Press releases | Archive 2006
RBC delivers strong performance in 2005, with consolidated revenue exceeding $100m
- RBC's full-year revenue is up 31% to $104.8m, primarily due to dynamic expansion of the media business
- Consolidated EBITDA rises 73% to $34.3m and consolidated net income surges 116% to $22.5m, as RBC TV starts generating meaningful earnings.
- RBC TV reports net income of $1.8m, the first time it has generated a positive net financial result since the launch in September 2003
- RBC was ranked 8th in the 2005 Disclosure and Transparency Survey of 67 Russian companies issued by Standard & Poor's annually
- RBC was selected by Global Finance magazine as the best Media/IT company in Russia for 2005
- Forecast 2006: total revenue is expected to reach about $170-178m (including the contribution from Helios Computer and ASKO-TBS Consulting).
Key consolidated figures for the full year 2005
|USD mln||% of revenue||USD mln||% of revenue|
1 - Financial data for 2005 is based on management accounts in accordance with IFRS.
2 - Financial statements for the year 2004
Moscow, March 24, 2006 - RBC Information Systems (RTS, MICEX: RBCI) today reported preliminary results for the full year 2005.
"I am pleased to present once again a strong performance and excellent results in 2005 as RBC delivered record revenue of over $100m," said RBC Chairman and CEO German Kaplun. "Importantly, total net income and EBITDA grew ahead of sales volume, driven by RBC TV, which turned profitable last year. As we look ahead, we will continue to enhance our advertising products and IT expertise, offering the most effective solutions to our clients. On the media front, we will focus on the Internet and TV, while also looking for new opportunities in other media segments with substantial growth potential. In the IT field, we expect to gain market share organically and due to the recent acquisitions in IT consulting and system integration."
Total revenue hits the $100m mark
The company outperformed its preliminary top-line growth target, and generated revenue of $104.8m against the $98.0m initially projected. The company's total full-year revenue (including RBC TV) advanced 31% from $79.7m in 2004 to $104.8m in 2005, based on excellent performances from key advertising products targeting high-income audiences, increased contribution from system integration services and healthy growth in software programming for domestic clients. Media Services (including RBC TV) accounted for 71% of total RBC revenue with IT Services bringing 29%.
RBC TV turns profitable, driving consolidated EBITDA and net income up
Consolidated net income more than doubled, rising from $10.4m (13% of revenue) in 2004 to $22.5m (21.5% of revenue) in 2005, primarily due to the fact that RBC TV turned bottom line positive and reported net income of $1.8m for 2005. Total EBITDA advanced from $19.8m (24.8% of revenue) in 2004 to $34.3m (32.7% of revenue) in the year under review.
RBC has successfully built up a strong presence in the highly specialized media market segments in Russia by providing indispensable news content and data to the business community on the Internet and TV. According to the company's statistics, the monthly number of users visiting its business sites and watching RBC TV reached approximately 10 million people, which is the largest audience of all business mass media in Russia. RBC continues to work on new advertising products and effectively utilize access to its affluent demographic to deliver the best value for advertisers, using the strong brand name and skilled sales force. It is also actively participating in the consolidation of small but attractive non-business online resources to position the company for future growth as the Internet becomes increasingly affordable to the masses.
In the information technology (IT) field, the company put a greater focus on offering programming, consulting and system integration solutions to a wide range of clients based in Russia and the CIS as opposed to the global software outsourcing market. Using its strong brand name, broad technological expertise and excellent track record, RBC enhanced its contracts with domestic corporate, government and private customers. RBC also reached an agreement on concluding two strategic acquisitions in IT consulting and system integration to strengthen its position in areas with high growth potential.
Good corporate governance remains a high priority at RBC. Respect for shareholder interests, openness and transparency are key aspects of RBC's corporate governance policy, which forms the basis for all decision-making. As a result, RBC was ranked No. 8 among 67 Russian companies in the 2005 Transparency and Disclosure Survey released by Standard & Poor's. Additionally, RBC received the highest mark (A-class rating) in a corporate governance rating administered by the Russian Institute of Directors (RID) and Expert RA.
