VK COMPANY LIMITED 22.02.2017
Mail.Ru Group Limited Preliminary Trading Statement for the Full Year 2016
Mail.Ru Group Limited (LSE: MAIL, hereinafter referred as 'the Company' or 'the Group'), one of the largest companies in the Russian-speaking Internet market, today provides the following preliminary unaudited financial information and key operating highlights for the full year ended 31 December 2016.
FY 2016 Performance Highlights
Current Group results on a pro-forma basis:
- FY 2016 Group aggregate segment revenue grew 14.8% Y-o-Y to RUR 42,751 million. Q4 2016 Group aggregate segment revenue grew 19.2% Y-o-Y to RUR 13,241 million.
- Including non-cash one time exceptional tax charge of RUR 768 million FY 2016 Group aggregate segment EBITDA decreased 1.0% Y-o-Y to RUR 17,914 million. Ex this tax charge EBITDA increased 3.3% to RUR 18,682 million.
- Including non-cash one time exceptional tax charge of RUR 1,022 million FY 2016 Group aggregate net profit grew 18.0% Y-o-Y to RUR 11,616 million. Ex this tax charge net profit increased 28.4% to RUR 12,638 million.
Excluding Delivery Club, effect of VAT exemption on our Russian online games revenue in Q4 2016 and non-cash one time tax charge:
- FY 2016 Group aggregate segment revenue grew 13.6% Y-o-Y to RUR 41,787 million. Q4 2016 Group aggregate segment revenue grew 15.9% Y-o-Y to RUR 12,713 million.
- FY 2016 Group aggregate segment EBITDA grew 3.7% Y-o-Y to RUR 18,811 million.
- FY 2016 Group aggregate net profit grew 29.3% Y-o-Y to RUR 12,820 million.
- Net cash position as of 31 December 2016 was RUR 5,391 million.
- Ru Group is the leading online property in Russia with 77.7 million monthly active users (comScore MMX Multi-Platform, Russia, age 6+, December 2016); VK reached 95 million monthly active users globally (internal data, December 2016).
Key recent developments
Ru Group acquired 100% of Delivery Club, the number one online food delivery company in Russia; since the acquisition number of orders increased over 60%.
Launch of ride-sharing service BeepCar (on iOS, Android and web).
Our mobile marketplace Youla was updated with a new listing algorithm, similar product suggestions, user ranking and subscriptions to sellers.
Youla reached 2.0m daily and 9.6m monthly active users.
Ru for Business relaunched as a platform with all our B2B services.
Launch of Cloud for Business, a B2B service offering solutions for cold and hot data storage and storage for team collaboration.
Ru email service introduced option to schedule email sending.
Mail.Ru apps for iOS and Android were updated with photo & video gallery and paid plans optimized for media files storage.
Launch of VK Live, a mobile app for live video streaming, and video streaming directly in VK newsfeed with comments and donations (gifts, stickers).
VK introduced Stories, a feature that lets users instantly share photos and videos that are live for 24 hours (available on iOS and Android).
VK offered groups and public pages an extended API to create embedded applications for surveys, chats, donations, selling tickets, bookings, etc.
OK newsfeed now displays posts your friends commented on and attaches friends' avatars to their likes.
Stream enhancements (animated filters, masks, paintings by streamers), top streamers feed and stream statistics in OK Live app.
Ru Group acquired license to operate Warface in North America and Europe.
Launch of MMORPG Revelation Online in Russia.
Soft launch of mobile MOBA game Planet of Heroes on iOS.
New content and improved team play UI in War Robots.
ME updated with real time traffic data, new routing engine and data compression.
CPI optimization strategies in myTarget now available for all clients.
Rollout of newsfeed video ad format (cross-device on desktop and mobile).
myTarget mobile advertising network now serves ads to 82m MAUs from over 2,600 third-party apps (in addition to the Group's own projects).
Commenting on the results of the Group, Dmitry Grishin, Chairman of the Board and Boris Dobrodeev, CEO (Russia) of Mail.Ru Group, said:
We are pleased to announce the unaudited results for FY 2016 where, including Pixonic and Delivery Club on a pro-forma basis, the Company achieved revenue growth of 14.8% Y-o-Y to RUR 42,751m. Q4 revenues including Pixonic and Delivery Club on a pro forma basis grew 19.2% to RUR 13,241m. Q4 2016 results include a RUR 342m benefit from the exception of Russian VAT on our Russian online games revenue which will now continue going forward.
In 2016 there is an unrelated non-cash one time tax charge of RUR 768m above the EBITDA line and RUR 254m below the line. In 2016 the combined effect of Delivery Club and Pixonic was broadly EBITDA neutral. As a result overall EBITDA margins were 41.9% giving group EBITDA of RUR 17,914m. Excluding the non-cash one time tax charge FY 2016 EBITDA margins were 43.7% and EBITDA RUR 18,682m. Excluding Delivery Club and Pixonic and the VAT benefit and non-cash one time tax charge EBITDA margins would have been 46.9% and EBITDA RUR 18,629m.
