7th Jun 2007 07:00
RAMBLER MEDIA ANNOUNCES PRELIMINARY FINANCIAL RESULTS FOR FULL YEAR 2006 Internet revenue up 91% year on year to US$28.3 million (2005, US$14.8 million) Rambler Media Limited (RMG.LN), ("the Group"), a leading provider of internetmedia and services to the global Russian-speaking community, today announced itsfinancial results for the year ended 31 December 2006 in accordance withInternational Financial Reporting Standards (IFRS). The Group has almostcompleted its transition from a diversified media group encompassing TV, MobileVAS and Internet operations to a purely internet media and services focusedcompany. FINANCIAL HIGHLIGHTS -- Group revenue from continuing operations* of US$30.6 million (2005, US$18.6 million) -- Internet revenue up 91% year on year to US$28.3 million (2005, US$14.8 million) -- Group EBITDA** from continuing operations* of US$1.62 million, including US$2.6 million provision for potential tax related charges (2005, EBITDA** from continuing operations* restated to US$1.48 million, including US$1.2 million provision for potential tax related charges) -- Internet EBITDA** of US$5.6 million (2005, US$4.2 million) excluding provision for potential tax related charges above -- Consolidated net loss after interest, tax and discontinued operations of US$3.0 million (2005, net loss of US$4.4 million) -- Strong balance sheet with US$18.5 million of cash at year end before receiving final payment of US$21 million from sale of TV in January 2007 *Continuing operations exclude Television, which is classified as discontinuedoperations **Earnings before interest, tax, depreciation and amortisation OPERATING HIGHLIGHTS -- 24.4 million unique monthly users of main Rambler.ru portal in Dec. 2006, up approximately 25% year on year - further increase to over 29 million in first quarter 2007 - above Russian internet penetration growth of 23% -- 2 billion monthly page views in Dec. 2006, up 52% year on year -- Over 220 million search queries per month and growing fast (240 million May 2007) -- 16.8 million registered Rambler email accounts in Dec. 2006, up 77% year on year -- 1.6 million Rambler-ICQ instant messaging unique users per month in Dec. 2006 -- Acquisition of 51% of Price Express, operating www.price.ru , a leading Russian price comparison engine, and subsequent integration into Rambler Search -- Acquisition of 51% of online Russian social network www.damochka.ru and 51% of online banner exchange company Bannerbank -- Sale of Rambler TV for US$23 million (completed in January 2007) with a projected pre-tax gain on disposal of US$7.1 million -- Acquisition in Dec. 2006 of approximately 55% of Rambler Media's shares by Prof-Media, one of Russia's largest media holding groups and a major private investor in most sectors in the Russian media market, offering Rambler significant support for further growth Robert M. Brown III, Chairman of Rambler Media, commented: "2006 was marked byexciting developments in the life of Rambler Media. With the emergence of theinternet as a new mainstream media in Russia and the significant growth inonline advertising, Rambler Media made the strategic decision to devote itsresources entirely to its internet business. The increased focus resulted in thesale of Rambler TV at the end of the year. Rambler Media appointed Mark OpzoomerCEO and Arthur Akopyan CFO in March 2007 to drive this continued focus. WithRambler Media now a pure online player, and attracting over 32 million visitorsto its websites per month, the prospects are even greater for our business.Towards the end of 2006, one of Russia's largest media holding groups,Prof-Media, bought a majority stake in Rambler Media, further demonstrating theimportance and opportunities that the internet represents in the media sectorgoing forward. We are confident that these developments have placed RamblerMedia in an even stronger position to capture the market's growth goingforward." Mark Opzoomer, newly appointed Chief Executive Officer of Rambler Media,commented: "In 2006, revenues in our core internet division continued to growfaster than the internet advertising market itself, which demonstrates that, asan established brand and a leading online media resource for the globalRussian-Speaking community, Rambler Media holds an essential role in helpingbrands reach their audiences. Our focus is to provide the best of class dailyinternet media and services to Russian-speaking consumers and from that, growour share of both the display and search related advertising markets by offeringall advertisers innovative solutions to reach their target audiences." FINANCIAL SUMMARY \* T(US$ '000s) Jan - Dec Jan - Dec 2006 2005 (restated)Revenue from continuing operations 30,646 18,624Internet 28,305 14,818Mobile Value Added Services 2,341 3,806Discontinued operations(a) 5,435 2,797Investment income 1,574 515 -------------------------------Total