Global Finance magazine named RBC the best Media/IT company in Russia for 2005 based on a range of criteria, including market share, profitability, evidence of a winning long-term strategy, management quality and commitment to improvement in corporate governance. In 2005, RBC has also been included for the fourth time in the Deloitte Technology Fast 500 listing of five hundred fastest growing hi-tech companies in EMEA.
Full year business revenue breakdown3
|USD mln||2005г.||2004г.||% Change|
3 - Based on financial statements for the year 2004 and management accounts
Total revenue from Media Services rose 39% from $53.8m in 2004 to $74.9m in 2005. It consists of Internet and TV advertising, information services provided to subscribers through the company's web sites and marketing communication services. The company's media business continued to gain market share and delivered dynamic growth ahead of the market, which advanced 28% last year, according to the Association of Communication Agencies of Russia. The growth was driven by the increased contribution from RBC TV and excellent performances from key online advertising and information products. The company's total advertising base on the Internet and TV exceeded 2,300 clients. RBC also benefited from the overall strong growth of the media market, as Russia's economy continued to boom on the back of robust hydrocarbon prices and the small but fast-growing middle class.
Online Advertising reported a 45% advance in revenue, increasing from $21.9m in 2004 to $31.7m in 2005, with prices being the primary driver. Last year RBC increased its rate card twice - in April and September 2005; the effective price increase rate for the whole year reached about 36%. The company also developed new web properties (RBC Real Estate), added new sections to existing resources and refurbished several web sites (Cnews.ru, Autonews.ru) to increase the number of advertising spots.
The capacity utilization of advertising spaces available on RBC's business sites, which brought about 88% of the online advertising revenue, reached nearly 100%. It urged the company to seek new internet platforms. As a result of the purchase of several small non-business online resources, by the end of February 2006, the total daily audience of RBC's sites reached 1.35 million unique visitors (compared to 0.65 million in 2004) and the monthly audience amounted to 10 million (compared to 5.7 million in 2004). The key types of RBC's advertising clients included car manufacturers and dealers, banks and financial organizations, real estate and construction firms, telecommunications and hi-tech companies.
RBC TV revenue was up 42% over the preveious year from $ 17.1m to $24.3m in 2005, due to a growing volume of advertising and product placement, as advertisers increasingly appreciated the premium target audience offered by the business television channel.
In 2005, RBC TV reported net income of $1.8m, the first time it had generated a positive net financial result since the launch in September 2003 Most of the investment in television had already been made and operating costs were growing at a much slower pace than the revenue, resulting in the strengthening of RBC's consolidated profit margin from 13% in 2004 to 21.5% in 2005.
The company built up a very good presence in the Russian media space. The channel is currently available to managers, government officials, businessmen and decision makers in almost all large Russian cities. According to the independent researcher COMCON-Media, RBC TV's monthly audience in Russia amounted to 4.844 million people in November 2005. The weekly audience surged 32% from 3.094m in October 2004 to 4.073m in November 2005. The average daily viewership increased 16% from 1.680m to 1.947m. Coverage, i.e. the number of people to whom the channel is technically available, reached 41.6m people in Russia and about 15 million people in CIS countries. The company intends to further enhance the TV channel's distribution in those Russian cities where its target audience is based.
In February 2005, RBC TV began producing a weekly program 'Business Russia' for CNBC Europe, giving an in-depth review of Russia's business and economy to a wide number of foreign viewers. In October 2005, RBC TV launched several new programs on its schedule and renewed the concepts of some of its existing programs to satisfy the need for timely market reporting and give a greater variety of commentaries on more general business themes.
At the beginning of 2006, Russian lawmakers approved a new edition of the Advertising Law which cut down advertising time on television. The company believes these changes will have a positive impact on the revenue of RBC TV and RBC's Internet resources, as they will considerably increase advertising prices on federal television channels and force some advertisers to look for other, more targeted opportunities of media placement.