Advertising revenue growth remained strong through the entire of 2016 with 26.1% Y-o-Y growth to RUR 18,442m and Q4 growth of 26.3% to RUR 5,936m. The trends that we experienced in the first nine months of 2016 were unchanged in Q4. We continue to focus on the growth of mobile advertising and the roll out of new ad technology. Engagement continues to rise across all platforms and our unique position allows us to continue to take advantage as advertising budgets continue to shift to digital, and especially mobile.
While Q4 search revenues saw some improvement from Q3 they remained under pressure. However this was more than compensated for by continued strong growth in targeted advertising across the social networks and in mobile.
In 2017 we expect to see a broad continuation of the trends seen in 2016, with further shift of ad budgets online, further growth in mobile and continued growth in native advertising. With the continued roll out of further ad products, especially those around mobile and video, we believe we remain well positioned, and as such expect to see solid growth in 2017 advertising revenues.
Through 2016 VK continued to perform very well with engagement and audience increasing through the year. In FY 2016 revenues grew 43.4% to RUR 8,936m with Q4 growth of 49.9% to RUR 2,999m. The redesign of the desktop and the addition of new features, especially the smart newsfeed, on mobile in 2016 were well received by users and led to increased engagement. Total monthly active users set a new record of 95m in December with the embedded VK messaging on mobile and desktop reaching 82m monthly active users. Mobile usage also continued to see strong growth with a new record of over 78m mobile monthly users in December.
In 2017 the focus will remain on native, and especially mobile and video advertising in the newsfeed. As previously commented we expect the ad load and pricing to continue to increase from the current levels. At the time of the acquisition of the final 48.01% of VK in September 2014 we said that we would at least double revenues in 3 years. This has been achieved in 2 years. We continue to see significant further opportunities for VK with both an expanding user base and an increasing number of features, and as such, expect to be able to double the VK revenues again over the next 3 to 4 years.
In FY 2016 on a pro forma basis our MMO games revenue grew 21.2% Y-o-Y to RUR 11,390m with Q4 growth of 36.5% to RUR 3,861m. Warface remains our largest game, followed by War Robots. The pipeline of major releases for 2017 based around the key franchises is very full with the international release of Revelation and the console version of Skyforge planned for H1 2017. In addition to this there will be a number of mobile titles. As such we expect to see good growth from games in 2017.
IVAS revenues for the FY 2016 declined 5.2% as mobile monetization remained challenging. In 2017 we plan a number of new mobile products and an increased focus on the mobile UX, and hence increasing paying user penetration. As such we expect 2017 IVAS revenues to be broadly in line with 2016. In 2017 we expect the main mobile monetization will remain in advertising.
In October 2016 we announced the acquisitions of Pixonic and in November 2016 of Delivery Club. Both acquisitions have subsequently been fully integrated into the Group. For clarity we have given results in both the Q3 2016 statement and in the FY 2016 statements with results both including and excluding the acquisitions. Pixonic, with its key game War Robots, continues to see very strong growth in users which have more than doubled since the acquisition. We expect to see continued strong growth through 2017. Since the acquisition of Delivery Club in November 2016 we have seen orders rise over 60%. We already see that leveraging our mobile marketing resources intensifies new user acquisition and compared to other markets penetration of food delivery services in Russia remains low. As such, we expect to see significant further growth in Delivery Club through 2017.
Through Q4 2016 and into 2017 our location-based marketplace Youla continued to see very strong user growth and has now reached 9.6m monthly active users and 2.0m daily active users. This is a near doubling of the user base from the 5m MAU and 1m DAU that we reported with the Q3 revenue update in October. The app remains consistently in the Top-5 overall in Russia in both the App Store and Google Play. While we may start some limited monetization experiments in 2017 the main focus will be the further driving of user numbers and engagement and the ongoing expansion of new features across all platforms as we extend the reach of the product over the widest possible number of users. User feedback remains very positive and hence we anticipate strong further user growth through 2017.
As previously mentioned, in January 2017 we received formal confirmation from the Russian tax authorities that starting from Q4 2016 our Russian online games revenue should be exempt from Russian VAT going forward. Given that there is no change to the pricing of games and this VAT change is now ongoing, this will give an ongoing increase to revenues. In Q4 2016 this gave a benefit of around RUR 342m. In 2017 the revenue benefit from the VAT exception is expected to be of the order of around RUR 1bn.
