26th Aug 2009 07:00
RAMBLER MEDIA LIMITED
CONDENSED CONSOLIDATED UNAUDITED INTERIM RESULTS
FOR THE 6 MONTHS ENDED 30 JUNE 2009
Rambler Media Limited (RMG.LN), ("Rambler" or the "Group"), operating one of Russia's most popular internet brands, today announces its condensed consolidated unaudited financial results in accordance with International Financial Reporting Standards (IFRS) for the six months ended 30 June 2009.
FINANCIAL HIGHLIGHTS*
Consolidated total revenue down 18% year-on-year to RUR* 1,019 million (US$ 30.8 million) (H1 2008, RUR 1,236 million / US$ 51.7 million) due to macroeconomic turmoil and weak advertising demand in the period Full year revenue projections down around 15% from 2008 revenue in Roubles Consolidated display / banner advertising revenue down 12% to RUR 432 million (US$ 13.1 million) (H1 2008, RUR 490 million / US$ 20.5 million) Consolidated contextual revenue down 24% to RUR 419 million (US$12.7 million) (H1 2008, RUR 554 million / US$ 23.2 million) Consolidated listings revenue down 15% to RUR 60 million (US$1.8 million) (H1 2008, RUR 71 million / US$ 2.9 million) Consolidated EBITDA down 60% to RUR 85 million (US$ 2.6 million) (H1 2008, RUR 214 million / US$ 8.9 million) with an EBITDA margin of 8.4% (H1 2008, 17.3%) due to adverse macroeconomic conditions since Q4 2008 and including one-off provisions for legal claims for RUR 19 million Consolidated net loss after interest and tax of RUR 68 million (US$ 2.1 million) (H1 2008, RUR 11 million loss / US$ 0.5 million loss) including a RUR 70 mln amortization charge due the reclassification of Begun (no longer classified as an asset held for sale) CAPEX was RUR 19 million (US$ 0.6 million) (H1 2008, RUR 65 million / US$ 2.7 million) Strong balance sheet with cash position of RUR 772 million (US$ 24.7 million) and zero debt as at 30 June 2009. RUR 160 mln cash out in H1 due to payments for 2007-2008 expenses (sales and marketing and legal costs associated with Google deal)* To align the reporting currency with the predominant functional currency of the Group and simplify comparative performance analysis, the Group has decided to report both in Russian rouble and in US dollar. The USD/RUR exchange rate at the end of June 2009 was 31.29 and the average rate for the first half of 2009 was 33.07, the USD/RUR exchange rate at the end of June 2008 was 23.46 and the average rate for the first half of 2008 was 23.94.
Olga Turischeva, Chief Executive Officer of Rambler Media, commented:
"During the first half of 2009, the operating environment was particularly challenging for Rambler due to low business confidence, decreasing GDP and production in Russia and a prevailing lack of visibility which limited advertising spend across all sectors, as was the case in the last recession of 1998. While we are seeing early signs of stabilisation in the economy, including the stabilisation of the USD/RUR exchange rate, a recovery in the oil price and a rebound in the stock markets, we remain cautious on the outlook for the rest of the year and we now expect our full year revenue to be down around 15% year-on-year in 2009 in Rouble terms.
"Despite unfavourable market conditions, the internet continues to offer the strongest growth opportunities in the media sector. Online advertising has proven to be an extremely efficient way to reach Russian consumers offering a targeted and interactive approach. As a top internet brand in Russia, Rambler will continue to benefit from the growing internet penetration among Russian consumers, prolonged time spent online and greater overall involvement in internet activities. The traditional mix of media consumption is tangibly shifting towards the internet and thus the media mix in advertising campaigns is changing in favour of online advertising.
"Since joining Rambler in April, my objective has been to secure profitable growth for the group by revising our offering in the Russian internet landscape in order to increase our share of user reach and capture more advertising revenue. Our focus is to reverse the recent negative trends that have affected Rambler. What is obvious is that we need to reconsider the balance of our product portfolio, bearing in mind the needs of more active users spending increasingly more time online. Reallocating more effort to such services as communications and navigation is crucial. It is the key need of every online user and forms the core of our strategy to create an active and loyal audience. Although we remain committed to containing costs during this tough environment, I believe that we also need to continue to invest in innovation and to encourage new ideas and new projects that will attract new users to Rambler. My long term vision is to transform Rambler into an incubator of ideas and start ups - and our strong financial position means that we are well prepared to implement this strategy even in tough macroeconomic conditions. We intend to attract more talented young people to Rambler, and a new team is being formed now through which we plan to reinvigorate our corporate culture and revive our market leadership."
Rambler User Statistics
16.2 millon new monthly unique users at Rambler (June '09 vs. '08, Rambler statistics). Rambler reaching 51% monthly Runet users accordning to TNS 3.1 billion monthly page views on average in H1 2009, up 17% year-on-year (2.96 billion in June 2009 vs. 2.45 billion in June 2008 representing a 10% increase). Total search queries amounted to 1.15 billion in H1 2009 60.8 million registered email accountsRussian Internet / Advertising Market
Russian internet penetration up 15% year-on-year in H1 2009 to 37.5 million users. Internet penetration of 33%, still far behind mature markets (source: Public Opinion Foundation). Russian advertising forecast to be down as much as 24% year-on-year in 2009 to RUR 202 million (2008, RUB 267 million) (source: ZenithOptimedia). Demand in internet advertising forecast to be the most resilient of all media segments (growth of 0 to 12% in 2009 according to Zenith Optimedia) demonstrating that internet offers the strongest opportunities for growth in the media sector. Media mix changing in favor of online: 5.8% of ad market in '08 vs 7.5% expected in '09FINANCIAL SUMMARY
| RUR million | USD '000s | RUR million | USD '000s | ||||||||||
| Jan - Jun2009 | Jan - Jun2008 | Jan - Jun2009 | Jan - Jun2008 | Jan - Dec 2008 | Jan - Dec 2008 | ||||||||
| Group Revenue | 1,019 | 1,236 | 30,812 | 51,704 | 2,737 | 110,033 | |||||||
| Rambler Media excl. Begun | 723 | 846 | 21,870 | 35,409 | 1,939 | 77,948 | |||||||
| Begun's partner network | 296 | 390 | 8,942 | 16,295 | 798 | 32,085 | |||||||
| Investment income | - | - | - | - | 3 | 106 | |||||||
| Total revenue and investment income | 1,019 | 1,236 | 30,812 | 51,704 | 2,740 | 110,139 | |||||||
| EBITDA* | 85 | 214 | 2,574 | 8,931 | 402 | 16,150 | |||||||
| EBITDA margin** | 8.4 % | 17.3% | 8.4% | 17.3% | 14.7% | 14.7% | |||||||
| Operating (loss) / profit | (98) | (23) | (2,975) | (969) | 95 | 3,804 | |||||||
| Net (loss) / profit attributable toequity holders of the Group | (23) | 18 | (689) | 756 | 77 | 3,570 | |||||||
| (Loss) / earnings per share fromcontinuing operations - basic(RUR/US$ per share) | (1.49) | 1.17 | (0.045) | 0.049 | 5.00 | 0.232 | |||||||
| (Loss) / earnings per share fromcontinuing operations - diluted(RUR/US$ per share) | (1.49) | 1.17 | (0.045) | 0.049 | 5.00 | 0.232 | |||||||
* Earnings before interest, tax, depreciation and amortisation
** Total EBITDA divided by total revenue.
Forward-looking statements
Certain statements in this half-yearly 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.
OTHER INFORMATION
The Group will host a conference call to present the results at 1 pm London Time (4 pm Moscow Time) today (26 August 2009).
To participate in the conference call, please register online at:
www.sharedvalue.net/ramblermedia/hy2009
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 | |||
| Konstantin Vorontsov | Nicolas Duperrier | |||
| Marina Anisimova | Mark Walter | |||
| Tel. +7 495 745 3619 | Tel. +44 (0) 20 7321 5010 | |||
| 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.
Rambler Media Limited,
Condensed consolidated Unaudited half-yearly financial information,
30 June 2009
Contents
Interim management report
Balance sheet
Statement of comprehensive income
Statement of changes in equity
Cash flow statement
Notes to financial information
Statement of directors' responsibilities
Interim 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*
Consolidated total revenue down 18% year-on-year to RUR* 1,019 million (US$ 30.8 million) (H1 2008, RUR 1,236 million / US$ 51.7 million) due to macroeconomic turmoil and weak advertising demand in the period Full year revenue 2009 projections down around 15% from 2008 revenue in roubles Consolidated display / banner advertising revenue down 12% to RUR 432 million (US$ 13.1 million) (H1 2008, RUR 490 million / US$ 20.5 million) Consolidated contextual revenue down 24% to RUR 419 million (US$12.7 million) (H1 2008, RUR 554 million / US$ 23.2 million) Consolidated listings revenue down 15% to RUR 60 million (US$1.8 million) (H1 2008, RUR 71 million / US$ 2.9 million) Consolidated EBITDA down 60% to RUR 85 million (US$ 2.6 million) (H1 2008, RUR 214 million / US$ 8.9 million) with an EBITDA margin of 8.4% (H1 2008, 17.3%) due to adverse macroeconomic conditions since Q4 2008 Consolidated net loss after interest and tax of RUR 68 million (US$ 2.1 million) (H1 2008, RUR 11 million loss / US$ 0.5 million loss) CAPEX was RUR 19 million (US$ 0.6 million) (H1 2008, RUR 65 million / US$ 2.7 million) Strong balance sheet with cash position of US$ 24.7 million and zero debt at 30 June 2009* To align the reporting currency with the predominant functional currency of the Group and simplify comparative performance analysis, the Group has decided to report both in Russian rouble and in US dollar. The USD/RUR exchange rate at the end of June 2009 was 31.29 and the average rate for the first half of 2009 was 33.07, the USD/RUR exchange rate at the end of June 2008 was 23.46 and the average rate for the first half of 2008 was 23.94.
