21st Apr 2009 07:00
RAMBLER MEDIA LIMITED AUDITED FINANCIAL RESULTS FOR THE 12 MONTHS ENDED 31 DECEMBER 2008
Revenue up 59% year-on-year to US$110.0 million (2007, US$69.1 million)
112% year-on-year growth in EBITDA to US$16.1 million (2007, US$7.6 million)
First year of positive net profit from continuing operations
Rambler Media Ltd. ("Rambler" , the "Company" or the "Group"), operating one of Russia's most popular internet brands, today announces its consolidated financial results in accordance with International Financial Reporting Standards (IFRS) for the twelve months ended 31 December 2008. The following information has been audited by PricewaterhouseCoopers CI LLP.
FINANCIAL HIGHLIGHTS
59% year-on-year growth in consolidated revenue to US$110.0 million(2007, US$69.1 million) 89% year-on-year growth in consolidated contextual revenue to US$47.0 million(2007, US$24.9 million) 49% year-on-year growth in display / banner advertising to US$49.5 million(2007, US$33.3 million) despite marked slow down in Q4 2008 112% year-on-year growth in consolidated EBITDA to US$16.1 million(2007, US$7.6 million) with EBITDA margin of 14.7% (2007, 11%). Adverse macroeconomic conditions in Q4 2008, which is usually the strongest quarter in the year, halted the progress that the Company had demonstrated in the previous five quarters Consolidated net profit after interest and tax of US$3.3 million (2007, US$5.7 million profit including net gain of US$7.1 million from disposal of TV operation). First year of positive net profit from continuing operations Significant cost saving measures initiated in Q4 2008, including headcount reduction from 730 employees as at 31 October 2008 down to 660 employees at 31 December 2008 with further cost reductions planned for 2009 US$15.8 million cash generated from operations (2007, US$12.0 million) Strong balance sheet with cash position of US$29.0 million including US$4.1 million in Begun and zero debt at 31 December 2008Chairperson's Statement
"Rambler Media entered 2008 with an ambitious programme to launch new services and partnerships in order to benefit from the growth in online advertising market in Russia. In spite of the difficult economic conditions which have undoubtedly affected ad markets towards the end of the year, 2008 will remain a historic year for Rambler's underlying business, with record revenue and profitability levels and for the first time a positive annual net profit from continuing operations. According to recently published market statistics1, the Russian internet advertising market grew 55% in 2008. Rambler's sales grew almost 60% in the same period, therefore beating the performance of the market and demonstrating that successful change is underway.
"However, the global credit crisis and its effect on the market outlook have continued to worsen in 2009. These factors together with a general lack of liquidity on AIM have contributed to the company's share price falling to an all time low. New market realities require a necessity to implement the Group's strategy for growth with even more determination and focus on effective cost management going forward.
"In March 2009, we announced the appointment of new Board directors. I am honored to have joined Rambler at this challenging time. Important initiatives have already been implemented to aggressively manage the Group's costs and position Rambler stronger as advertisers will allocate more of their spending on the internet in Russia. Our priorities through the year will be to further enhance Rambler's position as one of Russia's favourite internet destinations for media and entertainment and attract the greatest number of visitors to our sites.
"We continue to believe in the long-term opportunities that the internet offers in Russia and we are confident that Rambler is well positioned to weather the downturn and maintain its status as one of the leading internet brands in Russia.
"On behalf of Rambler Media's Board of Directors, I would like to thank all shareholders for their continued support and all employees for their hard work and dedication."
Julia Solovieva, Chairperson
(1) Source: Mindshare Interaction, Feb 2009
Rambler User Statistics
Unique number of visitors to rambler.ru up 28% year-on-year to 38 million per month on average in the year (2007, 29.6 million). Rambler reached a peak of 45 million unique visitors in December Average monthly page views reached 2.7 billion during 2008, up 16% from 2007. Total number of registered email accounts reached 48.6 million, up 60% year-on-year, with over 15 million active accounts.Russian Internet / Advertising Market
(source: MindShare Interaction)
Total Russian online advertising market reached around US$590 million (RUR14.7 billion) in 2008, thus growing 55% from 2007 and accounting for around 5% of the total Russian advertising market. Russian Internet display advertising up 45% year-on-year in 2008 to US$233 million (RUR 5.8 billion) and accounted for 40% of total online ad spending Russian Contextual advertising up 61% year-on-year in 2008 to US$358 million (RUR 8.9 billion) and accounted for 60% of total online ad spendingFinancial Review
"I joined Rambler's management team as CFO in October 2008. I have been a dedicated Rambler user since 1997 and for me, the chance to participate in the sustainable growth of Rambler, one of Russia's leading brands in the internet space, has been extremely gratifying.
In 2008, Rambler reported major improvements in its financial results. Revenue was up nearly 60% year-on-year and the Group generated healthy cash flows. The noticeable slowdown which affected the advertising market in Russia in Q4 2008 had a negative impact on EBITDA and temporarily held back our progress. Nonetheless, the EBITDA margin for the full year 2008 was considerably higher than in 2007.