revenue and investment income 37,655 21,936EBITDA(b) from continuing operations 1,624 1,476Net loss (including discontinued operations) (3,035) (4,361)Profit / (loss) per share from continuing operations - basic and diluted 0.001 (0.040)Loss per share from discontinued operations(a) - basic and diluted (0.202) (0.280)\* T (a)Television was classified as discontinued operations (b)Earnings before interest, tax, depreciation and amortisation FINANCIAL & OPERATING REVIEW Group Revenue for the twelve months ended 31 December 2006 from continuing operationswas US$30.65 million (2005, US$18.62 million) with the increase fully driven bythe Internet Segment. The Group results are more meaningfully reviewed on asegment basis below and a table of Revenues, Operating Expenses and EBITDA isattached. The Group reported a 72% increase in like-for-like total revenue andinvestment income to US$37.7 million (2005, US$21.9 million), reflecting theoverall strength of the Russian media market. Encouragingly, the Group reportedconsolidated EBITDA from continuing operations of US$1.62 million, up fromUS$1.48 million in 2005. The improvement was limited by the 70% rise in Groupoperating expenses (excluding depreciation and amortisation and the tax relatedprovision) to US$28.04 million (2005, US$16.46 million). This increase wasprimarily driven by higher wage and commission costs in the Russian internetmarket generally coupled with intentionally increased marketing costs to driveproduct growth. As a result of the directors' reassessing the tax exposures during the year, theGroup's 2005 EBITDA result has been restated to include a provision forpotential tax related charges of US$1.2 million, which therefore also impactedon the Group's net income. The Group's 2006 results also include a similarprovision for potential tax related charges of US$2.6 million. The provisionsrelate to potential liabilities for taxes other than income tax, which arisefrom the legal structure of the Group and the jurisdictions in which variousincome and expense items are recognised and assessed. These issues are alsoimpacted by the absence of group relief between various entities in the Groupstructure, for example the ability to offset losses from the TV and Mobile VASsegments. The Group is now taking steps to simplify its legal structure bycreating a primary trading entity with multiple operating business divisions.This process is expected to be completed within 12 months and to result in aforward prevailing tax rate of approximately 25% when complete. These provisionshave been reflected in the Internet segment. If appropriate, the provisions maybe released at some point in the future. The Group's consolidated net loss after interest, tax and discontinuedoperations was US$3.0 million in 2006 (2005, net loss US$4.4 million). This 2006net loss is split between a net profit from the continuing operations of US$0.02million and a net loss from discontinued operations of US$3.06 million. The Group's profit per share from continuing operations (basic and diluted) wasUS$0.001 (2005, loss per share US$0.040). The Group's loss per share fromdiscontinued operations (basic and diluted) was US$0.202 (2005, loss per shareUS$0.280). Internet segment Internet revenue, making up 92% of revenues from continuing operations, grew by91% year on year from US$14.8 million to US$28.3 million following sustainedgrowth in the number of Rambler.ru users and strong growth in Russia's internetadvertising market, up approximately 70%. In addition to its internet revenue,the Group also recorded investment income of US$1.6 million (2005, US$0.5million) for dividends received from Rambler's 25% interest in Begun, one ofRussia's leading search and contextual text based advertising platforms with anetwork of over 10,000 individual advertisers and over 30,000 partnerdistribution sites. This demonstrates the healthy growth of the text basedadvertising market in Russia and Begun's favourable position in the market. TheGroup's Internet division has been profitable since 2004 and generated EBITDA ofUS$5.6 million in 2006 (2005, US$4.2 million) excluding provision for potentialtax related charges of US$2.6 million (2005, US$1.2 million) as explained above. Operating expenses (excluding depreciation and amortisation and tax relatedprovision) in the Group's Internet segment rose 119% to US$24.3 million (2005,US$11.1 million). Staff related costs represent 40% of Internet revenues and areunder pressure from high salary inflation and high staff demand in the Moscowlabour market. These expenses alone account for approximately half of theincrease in operating expenses. The next largest increase is due to partner feesand commissions due to the success of certain projects, such as Rambler-ICQ,followed by planned increases in marketing expenditures to drive traffic. Rambler.ru (www.rambler.ru) ("Rambler") is a leading Russian language internetportal which successfully combines search with communication and communityactivities; and media and entertainment services. In 2006, Rambler.ru reached24.4 million unique monthly users, up approximately 25% from the 19.5 millionusers in 2005. This growth rate is above the average 23% yearly increase inRussian internet penetration. Rambler aggregates the best of class internet media and services in Russia andenables mass audiences to navigate to specific pages according to theirinterest. 