters
not derived from the market has become material at a given balance sheet date (and it used to be immaterial).
4.4.6 Impairment of financial assets
Financial assets, aside from those carried at fair value through profit or loss, are tested for impairment at every balance sheet
date. Financial assets are impaired when there is objective evidence that the events which occurred after initial recognition of
the asset have an adverse impact on the estimated future cash flows of the given financial assets.
Concerning listed stock classified as available for sale, a material or long-term decline in share prices is considered to be
objective evidence of impairment.
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Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
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For certain categories of financial assets, e.g. trade receivables, specific assets which are not considered past due, are tested
for impairment cumulatively. Objective evidence of impairment of a portfolio of receivables includes the Company’s experience
in collecting receivables; increase in the number of payments past due by 90 days on average and observable changes in the
domestic or local economic environment which are connected with cases of the untimely payment of liabilities
At each reporting date, an entity measures the loss allowance for a financial instrument at an amount equal to the lifetime
expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. At each
reporting date, an entity assesses whether the credit risk on a financial instrument has increased significantly since initial
recognition. When making the assessment, an entity uses the change in the risk of a default occurring over the expected life of
the financial instrument instead of the change in the amount of expected credit losses. To make that assessment, an entity
compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring
on the financial instrument as at the date of initial recognition and consider reasonable and supportable information, that is
available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition.
4.4.7 Derecognition of financial assets from the balance sheet
The Group derecognises a financial asset from the balance sheet only when contractual rights to cash flows generated by the
asset expire or when the financial asset with essentially all risks and rewards of ownership of such asset is transferred to
another entity. If the Group does not transfer or retain essentially all risks and rewards of ownership of such asset, and continues
to control it, the Group recognises the retained share in such asset and related liabilities under payments due, if any. If, in turn,
the Group retains essentially all the risks and benefits of the asset transferred, it continues to recognise the relevant financial
asset. At the time of derecognising a financial asset in full, the difference between (i) the carrying amount and (ii) the sum of
payment received and any accumulated gains or losses entered under other comprehensive income, is recognised under the
income or expenses for the period.
4.4.8 Financial liabilities held for trading (at fair value through profit or loss)
In this category the Group includes financial liabilities held for trading or classified as carried at fair value through profit or loss
at initial disclosure.
A financial liability is classified as held for trading if:
• it was incurred primarily for repurchase over a short period of time;
• it is part of a specific financial instrument portfolio managed jointly by the Company in accordance with the current and
actual model for generating short–term profits; or
• it is a derivative instrument not classified and not operating as collateral.
An entity may, at initial recognition, irrevocably designate a financial liability as measured at fair value through profit or loss
when doing so results in more relevant information, because either:
a) it eliminates or significantly reduces a measurement or recognition inconsistency (sometimes referred to as ‘an accounting
mismatch’) that would otherwise arise from measuring assets or liabilities or recognising the gains and losses on them on
different bases; or
b) a group of financial liabilities or financial assets and financial liabilities is managed and its performance is evaluated on a fair
value basis, in accordance with a documented risk management or investment strategy, and information about the group is
provided internally on that basis to the entity's key management personnel (as defined in IAS 24 Related Party Disclosures), for
example, the entity's board of directors and chief executive officer.
Financial liabilities at fair value through profit or loss are disclosed at fair value and the resulting financial profits or losses are
entered under income or expenses for the period, and the resulting financial profit or loss is recognised as the income or
expenses for the period, taking into account interest paid on a given financial liability.
4.4.9 Other financial liabilities
Other financial liabilities, including bank loans and borrowings, are initially carried at fair value less transaction costs.
Later on, they are measured at amortised cost using the effective interest rate method.
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 21
The effective interest rate method is used to calculate amortised cost of a liability and to allocate interest costs in the
appropriate period. The effective interest rate is a rate effectively discounting future cash payments in the anticipated useful
life of a given liability or a shorter period if necessary.
4.4.10 Derecognition of financial liabilities from the balance sheet
The Group derecognises financial liabilities from the balance sheet only if the appropriate liabilities of the Group are performed,
invalidated or if they expire. At the time of derecognising a financial liability, the difference between (i) the carrying amount and
(ii) the sum of payment made any accumulated gains or losses is entered under income or expenses for the period.
4.5 Contributions to the compensation scheme
The Parent Company makes obligatory payments to the compensation scheme maintained by KDPW which constitute long–
term receivables of the compensation scheme participant due from the KDPW.
Pursuant to the Act on Trading in Financial Instruments of 29 July 2005 (Journal of Laws No. 183, item 1538, as amended,
hereinafter, the “Act”), the Parent Company participates in the obligatory compensation scheme. The purpose of the
compensation scheme maintained by the KDPW is to secure the assets held in cash accounts and securities accounts of
customers of brokerage houses and banks maintaining securities accounts, in the event of their loss, in accordance with the
principles established in the Act. The compensation scheme is created from payments made by its participants and profits
generated on such payments. Payments contributed to the compensation system may be returned to a brokerage house only
when it is fully discharged from participation in the system (it winds up its operations specified in the decision on withdrawal,
repeal of a permit to provide brokerage services or expiry of such permit) and provided that such funds have not already been
used for purposes as specified. On a quarterly basis, the KDPW informs system participants of accrued profits. The Parent
Company’s payments to the compensation system are reported as expenses, under “Other costs” in the comprehensive income
statement.
The Parent Company maintains a register of payments to the compensation system and profits generated in connection with
the management of funds collected by the KDPW in the compensation scheme in a manner that enables calculation of the
balances of payments made and profits accrued.
4.6 Intangible assets
Intangible assets include the Group’s assets which do not exist physically, which are identifiable and can be reliably measured,
and which will give the Group economic benefits in the future.
Intangible assets are disclosed initially at cost of acquisition or production. As at the balance sheet date, intangible assets are
carried at cost less accumulated amortisation and impairment write–offs, if any.
Intangible assets arising as a result of development works are disclosed in the statement of financial position, provided that
the following conditions are met:
• from a technical point of view, it is feasible to complete the intangible asset so that it is available for use or sale;
• it is possible to demonstrate the intent to complete the intangible asset and to use and sell it;
• the intangible asset will be fit for use or sale;
• it is known how the intangible asset will generate probable future economic benefits;
• technical and financial resources necessary to complete development works and its use or sale will be provided;
• it is possible to reliably measure the expenditures attributable to the intangible asset during its development.
The expenditures attributable to the intangible asset during its development and expenditures that do not meet the above
criteria are disclosed as expenses in the comprehensive income statement as on the date they were incurred.
Amortisation of intangible assets is carried out on the basis of rates reflecting their estimated useful lives. The Group has no
intangible assets with an indefinite useful life. The straight-line method is applied to depreciate intangible assets with a definite
useful life. The useful life of the respective intangible assets is as follows:
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 22
TYPE
DEPRECIATION PERIOD
Software licences
5 years
Intangible assets manufactured internally
5 years
Other intangible assets
10 years
Intangible assets are tested for impairment, whenever there is an indication of impairment, however with regard to intangible
assets in the period of realisation, a potential impairment is defined at each balance sheet date. Effects of impairment and of
amortisation of intangible assets are disclosed under operating expenses.
Intangible assets held under finance lease agreements are depreciated over their expected useful life, in the same manner as
own assets, but for a period no longer than the term of the lease.
Gains or losses from sale / liquidation or discontinued use of items of property, plant and equipment are defined as the
difference between revenue from sales and the carrying amount of these items, and disclosed in the comprehensive income
statement.
4.7 Property, plant and equipment
Property, plant and equipment include items of property, plant and equipment as well as expenses for property, plant and
equipment under construction which the Group intends to use in connection with its operations and for administration
purposes, in a period of over 1 year, and which will bring economic benefits in the future. Expenditures on property, plant and
equipment include actual capital expenditures, as well as expenditures for future supplies of equipment and services connected
with the development of items of property, plant and equipment (prepayments made). Property, plant and equipment include
significant specialist spare parts which are elements of a tangible asset.
Property, plant and equipment and expenses for property, plant and equipment under construction are initially disclosed at cost
of acquisition or production. Significant components are also treated as separate items of property, plant and equipment. As at
the balance sheet date, property, plant and equipment is carried at cost less depreciation and impairment write-offs, if any.
Depreciation of property, plant and equipment, including their components, is carried out on the basis of rates reflecting their
estimated useful lives, and starts in the month following the month they are accepted for use. Useful life estimates are reviewed
on an annual basis. The straight-line method is applied to depreciate property, plant and equipment. The useful life of the
respective items of property, plant and equipment is as follows:
TYPE
DEPRECIATION PERIOD
Computers
3 years
Vehicles
5 years
Office furniture and equipment
5 years
Assets held under finance lease agreements are depreciated over their expected useful life, in the same manner as own assets,
but for a period no longer than the term of lease.
Gains or losses from sale / liquidation or discontinued use of items of property, plant and equipment are defined as the
difference between revenue from sales and the carrying amount of these items, and disclosed in the comprehensive income
statement.
4.8 Lease
IFRS 16 introduces a unitary model of the lessee's accounting and requires the lessee to recognize assets and liabilities
resulting from each lease with a period exceeding 12 months, unless the underlying asset is of low value. At the commencement
date, the lessee recognizes an asset representing the right to use the underlying asset and a liability to make lease payments.
Identifying a lease
At new contract inception, the Group assesses whether the contract is a lease or whether it contains a lease. An agreement is
a lease or contains a lease if it transfers the right to control the use of an identified asset for a given period in exchange for
remuneration. In order to assess if an agreement transfers the right to control the use of an identified asset for a given period,
the Group shall determine whether throughout the entire period of use the customer enjoys the following rights:
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 23
a) the right to obtain substantially all economic benefits from the use of the identified asset and
b) the right to manage the use of the identified asset.
Should the Group have the right to control the use of an identified asset for part of the duration of an agreement only, the
agreement contains a lease in respect of this part of the period.
Rights resulting from lease, rental, hire or other agreements which meet the definition of a lease as per IFRS 16 are recognised
as right of use underlying assets within the framework of non-current assets with a corresponding lease liabilities.
Initial recognition and measurement
The Group recognises the right of use asset as well as the lease liability on the date of commencement of the lease.
On the date of commencement the Group measured the right of use asset at cost.
The cost of the right of use asset is inclusive of the following:
a) the amount of the initial measurement of the lease liability,
b) all lease payments paid on or before the date of commencement, less any lease incentives received,
c) all initial costs directly incurred by the lessee, and
d) estimated costs to be incurred by the lessee in connection with the dismantling and removal of underlying assets, the
refurbishment of premises within which they were located, or the refurbishment of underlying assets to the condition required
by the terms and conditions of the lease.
Lease payments included in the evaluation of lease liability include:
- fixed lease payments;
- variable lease payments, which depend on an index or a rate, initially measured using the index or rate as at the
commencement date;
- amounts that are expected to be paid by the lessee as part of the guaranteed residual value;
- the call exercise price, should it be assumed with reasonable certainty that the Group shall decide to exercise the call option;
- penalty payments for termination of a lease, unless it can be assumed with reasonable certainty that the Group shall not
terminate the lease.
