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RBC Information SystemsRBC Information SystemsRUSSIA`S LEADING MEDIA & IT GROUPRUSSIA`S LEADING MEDIA & IT GROUP
Presentation for CA IB’s Annual Emerging Europe Conference
Istanbul, October 2006
RBC TODAY
Russia’s major Media & IT group Media business: TV, Internet, magazines, newspaper, news agency IT business: software programming, IT consulting, system integration RBC has the largest business audience in Russia. TV & Internet
combined business audience is ~ 12mln people a month Large and diverse client base - over 2 300 advertisers and more than
300 IT clients Over 2 000 employees Experienced management team with proven ability to grow sales and
increase earnings 1/3 of the Board is comprised of independent directors Internet market share – about 50% of Internet spot advertising in
Russia RBC ranks among the top-20 Russian magazine publishers
2
COMPANY OPERATIONS
Financial projections
2005 2006F
Revenue $109.4m $170-178m
EBITDA $29.6m $50-55m
Net Profit $20.8m $32-37m
Source: company data
Internet advertising
33%
RBC TV22%
IT26%
Online news & subscription
4%
Marketing communications
15%
Breakdown of revenue in 2005
3
RBC STOCK
Three founders of the Company retain the controlling stake in RBC:
Went public through Russia’s first successful domestic IPO in 2002
The stock is listed on MICEX and RTS, ticker symbol: RBCI
1-level ADR, ticker symbol: RINFY, traded on OTC
The market capitalization of the Company has reached $1bn in 2006
Source: company register, April 2006
Ownership structure
German Kaplun, Chairman Alexander Morgulchik, Vice Chairman Dmitry Belik, Chief Financial Officer
…the rest is a free float.
ADR12.61%
Institutions35.61%
RBC management
51.78%
4
RBC – MEDIA BUSINESS
As a media company, RBC offers a multi-channel content delivery through:
• RBC TV, the first and only Russian business TV channel, launched in cooperation with CNBC and CNN in 2003 and currently available to 58mln people in Russia and former Soviet republics
• Over 15 Internet websites, occupying leading positions in their niches. RBC’s online resources target high-income specialized audiences (business community, stock market professionals, car owners, people interested in real estate and hi-tech…)
• Niche print media publications focusing on business information, hi-tech, architecture, design and construction.
• News agency RosBusinessConsulting dedicated to business, financial and economic news. RBC issues around 1,300 various news materials per day
5
RUSSIAN MEDIA MARKET IS EXPECTED TO DOUBLE BY 2010
RUSSIAN ADVERTISING MARKET 2004-2008F
$9.2bn$7.6bn
$3.9bn $5.0bn $6.1bn
0
2
4
6
8
10
2004 2005 2006F 2007F 2008F
By 2008 Russia is to join top ten contributors to the world media market
Source: Association of Communication Agencies of Russia (ACAR) February 2006, ZenithOptimedia December 2005
TOP FIVE AD-GROWTH COUNTRIES
Source: ZenithOptimedia, December 2005
CAGR 24%
# Country CAGR 2004-
2008F, %
Volume in 2008F,
$ bn
1 Egypt 25% 1.25
2 Russia 24% 9.22
3 Indonesia 22% 5.73
4 Brazil 19% 9.32
5 China 18% 16.33
6
MEDIA MARKET – GROWTH DRIVERS
ADVERTISING REVENUES AS % OF GDP IN 2006E
Russia 0.94%
USA 2.03%
Poland 1.47%
Czech Republic 1.48%
Hungary 2.48%
Source: ZenithOptimedia, December 2005, www.cia.gov
Russia’s media advertising has yet to catch up with international levels
ADVERTISING SPENDING PER CAPITA IN 2006E (USD)
43 104 175 247 285
900
0
200
400
600
800
1000
7
COMPOSITION OF RUSSIAN ADVERTISING MARKET
2005 Volume = $5.01bn
2010F Volume = $10.3bn
Magazines11.6%
Radio6.0%
Outdoor18.2%
Other0.4%
TV46.5%
Internet1.2%
Other print10.3%
Newspapers5.8% Radio
4.5%TV
56.8%
Magazines10.2%
Other print4.9%
Internet4.9%
Newspapers4.3%
Other0.9%
Outdoor13.5%
Source: ACAR, February 2006
8
INTERNET AUDIENCE AS % OF TOTAL POPULATION BY COUNTRY
2006E 2007F 2008F 2009F 2010F
Audience, mln 22.0 29.3 38.9 51.8 68.8
Source: Nielsen/NetRatings, March 2006
RUSSIAN INTERNET: GROWTH DRIVERS