2. Key Statistics
Rambler User Statistics
51.5 million unique monthly visitors to Rambler.ru on average in the period, up 38% year-on-year (H1 2008, 37.3 million). In June 2009, Rambler reached 50.7 million unique users vs. 34.5 million in June 2008, representing 47% growth. 3.1 billion monthly page views on average in H1 2009, up 17% year-on-year (2.96 billion in June 2009 vs. 2.45 billion in June 2008 representing a 10% increase). Total search queries amounted to 1.15 billion in H1 2009 60.8 million registered email accountsRussian Internet / Advertising Market
Russian internet penetration up 15% year-on-year in the first six months of 2009 to 37.5 million internet users in Russia compared to 32.7 million in the same period last year (source: The Public Opinion Foundation). Russian advertising forecast to be down as much as 24% year-on-year in 2009 to RUB 202 million (2008, RUB 267 million) (source: ZenithOptimedia). Demand in internet advertising forecast to be the most resilient of all media segments (growth of 0 to 12% in 2009 according to Zenith Optimedia) demonstrating that internet offers the strongest opportunities for growth in the media sector.3. Performance
3.1. Financial Summary
| RUR million | USD '000s | RUR million | USD '000s | ||||||||||
| Jan - Jun2009 | Jan - Jun2008 | Jan - Jun2009 | Jan - Jun2008 | Jan - Dec 2008 | Jan - Dec 2008 | ||||||||
| Group Revenue | 1,019 | 1,236 | 30,812 | 51,704 | 2,737 | 110,033 | |||||||
| Rambler Media excl. Begun | 723 | 846 | 21,870 | 35,409 | 1,939 | 77,948 | |||||||
| Begun's partner network | 296 | 390 | 8,942 | 16,295 | 798 | 32,085 | |||||||
| Investment income | - | - | - | - | 3 | 106 | |||||||
| Total revenue and investment income | 1,019 | 1,236 | 30,812 | 51,704 | 2,740 | 110,139 | |||||||
| EBITDA* | 85 | 214 | 2,574 | 8,931 | 402 | 16,150 | |||||||
| EBITDA margin** | 8.4 % | 17.3% | 8.4% | 17.3% | 14.7% | 14.7% | |||||||
| Operating (loss) / profit | (98) | (23) | (2,975) | (969) | 95 | 3,804 | |||||||
| Net (loss) / profit attributable to equity holders of the Group | (23) | 18 | (689) | 756 | 77 | 3,570 | |||||||
| (Loss) / earnings per share from continuing operations - basic (RUR/US$ per share) | (1.49) | 1.17 | (0.045) | 0.049 | 5.00 | 0.232 | |||||||
| (Loss) / earnings per share from continuing operations - diluted (RUR/US$ per share) | (1.49) | 1.17 | (0.045) | 0.049 | 5.00 | 0.232 | |||||||
* Earnings before interest, tax, depreciation and amortisation
** Total EBITDA divided by total revenue.
3.2. Half year review and outlook
The noticeable slowdown in global advertising spend across all sectors that has been observed in Russia since the fourth quarter of 2008 has prevailed during the first half of 2009. Despite some visible positive trends, such as the stabilisation of the stock markets and of the RUR/USD exchange rate as well as rising oil prices, the global economic situation remains uncertain. The Russian advertising market is forecast to decline by as much as 24% in 2009 (source: ZenithOptimedia, July 2009) halting the significant growth experienced in the market in recent years.
The Group estimates that demand in internet advertising will be the most resilient of all media segments, particularly in Russia where the number of internet users and the time they spend online continue to grow while penetration is still relatively low. Nonetheless, weak market conditions will have an impact on Rambler's operations and are likely to result in lower advertising revenue in 2009 than in 2008. As a result, the Directors of Rambler now estimate that 2009 revenue will be 15% down from 2008 revenue in rouble terms.
The Company is continuing to focus on optimizing costs to limit the impact of the current economic climate on Rambler's profitability. At the same time and with a new management in place, the Group is implementing strategic actions intended to accelerate its growth and improve its brands' appeal with the rising Russian internet audience. In April 2009, Ms. Olga Turischeva was appointed as Rambler's new Chief Executive Officer. Under her leadership, Rambler has undergone a review of its operations, from which new priorities have emerged including the need for the Company to re-evaluate its product offering and invest in key products, especially in the segments of navigation (search and catalogues) and communications (mail, messaging), and restructure its sales partnerships in an effort to increase revenues.
In the first half of 2009, Rambler continued to offer new products such as MyRambler and Mobile Rambler based on Netvibes' technology. Moreover, Rambler has recently announced a totally new communication platform called 'Virtus', introduced an updated e-mail service and some innovations in search. All of these developments contributed to make Rambler's websites some of the most frequently used in the Russian speaking community with over 51 million unique monthly users visiting Rambler.ru on average in the first six months of 2009.
3.2.1 Revenue
Although Rambler operates primarily in Russian roubles, the Group has, until now, been reporting exclusively in US dollars. Faced with the depreciation of the Russian currency and in order to provide followers with a clearer picture of Rambler's underlying performance, the Group will, from now on, be providing comparable data in Russian roubles.
The volume of sales for internet advertising is subject to certain seasonal fluctuations, and the first half of the year is typically lower than the second half due to holiday seasons.
Group revenues for the six months to 30 June 2009 were down 18% year-on-year to RUR 1,019 million (H1 2008, RUR 1,236 million), including RUR 296 million (H1 2008, RUR 390 million) from Begun's partner network. Begun partner network revenue is part of consolidated contextual revenue.
Group sales have suffered from the economic turmoil but also from increasing competition in the Russian internet landscape. This is due to a combination of factors such as the emergence of social networks and growing internet penetration resulting in the abundance of traffic on websites opposed to the shrinking marketing budgets which made competition even tougher.
Display / banner advertising revenue was down 12% to RUR 432 million (H1 2008, RUR 490 million), and represented 42% of the Group's total revenue (40% in H1 2008). 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 down 24% to RUR 419 million in H1 2009 (H1 2008, RUR 554 million), and represented 41% of the Group's total revenue (45% in H1 2008).
Other revenues attributable mainly to listing fees (Price comparison) and user generated payments such as mobile revenues (SMS) amounted to RUR 168 million (H1 2008, RUR 192 million), and represented 17% of the Group's total revenue (16% in H1 2008).
3.2.2. EBITDA
During the first half of 2009, the Group's consolidated EBITDA was down as a result of the prevailing weak market conditions and amounted to RUR 85 million (H1 2008, RUR 214 million).
The slowdown in sales activity halted the progress that the company had made in 2008. Rambler introduced a cost reduction programme in Q4 2008 and Q1 2009, which translated into higher restructuring costs but is intended to deliver benefits in the full year 2009.
3.2.3. Operating Expenses
The Group's operating expenses (including depreciation, amortisation and tax related provisions) reached RUR 1,121 million in H1 2009, slightly lower than a year ago (H1 2008, RUR 1,143 million), demonstrating that the Group was able to operate efficiently and responsibly.
Direct costs, including commissions, content, traffic acquisition costs, data centre costs and user generated payment costs have been reduced from RUR 428 million in H1 2008 to RUR 417 million in H1 2009. Commissions on banner sales are down from RUR 72 million in H1 2008 to RUR 68 million in H1 2009.
In H1 2009, the Group's labour costs continued to stabilise and account for 31% of total operating expenses and 34% of total revenues, compared to 32% and 30% respectively in H1 2008. Labour costs are down 5% to RUR 346 million (H1 2008, RUR 365 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 H1 2009, the provision for potential tax-related charges amounted to approximately RUR 36 million (H1 2008, RUR 39 million).
Legal and professional fees went from RUR 31 million in H1 2008 to RUR 75 million in H1 2009.
The Group's amortisation expense went up by 84% from RUR 74 million in H1 2008 to RUR 136 million in H1 2009 and the Group's depreciation expense increased to RUR 47 million (H1 2008, RUR 40 million) due to reclassification of Begun from asset held for sale.
The Group's consolidated net loss from continuing operations after interest and tax was RUR 68 million in H1 2009 (H1 2008, RUR 11 million net loss).
The Group's basic loss per share from continuing operations in H1 2009 is US$ 0.045 (H1 2008, earnings of US$ 0.049).
3.2.4. Operating profit
The Group is reporting an operating loss of RUR 98 million in H1 2009 (H1 2008, RUR 23 million loss).
4. Cash position
The Group ended the period with cash balances of US$ 24.7 million (31 December 2008, US$29.0 million including US$4.1 in Begun classified as asset held for sale). The Group has no debt obligations.