45% of users visit Rambler for its search, 20% for email, 16% fornews, 11% for dating, 9% for instant messaging and 7% for photos - awell-balanced usage. Through its comprehensive tracking system, Rambler Top 100,Rambler offers valued statistics on internet use in Russia and the most visitedwebsites among 1 million sites in the Russian internet across 57 categories(automotive, travel, etc). In 2006, Rambler Search index contained approximately 1.4 billion Russiandocuments, which is 50% more than in 2005. Rambler Search processed on average200 million search queries per month in 2006 (220 million search queries inDecember 2006, now 240 million search queries in May 2007). Throughout the year,Rambler upgraded its search capabilities, for example enabling its users tosearch through multimedia documents including images. Rambler also entered intoa licensing agreement with FAST, a leading Norwegian search technology provider,to create further enhanced services. In 2006, Rambler Search continued the integration of Begun's text basedsponsored links for the monetisation of key word search. In June 2006, Rambler introduced a 'Rambler toolbar assistant' to incorporatethe search and other tools in a user-friendly interface which users can easilyaccess across Rambler pages. The new tool integrates news, mail, weather, audio,blogs and other personalised services. In October 2006, Rambler updated its map search to include new and more detailedmaps of Russia's largest cities with street search capabilities. In November 2006, Rambler launched a co-branded classifieds portal inpartnership with Russia's leading classifieds newspaper Iz Ruk V Ruki(http://irr.rambler.ru/). During 2006, Rambler News' audience grew by approximately 40%. Rambler News(http://www.rambler.ru/news/) launched a new version in October, featuring videoand audio content as well as new links with easier access to sports, finance,regional news, real estate and other sections. Rambler News also launchedsuccessful special weekly online supplements for auto, style, home and personalfinance. Lenta.ru (www.lenta.ru) is one of the Group's most frequented news sites and isthe leading online newspaper in Russia with over 3 million unique visitors permonth. Rambler Sport (http://sport.rambler.ru/) regularly launches customised sitesdedicated to special sporting events. 'Rambler Torino' was launched inconnection with the Winter Olympic Games and became the official online partnerof the Russian Olympic Committee, attracting over 1 million visitors in itsfirst week. Other unique sites include the 2006 FIFA World Cup Footballchampionship and the 2007 International Ice Hockey World Championships hosted inMoscow. During the year, Rambler developed its horoscope service to offer a morepersonalised and broader choice of horoscopes to its 2 million users everymonth. The service (http://horoscopes.rambler.ru/) attracted 55% more users in2006 than in 2005. Rambler launched a new email interface in 2006, including updated spell checkservice and increased mail box space. On average, Rambler's monthly emailaudience grew by 77% year on year in 2006. There are over 16.8 millionregistered Rambler email accounts. One of Rambler's most successful projects has been its partnership with ICQ tooffer instant messaging services. Before its partnership with Rambler, ICQ had 2million users in Russia. Since Rambler-ICQ's launch, ICQ's users have doubled to4 million users, of whom 2 million are today active users via the Rambler-ICQjoint service (http://icq.rambler.ru/). Rambler Planeta (http://planeta.rambler.ru/), the blogging portal, has beenintegrated with Rambler Photo (http://foto.rambler.ru/), Rambler Vision(http://vision.rambler.ru/) and other Rambler services to allow users to searchpeers by categories of interest and search through video files. In early 2006,Rambler Planeta had 100,000 blogs and today, the portal attracts 1.3 millionregistered users. Rambler Vision has 1.5 million unique monthly users. In June 2006, Rambler launched a gaming service called Rambler Games(http://games.rambler.ru/) as part of Rambler.ru's main portal, includingmultiplayer, skill games and premium downloadable games. At the end of 2006,Rambler Games had 1.6 million unique monthly users. In January 2006, Rambler Media bought 51% of Price Express, a leading e-commerceinternet Group operating price.ru (www.price.ru), which provides