In December 2016 MegaFon announced that they intended to acquire the 15.2% equity stake owned by USM. This was then approved by MegaFon shareholders in January 2017. Statements from both companies have made clear that both businesses will continue to operate separately and there is no change to Mail.Ru governance, culture, operating procedures or management. Any co-operation between the companies will be on an arms length basis and on fully commercial terms. However, as a result of the 63.8% voting weight attached to these shares MegaFon will now consolidate Mail.Ru into its accounts. As such, starting from Q1 2017 Mail.Ru will move from being a half year reporting business with quarterly revenue updates to a full quarterly reporting business.
Through 2016 the cash generating capacity of our business remains unchanged and cash conversion was as expected. As a result net cash at the end of 2016 was RUR 5,391 million. This is prior to the final payment of $10m for Delivery Club due in Q1 2017.
We are very pleased with the 2 acquisitions we have announced in Q4 2016. They fit well within the core strategy and mobile assets of the Group and present significant opportunities for the future. With a strong balance sheet and unchanged cash generation capabilities we will continue to examine further similar-sized acquisition opportunities
We had a strong finish to FY 2016 with good contributions from advertising and games. We continue to believe we are well positioned to benefit from the ongoing structural trends in advertising. As forecast in the Q3 statement games returned to growth in Q4 and with both War Robots and a full release schedule we expect games to see good growth in 2017. We are very excited by the potential for Youla and Delivery Club and continue to see very strong engagement and user growth.
2017 has had a strong start and as such on a pro-forma basis, and based on current visibility, we expect to see 2017 revenue growth of between 16-19% to between RUR 49.6 to 50.9bn. In the near term the combined effect of Pixonic and Delivery Club is expected to be broadly EBITDA neutral as we continue to invest in those businesses. This investment, along with ongoing spending on Youla will be H1 weighted. As a result we would expect EBITDA margins to be around 42% for FY 2017.
Conference call
The management team will host an analyst and investor conference call at 9.00 UK time (12.00 Moscow time), on Wednesday 22nd February 2017, including a Question and Answer session.
To participate in this conference call, please use the following access details:
Confirmation Code: 7069766
Participant Toll Free Telephone Numbers:
Russia Free Phone 8 800 500 9283
UK Free Phone 800 358 6377
USA Free Phone 888 349 9618
For further information please contact:
Investors
Matthew Hammond
E-mail: hammond@corp.mail.ru
Press
Madina Tayupova
E-mail: m.tayupova@corp.mail.ru
Cautionary Statement regarding Forward Looking Statements
This press release contains statements of expectation and other forward-looking statements regarding future events or the future financial performance of the Group. You can identify forward looking statements by terms such as 'expect', 'believe', 'anticipate', 'estimate', 'forecast', 'intend', 'will', 'could', 'may' or 'might', the negative of such terms or other similar expressions including 'outlook' or 'guidance'. The forward-looking statements in this release are based upon various assumptions that are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and may be beyond the Group's control. Actual results could differ materially from those discussed in the forward looking statements herein. Many factors could cause actual results to differ materially from those discussed in the forward looking statements included herein, including competition in the marketplace, changes in consumer preferences, the degree of Internet penetration and online advertising in Russia, concerns about data security, claims of intellectual property infringement, adverse media speculation, changes in political, social, legal or economic conditions in Russia, exchange rate fluctuations, and the Group's success in identifying and responding to these and other risks involved in its business, including those referenced under 'Risk Factors' in the Group's public filings. The forward-looking statements contained herein speak only as of the date they were made, and the Group does not intend to amend or update these statements except to the extent required by law to reflect events and circumstances occurring after the date hereof.
About Mail.Ru Group
Mail.Ru Group, international brand My.com (LSE:MAIL, listed since November 5, 2010) is the largest internet business in Russia, based on mobile daily audience (TNS Mobile Index, population aged 12-64 in the cities 700 000+, November 2016, Russia).
In line with the communitainment (communication plus entertainment) strategy, the company is developing an integrated communications and entertainment platform. The company owns Russia's leading email service and one of Russia's largest internet portals, Mail.Ru. The company operates three of the major Russian language social networks, VKontakte (VK), Odnoklassniki (OK) and Moi Mir (My World), and Russia's largest online games, including such gaming titles as Warface, Armored Warfare, Skyforge and Perfect World. The сompany's portfolio also includes a leading OpenStreetMap-based offline mobile maps and navigation service MAPS.ME, two instant messaging services popular in Russia and CIS, Agent Mail.Ru and ICQ, and Youla, a mobile location based marketplace.
The Company owns 100% of mobile games developer Pixonic, and 100% of Delivery Club, the number one food delivery company in Russia. Mail.Ru Group also holds equity stakes in a number of small venture capital investments in various Internet companies in Russia, Ukraine and Israel.
