Rambler Media Limited
RAMBLER MEDIA ANNOUNCES PRELIMINARY FINANCIAL RESULTS
FOR FULL YEAR 2006
Internet revenue up 91% year on year to US$28.3 million (2005, US$14.8 million)
Rambler Media Limited (RMG.LN), ("the Group"), a leading provider of internet
media and services to the global Russian-speaking community, today announced its
financial results for the year ended 31 December 2006 in accordance with
International Financial Reporting Standards (IFRS). The Group has almost
completed its transition from a diversified media group encompassing TV, Mobile
VAS and Internet operations to a purely internet media and services focused
company.
FINANCIAL HIGHLIGHTS
-- Group revenue from continuing operations* of US$30.6 million
(2005, US$18.6 million)
-- Internet revenue up 91% year on year to US$28.3 million
(2005, US$14.8 million)
-- Group EBITDA** from continuing operations* of US$1.62 million, including
US$2.6 million provision for potential tax related charges (2005,
EBITDA** from continuing operations* restated to US$1.48 million,
including US$1.2 million provision for potential tax related charges)
-- Internet EBITDA** of US$5.6 million (2005, US$4.2 million) excluding
provision for potential tax related charges above
-- Consolidated net loss after interest, tax and discontinued operations of
US$3.0 million (2005, net loss of US$4.4 million)
-- Strong balance sheet with US$18.5 million of cash at year end before
receiving final payment of US$21 million from sale of TV in January 2007
*Continuing operations exclude Television, which is classified as discontinued
operations
**Earnings before interest, tax, depreciation and amortisation
OPERATING HIGHLIGHTS
-- 24.4 million unique monthly users of main Rambler.ru portal in Dec.
2006, up approximately 25% year on year - further increase to over 29
million in first quarter 2007 - above Russian internet penetration
growth of 23%
-- 2 billion monthly page views in Dec. 2006, up 52% year on year
-- Over 220 million search queries per month and growing fast (240 million
May 2007)
-- 16.8 million registered Rambler email accounts in Dec. 2006, up 77% year
on year
-- 1.6 million Rambler-ICQ instant messaging unique users per month in Dec.
2006
-- Acquisition of 51% of Price Express, operating www.price.ru , a leading
Russian price comparison engine, and subsequent integration into Rambler
Search
-- Acquisition of 51% of online Russian social network www.damochka.ru and
51% of online banner exchange company Bannerbank
-- Sale of Rambler TV for US$23 million (completed in January 2007) with a
projected pre-tax gain on disposal of US$7.1 million
-- Acquisition in Dec. 2006 of approximately 55% of Rambler Media's shares
by Prof-Media, one of Russia's largest media holding groups and a major
private investor in most sectors in the Russian media market, offering
Rambler significant support for further growth
Robert M. Brown III, Chairman of Rambler Media, commented: "2006 was marked by
exciting developments in the life of Rambler Media. With the emergence of the
internet as a new mainstream media in Russia and the significant growth in
online advertising, Rambler Media made the strategic decision to devote its
resources entirely to its internet business. The increased focus resulted in the
sale of Rambler TV at the end of the year. Rambler Media appointed Mark Opzoomer
CEO and Arthur Akopyan CFO in March 2007 to drive this continued focus. With
Rambler Media now a pure online player, and attracting over 32 million visitors
to its websites per month, the prospects are even greater for our business.
Towards the end of 2006, one of Russia's largest media holding groups,
Prof-Media, bought a majority stake in Rambler Media, further demonstrating the
importance and opportunities that the internet represents in the media sector
going forward. We are confident that these developments have placed Rambler
Media in an even stronger position to capture the market's growth going
forward."
Mark Opzoomer, newly appointed Chief Executive Officer of Rambler Media,
commented: "In 2006, revenues in our core internet division continued to grow
faster than the internet advertising market itself, which demonstrates that, as
an established brand and a leading online media resource for the global
Russian-Speaking community, Rambler Media holds an essential role in helping
brands reach their audiences. Our focus is to provide the best of class daily
internet media and services to Russian-speaking consumers and from that, grow
our share of both the display and search related advertising markets by offering
all advertisers innovative solutions to reach their target audiences."