product searchand price comparison tools designed to help online shoppers make the mostcost-effective buying decisions. Price.ru has a database of 40 million priceditems, offering consumers one of the largest and quickest buying choices in theRussian internet market. Price.ru was integrated into Rambler Search onRambler.ru's main page. In July 2006, Rambler Media acquired 51% of Damochka.ru (www.damochka.ru) and51% of BannerBank from eHouse Holding. Damochka.ru is a leading Russianlanguage, social network, and personal ads website with over 1.7 millionregistered users. BannerBank operates a banner exchange network. Mobile segment Mobile Value Added Services revenues were US$2.3 million (2005, US$3.8 million)and accounted for 7.6% of revenues from continuing operations in the period (20%of revenues in 2005). The reduction in revenues was intended to begin focusingthe Mobile operations on the Group's own Internet products and services, andless on providing lower margin services to other content providers. The Mobilesegment EBITDA loss was reduced to US$1.12 million (2005, US$1.49 million loss).Mobile services are strategically important and are being redeveloped to allowthe Group's large internet audience to enjoy all the Group's Internet media andservices on their mobile devices. As such, the Mobile segment will be integratedinto the Internet segment in the future. Television segment (further discontinued operations) The Group's TV business, the sale of which was completed after the end of theperiod, is classified as discontinued operations. Revenue generated by Rambler TV in the full year 2006 nearly doubled totalingUS$5.4 million (2005, US$2.8 million) reflecting the generally strong TVadvertising market in Russia. Nevertheless, the Group's TV operations were toosmall relative to the market competition and were becoming a distraction to theGroup's large position in the internet space. The discontinued TV operationreported an EBITDA loss of US$3.0 million (2005, US$3.2 million full year EBITDAloss). Management approved the sale of Rambler TV during the second half of 2006 andthe sale was completed in January 2007, allowing the Group to dedicate fully togrowing the Group's Internet segment. Outlook The global Russian speaking audience approximates 280 million, of whichapproximately 140 million are in Russia. Russia has rapidly become one ofEurope's largest online communities, third after Germany and the UK, with 28million Russians online in 2006, representing about 25% of the Russian adultpopulation (source: The Public Opinion Foundation). This percentage is forecastto more than double by 2010, according to the Russian Ministry ofCommunications, which could make Russia the largest online market in Europe. Theoverall Russian advertising market is growing very strongly, and internetadvertising is the fastest growing segment. Online display advertising wasestimated to have increased by 67% year on year in 2006 to US$100 million (2005,US$60 million) (source: Russian Association of Communication Agencies - AKAR).In addition, text based advertising on Russian-language internet sites soared toUS$110 million in 2006 from US$45 million in 2005. In 2006, revenue fromInternet advertising accounted for 1.6% of the total advertising market but thesegment is growing faster than any other media and is forecast to attract 4% oftotal advertising by 2010 (source: Zenith Optimedia). The Group is well-positioned to continue its rapid growth, in line with orfaster than that of the online advertising market, due to its established brand,large market share, and wide range of internet media and services. FINANCIAL POSITION The Group ended the period with cash balances of US$18.5 million. Since the saleof Rambler TV was completed at the beginning of 2007, the sale's final paymentof US$21 million was not included in the 2006 cash balance. RECENT DEVELOPMENTS At an Extraordinary General Meeting of shareholders held in Jersey on 15 March2007, Messrs Vladimir Pravdivy and Ilya Oskolkov-Tsentsiper were appointed asDirectors of the Group, and Messrs Alexander Rappaport and Vitaly Rudenkoresigned from the Board of Directors. In addition, due to the Group's change ofmanagement, Messrs Mark Opzoomer and Arthur Akopyan, CEO and CFO of RamblerMedia respectively, were appointed as Executive Directors on the Board. Ms.Irina Gofman remains on the Board of Directors of the Group as a Non-executiveDirector. Mr. James Mullins resigned from his positions of CFO and Director. OTHER INFORMATION The Group's consolidated accounts have been prepared according to InternationalFinancial Reporting Standards (IFRS). The following preliminary financialinformation has been approved for release by the Group's auditors.PricewaterhouseCoopers was appointed as the Group's new auditor of record inDecember 2006. The full final financial statements and auditors' report have notyet been signed