WARSAW, Poland, Nov. 16 /PRNewswire-FirstCall/ -- Stream
Communications Network & Media Inc. (SCNWF PINK SHEETS &
FSE: TPJ) ("Stream"), a broadband cable company offering Cable TV,
high-speed Internet and VoIP services in Poland, today announced
audited results for the year ended December 31, 2006.(1) Financial
and Operational Highlights (in Canadian dollars) Financial
Highlights 2006 2005 $ $ Revenue 6,472,905 5,826,112 Loss from
Operations (3,023,654) (5,627,499) Operational Highlights (in
revenue generating units - RGU's) Cable Television RGU's 58,673
59,588 Internet HFC RGU's 2,491 1,182 Internet A-Lan RGU's 3,225
3,361 [HFC: Hybrid Fibre Coaxial network and A-Lan: Apartment Local
Access network] Stream's president, Mr. Jan S. Rynkiewicz,
commented, "Revenues continued to grow during 2006, and we
continued to gain operating efficiencies. During the year we
completed the previously announced corporate reorganization program
and invested in expansion and improvement of our network. Operating
expenses declined as a result of the reorganization. As well, our
management team, now fully based in Poland, is continuing to find
ways to expand our business while improving the customer offering.
"Adjusted EBITDA(2) has gotten closer to breakeven. As we have
identified and assessed several target acquisition networks in
Poland, we are considering financing proposals in both the equity
and debt markets. Our goal is to expand our competitive position
and increase penetration in existing markets," said Mr. Rynkiewicz.
2006 FULL YEAR CONSOLIDATED RESULTS Revenues Revenues for 2006 rose
11.0% to $6,472,905 from $5,826,112 in 2005, after adjusting for
foreign exchange from Polish Zloty to Canadian dollars. The
increase is related to rate increases for cable TV services and the
launch of internet services in the recently modernized networks in
several Polish cities. Also contributing to the increase, the
number of internet HFC subscribers increased by 100% from December
31, 2005 to December 31, 2006. Table 2: Overall Expenses 2006 2005
$ $ Revenues 6,472,905 5,826,112 Operating expenses Programming and
system lease 2,408,716 1,092,913 Amortization 2,388,716 2,650,139
Payroll and related 2,363,858 2,319,329 Management and professional
fees 777,036 388,531 Office expenses 328,242 1,154,785 Travel and
entertainment 292,364 329,712 Occupancy costs 276,486 496,390
Stock-based compensation (Note 11) 232,586 873,983 Advertising and
marketing 178,525 219,861 Investor relations 118,076 1,498,363
9,364,605 11,024,006 Expenses Overall expenses for the period
declined 16.0% year over year, to $9,364,605, or 143% of revenues,
from $11,024,006, or 189% of revenues, for the year-ago period. A
22% effective rise in programming and system expense is related to
the cost of programming provided to customers, a new
government-mandated tariff, and the launch of internet service. The
additional rise in the programming and system expense is
attributable to the fact that certain system operating lease
expenses were previously categorized as 'office expenses.' The 92%
decrease in the cost of investor relations was related to the
connected with the 2005 investor relations and fundraising efforts.
In 2006, a similar expenditure was not incurred. In the category of
restructuring expenses, in 2006 the company incurred a $209,523 as
a result of the corporate move from Canada to Poland. Other
non-operating expenses for the year ended December 31, 2006
included an expense of $1,021,140 versus an expense of $516,899 for
the prior year, due to several items. First, in 2005 the company
reversed an accrual for the payment of IPO expenses relating to a
listing on the Warsaw Stock Exchange. In 2006 a Standby Guarantee
fee was paid to two shareholders at the expense of $798,289 (paid
in shares). Interest expense declined to $297,852 in 2006 from
$501,508 in 2005 because the Company raised equity to repay the
Quest Capital Corp. loan and supplier debt. Results from Operations
(before amortization and other items) and adjusted EBITDA Loss from
operations (before amortization and other items) for 2006 was
$3,023,654 compared to a loss of $5,267,499 for 2005. Loss before
income taxes for 2006 improved to negative $4,044,794, from a loss
of $5,784,398 in 2005, or an overall improvement of $1,739,604.