Variable payments, which do not depend on an index or a rate should not be taken into account when calculating lease liability.
Such payments are recognised in the profit or loss in the period of the occurrence which renders them payable.
The lease liability on the commencement date shall be calculated on the basis of the current lease payments that are payable
by that date and discounted by the marginal interest rates of the lessee.
The Group does not discount lease liabilities by the lease interest rate as the calculation of such rates requires information
known only to the lessor (the non-guaranteed residual value of the leased asset as well as the direct costs incurred by the
lessor).
Determining the lessee’s marginal interest rate
Marginal interest rates were specified as the sum of:
a) the risk free rate, based on the Interest Rate Swap (IRS) in accordance with the maturity of the discount rate, and the relevant
basic rate for the given currency, as well as
b) the Group's credit risk premium based on the credit margin calculated inclusive of the credit risk segmentation of all
companies which have entered into lease agreements.
Subsequent measurement
After the commencement date, the lessee measures the right of use asset applying the cost model.
In applying the cost model, the lessee shall measure the cost of the right of use asset:
a) less any accumulated depreciation and accumulated impairment losses; and
b) adjusted in respect of any updates to the measurement of lease liability not resulting in the necessity for recognition of a
separate asset.
After the date of commencement the lessee shall measure the lease liability by:
a) increasing the carrying amount to reflect interest on the lease liability,
b) decreasing the carrying amount to reflect the leasing payments made, and
c) remeasuring of the carrying amount to reflect any reassessment or lease modifications or to revise in-substance fixed lease
payments.
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 24
The Group shall remeasure the lease liability in cases where there is a change in future lease payments as a result of a change
in the index or rate used to determine lease payments (e.g. a change in payment associated with the right of perpetual use), in
cases where there is a change in the amount expected by the Group to be payable under the residual amount guarantee, or if
the Group reassesses the likelihood of the exercise of the call option, or the extension or termination of the lease.
Updated of the lease liability also adjusts the value of the right of use asset. In a situation where the carrying amount of the
right of use asset has been reduced to zero, further reductions in the measurement of the lease liability shall be recognised by
the Group as profit or loss.
Depreciation
The right of use asset is depreciated linearly over the shorter of the following two periods: the period of lease or the useful life
of the underlying asset. However in cases where the Group can be reasonably sure that it will regain ownership of the asset
prior to the end of the lease term, right of use shall be depreciated from the day of commencement of the lease until the end of
the useful life of the asset.
Impairment
The Group applies IAS 36 Impairment of Assets to determine whether the right of use asset is impaired and to account for any
impairment loss identified.
Simplifications and practical solutions in the application of IFRS 16
Short-term lease
The Group applies a practical solution to short-term lease contracts, which are characterised by contract term to 12 months.
Simplifications regarding these contracts involve the settlement of lease payments as costs:
- on a straight-line basis, for the duration of the lease agreement, or
- another systematic method, if it better reflects the way of spreading the benefits gained by the user in time.
Leases of low-value assets
The Group does not apply the rules concerning recognition, measurement and presentation outlined in IFRS 16 to lease
agreements of low-value assets. Low-value assets are considered to be those which have a value when new not higher than
PLN 43 thousand translated at the exchange rate of the first day of application, i.e. 1 January 2019 (representing EUR 10
thousand) or the equivalent value in another currency as per the average closing rate of exchange of the National Bank of
Poland at the moment of initial recognition of a contract.
Simplifications in respect of such contracts are due to the settlement of costs on a straight-line basis for the term of the lease
contract.
An asset covered by a lease must not be counted as a low-value asset if the asset would typically not be of low value when
new. As low-value items, the Group includes for example: coffee machines, printers and small items of furniture.
The underlying asset may have a low-value only if:
a) the lessee may benefit from use of the underlying asset itself or with other resources which are readily available to him, and
b) the underlying asset is not highly dependent on or related to other assets.
4.9 Impairment of property, plant and equipment and intangible assets except goodwill
As at each balance sheet date, the Group reviews the carrying amounts of its property, plant and equipment and intangible
assets for indications of impairment. If such indications are identified, the Group estimates the recoverable amount of a given
asset in order to determine the potential write-down thereon. When an asset does not generate cash flows that are largely
independent of those from other assets, an analysis is carried out for the Group’s cash-generating assets to which a given
asset belongs. Where it is possible to specify a reliable and uniform allocation basis, the Group’s property, plant and equipment
are allocated to the relevant cash-generating units or the smallest clusters of cash-generating units for which such reliable and
uniform allocation bases can be established.
For intangible assets with an indefinite useful life, an impairment test is performed yearly and whenever there are any indications
of potential impairment.
The recoverable amount is calculated as the higher of: fair value less selling costs or value-in-use. The latter value represents
the current value of estimated future cash flows discounted using the discount rate before tax taking into account the current
market time value of money and the asset-specific risk.
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 25
If the recoverable amount is lower than the carrying amount of an asset (or a cash-generating unit), the carrying amount of the
asset or the unit is decreased to the recoverable amount. Impairment loss is recognised promptly as the cost of the period
when it occurred.
If the impairment loss is then reversed, the net value of an asset (or a cash-generating unit) is increased to the newly estimated
recoverable amount, however no higher than the carrying amount of the assets that would be established had the impairment
loss of an asset / cash-generating unit not been recognised in the preceding years. A reversal of impairment losses is disclosed
promptly in the comprehensive income statement.
4.10 Provisions for liabilities
Provisions for liabilities are established when the Group has an existing legal or constructive obligation connected with past
events and it is probable that the performance of this obligation will result in an outflow of funds representing economic
benefits, and the amount of the liability can be reliably assessed, although the amount or maturity of the liability are not certain.
The amount of the provision recognised reflects the most accurate estimates possible of the amount required to settle the
current liability as at the balance sheet date, taking into account risk and uncertainty connected with this liability. In the event
of measuring a provision using the estimated cash flow method necessary to settle the current liability, its carrying amount
reflects the current value of such cash flows.
If it is probable that some or all of the economic benefits required to settle a provision can be recovered from a third party, such
receivable will be recognised as an asset, provided that the probability of recovery is sufficiently high and can be reliably
assessed.
4.10.1 Onerous contracts
Current liabilities under onerous contracts are disclosed as provisions. A contract entered into by the Group is considered to be
onerous if it involves inevitable costs of performance of contractual obligations whose value exceeds the value of economic
benefits expected under the contract.
4.11 Equity
Equity includes capitals and funds established in compliance with the mandatory legal regulations, i.e. applicable laws and the
statute. Retained profit is also disclosed under equity. Share capital is disclosed in the amount set out in the Parent Company’s
Statute. Unregistered payments to the share capital are disclosed under the Parent Company’s equity and reported in the
nominal amount of the payment received.
4.12 Customers’ financial instruments and nominal values of transactions on derivatives
(off–balance sheet items)
Off–balance sheet items include: the nominal values of derivatives in transactions executed with customers and brokers in the
OTC market, and the values of financial instruments of the Group’s customers, acquired on the regulated stock exchange
market and deposited in the accounts of the Group’s customers.
4.13 The result of operations on financial instruments
The result of operations on financial instruments covers all realised and unrealised income and expenses connected with
trading in financial instruments, including dividend, interest and FX rate differences. The result of operations on financial
instruments is calculated as the difference between the value of the instrument at the sale price and the purchase price.
The result of operations on financial instruments is composed of the following items:
• Result on financial assets held for trading: result on financial instruments on transactions with customers and brokers;
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 26
• The net income/(costs) on financial assets held to maturity: result on debt securities (interest result calculated using the
effective interest rate method);
• Gains from the sale of investments in a subsidiary;
Discounts for customers and commissions for introducing brokers depend on the actual volume of trading in the financial
instruments. This item decreases the result on transactions in financial instruments.
4.14 Fee and commission income and expenses
Fee and commission income includes brokerage fees and other charges against financial services charged to customers, and
is disclosed at the date when the customer enters into a given transaction.
Fee and commission expenses are connected with financial brokerage services acquired by the Group, and disclosed at the
date when the services were provided.
4.15 Cost of employee benefits
Short–term employee benefits, including specific contributions to benefit schemes, are disclosed in the period when the Group
received a given benefit from an employee, and in the case of profit distribution or bonus payments, when the following
conditions are met:
• the entity has a present legal or constructive obligation to make such payments as a result of past events; and
• a reliable estimate of the obligation can be made.
For paid leave benefits, employee benefits are recognised to the extent of accumulated paid leave, at the time of performance
of work that increases the entitlement to future paid absences (provision for unused holidays). Non–accumulating paid
absences are recognised when the absences occur.
Post–employment benefits in the form of benefit schemes (retirement severance pays) and other long–term benefits (length
of service bonuses, etc.) are determined using the projected personal right method, with an actuarial valuation performed at
each balance sheet date. Actuarial gains and losses are disclosed in full in the comprehensive income statement. Past service
costs are recognised promptly to the extent in which they pertain to benefits already gained, and in other cases amortised with
the straight line method for the average period after which such benefits are gained.
Pursuant to the requirements of the Regulation of the Minister of Finance of 2 December 2011 on the principles of defining the
policy of variable remuneration elements for the management staff by brokerage houses, starting from 2012, the Parent
Company applies the policy of variable remuneration elements for the persons occupying key positions. Benefits granted to the
employees within the framework of the Program of variable remuneration elements are granted in cash – 50 per cent and in
the form of the financial instruments whose value is related to the Parent Company’s financial standing – 50 per cent. The part
of benefits granted in the form of financial instruments whose value is related to the Parent Company’s financial standing, is
paid in cash within three years after the date of being granted. The provision for employee benefits due to variable remuneration
elements is recognised in accordance with IAS 19 in the comprehensive income statement in “Employee benefits and
remuneration”.
4.16 Finance income and costs
Finance income includes interest income on funds invested by the Group. Finance costs consist of interest expense paid to
customers, interest on finance lease paid and other interest on liabilities.
Interest income and expenses are disclosed in profits or losses of the current period, using the effective interest rate method.
Dividend income is disclosed at the time when the shareholders’ right to obtain such dividend is established.
Finance income and costs also include gains and losses arising from foreign exchange rate differences, disclosed in net
amounts.
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 27
4.17 Tax
The entity’s income tax comprises current tax due and deferred tax.
4.17.1 Current tax
Current tax liability is calculated on the basis of the tax result (taxable base) for a given financial year. The tax profit (loss) is
different from the accounting net profit (loss) because it does not include non–taxable income and non–deductible expenses.
Tax expenses are calculated on the basis of tax rates in force in a given financial year and pursuant to the tax regulations of
the countries in which the branches of the Parent Company and its subsidiaries are located.
Regulations concerning the tax on goods and services, corporate income tax and the burden of social insurance are subject to
frequent changes. These frequent changes result in lack of appropriate benchmarks, inconsistent interpretations and few
established precedents that could be applied. The current regulations also contain uncertainties, resulting in differences in
opinion regarding the legal interpretation of tax regulations both between government bodies and companies.
