Rambler Media Limited
RAMBLER MEDIA ANNOUNCES PRELIMINARY FINANCIAL RESULTS
FOR FULL YEAR 2005
More than doubling of internet sales
EBITDA positive on group level 2nd half 2005
71% year on year sales growth on total sales
82% year on year reduction in consolidated EBITDA loss
Moscow, 11 May 2006 - Rambler Media Limited (RMG.LN), a leading integrated media
company providing services to the global Russian-speaking community, today
announced its financial results for the year ended 31 December 2005.
FINANCIAL HIGHLIGHTS
-- Net sales up 71% year on year to US$ 21.42 million (US$ 12.5 million)
-- Internet sales up 112% to US$ 14.82 million (US$ 7.01 million)
-- Group business EBITDA* profitable for first time in second half of the year
-- 82% year on year reduction in EBITDA loss to US$ -0.6 million (US$-3.22
million)
-- Strengthened balance sheet with US$ 21.5 million of cash at year end
-- US$ 26 million of net proceeds from successful IPO and listing on AIM
OPERATING HIGHLIGHTS
-- 54% year on year increase in number of unique monthly users of Rambler.ru to
over 19.5 million - further increase to 20.8 million by end of March 2006
-- 156% increase in monthly page views to 1.3 billion - further increase to 1.5
billion by end of March 2006
-- Acquisition of strategic stake in key St Petersburg TV station
-- Launch of co-branded Rambler-ICQ instant messenger
-- Launch of internet hypermarket - Shop.rambler.ru
-- Partnership with St Minver to launch online gaming portal - Ramblas.ru
* Earnings before interest, tax, depreciation and amortization
Irina Gofman, Chief Executive Officer of Rambler Media, commented: "As
predicted, growth in the Russian advertising market has accelerated in the
second half of 2005, with the strongest growth being in the internet advertising
market.
"Revenues in our internet division grew faster than the internet advertising
market itself, due to the introduction of innovative new online services and to
increased internet penetration and usage in Russia. Our TV division is growing
rapidly and our Mobile content business is approaching profitability despite
heightened competition. We continue to explore new opportunities to create
synergies through our multimedia windows.
These solid results demonstrate the quality of our services and confirm that
Rambler Media has become the partner of choice for advertisers targeting urban,
active, Russian-speaking consumers in Russia and internationally. We are
confident that these favourable market trends will continue beyond 2006 and that
we will continue to create value for our users, partners and shareholders."
FINANCIAL SUMMARY
(US$ '000s) Jul - Dec Jul - Dec Jan - Dec Jan - Dec
2005* 2004 2005 2004
(audited -
restated)
Net Sales 13,476 8,295 21,421 12,505
Other income 515 - 515 -
EBITDA** Profit/(Loss) 1,293 (1,118) (568) (3,223)
Net profit/(loss) 111 (1,486) (2,384) (4,624)
Profit/(loss) per share -
basic and fully diluted
(US$) 0.01 (0.13) (0.18) (0.41)
* The results for the second half of 2005 include annual audit adjustments **
Earnings before interest, tax, depreciation and amortisation
Overview Rambler Media reported a 71% year on year increase in sales to US$ 21.4
million for the full year 2005, compared to US$ 12.5 million in the full year
2004. The Group reported an 82% year on year reduction in EBITDA losses from US$
-3.22 million in 2004 to US$ -0.6 million, despite a 43% year on year increase
in the Group's operating expenses in the year. The Internet segment was EBITDA
profitable in the first and the second half of the year enabling the company to
break even on a half yearly consolidated basis for the first time in the second
half of 2005. The ongoing investments in the operating businesses reflect
Rambler Media's focus on increasing the penetration and market shares of its
brands, technologies, products and services.
Internet Rambler Internet reported a 454% increase in EBITDA profit following
strong year on year growth in the number of users and in advertising sales.
Sales in the Internet services division grew by 112% year on year from US$ 7.0
million to US$ 14.82 million and represented 69% of group sales for the year.
The business generated an EBITDA profit of US$ 4.21 million in the year,
compared to an EBITDA profit of US$ 0.76 in 2004.