FINANCIAL SUMMARY
(US$ '000s) Jan - Dec Jan - Dec
2006 2005
(restated)
Revenue from continuing operations 30,646 18,624
Internet 28,305 14,818
Mobile Value Added Services 2,341 3,806
Discontinued operations(a) 5,435 2,797
Investment income 1,574 515
-------------------------------
Total revenue and investment income 37,655 21,936
EBITDA(b) from continuing operations 1,624 1,476
Net loss (including discontinued
operations) (3,035) (4,361)
Profit / (loss) per share from
continuing operations - basic and
diluted 0.001 (0.040)
Loss per share from discontinued
operations(a) - basic and diluted (0.202) (0.280)
(a)Television was classified as discontinued operations
(b)Earnings before interest, tax, depreciation and amortisation
FINANCIAL & OPERATING REVIEW
Group
Revenue for the twelve months ended 31 December 2006 from continuing operations
was US$30.65 million (2005, US$18.62 million) with the increase fully driven by
the Internet Segment. The Group results are more meaningfully reviewed on a
segment basis below and a table of Revenues, Operating Expenses and EBITDA is
attached. The Group reported a 72% increase in like-for-like total revenue and
investment income to US$37.7 million (2005, US$21.9 million), reflecting the
overall strength of the Russian media market. Encouragingly, the Group reported
consolidated EBITDA from continuing operations of US$1.62 million, up from
US$1.48 million in 2005. The improvement was limited by the 70% rise in Group
operating expenses (excluding depreciation and amortisation and the tax related
provision) to US$28.04 million (2005, US$16.46 million). This increase was
primarily driven by higher wage and commission costs in the Russian internet
market generally coupled with intentionally increased marketing costs to drive
product growth.
As a result of the directors' reassessing the tax exposures during the year, the
Group's 2005 EBITDA result has been restated to include a provision for
potential tax related charges of US$1.2 million, which therefore also impacted
on the Group's net income. The Group's 2006 results also include a similar
provision for potential tax related charges of US$2.6 million. The provisions
relate to potential liabilities for taxes other than income tax, which arise
from the legal structure of the Group and the jurisdictions in which various
income and expense items are recognised and assessed. These issues are also
impacted by the absence of group relief between various entities in the Group
structure, for example the ability to offset losses from the TV and Mobile VAS
segments. The Group is now taking steps to simplify its legal structure by
creating a primary trading entity with multiple operating business divisions.
This process is expected to be completed within 12 months and to result in a
forward prevailing tax rate of approximately 25% when complete. These provisions
have been reflected in the Internet segment. If appropriate, the provisions may
be released at some point in the future.
The Group's consolidated net loss after interest, tax and discontinued
operations was US$3.0 million in 2006 (2005, net loss US$4.4 million). This 2006
net loss is split between a net profit from the continuing operations of US$0.02
million and a net loss from discontinued operations of US$3.06 million.
The Group's profit per share from continuing operations (basic and diluted) was
US$0.001 (2005, loss per share US$0.040). The Group's loss per share from
discontinued operations (basic and diluted) was US$0.202 (2005, loss per share
US$0.280).
Internet segment
Internet revenue, making up 92% of revenues from continuing operations, grew by
91% year on year from US$14.8 million to US$28.3 million following sustained
growth in the number of Rambler.ru users and strong growth in Russia's internet
advertising market, up approximately 70%. In addition to its internet revenue,
the Group also recorded investment income of US$1.6 million (2005, US$0.5
million) for dividends received from Rambler's 25% interest in Begun, one of
Russia's leading search and contextual text based advertising platforms with a
network of over 10,000 individual advertisers and over 30,000 partner
distribution sites. This demonstrates the healthy growth of the text based
advertising market in Russia and Begun's favourable position in the market. The
Group's Internet division has been profitable since 2004 and generated EBITDA of
US$5.6 million in 2006 (2005, US$4.2 million) excluding provision for potential
tax related charges of US$2.6 million (2005, US$1.2 million) as explained above.