Tax settlements and other areas of activity (for example, customs or foreign exchange) may be subject to inspection by control
authorities that are entitled to impose high penalties and fines, and any additional tax liabilities resulting from inspections must
be paid together with high interest. These conditions cause that tax risk in Poland is higher than in countries with more mature
tax systems.
Consequently, the amounts reported and disclosed in the financial statements may change in the future as a result of a final
decision of the tax audit.
On 15 July 2016 changes have been introduced to the Tax Code to take into account the provisions of the General Anti
Avoidance Rules (GAAR). GAAR is to prevent the formation and use of artificial legal structures created in order to avoid payment
of tax in Poland. GAAR defines tax avoidance operation as an action made primarily in order to achieve a tax advantage being
in conflict with the subject and purpose of the provisions of the Tax Act. According to GAAR such activity does not result in the
achievement of a tax advantage if the behaviour was artificial. Any occurrence of (i) unjustified sharing operations, (ii) the
involvement of intermediaries, despite the lack of economic justification or business, (iii) the elements mutually terminating or
compensating, and (iv) other actions with a similar effect to the aforementioned, may be treated as a condition of existence
false operations covered by GAAR. The new regulations will require greater judgment when assessing the tax consequences of
particular transactions.
GAAR clause should apply to transactions made after its entry into force and to the transactions that were carried out prior to
the entry into force of the GAAR clause but for which the benefits have been achieved or are still. The implementation of these
regulations will enable the Polish tax authorities to question legal arrangements and agreements carried out by the taxpayers,
such as restructuring and group reorganization.
4.17.2 Deferred income tax
Deferred tax is calculated using the balance sheet method, based on differences between the carrying amounts of assets and
liabilities and corresponding tax values used to calculate the tax basis.
Deferred tax liability is established on all taxable positive temporary differences, while deferred tax assets are recognised up to
the probable amount of a reduction in future taxable profit by recognised deductible temporary differences and tax losses or
credits that the Group may use.
The value of deferred tax assets is assessed as on each balance sheet date and if the expected future taxable profits are not
sufficient to realise an asset or its portion, a write-down will be performed.
Deferred tax is calculated based on tax rates that will be applicable when the asset is realised or the liability becomes due. In
the statement of financial position, deferred tax is disclosed upon off-set to the extent that it applies to the same tax residency.
4.17.3 Current and deferred tax for the current reporting period
Current and deferred tax is disclosed in the comprehensive income statement, except for cases in which it pertains to items
that credit or debit other comprehensive income directly, because then the tax is also disclosed in the other comprehensive
income statement, or when it is the result of an initial calculation of a business combination.
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 28
4.18 Earnings per share
Earnings per share for each period is calculated by dividing the net profit for the period by the weighted average number of
shares outstanding during the reporting period.
5. Operating income
5.1 Result of operations in financial instruments
(IN PLN’000)
TWELVE-MONTH
PERIOD ENDED
31.12.2020
TWELVE-MONTH
PERIOD ENDED
31.12.2019
Financial instruments (CFD)
Index CFDs
425 917
175 116
Commodity CFDs
263 949
12 021
Currency CFDs
91 951
42 624
Stock and ETF CFDs
12 885
2 313
Bond CFDs
198
771
Total CFDs
794 900
232 845
Stocks and ETFs
4 988
1 199
Gross gain on transactions in financial instruments
799 888
234 044
Bonuses and discounts paid to customers
(1 580)
(300)
Commission paid to cooperating brokers
(5 520)
(638)
Net gain on transactions in financial instruments
792 788
233 106
Bonuses paid to clients are strictly related to trading in financial instruments by the customer with Group
The Group concludes cooperation agreements with introducing brokers who receive commissions which depend on the trade
generated under the cooperation agreements. The income generated and the costs incurred between the Group and particular
brokers relate to the trade between the broker and customers that are not his customers.
The Group’s operating incomes is generated from: (i) spreads (the differences between the “offer” price and the “bid” price); (ii)
net results (gains offset by losses) from Group’s market making activities; (iii) fees and commissions charged by the Group to
its clients; and (iv) swap points charged (being the amounts resulting from the difference between the notional forward rate
and the spot rate of a given financial instrument). The table below presents percentage share of income categories in gross
gain on transactions in financial instruments.
TWELVE-MONTH
PERIOD ENDED
31.12.2020
TWELVE-MONTH
PERIOD ENDED
31.12.2019
Spread
54%
62%
Market Making
30%
23%
Swap, fees and commissions
16%
15%
Gross gain on transactions in financial instruments
(excluding dividends from subsidiaries).
100%
100%
5.2 Income from fees and charges
(IN PLN’000)
TWELVE-MONTH
PERIOD ENDED
31.12.2020
TWELVE-MONTH
PERIOD ENDED
31.12.2019
Fees and charges from institutional clients
2 869
3 952
Fees and charges from retail clients
1 970
1 677
Total income from fees and charges
4 839
5 629
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 29
5.3 Geographical areas
(IN PLN’000)
TWELVE-MONTH
PERIOD ENDED
31.12.2020
TWELVE-MONTH
PERIOD ENDED
31.12.2019
Operating income
Central and Eastern Europe
404 414
121 334
- including Poland
295 148
95 390
Western Europe
303 177
90 934
- including Spain
127 755
47 642
Latin America
90 159
27 036
Total operating income
797 750
239 304
The countries from which the Group derives each time 15% and over of its revenue are Poland and Spain. The share of other
countries in the structure of the Group’s revenue by geographical area does not in any case exceed 15%. Due to the overall
share in the Group’s revenue, Poland and Spain were set apart for presentation purposes within the geographical area.
The Group breaks its revenue down into geographical area by country in which a given customer was acquired.
6. Salaries and employee benefits
(IN PLN’000)
TWELVE-MONTH
PERIOD ENDED
31.12.2020
TWELVE-MONTH
PERIOD ENDED
31.12.2019
Salaries
(99 616)
(70 249)
Social insurance and other benefits
(16 004)
(11 366)
Employee benefits
(3 521)
(4 409)
Total salaries and employee benefits
(119 141)
(86 024)
7. Marketing
(IN PLN’000)
TWELVE-MONTH
PERIOD ENDED
31.12.2020
TWELVE-MONTH
PERIOD ENDED
31.12.2019
Marketing online
(83 279)
(34 631)
Marketing offline
(4 442)
(3 067)
Competitions for clients
(10)
(18)
Total marketing
(87 731)
(37 716)
Marketing activities carried out by the Group are mainly focused on Internet marketing, which is also supported by other
marketing activities.
8. Costs of maintenance and lease of buildings
(IN PLN’000)
TWELVE-MONTH
PERIOD ENDED
31.12.2020
TWELVE-MONTH
PERIOD ENDED
31.12.2019
Maintenance costs
(2 690)
(2 061)
Costs for renting low-value or short-term tangible assets
(423)
(458)
Other costs
(675)
(639)
Total costs of maintenance and lease of buildings
(3 788)
(3 158)
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 30
9. Other external services
(IN PLN’000)
TWELVE-MONTH
PERIOD ENDED
31.12.2020
TWELVE-MONTH
PERIOD ENDED
31.12.2019
Support database systems
(10 036)
(7 389)
Market data delivery
(6 014)
(5 558)
Legal and advisory services
(5 150)
(5 158)
Internet and telecommunications
(2 718)
(2 587)
Accounting and audit services
(1 905)
(1 887)
IT support services
(1 919)
(927)
Recruitment
(491)
(375)
Postal and courier services
(303)
(181)
Translation
(101)
(149)
Other external services
(806)
(427)
Total other external services
(29 443)
(24 638)
10. Commission expenses
(IN PLN’000)
TWELVE-MONTH
PERIOD ENDED
31.12.2020
TWELVE-MONTH
PERIOD ENDED
31.12.2019
Bank commissions
(19 002)
(5 611)
Stock exchange fees and charges
(3 016)
(2 355)
Commissions of foreign brokers
(521)
(363)
Total commission expenses
(22 539)
(8 329)
11. Other expenses
(IN PLN’000)
TWELVE-MONTH
PERIOD ENDED
31.12.2020
TWELVE-MONTH
PERIOD ENDED
31.12.2019
Costs relating to legal risk
(4 892)
(887)
Receivables impairment write–downs
(1 049)
(421)
Materials
(877)
(1 101)
Insurance
(278)
(240)
Business trips
(204)
(919)
Membership fees
(77)
(74)
Representation
(61)
(168)
Other
(448)
(514)
Total other expenses
(7 886)
(4 324)
Write-downs of receivables are the result of the debit balances which arose in customers’ accounts in that period.
12. Finance income and costs
(IN PLN’000)
TWELVE-MONTH
PERIOD ENDED
31.12.2020
TWELVE-MONTH
PERIOD ENDED
31.12.2019
Interest income
Interest on own cash
1 350
5 072
Interest on customers’ cash
225
764
Total interest income
1 575
5 836
Income on bonds
4 168
−
Other finance income
114
65
Total finance income
5 857
5 901
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 31
(IN PLN’000)
TWELVE-MONTH
PERIOD ENDED
31.12.2020
TWELVE-MONTH
PERIOD ENDED
31.12.2019
Interest expense
Interest paid to customers
(2)
(79)
Interest paid under lease agreements
(306)
(397)
Other interest
(93)
(82)
Total interest expense
(401)
(558)
Foreign exchange losses
(22 505)
(1 313)
Other finance costs
−
(6)
Total finance costs
(22 906)
(1 877)
Foreign exchange losses presented in 2020 result mainly from reduction the share capital of subsidiary in Turkey what is
presented in note 1.2.
Foreign exchange differences relate to unrealised differences on the measurement of balance sheet items denominated in a
currency other than the functional currency.
13. Segment information
For management reporting purposes, the Group’s operations are divided into the following two business segments:
1. Retail operations, which include the provision of trading in financial instruments for individual customers.
2. Institutional activity, which includes the provision of trading in financial instruments and offering trade infrastructure to
entities (institutions), which in turn provide services of trading in financial instruments for their own customers under their
own brand.
These segments do not aggregate other lower-level segments. The management monitors the results of the operating
segments separately, in order to decide on the implementation of strategies, allocation of resources and performance
assessment. Operations in segment are assessed on the basis of segment profitability and its impact on the overall profitability
reported in the financial statements.
Transfer prices between operating segments are based on market prices, according to the principles similar to those applied in
settlements with unrelated parties.
The Group concludes transactions only with external clients. Transactions between operating segments are not concluded.
Valuation of assets and liabilities, incomes and expenses of segments is based on the accounting policies applied by the
Company.
The Group does not allocate financial activity and corporate income tax burden on business segments.