Group Aggregate Segment Financial Information
RUR millions | |||
2015 | 2016 | YoY, % | |
Group aggregate segment revenue (1) | |||
Online advertising | 14,630 | 18,442 | 26.1% |
MMO games | 9,401 | 11,390 | 21.2% |
Community IVAS | 12,508 | 11,854 | -5.2% |
Other revenue** | 689 | 1,065 | 54.6% |
Total Group aggregate segment revenue | 37,227 | 42,751 | 14.8% |
Group aggregate operating expenses | |||
Personnel expenses | 7,071 | 8,630 | 22.1% |
Office rent and maintenance | 1,932 | 2,052 | 6.2% |
Agent/partner fees | 4,995 | 6,892 | 38.0% |
Marketing expenses | 1,447 | 3,017 | 108.5% |
Server hosting expenses | 2,145 | 1,894 | -11.7% |
Professional services | 414 | 509 | 22.7% |
Other operating (income)/expenses, excl. D&A | 1,137 | 1,844 | 62.2% |
Total Group aggregate operating expenses | 19,141 | 24,837 | 29.8% |
Group aggregate segment EBITDA (2) | 18,086 | 17,914 | -1.0% |
margin, % | 48.6% | 41.9% | |
Depreciation, amortisation and impairment*** (3) | 3,723 | 2,940 | -21.0% |
Other non-operating income (expense), net**** | (1,766) | 115 | |
Profit before tax (4) | 12,597 | 15,089 | 19.8% |
Income tax expense (5) | 2,753 | 3,473 | 26.2% |
Group aggregate net profit (6) | 9,844 | 11,616 | 18.0% |
margin, % | 26.4% | 27.2% | |
Note: Group aggregate segment financial information for the years ended December 31, 2015 and 2016 has been retrospectively adjusted to include pro-forma consolidation of Pixonic and Delivery Club from January 1, 2015
(*) The numbers in this table and further in the document may not exactly foot or cross-foot due to rounding
(**) Including Other IVAS revenues
(***) Including impairment of intangible assets of RUR 1,397 and 52 million in 2015 and 2016 respectively
(****) Including interest expenses of RUR 2,351 and 767 million in 2015 and 2016 respectively
(1) Group aggregate segment revenue is calculated by aggregating the segment revenue of the Company's operating segments and eliminating intra-segment and inter-segment revenues. This measure differs in significant respects from IFRS consolidated net revenue. See 'Presentation of Aggregate Segment Financial Information' below.
(2) Group aggregate segment EBITDA is calculated by subtracting Group aggregate segment operating expenses from Group aggregate segment revenue. Group aggregate segment operating expenses are calculated by aggregating the segment operating expenses (excluding the depreciation and amortisation) of the Company's operating segments including allocated Company's corporate expenses, and eliminating intra-segment and inter-segment expenses. See 'Presentation of Aggregate Segment Financial Information'.
(3) Group aggregate depreciation, amortisation and impairment expense is calculated by aggregating the depreciation, amortisation and impairment expense of the subsidiaries consolidated as of the date hereof, excluding amortisation and impairment of fair value adjustments to intangible assets acquired in business combinations.
(4) Profit before tax is calculated by deducting from Group aggregate segment EBITDA Group aggregate depreciation, amortisation and impairment expense and adding/deducting Group aggregate other non-operating incomes/expenses primarily consisting of interest income on cash deposits, interest expenses, dividends from financial and available-for-sale investments and other non-operating items.
(5) Group aggregate income tax expense is calculated by aggregating the income tax expense of the subsidiaries consolidated as of the date hereof. Group aggregate income tax expense is different from income tax as would be recorded under IFRS, as (i) it excludes deferred tax on unremitted earnings of the Company's subsidiaries and (ii) it is adjusted for the tax effect of differences in profit before tax between Group aggregate segment financial information and IFRS.
(6) Group aggregate net profit is the (i) Group aggregate segment EBITDA; less (ii) Group aggregate depreciation, amortisation and impairment expense; less (iii) Group aggregate other non-operating expense; plus (iv) Group aggregate other non-operating income; less (v) Group aggregate income tax expense. Group aggregate net profit differs in significant respects from IFRS consolidated net profit. See 'Presentation of Aggregate Segment Financial Information'.