Revenue from Marketing Communications services advanced 31% from $10.8m in 2004 to $14.2m in 2005. Growth was mainly driven by the agent's fees that RBC received while placing advertising for some of its clients on others' media resources. For example, the company began acting as an advertising agent for several online resources due to the lack of its own unsold inventory on the Internet. RBC also holds international business conferences and organizes such national business award programs as 'The Best Brand', 'Company of the Year' and 'Person of the Year'.
Information Services revenue climbed a healthy 15% from $4.1 in 2004 to $4.7m in 2005, primarily driven by the sales of market research reports and the QuoteTotal information terminal and its versions. The company also offers access to news lines and analysis, data feeds with quotes from stock and commodity exchanges and over-the-counter markets, databases, economic ratings, rankings and a wide range of surveys.
RBC's revenue from IT Services grew 15% from $25.9m in 2004 to $29.9m in the reported period, based on the company's proven track record, in-depth industry knowledge and skilled personnel, as well as bolstered by the growing need within the Russian corporate and government sector for advanced IT products and management information systems. This total consists of the development of tailored and turn-key business-to-business IT solutions, the customization and implementation of products created by leading international software vendors, as well as system integration services.
General Programming generated $17.3m in annual revenue, a 19% increase from $14.5m in 2004. The System Integration branch reported a 71% growth from $4.9m in 2004 to $6.5m in the period under review. This performance was partly offset by lower sales in Offshore Programming, which contributed $4.2m in 2005 compared to $6.5m in the previous year. In 2005 and going forward, RBC decided put a greater focus on offering IT services to domestic clients as opposed to providing outsourcing services to foreign customers. The reasons for this is high marketing costs, expensive and time-consuming procedures for getting on the vendor list of potential clients without a guaranteed order volume, amid strong competition with Indian firms.
Using its strong brand name, broad technological expertise and excellent track record, RBC enhanced its contracts with existing domestic corporate, government and private customers and attracted new clients. By the end of the year, the total customer base increased by 20% to about 300 accounts.
In October 2005, the company announced an agreement to acquire controlling stakes in two Russian IT firms involved in systems integration (Helios Computer) and IT consulting (ASKO-TBS Consulting). The goal of these deals is to increase RBC's presence in the rapidly growing IT market in Russia and boost its IT revenue in 2006. In addition, a broader scope of IT products and services and significantly increased revenue will enable RBC to successfully bid for larger IT contracts with state and commercial organizations. The company intends to improve the profitability of the acquired firms, which is lower than that of the RBC's IT business, by actively using cross-selling opportunities and cost synergies with its current IT operations.
The company's goal for 2006 is to successfully integrate the acquired companies, build up the sales volume and help margins through increasing the share of maintenance services and the scalability of business.
Anticipated presentational changes
RBC is planning to change over to a new breakdown of revenue, effective during the 1st quarter of 2006, when giving quarterly guidance based on managements accounts. The change will more accurately reflect RBC's current significant revenue streams and the emergence of new business segments. The company believes that this format of reporting will aid investors' understanding and valuation of the different elements of RBC's business. The company will continue to distinguish between Media Services and IT Services as follows:
Internet - display of advertising and provision of information services to subscribers through the company's web sites.
Television - advertising and other revenues from a TV channel
Publishing - advertising and subscription revenue and newsstand copy sales from print publications
Other - provision of marketing communications and other services
Software Programming - development of software solutions for Russian and foreign clients and related services
System Integration - provision, installation and customization of IT equipment and applications
Outlook for 2006
RBC expects further dynamic growth of its media and IT businesses in 2006, based on existing contracts, new product launches and active cost-conscious entrepreneurial action. The forecast is further bolstered by the strong macroeconomic trend and the ongoing rapid growth of the media and IT markets in Russia. The company is estimated to generate total revenue of about $170m - $178m. This figure is expected to consist of about $90m - $95m from Media Services (including about $30m - $35m from RBC TV) and around $75m - $80m from IT Services (including approximately $40m - $45m from Helios Computer and ASKO-TBS Consulting).
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.