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 36
14. Cash and cash equivalents
Broken down by type:
(IN PLN’000)
31.12.2020
31.12.2019
In hand
1
1
In current bank accounts
1 575 806
955 195
Cash and cash equivalents in total
1 575 807
955 196
Own cash and restricted cash – customers’ cash:
(IN PLN’000)
31.12.2020
31.12.2019
Customers’ cash and cash equivalents
1 033 602
470 845
Own cash and cash equivalents
542 205
484 351
Cash and cash equivalents in total
1 575 807
955 196
Customers’ cash and cash equivalents include the value of clients’ open transactions.
15. Financial assets at fair value through P&L
(IN PLN’000)
31.12.2020
31.12.2019
Index CFDs
133 307
78 039
Currency CFDs
41 609
22 852
Commodity CFDs
43 975
18 424
Stock and ETF CFDs
36 396
10 744
Bond CFDs
14
29
Debt instruments
398 616
14 899
Stocks and ETFs
9 216
4 331
Total financial assets at fair value through P&L
663 133
149 318
Detailed information on the estimated fair value of the instrument is presented in note 37.1.1.
16. Financial assets at amortised cost
(IN PLN’000)
31.12.2020
31.12.2019
Receivables due from clients
4 453
3 414
Trade receivables
10 366
3 975
Deposits
2 478
1 865
Statutory receivables
1 081
1 271
Gross other receivables
18 378
10 525
Impairment write-downs of receivables
(1 207)
(854)
Impairment write-downs of receivables due from clients
(3 861)
(3 197)
Total net other receivables
13 310
6 474
Movements in impairment write-downs of receivables
(IN PLN’000)
31.12.2020
31.12.2019
Impairment write-downs of receivables – at the beginning of the reporting period
(4 051)
(3 624)
Write-downs recorded
(1 095)
(847)
Write-downs reversed
46
426
Write-downs utilized
32
(6)
Impairment write-downs of receivables – at the end of the reporting period
(5 068)
(4 051)
Write-downs of receivables in 2020 and 2019 resulted from the debit balances which arose in customers’ accounts in those
periods.
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 37
17. Prepayments and deferred costs
(IN PLN’000)
31.12.2020
31.12.2019
CRM
1 461
1 213
Database application
1 122
279
Licenses and news services
959
905
Advertising
857
816
Insurance
277
319
Prepaid ren
220
220
Other
501
321
Total prepayments and deferred costs
5 397
4 073
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 42
Non-current assets by geographical area
(IN PLN’000)
31.12.2020
31.12.2019
Central and Eastern Europe
7 717
9 005
- including Poland
6 580
7 702
Western Europe
4 893
5 116
- including Spain
732
366
Latin America and Turkey
1 289
644
Total non-current assets
13 899
14 765
20. Amounts due to customers
(IN PLN’000)
31.12.2020
31.12.2019
Amounts due to retail customers
1 145 630
532 822
Amounts due to institutional customers
57 613
40 970
Total amounts due to customers
1 203 243
573 792
Amounts due to customers are connected with transactions concluded by the customers (including cash deposited in the
customers’ accounts).
21. Financial liabilities held for trading
(IN PLN’000)
31.12.2020
31.12.2019
Index CFDs
31 673
12 720
Stock and ETF CFDs
31 427
3 807
Commodity CFDs
20 113
3 900
Currency CFDs
13 414
2 979
Bond CFDs
5
123
Total financial liabilities held for trading
96 632
23 529
22. Other liabilities
(IN PLN’000)
31.12.2020
31.12.2019
Provisions for other employee benefits
27 091
10 295
Trade liabilities
15 822
5 546
Liabilities due to brokers
6 842
768
Statutory liabilities
3 728
2 563
Liabilities due to employees
506
362
Amounts due to the Central Securities Depository of Poland
178
142
Total other liabilities
54 167
19 676
Liabilities under employee benefits include estimates, as at the balance sheet date, of bonuses for the reporting period, including
from the Program of variable remuneration elements, as well as the provision for unused holiday leave, established in the
amount of projected benefits, which the Group is obligated to pay in the event of payment of holiday equivalents.
Program of variable remuneration elements
Pursuant to the Variable Remuneration Elements policy applied by the Parent Company, the employees of the Parent Company
in the top management positions receive annually variable remuneration paid in cash and in financial instruments.
The value of provisions for employee benefits includes variable remuneration granted in cash and based on financial
instruments, deferred for payment in three consecutive years.
As at 31 December 2020, salaries and employee benefits included the provision for variable remuneration elements in the
amount of PLN 3 765 thousand (value of the gross variable components PLN 3 635 thousand and social security expense of
the employer PLN 129 thousand) and as at 31 December 2019 in the amount of PLN 1 756 thousand (value of the gross variable
components PLN 1 701 thousand and social security expense of the employer PLN 55 thousand).
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 43
23. Liabilities due to lease
(IN PLN’000)
31.12.2020
31.12.2019
Short- term
4 628
4 323
Long- term
4 026
6 449
Total liabilities due to lease
8 654
10 772
Liabilities due to lease do not include short-term leasing contracts and lease of low-value assets. In the period from 1 January
to 31 December 2020 the cost related to short-term leasing included in the statement of comprehensive income amounted to
PLN 760 thousand, the cost related to lease of low-value assets included in the statement of comprehensive income amounted
to PLN 73 thousand. . In the period from 1 January to 31 December 2019 the cost related to short-term leasing included in the
statement of comprehensive income amounted to PLN 283 thousand, the cost related to lease of low-value assets included in
the statement of comprehensive income amounted to PLN 107 thousand.
24. Provisions for liabilities and contingent liabilities
24.1 Provisions for liabilities
(IN PLN’000)
31.12.2020
31.12.2019
Provisions for retirement benefits
1 610
1 184
Provisions for legal risk
6 329
1 945
Total provisions
7 939
3 129
Provisions for retirement benefits are established on the basis of an actuarial valuation carried out in accordance with the
applicable regulations and agreements connected with obligatory retirement benefits to be covered by the employer.
Provisions for legal risk include expected amounts of payments to be made in connection with disputes to which the Group is
a party. As at the date of preparation of these financial statements, the Company is not able to specify when the above liabilities
will be repaid. The information on the significant court proceedings, arbitration authority or public administration authority was
described in point 5.2 of the Management Board report on the operations of the Group and Company. To the best of our
knowledge and belief, the procedures described therein and the future resolution of these proceedings in the context of a
possible impact on other clients of the Group do not have a material impact on these consolidated financial statements.
Movements in provisions in the period from 1 January 2020 to 31 December 2020
(IN PLN’000)
VALUE AS AT
01.01.2020
INCREASES
DECREASES
USE
DECREASES
REVERSAL
VALUE AS AT
31.12.2020
Provisions for retirement benefits
1 184
426
−
−
1 610
Provisions for legal risk
1 945
4 607
28
195
6 329
Total provisions
3 129
5 033
28
195
7 939
Movements in provisions in the period from 1 January 2019 to 31 December 2019
(IN PLN’000)
VALUE AS AT
01.01.2019
INCREASES
DECREASES
USE
DECREASES
REVERSAL
VALUE AS AT
31.12.2019
Provisions for retirement benefits
1 055
129
−
−
1 184
Provisions for legal risk
925
1 611
131
460
1 945
Total provisions
1 980
1 740
131
460
3 129
24.2 Contingent liabilities
The Group is party to a number of court proceedings associated with the Group’s operations. The proceedings in which the
Group acts as defendant relate mainly to employees’ and customers’ claims. As at 31 December 2020 the total value of claims
brought against the Group amounted to approx. PLN 14 801 thousand (as at 31 December 2019: PLN 7 626 thousand).
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 44
Company has not created provisions for the above proceedings. In the assessment of the Group there is low probability of loss
in these proceedings.
On May 9, 2014, the Parent Company issued a guarantee in the amount of PLN 56 thousand to secure an agreement concluded
by a subsidiary XTB Limited, based in the UK and PayPal (Europe) Sarl & Cie, SCA based in Luxembourg. The guarantee was
granted for the duration of the main contract, which was concluded for an indefinite period.
On 7 July 2017 the Parent Company issued a guarantee in the amount of PLN 5 646 thousand to secure the agreement
concluded between subsidiary XTB Limited based in UK and Worldpay (UK) Limited, Worldpay Limited and Worldpay AP LTD
based in UK. The guarantee was issued for the period of the agreement which was concluded for three years with the possibility
of further extension.
25. Equity
Share capital structure as at 31 December 2020 and 31 December 2019
SERIES/ISSUE
NUMBER OF
SHARES
NOMINAL VALUE OF SHARES
(IN PLN)
NOMINAL VALUE OF ISSUE
(IN PLN’000)
Series A
117 383 635
0,05
5 869
All shares in the Company have the same nominal value, are fully paid for, and carry the same voting and profit-sharing rights.
No preference is attached to any share series. The shares are A-series ordinary registered shares.
Shareholding structure of the Parent Company
To the best Parent Company’s knowledge, the shareholding structure of the Parent Company as at 31 December 2020 was as
follows:
NUMBER OF
SHARES
NOMINAL VALUE OF SHARES
(IN PLN’000)
SHARE
XXZW Investment Group S.A.
78 629 794
3 932
66,99%
Other shareholders
38 753 841
1 937
33,01%
Total
117 383 635
5 869
100,00%
To the best Parent Company’s knowledge, the shareholding structure of the Parent Company as at 31 December 2019 was as
follows:
NUMBER OF
SHARES
NOMINAL VALUE OF SHARES
(IN PLN’000)
SHARE
XXZW Investment Group S.A.
78 629 794
3 932
66,99%
Systexan SARL
22 280 207
1 114
18,98%
Quercus TFI S.A.
5 930 000
297
5,05%
Other shareholders
10 543 634
526
8,98%
Total
117 383 635
5 869
100,00%
Other capitals
Other capitals consist of:
• supplementary capital in the total amount of PLN 71 608 thousand, mandatorily established from annual profit distribution
to be used to cover potential losses that may occur in connection with the Company’s operations, up to the amount of at
least one third of the share capital, amounting to PLN 1 957 thousand and from surplus of the issue price over the nominal
price in the amount of PLN 69 651 thousand, resulting from the capital increase in 2012 with a nominal value of PLN 348
thousand for the price of PLN 69 999 thousand,
• reserve capital, established from annual distribution of profit as resolved by the General Meeting of Shareholders to be used
for financing of further operations of the Company or payment of dividend in the amount of PLN 390 730 thousand,
• foreign exchange differences on translation, including foreign exchange of branches and foreign operations in the amount
of PLN 9 thousand.
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 45
(IN PLN’000)
31.12.2020
31.12.2019
X-Trade Brokers Dom Maklerski Spółka Akcyjna branch in Germany
796
326
X-Trade Brokers Dom Maklerski Spółka Akcyjna branch in Czech Republic
701
429
XTB Limited (CY)
496
(92)
X-Trade Brokers Dom Maklerski Spółka Akcyjna branch in Spain
463
17
X-Trade Brokers Dom Maklerski Spółka Akcyjna branch in Romania
287
282
X-Trade Brokers Dom Maklerski Spółka Akcyjna branch in France
275
(37)
X-Trade Brokers Dom Maklerski Spółka Akcyjna branch in Slovakia
136
7
XTB Services Limited
105
−
X-Trade Brokers Dom Maklerski Spółka Akcyjna branch in Portugal
81
4
X-Trade Brokers Dom Maklerski Spółka Akcyjna
20
29
XTB Africa (PTY) Ltd.