Revenue details
in RUR millions | |||
Q4 2015 | Q4 2016 | YoY growth | |
Excl. Delivery Club | |||
Online advertising | 4,700 | 5,936 | 26.3% |
MMO games | 2,829 | 3,861 | 36.5% |
Community IVAS | 3,348 | 3,055 | -8.7% |
Other revenue | 90 | 203 | 125.6% |
Group aggregate segment revenue | 10,968 | 13,056 | 19.0% |
Incl. Delivery Club | |||
Online advertising | 4,700 | 5,936 | 26.3% |
MMO games | 2,829 | 3,861 | 36.5% |
Community IVAS | 3,348 | 3,055 | -8.7% |
Other revenue | 228 | 388 | 70.0% |
Group aggregate segment revenue | 11,106 | 13,241 | 19.2% |
FY 2015 | FY 2016 | YoY growth | |
Excl. Delivery Club | |||
Online advertising | 14,630 | 18,442 | 26.1% |
MMO games | 9,401 | 11,390 | 21.2% |
Community IVAS | 12,508 | 11,854 | -5.2% |
Other revenue | 233 | 444 | 90.1% |
Group aggregate segment revenue | 36,772 | 42,130 | 14.6% |
Incl. Delivery Club | |||
Online advertising | 14,630 | 18,442 | 26.1% |
MMO games | 9,401 | 11,390 | 21.2% |
Community IVAS | 12,508 | 11,854 | -5.2% |
Other revenue | 689 | 1,065 | 54.6% |
Group aggregate segment revenue | 37,227 | 42,751 | 14.8% |
Note: Group aggregate segment revenue for the years ended December 31, 2015 and 2016 has been retrospectively adjusted to include pro-forma consolidation of Pixonic and Delivery Club (as applicable) from January 1, 2015
Operating Segments
We identify our operating segments based on the types of products and services we offer. We have identified the following reportable segments on this basis:
Email, Portal and IM;
VK (Vkontakte);
Social Networks (excluding VK);
Online Games;
Search, E-Commerce and Other Services.
The Email, Portal and IM segment includes email, instant messaging and portal (main page and verticals). It earns substantially all revenues from display and context advertising.
The VK segment includes the Group's social network Vkontakte (VK.com) and earns revenues from (i) commission from application developers based on the respective applications' revenue, (ii) user payments for virtual gifts and stickers, and (iii) online advertising, including display and context advertising.
The Social Networks (excluding VK) segment includes the Group's two other social networks (OK and My World) and earns revenues from (i) user payments for virtual gifts, (ii) commission from application developers based on the respective applications' revenue, and (iii) online advertising, including display and context advertising.
The Online Games segment includes online gaming services, including MMO, social and mobile games. It earns substantially all revenues from (i) sale of virtual in-game items to users and (ii) royalties for games licensed to third-party online game operators.
The Search, E-commerce and Other Services segment primarily consists of search engine services earning substantially all revenues from context advertising and food delivery business earning substantially all revenues in commissions from restaurants. This segment also includes a variety of other services, which are considered insignificant by the CODM for the purposes of performance review and resource allocation.
Each segment's EBITDA is calculated as the respective segment's revenue less operating expenses (excluding depreciation and amortisation and impairment of intangible assets), including our corporate expenses allocated to the respective segment.
Operating Segments Performance - FY 2016
Email, Portal | Social Networks (ex VK) | Online Games | VK | Search, E-Commerce and other | Eliminations | Group | |
RUR millions | |||||||
Revenue | |||||||
External revenue | 4,799 | 14,218 | 11,740 | 8,882 | 3,112 | - | 42,751 |
Intersegment revenue | 4 | 20 | - | 54 | 383 | (461) | - |
Total revenue | 4,803 | 14,238 | 11,740 | 8,936 | 3,495 | (461) | 42,751 |
Total operating expenses | 3,252 | 4,657 | 9,590 | 3,600 | 4,199 | (461) | 24,837 |
EBITDA | 1,551 | 9,581 | 2,150 | 5,336 | (704) | - | 17,914 |
EBITDA margin, % | 32.3% | 67.3% | 18.3% | 59.7% | -20.1% | 41.9% | |
Net profit | 11,616 | ||||||
Net profit margin, % | 27.2% |
Note: Group aggregate segment financial information for the year ended December 31, 2016 has been retrospectively adjusted to include pro-forma consolidation of Pixonic and Delivery Club from January 1, 2016
Operating Segments Performance - FY 2015
Email, Portal | Social Networks (ex VK) | Online Games | VK | Search, E-Commerce and other | Eliminations | Group | |
RUR millions | |||||||
Revenue | |||||||
External revenue | 4,544 | 14,101 | 9,516 | 6,214 | 2,852 | - | 37,227 |
Intersegment revenue | 4 | - | - | 18 | 362 | (384) | - |
Total revenue | 4,548 | 14,101 | 9,516 | 6,232 | 3,214 | (384) | 37,227 |
Total operating expenses | 2,800 | 3,855 | 7,039 | 3,156 | 2,675 | (384) | 19,141 |
EBITDA | 1,748 | 10,246 | 2,477 | 3,076 | 539 | - | 18,086 |
EBITDA margin, % | 38.4% | 72.7% | 26.0% | 49.4% | 16.8% | 48.6% | |
Net profit | 9,844 | ||||||
Net profit margin, % | 26.4% |
Note: Group aggregate segment financial information for the year ended December 31, 2015 has been retrospectively adjusted to include pro-forma consolidation of Pixonic and Delivery Club from January 1, 2015
Liquidity
As of 31 December 2016, the Company had RUR 5,513 million of cash (including term deposits) and RUR 122 million of debt outstanding, therefore the Company's net cash position was RUR 5,391 million.