In 2009, we are facing new global uncertainties and more adverse market conditions. The recent slowdown in the market is likely to continue and has prompted us to implement cost reductions across our operations and expenses with heightened financial discipline. We have introduced a 'Profit and Loss approach' to project management when developing new products, thus ensuring that responsibility is taken across the organisation both for top-line and bottom-line results. These elements have been introduced as part of Rambler's renewed focus on media and entertainment core strategy. A number of projects that do not appear to be effective or consume too much resource are under review and we will reallocate those resources to more promising products. These measures will continue to be implemented as we seek to aggressively control our cost base so as to continue the year-on-year progress in profitability that Rambler has been making.
It is important to note that the continuing weakening of the Ruble/US$ exchange rate will have an impact on the Group's reported US$ results in 2009. However, our activities are conducted primarily in Roubles and we expect our full year Rouble results to remain at similar levels in 2009 compared to 2008. Rambler's websites remain among the most popular in Russia with around 45 million unique monthly visitors in December. We intend to continue to generate free cash flow from operations in 2009 and to use our strong cash position during the economic downturn as an opportunity to participate in market consolidation.
We are confident that, of all media channels, the internet will be best placed to withstand these difficult conditions as it presents advertisers with cost effective and highly targeted ways to reach a premium Russian audience. There is ample room for internet to increase its share of the total advertising market in Russia, which currently stands at only around 5% of 'ad pie' even though Russia constitutes one of the largest internet communities in Europe".
Nikita Serguienko, Chief Financial Officer
FINANCIAL SUMMARY
| (US$ '000s) | Jan - Dec2008 | Jan - Dec 2007 | |||||
| Group Revenue Rambler Media excl. Begun Begun's partner network | 110,033 77,948 32,085 | 69,083 54,162 14,921 | |||||
| Investment income | 106 | 902 | |||||
| Total revenue and investment income | 110,139 | 69,985 | |||||
| EBITDA* | 16,150 | 7,631 | |||||
| EBITDA margin** | 14.7% | 11.0% | |||||
| Operating profit | 3,804 | 940 | |||||
| Net profit attributable to equity holders of the Group | 3,570 | 6,080 | |||||
| Net gain from disposal of subsidiaries (included in net profit above) | 589 | - | |||||
| Net gain from disposal of subsidiaries classified as discontinued operations | - | 7,089 | |||||
| Earnings / (loss) per share from continuing operations - basic (US$ per share) | 0.232 | (0.066) | |||||
| Earnings / (loss) per share from continuing operations - diluted (US$ per share) | 0.232 | (0.066) | |||||
| Earnings per share from discontinued operations - basic (US$ per share) | - | 0.461 | |||||
| Earnings per share from discontinued operations - diluted (US$ per share) | - | 0.460 |
* Earnings before interest, tax, depreciation and amortisation** Total EBITDA divided by total revenue.
The results for the 12 months ended 31 December 2008 are as follows:
| (US$ '000s) | Total | ||
| Total revenue | 110,033 | ||
| Operating expenses and overheads | (101,337) | ||
| 8,696 | |||
| Investment income Share of profit of an associate | 106 663 | ||
| Depreciation and amortisation | 6,685 | ||
| EBITDA | 16,150 |
*EBITDA includes US$2,009,000 provision for potential tax related charges, US$2,671,000 foreign currency translation gain and US$78,000 relating to share options costs, and excludes non-recurring impairment charge of US$5,661,000
The results for the 12 months ended 31 December 2007 are as follows:
| (US$ '000s) | Total | ||
| Total revenue | 69,083 | ||
| Operating expenses and overheads | (67,524) | ||
| 1,559 | |||
| Investment income | 902 | ||
| Depreciation and amortisation | 5,170 | ||
| EBITDA | 7,631 |
*EBITDA includes US$2,826,000 provision for potential tax related charges, US$1,808,000 foreign currency translation loss and US$134,000 relating to share options costs, and excludes non-recurring goodwill impairment charge of US$1,521,000
OTHER INFORMATION
The financial statements should be read in conjunction with the notes in Rambler Media's 2008 annual report, which was published today, 21 April 2008, and is available on www.ramblermedia.com.
The Group will host a conference call to present the results at 1 pm London Time (4 pm Moscow Time) today (21 April 2009). The results statement and the annual report 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/fy2008.
The number for the conference call will be made available upon registration.
***
For further information, please visit www.ramblermedia.com or contact:
| Rambler Media | Shared Value Limited | ||
| Konstantin Vorontsov | Nicolas Duperrier | ||
| Marina Anisimova | Tel. +44 (0) 20 7321 5010 | ||
| Tel. +7 495 745 3619 | |||
| ING Wholesale Banking | |||
| Daniel Friedman | |||
| Tel. +44 (0) 20 7767 1000 | |||
ABOUT RAMBLER MEDIA
Rambler Media is an internet media and services group which operates or has interests in leading Russian language internet brands including the Russian open portal 'Rambler.ru', on-line newspaper 'Lenta.ru', product comparison website 'Price.ru', internet catalogue and navigation system 'Top 100' and contextual advertising company 'Begun'. 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 Group 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 Group 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.