Source: Russian Communications Ministry, 2006
69%63%
50%
28%17% 14% 9% 5%
0%
10%
20%
30%
40%
50%
60%
70%
USA UK CzechRepublic
Poland Russia Brazil China India
RUNET AUDIENCE GROWTH FORECAST
9
REDISTRIBUTION OF INCOME AMONG DIFFERENT STRATA IN RUSSIAN POPULATION
Million people 2004 2005 2006E 2007F 2008F 2009F
Population with monthly income < $250
103.0 90.3 77.5 64.3 51.8 40.1
Population with monthly income from $250 to $800
37.0 46.6 55.9 64.9 73.0 80.2
YoY change (> $800) 68% 57% 42% 36% 29% 24%
People with monthly income > $800
4.2 6.6 9.4 12.8 16.6 20.5
TOTAL RUSSIAN POPULATION
144.2 143.5 142.8 ~142 141.4 140.7
Source: the Russian State Statistics Agency, COMCON’s RTGI, RBC estimates
Assuming the redistribution trend will continue at similar pace, by 2009 the share of high-income earners (over $800) will be comparable to the half of the current size of the population in Poland (38.6mln)!
10
MEDIA BUSINESS: RBC INTERNET BUSINESS
Over 15 Internet resources with the combined audience of 18mln unique visitors a month and 1.6mln visitors a day
The Company offers attractive business demographic and charges up to 10 times average advertising rate for reaching its users
88% of Internet revenue came from business sites and 12% from non-business resources in 2005
CategoryAverage no. visitors
per day (ex weekends)Main
competitor Average no. visitors
per day (ex weekends)
Rbc.ru Business news 500,000* Vedomosti.ru 25,000
Utro.ru General news 300,000* Lenta.ru 170,000
Rbcdaily.ruOnline business newspaper
77,000* Vedomosti.ru 25,000
Quote.ru Forex, stock market news 43,000* Finam.ru 25,000
Autonews.ru Auto/motor news 75,000* Auto.mail.ru 58,000
Сnews.ru Hi-tech news 100,000* 3dnews.ru 50,000
Anekdot.ru Humor 73,000*Anekdotov.net
35,000
Source: mail.ru, (September 2006), * company data
11
MEDIA BUSINESS: KEY FACTS ABOUT RBC TV
0
12
18 6
Active broadcastingfrom 7 a.m. to 1 a.m.
Program recapsfrom 1 a.m. to 7 a.m.
90% of content is dedicated to Russia; 10% is international coverage
Monthly audience surged 59% in 1 year from May 2005 to May 2006
Mln viewersGrowth
2005 2006
Monthly audience 4.839 7.705 59%
Weekly audience 3.729 5.283 42%
Daily audience (week-days) 2.191 3.024 38%
Daily audience (weekends) 1.723 2.111 23%
AVERAGE VIEWING TIME (min./week)
Channel One 378
RBC TV 288
Rossiya 286
CTC 249
NTV 240
Sport 196
Source: COMCON-Media, May 2006Source: COMCON-Media, May 2005, May 2006
RBC TV is the first and only Russian business TV station launched in September 2003 in cooperation with CNBC and CNN
Content:
Distribution:
Coverage:
combination of cable, satellite and terrestrial
broadcasting
43 mln people in Russia 15 mln in former Soviet republics
12
MEDIA BUSINESS: RBC’S PRINT MEDIA PUBLICATIONS
Business Hi-tech Design & architecture
Total circulation – 925,000 copies
Why RBC has entered the print media segment :
Print media will remain the 2nd largest ad segment after television by 2010
RBC expands to lucrative niches to charge significant ad premium compared to the general press
Existing clients are willing to increase budgets and we offer them package advertising (TV + Internet + print)
Certain categories of advertisers (luxury goods, fashion & beauty products) prefer glossy print
We have a strong media brand and professional sales force
A large pull of RBC journalists provides quality content for our business and hi-tech titles in print
13
RBC HAS OVER 2300 ADVERTISERS ON THE INTERNET AND TV
Car manufacturers & dealers Banks & financial
organizations Real estate & construction
firms Telecom & hi-tech companies B2B service providers Luxury goods producers Listed companies & bond
issuers
14
IT MARKET IN RUSSIA IS ONLY 2.1% OF GDP COMPARED TO 5.2% IN THE USA
5.97.1
9.0
12.0
15.2
0
2
4
6
8
10
12
14
16
2002 2003 2004 2005 2006E
IT MARKET, $bn BREAKDOWN OF IT MARKET IN 2005
Source: IDC Source: IDC, Gartner, CNews
34%20%
33%
27%
27%Software13%
Hardware & peripherals
66%
IT services (IT
consulting, maintenance, training, etc.)