Presentation of Aggregate Segment Financial Information
The Group aggregate segment financial information is derived from the financial information used by management to manage the Company's business by aggregating the segment financial data of the Company's operating segments and eliminating intra-segment and inter-segment revenues and expenses. Group aggregate segment financial information differs significantly from the financial information presented on the face of the Company's consolidated financial statements in accordance with IFRS. In particular:
The Company's segment financial information excludes certain IFRS adjustments which are not analysed by management in assessing the core operating performance of the business. Such adjustments affect such major areas as revenue recognition, deferred tax on unremitted earnings of subsidiaries, share-based payment transactions, disposal of and impairment of investments, business combinations, fair value adjustments, amortisation and impairment thereof, net foreign exchange gains and losses, share in financial results of associates, as well as irregular non-recurring items that occur from time to time and are evaluated for adjustment as and when they occur. The tax effect of these adjustments is also excluded from segment reporting.
The segment financial information is presented for each period on the basis of an ownership interest as of the date hereof and consolidation of each of the Company's subsidiaries, including for periods prior to the acquisition of control of the entities in question, so long as the Company held at least one share of such entities during such periods. The financial information of subsidiaries disposed of prior to the date hereof is excluded from the segment presentation starting from the beginning of the earliest period presented.
Segment revenues do not reflect certain other adjustments required when presenting consolidated revenues under IFRS. For example, segment revenue excludes barter revenues and adjustments to defer online gaming and social network revenues under IFRS.
A reconciliation of Group aggregate segment revenue to IFRS consolidated revenue of the Company for the years ended 31 December 2015 and 2016 is presented below:
RUR millions | 2015 | 2016 |
Group aggregate segment revenue, as presented to the CODM | 37,227 | 42,751 |
Adjustments to reconcile revenue as presented to the CODM to consolidated revenue under IFRS: | ||
Effect of difference in dates of acquisition and loss of control in subsidiaries | 2,114 | (1,076) |
Differences in timing of revenue recognition | (1,515) | (1,740) |
Barter revenue | 77 | 30 |
Dividend revenue from venture capital investments | 83 | 36 |
Consolidated revenue under IFRS | 37,986 | 40,001 |
A reconciliation of Group aggregate segment EBITDA to IFRS consolidated profit before income tax expense of the Company for the years ended 31 December 2015 and 2016 is presented below:
RUR millions | 2015 | 2016 |
Group aggregate segment EBITDA, as presented to the CODM | 18,086 | 17,914 |
Adjustments to reconcile EBITDA as presented to the CODM to consolidated profit before income tax expenses under IFRS: | ||
Effect of difference in dates of acquisition and loss of control in subsidiaries | 1,445 | 206 |
Differences in timing of revenue recognition | (1,515) | (1,740) |
Net loss on venture capital investments | (387) | (769) |
Share-based payment transactions | (2,989) | (2,226) |
Dividend revenue from venture capital investments | 83 | 36 |
Non-recurring VAT charge | (250) | - |
Other | (319) | (47) |
EBITDA | 14,154 | 13,374 |
Depreciation and amortisation | (7,165) | (7,754) |
Impairment of intangible assets | (1,397) | (52) |
Share of profit of equity accounted associates | - | 27 |
Finance income | 613 | 839 |
Finance expenses | (2,326) | (732) |
Other non-operating income/(loss) | (11) | 39 |
Net loss on disposal of shares in available-for-sale investments | - | (342) |
Net (loss)/gain on derivative financial assets and liabilities at fair value through profit or loss | 23 | (112) |
Net gain on disposal of shares in subsidiaries | - | 8,712 |
Net foreign exchange (loss)/gain | 832 | (1,330) |
Consolidated profit before income tax expense under IFRS | 4,723 | 12,669 |
A reconciliation of Group aggregate net profit to IFRS consolidated net profit of the Company for the years ended 31 December 2015 and 2016 is presented below:
RUR millions | 2015 | 2016 |
Group aggregate segment net profit, as presented to the CODM | 9,844 | 11,616 |
Adjustments to reconcile net profit as presented to the CODM to consolidated net profit under IFRS: | ||
Share-based payment transactions | (2,989) | (2,226) |