Rambler Internet's primary business is Rambler.ru (www.rambler.ru), a leading
Russian language Internet portal offering search, communication and media
services. It is complemented by a number of other web properties, including
leading on-line Russian language newspaper Lenta.ru (www.lenta.ru), which
attracted 2.7 million unique visitors per month in March 2006, and several
specialised web resources. Rambler Internet generates its revenues primarily
from brand advertising, sponsored key word searches and e-commerce. In March
2005, Rambler Media acquired a 25% plus one share equity stake in Begun.ru,
which is a fast growing Russian sponsored search company. Rambler Media has an
option to increase its stake in Begun.ru in the future.
At the end of December 2005, Rambler.ru had 19.5 million unique monthly users,
up 54% from the 12.6 million users at the end of December 2004. The number of
Rambler.ru users increased further to 20.8 million unique monthly users by the
end of March 2006. The number of pages viewed increased by 156% from 513 million
in December 2004 to 1.3 billion in December 2005 and reached 1.5 billion by the
end of March 2006. Users of the Russian language service are located all over
the world and the Russian domestic audience alone increased by 50% year on year
to 13 million users by the end of the reporting period. This growth rate is well
above the 35% increase in Russian Internet penetration during the year,
demonstrating the increased take-up and usage of the site and growing market
share. Russian domestic users represent 67% of all Rambler users. Internet
advertising is the fastest growing segment of the Russian advertising market and
was estimated to have increased by 71% year on year in 2005 to US$ 60 million
(US$ 35 million). (Source: Russian Association of Communication Agencies - RACA)
Rambler Media has launched a number of new products and services in the year
including text links and paid search services through Begun.ru. Rambler derives
pay-per-click-through revenues from its partnership with Begun, which were
partially introduced in the first half of the year and were fully implemented
during the second half. As of December 2005, paid search services generated 33%
of Rambler's total internet revenues.
In the second half of 2005, Rambler introduced instant messaging services by
launching the first Russian co-branded version of ICQ. ICQ is the most popular
instant messenger in Russia, and now has 3 million registered users, of whom 1.3
million are daily users. Rambler-ICQ (http://icq.rambler.ru/) integrates Rambler
email services and provides access to Rambler's internet search engine and
online games, as well as Russian-language news and other information services.
Rambler also launched an internet shopping window (http://shop.rambler.ru) which
enables visitors to shop through more than a quarter of a million of items,
including books, music and films, IT and photographic equipment, mobile phones
and accessories, office and consumer electronic products, childrens' goods,
perfumes and jewellery. Rambler acts as a shopping window while its e-commerce
partners handle all logistical and inventory solutions to deliver items in more
than 150 towns across Russia.
A new Rambler.ru home page design was also launched during the year with
enhanced usability, paid search services, as well as new community and
communication services.
Finally, Rambler announced the launch of a new online gaming portal
(www.ramblas.ru) in December 2005. The portal has been developed in partnership
with St Minver and offers gaming solutions for blue-chip media brands with 24/7
customer service and back office support. The new portal offers a full range of
the most popular games.
Market trends remain favourable with the number of Internet users in Russia
forecast to increase by approximately 29% year on year in 2006 according to the
Ministry of Informatisation and Communication, and the internet advertising
market expected to grow by 65% to 70%, according to the Russian Association of
Communication Agencies. The value of the Internet access and data transmission
services markets is forecast to grow by 33% year on year to US$ 2 billion in
2006 according to Jason and Partners, whilst the total value of B2C product and
service transactions was estimated to have increased by 35% to US$ 1.5 billion
in 2005. Rambler Internet is well positioned to benefit from this growth due to
its established brand, large and growing market share, and its wide range of
existing and new services. (Source: Russian Association of Communication
Agencies (RACA), J'son & Partners, Ministry of Communications, National
Association of Electronic Commerce)
Mobile Value Added Services Sales of Mobile VAS reached US$ 3.81 million (US$
4.09 million) in 2005, and accounted for 18% of Group revenues in the year. The
value of the Russian market for mobile content: SMS, MMS and premium SMS
content, increased by 21% in 2005 to US$ 350 million (from US$ 290 million).
