Press releases | Archive 2004
RBC announces strong preliminary results, with total sales approaching $50m in 2003RBC announces strong preliminary results, with total sales approaching $50m in 2003
- Full-year sales (including RBC TV revenue) up 68% to $49.1m
- Core Media1 and IT businesses grow 50% boosted by the successful launch of RBC TV
- Net income, excluding the impact of the TV project, increases 31%
- RBC TV brings $5.5m in revenues, up 57% from $3.5m set as a target for four months of operation in 2003
- RBC moved up twenty-nine places to Number 43 on the Deloitte Touche Tohmatsu Fast 500 as one of the fastest growing technology companies in Europe
- RBC is named Number 15 in the S&P Transparency and Disclosure Survey 2003 of 45 largest Russian companies
- Total revenue in 2004 is projected to reach $70m, including $16m from RBC TV
Key figures for the full year 2003
& IT business
|Revenue||43 600||29 151||5 500||49 100||29 151|
|Net||12 100||9 207||-7 900||4 200||9 207|
2Figures calculated on the basis of management accounts in accordance with IAS (unaudited).
Moscow, March 23, 2004 - Reviewing the preliminary full-year 2003 results of RBC Information Systems (RTS, MICEX: RBCI) published today, RBC Chairman and CEO German Kaplun said: "I am delighted to report that RBC finished year 2003 on a strong note as our sales continued to grow dynamically based on increasingly strong brand recognition, enhanced product range, aggressive marketing and overall media and IT market growth. The launch of RBC TV, which did extremely well in the first four months of operation, significantly expanded RBC's long-term growth potential. Our core media business achieved an exceptionally strong growth of 75%. This combination of activities uniquely positions RBC at the forefront of bringing quality business news content and innovative information products to our target business audience in Russia. Our IT division also notably expanded its project pipeline and contract book, promising rapid future growth."
Media and IT revenue delivers exceptionally strong growth
RBC is exposed to two dynamic sectors of the Russian economy - media and information technology (IT). Full-year Media and IT sales rose 50% from $29.2 million in 2002 to $43.6 million in 2003, primarily due to record volume gains in Advertising and successful implementation of IT contracts with major private and state organizations. In the total Media & IT revenue mix Media Services accounted for 62%, with the rest of the top line coming from IT Services. Including RBC TV's contribution, the total revenue surged 68% to $49.1 million last year.
In Media, the popularity of RBC's news sites was fuelled by the launch of the TV project, which gave an enormous lift to the RBC brand, expanded the editorial coverage and made RBC a clear leader in delivering business news to Russian-speaking audiences. On the IT side, attractive sales opportunities were spotted and developed in CIS countries, whereas the implementation of RBC-developed IT products provided healthy growth in Russia.
Media & IT net income adds 31%, excluding the impact of the TV project
As sales continued to expand strongly, Media & IT net income increased from $9.2 million in 2002 to $12.1 million in 2003, a 31% rise over the previous year. Consolidated net income, reflecting the impact of RBC TV, is expected to amount to $4.2 million. The EBITDA margin of the core Media & IT business is projected to reach around 40%.
In 2003 RBC achieved outstanding results in online advertising and made a strategic move to the TV advertising market, the largest and most dynamic segment of the Russian advertising market. Being on a strong track for broadening its target business audience, the company launched Russia's first and only business dedicated television channel on September 2, 2003.
At the end of 2003 RBC was named Number 43 on the Deloitte Touche Tohmatsu 2003 European Technology Fast 500, a ranking of the 500 fastest-growing technology companies in Europe. The company has achieved a 2,112% average growth over the past five years and moved up twenty-nine places on Fast 500 as compared to 2002.
In September 2003 RBC was named number fifteen in the S&P Transparency and Disclosure Survey 2003 of forty-five largest Russian companies. The company entered the list for the first time since going public in April 2002. The result of this survey reflects RBC's ongoing commitment to high corporate governance standards and corporate transparency in particular.
At the end of 2003, RBC stock was included in the RTS index, which testifies to the fact that RBC shares are seen as a reliable market instrument with a stable trading volume.