Operating expenses (excluding depreciation and amortisation and tax related
provision) in the Group's Internet segment rose 119% to US$24.3 million (2005,
US$11.1 million). Staff related costs represent 40% of Internet revenues and are
under pressure from high salary inflation and high staff demand in the Moscow
labour market. These expenses alone account for approximately half of the
increase in operating expenses. The next largest increase is due to partner fees
and commissions due to the success of certain projects, such as Rambler-ICQ,
followed by planned increases in marketing expenditures to drive traffic.
Rambler.ru (www.rambler.ru) ("Rambler") is a leading Russian language internet
portal which successfully combines search with communication and community
activities; and media and entertainment services. In 2006, Rambler.ru reached
24.4 million unique monthly users, up approximately 25% from the 19.5 million
users in 2005. This growth rate is above the average 23% yearly increase in
Russian internet penetration.
Rambler aggregates the best of class internet media and services in Russia and
enables mass audiences to navigate to specific pages according to their
interest. 45% of users visit Rambler for its search, 20% for email, 16% for
news, 11% for dating, 9% for instant messaging and 7% for photos - a
well-balanced usage. Through its comprehensive tracking system, Rambler Top 100,
Rambler offers valued statistics on internet use in Russia and the most visited
websites among 1 million sites in the Russian internet across 57 categories
(automotive, travel, etc).
In 2006, Rambler Search index contained approximately 1.4 billion Russian
documents, which is 50% more than in 2005. Rambler Search processed on average
200 million search queries per month in 2006 (220 million search queries in
December 2006, now 240 million search queries in May 2007). Throughout the year,
Rambler upgraded its search capabilities, for example enabling its users to
search through multimedia documents including images. Rambler also entered into
a licensing agreement with FAST, a leading Norwegian search technology provider,
to create further enhanced services.
In 2006, Rambler Search continued the integration of Begun's text based
sponsored links for the monetisation of key word search.
In June 2006, Rambler introduced a 'Rambler toolbar assistant' to incorporate
the search and other tools in a user-friendly interface which users can easily
access across Rambler pages. The new tool integrates news, mail, weather, audio,
blogs and other personalised services.
In October 2006, Rambler updated its map search to include new and more detailed
maps of Russia's largest cities with street search capabilities.
In November 2006, Rambler launched a co-branded classifieds portal in
partnership with Russia's leading classifieds newspaper Iz Ruk V Ruki
(http://irr.rambler.ru/).
During 2006, Rambler News' audience grew by approximately 40%. Rambler News
(http://www.rambler.ru/news/) launched a new version in October, featuring video
and audio content as well as new links with easier access to sports, finance,
regional news, real estate and other sections. Rambler News also launched
successful special weekly online supplements for auto, style, home and personal
finance.
Lenta.ru (www.lenta.ru) is one of the Group's most frequented news sites and is
the leading online newspaper in Russia with over 3 million unique visitors per
month.
Rambler Sport (http://sport.rambler.ru/) regularly launches customised sites
dedicated to special sporting events. 'Rambler Torino' was launched in
connection with the Winter Olympic Games and became the official online partner
of the Russian Olympic Committee, attracting over 1 million visitors in its
first week. Other unique sites include the 2006 FIFA World Cup Football
championship and the 2007 International Ice Hockey World Championships hosted in
Moscow.
During the year, Rambler developed its horoscope service to offer a more
personalised and broader choice of horoscopes to its 2 million users every
month. The service (http://horoscopes.rambler.ru/) attracted 55% more users in
2006 than in 2005.
Rambler launched a new email interface in 2006, including updated spell check
service and increased mail box space. On average, Rambler's monthly email
audience grew by 77% year on year in 2006. There are over 16.8 million
registered Rambler email accounts.
One of Rambler's most successful projects has been its partnership with ICQ to
offer instant messaging services. Before its partnership with Rambler, ICQ had 2
million users in Russia. Since Rambler-ICQ's launch, ICQ's users have doubled to
4 million users, of whom 2 million are today active users via the Rambler-ICQ
joint service (http://icq.rambler.ru/).