Differences in timing of revenue recognition | (1,515) | (1,740) |
Effect of difference in dates of acquisition and loss of control in subsidiaries | 1,237 | 214 |
Amortisation of fair value adjustments to intangible assets and impairment thereof | (4,804) | (4,867) |
Net loss on financial instruments at fair value through profit or loss | (365) | (882) |
Net gain on disposal of shares in subsidiaries | - | 8,712 |
Net foreign exchange (loss)/gain | 832 | (1,330) |
Net loss on disposal of shares in available-for-sale investments | - | (342) |
Share of profit of equity accounted associates | - | 27 |
Non-recurring VAT charge | (250) | - |
Other | (341) | (43) |
Tax effect of the adjustments and tax on unremitted earnings | 1,338 | 2,692 |
Consolidated net profit under IFRS | 2,987 | 11,831 |
Selected Operating Statistics
Ru Group is the leading online property in Russia with 77.7 million monthly active users (comScore MMX Multi-Platform, Russia, age 6+, December 2016)
Ru Group is holding the lead in Russian mobile internet (TNS, Russia, cities 700k+, age 12-64, mobile daily active users, December 2016)
MMO average monthly payers amounted to 609 and 662 thousand users in H1 2016 and H2 2016 respectively (the numbers combine paying users of individual MMO and mobile games and may include overlap)
Community IVAS average monthly payers amounted to 8,350 and 6,987 thousand users in H1 2016 and H2 2016 respectively (the numbers combine paying users of VK, OK.RU, My World, love.mail.ru and our own social games on third-party networks and may include overlap)
Unaudited Consolidated IFRS Statement of Financial Position
RUR millions | ||
December 31, 2015 | December 31, 2016 | |
ASSETS | ||
Non-current assets | ||
Investments in equity accounted associates | 643 | 649 |
Goodwill | 126,721 | 132,309 |
Other intangible assets | 30,926 | 29,894 |
Property and equipment | 3,687 | 3,840 |
Available-for-sale financial assets | 932 | - |
Financial assets at fair value through profit or loss | 1,071 | 403 |
Deferred income tax assets | 1,730 | 2,600 |
Other non-current assets | 745 | 2,265 |
Total non-current assets | 166,455 | 171,960 |
Current assets | ||
Trade accounts receivable | 3,584 | 5,089 |
Prepaid income tax | 1,041 | 49 |
Prepaid expenses and advances to suppliers | 1,855 | 2,111 |
Financial assets at fair value through profit or loss | 172 | 105 |
Other current assets | 195 | 201 |
Short-term time deposits | 16 | - |
Cash and cash equivalents | 8,676 | 5,513 |
Total current assets | 15,539 | 13,068 |
Total assets | 181,994 | 185,028 |
EQUITY AND LIABILITIES | ||
Equity attributable to equity holders of the parent | ||
Issued capital | - | - |
Share premium | 49,328 | 51,758 |
Treasury shares | (1,293) | (1,290) |
Retained earnings | 100,602 | 112,415 |
Accumulated other comprehensive income/(loss) | (205) | 470 |
Total equity attributable to equity holders of the parent | 148,432 | 163,353 |
Non-controlling interests | 15 | 64 |
Total equity | 148,447 | 163,417 |
Non-current liabilities | ||
Deferred income tax liabilities | 4,891 | 3,265 |
Deferred revenue | 1,716 | 2,710 |
Long-term interest-bearing loans | 10,331 | - |
Other non-current liabilities | - | 748 |
Total non-current liabilities | 16,938 | 6,723 |
Current liabilities | ||
Trade accounts payable | 2,374 | 3,355 |
Income tax payable | 277 | 389 |
Financial liabilities at fair value through profit or loss | - | 195 |
VAT and other taxes payable | 1,878 | 2,231 |
Deferred revenue and customer advances | 4,139 | 4,893 |
Short-term portion of long-term interest-bearing loans | 4,875 | 122 |
Other payables, provisions and accrued expenses | 3,066 | 3,703 |
Total current liabilities | 16,609 | 14,888 |
Total liabilities | 33,547 | 21,611 |
Total equity and liabilities | 181,994 | 185,028 |
Unaudited Consolidated IFRS Statement of Comprehensive Income
RUR millions | ||
2015 | 2016 | |
Online advertising | 14,825 | 18,492 |
MMO games | 7,673 | 8,745 |
Community IVAS | 12,246 | 11,647 |
Other revenue | 3,242 | 1,117 |
Total revenue | 37,986 | 40,001 |
Net loss on venture capital investments | (387) | (769) |
Personnel expenses | (11,026) | (10,722) |
Office rent and maintenance | (2,005) | (2,023) |
Agent/partner fees | (4,942) | (6,512) |
Marketing expenses | (1,338) | (2,429) |
Server hosting expenses | (2,233) | (1,863) |
Professional services | (454) | (493) |
Other operating expenses | (1,447) | (1,816) |
Total operating expenses | (23,445) | (25,858) |
EBITDA | 14,154 | 13,374 |
Depreciation and amortisation | (7,165) | (7,754) |
Impairment of intangible assets | (1,397) | (52) |
Share of profit of equity accounted associates | - | 27 |
Finance income | 613 | 839 |
Finance expenses | (2,326) | (732) |