21%
15
IT BUSINESS: RBC’S POSITION
RBC is ranked 10th on the iOne-2005 rating of leading software developers in Russia
Innovative solutions and software products Over 480 IT professionals Co-operation with leading foreign and Russian institutions: Microsoft, Intel, IBM,
Oracle, Siebel, Thawte, Verisign, Documentum, Sun, Saba Learning, i2, RosNIIROS, HP, Dell, Cisco, Fujitsu-Siemens, Novell, Lucent and others
RBC’s total customer base exceeded 300 clients in 2005
IT Services:R&D, Turnkey solutions, General software programming, Offshore programming, System integration, IT consulting
Solutions for:
Financial institutions, Transport / Logistics, Mass media, Oil and gas, Law firms, Government agencies
BREAKDOWN OF IT REVENUE IN 2005
Source: company data
Russian corporations
45%
Government contracts
40%
Foreign clients15%
16
STRATEGY
We plan to divest the IT segment and concentrate on the media business
Internet:To maintain a leading position in Internet advertising in Russia and the CISStrengthen the leadership among business information resources in Russia/CISBroaden RBC's Internet audience through expansion into increasingly
attractive non-business Internet and gain access to new types of advertisersTV:
Increase RBC TV’s penetration in Moscow and coverage in the regions Increase market share and capitalize on the unmet demand for TV advertising
timeOpen a new non-business channel within two years to capture a broader
audiencePrint:
Print is viewed as a complementary product, while the focus is still on Internet and TV
Create a new range of advertising spaces for current clientsEnlarge the audience through penetration into other segments (such as luxury)
under alternate brand names
17
INCOME STATEMENT (MLN USD)
2004 2005 2006F**
Revenue EBITDA Net Profit Revenue EBITDA Net Profit Revenue EBITDA Net Profit
$m $m $m NPM $m $m $m NPM $m $m $m
IT 25.9 6.48* 4.8* 19% 29.3 7.4* 5.6* 19% 75-80
50-55 32-37Media 36.7 15.78* 10.6* 29% 55.8 18.3* 13.4* 24% 60-65
TV 17.1 -2.46* -5* - 24.3 3.9* 1.8* 7% 30-35
Total 79.7 19.8 10.4 13% 109.4 29.6 20.8 29% 170-178
* based on management accounts in accordance with IFRS (un-audited)
** including IT acquisitions
Long-term: at least 30% revenue CAGR over the next three-five years via acquisitions, start-up projects and organic growth of existing business
18
REVENUE, EBITDA AND PROFIT AFTER TAX (MLN USD)
*
* Including IT acquisitions
19.8
79.7
20.89.9
3.910.4
32-37
14.88.4
29.6
50-55
31.5
51.5
109.4
170-178
0
20
40
60
80
100
120
140
160
180
200
2002 2003 2004 2005 2006F*
Profit after tax EBITDA Total revenue
19
Thank you!
RBC Information Systemswww.rbcinfosystems.com
www.rbc.ru
Tel.: +7 (495) 363 1111
Fax: +7 (495) 363 1125
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the information in this presentation 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 at www.rbcinfosystems.com. RBC assumes no obligation to update any forward-looking information contained in this presentation.
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