(Source: J'son & Partners Russian Wireless Content Report 2005-2007) However,
this growth was not as high as was generally forecast by official sources. Due
to the highly competitive nature of the mobile content market in Russia, with
many small content providers trying to win market share at any cost, sometimes
at a loss, SMXCOM's business model has been increasingly focused on a revenue
sharing model, under which regional TV stations gain a share of Rambler's
revenues in exchange for advertising its services. The advantage of this model
over the direct advertising is that Rambler does not incur direct advertising
costs. In order to expand its revenue sharing activities, SMXCOM plans to
leverage on Rambler Media's existing relationships with regional TV stations
through the Rambler TV network.
In the period, SMXCOM reported an EBITDA loss of US$ -1.51 million (US$
-685,000). SMXCOM continued to invest in the development and marketing of its
mobile content brands and its relationships with Mobile TeleSystems, VimpelCom
and Megafon in Russia, which together account for approximately 90% of mobile
subscribers. SMXCOM will continue to increase its coverage to mobile users by
adding and connecting to new GSM operators, thus maximising the selling
opportunities.
90% of SMXCOM sales are generated from in-house developed SMS-based products and
the Company also has licensing agreements with third party providers of content
such as ring tones, icons, screen savers and games. Revenues are generated from
a share of the fixed fees paid by subscribers to their network provider for the
download of SMXCOM products. New services will also be offered to mobile users
including Interactive Voice Retrieval (IVR) services, mobile gambling, on line /
offline interactive mobile games, SMS Lottery, ICQ2waySMS and SMS Classifieds.
SMXCOM recently rebranded to 'Rambler Mobile' enabling better association with
Rambler Media and its group of companies. Rambler Mobile plans to be in the
position to offer mobile users a wide range of premium rate Voice and SMS
services at competitive rates and thereby increase revenue and improve
profitability. Rambler Mobile further expects to benefit from enhanced mobile
phone capabilities and deployment of new cellular technologies, as well as
closer integration with Rambler Internet, Rambler TV and other Rambler Media
owned companies by adding and integrating mobile content to existing products,
programming and services.
Rambler Mobile also seeks to benefit from the expected growth in demand for
mobile and mobile VAS services in Russia and other countries within the Region.
Market fundamentals point to continued growth of cellular penetration in Russia
and the Region. The value of the Russian market for mobile content: SMS, MMS and
premium SMS content, is forecast to grow to US$580 million in 2006. (Source:
J'son & Partners Russian Wireless Content Report 2005-2007)
Television Rambler TV's sales grew by 99% year on year to US$ 2.8 million from
US$ 1.4 million in 2004, and represented 13% of Group revenues in 2005. Revenues
are primarily generated from the sale of advertising airtime, as well as 'below
the line' advertising. The division reported an EBITDA loss of US$ -3.27 million
in 2005 (US$ -3.30 million).
Rambler TV is a free-to-air documentary and entertainment channel, which holds a
national broadcasting license in Russia and reaches 40 million people through a
network of 900 local affiliate stations broadcasting in 470 towns and cities
across Russia. 30% of the content is produced by Rambler Media. The channel's
core target audience is 25-45 year-old adults, which is the most economically
active segment of the population. Research by TNS Gallup Media in July 2005
demonstrated that Rambler TV reaches consumers who have higher than average
education.
The gross TV Advertising market grew by 35% year on year in 2005 to US$ 2.3
billion, and accounted for 47% of total Russian gross advertising spend during
the period (Source: Russian Association of Communication Agencies (RACA)).
Rambler TV's national share of viewing amongst the total universe of viewers
between the age of 6 and 54 grew from 0.26% in December 2004 to 0.46% in
December 2005. Rambler TV has also continued to invest in increasing its
national penetration, which rose by 42% from 20.7% in December 2004 to 29.5% in
December 2005. (Source: TNS Gallup Media, Dec 2005)
Rambler TV signed an exclusive contract with a leading independent media sales
house in April 2005, in order to augment Rambler's own in-house sales capacity,
and also increased its penetration through inclusion in the Teleinform Moscow
cable network. Teleinform enables the channel to reach an additional 1.2 million
viewers in the key Moscow city and regional market. In addition, Rambler
completed the acquisition of Loclear Limited in July 2005. Loclear owns NBN, a
local television station covering approximately 75% of the key St Petersburg
region and reaching approximately 3.5 million potential viewers.