Rambler Planeta (http://planeta.rambler.ru/), the blogging portal, has been
integrated with Rambler Photo (http://foto.rambler.ru/), Rambler Vision
(http://vision.rambler.ru/) and other Rambler services to allow users to search
peers by categories of interest and search through video files. In early 2006,
Rambler Planeta had 100,000 blogs and today, the portal attracts 1.3 million
registered users. Rambler Vision has 1.5 million unique monthly users.
In June 2006, Rambler launched a gaming service called Rambler Games
(http://games.rambler.ru/) as part of Rambler.ru's main portal, including
multiplayer, skill games and premium downloadable games. At the end of 2006,
Rambler Games had 1.6 million unique monthly users.
In January 2006, Rambler Media bought 51% of Price Express, a leading e-commerce
internet Group operating price.ru (www.price.ru), which provides product search
and price comparison tools designed to help online shoppers make the most
cost-effective buying decisions. Price.ru has a database of 40 million priced
items, offering consumers one of the largest and quickest buying choices in the
Russian internet market. Price.ru was integrated into Rambler Search on
Rambler.ru's main page.
In July 2006, Rambler Media acquired 51% of Damochka.ru (www.damochka.ru) and
51% of BannerBank from eHouse Holding. Damochka.ru is a leading Russian
language, social network, and personal ads website with over 1.7 million
registered users. BannerBank operates a banner exchange network.
Mobile segment
Mobile Value Added Services revenues were US$2.3 million (2005, US$3.8 million)
and accounted for 7.6% of revenues from continuing operations in the period (20%
of revenues in 2005). The reduction in revenues was intended to begin focusing
the Mobile operations on the Group's own Internet products and services, and
less on providing lower margin services to other content providers. The Mobile
segment EBITDA loss was reduced to US$1.12 million (2005, US$1.49 million loss).
Mobile services are strategically important and are being redeveloped to allow
the Group's large internet audience to enjoy all the Group's Internet media and
services on their mobile devices. As such, the Mobile segment will be integrated
into the Internet segment in the future.
Television segment (further discontinued operations)
The Group's TV business, the sale of which was completed after the end of the
period, is classified as discontinued operations.
Revenue generated by Rambler TV in the full year 2006 nearly doubled totaling
US$5.4 million (2005, US$2.8 million) reflecting the generally strong TV
advertising market in Russia. Nevertheless, the Group's TV operations were too
small relative to the market competition and were becoming a distraction to the
Group's large position in the internet space. The discontinued TV operation
reported an EBITDA loss of US$3.0 million (2005, US$3.2 million full year EBITDA
loss).
Management approved the sale of Rambler TV during the second half of 2006 and
the sale was completed in January 2007, allowing the Group to dedicate fully to
growing the Group's Internet segment.
Outlook
The global Russian speaking audience approximates 280 million, of which
approximately 140 million are in Russia. Russia has rapidly become one of
Europe's largest online communities, third after Germany and the UK, with 28
million Russians online in 2006, representing about 25% of the Russian adult
population (source: The Public Opinion Foundation). This percentage is forecast
to more than double by 2010, according to the Russian Ministry of
Communications, which could make Russia the largest online market in Europe. The
overall Russian advertising market is growing very strongly, and internet
advertising is the fastest growing segment. Online display advertising was
estimated to have increased by 67% year on year in 2006 to US$100 million (2005,
US$60 million) (source: Russian Association of Communication Agencies - AKAR).
In addition, text based advertising on Russian-language internet sites soared to
US$110 million in 2006 from US$45 million in 2005. In 2006, revenue from
Internet advertising accounted for 1.6% of the total advertising market but the
segment is growing faster than any other media and is forecast to attract 4% of
total advertising by 2010 (source: Zenith Optimedia).
The Group is well-positioned to continue its rapid growth, in line with or
faster than that of the online advertising market, due to its established brand,
large market share, and wide range of internet media and services.
FINANCIAL POSITION
The Group ended the period with cash balances of US$18.5 million. Since the sale
of Rambler TV was completed at the beginning of 2007, the sale's final payment
of US$21 million was not included in the 2006 cash balance.