Adjusted EBITDA, defined as operating loss/earnings before
amortization and write-down of capital assets, plus other income
(expenses), was negative $502,984 compared with a loss of
$2,907,755 in 2005. Table 3: Adjusted EBITDA 2006 2005 $ $ Loss
from Operations (3,023,654) (5,627,499) Add: Amortization 2,388,716
2,650,139 Add: Restructuring 209,523 - Add: Loss (gain) on disposal
of assets 16,013 - Add: Loss (Gain) on foreign exchange (93,582)
69,605 (502,984) (2,907,755) Net Loss During the period the company
recorded a net loss of $4,485,893. This was a $1,325,466
improvement from the $5,811,359 net loss in 2005. LIQUIDITY AND
CAPITAL RESOURCES As of December 31, 2006, the company had a
working capital deficit of $1,787,498, compared to a working
capital deficit of $2,552,192 at December 31, 2005. The improvement
in the deficiency was financed with proceeds from private
placements, through the issue of 16,101,664 shares and an
equivalent amount of warrants. Each warrant permits the warrant
holder to purchase 1/2 of a Stream common share, or a total of
8,050,832 shares. The company received a total of $2,641,246 from
placements that took place through 2006. In addition to private
placements, an additional 3,534,819 Stream shares were issued for
payment or settlement for wages, legal services, restructuring
costs related to the corporate relocation and interest expense. On
June 12, 2006, the company secured a standby guarantee of
$5,826,826 (US$5,000,000) guaranteed by two shareholders. The fee
for the guarantee was $798,289, (US$750,000) paid in the form of
3,807,107 Stream shares, was incurred in the fourth quarter of
2006. KEY DEVELOPMENTS The company continued to integrate and
modernize its systems in Czestochowa, Bielsko-Biala and Bytom for
internet capability. As the result of the process over 20,000 homes
passed (HPs) were modernized, bringing the total to 38,000 two-way
capable homes passed by December 2006. Other cities where network
and conduit was constructed and fibers laid were Katowice,
Czestochowa, Bytom and Bielsko-Biala. System modernization capital
expenditures totaled approximately $1 million in 2006. The company
completed an internal restructuring to reduce costs by moving its
corporate headquarters to Poland from Canada. SUBSEQUENT EVENTS The
company has continued to work with the Polish commercial bank to
complete its mid-term bond issue announced in October 2006.
Following completion of the collateralization, funds are expected
to be available to modernize existing networks and to refinance
current liabilities. The company will be reporting its results for
the nine months ended September 30, 2007 on November 21, 2007.
Further operational updates will be made at that time. About Stream
Communications Stream is a broadband cable company and offers Cable
TV, high-speed Internet and VoIP services in Poland. Stream is the
7th largest Cable TV operator in Poland, focusing on the densely
populated markets of Southern Poland. Safe Harbor for
Forward-Looking Statement Except for statements of historical fact,
the information presented herein constitutes forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Such forward-looking statements involve known
and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of the company to
be materially different from any future results, performance or
achievements expressed or implied by such forward-looking
statements. Such factors include general economic and business
conditions, the ability to acquire and develop specific projects,
the ability to fund operations and changes in consumer and business
consumption habits and other factors over which Stream
Communications Network and Media Inc. has little or no control. (1)
Unless otherwise stated, all financial figures discussed in this
announcement are prepared in accordance with Canadian generally
accepted accounting principles, and expressed in Canadian dollars.
(2) The Adjusted EBITDA calculation is shown on page 3 of this
press release. Adjusted EBITDA is a non-GAAP measure. Stream
Communications Network & Media Inc. Consolidated balance sheet
as at December 31, (Expressed in Canadian dollars) 2006 2005 $ $
Assets Current assets Cash and cash equivalents 764,544 439,937
Short-term investments 27,921 - Accounts receivable, net (Note 3)
271,282 293,898 GST and VAT receivables 125,946 - Prepaid expenses
and other assets (Note 4) 125,702 83,494 Future income tax assets
(Note 12) 24,837 - 1,340,232 817,329 Property, plant and equipment,
net (Note 5) 11,741,717 9,367,012 Cable TV subscriber base (Note 6)
1,281,108 2,849,253 Other intangible assets (Note 7) 78,992 78,514
