MESSAGE FROM THE CEO OF PMH

In 2017, we continued the re-organization plan to reduce our costs and our headcount from 546 to 163 which was mostly achieved through cessation of our digital activities in November 2017, as well as by means of the successful acquisition of our brand JOB.ru by the company HeadHunter. It is our goal to finalize ongoing negotiations with potential investors for our remaining assets in order to create cash inflow and minimize losses.

On behalf of Top Management, I would like to thank the Shareholders and Board of Directors of the Group for their belief and support in our initiatives throughout the year 2017.

 

 

Anna Ushakova

Chief Executive Officer of PMH, CEO

27 April 2018

 

 

 

 

 

REPORT OF THE BOARD OF DIRECTORS

The Directors of the Group present their report and the audited consolidated financial statements for the year ended 31 December 2017.

Incorporation

The Company was incorporated in Jersey, Channel Islands in November 2005 and it was re-registered on 6 February 2006.

Statement of Directors' Responsibilities

The Directors are responsible for preparing the financial statements in accordance with any applicable law and regulations.

Under Article 105(11) of the Companies (Jersey) Law 1991 the directors of a holding company need not prepare separate financial statements (i.e. Company only financial statements) if consolidated accounts for the Company are prepared, unless required to do so by the members of the Company by ordinary resolution. The members of the Company had not passed a resolution requiring separate financial statements and, in the Directors' opinion, the Company meets the definition of a holding company. As permitted by law, the Directors have elected not to prepare separate financial statements.

The Companies (Jersey) Law 1991 requires the Directors to prepare the financial statements for each financial year. Under that law, the Directors have elected to prepare the consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU). The consolidated financial statements are required by law to give a true and fair view of the state of affairs of the Group and of the profit or loss of the Group for that period.

International Accounting Standard 1 requires that the consolidated financial statements present fairly for each financial year the Group's financial position, financial performance and cash flows. This requires the faithful representation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the International Accounting Standards Board's "Framework for the preparation and presentation of financial statements". In virtually, all circumstances, a fair presentation will be achieved by compliance with all applicable IFRSs. However, the Directors are also required to:

·      properly select and apply accounting policies;

·      present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

·      provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and

·      make an assessment of the Group's ability to continue as a going concern.

The Directors confirm they have complied with all the above requirements in preparing the consolidated financial statements.

The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Group and enable them to ensure that the financial statements comply with the Companies (Jersey) Law 1991. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

So far as the Directors are aware, there is no relevant audit information of which the Company's auditors are unaware, and each Director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the Company's auditors are aware of that information.

 

 

The maintenance and integrity of the website is the responsibility of the Directors, the work carried out by the auditors does not involve consideration of these matters and accordingly, the auditors accept no responsibility for any changes that may have occurred to the information contained in the consolidated financial statements since they were initially presented on the website.

The Directors are also required by the Disclosure and Transparency Rules (DTR) of the United Kingdom Listing Authority (UKLA) to include a Management Report containing a fair review of the business and a description of the principal risks and uncertainties facing the Group.

Directors' Statement pursuant to the Disclosure and Transparency Rules (DTR)

Each of the Directors, whose names and functions are listed on pages 7 and 8 confirm that, to the best of each person's knowledge and belief:

·      the Consolidated Financial Statements, prepared in accordance with IFRS as adopted by EU, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group and the undertakings included in the consolidation taken as a whole;

·      the Directors' Report contained in the Annual Report includes a review of the development and performance of the business and the position of the Group and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face; and

·      the Annual Report and the Consolidated Financial Statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for the shareholders to assess the Group's performance, business model and strategy.

Principal Activities

The Group is one of the leading marketplace for communities of generalist, real estate, auto , goods and services , with strong local brands, serving local markets in the Russian Federation and Belarus. The Group transferred its activities to the web site IRR.ru, with more than 2 million monthly visitors who left the advertisements. The Group is one of the largest companies in the region operating with websites, primarily in the real estate, automotive and goods and services categories.

Results and Dividends

The profit and loss account of the Group for the year ended 31 December 2017 is set out in the audited consolidated financial statements. No dividends were paid during the year 2017.

Directors

The composition of the Board of Directors as at 31 December 2017 is as follows:

·      Mrs. Vuslat Sabanc? as Chairwoman, Senior Director;

·      Mr. Turhan Cemal Beriker as Vice-Chairman & Senior Director;

·      Mrs. Özlem Merto?lu-Munano?lu as Senior Director.

Directors' Interests

No options were granted to or exercised by any director of TME in the period between 31 December 2017 and the signing date of these audited consolidated financial statements. None of the directors had a material interest in any contract of significance to which the Group was a party during the year.

Policy on Payment of Creditors

It is Group policy, in respect of all of its suppliers, to settle the terms of payment when agreeing each transaction, to ensure that suppliers are made aware of the terms of payment and to abide by those terms. The average number of creditor days in relation to trade creditors outstanding depends on each country where we generally apply local practices.
 

Financial Risk Management

The Group finances its operations through the generation of cash from operating activities and bank borrowings. Moreover, the parent company management is able to provide financial support to Trader Media East Limited and its subsidiaries. Liquidity risk is managed through forecasting the future cash flow requirements of the business and maintaining sufficient cash at bank balances

Principal Risks and Uncertainties

The following risks and uncertainties could have an effect on the Group's performance. As at the date of this report, the Board considers the risks described below as the principal risks facing the Group. The Group has a risk management structure in place that is designed to identify, manage, and mitigate business risks. This forms part of the Group's system of internal control that is described in detail in Corporate Governance. The key risks identified through this risk management process, and how they are managed is detailed below.