RECENT DEVELOPMENTS
At an Extraordinary General Meeting of shareholders held in Jersey on 15 March
2007, Messrs Vladimir Pravdivy and Ilya Oskolkov-Tsentsiper were appointed as
Directors of the Group, and Messrs Alexander Rappaport and Vitaly Rudenko
resigned from the Board of Directors. In addition, due to the Group's change of
management, Messrs Mark Opzoomer and Arthur Akopyan, CEO and CFO of Rambler
Media respectively, were appointed as Executive Directors on the Board. Ms.
Irina Gofman remains on the Board of Directors of the Group as a Non-executive
Director. Mr. James Mullins resigned from his positions of CFO and Director.
OTHER INFORMATION
The Group'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 Group's auditors.
PricewaterhouseCoopers was appointed as the Group's new auditor of record in
December 2006. The full final financial statements and auditors' report have not
yet been signed by the auditors.
The Group will host a conference call to present the results at 4:30 pm (Moscow
Time)/ 2:30 pm (CET) / 1:30 pm (London Time) / 8:30 am (New York Time) today.
The results statement is available on Rambler Media's website at
www.ramblermedia.com. To participate in the conference call, please register
online at www.sharedvalue.net/ramblermedia/fy2006. 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 ING Wholesale Banking
Mark Opzoomer Nicolas Duperrier Daniel Friedman
Tel. +7 495 500 3826 Tel. +44 (0) 20 7321 5010 William Marle
rambler@sharedvalue.net Tel: +44 (0) 20 7767 1000
***
ABOUT RAMBLER MEDIA
Rambler Media is a diversified Russian language media, entertainment, services
and content delivery Group which operates various internet properties including
the leading Russian language internet portal and search engine 'rambler.ru',
on-line newspaper 'Lenta.ru', broadband ISP 'Rambler Telecom', interactive
advertising Group 'Index20', and mobile content service provider 'Rambler
Mobile'. Rambler Media's shares are traded on AIM, the junior 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,
and 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 or circumstances occurring after
the date of this announcement except as required by applicable law or by any
applicable regulatory authority.
FULL YEAR RESULTS BY BUSINESS SEGMENT
(US $'000s)
YEAR TO 31 DECEMBER 2006
The reconciliation between results of business segments (including discontinued
operations) and the numbers reported in the Company's financial statements for
the year ended 31 December 2006 is as follows. Inter-segment revenues are not
material and therefore have not been disclosed.
Internet Total TV
Services Mobile VAS continuing (discontinued
operations operations)
----------------------------------------------------
Revenue 28,305 2,341 30,646 5,435
Investment income 1,574 - 1,574 -
Operating expenses
(excluding depreciation
and amortisation and tax
related provisions) (24,316) (3,463) (28,039)(a) (8,395)
Depreciation and
amortisation (1,281) (209) (1,490) (244)
Tax related provisions(a) (2,557) - (2,557) -
EBIT 1,725 (1,331) 134(b) (3,204)
----------------------------------------------------
EBITDA(a) 3,006 (1,122) 1,624(b) (2,960)
====================================================
(a)Internet EBITDA excluding tax related provisions: US$5,563 (see explanation
on page 3 and 4)
(b)including US$260 relating to the share options costs
YEAR TO 31 DECEMBER 2005
The segmental results for the year ended 31 December 2005 by business segment
are as follows:
Internet Total TV
Services Mobile VAS continuing (discontinued
operations operations)
------------------------------------------------------
Revenue 14,818 3,806 18,624 2,797
Investment income 515 - 515 -
Operating expenses
(excluding depreciation
and amortisation and
tax related provisions) (11,086) (5,296) (16,463)(b) (5,985)
Depreciation and
amortisation (1,106) (130) (1,236) (621)
Tax related
provisions(a) (1,200) - (1,200) -
------------------------------------------------------
EBIT 1,941 (1,620) 240(b) (3,809)
------------------------------------------------------
EBITDA(b) 3,047 (1,490) 1,476(b) (3,188)
======================================================
(a)Internet EBITDA excluding tax related provisions: US$4,247 (see explanation
on page 3 and 4)
(b)including US$81 relating to the share options costs
CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED
31 DECEMBER 2006
(US $'000s)
Notes 2005
2006 (restated)
-------------------------------------------------------------------------------------------
Continuing operations:
Revenue 30,646 18,624
Investment income 1,574 515
Operating expenses (32,086) (18,899)