Rambler Media Limited, Condensed consolidated full-yearly financial information, 31 December 2008
| Contents |
| ||||||
| Page | |||||||
| Annual management report | 7 | ||||||
| Balance sheet | 14 | ||||||
| Income statement | 15 | ||||||
| Cash flow statement | 16 | ||||||
| Statement of changes in equity | 17 | ||||||
| Statement of directors' responsibilities | 18 | ||||||
| Auditors' report | 19 |
Annual management report
Rambler Media is an internet media and services group which operates or has interests in leading Russian language internet brands including the Russian open portal 'Rambler.ru', on-line newspaper 'Lenta.ru', product comparison website 'Price.ru', internet catalogue and navigation system 'Top 100' and contextual advertising company 'Begun'. Rambler Media's shares are traded on AIM, the junior market of the London Stock Exchange under the symbol 'RMG'.
1. Highlights
59% year-on-year growth in consolidated revenue to US$110.0 million (2007, US$69.1 million) 89% year-on-year growth in consolidated contextual revenue to US$47.0 million (2007, US$24.9 million) 49% year-on-year growth in display / banner advertising to US$49.5 million (2007, US$33.3 million) despite marked slow down in Q4 2008 112% year-on-year growth in consolidated EBITDA to US$16.1 million (2007, US$7.6 million) with EBITDA margin of 14.7% (2007, 11%). Adverse macroeconomic conditions in Q4 2008, which is usually the strongest quarter in the year, halted the progress that the Company had demonstrated in the previous five quarters Consolidated net profit after interest and tax of US$3.3 million (2007, US$5.7 million profit including net gain of US$7.1 million from disposal of TV operation). First year of positive net profit from continuing operations Significant cost saving measures initiated in Q4 2008, including headcount reduction from 730 employees as at 31 October 2008 down to 660 employees at 31 December 2008 with further cost reductions planned for 2009 US$15.8 million cash generated from operations (2007, US$12.0 million) Strong balance sheet with cash position of US$29.0 million including US$4.1 million in Begun and zero debt at 31 December 20082. Key Statistics
Rambler User Statistics
Unique number of visitors to rambler.ru up 28% year-on-year to 38 million per month on average in the year (2007, 29.6 million). Rambler reached a peak of 45 million unique visitors in December Average monthly page views reached 2.7 billion during 2008, up 16% from 2007. Total number of registered email accounts reached 48.6 million, up 60% year-on-year, with over 15 million active accounts.Russian Internet / Advertising Market (source: MindShare Interaction)
Total Russian online advertising market reached around US$590 million (RUR14.7 billion) in 2008, thus growing 55% from 2007 and accounting for around 5% of the total Russian advertising market. Russian Internet display advertising up 45% year-on-year in 2008 to US$233 million (RUR 5.8 billion) and accounted for 40% of total online ad spending Russian Contextual advertising up 61% year-on-year in 2008 to US$358 million (RUR 8.9 billion) and accounted for 60% of total online ad spending3. Performance
3.1. Financial Summary
| (US$ '000s) | Jan - Dec2008 | Jan - Dec 2007 | ||||
| Group Revenue Rambler Media excl. Begun Begun's partner network | 110,033 77,948 32,085 | 69,083 54,162 14,921 | ||||
| Investment income | 106 | 902 | ||||
| Total revenue and investment income | 110,139 | 69,985 | ||||
| EBITDA* | 16,150 | 7,631 | ||||
| EBITDA margin** | 14.7% | 11.0% | ||||
| Operating profit | 3,804 | 940 | ||||
| Net profit attributable to equity holders of the Group | 3,570 | 6,080 | ||||
| Net gain from disposal of subsidiaries (included in net profit above) | 589 | - | ||||
| Net gain from disposal of subsidiaries classified as discontinued operations | - | 7,089 | ||||
| Earnings / (loss) per share from continuing operations - basic (US$ per share) | 0.232 | (0.066) | ||||
| Earnings / (loss) per share from continuing operations - diluted (US$ per share) | 0.232 | (0.066) | ||||
| Earnings per share from discontinued operations - basic (US$ per share) | - | 0.461 | ||||
| Earnings per share from discontinued operations - diluted (US$ per share) | - | 0.460 |
* Earnings before interest, tax, depreciation and amortisation** Total EBITDA divided by total revenue.
The results for the 12 months ended 31 December 2008 are as follows:
| (US$ '000s) | Total | ||
| Total revenue | 110,033 | ||
| Operating expenses and overheads | (101,337) | ||
| 8,696 | |||
| Investment incomeShare of profit of an associate
| 106 663 | ||
| Depreciation and amortisation | 6,685 | ||
| EBITDA | 16,150 |
*EBITDA includes US$2,009,000 provision for potential tax related charges, US$2,671,000 foreign currency translation gain and US$78,000 relating to share options costs, and excludes non-recurring impairment charge of US$5,661,000
The results for the 12 months ended 31 December 2007 are as follows:
| (US$ '000s) | Total | ||
| Total revenue | 69,083 | ||
| Operating expenses and overheads | (67,524) | ||
| 1,559 | |||
| Investment income | 902 | ||
| Depreciation and amortisation | 5,170 | ||
| EBITDA | 7,631 |
*EBITDA includes US$2,826,000 provision for potential tax related charges, US$1,808,000 foreign currency translation loss and US$134,000 relating to share options costs, and excludes non-recurring goodwill impairment charge of US$1,521,000
3.2. The Group's financial review
3.2.1 Revenue
Group revenue for the twelve months to 31 December 2008 increased by 59% year-on-year to reach US$110.0 million (2007, US$69.1 million), including US$32.1 million (2007, US$14.9 million) from Begun's partner network. Begun partner network revenue is part of consolidated contextual revenue.