2
71
XTB Limited (UK)
(8)
(331)
XTB Chile SpA
(65)
(207)
XTB International
(258)
(76)
Tasfiye Halinde XTB Yönetim Danışmanlığı A.Ş.
(3 022)
(24 059)
Total foreign exchange differences on translation
9
(23 637)
26. Profit distribution and dividend
Pursuant to the decision of the General Shareholders’ Meeting of the Parent Company, the net profit for 2019 in the amount of
PLN 54 145 thousand was partially earmarked for the payment of a dividend in the amount of PLN 28 172 thousand, the
remaining amount was transferred to reserve capital.
The amount of dividend per share paid for 2019 was equal to PLN 0,24. The dividend paid on 15 May 2020 amounted to PLN.
Pursuant to the decision of the General Shareholders’ Meeting of the Parent Company, the net profit for 2018 in the amount of
PLN 90 898 thousand was partially earmarked for the payment of a dividend in the amount of PLN 61 039 thousand, the
remaining amount was transferred to reserve capital.
The amount of dividend per share paid for 2018 was equal to PLN 0,52. The dividend was paid with an advance towards the
dividend advance payment paid December 2018 in the amount of PLN 41 084 thousand (PLN 0,35 per share). The dividend
paid on 10 May 2019 amounted to PLN 19 955 thousand (PLN 0,17 per share).
27. Earnings per share
Basic earnings per share are calculated by dividing the net profit for the period attributable to shareholders of the Parent
Company by the weighted average number of ordinary shares outstanding during the period. When calculating both basic and
diluted earnings per share, the Group uses the amount of net profit attributable to shareholders of the Parent Company as the
numerator, i.e., there is no dilutive effect influencing the amount of profit (loss). The calculation of basic and diluted earnings
per share, together with a reconciliation of the weighted average diluted number of shares is presented below.
(IN PLN’000)
TWELVE-MONTH
PERIOD ENDED
31.12.2020
TWELVE-MONTH
PERIOD ENDED
31.12.2019
Profit from continuing operations attributable to shareholders of the Parent
Company
402 087
57 701
Weighted average number of ordinary shares
117 383 635
117 383 635
Shares causing dilution (share option plan)
−
−
Weighted average number of shares including dilution effect
117 383 635
117 383 635
Basic net profit per share from continuing operations for the year
attributable to shareholders of the Parent Company
3,43
0,49
Diluted net profit per share from continuing operations for the year
attributable to shareholders of the Parent Company
3,43
0,49
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 46
28. Current income tax and deferred income tax
28.1 Current income tax
Income tax disclosed in the current period’s profit and loss
(IN PLN’000)
TWELVE-MONTH
PERIOD ENDED
31.12.2020
TWELVE-MONTH
PERIOD ENDED
31.12.2019
Income tax – current portion
Income tax for the reporting period
(89 903)
(8 390)
Income tax – deferred portion
Occurrence / reversal of temporary differences
(6 707)
(3 345)
Income tax disclosed in profit and loss
(96 610)
(11 735)
Reconciliation of the actual tax burden
(IN PLN’000)
TWELVE-MONTH
PERIOD ENDED
31.12.2020
TWELVE-MONTH
PERIOD ENDED
31.12.2019
Profit before tax
498 697
69 436
Income tax based in the applicable tax rate of 19%
(94 752)
(13 193)
Difference resulting from application of tax rates applicable in other
countries
415
119
Non-taxable revenue
293
29
Non-deductible expenses
(1 080)
(976)
Realisation of tax losses for the preceding periods
44
35
Writing off tax losses activated in previous years
−
(103)
Other items affecting the tax burden amount
(1 530)
2 354
Income tax disclosed in profit or loss
(96 610)
(11 735)
On the basis of art 18d of Act on corporate income tax dated 15 February 1992 with further amendments the Group benefited
in 2020 from the tax burden for research and development in total amounted to PLN 3 274 thousands. In 2019 benefits from
the tax burden amounted to PLN 2 767 thousand.
28.2 Deferred income tax
28.2.1 Unrecognized deferred income tax asset
Deferred income tax was not disclosed with respect to the items below:
(IN PLN’000)
31.12.2020
31.12.2019
Tax loss
513
591
Taking into account the risks connected with further business development in foreign markets, the Company’s management
has doubts relative to certain tax credits of foreign operations and whether their respective profits will make it possible to settle
the tax losses. Therefore, no deferred tax assets connected with such tax loss in the amount of PLN 513 thousand as at 31
December 2020 and in the amount of PLN 591 thousand as at 31 December 2019.
The company did not recognize deferred tax assets on tax loss arising in Romania and France.
UNRECOGNIZED TAX LOSSES AVAILABLE FOR USE (IN PLN’000)
31.12.2020
31.12.2019
until the end of 2020
−
118
until the end of 2021
23
21
until the end of 2023
4
4
no limit
486
448
Total unrecognized tax losses available for use
513
591
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 47
28.2.2 Recognized deferred tax asset relating to tax losses
Balance of deferred tax asset relating to tax losses
RECOGNIZED TAX LOSSES TO BE UTILIZED
(IN PLN’000)
31.12.2020
31.12.2019
Deferred tax on tax losses
9 217
8 916
As at 31 December 2020 the Company established deferred tax assets with regard to tax losses to be settled in future periods
in the total amount of PLN 9 217 thousand (as at 31 December 2019: PLN 8 916 thousand). The management believes that due
to dynamic development of business and growth of sales in foreign markets, the Company may generate taxable income in
future periods, and tax losses will be settled accordingly.
Deferred tax losses may be utilised over an unlimited period in Germany, France and in Great Britain. Forecasted results of
these branches and subsidiary, their margins and development plans assume an effective settlement of losses in the future.
28.2.3 Deferred income tax assets and deferred income tax provision
Change in the balance of deferred tax for the period from 1 January to 31 December 2020
(IN PLN’000)
AS AT
01.01.2020
PROFIT
OR (LOSS)
AS AT
31.12.2020
Deferred income tax assets:
Property, plant and equipment
81
57
138
Financial liabilities held for trading
3 809
10 387
14 196
Provisions for liabilities
24
646
670
Prepayments and deferred costs
1 551
1 902
3 453
Other liabilities
1 829
1 173
3 002
Tax losses of previous periods to be settled in future periods
8 916
301
9 217
Total deferred income tax assets
16 210
14 466
30 676
(IN PLN’000)
AS AT
01.01.2020
PROFIT
OR (LOSS)
AS AT
31.12.2020
Deferred income tax provision:
Financial assets at fair value through P&L
−
15
15
Other liabilities
22 325
20 902
43 227
Financial assets at amortised cost
93
110
203
Prepayments and deferred costs
237
146
383
Total deferred income tax provision
22 655
21 173
43 828
Deferred tax disclosed in profit or (loss)
−
(6 707)
−
(IN PLN’000)
AS AT
01.01.2020
INCLUDED
IN EQUITY
AS AT
31.12.2020
Deferred income tax assets included directly in the equity:
Separate equity of branches
113
605
718
Total deferred income tax assets included directly in the
equity
113
605
718
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 48
Change in the balance of deferred tax for the period from 1 January to 31 December 2019
(IN PLN’000)
AS AT
01.01.2019
PROFIT
OR (LOSS)
AS AT
31.12.2019
Deferred income tax assets:
Property, plant and equipment
83
(2)
81
Financial liabilities held for trading
5 001
(1 192)
3 809
Provisions for liabilities
506
(482)
24
Prepayments and deferred costs
1 412
139
1 551
Other liabilities
20
1 809
1 829
Tax losses of previous periods to be settled in future periods
9 271
(355)
8 916
Total deferred income tax assets
16 293
(83)
16 210
(IN PLN’000)
AS AT
01.01.2019
PROFIT
OR (LOSS)
AS AT
31.12.2019
Deferred income tax provision:
Financial assets at fair value through P&L
19 235
3 090
22 325
Other liabilities
−
93
93
Financial assets at amortised cost
142
95
237
Prepayments and deferred costs
16
(16)
−
Total deferred income tax provision
19 393
3 262
22 655
Deferred tax disclosed in profit or (loss)
−
(3 345)
−
(IN PLN’000)
AS AT
01.01.2019
INCLUDED
IN EQUITY
AS AT
31.12.2019
Deferred income tax assets included directly in the equity:
Separate equity of branches
212
(99)
113
Total deferred income tax assets included directly in the
equity
212
(99)
113
Geographical division of deferred income tax assets
(IN PLN’000)
31.12.2020
31.12.2019
Deferred income tax assets
Central and Eastern Europe
153
57
- including Poland
−
−
Western Europe
9 234
8 935
- including Spain
−
−
Latin America and Turkey
−
11
Total deferred income tax assets
9 387
9 003
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 49
Data concerning the presentation of deferred income tax by country of origin and reconciliation of presentation in the statement
of financial position as at 31 December 2020:
(IN PLN’000)
DATA ACCORDING TO
THE NATURE OF ORIGIN
DEFERRED INCOME
TAX ASSETS
DATA ACCORDING TO
THE NATURE OF ORIGIN
DEFERRED INCOME
TAX PROVISION
DATA PRESENTED IN THE
STATEMENT OF
FINANCIAL POSITION
DEFERRED INCOME
TAX ASSETS
DATA PRESENTED IN THE
STATEMENT OF
FINANCIAL POSITION
DEFERRED INCOME
TAX PROVISION
Poland
20 923
44 089
−
23 166
Czech Republic
67
−
67
−
Slovakia
102
16
86
−
Germany
2 718
−
2 718
−
France
4 647
−
4 647
−
Great Britain
1 869
−
1 869
−
Chile
350
383
−
33
Belize
−
58
−
58
Total
30 676
44 546
9 387
23 257
Data concerning the presentation of deferred income tax by country of origin and reconciliation of presentation in the statement
of financial position as at 31 December 2019:
(IN PLN’000)
DATA ACCORDING TO
THE NATURE OF ORIGIN
DEFERRED INCOME
TAX ASSETS
DATA ACCORDING TO
THE NATURE OF ORIGIN
DEFERRED INCOME
TAX PROVISION
DATA PRESENTED IN THE
STATEMENT OF
FINANCIAL POSITION
DEFERRED INCOME
TAX ASSETS
DATA PRESENTED IN THE
STATEMENT OF
FINANCIAL POSITION
DEFERRED INCOME
TAX PROVISION
Poland
6 969
22 530
−
15 561
Czech Republic
29
−
29
−
Slovakia
28
−
28
−
Germany
2 683
−
2 683
−
France
4 449
−
4 449
−
Great Britain
1 803
−
1 803
−
Chile
249
238
11
−
Total
16 210
22 768
9 003
15 561
29. Related party transactions
29.1 Parent Company
XXZW Investment Group S.A. with its registered office in Luxembourg is the key shareholder of the Company. As at 31
December 2020 it holds 66,99% of shares and votes in the General Meeting as per Company’s best knowledge. XXZW
Investment Group S.A. prepares consolidated financial statements.
