Press releases | Archive 2005
RBC reports strong preliminary results for 2004: total revenue growth exceeds 50% for the fourth year runningRBC reports strong preliminary results for 2004: total revenue growth exceeds 50% for the fourth year running
- Full-year revenue rises 55% to $75.1m, due to strong operating performance and overall economic growth in Russia
- RBC TV is continuing to exceed its targets, revenue reaches $17.0m, which is comparable to RBC's revenue from Online Advertising
- Consolidated net income up from $3.7m to $10.9m, due to a smaller negative effect from RBC TV
- RBC TV is strongly on track to reach an operational break-even point in the 2nd quarter of 2005
- RBC was given 51st place on the Deloitte Technology Fast 500 rating of the fastest growing hi-tech companies in EMEA
- RBC is ranked 14th in the S&P Transparency and Disclosure Survey 2004 of 60 largest Russian public companies; the highest A-class corporate governance rating awarded by Expert RA and RID
- Forecast 2005: excluding planned acquisitions, total revenue is expected to reach $98.0m, consolidated EBITDA $29.4m, and consolidated net profit $22.0m.
|Media & IT business|
(excluding RBC TV)
|RBC TV||Consolidated results|
|Revenue||58 100||42 866||16 950||5 653||75 050||48 519|
|Net||15 900||12 100||- 5 000||- 8 399||10 900||3 701|
Moscow, March 15, 2005 - Commenting on the preliminary full-year results for 2004 published by RBC Information Systems (RTS, MICEX: RBCI) today, RBC Chairman and CEO German Kaplun said: "RBC had a tremendous 2004, as the company registered a total revenue growth exceeding 50% for the forth year in a row. Moreover, we had an excellent second half of the year, and outperformed our initial annual sales forecast in the area of IT services and TV advertising. We are benefiting from strong execution of our growth initiatives and Russia's good economic performance. As a result, we are going into 2005 with excellent momentum and solid basis for further expansion. Looking forward, we are going to build on our successes as we launch more new media and IT projects in 2005 and beyond. We are also confident that our organic growth will be considerably accelerated through acquisitions."
Revenue growth surpasses expectations
The company outperformed its preliminary top-line growth target, and generated $75.1m against $71m projected initially. The company's total full-year revenue (including RBC TV) soared 55% from $48.5m in 2003 to $75.1m in 2004, due to strong operating performance in key segments and overall market growth. Media and IT revenue (excluding RBC TV) was up 36% from $42.9m in 2003 to $58.1m in 2004, driven by dynamic expansion in Online Advertising and IT Services. Media Services accounted for 45% of the total RBC sales, with IT Services bringing 32% and the remaining 23% coming from RBC TV.
Consolidated net income recovers from RBC TV startup costs
As the television channel continued progressing on schedule, and alleviated much of its pressure on the company's bottom line, the consolidated net income dramatically increased from $3.7m (7.6% of revenue) in 2003 to $10.9m (14.5% of revenue) in 2004. Consolidated EBITDA was up from $7.9m (16.3% of revenue) in 2003 to $20.1m (26.8% of revenue) in the year under review. In 2005, consolidated EBITDA is forecast to reach $29.4m, and consolidated net profit is expected to rise to $22.0m.
In media, RBC further reinforced its position as a leading provider of business and financial information for Russian-speaking audiences. The successful development of RBC TV, Russia's first business television station, as well as the launch of new Internet media products, enhanced the number of users of RBC's information resources, strengthened the company's brand on a nationwide level, and allowed the broadening of the company's advertising base to approximately 1,700 clients.
On the IT side, RBC is a well-established player in the field of software programming, with a broad portfolio of proprietary products and solutions. It also has partnership and cooperation agreements with some of the world's leading IT and software solution providers, including Microsoft, Intel, IBM, Oracle, Documentum and Siebel. The company served to more than 250 IT clients in 2004. A significant increase in the order book mainly stems from a healthy demand for automation systems from state organizations and large and medium-size Russian companies.
In 2004, RBC was given 51st place on the Deloitte Technology Fast 500 rating of the fastest growing hi-tech companies in EMEA. It has applied for ratings three years in a row, each time scoring listings among the top 100. The company is the only Russian firm named on Deloitte's list in 2004, and registered an average five-year revenue growth of 1,569%.
RBC continued its focus on implementing sound principles of corporate governance and information transparency, which are seen as a precondition for obtaining and retaining the trust of shareholders. These efforts have been recognized by Standard & Poor's, which named RBC Number 14 in its 2004 Transparency and Disclosure Survey of the 60 largest Russian public companies. The company was granted an A-class rating, the highest estimate in a corporate governance rating prepared by the Russian Institute of Directors (RID) and Expert RA rating agency.