by the auditors. The Group will host a conference call to present the results at 4:30 pm (MoscowTime)/ 2:30 pm (CET) / 1:30 pm (London Time) / 8:30 am (New York Time) today.The results statement is available on Rambler Media's website atwww.ramblermedia.com. To participate in the conference call, please registeronline at www.sharedvalue.net/ramblermedia/fy2006. The number for the conferencecall will be available upon registration. For further information, please visit www.ramblermedia.com or contact: \* TRambler Media Shared Value Limited ING Wholesale BankingMark Opzoomer Nicolas Duperrier Daniel FriedmanTel. +7 495 500 3826 Tel. +44 (0) 20 7321 5010 William Marle [email protected] Tel: +44 (0) 20 7767 1000\* T *** ABOUT RAMBLER MEDIA Rambler Media is a diversified Russian language media, entertainment, servicesand content delivery Group which operates various internet properties includingthe leading Russian language internet portal and search engine 'rambler.ru',on-line newspaper 'Lenta.ru', broadband ISP 'Rambler Telecom', interactiveadvertising Group 'Index20', and mobile content service provider 'RamblerMobile'. Rambler Media's shares are traded on AIM, the junior market of theLondon Stock Exchange under the symbol 'RMG'. For more information on RamblerMedia, visit our corporate website at www.ramblermedia.com. Certain statements within this announcement constitute forward-lookingstatements. Such forward-looking statements involve risks and other factorswhich may cause the actual results, achievements or performance of the Companyto be materially different from any future results, achievements or performanceexpressed or implied by such forward-looking statements. Such risks and otherfactors include, but are not limited to, general economic and businessconditions, changes in government regulations, and court interpretations of suchregulations, currency fluctuations (including the US$/Rbs rate), competition,and changes in development plans. There can be no assurance that the results andevents contemplated by the forward-looking statements contained in thisannouncement will, in fact, occur. Any forward-looking statements made in thisannouncement represent management's best judgment as to what may occur in thefuture and are correct only as at the date of this announcement. The Companywill not undertake any obligation to release publicly any revisions to theseforward-looking statements to reflect events or circumstances occurring afterthe date of this announcement except as required by applicable law or by anyapplicable regulatory authority. FULL YEAR RESULTS BY BUSINESS SEGMENT(US $'000s) YEAR TO 31 DECEMBER 2006 The reconciliation between results of business segments (including discontinuedoperations) and the numbers reported in the Company's financial statements forthe year ended 31 December 2006 is as follows. Inter-segment revenues are notmaterial and therefore have not been disclosed. \* T Internet Total TV Services Mobile VAS continuing (discontinued operations operations) ---------------------------------------------------- Revenue 28,305 2,341 30,646 5,435Investment income 1,574 - 1,574 -Operating expenses (excluding depreciation and amortisation and tax related provisions) (24,316) (3,463) (28,039)(a) (8,395)Depreciation and amortisation (1,281) (209) (1,490) (244)Tax related provisions(a) (2,557) - (2,557) -EBIT 1,725 (1,331) 134(b) (3,204) ---------------------------------------------------- EBITDA(a) 3,006 (1,122) 1,624(b) (2,960) ====================================================\* T (a)Internet EBITDA excluding tax related provisions: US$5,563 (see explanationon page 3 and 4) (b)including US$260 relating to the share options costs YEAR TO 31 DECEMBER 2005 The segmental results for the year ended 31 December 2005 by business segmentare as follows: \* T Internet Total TV Services Mobile VAS continuing (discontinued operations operations) ------------------------------------------------------ Revenue 14,818 3,806 18,624 2,797Investment income 515 - 515 -Operating expenses (excluding depreciation and amortisation and tax related provisions) (11,086) (5,296) (16,463)(b) (5,985)Depreciation and amortisation (1,106) (130) (1,236) (621)Tax related provisions(a) (1,200) - (1,200) - ------------------------------------------------------EBIT 1,941 (1,620) 240(b) (3,809) ------------------------------------------------------EBITDA(b) 3,047 (1,490) 1,476(b) (3,188) ======================================================\* T (a)Internet EBITDA excluding tax related provisions: US$4,247 (see explanationon page 3 and 4) (b)including US$81 relating to the share options costs CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED31 DECEMBER 2006(US $'000s) \* T Notes 2005 2006 (restated)-------------------------------------------------------------------------------------------Continuing operations:Revenue 30,646 18,624 Investment