Mr. Jakub Zabłocki is the ultimate parent company for the Company and XXZW Investment Group S.A.
29.2 Figures concerning related party transactions
As at 31 December 2020 the Company has liabilities to Mr Jakub Zabłocki in the amount of PLN 14 thousand due to his
investment account (as at 31 December 2019 PLN 1 thousand). In the period from 1 January to 31 December 2020 the
Company noted loss from transactions with Mr Jakub Zabłocki in amount of PLN 4 thousand (in the analogical period of 2019
noted no transactions). Moreover Mr Jakub Zabłocki is employed on the basis of work contract in subsidiary in Great Britain. In
the period from 1 January to 31 December 2020 the paid gross salary and bonuses amounted to PLN 1 393 thousand and in
the analogical period of 2019 amounted to PLN 1 571 thousand.
Mr Hubert Walentynowicz receives salary on the basis of work contract. In the period from 1 January to 31 December 2020 the
paid gross salary and bonuses amounted to PLN 485 thousand and in the analogical period of 2019 amounted to PLN 461
thousand.
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 50
In the period from 1 January to 31 December 2020 the Company noted loss from transactions with Mr Paweł Szejko in the
amount of PLN 2 thousand (in the analogical period of 2019 noted no transactions).
As at 31 December 2020 the Company has liabilities to Mr Filip Kaczmarzyk in the amount of PLN 42 thousand due to his
investment account (as at 31 December 2019 PLN 42 thousand).
29.3 Benefits to Management Board and Supervisory Board
(IN PLN’000)
TWELVE-MONTH
PERIOD ENDED
31.12.2020
TWELVE-MONTH
PERIOD ENDED
31.12.2019
Benefits to the Management Board members
(5 098)
(2 722)
Benefits to the Supervisory Board members
(222)
(217)
Total benefits to the Management Board and Supervisory Board
(5 320)
(2 939)
These benefits include base salaries, bonuses, contributions to social security paid for by the employer and supplementary
benefits (money bills, healthcare, holiday allowances).
Members of the Management Board of the Company are included in the scheme of variable remuneration elements specified
in note 22 of the financial statements. The value of the element settled in financial instruments acquired by the members of the
Management Board amounts to PLN 3 765 thousand.(value of the gross variable components PLN 3 635 thousand and social
security expense of the employer PLN 129 thousand) and as at 31 December 2019 in the amount of PLN 1 756 thousand (value
of the gross variable components PLN 1 701 thousand and social security expense of the employer PLN 55 thousand).
29.4 Loans granted to the Management and Supervisory Board members
As at 31 December 2020 and 31 December 2019 there are no loans granted to the Management and Supervisory Board
members.
30. Remuneration of the audit companies
REMUNERATION OF THE AUDIT COMPANIES DUE FOR THE FINANCIAL YEAR
(IN PLN’000)
TWELVE-MONTH
PERIOD ENDED
31.12.2020
TWELVE-MONTH
PERIOD ENDED
31.12.2019
Statutory audit of standalone and consolidated financial statements
400
400
Review of half-year standalone and consolidated financial statements
120
120
Statutory audit of annual financial statements of branch offices
64
60
Other certifying services
127
103
Statutory audit of annual financial statements of subsidiaries
222
295
Total remuneration of the audit companies
933
1 014
Above remuneration due to audit companies are net amounts.
PricewaterhouseCoopers Polska spółka z ograniczoną odpowiedzialnością Audyt sp.k was the main auditor for the Company
in 2019 and 2018. In 2020 total remuneration due to PwC companies amounted to PLN 601 thousand (in 2019: PLN 624
thousand).
31. Employment
The average number of employees in the Group was 501 persons in 2020 and 434 persons in 2019.
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 51
32. Supplementary information and explanations to the cash flow statement
32.1 Change in the balance of other liabilities
(IN PLN’000)
TWELVE-MONTH
PERIOD ENDED
31.12.2020
TWELVE-MONTH
PERIOD ENDED
31.12.2019
Change in other liabilities
34 491
(4 068)
Rent-free period settlement
−
363
Change in the balance of other liabilities
34 491
(3 705)
32.2 Other adjustments
The “other adjustments” item includes the following adjustments:
(IN PLN’000)
TWELVE-MONTH
PERIOD ENDED
31.12.2020
TWELVE-MONTH
PERIOD ENDED
31.12.2019
Change in the balance of differences from the conversion of branches and
subsidiaries
23 646
(2 158)
Foreign exchange differences on translation of movements in property,
plant and equipment, and intangible assets
(382)
(23)
Change in other adjustments
23 264
(2 181)
Foreign exchange differences on translation of movements in tangible and intangible assets include the difference between the
rates as at the opening balance and as at the closing balance adopted for valuation of the gross value of tangible and intangible
assets in the Group’s foreign entities and the difference between the rate applied to value amortization and depreciation cost
of fixed assets and intangible assets in the Group’s foreign entities and the rate of translation of amortization and depreciation
amounts on such assets. This value results from the chart of movements in tangible and intangible assets.
33. Post balance sheet events
On 9 January 2021 the company XTB MENA Limited based in the United Arab Emirates was registered in the local entrepreneurs
register. Shares have yet not been paid.
34. Off-balance sheet items
34.1 Nominal value of financial instruments
(IN PLN’000)
31.12.2020
31.12.2019
Index CFDs
3 990 495
2 136 475
Currency CFDs
1 481 916
1 921 898
Commodity CFDs
1 143 499
515 599
Stock and ETF CFDs
876 726
235 037
Bond CFDs
384 593
23 896
Total financial instruments
7 877 229
4 832 905
The nominal value of instruments presented in the chart above includes transactions with customers and brokers. As at 31
December 2020 transactions with brokers represent 14% of the total nominal value of instruments (as at 31 December 2019:
9% of the total nominal value of instruments).
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 52
34.2 Customers’ financial instruments
Presented below is a list of customers’ instruments deposited in the accounts of the brokerage house:
(IN PLN’000)
31.12.2020
31.12.2019
Listed stocks, ETF and rights to stocks registered in customers’ securities
accounts
871 389
108 978
Other securities registered in customers’ securities accounts
207
207
Total customers’ financial instruments
871 596
109 185
34.3 Transaction limits
The amount of unused transaction limits granted to related entities was as at 31 December 2020 PLN 12 403 thousand and as
at 31 December 2019 was PLN 4 918 thousand.
35. Items regarding the compensation scheme
(IN PLN’000)
31.12.2020
31.12.2019
1. Contributions made to the compensation scheme
a) opening balance
4 709
3 987
- increases
945
722
b) closing balance
5 654
4 709
2. XTB’s share in the profits from the compensation scheme
336
317
36. Capital management
The Group’s principles of capital management are established in the “Capital management policy in X–Trade Brokers Dom
Maklerski S.A.”. The document is approved by the Parent Company’s Supervisory Board. The policy defines the basic concepts,
objectives and rules which constitute the Parent Company’s capital strategy. It specifies, in particular, long-term capital
objectives, the current and preferred capital structure, contingency plans and basic elements of the internal capital estimation
process. The policy is updated as appropriate so as to reflect the development in the Group and its business environment.
The objective of the capital management policy is to ensure balanced long-term growth for the shareholders and to maintain
sufficient capital to enable the Group to operate in a prudent and efficient manner. This objective is attained by maintaining an
appropriate capital base, taking into account the Group’s risk profile and prudential regulations, as well as risk-based capital
management in view of the operating goals.
Determination of capital-related goals is essential for equity management and serves as a basic reference in the context of
capital planning, allocation and contingency plans. The Group establishes capital-related objectives which ensure a stable
capital base, achievement of its capital strategy goals (in accordance with its general principles), and also match the Group’s
risk appetite. To establish its capital-related goals, the Group takes into consideration its strategic plans and expected growth
of operations as well as external conditions, including the macroeconomic situation and other business environment factors.
The capital-related goals are set for a horizon similar to that of the business strategy and are approved by the Management
Board. Capital planning is focused on an assessment of the Group’s current and future capital requirements (both regulatory
and internal), and on comparing them with the current and projected levels of available capital. The Group has prepared
contingency plans to be launched in the event of a capital adequacy problem, described in detail in the “Capital management
policy in X–Trade Brokers Dom Maklerski S.A.”
As part of ICAAP, the Group assesses its internal capital in order to define the overall capital requirement to cover all significant
risks in the Group’s operations and evaluates its quality. The Group estimates internal capital necessary to cover identified
significant risks in compliance with procedures adopted by the Group and taking into account stress test results.
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 53
The Parent Company is obligated to maintain the capitals (equity) to cover the higher of the following values:
• capital requirements calculated in accordance with the Regulation (EU) of the European Parliament and of the Council No.
575/2013 of 26 June 2013 on prudential requirements for credit institutions and investment firms (CRR) and
• internal capital estimated in compliance with the Ordinance of the Minister of Finance of 25 April 2017 on internal capital,
risk management system, supervisory assessment program and supervisory examination and evaluation as well as
remuneration policy in a brokerage house (Journal of Laws 2017, item 856).
The principles of calculation of own funds are established in the CRR resolution, “The procedure for calculating risk adequacy
ratios in X–Trade Brokers Dom Maklerski S.A.” and are not regulated by IFRS. The Parent Company calculated equity in
accordance with part two of the Regulation of the European Parliament and of the Council (EU) No. 575/2013 dated 26 June
2013 on prudential requirements for credit institutions and investment firms, amending Regulation (EU) No. 648/2012 (“CRR”).
At present, the total equity of the Group belongs to the best category – Tier 1.
Prudential consolidation according to the CRR applies to subsidiaries in excess of the threshold referred to in Article 19 of the
CRR. As regards the Group, the Parent Company includes its subsidiary X-Trade Brokers Menkul Değerler A.Ş. in prudential
consolidation, from 31 October 2015 includes its subsidiary XTB Limited in Great Britain, from 30 April 2017 includes its
subsidiary XTB International and from 31 July 2018 includes its subsidiary XTB Limited in Cyprus.
In accordance with the Act on macroprudential supervision of the financial system and crisis management in the financial
system of 5 August 2015, since 1 January 2016 the Group is obliged to maintain capital buffers. In the period covered by the
financial statements the Company was obliged to maintain the capital conservation buffer and countercyclical buffer.
Key values in capital management:
(IN PLN’000)
31.12.2020
31.12.2019
The Group’s own funds
528 869
408 570
Tier I Capital
528 869
408 570
Common Equity Tier I capital
528 869
408 570
Total Group’s risk exposure
2 836 093
2 563 461
Capital conservation buffer
70 902
64 087
Countercyclical capital buffer
3 932
4 512
Combined buffer requirement
74 834
68 599
Total capital ratio
18,6%
15,9%
Total capital ratio including buffers
16,0%
13,3%
Minimal required total capital ratio including buffers (art. 92 ust.1 lit. c) CRR)
8%
8%
The mandatory capital adequacy was not breached in the periods covered by the consolidated financial statements.