Rambler Media expects to benefit from the Russian Federation Government's new TV
advertising law introduced by the State Duma, which will effectively reduce the
allowable advertising airtime for the major TV channels with effect from July 1,
2006. Prices of TV advertising on the leading channels are expected to increase
as a result of the new legislation, which may encourage advertisers to seek
alternative marketing channels such as smaller TV networks and online media.
FINANCIAL POSITION Rambler raised US$ 26 million in net proceeds from the
placing of 3,000,000 new shares to international institutional investors at a
price of US$ 10.25 per share in June 2005. The Company's balance sheet was
therefore significantly strengthened and the Company ended the year with cash
balances of US$ 21.5 million. Rambler's total issued outstanding share capital
following the issue of new shares amounts to 14,975,731 ordinary shares as at
December 31, 2005.
RECENT DEVELOPMENTS In January 2006, Rambler Media bought 51% of Price Express,
a leading e-commerce internet company operating the portals price.ru
(www.price.ru), Domoteka.ru (www.domoteka.ru) and Tyndex.ru (www.tyndex.ru). The
portals provide price and product comparison tools designed to help online
shoppers make the most cost-effective buying decisions. Price Express has a
database of 40 million priced items, offering consumers one of the largest and
quickest buying choices in the Russian internet market, directly integrated into
Rambler search. Over 1 million shoppers visited Price Express's websites every
month in 2005.
In March 2006, our Rambler-ICQ instant messaging service had 1,111,960 active
users and 517,121 daily active users, i.e. one out of every 3 ICQ user in Russia
in only six months after launch.
In April 2006, Rambler signed an exclusive partnership with Trader Media East's
Iz Ruk V Ruki, which is Russia's largest classified newspaper, to launch online
classified ads in Russia. Through the launch of a new co-branded website, Iz Ruk
V Ruki private and commercial customers will be able to place their
advertisements online and benefit from Rambler's extensive reach and numerous
online properties and services. The new service will also enable Rambler's users
to search through the biggest database of classified ads from all regions of
Russia via a new, highly flexible and user friendly platform designed by Trader
Media East.
OTHER INFORMATION The Company's consolidated accounts have been prepared
according to International Financial Reporting Standards (IFRS). The following
preliminary financial information has been approved for release by the company's
auditors.
The company will host a conference call to present the results at 5:00 pm
(Moscow Time)/ 3:00 pm (CET) / 2:00 pm (London Time) / 9:00 am (New York Time)
today. The results statement and related documentation are available on Rambler
Media's website at www.ramblermedia.com. To participate in the conference call,
please register online at www.sharedvalue.net/ramblermedia/fy2005. The number
for the conference call will be available upon registration.
* * *
For further information, please visit www.ramblermedia.com or contact:
Rambler Media Shared Value Limited
Irina Gofman Nicolas Duperrier
Tel. +7 495 500 3826 Tel. +44 (0) 20 7321 5010
rambler@sharedvalue.net
ABOUT RAMBLER MEDIA
Rambler Media is an integrated and diversified Russian language media,
entertainment, services and content delivery company with three main segments:
internet services, mobile value added services, and television broadcasting.
Rambler Media operates businesses including the Russian language internet portal
and search engine 'rambler.ru', on-line newspaper 'Lenta.ru', broadband ISP
'Rambler Telecom', interactive advertising company 'Index20', mobile content
service provider 'SMXCOM', and documentary and entertainment TV network
'RamblerTV'. Rambler Media's shares are traded on the AIM market of the London
Stock Exchange under the symbol 'RMG'. For more information on Rambler Media,
visit our corporate website at www.ramblermedia.com.