income 1,574 515 Operating expenses (32,086) (18,899)------------------------------------------------------------------------------------------- Net profit before interest, taxation and minority interest 134 240 Interest income 940 442Interest expense (5) (62)------------------------------------------------------------------------------------------- Net profit before taxation and minority interest 1,069 620 Taxation (1,048) (1,165)------------------------------------------------------------------------------------------- Net profit/(loss) from continuing operations 21 (545) Discontinued operations:Loss from discontinued operations 5 (3,056) (3,816) -------------------------------------------------------------------------------------------Net loss (3,035) (4,361)------------------------------------------------------------------------------------------- Loss attributable to:Loss attributable to equity holders of parent (3,183) (4,384) Minority interest 148 23------------------------------------------------------------------------------------------- Net loss (3,035) (4,361)------------------------------------------------------------------------------------------- Profit/(loss) per share from continuing operations - basic and diluted (expressed in USD per share) 2 0.001 (0.040) Loss per share from discontinued operations - basic and diluted (expressed in USD per share) 2 (0.202) (0.280)-------------------------------------------------------------------------------------------\* T CONSOLIDATED BALANCE SHEETS AS AT 31 DECEMBER 2006(US $'000s) \* T Consolidated--------------------------------------------------------------- 2006 2005 (restated)---------------------------------------------------------------AssetsNon Current Assets Property, plant and equipment 3,731 3,815 Intangible assets 13,741 15,770 Investments in subsidiaries - - Financial assets 864 778 Deferred income tax asset 1,657 2,267--------------------------------------------------------------- 19,993 22,630 Current Assets Trade debtors 5,529 3,690 Inventory - 367 Prepayments 1,217 392 VAT receivable 612 558 Other receivables 1,172 861 Bank and cash balances 18,461 21,482--------------------------------------------------------------- 26,991 27,350 Non-current assets held for sale 18,718 ---------------------------------------------------------------- Total Assets 65,702 49,980--------------------------------------------------------------- LiabilitiesCurrent Liabilities Trade creditors 4,379 1,213 Current income tax payable 2,536 800 VAT payable 303 - Other provisions for liabilities and charges 3,757 1,200 Deferred income 4,067 829 Loans - 10--------------------------------------------------------------- 15,042 4,052 Liabilities directly associated with assets held for sale 2,807 ---------------------------------------------------------------- 2,807 - Long Term Liabilities Loans - 131 Deferred income tax liability 4,124 3,993--------------------------------------------------------------- 4,124 4,124--------------------------------------------------------------- Total liabilities 21,973 8,176--------------------------------------------------------------- Shareholders' equityIssued capital 153 150Share premium 57,208 55,902Options reserve 601 341Merger reserve - 51Accumulated losses (17,846) (14,663)---------------------------------------------------------------Total shareholders' equity 40,116 41,781--------------------------------------------------------------- Minority interests 3,613 23--------------------------------------------------------------- Liabilities and Shareholders' Equity 65,702 49,980---------------------------------------------------------------\* T CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED31 DECEMBER 2006(US $'000s) \* T 2006 2005 (restated)---------------------------------------------------------------------------- Cash flows from operating activitiesNet (loss) for the year (3,183) (4,384)Adjusted for: - -Minority interest 148 23Interest received (940) (442)Interest charged 10 69Taxation charge 1,048 1,165Cost of share options exercised 260 81Merger reserve write-off (51) -Depreciation and amortisation 1,734 1,857Loss on disposal of fixed assets 142 56(Increase) in inventory (174) (157)(Increase) in debtors and receivables (4,604) (2,306)Increase in creditors and other payables 9,002 1,451----------------------------------------------------------------------------Net cash from/(used in) operating activities 3,392 (2,587)---------------------------------------------------------------------------- Cash flows from investing activitiesPurchase of subsidiary undertakings (5,004) (5,020)Purchase of investments (154) (778)Purchase of property, plant and equipment (2,151) (1,720)Proceeds on disposal of property, plant and equipment - 34Acquisition of intangible assets (1,461) (510)----------------------------------------------------------------------------Net