The table below presents data on the level of capitals and on the total capital requirement divided into requirements due to
specific types of risks calculated in accordance with separate regulations together with average monthly values. Average
monthly values were calculated as an estimation of the average values calculated based on statuses at the end of specific
days.
In the table below, in order to ensure comparability of the presentation, the total capital requirement was presented as 8% of
the total risk exposure, calculated in accordance with the CRR.
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 54
(IN PLN’000)
AS AT
31.12.2020
AVERAGE MONTHLY
VALUE IN THE PERIOD
AS AT
31.12.2019
1. Capital/Own funds
528 869
437 449
408 570
1.1. Base capital/Common Equity Tier I without deductions
545 606
460 652
441 633
1.2. Additional items of common equity/Supplementary capital Tier I
−
−
−
1.3. Items decreasing share capitals
(16 737)
(23 203)
(33 063)
2. Amount of Tier II capital included in the value of capital subject to
monitoring/Tier II capital
−
−
−
I. Level of capitals subject to monitoring/Own funds
528 869
437 449
408 570
1. Market risk
123 376
135 402
122 863
2. Settlement and delivery risk, contractor’s credit risk and the CVA
requirement
8 964
7 906
6 294
3. Credit risk
46 041
34 483
27 413
4. Operating risk
48 507
48 507
48 507
5. Exceeding the limit of exposure concentration and the limit of
high exposures
−.
−.
−
6. Capital requirement due to fixed costs
N/A
N/A
N/A
IIa. Overall capital requirement
226 888
226 298
205 077
IIb. Total risk exposure
2 836 093
2 828 717
2 563 461
Capital conservation buffer
70 902
70 639
64 087
Countercyclical capital buffer
3 932
5 974
4 512
Combined buffer requirement
74 834
76 613
68 599
Pursuant to CRR the duty to calculate the capital requirement in respect of fixed costs arises only in the event that the entity
does not calculate the capital requirement in respect of operating risk.
37. Risk management
The Group is exposed to a variety of risks connected with its current operations. The purpose of risk management is to make
sure that the Group takes risk in a conscious and controlled manner. Risk management policies are formulated in order to
identify and measure the risks taken, as well as to establish appropriate limits to mitigate such risk on a regular basis.
At the strategy level, the Management Board is responsible for establishing and monitoring the risk management policy. All
risks are monitored and controlled with regard to profitability of the operations as well as the level of capital necessary to ensure
safety of operations from the capital requirement perspective.
The Parent Company has appointed a Risk Management Committee. Its key tasks include performing supervisory, consultative
and advisory functions for the Company’s statutory bodies in the area of capital management strategy, risk management policy,
risk measurement methods, capital planning and the Company’s capital adequacy. In particular, the Committee supports the
Risk Control Department in the area of identifying significant risks within the Company and creating a catalogue of risks,
approves policies and procedures of risk and ICAAP management, reviews and approves analyses carried out by owners of
specific risks and the Risk Control Department as part of the risk and ICAAP management system within the Company.
The Risk Control Department supports the Management Board in formulating, reviewing and updating ICAAP rules in the event
of the occurrence of new types of risk, significant changes in strategy and operating plans. The Department also monitors the
appropriateness and efficiency of the implemented risk management system, identifies, monitors and controls the market risk
of the Company’s own investments, defines the overall capital requirement and estimates internal capital.
The Risk Control Department is managed by the Member of the Management Board responsible for the supervision of the risk
management system
The Parent Company’s Supervisory Board approves risk management system.
37.1 Fair value
37.1.1 Carrying amount and fair value
The fair value of cash and cash equivalents is estimated as being close to their carrying amount.
The fair value of loans granted and other receivables, amounts due to customers and other liabilities is estimated as being close
to their carrying amount in view of the short-term maturities of these balance sheet items.
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 55
37.1.2 Fair value hierarchy
The Group discloses fair value measurement of financial instruments carried at fair value, applying the following fair value
hierarchy which reflects the significance of input data used to establish the fair value:
• Level 1: quoted prices (unadjusted) in active markets for the assets or liabilities;
• Level 2: input data other than quoted prices classified in Level 1 that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. based on prices). This category includes financial assets and liabilities measured using prices
quoted in active markets for identical assets, prices quoted in active markets for identical assets considered less active or
other valuation methods where all significant inputs originate directly or indirectly from the markets;
• Level 3: input data for valuation of a given asset or liability is not based on observable market data (unobservable inputs).
31.12.2020 (IN PLN’000)
LEVEL 1
LEVEL 2
LEVEL 3
TOTAL
Financial assets
Financial assets at fair value through P&L
407 832
255 301
−
663 133
Total financial assets
407 832
255 301
−
663 133
Financial liabilities
Financial liabilities held for trading
−
96 632
−
96 632
Total financial liabilities
−
96 632
−
96 632
31.12.2019 (IN PLN’000)
LEVEL 1
LEVEL 2
LEVEL 3
TOTAL
Financial assets
Financial assets at fair value through P&L
19 230
130 088
−
149 318
Total financial assets
19 230
130 088
−
149 318
Financial liabilities
Financial liabilities held for trading
−
23 529
−
23 529
Total financial liabilities
−
23 529
−
23 529
In the periods covered by the consolidated financial statements, there were no transfers of items between the levels of the fair
value hierarchy.
The fair value of contracts for differences (CFDs) is determined based on the market prices of underlying instruments, derived
from independent sources, ie. from reliable liquidity suppliers and reputable news, adjusted for the spread specified by the
Group. The valuation is performed using closing prices or the last bid and ask prices. CFDs are measured as the difference
between the current price and the opening price, taking account of accrued commissions and swap points.
The impact of adjustments due to credit risk of the contractor, estimated by the Group, was insignificant from the point of view
of the general estimation of derivative transactions concluded by the Group. Therefore, the Group does not recognise the impact
of unobservable input data used for the estimation of derivative transactions as significant and, pursuant to IFRS 13.73, does
not classify such transactions as level 3 of the fair value hierarchy.
37.2 Market risk
In the period covered by these consolidated financial statements, the Group entered into OTC contracts for differences (CFDs)
and digital options. The Group may also acquire securities and enter into forward contracts on its own account on regulated
stock markets.
The following risks are specified, depending on the risk factor:
• Currency risk connected with fluctuations of exchange rates
• Interest rate risk
• Commodity price risk
• Equity investment price risk
The Group’s key market risk management objective is to mitigate the impact of such risk on the profitability of its operations.
The Company’s practice in this area is consistent with the following principles.
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 56
As part of the internal procedures, the Group applies limits to mitigate market risk connected with maintaining open positions
on financial instruments. These are, in particular: a maximum open position on a given instrument, currency exposure limits,
maximum value of a single instruction. The Trading Department monitors open positions subject to limits on a current basis,
and in case of excesses, enters into appropriate hedging transactions. The Risk Control Department reviews the limit usage on
a regular basis, and controls the hedges entered into.
37.2.1 Currency risk
The Group enters into transactions principally in instruments bearing currency risk. Aside from transactions where the FX rate
is an underlying instrument, the Group also offers instruments which price is denominated in foreign currencies. Also, the Group
has assets in foreign currencies, i.e. the so-called currency positions. Currency positions include the brokerage’s own funds
denominated in foreign currencies held for the purpose of settling transactions in foreign markets and connected with foreign
operations.
The carrying amount of the Group’s assets and liabilities in foreign currencies as at the balance sheet date is presented below.
The values for all base currencies are expressed in PLN’000:
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 59
A change in exchange rates, in particular, the PLN exchange rate, affects the balance sheet valuation of the Group’s financial
instruments and the result on translation of foreign currency balances of other balance sheet items. Sensitivity to exchange
rate fluctuations was calculated with the assumption that all foreign currency rates change by ±5% to PLN. The carrying amount
of financial instruments was revalued.
The sensitivity of the Group’s equity and profit before tax to a 5% increase or decrease of the PLN exchange rate is presented
below:
(IN PLN’000)
31.12.2020
INCREASE IN
EXCHANGE
RATES BY 5%
31.12.2020
INCREASE IN
EXCHANGE
RATES BY 5%
31.12.2019
INCREASE IN
EXCHANGE
RATES BY 5%
31.12.2019
INCREASE IN
EXCHANGE
RATES BY 5%
Income (expenses) of the period
21 349
(21 349)
2 361
(2 361)
Equity, of which:
3 012
(3 012)
3 303
(3 303)
Foreign exchange differences on translation
3 012
(3 012)
3 303
(3 303)
The sensitivity of equity is connected with foreign exchange differences in the translation of value in functional currencies of
the foreign operations.
37.2.2 Interest rate risk
Interest rate risk is the risk of exposure of the current and future financial result and equity of the Group to the adverse impact
of exchange rate fluctuations. Such risk may result from the contracts entered into by the Group, where receivables or liabilities
are dependent upon exchange rates as well as from holding assets or liabilities dependent on exchange rates.
The basic interest rate risk for the Group is the mismatch of interest rates paid to customers in connection with funds deposited
in cash accounts in the Group, and of the bank account and bank deposits where the Group’s customers’ funds are invested.
In addition, the source of the Group’s profit variability associated with the level of market interest rates, are amounts paid and
received in connection with the occurrence of the difference in interest rates for different currencies (swap points) as well as
potential debt instruments. As a rule, the change in bank interest rates does not significantly affect the Group’s financial
position, since the Group determines interest rates for funds deposited in customers’ cash accounts based on a variable
formula, in an amount not higher than the interest rate received by the Group from the bank maintaining the bank account in
which customers’ funds are deposited.
Interest rates applicable to cash accounts are floating, and related to WIBID/WIBOR/LIBOR/EURIBOR rates. Therefore, the risk
of interest rate mismatch adverse to the brokerage house is very low.
Since the Group maintains a low duration of assets and liabilities and minimises the duration gap, sensitivity of the market
value of assets and liabilities to calculations of market interest rates is very low. As part of a significant risk identification
process, the Risk Management Committee established that the interest rate risk is not significant for the Group’s operations.
Sensitivity analysis of financial assets and liabilities where cash flows are exposed to interest rate risk
The structure of financial assets and liabilities where cash flows are exposed to interest rate risk is as follows:
(IN PLN’000)
31.12.2020
31.12.2019
Financial assets
Cash and cash equivalents
1 575 807
955 196
Debt instruments
398 616
24 899
Total financial assets
1 974 423
970 085
Financial liabilities
Amounts due to customers
60
2 641
Other liabilities
8 654
10 743
Total financial liabilities
8 714
13 384
Impact of a change in interest rates by 50 base points (BP) on profit before tax is presented below. The analysis below relies on
the assumption that other variables, in particular exchange rates, will remain constant. The analysis was carried out on the
basis of average balances of cash in 2020 and 2019, using the average 1M interest rate in a given market.