Display / banner advertising revenue grew by 49% to US$49.5 million (2007, US$33.3 million), representing 45% of the Group's total revenue. Most of display advertising on Rambler's pages is sold through Video International Group's IMHO VI.
Contextual revenue, generated through the sale of search-related or text-based advertising on Rambler's and Begun's partner sites, was up 89% to US$47.0 million in 2008 (2007, US$24.9 million), representing 43% of the Group's total revenue.
Other revenues attributable mainly to listing fees (Price comparison) and mobile revenues (SMS) amounted to US$13.6 million (2007, US$10.9 million), representing 12% of the Group's total revenue.
3.2.2. EBITDA
During 2008, the Group's consolidated EBITDA increased by 112% to US$16.1 million (2007, US$7.6 million). New initiatives were implemented by Rambler to accelerate top-line revenue growth, including the reinforcement of Rambler's strategic partnership with IMHO VI which resulted in successful increases in display advertising sales on Rambler's web properties.
During the fourth quarter of the year, which is usually the strongest, Rambler experienced a 5% year-on-year decline in sales due to a sharp decline in market activity. The slowdown had a negative impact on EBITDA and halted the progress that the company had made in the previous five quarters. Rambler introduced a cost reduction programme which translated into higher restructuring costs but intended to deliver benefits in 2009.
3.2.3. Operating Expenses
The Group's operating expenses (including depreciation, amortisation and tax related provisions) reached US$101.3 million in 2008, up 50% from US$67.5 million in 2007 (including Begun's operating expenses from August 2007).
Direct costs, including commissions, content, traffic acquisition costs, data centre costs and mobile costs rose by 81% from US$22.4 million in 2007 to US$40.6 million in 2008, mainly as a result of increased revenues and commissions paid to partners of Begun's advertising network. Without the impact of Begun's commissions to its advertising network, the growth in direct costs would have been limited to 59% year-on-year. Commissions on banner sales rose by 172% from US$3.6 million in 2007 to US$9.8 million in 2008 as a result of increased revenues and the establishment of a progressive commission-based sales agreement in 2008 through the sale of Index20 to IMHO VI.
In 2008, the Group's labour costs continued to stabilise and accounted for 30% of total operating expenses and less than 28% of total revenues, compared to 32% in 2007. Labour costs rose by 38% to US$30.3 million (2007, US$22.0 million).
The Group's results include provisions for potential tax related charges. These 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. In 2008, the provision for potential tax-related charges amounted to approximately US$2.0 million (2007, US$2.8 million), net of relative tax release of US$1.6 million (2007, US$0.1 million) upon expiry of the review period by the tax authorities.
Legal and professional fees went up from US$3.0 million in 2007 to US$4.8 million in 2008 primarily in connection with advice on transactions and Rambler's intention to sell a stake in Begun to Google. In October 2008, the Russian Federal Anti-Monopoly Service (FAS) issued a statement in which it refused to approve Google's acquisition of 100% of Begun. The agreement with Google was therefore cancelled. Rambler continues to own a 50.1% stake in Begun until further notice.
The Group's amortisation expense went down by 5% from US$3.7 million in 2007 to US$3.5 million. The Group's depreciation expense went up by 124% from US$1.4 million to US$3.2 million in line with the increase in the underlying depreciable fixed assets.
The Group's consolidated net profit from continuing operations after interest and tax was US$3.3 million in 2008 (2007, US$1.4 million loss). In addition to the net loss in 2007, the disposal of the TV operation (classified as discontinued operations in 2007) generated a net gain on disposal of US$7.1 million in 2007.
The Group's basic earnings per share from continuing operations in 2008 were US$0.232 (2007, loss of US$0.066).
3.2.4. Operating profit
The Group reported an operating profit of US$3.8 million after US$5.7 million impairment charge in 2008 related principally to Damochka.ru (2007, US$0.9 million after US$1.5 million impairment charge).
4. Position
The Group ended the period with cash balances of US$29.0 million including US$4.1 million in Begun (31 December 2007, US$31.5 million). The Group has no debt obligations.
Rambler generated US$15.8 million cash from operations in 2008 (2007, US$12.0 million).
5. Principal risks
Russian taxation and currency control regulations
A substantial part of the operations of the Group is conducted in Russia or involves transactions with Russian entities. As a result the Group has significant exposure to the Russian taxation and currency control regimes.
Russian tax and customs legislation is subject to varying interpretations, and changes, which can occur frequently. Management's interpretation of such legislation as applied to the transactions and activity of the Group may be challenged by the relevant authorities.
The Russian tax authorities may be taking a more assertive position in their interpretation of the legislation and assessments, and it is possible that transactions and activities that have not been challenged in the past may be challenged. The Supreme Arbitration Court issued guidance to lower courts on reviewing tax cases providing a systemic roadmap for anti-avoidance claims, and it is possible that this will significantly increase the level and frequency of tax authorities scrutiny.