Certain statements within this announcement constitute forward looking
statements. Such forward looking statements involve risks and other factors
which may cause the actual results, achievements or performance of the Company
to be materially different from any future results, achievements or performance
expressed or implied by such forward looking statements. Such risks and other
factors include, but are not limited to, general economic and business
conditions, changes in government regulations, and court interpretations of such
regulations, currency fluctuations (including the US$/Rbs rate), competition,
changes in development plans. There can be no assurance that the results and
events contemplated by the forward looking statements contained in this
announcement will, in fact, occur. Any forward looking statements made in this
announcement represent management's best judgment as to what may occur in the
future and are correct only as at the date of this announcement. The Company
will not undertake any obligation to release publicly any revisions to these
forward looking statements to reflect events, circumstance or unanticipated
events occurring after the date of this announcement except as required by
applicable law or by any applicable regulatory authority.
CONSOLIDATED PROFIT & LOSS ACCOUNT (US $'000s)
July - Dec July - Dec Jan - Dec Jan - Dec Notes
2005 2004 2005 2004
(audited -
restated)
----------- ----------- ----------- ----------- --------
Revenue 13,476 8,295 21,421 12,505
Other Income 515 - 515 -
Operating expenses (12,698) (9,413) (22,504) (15,728)
----------- ----------- ------------------------
Earnings before Interest, Tax,
Depreciation and Amortisation 1,293 (1,118) (568) (3,223)
Depreciation (1,255) (402) (1,801) (637)
----------- ----------- ------------------------
Net profit/(loss) before
interest, taxation and
minority interest 38 (1,520) (2,369) (3,860)
Interest receivable 359 - 442
Interest expense (7) (67) (69) (117)
----------- ----------- ----------- -----------
Net profit/(loss) before
taxation and minority
interest 390 (1,587) (1,996) (3,977)
Taxation (314) 101 (365) (647)
----------- ----------- ----------- -----------
Net profit/(loss) before
minority interest 76 (1,486) (2,361) (4,624)
Minority interest 35 - (23) -
----------- ----------- ----------- -----------
Net profit/(loss) 111 (1,486) (2,384) (4,624)
=========== =========== =========== ===========
Profit/(loss) per share - -USD (USD 0.13) (USD 0.18) (USD 0.41)
basic and diluted 0.01 2
----------- ----------- ----------- -----------
SECOND HALF RESULTS BY BUSINESS SEGMENT (US $'000s)
6 MONTHS TO 31 DECEMBER 2005
Internet Services TV Mobile VAS Total
----------------- ------------- --------------- ---------------
Revenue 9,750 1,845 1,881 13,476
Other revenue 515 - - 515
Operating
expenses
(excluding
depreciation) (6,478) (3,522) (2,698) (12,698)
----------------- ------------- --------------- ---------------
EBITDA 3,787 (1,677) (817) 1,293
================= ============= =============== ===============
6 MONTHS TO 31 DECEMBER 2004
Internet Services TV Mobile VAS Total
----------------- ------------- --------------- ---------------
Revenue 4,165 719 3,411 8,295
Operating
expenses
(excluding
depreciation) (2,997) (2,436) (3,980) (9,413)
----------------- ------------- --------------- ---------------
EBITDA 1,168 (1,717) (569) (1,118)
================= ============= =============== ===============
FULL YEAR RESULTS BY BUSINESS SEGMENT (US $'000s)
12 MONTHS TO 31 DECEMBER 2005
Internet Services TV Mobile VAS Total
----------------- ------------- --------------- ---------------
Revenue 14,819 2,797 3,805 21,421
Other income 515 515
Operating
expenses
(excluding
depreciation) (11,123) (6,066) (5,315) (22,504)
----------------- ------------- --------------- ---------------
EBITDA 4,211 (3,269) (1,510) (568)
================= ============= =============== ===============
12 MONTHS TO 31 DECEMBER 2004 (AUDITED-RESTATED)
Internet Services TV Mobile VAS Total
----------------- ------------- --------------- ---------------
Revenue 7,015 1,404 4,086 12,505
Operating
expenses and
overheads
(excluding
depreciation) (6,255) (4,702) (4,771) (15,728)