General

The Group's activities expose it to a variety of operational and financial risks; these risks are market risk including the effects of changes in debt and equity market prices, foreign currency exchange rates, fair value interest rate risk, and cash flow interest rate risk, credit risk, and liquidity risk. The Group's overall risk management program focuses on the unpredictability of financial markets   as well as changeable parameters of the Russian economy and seeks to minimize potential adverse effects on the financial performance of the Group. As the Group operates in different regions and countries, TME headquarters deal effectively with the coordination of management of different entities.

Risks relating to the Group's Business and Industry

According to Federal Statistics Service' report, Russia's economy grew by 1.5% in 2017 while it was dipped by 0.2% in 2016. The Russian economy shrank by 0.2% in 2016 and 2.8% in 2015, in a recession caused by the fall in energy prices and the impact of US and EU sanctions triggered by Russia's annexation of Crimea. Published data suggests that Russia's agriculture and mining industries grew last year, the data showed, helped by reciprocal sanctions imposed by Moscow that ban many food imports from the EU. A rise in oil prices to around $70 a barrel has also helped fuel Russia's recovery from recession.

Kazakhstan's gross domestic product grew 4% in 2017. The outcome was determined by the following factors: two-thirds of the growth was provided by non-extractive industries, almost all sub-industries showed growth, manufacturing reached a five-year maximum, the "desired" industries showed a significant increase (e.g., pharmaceuticals) and non-primary exports and deeply processed goods also grew.

In Belarus, the economy returned to growth in 2017, expanding at a six-year high, following two years of recession. In 2017, GDP in Belarus increase by 2.4% (2016: decreased by 2.6%), according to the National Statistical Committee (Belstat).

Risks relating to the Group's Financial Condition

The Group is exposed to variety of financial risks due to its operations. These risks include liquidity risk, funding risk, credit risk and foreign currency risk. The Group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group's financial performance.

The Group finances its operations through loan facilities provided by its controlling shareholder, Hürriyet Group, as well as bank loans. Liquidity risk is managed through forecasting the future cash flow requirements of the business.

Competitive Forces

The markets in which the Group operates are highly dynamic and competitive. The majority of its co-operation is long term in nature and access to the key platforms is critical to the success of the business. This requires sustained investment in technology, capability and infrastructure, which presents a high barrier to entry. However, these factors alone do not protect the Group from competition, such that price competition and technical advances made by competitors could adversely affect the Group's results. The Group has developed a balanced business portfolio and maintained a steady improvement in operational performance, which together with the establishment of long-term customer relationships and sustained investment in technology acquisition, allow the Group to respond to competitive pressure.

Foreign Currency

A high proportion of the Group's revenues from continuing operations (62%) and operating loss arise in the Russian Federation. As a result, the Group's reported results in 2017 have been negatively affected by the weakening of the Russian Rouble (RUB) against the US Dollar (US$) versus 2016.

Legal Risks

The Group operates internationally and is subject to applicable laws and regulations in a large number of jurisdictions. Combined with this, the large numbers of customers and suppliers to the Group result in a complex set of contractual obligations and a risk of non-compliance with the applicable laws and regulations.

The Group addresses this risk in a number of ways:

·      through reviews, advice and opinions provided by the in-house legal department;

·      monitoring and reporting of issues by the Internal Audit function;

·      internal control processes requiring local and Group's Executive Management to report on areas of potential non-compliance; and

·      controls on the levels of the Management required to approve proposed contractual arrangements.

Charitable and Political Donations

The Group did not make any material charitable or political donations during the year.

Intangible Assets

Historically, the Group has attributed value to its main tradenames and goodwill in allocating a part of the purchase price paid for its subsidiaries to these intangible assets. These values attributed to intangible assets are referred to in Note 12 to the consolidated financial statements.

Purchase of Own Shares

The Group did not purchase any of its shares for cancellation during the year.

Secretary

E. Ekin Çayhan has been the Company Secretary since 13 May 2016.

Independent Auditors

AO PricewaterhouseCoopers Audit was appointed as External Auditor to the Group at the Annual General Assembly on 29 June 2017.

A resolution to appoint the auditors and to authorise the directors to fix their remuneration will be proposed at the Annual General Meeting (AGM), which will be held during 29 June 2018 at the Company's headquarter in Amsterdam, The Netherlands.

By order of the Board                                                                                     Registered office:

SANNE Corporate Service Limited

13 Castle Street

St. Helier Jersey JE4 5UT

Channels Islands

E. Ekin Çayhan

General Secretary & Counsel

27 April 2018

 

 

 

RESPONSIBILITY STATEMENT

TME Annual Report & Consolidated Financial Statements of 2017 contain a "Responsibility Statement" in compliance with paragraph 4.1.12 of the DTR signed by order of the Board by Mrs. Vuslat Sabanc? as Chairwoman of the Board & Senior Director, Mr. Turhan Cemal Beriker as Vice-Chairman & Senior Director, and Mrs. Özlem Merto?lu-Munano?lu as Senior Director of the Company.

This statement is set out below in full and unedited text. This states that on 27 April 2018, the date of approval of the 2017 Annual Report & Consolidated Financial Statements (Accounts).

Each of the Directors hereby confirm:

"To the best of our knowledge, and in accordance with the applicable reporting principles, the consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group, and the Group management report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal opportunities and risks associated with the expected development of the Group".

Amsterdam, The Netherlands

27 April 2018

 

TRADER MEDIA EAST LIMITED

 

 

____________________

Vuslat Sabanc?

Chairwoman

 

 

____________________

Turhan Cemal Beriker

Vice-Chairman, Director