5. Management and Board Changes
In the first half of 2009, Mark Opzoomer announced his decision to step down from his role as Chief Executive Officer and Executive Director. The Board recognised the need to review its structure and decision making processes in order to reshape and adapt them to new fast changing realities in Russia. As a result, in March 2009, Rambler announced significant changes to its board, which are detailed in the 2008 annual report. Julia Solovieva was appointed as Rambler's new Chairperson to succeed Robert Brown, and two new non-Executive independent Directors, Arthur Markaryan and Denis Frolov were appointed to succeed Nick Hynes and Ilya Oskolkov-Tsentsiper. Olga Turischeva was appointed as Rambler's new Chief Executive Officer and Executive Director on the Board from 16 April 2009. Nikita Serguienko stepped down from his position as Chief Financial Officer and Board Director on 21 May 2009.
6. 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.
Impact of the ongoing global financial and economic crisis.
The ongoing global financial and economic crisis that emerged out of the severe reduction in global liquidity which commenced in the middle of 2007 (often referred to as the "Credit Crunch") has resulted in, among other things, a lower level of capital market funding, lower liquidity levels across the banking sector, and, at times, higher interbank lending rates and very high volatility in stock markets. The uncertainties in the global financial markets have also led to failures of banks and other corporates and to bank rescues in the United States of America, Western Europe, Russia and elsewhere. The full extent of the impact of the ongoing global financial and economic crisis is proving to be difficult to anticipate or completely guard against.
Debtors of the Group may be adversely affected by the financial and economic environment, which could in turn impact their ability to repay the amounts owed. Deteriorating economic conditions for customers may also have an impact on management's cash flow forecasts and assessment of the impairment of financial and non-financial assets. To the extent that information is available, management has properly reflected revised estimates of expected future cash flows in its impairment assessments.
7. Forward-Looking Statements
Certain statements in this 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.
Rambler Media Limited
Condensed Consolidated Unaudited Interim Balance Sheet as at 30 June 2009
| Notes | 1H2009 | 2008 | 1H2009 | 2008 | ||||||
| US$'000 | US$'000 | RURm | RURm | |||||||
| Assets | ||||||||||
| Non Current Assets | ||||||||||
| Property, plant and equipment | 5 | 4,882 | 5,311 | 153 | 156 | |||||
| Intangible assets | 6 | 12,325 | 4,805 | 385 | 141 | |||||
| Goodwill | 7 | 16,667 | 2,974 | 521 | 87 | |||||
| Investments in associates | 8 | 354 | 504 | 11 | 15 | |||||
| Other non-current assets | 9 | 1,044 | 29 | 33 | 1 | |||||
| Deferred income tax asset | 1,665 | 673 | 52 | 20 | ||||||
| 36,937 | 14,296 | 1,155 | 420 | |||||||
| Current Assets | ||||||||||
| Trade debtors | 7,425 | 7,057 | 233 | 207 | ||||||
| Prepayments | 1,438 | 1,880 | 45 | 55 | ||||||
| VAT receivable | 692 | 335 | 22 | 10 | ||||||
| Other receivables | 607 | 589 | 19 | 18 | ||||||
| Bank and cash balances | 24,662 | 25,018 | 772 | 735 | ||||||
| 34,824 | 34,879 | 1,091 | 1,025 | |||||||
| Non-current assets held for sale | 20 | - | 34,658 | - | 1,018 | |||||
| Total assets | 71,761 | 83,833 | 2,246 | 2,463 | ||||||
| Liabilities | ||||||||||
| Current Liabilities | ||||||||||
| Trade and other creditors | 9,060 | 11,872 | 283 | 349 | ||||||
| Current income tax payable | 5,999 | 1,894 | 188 | 55 | ||||||
| VAT payable | 1,769 | 1,117 | 55 | 33 | ||||||
| Other provisions for liabilities and charges | 12 | 11,045 | 4,208 | 346 | 124 | |||||
| Deferred income | 1,988 | 945 | 62 | 28 | ||||||
| 29,861 | 20,036 | 934 | 589 | |||||||
| Long Term Liabilities | ||||||||||
| Deferred taxation | 2,268 | 762 | 71 | 22 | ||||||
| 2,268 | 762 | 71 | 22 | |||||||
| Liabilities directly associated with assets held for sale | 20 | - | 18,530 | - | 544 | |||||
| Total liabilities | 32,129 | 39,328 | 1,005 | 1,155 | ||||||
| Shareholders' equity | ||||||||||
| Issued capital | 10 | 130 | 138 | 4 | 4 | |||||
| Share premium | 50,247 | 53,514 | 1,572 | 1,572 | ||||||
| Options reserve | 196 | 189 | 7 | 6 | ||||||
| Assets valuation reserve | 758 | 807 | 24 | 24 | ||||||
| Accumulated losses | (7,813) | (7,548) | (313) | (290) | ||||||
| Currency translation reserve | (2,174) | (2,315) | - | - | ||||||
| Total shareholders' equity | 41,344 | 44,785 | 1,294 | 1,316 | ||||||
| Minority interest directly associated with assets held for sale | - | (308) | - | (9) | ||||||
| Minority interest | 15 | (1,712) | 28 | (53) | 1 | |||||
| Liabilities and Shareholders' Equity: | 71,761 | 83,833 | 2,246 | 2,463 |
The accompanying notes are an integral part of this condensed interim financial information.
These condensed interim financial statements were approved by the Directors on 7 August 2009
Olga Turisheva, CEO
Rambler Media Limited
Condensed Consolidated Unaudited Interim Statement of Comprehensive Income
for the 6 month period ended 30 June 2009
| Notes | 1H2009 | 1?2008 | 1H2009 | 1?2008 | ||||||
| US$'000 | US$'000 | RURm | RURm | |||||||
| Continuing Operations | ||||||||||
| Revenue | 13 | 30,812 | 51,704 | 1,019 | 1,236 | |||||
| Operating expenses | 14 | (33,904) | (47,815) | (1,121) | (1,143) | |||||
| Impairment expenses | - | (5,145) | - | (123) | ||||||
| Share of profit of an associate | 8 | 117 | 287 | 4 | 7 | |||||
| Operating loss | (2,975) | (969) | (98) | (23) | ||||||
| Gain (loss) on disposal of a subsidiary | 18 | 123 | (241) | 4 | (6) | |||||
| Interest income | 203 | 494 | 6 | 12 | ||||||
| Loss before tax | (2,649) | (716) | (88) | (17) | ||||||
| Income tax benefit | 16 | 595 | 259 | 20 | 6 | |||||
| Net loss | (2,054) | (457) | (68) | (11) | ||||||
| Other comprehensive (loss)/income: | ||||||||||
| Currency translation differences | (2,830) | 1,427 | - | - | ||||||
| Total comprehensive (loss)/income | (4,884) | 970 | (68) | (11) | ||||||
| (Loss) / profit attributable to: | ||||||||||
| - equity holders of the company | (689) | 756 | (23) | 18 | ||||||
| - minority interest | 15 | (1,365) | (1,213) | (45) | (29) | |||||
| (2,054) | (457) | (68) | (11) | |||||||
| Total comprehensive (loss)/income attributable to: | ||||||||||
| - equity holders of the company | (3,458) | 1,770 | (23) | 18 | ||||||
| - minority interest | (1,426) | (800) | (45) | (29) | ||||||
| (4,884) | 970 | (68) | (11) | |||||||
| (Loss) / earnings per share for profit/(loss) attributable to the equity holders of the company | ||||||||||
| (Loss)/ earnings per share from | ||||||||||
| continuing operations | ||||||||||
| -- basic (in US$/RUR per share) | (0.045) | 0.049 | (1.49) | 1.17 | ||||||
| -- diluted (in US$/RUR per share) | 17 | (0.045) | 0.049 | (1.49) | 1.17 |
The accompanying notes are an integral part of this condensed interim financial information.