Full year business revenue breakdown
|MEDIA SERVICES³||34 100||26 876||27|
|Online advertising||20 500||13 957||47|
|Marketing communications||10 200||9 700||5|
|Information services||3 400||3 219||6|
|IT SERVICES||24 000||15 990||50|
|General programming||13 475||9 274||45|
|Offshore programming||6 025||4 477||35|
|System integration||4 500||2 239||101|
|Revenue (Media & IT)||58 100||42 866||36|
|RBC TV||16 950||5 653||200|
|Total revenue||75 050||48 519||55|
³ Unaudited breakdown of revenue from media services.
RBC's media revenue (excluding the TV channel) amounted to $34.1m in 2004, up 27% from $26.9m in the previous year. This total consisted of subscription and marketing communications services and advertising placed on the company's web sites. This growth was driven by new product launches, the increasing popularity of RBC's web sites and the fact that advertisers are willing to pay premium rates to reach the high quality audiences delivered by the company via its online resources. Another important factor is promotion given by RBC TV. Among positive conditions that encouraged advertising spending growth in the country were Russia's healthy fundamentals, high commodity prices and increasing competition among businesses. The further development of Russian financial markets spurred demand for quality business data.
Online Advertising revenue surged 47% from $13.9m in 2003 to $20.5m in 2004, driven by an increased demand for efficient advertising to target high-income audiences, introduction of new information resources with attractive advertising spots, cross-selling with RBC TV, and overall market growth. RBC maintains 12 business-oriented portals and specialized websites, as well as the largest banner exchange network on the Russian Internet. The principal online resource is the company's main portal, providing financial and business news at www.rbc.ru, which yields approximately 75% of RBC's revenue from online advertising. By the end of 2004, the monthly audience of the company's business sites reached 3.2 million users (compared to 2.3 million in 2003), and the total monthly audience of all RBC's sites was 5.7 million (compared to 4.0 million in 2003). The overall growth in usage, combined with the high demographic quality of the audience enabled RBC to raise its Internet advertising rates by 30% in 2004, and to announce that the next 30% rate increase would be in April 2005.
The many new advertising clients include Arbat Prestige, Autokey, AvtoSpecCentre Audi na Taganke, Caligula boutiques, CIT Asset Management, Citibank, Citroen, Diageo, Euroset, Financial Corporation URALSIB, Gasprom, Glavmosstroy, Guta Insurance, Investment Construction Group Su-155, Irkut, KALEVA, Konfael, Kyocera, LG, Mercedes Benz Center, Musa Motors, Panasonic, Patrick Hellman Collection, Pernod Ricard, Prospect Investment, Rosgosstrakh, SAP, Sun Microsystems, TNK-BP, and Web-invest Bank. RBC offers 'Internet + TV' advertising packages to the majority of its clients. The company has a strong sales force, generating 80% of RBC's advertising revenue on the Internet and TV, with the remaining 20% coming from different advertising agencies. These include BBDO, CIA, Grey, Maxima, M-one (MindShare), Salesup and Young & Rubicam.
Marketing Communications reported a healthy 5% advance in revenue, increasing from $9.7m in 2003 to $10.2m in 2004. The growth was mainly driven by increased RBC brand recognition. An additional growth factor was the acquisition of 'The Best Brand' business award program, which complemented well the other two organized by RBC - 'Company of the Year' and 'Person of the Year'. RBC also holds international business conferences and provides marketing consultancy and advice to its clients, acting as an advertising agency for clients that allocate a significant portion of their campaign to RBC's resources.
In the area of Information Services the company offers access to news lines and analysis, data feeds with quotes from stock and commodity exchanges and over-the-counter markets, databases, economic ratings and rankings, market research, and surveys. This branch delivered a robust revenue increase of 6% from $3.2m in 2003 to $3.4m in 2004, which is in line with expectations. This advance was supported by the strong performance of the information terminal QuoteTotal and the market research project. New product launches in this area include a portal with stock and commodity market information for finance professionals (Quote.ru), an online bulletin board service to connect buyers and sellers of different businesses (www.biztorg.ru), an aggregation of a wide array of ratings and rankings on different topics (RBC Ratings) and an online board on real estate and construction intended primarily for premium сlass housing offerings (RBC Real Estate). The company expects these to drive its subscription revenue going forward, and increase RBC's popularity as a provider of a full spectrum of business data and related value-added services.
Last year the RBC TV station turned in excellent results and outperformed the management's forecast, delivering $17.0m in revenues compared to the initially forecasted $16.0m, due to efficient marketing and impressive audience statistics.
