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Press releases | Archive 2004

RBC reports 86% sales growth in the first half of 2004

RBC reports 86% sales growth in the first half of 2004
  • First-half sales (including RBC TV revenue) surge 86% to $33.7 million, fueled by the TV project's excellent performance
  • The core Media and IT business grows 47%, primarily due to strong sales in online advertising and software programming
  • RBC TV brings $7 million in revenue, which is almost half of its sales target for 2004
  • RBC reiterates its positive year-end outlook for 2004. The total revenue is expected to reach at least $71 million (including RBC TV revenue)

Revenue for the 1st half of 2004

$'0001H200411H20032% Growth
Media services16 40011 06048
IT services10 3007 05046
Core Media & IT business26 70018 11047
TV project7 000--
Total revenue33 70018 11086

1 All references to Media refer to RBC's Information and Advertising Services. The TV project is presented as a separate line of business for the convenience of valuation of the different elements of RBC's activities.
2 Figures calculated on the basis of management accounts in accordance with IFRS (unaudited).

Moscow, September 15, 2004 - Commenting on the preliminary first-half 2004 results of RBC Information Systems (RTS, MICEX: RBCI) reported today, RBC Chairman and CEO German Kaplun said: "In the first six months, we delivered a strong performance with a total sales growth of 86%. Almost 45 percentage points were contributed by the TV project, which is progressing on schedule and keeps driving our media revenue. A growth in the core media and IT business has surpassed our expectations as well. Our team is working on new projects and continues to turn in good results, driven by broad product portfolio, a well-known brand and the effective allocation of recourses. We are very confident that the company will meet its financial and operational full-year 2004 targets."

Revenue. In the first half of 2004, RBC continued to strengthen its operational excellence in the media and information technologies (IT) sectors, which are demonstrating spectacular growth in Russia. The total 1H2004 revenue of the company (including RBC TV) rose 86% to $33.7 million, primarily due to the significant contribution of the TV project and considerable gains in the area of online advertising and software programming services. Revenue from the core media and IT business increased 47% to $26.7 million as compared to $18.1 million in the first six months of 2003. In the total 1H2004 revenue mix, the core media business and the TV project accounted for 69%, with 31% coming from IT services.

Media Services. The revenue from media services, consisting of information services, online advertising and marketing communications, surged 48% from $11.1 million in the first half of 2003 to $16.4 million in the same period of 2004. RBC's media division delivered an excellent double-digit growth ahead of the market, which, according to the Russian Association of Communication Agencies, increased 31% in the period from January to June 2004.

The cancellation of the advertising tax by Russian authorities effective January 1, 2005 came as a positive market development. This move is expected to contribute to further growth in advertising spending in Russia and to have a positive effect on RBC's media business. At the same time, recently imposed limitations on beer advertising are not anticipated to influence RBC's revenues, as this category of products does not belong to the company's key advertisers.

In the period under review, RBC launched several new media products to meet the needs of its business-oriented users (the Quote.ru portal and a new version of the QuoteTotal terminal) and to expand a wider mainstream audience (RBC Ratings).

RBC TV. In the first six months of 2004, the total revenue from RBC TV reached $7 million, which is almost half of the sales target for 2004. In this period, the channel considerably enhanced its distribution in Russia and CIS countries. It made an agreement with the largest cable operator of St. Petersburg that covers some 85% of the city. As a result of domestic expansion, presently RBC TV's penetration has exceeded 37 million people in Russia. In response to strong demand from the former Soviet republics, RBC TV began broadcasting in Ukraine, Kazakhstan, Belarus and the Baltic States.

Since the launch in September 2003, the channel has attracted a quality target audience. According to an independent media researcher Comcon Media, the weekly audience of RBC TV amounted to 1.563 million people. Almost one fourth of them are middle and top managers and 27.6% are qualified specialists. One third of the audience of RBC TV is employed in such spheres as the manufacturing industry, construction and the financial sector.

RBC TV significantly increased the number of advertisers, with the key client groups being investment and commercial banks, insurance companies, construction and real estate firms, telecommunication providers, automotive dealers and electronic goods producers. RBC TV advertisers include Aeroflot, Aton Capital, Aquarius, Audi, Blackwood Realty, BMW, Caligula boutiques, Capital Group, Fujitsu Siemens, Genser, Hansgrohe, Kazkommertsbank, Konti, LUKoil, Industrial Group MAIR, IFC Metropol, MDM-Bank, Norilsk Nickel, Patrick Hellman Collection, Promsvyazbank, Russia Insurance Company, Tatneft and Troika Dialog.

Overall, the project is developing in line with the business plan and expected to reach an operational break-even point in April 2005.

IT Services. The total revenue from the IT business of the company, consisting of general and offshore programming and system integration, rose 46% from $7.05 million in the first half of 2003 to $10.3 million in the same period of 2004. Healthy revenue streams came from large and medium-sized domestic companies, driven by their desire to increase business efficiency on rising competition. RBC's IT business is also benefiting from an increased contract book with state organizations, which unlocked their IT budgets after the ending of the election period in the country.

Outlook for 2004. Based on the performance to date in 2004, RBC expects strong business expansion to continue and the company to deliver high double-digit growth. RBC management reiterates its year-end sales forecast of at least $71 million, excluding potential acquisitions. The revenue is expected to consist of approximately $34 million from the underlying media business, $16 million from RBC TV and $21 million from IT services. Given that the current favorable market condition remains in place, in late October the company may be in a position to upgrade its forecast for the full year 2004.

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 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 IPO Circular on www.rbcinfosystems.com. RBC assumes no obligation to update any forward-looking information contained in this document.

Press and investor contacts:
Tel: +7 (495) 363-1111
Email: pr@rbc.ru
Web: www.rbcholding.com