As a result, significant additional taxes, penalties and interest may be assessed. Fiscal periods remain open to review by the authorities in respect of taxes for three calendar years preceding the year of review. Under certain circumstances reviews may cover longer periods.
Russian transfer pricing legislation introduced on 1 January 1999 provides the possibility for tax authorities to make transfer pricing adjustments and impose additional tax liabilities in respect of all controllable transactions, provided that the transaction price differs from the market price by more than 20%.
Controllable transactions include transactions with interdependent parties, as determined under the Russian Tax Code, all cross-border transactions (irrespective whether performed between related or unrelated parties), transactions where the price applied by a taxpayer differs by more than 20% from the price applied in similar transactions by the same taxpayer within a short period of time, and barter transactions. There is no formal guidance as to how these rules should be applied in practice. In the past, the arbitration court practice with this respect has been contradictory.
Tax liabilities arising from intercompany transactions are determined using actual transaction prices. It is possible with the evolution of the interpretation of the transfer pricing rules in the Russian Federation and the changes in the approach of the Russian tax authorities, that such transfer prices could potentially be challenged in the future. Given the brief nature of the current Russian transfer pricing rules, the impact of any such challenge cannot be reliably estimated; however, it may be significant to the financial condition and/or the overall operations of the entity.
The Group includes companies incorporated outside of Russia. Russian tax laws do not provide detailed rules on taxation of foreign companies. It is possible that with the evolution of the interpretation of these rules and the changes in the approach of the Russian tax authorities, the non-taxable status of some or all of the foreign companies of the Group in Russia may be challenged. Where the Group believes that it is probable that its position could not be sustained, the related tax and associated balances have been accrued. However, it is possible that additional challenges may occur and the impact of such challenges, if any, cannot be reliably estimated; however, it may be significant to the financial condition and/or the overall operations of the entity.
Russian tax legislation does not provide definitive guidance in certain areas. From time to time, the Group adopts interpretations of such uncertain areas that reduce the overall tax rate of the Group. As noted above, such tax positions may come under heightened scrutiny as a result of recent developments in administrative and court practices; the impact of any challenge by the tax authorities cannot be reliably estimated; however, it may be significant to the financial condition and/or the overall operations of the entity.
Business risks
The Group's business risk is difficult to evaluate because the Group has a limited operating history in an emerging and rapidly evolving market. The Group derives nearly all of its net revenue from online advertising, which is a relatively new advertising medium. The Group's ability to succeed in this market may be restrained by limited resources, expenses, risks, and complications frequently encountered by similar companies in emerging and changing markets. To address these risks, the Group must, amongst other things:
maintain and increase the size of its audience; maintain and increase its advertisers' base; implement and successfully execute its business and marketing strategy; continue to develop and upgrade its technology; continually update and improve its service offerings and features; find and integrate strategic transactions; respond to industry and competitive developments; and attract, retain, and motivate qualified personnel.The Group may not be successful in addressing these risks, particularly as some of them are largely beyond its control. If the Group is unable to do so, its business, financial condition, and results of operations would be materially and adversely affected.
Directors believe in the long-term prospects of the internet and the advertising market in Russia. The underlying dynamics of more Russian consumers coming online and online users continuing to increase their media consumption via the internet, is set to continue. However, faced with deteriorating macroeconomic and financial markets, Directors consider that the current crisis and its effects on market conditions in Russia will continue to be the major risk for the Company in 2009. The weakening of the Rouble/US$ exchange rate, in particular, is anticipated to have an impact on the Company's reported US$ results.
6. Forward-Looking Statements
Certain statements in this annual report are forward-looking. Although the Group believes that the expectations reflected in these forward-looking statements are reasonable, we can give no assurance that these expectations will prove to be correct. Because these statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements.
7. Other Information
The financial statements should be read in conjunction with the notes in Rambler Media's 2008 annual report, which was published today, 21 April 2008, and is available on www.ramblermedia.com.