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 60
(IN PLN’000)
31.12.2020
INCREASE BY
50 PB
31.12.2020
DECREASE BY
50 PB
31.12.2019
INCREASE BY
50 PB
31.12.2019
DECREASE BY
50 PB
Profit/(loss) before tax
1 866
(1 728)
4 395
(4 395)
Sensitivity analysis of financial assets and liabilities whose fair value is exposed to interest rate risk
In the period covered by these consolidated financial statements and in the comparative period, the Group did not hold any
financial assets or liabilities whose fair value would be exposed to the risk of changes in interest rates.
37.2.3 Other price risk
Other price risk is exposure of the Group’s financial position to unfavourable changes in the prices of commodities, equity
investments (equity, indices) and debt instruments (in a scope not resulting from interest rates).
The carrying amount of financial instruments exposed to other price risk is presented below:
(IN PLN’000)
31.12.2020
31.12.2019
Financial assets at fair value through P&L
Commodity
Precious metals
9 490
4 650
Base metals
508
193
Other
29 652
9 344
Total commodity
39 651
14 187
Equity instruments
Stocks and ETFs
40 930
13 745
Indicies
126 578
57 382
Total equity instruments
167 508
71 127
Debt instruments
12
28
Total financial assets at fair value through P&L
207 171
85 342
Financial liabilities held for trading
Commodity
Precious metals
7 141
2 126
Base metals
94
24
Other
8 545
3 506
Total commodity
15 781
5 656
Equity instruments
Stocks and ETFs
26 835
2 356
Indicies
24 884
7 912
Total equity instruments
51 719
10 268
Debt instruments
3
122
Total financial liabilities held for trading
67 503
16 046
X-Trade Brokers Dom Maklerski S.A. Group
Consolidated financial statements for 2020
(Translation of a document originally issued in Polish)
www.xtb.pl 61
The Group’s sensitivity to fluctuations in the prices of specific commodities and equity investments by ±5 per cent with regard
to equity and profit before tax is presented below.
(IN PLN’000)
31.12.2020
INCREASE BY 5%
31.12.2020
DECREASE BY 5%
31.12.2019
INCREASE BY 5%
31.12.2019
DECREASE BY 5%
Income/(expenses) for the period
Commodity
Precious metals
(5 507)
5 507
(696)
696
Base metals
(202)
202
(152)
152
Other
7 556
(7 556)
(4 144)
4 144
Total commodity
1 847
(1 847)
(4 992)
4 992
Equity instruments
Stocks and ETFs
17
(17)
(7)
7
Indicies
10 125
(10 125)
30 741
(30 741)
Total equity instruments
10 142
(10 142)
30 734
(30 734)
Debt instruments
(45)
45
734
(734)
Total income/(expenses) for the period
11 944
(11 944)
26 476
(26 476)
37.3 Liquidity risk
For the Group, liquidity risk is the risk of losing its payment liquidity, i.e. the risk of losing capacity to finance its assets and to
perform its obligations in a timely manner in the course of normal operations or in other predictable circumstances with no risk
of loss. In its liquidity analysis, the Group takes into consideration current possibility of generation of liquid assets, future needs,
alternative scenarios and payment liquidity contingency plans.
The objective of liquidity management in X–Trade Brokers is to maintain the amount of cash on the appropriate bank accounts
that will cover all the operations necessary to be carried on such accounts. In order to manage liquidity in relation to certain
bank accounts associated with the operations of financial instruments, the Group uses the liquidity model of which the essence
is to determine the safe area of the state of free cash flow that does not require corrective action. Where the upper limit is
achieved, the Group makes a transfer to the appropriate current account corresponding to the surplus above the optimum level.
Similarly, if the cash in the account falls to the lower limit, the Group makes a transfer of funds from the current account to the
appropriate account in order to bring cash to the optimum level.
Tasks relating to the maintenance and updating of the rules of the liquidity model are performed by the Parent Company’s Risk
Control Department. Risk Control Department employees are required to analyse liquidity at least once a week, as well as to
transfer the relevant information to the Parent Company’s Accounting Department in order to make certain operations in the
accounts.
The subsidiaries manage liquidity by analysing the anticipated cash flows and by matching the maturities of assets with the
maturities of liabilities. The subsidiaries do not use any models for managing liquidity. Liquidity management based on the
liquidity gap analysis is effective and sufficient – in subsidiaries, there were no incidents related to lack of liquidity or the lack
of possibility of meeting financial obligations. In extraordinary cases, the subsidiaries’ liquidity may be provided by the Parent
Company.
The procedure also provides for the possibility of deviating from its application, and such procedure requires the consent of at
least two members of the Parent Company’s Management. Information on deviations is transmitted to the Risk Control
Department of the Parent Company.
The Parent Company has also implemented liquidity contingency plans, which were not used in the period covered by the
financial statements and in the comparative period, due to the fact that the amount of the most liquid assets (own cash and
cash equivalents) greatly exceeds the amount of liabilities.
As part of ongoing business and the tasks related to liquidity risk management, the managers of appropriate organisational
units of the Parent Company monitor the balance of funds deposited in the account in the context of planned liquidity needs
related to the Parent Company’s operating activities. In its liquidity analysis, the existing possibility of generation of liquid assets,
future needs, alternative scenarios and payment liquidity contingency plans are taken into consideration.
The contractual payment periods of financial assets and liabilities are presented below. The marginal and cumulative
contractual liquidity gap, calculated as the difference between total assets and total liabilities for each maturity bucket, is
presented for specific payment periods.
37.4 Credit risk
The chart below shows the carrying amounts of financial assets corresponding to the Group’s exposure to credit risk:
(IN PLN’000)
31.12.2020
CARRYING
AMOUNT
31.12.2020
MAXIMUM
EXPOSURE TO
CREDIT RISK
31.12.2019
CARRYING
AMOUNT
31.12.2019
MAXIMUM
EXPOSURE TO
CREDIT RISK
Financial assets
Cash and cash equivalents
1 575 807
1 575 807
955 196
955 196
Financial assets at fair value through P&L *
663 133
20 779
130 088
6 676
Financial assets at amortised cost
13 310
13 310
6 474
6 474
Total financial assets
2 252 250
1 609 896
1 110 988
968 346
* As at 31 December 2020 the maximum exposure to credit risk for financial assets held for trading, not including the collateral received, was PLN 234 999 thousand (2019: PLN 130 190
thousand). This exposure was collateralised with customers’ cash, which, as at 31 December 2020, covered the amount of PLN 214 221 thousand (2019 PLN 101 350 thousand). Exposures
to credit risk connected with transactions with brokers as well as exposures to the Warsaw Stock Exchange were not collateralised.
The credit quality of the Group’s financial assets is assessed based on external credit quality assessments, risk weights
assigned based on the CRR, taking account of the mechanisms used to mitigate credit risk, the number of days past due, and
the probability of counterparty insolvency.
The Group’s assets fall within the following credit rating brackets:
• Fitch Ratings – from F1+ to B
• Standard & Poor's Ratings Services – from A-1+ to B
• Moody’s – from P-1 to N/A
Cash and cash equivalents
Credit risk connected with cash and cash equivalents is related to the fact that own cash and customers’ cash is held in bank
accounts. Credit risk involving cash is mitigated by selecting banks with a high credit rating granted by international rating
agencies and through diversification of banks with which accounts are opened. As at 31 December 2020, the Group had deposit
accounts in 45 banks and institutions (2019: in 44 banks and institutions). The ten largest exposures are presented in the table
below (numbering of banks and institutions determined individually for each period:
ENTITY
31.12.2020
(IN PLN’000)
ENTITY
31.12.2019
(IN PLN’000)
Bank 1
443 072
Bank 1
257 494
Bank 2
217 016
Bank 2
197 799
Bank 3
149 940
Bank 3
135 374
Bank 4
112 916
Bank 4
93 637
Institution 1
91 259
Bank 5
43 170
Bank 5
80 292
Bank 6
36 649
Bank 6
58 939
Bank 7
27 005
Bank 7
54 793
Bank 8
25 291
Bank 8
53 925
Bank 9
22 982
Bank 9
49 917
Bank 10
17 982
Other
263 738
Other
97 813
Total
1 575 807
Total
955 196
The table below presents a short-term assessment of the credit quality of the Group’s cash and cash equivalents according to
credit quality steps determined based on external credit quality assessments (where step 1 means the best credit quality and
step 6 – the worst) and the risk weights assigned based on the CRR. Long-term assessment of the credit quality were used in
case of exposures without short-term assessment of the credit quality or maturity longer than 3 months.
CREDIT QUALITY STEPS
CARRYING AMOUNT (IN
PLN’000)
31.12.2020
CARRYING AMOUNT (IN
PLN’000)
31.12.2019
Cash and cash equivalent
Step 1
1 346 247
804 016
Step 2
10 646
49 735
Step 3
216 325
78 403
Step 4
2 589
20 941
Step 5
−
2 101
Total
1 575 807
955 196
Financial assets held for trading
Financial assets held for trading result from transactions in financial instruments entered into with the Group’s customers and
the related hedging transactions.
Credit risk involving financial assets held for trading is connected with the risk of customer or counterparty insolvency. With
regard to OTC transactions with customers, the Group’s policy is to mitigate the counterparty credit risk through the so-called
“stop out” mechanism. Customer funds deposited in the brokerage serve as a security. If a customer’s current balance is 50
per cent or less of the security paid in and blocked by the transaction system, the position that generates the highest losses is
automatically closed at the current market price. The initial margin amount is established depending on the type of financial
instrument, customer account, account currency and the balance of the cash account in the transaction system, as a percent
of the transaction’s nominal value. A detailed mechanism is set forth in the rules binding on the customers. In addition, in order
to mitigate counterparty credit risk, the Group includes special clauses in agreements with selected customers, in particular,
requirements regarding minimum balances in cash accounts.
Due to the mechanisms in place, used to mitigate credit risk, the credit quality of financial assets held for trading is high and
does not show significant diversity.
The Group’s top 10 exposures to counterparty credit risk taking into account collateral (net exposure) are presented in the table
below (numbering of counterparties determined individually for each period):
ENTITY
31.12.2020
NET EXPOSURE (IN PLN’000)
ENTITY
31.12.2019
NET EXPOSURE (IN PLN’000)
Entity 1
8 542
Entity 1
3 071
Entity 2
4 665
Entity 2
1 212
Entity 3
747
Entity 3
295
Entity 4
604
Entity 4
267
Entity 5
566
Entity 5
262
Entity 6
528
Entity 6
180
Entity 7
440
Entity 7
109
Entity 8
258
Entity 8
103
Entity 9
247
Entity 9
88
Entity 10
211
Entity 10
84
Total
16 808
Total
5 671
Other receivables
Other receivables do not show a significant concentration, and they arose in the normal course of the Group’s business. Non-
overdue other receivables are collected on a regular basis and, from the perspective of credit quality, they do not pose a material
risk to the Group.