Rambler Media Limited
Condensed Consolidated Unaudited Interim Statement of Changes in Shareholders' Equity
for the 6 month period ended 30 June 2009
| Issued capital | Share premium | Assets valuation reserve | Options reserve | Accumulated Losses | Translation reserve | Total | Minority interest directly associated with AHS | Minority interest | Total equity | ||||||||||||
| US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | ||||||||||||
| 31 December 2007 | 165 | 64,053 | 966 | 148 | (13,315) | (446) | 51,571 | 1,876 | 4,747 | 58,194 | |||||||||||
| Profit/(loss) for the period | - | - | - | - | 756 | - | 756 | - | (1,213) | (457) | |||||||||||
| Currency translation | 8 | 2,973 | 45 | 7 | (777) | (1,242) | 1,014 | - | 413 | 1,427 | |||||||||||
| Total comprehensive income | 8 | 2,973 | 45 | 7 | (21) | (1,242) | 1,770 | - | (800) | 970 | |||||||||||
| Share based payment charge | - | - | - | 39 | - | - | 39 | - | - | 39 | |||||||||||
| Classified as assets held for sale | - | - | - | - | - | - | - | (490) | 490 | - | |||||||||||
| Dividends paid | - | - | - | - | - | - | - | - | (3,063) | (3,063) | |||||||||||
| 30 June 2008 | 173 | 67,026 | 1,011 | 194 | (13,336) | (1,688) | 53,380 | 1,386 | 1,374 | 56,140 | |||||||||||
| Profit/(loss) for the period | - | - | - | - | 2,813 | - | 2,813 | - | 925 | 3,738 | |||||||||||
| Currency translation | (35) | (13,512) | (204) | (44) | 2,975 | (627) | (11,447) | (308) | (88) | (11,843) | |||||||||||
| Total comprehensive income | (35) | (13,512) | (204) | (44) | 5,788 | (627) | (8,634) | (308) | 837 | (8,105) | |||||||||||
| Share based payment charge | - | - | - | 39 | - | - | 39 | - | - | 39 | |||||||||||
| Classified as assets held for sale | - | - | - | - | - | - | - | (1,386) | 1,386 | - | |||||||||||
| Acquisition of minority interest | - | - | - | - | - | - | - | - | (1,245) | (1,245) | |||||||||||
| Disposal of subsidiary | - | - | - | - | - | - | - | - | (64) | (64) | |||||||||||
| Dividends paid | - | - | - | - | - | - | - | - | (2,260) | (2,260) | |||||||||||
| 31 December 2008 | 138 | 53,514 | 807 | 189 | (7,548) | (2,315) | 44,785 | (308) | 28 | 44,505 | |||||||||||
| Profit/(loss) for the period | - | - | - | - | (689) | - | (689) | - | (1,365) | (2,054) | |||||||||||
| Currency translation | (8) | (3,267) | (49) | (10) | 424 | 141 | (2,769) | - | (61) | (2,830) | |||||||||||
| Total comprehensive income | (8) | (3,267) | (49) | (10) | (265) | 141 | (3,458) | - | (1,426) | (4,884) | |||||||||||
| Share based payment charge | - | - | - | 17 | - | - | 17 | - | - | 17 | |||||||||||
| Disposal of subsidiary | - | - | - | - | - | - | - | - | (6) | (6) | |||||||||||
| Declassified from assets held for sale | - | - | - | - | - | - | - | 308 | (308) | - | |||||||||||
| 30 June 2009 | 130 | 50,247 | 758 | 196 | (7,813) | (2,174) | 41,344 | - | (1,712) | 39,632 |
Rambler Media Limited
Condensed Consolidated Unaudited Interim Statement of Changes in Shareholders' Equity
for the 6 month period ended 30 June 2009
| Issued capital | Share premium | Assets valuation reserve | Options reserve | Accumulated Losses | Total | Minority interest directlyassociated with AHS | Minority interest | Total equity | |||||||||||
| RURm | RURm | RURm | RURm | RURm | RURm | RURm | RURm | RURm | |||||||||||
| 31 December 2007 | 4 | 1,572 | 24 | 4 | (367) | 1,237 | 46 | 117 | 1,400 | ||||||||||
| Profit/(loss) for the period | - | - | - | - | 18 | 18 | - | (29) | (11) | ||||||||||
| Total comprehensive income | - | - | - | - | 18 | 18 | - | (29) | (11) | ||||||||||
| Share based payment charge | - | - | - | 1 | - | 1 | - | - | 1 | ||||||||||
| Classified as assets held for sale | - | - | - | - | - | - | (13) | 13 | - | ||||||||||
| Dividends paid | - | - | - | - | - | - | - | (69) | (69) | ||||||||||
| 30 June 2008 | 4 | 1,572 | 24 | 5 | (349) | 1,256 | 33 | 32 | 1,321 | ||||||||||
| Profit/(loss) for the period | - | - | - | - | 59 | 59 | - | 21 | 9 | ||||||||||
| Total comprehensive income | - | - | - | - | 59 | 59 | - | 21 | 80 | ||||||||||
| Share based payment charge | - | - | - | 1 | - | 1 | - | - | 1 | ||||||||||
| Classified as assets held for sale | - | - | - | - | - | - | (42) | 42 | - | ||||||||||
| Acquisition of minority interest | - | - | - | - | - | - | - | (30) | (30) | ||||||||||
| Disposal of subsidiary | - | - | - | - | - | - | - | (2) | (2) | ||||||||||
| Dividends paid | - | - | - | - | - | - | - | (62) | (62) | ||||||||||
| 31 December 2008 | 4 | 1,572 | 24 | 6 | (290) | 1,316 | (9) | 1 | 1,308 | ||||||||||
| Profit/(loss) for the period | - | - | - | - | (23) | (23) | - | (45) | (68) | ||||||||||
| Total comprehensive income | - | - | - | - | (23) | (23) | - | (45) | (68) | ||||||||||
| Share based payment charge | - | - | - | 1 | - | 1 | - | - | 1 | ||||||||||
| Declassified from assets held for sale | - | - | - | - | - | - | 9 | (9) | - | ||||||||||
| 30 June 2009 | 4 | 1,572 | 24 | 7 | (313) | 1,294 | - | (53) | 1,241 |
Rambler Media Limited
Condensed Consolidated Unaudited Interim Statement of Cash Flows
for the 6 month period ended 30 June 2009
| 1H2009 | 1?2008 | 1H2009 | 1?2008 | ||||||
| US$'000 | US$'000 | RURm | RURm | ||||||
| Cash flows from operating activities | |||||||||
| Net loss | (2,054) | (457) | (68) | (11) | |||||
| Adjusted for: | |||||||||
| Interest income | (203) | (494) | (6) | (12) | |||||
| Share of profit of associates | (117) | (287) | (4) | (7) | |||||
| Income tax benefit | (595) | (259) | (20) | (6) | |||||
| Impairment expenses | - | 5,145 | - | 123 | |||||
| Cost of share options vested | 17 |
| 39 | 1 |
| 1 | |||
| Foreign currency translation (gain) loss | (1,305) | 753 | (43) | 18 | |||||
| Depreciation and amortisation | 5,549 | 4,755 | 183 | 114 | |||||
| Increase in provision for taxes other than income tax | 1,100 | 1,646 | 36 | 39 | |||||
| Gain on disposal or sales of assets and investments | (113) | - | (4) | - | |||||
| Operating cash flows before working capital changes | 2,279 | 10,841 | 75 | 259 | |||||
| (Increase) / decrease in debtors and receivables | (459) | 1,685 | (15) | 40 | |||||
| (Increase) / decrease in prepayments | (39) | (56) | (1) | (1) | |||||
| (Decrease) / increase in creditors and other payables | (5,324) | 592 | (177) | 14 | |||||
| Increase / (decrease) in deferred income | 280 | (1,884) | 9 | (45) | |||||
| Cash (used in) / generated from operations | (3,263) | 11,178 | (109) | 267 | |||||
| Income taxes paid | (189) | (3,544) | (6) | (84) | |||||
| Net cash (used in) / generated from operating activities | (3,452) | 7,634 | (115) | 183 | |||||
| Cash flows from investing activities | |||||||||
| Sale of subsidiary undertakings | 50 | 110 | 2 | 3 | |||||
| Dividend income | 228 | - | 8 | - | |||||
| Purchase of property, plant and equipment | (234) | (2,123) | (8) | (51) | |||||
| Purchase of intangibles assets | (336) | (585) | (11) | (14) | |||||
| Net cash used in investing activities | (292) | (2,598) | (9) | (62) | |||||
| Cash flows from financing activities | |||||||||
| Dividends paid | (787) | - | (26) | - | |||||
| Interest received | 187 | 427 | 6 | 10 | |||||
| Net cash (used in) / from investing activities | (600) | 427 | (20) | 10 | |||||
| Net (decrease) / increase in cash | (4,344) | 5,463 | (144) | 131 | |||||
| Exchange (loss) gain | (87) | - | 61 | (39) | |||||
| Cash at the beginning of the period - continuing operations | 25,018 | 31,462 | 735 | 772 | |||||
| Cash at the beginning of the year - assets held for sale | 4,075 | 1 | 120 | - | |||||
| Cash at the end of the period - continuing operations | 24,662 | 26,075 | 772 | 610 | |||||
| Cash at the end of the year - asset held for sale | - | 10,851 | - | 254 | |||||
| Cash at the end of the period | 24,662 | 36,926 | 772 | 864 |
Notes to the condensed consolidated unaudited half-yearly interim financial information
1. General Information
Rambler Media Limited ("the company") was incorporated in Jersey on 10 June 2004 as a private limited company (now a public company - see below). The company has its registered office at First Island House, Peter Street, St. Helier, Jersey JE2 4SP. The condensed consolidated financial information presented herein includes the condensed interim financial information of the company, its wholly owned subsidiaries and investees in which the parent company has control (together referred to as "the Group").
The Group's principal place of business is the Russian Federation and CIS.
Rambler Media is a diversified Russian language media, entertainment, services and content delivery company which operates various internet properties including the leading Russian language internet portal and search engine "Rambler.ru", Top 100 rating system, free email service, on-line newspaper "Lenta.ru", price comparison website "Price.ru", data center operator "Rambler Telecom" and contextual advertising company "Begun".
Rambler Media's shares are traded on the AIM market of the London Stock Exchange under the symbol "RMG" since the Initial Public Offering (IPO) which took place on 15 June 2005.
At 30 June 2009, the Rambler Group had 605 employees in continuing operations (31 December 2008: 660; 30 June 2008: 700).
On 31 October 2006 Prof-Media, a Russian media holding, acquired 48.8% of the shares of Rambler Media Limited from funds managed by FM Asset Management Limited. In December 2006, following the anti-monopoly approval, Prof-Media obtained control of Rambler Media Limited. Subsequently, Prof-Media (the "PM Group") increased its stake to 54.84%. The immediate controlling party of the PM Group is KM Technologies (Overseas) Limited. In 2008 Mr V.Potanin completed the acquisition of Mr M.Prokhorov`s stake in the company controlling KM Technologies (Overseas) Limited, and subsequently became the sole ultimate controlling party of the PM Group and Rambler.