-------------------------------------------------------------------------------------------
Net profit before interest, taxation and
minority interest 134 240
Interest income 940 442
Interest expense (5) (62)
-------------------------------------------------------------------------------------------
Net profit before taxation and minority
interest 1,069 620
Taxation (1,048) (1,165)
-------------------------------------------------------------------------------------------
Net profit/(loss) from continuing
operations 21 (545)
Discontinued operations:
Loss from discontinued operations 5 (3,056) (3,816)
-------------------------------------------------------------------------------------------
Net loss (3,035) (4,361)
-------------------------------------------------------------------------------------------
Loss attributable to:
Loss attributable to equity holders of
parent (3,183) (4,384)
Minority interest 148 23
-------------------------------------------------------------------------------------------
Net loss (3,035) (4,361)
-------------------------------------------------------------------------------------------
Profit/(loss) per share from continuing
operations - basic and diluted
(expressed in USD per share) 2 0.001 (0.040)
Loss per share from discontinued
operations - basic and diluted
(expressed in USD per share) 2 (0.202) (0.280)
-------------------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS AS AT 31 DECEMBER 2006
(US $'000s)
Consolidated
---------------------------------------------------------------
2006 2005 (restated)
---------------------------------------------------------------
Assets
Non Current Assets
Property, plant and
equipment 3,731 3,815
Intangible assets 13,741 15,770
Investments in subsidiaries - -
Financial assets 864 778
Deferred income tax asset 1,657 2,267
---------------------------------------------------------------
19,993 22,630
Current Assets
Trade debtors 5,529 3,690
Inventory - 367
Prepayments 1,217 392
VAT receivable 612 558
Other receivables 1,172 861
Bank and cash balances 18,461 21,482
---------------------------------------------------------------
26,991 27,350
Non-current assets held for
sale 18,718 -
---------------------------------------------------------------
Total Assets 65,702 49,980
---------------------------------------------------------------
Liabilities
Current Liabilities
Trade creditors 4,379 1,213
Current income tax payable 2,536 800
VAT payable 303 -
Other provisions for
liabilities and charges 3,757 1,200
Deferred income 4,067 829
Loans - 10
---------------------------------------------------------------
15,042 4,052
Liabilities directly
associated with assets held
for sale 2,807 -
---------------------------------------------------------------
2,807 -
Long Term Liabilities
Loans - 131
Deferred income tax
liability 4,124 3,993
---------------------------------------------------------------
4,124 4,124
---------------------------------------------------------------
Total liabilities 21,973 8,176
---------------------------------------------------------------
Shareholders' equity
Issued capital 153 150
Share premium 57,208 55,902
Options reserve 601 341
Merger reserve - 51
Accumulated losses (17,846) (14,663)
---------------------------------------------------------------
Total shareholders' equity 40,116 41,781
---------------------------------------------------------------
Minority interests 3,613 23
---------------------------------------------------------------
Liabilities and Shareholders'
Equity 65,702 49,980
---------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED
31 DECEMBER 2006
(US $'000s)
2006 2005 (restated)
----------------------------------------------------------------------------
Cash flows from operating activities
Net (loss) for the year (3,183) (4,384)
Adjusted for: - -
Minority interest 148 23
Interest received (940) (442)
Interest charged 10 69
Taxation charge 1,048 1,165
Cost of share options exercised 260 81
Merger reserve write-off (51) -
Depreciation and amortisation 1,734 1,857
Loss on disposal of fixed assets 142 56
(Increase) in inventory (174) (157)
(Increase) in debtors and receivables (4,604) (2,306)
Increase in creditors and other payables 9,002 1,451
----------------------------------------------------------------------------
Net cash from/(used in) operating activities 3,392 (2,587)
----------------------------------------------------------------------------
Cash flows from investing activities
Purchase of subsidiary undertakings (5,004) (5,020)
Purchase of investments (154) (778)
Purchase of property, plant and equipment (2,151) (1,720)