Full year business revenue breakdown
|Revenue (Media & IT)|
4Unaudited breakdown of revenue from IT services for 2002 and 2003.
The company's media division is represented by Advertising and Information Services. In 2003 RBC established itself as a differentiated firm in media services and an undisputable leader in providing practical, user-friendly and comprehensive business information for key audiences. The media revenue soared 75% from $15.4 million in 2002 to $27.0 million in 2003 full-year sales primarily on the back of enormous synergies with RBC TV, which provided the parent company with continuous promotion to its core customer base, key business leaders and decision makers.
On the advertising side, RBC is engaged in online advertising and marketing communications. Overall, the company achieved above-market growth5 in advertising to post an 87% rise from $12.9 million in 2002 to $24.0 million last year.
Online Advertising demonstrated an impressive 75% increase from $8.1 million in 2002 to $14.2 million in 20036, driven by the growing popularity of RBC's web sites and promotional impetus given by RBC TV. By the end of 2003 the monthly audience of RBC's business sites reached 2.3 million people, and the audience of all RBC's online resources amounted to 4 million users. Last year RBC's readers increasingly visited a greater number of online pages and the share of daily repeat users among RBC's business audience rose significantly. This enabled the company to increase its advertising inventory by 20% and improve advertising capacity utilization. Access to the affluent Russian demographic continued attracting premium advertisers. As a result, the company's advertising customer base increased by more than 25% and reached about 1,520. New clients included Aeroflot, Aquarius, Avtodom, Don-Stroy, Honda, IFD Capital Group, Interros, Konti Group, Megafon, PIO Global, Promsvyazbank, Russia Insurance Company, Samsung, SkyLink, Sovintel, Tatneft, Tinkoff and Troika Dialog. According to the management's estimations, the company maintained its 50% share of the Russian online advertising market in 2003.
With the RBC brand continuing to be the main driver throughout the year, Marketing Communications revenue more than doubled from $4.8 million in 2002 to $9.8 million in 20037. Last year the company's customers increasingly used RBC not only as an advertising site, but also as an advertising agency, which spurred growth in Marketing Communications. In addition to providing promotional campaigns and special marketing events for clients, RBC acts as the organizer of two prestigious business award programs and international investment conferences. In November 2003, RBC acquired all rights for the "Company of the Year" business contest. This attractive investment is expected to trigger further cost and revenue synergies with the company's media business.
In the area of Information Services the company continued to deepen its market specialization in providing business data to key customer groups. As a result, revenue from Information Services climbed 16% to $2.9 million in line with expectations. In response to a rapid expansion of the Russian financial market, RBC introduced QuoteTotal in June 2003. This terminal is RBC's first product in a range of expensive information systems intended for financial market professionals.
Over the past year RBC's marketing research project grew into the most comprehensive selection of research reports in Russia and the CIS, with over 1,000 items sold to clients. RBC centralizes a wide range of market intelligence publications from its own analytical department and 42 leading research firms. In September 2003 RBC presented a new project aimed to aggregate information on business seminars, corporate trainings and conferences available in Russia. The company launched these products to establish itself as a leading data source in these lucrative segments with high potential growth rates in view of increasing demand for marketing and educational services in the country.
RBC expects the growth in Information Services to continue due to new product additions and the accelerating performance of recently launched products, which have already achieved positive market awareness and brought healthy revenues.
5Based on data published by the Russian Association of Communication Agencies (AKAR) in January 2004, the Russian media market grew approximately 31% in 2003 compared with RBC advertising services 87%.
6Unaudited breakdown of revenue from advertising services for 2002 and 2003.
7Unaudited breakdown of revenue from advertising services for 2002 and 2003.
Launched on September 2, 2003, RBC TV is the only Russian business television station. The channel is dedicated solely to business news and analysis and provides 24-hour television coverage of the domestic and international financial markets seven days a week. RBC has news-sharing agreements with CNN and CNBC in place to complement the Russian content with general and business international news coverage.