2. Basis of preparation
This condensed consolidated interim financial information for the half-year ended 30 June 2009 has been prepared in accordance with IAS 34 "Interim financial reporting". The interim condensed financial report should be read in conjunction with the annual financial statements for the year ended 31 December 2008.
The accounting policies adopted are consistent with those of the annual consolidated financial statements for the year ended 31 December 2008, as described in the annual consolidated financial statements for the year ended 31 December 2008.
3. Accounting policies
a) Basis of consolidation
These condensed consolidated interim 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 condensed consolidated interim financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated (refer to Note 3 (e), New Accounting Pronouncements).
b) Functional currency
Management exercised its judgement to determine that for the purposes of the 2009 IFRS financial statements the Russian Rouble most fairly represents the economic effects of the underlying transactions, events and conditions.
c) Presentation currency
All amounts in these financial statements are presented in thousands of US dollars ("US$ thousands") and in millions of Russian Roubles ("RURm"), unless otherwise stated. It is a common practice for Russian companies operating in the media industry to use US$ as a presentation currency, however faced with depreciation of the Russian Rouble and in order to provide a more evident picture of the Group's underlying performance, the management made a decision to present corresponding data in Russian Roubles.
The Russian Rouble is not a fully convertible currency outside the Russian Federation and, accordingly, any translation of RUR denominated assets and liabilities into US$ for the purpose of these condensed consolidated interim financial statements does not imply that Group could or will in the future realise or settle in US$ the translated values of these assets and liabilities.
The results and financial position of each Group entity (functional currency of none of which is a currency of a hyperinflationary economy) are translated into the presentation currency as follows:
(i) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
(ii) income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and
(iii) all resulting exchange differences are recognised as a separate component of equity.
At 30 June 2009, the principal rate of exchange used for translating foreign currency balances was US$ 1 = RR 31.29 (31 December 2008: US$ 1 = RR 29.38).
d) Foreign currency translation
Monetary assets and liabilities are translated into each entity's functional currency at the official exchange rate of the Central Bank of the Russian Federation at the respective balance sheet dates. Foreign exchange gains and losses resulting from the settlement of the transactions and from the translation of monetary assets and liabilities into each entity's functional currency at year-end official exchange rates of the Central Bank of the Russian Federation are recognised in profit or loss. Translation at year-end rates does not apply to non-monetary items, including equity investments. Effects of exchange rate changes on the fair value of equity securities are recorded as part of the fair value gain or loss.
e) New accounting pronouncements
Certain new IFRSs became effective for the Group from 1 January 2009. Listed below are those new or amended standards or interpretations which are or in the future could be relevant to the Group's operations and the nature of their impact on the Group's accounting policies. All changes in accounting policies were applied unless otherwise described below.
The following new standards, amendments to standards or interpretations are mandatory for the first time for the financial year beginning 1 January 2009:
IAS 1, Presentation of Financial Statements (effective for annual periods beginning on or after 1 January 2009). The main change in IAS 1 is the replacement of the income statement by a statement of comprehensive income which will also include all non-owner changes in equity, such as the revaluation of available-for-sale financial assets. Alternatively, entities will be allowed to present two statements: a separate income statement and a statement of comprehensive income. The revised IAS 1 also introduces a requirement to present a statement of financial position (balance sheet) at the beginning of the earliest comparative period whenever the entity restates comparatives due to reclassifications, changes in accounting policies, or corrections of errors.
IFRS 8, Operating Segments (effective for annual periods beginning on or after 1 January 2009). The standard applies to entities whose debt or equity instruments are traded in a public market or that file, or are in the process of filing, their financial statements with a regulatory organisation for the purpose of issuing any class of instruments in a public market. IFRS 8 requires an entity to report financial and descriptive information about its operating segments and specifies how an entity should report such information.
The following new standards, amendments to standards or interpretations are mandatory for the first time for the financial year beginning 1 January 2009 but are not currently relevant for the group:
IAS 23 (amendment), 'Borrowing costs';
IFRS 2 (amendment), 'Share-based payment';
IAS 32 (amendment), 'Financial instruments: Presentation'.
IFRIC 13, 'Customer loyalty programmes'.
IFRIC 15, 'Agreements for the construction of real estate'.
IFRIC 16, 'Hedges of a net investment in a foreign operation'.
IAS 39 (amendment), 'Financial instruments: Recognition and measurement'.
The following new standards, amendments to standards and interpretations have been issued but are not effective for the financial year beginning 1 January 2009 and have not been early adopted:
IAS 27, Consolidated and Separate Financial Statements (revised January 2008; effective for annual periods beginning on or after 1 July 2009). The revised IAS 27 will require an entity to attribute total comprehensive income to the owners of the parent and to the non-controlling interests (previously "minority interests") even if this results in the non-controlling interests having a deficit balance (the current standard requires the excess losses to be allocated to the owners of the parent in most cases). The revised standard specifies that changes in a parent's ownership interest in a subsidiary that do not result in the loss of control must be accounted for as equity transactions. It also specifies how an entity should measure any gain or loss arising on the loss of control of a subsidiary. At the date when control is lost, any investment retained in the former subsidiary will have to be measured at its fair value. The Group is currently assessing the impact of the amended standard on its consolidated financial statements.
IFRS 3, Business Combinations (revised January 2008; effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 July 2009). The revised IFRS 3 will allow entities to choose to measure non-controlling interests using the existing IFRS 3 method (proportionate share of the acquiree's identifiable net assets) or on the same basis as US GAAP (at fair value). The revised IFRS 3 is more detailed in providing guidance on the application of the purchase method to business combinations. The requirement to measure at fair value every asset and liability at each step in a step acquisition for the purposes of calculating a portion of goodwill has been removed. Instead, goodwill will be measured as the difference at acquisition date between the fair value of any investment in the business held before the acquisition, the consideration transferred and the net assets acquired. Acquisition-related costs will be accounted for separately from the business combination and therefore recognised as expenses rather than included in goodwill. An acquirer will have to recognise at the acquisition date a liability for any contingent purchase consideration. Changes in the value of that liability after the acquisition date will be recognised in accordance with other applicable IFRSs, as appropriate, rather than by adjusting goodwill. The revised IFRS 3 brings into its scope business combinations involving only mutual entities and business combinations achieved by contract alone. The Group is currently assessing the impact of the amended standard on its consolidated financial statements.
IFRIC 17, Distribution of Non-Cash Assets to Owners (effective for annual periods beginning on or after 1 July 2009). The amendment clarifies when and how distribution of non-cash assets as dividends to the owners should be recognised. An entity should measure a liability to distribute non-cash assets as a dividend to its owners at the fair value of the assets to be distributed. A gain or loss on disposal of the distributed non-cash assets will be recognised in profit or loss when the entity settles the dividend payable. The Group is currently assessing the impact of the new interpretation on its financial statements.
IFRIC 18, Transfers of Assets from Customers (effective for annual periods beginning on or after 1 July 2009). The interpretation clarifies the accounting for transfers of assets from customers, namely, the circumstances in which the definition of an asset is met; the recognition of the asset and the measurement of its cost on initial recognition; the identification of the separately identifiable services (one or more services in exchange for the transferred asset); the recognition of revenue, and the accounting for transfers of cash from customers. IFRIC 18 is not expected to have any impact on the Group's financial statements.
Unless otherwise described above, the new standards and interpretations are not expected to significantly affect the Group's consolidated financial statements.
4. Segmental Information
The chief operational decision-maker has been identified as the Board of Directors. The Board reviews the group's internal reporting in order to assess performance and allocate resources. Management has determined the operating segments based on these reports.
The Board considers the business from product perspective:
Display and Value-Added Services ("VAS") - display advertising, mainly on rambler.ru and lenta.ru, and consumer fee-based services, mainly mobile and internet content
Context - paid search advertising on rambler.ru and context advertising offerings on websites from Begun partner's network
Listings - consumer listings-based services on price.ru
As the Group's business is conducted largely in a single geographical market, Russia and CIS, no geographical analysis is given.
The Board assesses the performance of the operating segments based on a measure of adjusted earnings before tax, gain(loss) on disposal of a subsidiary, interest income, impairment expense, depreciation and amortization (EBITDA).