----------------- ------------- --------------- ---------------
EBITDA 760 (3,298) (685) (3,223)
================= ============= =============== ===============
CONSOLIDATED BALANCE SHEET (US $'000s)
Dec Dec
2005 2004
(audited-
restated)
----------- -----------
Assets
Non Current Assets
Fixed assets
Leasehold improvements
and equipment 3,830 3,626
Investments 778 -
Intangible assets 15,762 10,608
----------- -----------
20,370 14,234
Current Assets
Trade debtors 3,690 1,551
Inventory 367 210
Prepayments 392 1,217
VAT, net 558 143
Other receivables 861 1,571
Bank and cash balances 21,482 5,408
----------- -----------
27,350 10,100
----------- -----------
Total assets 47,720 24,334
=========== ===========
Liabilities
Current Liabilities
Trade creditors 1,213 1,264
Deferred income 829 516
Loans 141 1,320
----------- -----------
2,183 3,100
Long Term Liabilities
Loans - 12
Deferred taxation 1,726 1,367
----------- -----------
1,726 1,379
----------- -----------
Total liabilities 3,909 4,479
Shareholders' equity
Issued capital 150 120
Reserves 56,301 30,014
Accumulated losses (12,663) (10,279)
----------- -----------
Total shareholders' equity 43,788 19,855
Minority interest 23 -
----------- -----------
Liabilities and
Shareholders' Equity 47,720 24,334
=========== ===========
SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOWS (US $'000s)
Jan - Dec Jan - Dec
2005 2004
(audited -
restated)
------------ ------------
Net cash used in operating
activities (2,873) (4,126)
Net cash used in investing
activities (8,144) (1,961)
Net cash from financing activities 27,091 11,065
------------ ------------
Net Increase in cash 16,074 4,978
Cash at the beginning of the year 5,408 430
------------ ------------
Cash at the end of the year 21,482 5,408
============ ============
NOTES
1. Principal Accounting Policies
a) Basis of preparation
The financial statements have been prepared in accordance with the
accounting policies set out in the Group's financial statements for the year
ended 31 December 2005. The financial statements for the year 2005 are
unaudited but have been approved for release by the company's auditors. The
results for the second half of 2005 include annual audit adjustments
b) Basis of consolidation
The financial statements consist of Rambler Media Limited (the Company) and
its respective subsidiary undertakings (the Group). On the acquisition of a
business, including an interest in a subsidiary undertaking, fair values are
attributed to the Group's share of net separable assets. Where the cost of
acquisition exceeds the fair values attributable to such net assets the
difference is treated as purchased goodwill and capitalised in the balance
sheet in the year of acquisition.
2. Losses per Share
Losses per share have been calculated as follows:
July - Dec July - Dec Jan - Dec Jan - Dec
2005 2004 2005 2004
------------ --------------------------------------
Net Profit/(loss) 111 (1,486) (2,384) (4,624)
Weighted average number of
issued shares (000s) 14,976 11,284 13,611 11,284
------------ --------------------------------------
Profit/(loss) per share 0.01 (USD 0. 13) (USD 0.18) (USD 0.41)
============ ======================================
3. Post Balance Sheet Events
(a) Purchase of Price Express
On January 16 2006 the Rambler Group purchased 51% of Price Express. Price
Express is a leading Russian Ecommerce internet company. It operates the
portals: Price.ru, Domoteka.ru and Tyndex.ru, which provide price and
product comparison tools designed to help on-line shoppers make the most
cost effective buying decisions.
(b) Strategic Partnership with Trader Media Limited
On April 26 2006 the Rambler Group entered into an exclusive relationship
with Trader Media Limited, a leader in classified advertising, to create a
co-branded website which will give Rambler.ru customers access to online
classified content in Russia.
4. Restatement of Year 2004
The figures for the year 2004 have been restated to reflect:
-- the revised requirements of IFRS 2 with respect to share options
(resulting in an increase in net losses of US$212 thousand)
-- The reclassification of TV programme rights as current assets
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