cash used in investing activities (8,770) (7,994)---------------------------------------------------------------------------- Cash flows from financing activitiesProceeds from equity financing 1,568 30,047AIM listing expenses paid by company - (2,443)Repayment of borrowings (141) (1,322)Interest received 940 442Interest paid (10) (69)----------------------------------------------------------------------------Net cash from financing activities 2,357 26,655---------------------------------------------------------------------------- Net (decrease)/increase in cash (3,021) 16,074Cash at the beginning of the year 21,482 5,408 Cash at the end of the year 18,461 21,482---------------------------------------------------------------------------- - - Material non-cash transactions:Other purchases on barter terms (1,319) (895)Sales on barter terms 1,319 895Proceeds from issue of shares retained by broker - 2,078AIM listing expenses paid by broker - (2,078)Loans assumed on acquisition of subsidiary undertaking - 131Dividend income (not received until the following year) 890 515----------------------------------------------------------------------------\* T CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE YEAR ENDED31 DECEMBER 2006(US $'000s) \* T Issued Share Options Merger Accumulated Minority Total capital premium reserve reserve losses interest equity--------------------- -------- ------------ ---------- -------- ------------ ---------- ---------- (restated) (restated) (restated) (restated)--------------------- -------- ------------ ---------- -------- ------------ ---------- ----------31 December 2004 (restated) 120 29,703 260 51 (10,279) - 19,855 Share capital issued 30 30,720 - - - - 30,750 Cost of share capital issued - (4,521) - - - - (4,521) Cost of share options - - 81 - - - 81 Loss for the year (restated) - - - - (4,384) (4,384) Minority interest - - - - - 23 23 --------------------- -------- ------------ ---------- -------- ------------ ---------- ----------31 December 2005 150 55,902 341 51 (14,663) 23 41,804--------------------- -------- ------------ ---------- -------- ------------ ---------- ---------- Share capital issued 3 1,306 - - - - 1,309 Cost of share options - - 260 - - - 260 Loss for the year - - - (51) (3,183) - (3,234) Minority interest - - - - - - - 3,590 3,590 --------------------- -------- ------------ ---------- -------- ------------ ---------- ----------31 December 2006 153 57,208 601 - (17,846) 3,613 43,729--------------------- -------- ------------ ---------- -------- ------------ ---------- ----------\* T The availability of the Rambler Companies' retained earnings for distribution toshareholders is determined by the Articles of Association of the individualcompanies within the Rambler Companies and by relevant legal and fiscalregulations and may not correspond to the figures presented above. NOTES (All amounts in the notes are stated in US$ thousand) 1. Significant Accounting Policies The principal accounting policies adopted in the preparation of theseconsolidated financial statements are set out below: a) Basis of preparation These consolidated financial statements have been prepared in accordance withInternational Financial Reporting Standards ("IFRS") under the historical costconvention. The principal accounting policies applied in the preparation ofthese consolidated financial statements are set out below. These policies havebeen consistently applied to all the periods presented, unless otherwise stated(refer to Note 5, Adoption of New or Revised Standards and Interpretations). b) Consolidated financial statements Subsidiaries are those companies and other entities (including special purposeentities) in which the Group, directly or indirectly, has an interest of morethan one half of the voting rights or otherwise has power to govern thefinancial and operating policies so as to obtain economic benefits. Theexistence and effect of potential voting rights that are presently exercisableor presently convertible are considered when assessing whether the Groupcontrols another entity. Subsidiaries are consolidated from the date on whichcontrol is transferred to the Group (acquisition date) and arede-consolidated from the date that control ceases. The purchase method of accounting is used to account for the acquisition ofsubsidiaries. The cost of an acquisition is measured at the fair value of theassets given up, equity instruments issued and liabilities incurred or assumedat the date of exchange, plus costs directly attributable to the acquisition.The date of exchange is the acquisition date where a business combination isachieved in a single transaction, and is the date of each share purchase where abusiness combination is achieved in stages by successive share purchases. The excess of the cost of acquisition over the fair value of the net assets ofthe acquiree at each exchange transaction