| Rambler Media Limited | ||||||||||||||||||||||
| Company and Consolidated Balance Sheets as at 31 December 2008 (in thousands US dollars, unless otherwise stated) | ||||||||||||||||||||||
| Company | Consolidated | |||||||||||||||||||||
| Notes | 2008 | 2007 | 2008 | 2007 | ||||||||||||||||||
| Assets | ||||||||||||||||||||||
| Non Current Assets | ||||||||||||||||||||||
| Property, plant and equipment | 8 | - | - | 5,311 | 7,865 | |||||||||||||||||
| Goodwill | 9 | - | - | 2,974 | 18,416 | |||||||||||||||||
| Intangible assets | 9 | 658 | - | 4,805 | 23,773 | |||||||||||||||||
| Investments in subsidiaries | 30 | 46,774 | 51,756 | - | - | |||||||||||||||||
| Investments in associates | 10 | - | - | 504 | - | |||||||||||||||||
| Financial assets | 11 | - | - | 29 | - | |||||||||||||||||
| Deferred income tax asset | 15 | - | - | 673 | 1,503 | |||||||||||||||||
| 47,432 | 51,756 | 14,296 | 51,557 | |||||||||||||||||||
| Current Assets | ||||||||||||||||||||||
| Trade receivables | 12 | - | - | 7,057 | 11,628 | |||||||||||||||||
| Prepayments | 43 | 2 | 1,880 | 2,143 | ||||||||||||||||||
| VAT receivable | - | - | 335 | 559 | ||||||||||||||||||
| Other receivables | - | - | 589 | 842 | ||||||||||||||||||
| Bank and cash balances | 13 | 10,625 | 15,784 | 25,018 | 31,462 | |||||||||||||||||
| 10,668 | 15,786 | 34,879 | 46,634 | |||||||||||||||||||
| Non-current assets held for sale | 23 | - | - | 34,658 | 5,231 | |||||||||||||||||
| Total Assets | 58,100 | 67,542 | 83,833 | 103,422 | ||||||||||||||||||
| Liabilities | ||||||||||||||||||||||
| Current Liabilities | ||||||||||||||||||||||
| Trade and other payables | 14 | 835 | 1,235 | 11,872 | 11,613 | |||||||||||||||||
| Current income tax payable | - | - | 1,894 | 8,193 | ||||||||||||||||||
| VAT payable | - | - | 1,117 | 1,813 | ||||||||||||||||||
| Other provisions for liabilities and charges | 24 | - | - | 4,208 | 10,887 | |||||||||||||||||
| Deferred income | - | - | 945 | 5,242 | ||||||||||||||||||
| 835 | 1,235 | 20,036 | 37,748 | |||||||||||||||||||
| Liabilities directly associated with assets held for sale | 23 | - | - | 18,530 | 1,331 | |||||||||||||||||
| Non Current Liabilities | ||||||||||||||||||||||
| Deferred income tax liability | 15 | - | - | 762 | 6,149 | |||||||||||||||||
| - | - | 762 | 6,149 | |||||||||||||||||||
| Total liabilities | 835 | 1,235 | 39,328 | 45,228 | ||||||||||||||||||
| Shareholders' equity | ||||||||||||||||||||||
| Issued capital | 16 | 138 | 165 | 138 | 165 | |||||||||||||||||
| Share premium | 53,514 | 64,053 | 53,514 | 64,053 | ||||||||||||||||||
| Options reserve | 189 | 148 | 189 | 148 | ||||||||||||||||||
| Assets valuation reserve | - | - | 807 | 966 | ||||||||||||||||||
| Retained earnings/(accumulated losses) | 1,540 | 2,991 | (7,548) | (13,315) | ||||||||||||||||||
| Currency translation reserve | 1,884 | (1,050) | (2,315) | (446) | ||||||||||||||||||
| Total shareholders' equity | 57,265 | 66,307 | 44,785 | 51,571 | ||||||||||||||||||
| Minority interests directly associated with assets held for sale
| - | - | (308) | 1,876 | ||||||||||||||||||
| Minority interests | 17 | - | - | 28 | 4,747 | |||||||||||||||||
| Liabilities and Shareholders' Equity | 58,100 | 67,542 | 83,833 | 103,422 | ||||||||||||||||||
Approved on 17 April 2009
Julia Solovieva , Chairperson of the Board Nikita Serguienko, CFO
| Rambler Media Limited |
| Consolidated Income Statement for the Year Ended 31 December 2008 (in thousands US dollars, unless otherwise stated) |
| Notes | 2008 | 2007 | ||||||||||
| Continuing operations: | ||||||||||||
| Revenue | 18 | 110,033 | 69,083 | |||||||||
| Investment income | 18 | 106 | 902 | |||||||||
| Operating expenses | 19 | (101,337) | (67,524) | |||||||||
| Impairment expense | 9 | (5,661) | (1,521) | |||||||||
| Share of profit of an associate | 10 | 663 | - | |||||||||
| Operating profit | 3,804 | 940 | ||||||||||
| Gain on disposal of a subsidiary | 28 | 589 | - | |||||||||
| Profit before interest and taxation | 4,393 | 940 | ||||||||||
| Finance income | 18 | 832 | 1,449 | |||||||||
| Profit before taxation | 5,225 | 2,389 | ||||||||||
| Taxation | 20 | (1,943) | (3,814) | |||||||||
| Profit / (loss) from continuing operations | 3,282 | (1,425) | ||||||||||
| Discontinued operations: | ||||||||||||
| Profit from discontinued operations | 23 | - | 7,089 | |||||||||
| Profit for the year | 3,282 | 5,664 | ||||||||||
| Profit attributable to: | ||||||||||||
| Profit attributable to equity holders of parent | 3,570 | 6,080 | ||||||||||
| Minority interest | 17 | (288) | (416) | |||||||||
| Profit / (loss) for the year | 3,282 | 5,664 | ||||||||||
| Earnings / (loss) per share from continuing operations attributable to equity holders of the parent - basic and diluted (expressed in US$ per share) | 21 | 0.232 | (0.066) | |||||||||
| Earnings / (loss) per share from discontinued operations attributable to equity holders of the parent - basic (expressed in US$ per share) | 21 | - | 0.461 | |||||||||
| Earnings / (loss) per share from discontinued operations attributable to equity holders of the parent - diluted (expressed in US$ per share) | 21 | - | 0.460 |
The notes available in the annual report are an integral part of these financial statements.