The segmental results for the six months ended 30 June 2009 were as follows:
| Display&VAS | Context | Listings | Total | ||||||
| US$'000 | US$'000 | US$'000 | US$'000 | ||||||
| Total Revenue (from external customers) | 16,348 | 12,659 | 1,805 | 30,812 | |||||
| Adjusted EBITDA | 605 | 1,455 | 514 | 2,574 | |||||
| Total assets | 39,722 | 26,409 | 5,630 | 71,761 | |||||
| RURm | RURm | RURm | RURm | ||||||
| Total Revenue (from external customers) | 540 | 419 | 60 | 1,019 | |||||
| Adjusted EBITDA | 20 | 48 | 17 | 85 | |||||
| Total assets | 1,244 | 826 | 176 | 2,246 |
The segmental results for the six months ended 30 June 2008 were as follows:
| Display&VAS | Context | Listings | Total | ||||||
| US$'000 | US$'000 | US$'000 | US$'000 | ||||||
| Total Revenue (from external customers) | 25,527 | 23,195 | 2,982 | 51,704 | |||||
| Adjusted EBITDA | 1,377 | 6,936 | 618 | 8,931 | |||||
| Total assets | 48,637 | 48,176 | 5,802 | 102,615 | |||||
| RURm | RURm | RURm | RURm | ||||||
| Total Revenue (from external customers) | 611 | 554 | 71 | 1,236 | |||||
| Adjusted EBITDA | 33 | 166 | 15 | 214 | |||||
| Total assets | 1,138 | 1,128 | 136 | 2,402 |
A reconciliation of total adjusted EBITDA to total loss before tax is provided as follows:
| 1H2009 | 1H2008 | 1H2009 | 1H2008 | ||||||
| US$'000 | US$'000 | RURm | RURm | ||||||
| Adjusted EBITDA for reportable segments | 2,574 | 8,931 | 85 | 214 | |||||
| Amortisation | (4,114) | (3,088) | (136) | (74) | |||||
| Depreciation | (1,435) | (1,667) | (47) | (40) | |||||
| Impairment expenses | - | (5,145) | - | (123) | |||||
| Operating loss | (2,975) | (969) | (98) | (23) | |||||
| Gain (loss) on disposal of a subsidiary | 123 | (241) | 4 | (6) | |||||
| Interest income | 203 | 494 | 6 | 12 | |||||
| Loss before tax | (2,649) | (716) | (88) | (17) |
5. Property, plant and equipment
| Leasehold Improve-ments | Office equipment | Total | Leasehold Improve-ments | Office equipment | Total | ||||||||
| US$'000 | US$'000 | US$'000 | RURm | RURm | RURm | ||||||||
| Cost | |||||||||||||
| 31 December 2007 | 654 | 11,700 | 12,354 | 16 | 287 | 303 | |||||||
| Additions | 231 | 1,892 | 2,123 | 6 | 45 | 51 | |||||||
| Disposals | - | (12) | (12) | - | - | - | |||||||
| Deconsolidation | (27) | (227) | (254) | (1) | (6) | (7) | |||||||
| Classified as assets held for sale | (209) | (1,233) | (1,442) | (5) | (29) | (34) | |||||||
| Currency translation | 35 | 580 | 615 | - | - | - | |||||||
| 30 June 2008 | 684 | 12,700 | 13,384 | 16 | 297 | 313 | |||||||
| Additions | 2 | 1,265 | 1,267 | - | 32 | 32 | |||||||
| Disposals | (72) | (1,218) | (1,290) | (1) | (29) | (31) | |||||||
| Deconsolidation | (11) | (44) | (55) | - | (1) | (1) | |||||||
| Declassified from assets held for sale | 209 | 1,233 | 1,442 | 5 | 29 | 34 | |||||||
| Classified as assets held for sale | (167) | (1,335) | (1,502) | (6) | (39) | (45) | |||||||
| Currency translation | (170) | (2,768) | (2,938) | - | - | - | |||||||
| 31 December 2008 | 475 | 9,833 | 10,308 | 14 | 289 | 303 | |||||||
| Additions | - | 234 | 234 | - | 8 | 8 | |||||||
| Disposals | - | (30) | (30) | - | (1) | (1) | |||||||
| Deconsolidation | (11) | (225) | (236) | (1) | (8) | (9) | |||||||
| Declassified from assets held for sale | 194 | 1,336 | 1,530 | 6 | 39 | 45 | |||||||
| Currency translation | (42) | (684) | (726) | - | - | - | |||||||
| 30 June 2009 | 616 | 10,464 | 11,080 | 19 | 327 | 346 | |||||||
| Accumulated Depreciation | |||||||||||||
| 31 December 2007 | 500 | 3,989 | 4,489 | 12 | 98 | 110 | |||||||
| Charge | 59 | 1,608 | 1,667 | 2 | 38 | 40 | |||||||
| Disposals | - | (6) | (6) | - | - | - | |||||||
| Deconsolidation | (14) | (123) | (137) | (1) | (3) | (4) | |||||||
| Classified as assets held for sale | (3) | (203) | (206) | - | (5) | (5) | |||||||
| Currency translation | 24 | 207 | 231 | - | - | - | |||||||
| 30 June 2008 | 566 | 5,472 | 6,038 | 13 | 128 | 141 | |||||||
| Charge | 51 | 1,453 | 1,504 | 1 | 37 | 38 | |||||||
| Disposals | (72) | (1,195) | (1,267) | (2) | (30) | (32) | |||||||
| Deconsolidation | (10) | (23) | (33) | - | - | - | |||||||
| Declassified from assets held for sale | 3 | 203 | 206 | - | 5 | 5 | |||||||
| Classified as assets held for sale | (2) | (140) | (142) | - | (5) | (5) | |||||||
| Currency translation | (111) | (1,198) | (1,309) | - | - | - | |||||||
| 31 December 2008 | 425 | 4,572 | 4,997 | 12 | 135 | 147 | |||||||
| Charge | 76 | 1,359 | 1,435 | 2 | 45 | 47 | |||||||
| Disposals | - | (20) | (20) | - | (1) | (1) | |||||||
| Deconsolidation | (11) | (165) | (176) | - | (5) | (5) | |||||||
| Declassified from assets held for sale | 3 | 207 | 210 | - | 5 | 5 | |||||||
| Currency translation | (23) | (225) | (248) | - | - | - | |||||||
| 30 June 2009 | 470 | 5,728 | 6,198 | 14 | 179 | 193 | |||||||
| Net book value | |||||||||||||
| 30 June 2009 | 146 | 4,736 | 4,882 | 5 | 148 | 153 | |||||||
| 31 December 2008 | 50 | 5,261 | 5,311 | 2 | 154 | 156 |
6. Intangible Assets
| Domain and trade names | Software and other intangibles | Total | Domain and trade names | Software and other intangibles | Total | ||||||||
| US$'000 | US$'000 | US$'000 | RURm | RURm | RURm | ||||||||
| Cost | |||||||||||||
| 31 December 2007 | 16,673 | 11,147 | 27,820 | 409 | 274 | 683 | |||||||
| Additions | - | 585 | 585 | - | 14 | 14 | |||||||
| Deconsolidation | - | (133) | (133) | - | (3) | (3) | |||||||
| Declassified from assets held for sale | 5,145 | - | 5,145 | 123 | - | 123 | |||||||
| Classified as assets held for sale | (11,798) | (9,039) | (20,837) | (277) | (213) | (490) | |||||||
| Impairment | (5,145) | - | (5,145) | (123) | - | (123) | |||||||
| Currency translation | 774 | 529 | 1,303 | - | - | - | |||||||
| 30 June 2008 | 5,649 | 3,089 | 8,738 | 132 | 72 | 204 | |||||||
| Additions | - | 899 | 899 | - | 23 | 23 | |||||||
| Disposals | (281) | (413) | (694) | (7) | (11) | (18) | |||||||
| Declassified from assets held for sale | 12,410 | 9,038 | 21,448 | 293 | 212 | 505 | |||||||
| Classified as assets held for sale | (9,420) | (7,215) | (16,635) | (277) | (212) | (489) | |||||||
| Impairment | (612) | (807) | (1,419) | (16) | (21) | (37) | |||||||
| Currency translation | (3,482) | (2,426) | (5,908) | - | - | - | |||||||
| 31 December 2008 | 4,264 | 2,165 | 6,429 | 125 | 63 | 188 | |||||||
| Additions | - | 336 | 336 | - | 11 | 11 | |||||||
| Deconsolidation | - | (422) | (422) | - | (14) | (14) | |||||||
| Declassified from assets held for sale | 9,420 | 7,215 | 16,635 | 277 | 212 | 489 | |||||||
| Currency translation | (835) | (580) | (1,415) | - | - | - | |||||||
| 30 June 2009 | 12,849 | 8,714 | 21,563 | 402 | 272 | 674 | |||||||
| Accumulated Amortisation | |||||||||||||
| 31 December 2007 | 1,792 | 2,255 | 4,047 | 44 | 55 | 99 | |||||||
| Amortisation expense | 1,370 | 1,718 | 3,088 | 33 | 41 | 74 | |||||||
| Classified as assets held for sale | (2,163) | (2,872) | (5,035) | (51) | (67) | (118) | |||||||
| Currency translation | 97 | 139 | 236 | - | - | - | |||||||
| 30 June 2008 | 1,096 | 1,240 | 2,336 | 26 | 29 | 55 | |||||||
| Amortisation expense | 181 | 245 | 426 | 4 | 6 | 10 | |||||||
| Disposed accumulated amortisation | (81) | (315) | (396) | (2) | (9) | (11) | |||||||
| Declassified from assets held for sale | 2,783 | 2,872 | 5,655 | 67 | 67 | 134 | |||||||
| Classified as assets held for sale | (1,727) | (2,270) | (3,997) | (51) | (67) | (118) | |||||||
| Impairment | (620) | (283) | (903) | (16) | (7) | (23) | |||||||
| Currency translation | (668) | (829) | (1,497) | - | - | - | |||||||
| 31 December 2008 | 964 | 660 | 1,624 | 28 | 19 | 47 | |||||||
| Amortisation expense | 1,803 | 2,311 | 4,114 | 59 | 76 | 135 | |||||||
| Deconsolidation | - | (362) | (362) | - | (12) | (12) | |||||||
| Declassified from assets held for sale | 1,727 | 2,271 | 3,998 | 51 | 67 | 118 | |||||||
| Currency translation | (62) | (74) | (136) | - | - | - | |||||||
| 30 June 2009 | 4,432 | 4,806 | 9,238 | 138 | 151 | 289 | |||||||
| Net book value | |||||||||||||
| 30 June 2009 | 8,417 | 3,908 | 12,325 | 264 | 121 | 385 | |||||||
| 31 December 2008 | 3,300 | 1,505 | 4,805 | 97 | 44 | 141 |
7. Goodwill
| Goodwill | Goodwill | ||||
| US$'000 | RURm | ||||
| 31 December 2007 | 18,416 | 452 | |||
| Classified as assets held for sale | (18,508) | (434) | |||
| Currency translation | 855 | - | |||
| 30 June 2008 | 763 | 18 | |||
| On acquisition from minority shareholder | 2,963 | 69 | |||
| Declassified as assets held for sale | 18,508 | 434 | |||
| Classified as assets held for sale | (14,777) | (434) | |||
| Currency translation | (4,483) | - | |||
| 31 December 2008 | 2,974 | 87 | |||
| Declassified as assets held for sale | 14,777 | 434 | |||
| Currency translation | (1,084) | - | |||
| 30 June 2009 | 16,667 | 521 |
Goodwill amount is detailed below:
| 1H 2009 | 2008 | 1H 2009 | 2008 | ||||||
| US$'000 | US$'000 | RURm | RURm | ||||||
| Lenta.ru | 481 | 512 | 15 | 15 | |||||
| Price.ru | 2,312 | 2,462 | 72 | 72 | |||||
| Begun.ru ( classified as asset held for sale at 31 December 2008) | 13,874 | - | 434 | - | |||||
| 16,667 | 2,974 | 521 | 87 |
Goodwill is tested for impairment annually at year end or whenever there is any indication of impairment. At 30 June 2009, there was no indication of impairment of goodwill.