Non-current advances (Note 8) 180,058 - 14,622,107 13,112,108
Liabilities Current liabilities Accounts payable and accrued
liabilities 2,607,720 2,565,017 Accounts payable pertaining to
financing costs - 477,113 Deferred revenue 2,792 15,430 Future
income tax liabilities (Note 12) - 11,577 Bank, leasing and other
financing (Note 9) 517,218 300,366 3,127,730 3,369,503 Bank,
leasing and other financing (Note 9) 5,239,352 4,873,760 8,367,082
8,243,263 Non-controlling interest (Note 10) 985,922 690,678
Shareholders' equity Common shares (Note 11 (b)) Authorized
150,000,000 common shares of no par value Issued and fully paid
43,941,186 41,129,499 Contributed surplus (Note 11 (d)) 3,110,060
2,877,474 Private placement subscriptions - 291,455 Warrants (Note
11 (e)) 3,825,648 2,439,684 Cumulative translation account
1,279,188 (158,859) Accumulated deficit (46,886,979) (42,401,086)
5,269,103 4,178,167 14,622,107 13,112,108 Stream Communications
Network & Media Inc. Consolidated statement of operations and
deficit year ended December 31, (Expressed in Canadian dollars)
2006 2005 $ $ Revenues 6,472,905 5,826,112 Operating expenses
Programming and system lease 2,408,716 1,092,913 Amortization
2,388,716 2,650,139 Payroll and related 2,363,858 2,319,329
Management and professional fees 777,036 388,531 Office expenses
328,242 1,154,785 Travel and entertainment 292,364 329,712
Occupancy costs 276,486 496,390 Stock-based compensation (Note 11)
232,586 873,983 Advertising and marketing 178,525 219,861 Investor
relations 118,076 1,498,363 9,364,605 11,024,006 Restructuring
expenses (Note 14) (209,523) - Loss on disposal of assets (16,013)
- Foreign exchange gain (loss) 93,582 (69,605) Loss from operations
(3,023,654) (5,267,499) Financial and other items Standby guarantee
(Note 13) (798,289) - Recovery of IPO expenses - 525,596 Financing
income (expense) 196 (540,987) Interest expense (297,852) (501,508)
Other income (expenses) 74,805 - Loss before income taxes
(4,044,794) (5,784,398) Income taxes (Note 12) 398,398 15,156 Loss
before non-controlling interest (4,443,192) (5,799,554) Non
controlling interest (Note 10) 42,701 11,805 Net loss for the year
(4,485,893) (5,811,359) Deficit, beginning of year (42,401,086)
(36,589,727) Deficit, end of year (46,886,979) (42,401,086) Basic
and diluted loss per common share (Note 15) (0.08) (0.14) Basic and
diluted weighted average number of common shares (Note 15)
59,629,483 42,953,922 Stream Communications Network & Media
Inc. Consolidated statement of cash flows year ended December 31,
(Expressed in Canadian dollars) 2006 2005 $ $ Operating activities
Net loss for the year (4,485,893) (5,811,359) Items not involving
cash Amortization 2,388,716 2,650,139 Loss on disposal of property,
plant and equipment 16,013 - Unrealized foreign exchange (11,916)
208,404 Stock-based compensation 232,586 873,983 Restructuring
expenses 76,378 - Issuance of shares for business development - -
Issuance of shares for services and financial expenses 681,738
1,057,573 Non-controlling interest 42,701 11,805 Issuance of shares
for standby guarantee fee 798,289 - (261,388) (1,009,455) Change in
non-cash working capital Accounts receivable 54,968 (215,744)
Prepaid expenses and other assets (158,164) (30,178) Accounts
payable and accrued liabilities (617,434) 555,777 Future income
taxes (37,823) 11,577 Deferred revenue (14,515) 15,430 (1,034,356)
(672,593) Investing activities Purchase of property, plant and
equipment (1,499,949) (1,729,926) Sale of property, plant and
equipment 32,193 - Purchase of short-term investments (27,921) -
Acquisition of subsidiaries, net of cash acquired - (646,289)
(1,495,677) (2,376,215) Financing activities Issuance of shares and
warrants for cash 2,349,791 3,018,162 Subscriptions received for
private placement - 291,455 Proceeds from loans and leasing
contracts 855,213 210,190 Proceeds from Quest Capital Corp. loan -
- Repayment of Quest Capital Corp. loan - (650,000) Repayments of
loans and leasing contracts (378,715) (86,138) 2,826,289 2,783,669
Foreign exchange effect on cash and cash equivalents 28,351 64,768
Increase (decrease) in cash and cash equivalents 324,607 (200,371)
Cash and cash equivalents, beginning of year 439,937 640,308 Cash
and cash equivalents, end of year 764,544 439,937 Supplemental cash
flow information Interest received 10,195 6,683 Interest paid
(405,688) (330,422) Income taxes paid (55,564) (24,175) DATASOURCE:
Stream Communications Network & Media Inc. CONTACT: Jens
Christensen, CFO, Stream Communications Network & Media Inc.,
+48-22-842-7666; Maura Gedid, Breakstone Group, +1-646-452-2335,
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