| Rambler Media Limited |
| Consolidated Statement of Cash Flows for the Year Ended 31 December 2008 (in thousands US dollars, unless otherwise stated) |
| Notes | 2008 | 2007 | ||||||||||||
| Cash flows from operating activities | ||||||||||||||
| Profit for the year | 3,570 | 6,080 | ||||||||||||
| Adjusted for: | ||||||||||||||
| Profit attributable to discontinued operations | - | (7,089) | ||||||||||||
| Minority interest | (288) | (416) | ||||||||||||
| Interest received | (832) | (1,449) | ||||||||||||
| Share of profit of associates | (663) | - | ||||||||||||
| Investment income | (106) | (902) | ||||||||||||
| Taxation charge | 1,943 | 3,814 | ||||||||||||
| Share based payment charge | 78 | 134 | ||||||||||||
| FX translation (gain) / loss | (2,671) | 1,809 | ||||||||||||
| Impairment | 5,661 | 1,521 | ||||||||||||
| Depreciation and amortisation | 6,685 | 5,170 | ||||||||||||
| Increase in other provisions for liabilities and charges | 2,009 | 2,826 | ||||||||||||
| Overhead costs attributable to discontinued operationspaid by continuing operations | - | 57 | ||||||||||||
| Loss on disposal of fixed assets and intangible assets | (370) | - | ||||||||||||
| Operating cash flows before working capital changes | 15,016 | 11,555 | ||||||||||||
| Decrease/ (increase) in trade and other receivables | 3,583 | (4,776) | ||||||||||||
| Decrease/ (increase) in prepayments | 94 | (48) | ||||||||||||
| (Decrease)/ increase in trade and other payables | (396) | 2,991 | ||||||||||||
| (Decrease)/ increase in deferred income | (2,497) | 2,290 | ||||||||||||
| Cash from operations | 15,800 | 12,012 | ||||||||||||
| Income taxes paid | (6,944) | (1,598) | ||||||||||||
| Net cash from operating activities | 8,856 | 10,414 | ||||||||||||
| Cash flows from investing activities | ||||||||||||||
| Acquisition of subsidiary undertakings, net of cashacquired | (4,063) | (18,131) | ||||||||||||
| Dividend income | 566 | 1,345 | ||||||||||||
| Purchase of property, plant and equipment | (3,036) | (4,583) | ||||||||||||
| Purchase of intangible assets | (1,484) | (396) | ||||||||||||
| Net cash used in investing activities - continuing operations | (8,017) | (21,765) | ||||||||||||
| Net cash from investing activities - discontinued operations | - | 20,523 | ||||||||||||
| Net cash used in investing activities | (8,017) | (1,242) | ||||||||||||
| Cash flows from financing activities | ||||||||||||||
| Proceeds from equity financing | - | 1,904 | ||||||||||||
| Dividends paid | (4,010) | - | ||||||||||||
| Finance income | 802 | 1,449 | ||||||||||||
| Net cash from financing activities | (3,208) | 3,353 | ||||||||||||
| Net (decrease) / increase in cash | (2,369) | 12,525 | ||||||||||||
| Cash at the beginning of the year - continuing operations | 13 | 31,462 | 18,461 | |||||||||||
| Cash at the beginning of the year classified as asset held for sale | 13 | 1 | 476 | |||||||||||
| Cash at the end of the year - continuing operations | 13 | 25,018 | 31,462 | |||||||||||
| Cash at the end of the year classified as asset held for sale | 13 | 4,075 | 1 | |||||||||||
| Material non-cash transactions: | ||||||||||||||
| Purchases on barter terms | (320) | (917) | ||||||||||||
| Sales on barter terms | 320 | 917 |
The notes available in the annual report are an integral part of these financial statements.