Proceeds on disposal of property, plant and
equipment - 34
Acquisition of intangible assets (1,461) (510)
----------------------------------------------------------------------------
Net cash used in investing activities (8,770) (7,994)
----------------------------------------------------------------------------
Cash flows from financing activities
Proceeds from equity financing 1,568 30,047
AIM listing expenses paid by company - (2,443)
Repayment of borrowings (141) (1,322)
Interest received 940 442
Interest paid (10) (69)
----------------------------------------------------------------------------
Net cash from financing activities 2,357 26,655
----------------------------------------------------------------------------
Net (decrease)/increase in cash (3,021) 16,074
Cash at the beginning of the year 21,482 5,408
Cash at the end of the year 18,461 21,482
----------------------------------------------------------------------------
- -
Material non-cash transactions:
Other purchases on barter terms (1,319) (895)
Sales on barter terms 1,319 895
Proceeds from issue of shares retained by
broker - 2,078
AIM listing expenses paid by broker - (2,078)
Loans assumed on acquisition of subsidiary
undertaking - 131
Dividend income (not received until the
following year) 890 515
----------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE YEAR ENDED
31 DECEMBER 2006
(US $'000s)
Issued Share Options Merger Accumulated Minority Total
capital premium reserve reserve losses interest equity
--------------------- -------- ------------ ---------- -------- ------------ ---------- ----------
(restated) (restated) (restated) (restated)
--------------------- -------- ------------ ---------- -------- ------------ ---------- ----------
31 December 2004
(restated) 120 29,703 260 51 (10,279) - 19,855
Share capital issued 30 30,720 - - - - 30,750
Cost of share capital
issued - (4,521) - - - - (4,521)
Cost of share options - - 81 - - - 81
Loss for the year
(restated) - - - - (4,384) (4,384)
Minority interest - - - - - 23 23
--------------------- -------- ------------ ---------- -------- ------------ ---------- ----------
31 December 2005 150 55,902 341 51 (14,663) 23 41,804
--------------------- -------- ------------ ---------- -------- ------------ ---------- ----------
Share capital issued 3 1,306 - - - - 1,309
Cost of share options - - 260 - - - 260
Loss for the year - - - (51) (3,183) - (3,234)
Minority interest - - - - - - - 3,590 3,590
--------------------- -------- ------------ ---------- -------- ------------ ---------- ----------
31 December 2006 153 57,208 601 - (17,846) 3,613 43,729
--------------------- -------- ------------ ---------- -------- ------------ ---------- ----------
The availability of the Rambler Companies' retained earnings for distribution to
shareholders is determined by the Articles of Association of the individual
companies within the Rambler Companies and by relevant legal and fiscal
regulations and may not correspond to the figures presented above.
NOTES (All amounts in the notes are stated in US$ thousand)
1. Significant Accounting Policies
The principal accounting policies adopted in the preparation of these
consolidated financial statements are set out below:
a) Basis of preparation
These consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS") under the historical cost
convention. The principal accounting policies applied in the preparation of
these consolidated financial statements are set out below. These policies have
been consistently applied to all the periods presented, unless otherwise stated
(refer to Note 5, Adoption of New or Revised Standards and Interpretations).
b) Consolidated financial statements
Subsidiaries are those companies and other entities (including special purpose
entities) in which the Group, directly or indirectly, has an interest of more
than one half of the voting rights or otherwise has power to govern the
financial and operating policies so as to obtain economic benefits. The
existence and effect of potential voting rights that are presently exercisable
or presently convertible are considered when assessing whether the Group
controls another entity. Subsidiaries are consolidated from the date on which
control is transferred to the Group (acquisition date) and are
de-consolidated from the date that control ceases.
The purchase method of accounting is used to account for the acquisition of
subsidiaries. The cost of an acquisition is measured at the fair value of the
assets given up, equity instruments issued and liabilities incurred or assumed
at the date of exchange, plus costs directly attributable to the acquisition.