Intangible assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstance indicate that the carrying amount may not be recoverable.
In 1H 2009, the Company ceased to classify Begun as an asset held for sale due to the lack of potential buyers for the entity. For additional information refer to Note 20.
There was no indication of impairment of other intangible assets at 30 June 2009.
8. Investments in associates
On 1 April 2008 the Company sold a 51% stake in RGL Holding Limited which owns 100% of ZAO Index20 to a subsidiary of Video International Group.
| 2009 | 2009 | |||
| US$'000 | RURm | |||
| Carrying amount at 1 January | 504 | 15 | ||
| Share of profit of an associate | 117 | 4 | ||
| Dividends received | (228) | (8) | ||
| Currency translation | (39) | - | ||
| Carrying amount at 30 June | 354 | 11 |
9. Other non-current assets
As at 30 June 2009 other non-current assets include a long-term deposit for the rent of office premises valued at US$1,017 thousand ( RUR 32 million).
10. Share Capital
The share capital of the Company at the balance sheet date is comprised as follows:
| 2009 | 2008 | 2009 | 2008 | |||||
| US$'000 | US$'000 | RURm | RURm | |||||
| Authorised ordinary shares of US$ 0.01 each (20 million shares) | 200 | 200 | 6 | 6 | ||||
| Issued and fully paid share capital 15,397,649ordinary shares of US$ 0.01 each | 130 | 138 | 4 | 4 |
There were no employee share options exercised during the first half of 2009 and 2008.
11. Share based payments
On 18 October 2004, at an Extraordinary General Meeting, the Shareholders of the Company approved the grant of options pursuant to the Rambler Media Limited Share Option Plan and the Rambler Media Limited Executive Share Option Plan (the "Share Option Plans"). Under the terms approved, directors of the Company may not allot more than 1,300,000 shares to the Share Option Plans without further approval by ordinary resolution of the Company in general meeting.
| Number | Weighted average exercise prices, USD | Total proceeds received and receivable, USD'000 | Weighted average exercise prices, RUR thousand | Total proceeds receivedand receivable, RURm | |||||||
| Balance at 31 December 2008 | 50,000 | 34.10 | 1,705 | 1 | 53 | ||||||
| New awards | - | - | - | ||||||||
| Exercised | - | - | - | ||||||||
| Balance at 30 June 2009 | 50,000 | 34.10 | 1,705 | 1 | 53 |
The estimated fair value of each share option granted was calculated by applying a Black-Scholes option pricing model.
12. Other provisions for liabilities and changes
Movements in Other Provisions for Liabilities and Charges are as follows:
| US$'000 | RURm | |||
| Carrying amount at 31 December 2008 | 4,208 | 124 | ||
| Additions charged to profit or loss | 1,100 | 36 | ||
| Declassified from liabilities directly associated with assets held for sale | 6,316 | 186 | ||
| Currency translation | (579) | - | ||
| Carrying amount at 30 June 2009 | 11,045 | 346 |
All of the above provisions relate to potential liabilities for taxes other than income taxes, and associated balances arising from the legal structure of the Group and the jurisdictions in which various income and expense items are recorded and where they may be deemed to be assessed for tax purposes. These issues are also impacted by the absence of group relief between various entities in the Group structure.
13. Revenue
Revenue comprises:
| 1H 2009 | 1H 2008 | 1H 2009 | 1H 2008 | |||||
| US$'000 | US$'000 | RURm | RURm | |||||
| Display / Banner advertising | 13,097 | 20,481 | 432 | 490 | ||||
| Paid Search / Contextual advertising | 12,659 | 23,195 | 419 | 554 | ||||
| User generated payments | 2,839 | 4,301 | 94 | 103 | ||||
| Listing fees | 1,805 | 2,982 | 60 | 71 | ||||
| Other Revenue | 412 | 745 | 14 | 18 | ||||
| 30,812 | 51,704 | 1,019 | 1,236 |
Certain comparative information, presented in the financial statements for the period ended 30 June 2008, has been reclassified in order to achieve consistency with current period presentation.
Changes in the classification on the consolidated income statement for the 6 months ended 30 June 2008 are detailed below:
| As previously reported | Reclassification | Adjusted amount | ||||
| US$'000 | US$'000 | US$'000 | ||||
| Display / Banner advertising | 21,702 | (1,221) | 20,481 | |||
| User generated payments | - | 4,301 | 4,301 | |||
| Mobile and Value Added Services | 3,080 | (3,080) | - | |||
| RURm | RURm | RURm | ||||
| Display / Banner advertising | 519 | (29) | 490 | |||
| User generated payments | - | 103 | 103 | |||
| Mobile and Value Added Services | 74 | (74) | - |
14. Operating expenses
Operating expenses comprise:
| 1H 2009 | 1H 2008 | 1H 2009 2009 | 1H 2008 | |||||
| US$'000 | US$'000 | RURm | RURm | |||||
| Labour | 10,467 | 15,279 | 346 | 365 | ||||
| Traffic acquisition cost - contextual | 4,884 | 7,571 | 162 | 181 | ||||
| Amortisation | 4,114 | 3,088 | 136 | 74 | ||||
| Legal and professional | 2,282 | 1,285 | 75 | 31 | ||||
| Commissions - banner sales | 2,042 | 3,020 | 68 | 72 | ||||
| Traffic Acquisition Cost - banner and revenue sharing | 1,729 | 2,564 | 57 | 61 | ||||
| User generated payments costs | 1,552 | 2,874 | 51 | 69 | ||||
| Marketing and advertising | 1,446 | 2,908 | 48 | 70 | ||||
| Depreciation | 1,435 | 1,667 | 47 | 40 | ||||
| Data center costs | 1,311 | 1,288 | 43 | 31 | ||||
| Provision for taxes other than income tax | 1,100 | 1,646 | 36 | 39 | ||||
| Content costs | 1,075 | 587 | 36 | 14 | ||||
| Rent - min lease payments | 961 | 1,167 | 32 | 28 | ||||
| General expenses | 794 | 1,842 | 26 | 43 | ||||
| Share options vested | 17 | 39 | 1 | 1 | ||||
| Other | - | 237 | - | 6 | ||||
| Foreign currency translation (gain) loss | (1,305) | 753 | (43) | 18 | ||||
| Total Operating expenses | 33,904 | 47,815 | 1,121 | 1,143 |
Certain comparative information, presented in the financial statements for the period ended 30 June 2008, has been reclassified in order to achieve consistency with current period presentation.
Changes in the classification on the consolidated income statement for the 6 months ended 30 June 2008 are detailed below:
| As previously reported | Reclassification | Adjusted amount | ||||
| US$'000 | US$'000 | US$'000 | ||||
| Commissions - banner sales | 3,633 | (613) | 3,020 | |||
| User generated payments costs | - | 2,874 | 2,874 | |||
| Mobile costs | 2,261 | (2,261) | - | |||
| RURm | RURm | RURm | ||||
| Commissions - banner sales | 87 | (15) | 72 | |||
| User generated payments costs | - | 69 | 69 | |||
| Mobile costs | 54 | (54) | - |
15. Minority interest
| Begun | Others | Total equity | Begun | Others | Total equity | ||||||||
| US$'000 | US$'000 | US$'000 | RURm | RURm | RURm | ||||||||
| As at 1 January 2009 | - | 28 | 28 | - | 1 | 1 | |||||||
| Loss for the period | (1,365) | - | (1,365) | (45) | - | (45) | |||||||
| Disposal of minority interest | - | (6) | (6) | - | - | - | |||||||
| Minority directly associated with assets held for sale | (308) | - | (308) | (9) | - | (9) | |||||||
| Currency translation | (59) | (2) | (61) | - | - | - | |||||||
| As at 30 June 2009 | (1,732) | 20 | (1,712) | (54) | 1 | (53) |
16. Income taxes
The Rambler Group has operations in a number of jurisdictions and is consequently exposed to the fiscal regimes of more than one country. Its main exposure is to the fiscal regime of the Russian Federation.