| Rambler Media Limited | |||||||||||||||||||||||||
| Consolidated Statement of Changes in Shareholders' Equity for the Year Ended 31 December 2008 (in thousands of US dollars, unless otherwise stated) | |||||||||||||||||||||||||
| Issued capital (Note16)
| Share Premium
| Options reserve (Note 26) | Assets Valuation Reserve | Accumulated losses
| TranslationReserve | Total | Minority interests directly associated with AHS | Minority interests | Total equity | ||||||||||||||||
| 31 December 2006 | 153 | 57,208 | 601 | - | (17,846) | - | 40,116 | - | 3,613 | 43,729 | |||||||||||||||
| Share capital issued | 1 | 2,503 | - | - | - | - | 2,504 | - | - | 2,504 | |||||||||||||||
| Exercise of share options | - | - | (601) | - | - | - | (601) | - | - | (601) | |||||||||||||||
| Share based payment charge | - | - | 134 | - | - | - | 134 | - | - | 134 | |||||||||||||||
| Valuation of acquiredinterest insubsidiary,net of tax | - | - | - | 936 | - | - | 936 | - | - | 936 | |||||||||||||||
| Classified asdirectlyassociatedwith assetsheld for sale | - | - | - | - | - |
- | - | 1,876 | (1,876) | - | |||||||||||||||
| Profit for theyear | - | - | - | - | 6,080 | - | 6,080 | - | (416) | 5,664 | |||||||||||||||
| Minorityinterestarising onacquisitions | - | - | - | - | - | - | - | - | 3,395 | 3,395 | |||||||||||||||
| Dividends paid | - | - | - | - | - | - | - | - | (334) | (334) | |||||||||||||||
| CurrencyTranslation | 11 | 4,342 | 14 | 30 | (1,549) | (446) | 2,402 | - | 365 | 2,767 | |||||||||||||||
| 31 December 2007 | 165 | 64,053 | 148 | 966 | (13,315) | (446) | 51,571 | 1,876 | 4,747 | 58,194 | |||||||||||||||
| Share basedpayment charge | - | - | 78 | - | - | - | 78 | - | - | 78 | |||||||||||||||
| Classified asdirectlyassociatedwith assetsheld for sale | - | - | - | - | - | - | - | (1,876) | 1,876 | - | |||||||||||||||
| Profit for theyear | - | - | - | - | 3,570 | - | 3,570 | - | (288) | 3,282 | |||||||||||||||
| Acquisition ofminorityinterest | - | - | - | - | - | - | - | - | (1,245) | (1,245) | |||||||||||||||
| Disposal ofsubsidiary | - | - | - | - | - | - | - | - | (64) | (64) | |||||||||||||||
| Dividends paid | - | - | - | - | - | - | - | - | (5,323) | (5,323) | |||||||||||||||
| Currency Translation | (27) | (10,539) | (37) | (159) | 2,197 | (1,869) | (10,434) | (308) | 325 | (10,417) | |||||||||||||||
| 31 December 2008 | 138 | 53,514 | 189 | 807 | (7,548) | (2,315) | 44,785 | (308) | 28 | 44,505 | |||||||||||||||
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.
The notes available in the annual report are an integral part of these financial statements.
Statements of directors' responsibility
The directors are required by the Companies (Jersey) Law 1991 to prepare the consolidated financial statements for each financial year that give a true and fair view of the state of affairs of the Company and the Group as at the end of the financial year and of the profit or loss for that period. In preparing these company and consolidated financial statements, the directors are required to:
Select suitable accounting principles and applying them consistently; Make judgments and estimates that are reasonable and prudent; State whether International Financial Reporting Standards (IFRS) have been followed, subject to any material departures disclosed and explained in the consolidated financial statements; and Prepare the consolidated financial statements on a going concern basis, unless it is inappropriate to presume that the Company and the Group will continue in business for the foreseeable future.The directors confirm that they have complied with the above requirements in preparing these company and consolidated financial statements.
The directors are also responsible for:
Designing, implementing and maintaining an effective and sound system of internal controls throughout the Company and the Group; Maintaining proper accounting records that disclose, with reasonable accuracy at any time, the financial position of the Company and the Group, and which enable them to ensure that the company and consolidated financial statements of the Group comply with the Company (Jersey) Law 1991 and IFRS; Maintaining statutory accounting records in compliance with local legislation and accounting standards in the respective jurisdictions in which the Company and the Group operates; Taking such steps as are reasonably available to them to safeguard the assets of the Company and the Group; and Preventing and detecting fraud and other irregularities.In the event of the Annual report and consolidated financial statements being published on the Company's website the directors advise that:
The maintenance and integrity of the Company's website is the responsibility of Rambler Media Limited; The work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the company and consolidated financial statements since they were initially presented on the website; Legislation in Jersey governing preparation and dissemination of consolidated financial statements may differ from legislation in other jurisdictions.PricewaterhouseCoopers CI LLP has expressed its willingness to continue in the office of Auditor and a resolution will be proposed at the annual general meeting that it will be reappointed.
| Julia Solovieva, Chairperson of the Board | Nikita Serguienko, CFO | |||
| 17 April 2009 | ||||
PricewaterhouseCoopers
Independent auditors' report to the members of Rambler Media Limited
| Report on the financial statements We have audited the accompanying consolidated financial statements of Rambler Media Limited which comprise the company and consolidated balance sheets as of 31 December 2008 and the consolidated income statement, the consolidated statement of changes in shareholders' equity, the consolidated statement of cash flows for the year then ended and a summary of significant accounting policies and other explanatory notes.
Directors' responsibility for the financial statements The directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and with the requirements of Jersey law. This responsibility includes: designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
Auditors' responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion In our opinion, the consolidated financial statements give a true and fair view of the financial position of the Company and the Group as of 31 December 2008 and of the financial performance and cash flows of the Group for the year then ended in accordance with International Financial Reporting Standards and have been properly prepared in accordance with the requirements of the Companies (Jersey) Law 1991.
We read the other information contained in the Annual Report and consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. The other information comprises the chairperson's statement, the operating and financial reviews, shareholder information & advisers, corporate governance, board of directors, executive management and the statement of directors' responsibilities.
In our opinion the information given in the statement of directors' responsibilities is consistent with the financial statements.
This report, including the opinion, has been prepared for and only for the Company's members as a body in accordance with Article 110 of the Companies (Jersey) Law, 1991 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
PricewaterhouseCoopers CI LLP Chartered Accountants Jersey, Channel Islands 17 April 2009
|
Copyright Business Wire 2009
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