represents goodwill. The excess of theacquirer's interest in the net fair value of the identifiable assets,liabilities and contingent liabilities acquired over cost ("negative goodwill")is recognised immediately in profit or loss. Identifiable assets acquired and liabilities and contingent liabilities assumedin a business combination are measured at their fair values at the acquisitiondate, irrespective of the extent of any minority interest. Intercompany transactions, balances and unrealised gains on transactions betweengroup companies are eliminated; unrealised losses are also eliminated unless thecost cannot be recovered. The Company and all of its subsidiaries use uniformaccounting policies consistent with the Group's policies. Minority interest is that part of the net results and of the net assets of asubsidiary, including the fair value adjustments, which is attributable tointerests which are not owned, directly or indirectly, by the Company. Minorityinterest forms a separate component of the Group's equity. 2. Profit/(loss) per Share Basic profit/(loss) per share is calculated by dividing the profit/(loss)attributable to equity holders of the Company by the weighted average number ofordinary shares in issue during the year, excluding treasury shares. The Company has no dilutive potential ordinary shares; therefore, the dilutedprofit/(loss) per share equals the basic profit/(loss) per share. Profit/(loss) per share from continuing operations is calculated as follows: \* T 2006 2005-------------------------------------------------------------------------------------- Profit/(loss) for the year from continuing operations 21 (545) Weighted average number of shares in issue (thousands) 15,153 13,611-------------------------------------------------------------------------------------- Basic and diluted profit/(loss) per share from continuing operations (expressed in USD per share) 0.001 (0.040)--------------------------------------------------------------------------------------\* T (Loss) per share from discontinued operations is calculated as follows: \* T 2006 2005-------------------------------------------------------------------------------------- Loss for the year from discontinued operations (3,056) (3,816) Weighted average number of shares in issue (thousands) 15,153 13,611 -------------------------------------------------------------------------------------- Basic and diluted loss per share from discontinued operations (expressed in USD per share) (0.202) (0.280)--------------------------------------------------------------------------------------\* T 3. Event after the Balance Sheet date Closing of TV business sale The sale of Rambler TV business to Osgora Productions Limited was officiallycompleted and closed on 12 January 2007. The final settlement for Rambler's TVbusiness in the amount of USD 21 million was received on 10 January 2007. 4. Restatement of results for the year ended 31 December 2005 As a result of the directors' reassessing the tax exposures during the year, theGroup's 2005 financial statements have been restated to include a provision forpotential tax related charges. The effects of the adjustment are summarisedbelow: \* T As previously reported Adjustment Restated at 31 December 2005--------------------------------------------------------------------------------------Taxation 365 800 1,165Other tax related (included inoperating expenses) - 1,200 1,200-------------------------------------------------------------------------------------- 2,000\* T 5. Discontinued operations The reconciliation between results from discontinued operations and the numbersreported in the Company's financial statements for the years ended 31 December2006 and 31 December 2005 is as follows. \* T 2006 2005----------------------------------------------------------------------- Revenue 5,435 2,797 Operating expenses 8,395 5,985Depreciation and amortisation 244 621----------------------------------------------------------------------- 8,639 6,606 -----------------------------------------------------------------------EBIT (3,204) (3,809)----------------------------------------------------------------------- Interest expense (12) (7)Taxation 160 ------------------------------------------------------------------------Loss from operations (3,056) (3,816)----------------------------------------------------------------------- Net loss (3,056) (3,816)-----------------------------------------------------------------------\* T 6. Change of majority controlling shareholder On 31 October 2006, Prof-Media, a Russian media conglomerate, acquired 48.8% ofshares in Rambler Media Limited from funds managed by FM Asset ManagementLimited. In December 2006, following anti-monopoly approval, Prof-Media obtainedcontrol and later increased its stake to 54.8%. Copyright Business Wire 2007Related Shares:
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