Other non-operating income/(loss) | (11) | 39 |
Net (loss)/gain on derivative financial assets and liabilities at fair value through profit or loss | 23 | (112) |
Net loss on disposal of shares in available-for-sale investments | - | (342) |
Net gain on disposal of shares in subsidiaries | - | 8,712 |
Net foreign exchange (loss)/gain | 832 | (1,330) |
Profit before income tax expense | 4,723 | 12,669 |
Income tax expense | (1,736) | (838) |
Net profit | 2,987 | 11,831 |
Attributable to: | ||
Equity holders of the parent | 2,937 | 11,813 |
Non-controlling interest | 50 | 18 |
Other comprehensive income/(loss) that may be reclassified to profit or loss in subsequent periods | ||
Exchange differences on translation of foreign operations: | ||
Differences arising during the period | (78) | 381 |
Available-for-sale financial assets: | ||
(Loss)/gain arising during the period (net of tax effect of zero) | 123 | (328) |
Reclassification adjustments for loss included in profit or loss | - | 342 |
Total other comprehensive income net of tax effect of 0 | 45 | 395 |
Total comprehensive income, net of tax | 3,032 | 12,226 |
Attributable to: | ||
Equity holders of the parent | 2,991 | 12,208 |
Non-controlling interest | 41 | 18 |
Earnings per share, in RUR: | ||
Basic earnings per share attributable to ordinary equity holders of the parent | 14.1 | 56.7 |
Diluted earnings per share attributable to ordinary equity holders of the parent | 14.1 | 54.4 |
Unaudited Consolidated IFRS Statement of Cash Flows
RUR millions | ||
2015 | 2016 | |
Cash flows from operating activities | ||
Profit before income tax | 4,723 | 12,669 |
Adjustments for: | ||
Depreciation and amortisation | 7,165 | 7,754 |
Bad debt expense | 90 | 60 |
Net loss/(gain) on financial assets and liabilities at fair value through profit or loss | (23) | 112 |
Net gain on disposal of shares in subsidiaries | - | (8,712) |
Net loss on disposal of shares in available-for-sale investments | - | 342 |
Loss on disposal of property and equipment and intangible assets | 63 | - |
Finance income | (613) | (839) |
Finance expenses | 2,326 | 732 |
Dividend revenue from venture capital investments | (83) | (36) |
Share of profit of equity accounted associates | - | (27) |
Impairment of intangible assets | 1,397 | 52 |
Net foreign exchange loss/(gain) | (832) | 1,330 |
Share-based payment expense | 2,989 | 2,226 |
Other non-cash items | 50 | 1 |
(Increase)/Decrease in accounts receivable | 141 | (1,458) |
Increase in prepaid expenses and advances to suppliers | (889) | (906) |
(Increase)/decrease in other assets | 137 | (27) |
Increase in accounts payable, provisions and accrued expenses | 711 | 719 |
(Increase)/decrease in other non-current assets | 163 | (1,522) |
Increase in deferred revenue and customers advances | 1,610 | 1,968 |
Decrease in financial assets at fair value through profit or loss | 387 | 669 |
Operating cash flows before interest and income taxes | 19,512 | 15,107 |
Dividends received from financial investments | 92 | 34 |
Interest received | 610 | 786 |
Interest paid | (2,300) | (740) |
Income tax paid | (3,968) | (2,567) |
Net cash provided by operating activities | 13,946 | 12,620 |
Cash flows from investing activities: | ||
Cash paid for property and equipment | (1,378) | (2,064) |
Cash paid for intangible assets | (1,294) | (1,763) |
Dividends received from equity accounted associates and investments designated as available-for-sale financial assets | 24 | 68 |
Collection/(issuance) of loans receivable | (17) | 23 |
Proceeds from disposal of shares in available-for-sale investments | - | 604 |
Cash paid for acquisitions of subsidiaries, net of cash acquired | (963) | (7,157) |
Proceeds from disposal of subsidiaries, net of cash disposed | - | 9,709 |
Collection of short-term and long term deposits | 483 | 17 |
Acquisition of short-term and long term deposits | (10) | - |
Net cash used in investing activities | (3,155) | (563) |
Cash flows from financing activities: | ||
Loans repaid | (6,927) | (15,534) |
Loans received | - | 298 |
Dividends paid by subsidiaries to non-controlling shareholders | (42) | (2) |
Net cash used in financing activities | (6,969) | (15,238) |
Net (decrease)/increase in cash and cash equivalents | 3,822 | (3,181) |
Effect of exchange differences on cash balances | 269 | 18 |
Cash and cash equivalents at the beginning of the period | 4,585 | 8,676 |
Cash and cash equivalents at the end of the period | 8,676 | 5,513 |
mail.ru Group Ltd. published this content on 22 February 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 22 February 2017 07:04:11 UTC.
Original documenthttps://corp.mail.ru/en/press/releases/9887/
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