Income taxes have been provided for in the consolidated financial statements in accordance with Russian legislation enacted or substantively enacted by the balance sheet date. The income tax charge/benefit comprises current tax and deferred tax and is recognised in the consolidated income statement unless it relates to transactions that are recognised, in the same or a different period, directly in equity.
Income tax comprised the following:
| 1H 2009 | 1H 2008 | 1H 2009 | 1H 2008 | ||||||
| US$'000 | US$'000 | RURm | RURm | ||||||
| Current tax expense | 1,079 | 2,217 | 35 | 53 | |||||
| Deferred tax benefit | (1,674) | (2,476) | (55) | (59) | |||||
| Income tax benefit for the period | (595) | (259) | (20) | (6) |
A reconciliation between the expected and the actual taxation charge is provided below:
| 1H 2009 | 1H 2008 | 1H 2009 | 1H 2008 | ||||||
| US$'000 | US$'000 | RURm | RURm | ||||||
| Accounting loss before taxation | (2,649) | (716) | (88) | (17) | |||||
| Theoretical tax benefit at statutory rate of 20% (2008: 24%) | (530) | (172) | (18) | (4) | |||||
| Tax effect of items which are not deductible or assessable for taxation purposes: | |||||||||
| Non-deductible expenses | 98 | 108 | 3 | 3 | |||||
| Non-deductible provisions for taxes other than on income | 220 | 395 | 7 | 10 | |||||
| Revenue generated in tax free jurisdictions | (533) | (1,530) | (18) | (37) | |||||
| Loss accumulated in tax free jurisdictions | 932 | 1,353 | 32 | 32 | |||||
| Use of estimated annual effective tax rate | (882) | (1,117) | (29) | (27) | |||||
| Additional charges for income tax in connection with the group's structure | 100 | 704 | 3 | 17 | |||||
| (65) | (87) | (2) | (2) | ||||||
| Income tax benefit for the period | (595) | (259) | (20) | (6) |
Income tax benefit is recognized based on management's best estimate of the weighted average annual income tax rate expected for the full financial year. The estimated average annual tax rate used for the year to 31 December 2009 is 22.5% (1H 2008: 36.4%).
17. Earnings/(loss) per share
Earnings/(loss) per share has been calculated as follows:
| 1H 2009 | 1H 2008 | 1H 2009 | 1H 2008 | ||||||
| US$'000 | US$'000 | RURm | RURm | ||||||
| (Loss)/profit for the period from continuing operations attributable to equity holders | (689) | 756 | (23) | 18 | |||||
| Weighted average number of shares in issue (thousands) - basic | 15,398 | 15,398 | 15,398 | 15,398 | |||||
| Weighted average number of shares in issue (thousands) - diluted | 15,398 | 15,398 | 15,398 | 15,398 | |||||
| Basic (loss)/earnings per share from continuing operations (expressed in US$/RUR per share) | (0.045) | 0.049 | (1.49) | 1.17 | |||||
| Diluted (loss)/earnings per share from continuing operations (expressed in US$/RUR per share) | (0.045) | 0.049 | (1.49) | 1.17 |
18. Disposal of a subsidiary
On 2 April 2009, the Group sold a 100% stake in its mobile value added services business SMX Communications Ltd. to a mobile content provider Plastic Media for US$50 thousand.
Details of the sale are as follows:
| US$'000 | RURm | ||||
| Total net assets | 146 | 5 | |||
| Total purchase consideration | 50 | 2 | |||
| Less: cash balance disposed of | (5) | - | |||
| Outflow of cash on sale | 45 | 2 | |||
| Loss on sale | (96) | (3) |
19. Directors' Remuneration
The directors' remuneration for 2009 and 2008 paid by Group companies are as follows (not in thousands):
| 1H 2009 | 1H 2008 | 1H 2009 | 1H 2008 | |||||
| US$ | US$ | RURm | RURm | |||||
| Olga Turisheva | 50,409 | - | 2 | - | ||||
| Nikita Serguienko | 91,310 | - | 2 | - | ||||
| Robert Mott Brown III | 85,359 | 58,987 | 3 | 1 | ||||
| Mark Opzoomer | 319,951 | 291,462 | 11 | 7 | ||||
| Arthur Akopyan | - | 177,116 | - | 4 | ||||
| Total Short term employee benefits | 547,029 | 527,565 | 18 | 12 |
20. Non-current assets held for sale (or disposals groups)
On 30 June 2008, the Company met the criteria of IFRS 5 to classify the Begun business as an asset held for sale. A plan to sell the business was approved in 2008 due to the necessity to establish a prosperous partnership with Google but the transaction was declined by Russian anti-monopoly authorities (FAS) in October 2008. Management decided to continue with an approved plan to sell Begun and to initiate an active programme to locate an interested buyer of the Group's 50.1% stake in Begun. Begun therefore continued to be classified as held for sale at 31 December 2008. In 1H2009, the Company ceased to classify Begun as an asset held for sale due to continued absence of potential buyers for the entity.
Major classes of non-current assets classified as held for sale (or disposal groups) are:
| 1H 2009 | 2008 | 1H 2009 | 2008 | ||||||
| US$'000 | US$'000 | RURm | RURm | ||||||
| Property, plant and equipment | - | 1,360 | - | 40 | |||||
| Intangible assets | - | 12,640 | - | 371 | |||||
| Goodwill | - | 14,777 | - | 434 | |||||
| Deferred tax asset | - | 507 | - | 15 | |||||
| Trade and other receivables | - | 1,299 | - | 38 | |||||
| Cash and cash equivalents | - | 4,075 | - | 120 | |||||
| - | 34,658 | - | 1,018 |
Major classes of liabilities directly associated with non-current assets (or disposal groups) classified as held for sale are:
| 1H 2009 | 2008 | 1H 2009 | 2008 | ||||||
| US$'000 | US$'000 | RURm | RURm | ||||||
| Deferred income tax liability | - | 2,957 | - | 87 | |||||
| Other taxes payable | - | 6,316 | - | 185 | |||||
| Trade and other payable | - | 9,257 | - | 272 | |||||
| - | 18,530 | - | 544 |
21. Contingent liabilities
(a) Russian taxation and currency control regulations
In addition to the possible attribution of additional tax to the Group's companies described in Note 12, management estimates that at 30 June 2009 the Group has other possible obligations from exposure to other than remote tax risks of US$4,667 thousand (RUR 146 million) and at 31 December 2008: US$4,821 thousand (RUR 142 million).
(b) Litigation
In the course of its normal business the Rambler Group receives legal claims from time to time. In the opinion of the directors none of the litigation currently in progress is likely to result in the crystallisation of a material liability.
(c) Commitment to pay for exclusive internet partnership
An agreement was signed on 8 December 2004 by the Rambler Group that commits it to paying a minimum amount per quarter in respect of an internet partnership to promote a customised co-branded instant messaging product for Russian and other CIS countries.
| 2009 | 2008 | 2009 | 2008 | ||||||
| US$'000 | US$'000 | RURm | RURm | ||||||
| Expiring within one year | 2,279 | 3,000 | 71 | 88 | |||||
| Expiring from 1 to 5 years | 1,312 | 3,000 | 41 | 88 |
(d) Lease commitments
The Group is committed to the following lease payments under the non-cancellable operating leases:
| 2009 | 2008 | 2009 | 2008 | ||||||
| US$'000 | US$'000 | RURm | RURm | ||||||
| Expiring within one year | 2,669 | 1,267 | 84 | 37 | |||||
| Expiring from 1 to 5 years | 6,945 | 671 | 217 | 20 |
22. Related-Party Transactions
Transactions between Rambler Companies and its related parties, as well as related party balances are not material for the period ended 30 June 2009 except for the following parties:
| 2009 | 2009 | ||||
| US$'000 | RURm | ||||
| FINAM Bank (related to Begun's minority shareholder) | |||||
| Cash at the beginning of the period - bank account | 932 | 27 | |||
| Cash at the period end - bank account | 1,288 | 40 | |||
| IMHO (majority shareholder of Index20) | |||||
| Balance receivable at the beginning of the period | 5,045 | 148 | |||
| Agent sales | 9,050 | 301 | |||
| Agent commission charge | (1,610) | (54) | |||
| Cash inflows (net) during the period | 8,588 | 285 | |||
| Currency translation | (381) | ||||
| Balance receivable at the period end | 3,516 | 110 |
23. Post Balance Sheet Events
There were no material events after the balance sheet date which affect the financial statements as at 30 June 2009.
24. Seasonality
The internet advertising volume of sales is subject to certain seasonal fluctuations, the second half of the year is typically higher than the first half due to holiday seasons. For the six months ended 30 June 2009 sales volume was affected by both seasonality and ongoing global financial and economic crisis and it represented in USD terms 28% (six months ended 30 June 2008: 47%) and in Roubles terms 37% (six months ended 30 June 2008: 44%) of the annual sales in the year ended 31 December 2008. The decrease in sales volume in USD terms in 1H 2009 was as well highly impacted by the Russian Rouble significant depreciation against US dollar.
Statements of directors' responsibility
The directors' confirm that this condensed set of financial statements has been prepared in accordance with IAS 34.
The directors of Rambler Media Limited are listed in Rambler Media's Annual Report for 31 December 2008. A list of current directors is maintained on Rambler Media Limited's corporate website at www.ramblermedia.com.
Olga Turisheva, CEO
26 August 2009
Copyright Business Wire 2009
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