The date of exchange is the acquisition date where a business combination is
achieved in a single transaction, and is the date of each share purchase where a
business combination is achieved in stages by successive share purchases.
The excess of the cost of acquisition over the fair value of the net assets of
the acquiree at each exchange transaction represents goodwill. The excess of the
acquirer's interest in the net fair value of the identifiable assets,
liabilities and contingent liabilities acquired over cost ("negative goodwill")
is recognised immediately in profit or loss.
Identifiable assets acquired and liabilities and contingent liabilities assumed
in a business combination are measured at their fair values at the acquisition
date, irrespective of the extent of any minority interest.
Intercompany transactions, balances and unrealised gains on transactions between
group companies are eliminated; unrealised losses are also eliminated unless the
cost cannot be recovered. The Company and all of its subsidiaries use uniform
accounting policies consistent with the Group's policies.
Minority interest is that part of the net results and of the net assets of a
subsidiary, including the fair value adjustments, which is attributable to
interests which are not owned, directly or indirectly, by the Company. Minority
interest forms a separate component of the Group's equity.
2. Profit/(loss) per Share
Basic profit/(loss) per share is calculated by dividing the profit/(loss)
attributable to equity holders of the Company by the weighted average number of
ordinary shares in issue during the year, excluding treasury shares.
The Company has no dilutive potential ordinary shares; therefore, the diluted
profit/(loss) per share equals the basic profit/(loss) per share.
Profit/(loss) per share from continuing operations is calculated as follows:
2006 2005
--------------------------------------------------------------------------------------
Profit/(loss) for the year from continuing operations 21 (545)
Weighted average number of shares in issue (thousands) 15,153 13,611
--------------------------------------------------------------------------------------
Basic and diluted profit/(loss) per share from continuing
operations (expressed in USD per share) 0.001 (0.040)
--------------------------------------------------------------------------------------
(Loss) per share from discontinued operations is calculated as follows:
2006 2005
--------------------------------------------------------------------------------------
Loss for the year from discontinued operations (3,056) (3,816)
Weighted average number of shares in issue (thousands) 15,153 13,611
--------------------------------------------------------------------------------------
Basic and diluted loss per share from discontinued operations
(expressed in USD per share) (0.202) (0.280)
--------------------------------------------------------------------------------------
3. Event after the Balance Sheet date
Closing of TV business sale
The sale of Rambler TV business to Osgora Productions Limited was officially
completed and closed on 12 January 2007. The final settlement for Rambler's TV
business in the amount of USD 21 million was received on 10 January 2007.
4. Restatement of results for the year ended 31 December 2005
As a result of the directors' reassessing the tax exposures during the year, the
Group's 2005 financial statements have been restated to include a provision for
potential tax related charges. The effects of the adjustment are summarised
below:
As previously reported Adjustment Restated at
31 December 2005
--------------------------------------------------------------------------------------
Taxation 365 800 1,165
Other tax related (included
in
operating expenses) - 1,200 1,200
--------------------------------------------------------------------------------------
2,000
5. Discontinued operations
The reconciliation between results from discontinued operations and the numbers
reported in the Company's financial statements for the years ended 31 December
2006 and 31 December 2005 is as follows.
2006 2005
-----------------------------------------------------------------------
Revenue 5,435 2,797
Operating expenses 8,395 5,985
Depreciation and amortisation 244 621
-----------------------------------------------------------------------
8,639 6,606
-----------------------------------------------------------------------
EBIT (3,204) (3,809)
-----------------------------------------------------------------------
Interest expense (12) (7)
Taxation 160 -
-----------------------------------------------------------------------
Loss from operations (3,056) (3,816)
-----------------------------------------------------------------------
Net loss (3,056) (3,816)
-----------------------------------------------------------------------
6. Change of majority controlling shareholder
On 31 October 2006, Prof-Media, a Russian media conglomerate, acquired 48.8% of
shares in Rambler Media Limited from funds managed by FM Asset Management
Limited. In December 2006, following anti-monopoly approval, Prof-Media obtained
control and later increased its stake to 54.8%.
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