The total revenue from RBC TV reached $5.5 million in four months of operation in 2003, up 57% from the earlier management's guidance of $3.5 million, reflecting the successful attempts of the television team in building attractive programming and due to aggressive marketing of advertising on the newly established channel to the current and new clients of RBC.
As expected, the principal advertising interest has come from automotive and telecommunications firms, hi-tech companies, financial organizations, including banks and insurance companies, as well as real estate and construction firms. Some of them prefer to make two-year contracts, protecting themselves from anticipated increases in RBC TV advertising rates. Although the business model of RBC TV implies that the channel will be financed solely from advertising revenue, a supplementary source of income came from program production.
By the end of 2003 RBC TV has successfully entered into agreements with various advertisers, which have committed approximately $9.5 million in advertising revenues and budgets allocated for the channel in 2004. RBC TV has done extremely well to achieve this level of commitment, which already makes 59% of the $16 million revenue target for 2004.
Overall, on the costs side, the TV project performed in line with the business plan. In the period from September to December 2003, the channel had a modest cost overrun, due to higher capital expenditures and promotional costs. However the cost increase was completely offset by a 57% increase in revenues.
In several months since the launch the channel has established a meaningful presence in the Russian media world and was recognized as "the main television event of 2003" by the VI Eurasian Television Forum and was awarded the viewers' prize of Kosmos-TV as the best information programs provider in 2003. In addition, the TV project received a "Faces-2003" award for innovation.
The company's IT business is represented by General Programming, Offshore Programming and System Integration. The total IT revenue grew 21% from $13.7 million in 2002 to $16.6 million in 2003 due to an enhanced contract book, as RBC's strong brand recognition in the business community gave the company an edge over competitors in gaining IT orders. The company secured contracts with new clients such as the State Customs Committee, the Permanent Committee of the Russian Belarus Union, the Russian Economic Development and Trade Ministry, the Russian Education Ministry, LK Leasing, Kazkommertsbank, Bank Turan Alem, Mitsubishi Motors and Russia Insurance Company. The total IT customer base was considerably expanded and exceeded 200 clients, as RBC continued to benefit from an IT product portfolio that covers both specialty and universal business software. A balanced product range consisting of RBC-developed solutions and the offering of products developed by Microsoft, Oracle, Siebel, Thawte, VeriSign, Hewlett Packard, Dell and Documentum, ensured healthy revenue streams. RBC is also a partner in the Intel e-Business Solution Provider Program (eBSP) and participates in IBM's PartnerWorld for Software Program. The aim of this cooperation is to employ the experience of global industry leaders for implementation in Russia.
Last year RBC was recognized as one of the most efficient IT businesses and named Number 8 in the ranking of Russian IT companies administered by the Kommersant-Dengi economic weekly and iOne Information Technologies.
Revenue from General Programming increased from $8.5 million in 2002 to $9.7 million in 2003, 14% up from last year. The growth in this segment could have been higher unless the implementation of several already signed IT contracts had been postponed by state organizations to 2004 due to the ongoing election period in the country.
Offshore Programming delivered a substantial 47% increase from $3.2 million in 2002 to $4.7 million in 2003, as healthy demand for business automation software came from clients based in CIS countries, Australia and the USA. In response to increasing IT needs of Kazakhstan companies, RBC and one of major Kazakhstan banks Kazkommertsbank signed an agreement on strategic partnership in promoting information technologies and IT project expertise in the country.
Revenue from System Integration increased 8% to $2.2 million last year. The company considers it as a non-core business due to generally low margins of system integration contracts as compared to RBC's margin. This branch is mainly driven by clients' desire to use RBC as a provider of a complete cycle of services. The company's policy is to make system integration commitments in the event they bring additional IT opportunities in relations with a client.
Outlook for 2004
This year RBC expects to deliver strong top-line growth, driven by existing contracts, cross selling between its businesses, the increasingly strong RBC brand and the launch of new products. Full-year 2004 revenue is projected to reach at least $70 million, including $16 million from RBC TV. RBC management remains committed to maintaining a high growth rate with healthy margins through cost-conscious action, conservative financing policies, and by building further business audience specialization and IT market expertise.
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.