According to the independent media researcher COMCON-Media, RBC TV's weekly audience in Russia almost doubled, soaring from 1.563 million viewers in April 2004 to 3.094 million in October 2004. The coverage, i.e. the number of people who can watch the channel in Russia, reached 37.456 million. This means that RBC TV's core audience rose from 5.4% to 8.3% of the total coverage. The average daily audience reached 1.680 million people on weekdays. In terms of the average viewing time, RBC TV occupies third place after Russia's two major national television channels. In 2004, RBC TV also expanded its distribution to some former Soviet republics, including Ukraine, Kazakhstan, Belarus and the Baltic States. Eventually, the coverage of RBC TV outside Russia reached around 10 million people by the end of 2004, in accordance with the company's estimations.
Based on feedback from its target audience, the channel introduced six new topical and industry-specific programs, and substantially amended the format of existing programs, adding more analysis to the coverage, and strengthening the block of stock and financial market news.
As a result of rapidly growing audience statistics and visible quality improvements, the total number of RBC TV advertisers increased to around 100, and the average capacity utilization rate reached around 15% of available advertising time.
The negative effect of RBC TV on the company's bottom line decreased from $8.4m in 2003 to around $5.0m in 2004, according to preliminary data. Launched in September 2003, the television station remains strongly on track to reach an operational break-even point in the 2nd quarter of 2005 and generate around $2m in profit by the end of the year.
RBC's revenue from IT Services rose 50% from $16.0 in 2003 to $24.0m in the reported period, due to its diversified product portfolio, strong project execution capabilities and favorable market trends. The wide brand recognition of RBC amongst the business community was an additional growth factor. This total consists of the development of tailored and turn-key IT solutions, the customization and implementation of products created by leading international software vendors, and system integration services. The revenue from General Programming grew an impressive 45% from $9.3m in 2003 to $13.5m in 2004, the Offshore Programming branch reported a 35% increase in revenue from $4.5m to $6.0m, and the revenue growth in the field of System Integration was up 101% from $2.2m to $4.5m.
In 2004, the government's IT spending was one of the major drivers behind the overall market growth in Russia. Orders placed by state organizations and internationally sponsored IT programs with the Russian government as the beneficiary amounted to approximately 25% of the total IT market4. The structure of demand shifted from the purchase of computer equipment toward the creation of sophisticated IT systems and related IT services. The state's generous spending triggered similar changes at a level of domestic enterprises, especially those working in the financial services, energy, consumer goods and retail sectors. They showed increasing demand for business-automation software, such as enterprise resource planning (ERP) and client relationship management (CRM) systems, with the purpose of improving efficiency amid intensifying competition.
RBC's IT business substantially benefited from these positive changes and increased its pipeline of state contracts to 35% of total IT revenue. Large and medium-size Russian companies accounted for 45% of the order book, and foreign clients brought the remaining 20% of the revenue. In 2004, RBC broadened its client base among state organizations and continued providing a growing scope of IT services to various state agencies. The company also strengthened its position as a provider of quality solutions for different types of companies. The client list includes EvrazHolding, Golden Telecom, Kamazleazing, Kazkommertsbank, LUKoil, Perekriostok, the Russian Education Ministry, the Russian Federal Atomic Energy Agency, the Russian Federal Customs Service, the Russian Federal Statistics Service, the Russian Finance Ministry, the Russian Federal Agency for Federal Property, Satari and Tatkommunpromkomplekt. At the same time, none of the customers account for more than 10% of the IT revenue.
The implementation of a Siebel eFinance CRM-system at Kazkommertsbank by RBC was recognized as the best system integration project of the year at the Global CRM Forum in Moscow. The company successfully promotes its new solution for the leasing industry, which has been developed on the MBS Navision platform in 2004. RBC has created additional modules responding to the specific needs of Russian leasing companies and is working on the implementation of this solution for several large clients. In the area of offshore programming, RBC's foreign clients are based in Kazakhstan, the USA, the U.K., Australia and Ukraine. By the end of 2004, the total number of clients exceeded 250.4 According to data published in the Expert magazine, 4-10 October 2004
Outlook for 2005
RBC expects to sustain a strong double-digit revenue growth, based on a combination of organic and acquisitive growth both in media and IT. Excluding planned acquisitions, the company is estimated to generate total revenue of at least $98.0m, driven by new media and IT products and an increasing contribution from RBC TV. Consolidated EBITDA is forecast to reach $29.4m, and consolidated net profit is expected to reach $22.0m in 2005.
Cautionary note regarding forward-looking statements
Some of the information in this press release may contain statements of future expectations and other forward-looking statements. These expectations are based on the management's current views and assumptions, and involve known and unknown risks and uncertainties. It is possible that the company's actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. For a discussion of some of the risks and important factors that could affect the firm's future results, see "Risk Factors" in the company's latest Annual Report on www.rbcinfosystems.com. RBC assumes no obligation to update any forward-looking information contained in this document.