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RBC Information Systems RUSSIA`S LEADING MEDIA & IT GROUP Presentation for CA IBs Annual Emerging Europe Conference Istanbul, October 2006.

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Presentation on theme: "RBC Information Systems RUSSIA`S LEADING MEDIA & IT GROUP Presentation for CA IBs Annual Emerging Europe Conference Istanbul, October 2006."— Presentation transcript:

1 RBC Information Systems RUSSIA`S LEADING MEDIA & IT GROUP Presentation for CA IBs Annual Emerging Europe Conference Istanbul, October 2006

2 RBC TODAY Russias 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

3 COMPANY OPERATIONS Financial projections 20052006F Revenue$109.4m$170-178m EBITDA$29.6m$50-55m Net Profit$20.8m$32-37m Source: company data Breakdown of revenue in 2005 3

4 RBC STOCK Three founders of the Company retain the controlling stake in RBC: Went public through Russias 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. 4

5 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. RBCs 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

6 RUSSIAN MEDIA MARKET IS EXPECTED TO DOUBLE BY 2010 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% #CountryCAGR 2004- 2008F, % Volume in 2008F, $ bn 1Egypt25%1.25 2Russia24%9.22 3Indonesia22%5.73 4Brazil19%9.32 5China18%16.33 6

7 MEDIA MARKET – GROWTH DRIVERS ADVERTISING REVENUES AS % OF GDP IN 2006E Russia0.94% USA2.03% Poland1.47% Czech Republic1.48% Hungary2.48% Source: ZenithOptimedia, December 2005, Russias media advertising has yet to catch up with international levels ADVERTISING SPENDING PER CAPITA IN 2006E (USD) 7

8 COMPOSITION OF RUSSIAN ADVERTISING MARKET 2005 Volume = $5.01bn 2010F Volume = $10.3bn Source: ACAR, February 2006 8

9 INTERNET AUDIENCE AS % OF TOTAL POPULATION BY COUNTRY 2006E2007F2008F2009F2010F Audience, mln22.029.338.951.868.8 Source: Nielsen/NetRatings, March 2006 RUSSIAN INTERNET: GROWTH DRIVERS Source: Russian Communications Ministry, 2006 RUNET AUDIENCE GROWTH FORECAST 9

10 REDISTRIBUTION OF INCOME AMONG DIFFERENT STRATA IN RUSSIAN POPULATION Million people200420052006E2007F2008F2009F Population with monthly income < $250 103.090.377.564.351.840.1 Population with monthly income from $250 to $800 37.046.655.964.973.080.2 YoY change (> $800)68%57%42%36%29%24% People with monthly income > $800 TOTAL RUSSIAN POPULATION 144.2143.5142.8~142141.4140.7 Source: the Russian State Statistics Agency, COMCONs 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

11 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 Category Average no. visitors per day (ex weekends) Main competitor Average no. visitors per day (ex weekends) Rbc.ruBusiness news500,000*Vedomosti.ru25,000 Utro.ruGeneral news300,000*Lenta.ru170,000 Online business newspaper 77,000*Vedomosti.ru25,000 Quote.ruForex, stock market news43,000*Finam.ru25,000 Autonews.ruAuto/motor news75,000*Auto.mail.ru58,000 Сnews.ruHi-tech news100,000*3dnews.ru50,000 Anekdot.ruHumor73,000* 35,000 Source:, (September 2006), * company data 11

12 MEDIA BUSINESS: KEY FACTS ABOUT RBC TV 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 viewers Growth 20052006 Monthly audience4.8397.70559% Weekly audience3.7295.28342% Daily audience (week-days)2.1913.02438% Daily audience (weekends)1.7232.11123% AVERAGE VIEWING TIME (min./week) Channel One378 RBC TV288 Rossiya286 CTC249 NTV240 Sport196 Source: COMCON-Media, May 2006 Source: 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

13 MEDIA BUSINESS: RBCS 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 2 nd 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

14 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

15 IT MARKET IN RUSSIA IS ONLY 2.1% OF GDP COMPARED TO 5.2% IN THE USA IT MARKET, $bn BREAKDOWN OF IT MARKET IN 2005 Source: IDC Source: IDC, Gartner, CNews 34% 20% 33% 27% 15

16 IT BUSINESS: RBCS 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 RBCs 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 16

17 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 CIS Strengthen the leadership among business information resources in Russia/CIS Broaden RBC's Internet audience through expansion into increasingly attractive non-business Internet and gain access to new types of advertisers TV: Increase RBC TVs penetration in Moscow and coverage in the regions Increase market share and capitalize on the unmet demand for TV advertising time Open a new non-business channel within two years to capture a broader audience Print: 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 clients Enlarge the audience through penetration into other segments (such as luxury) under alternate brand names 17

18 INCOME STATEMENT (MLN USD) 200420052006F** RevenueEBITDANet ProfitRevenueEBITDANet ProfitRevenueEBITDANet Profit $m NPM$m NPM$m IT25.96.48*4.8*19%29.37.4*5.6*19%75-80 50-5532-37 Media36.715.78*10.6*29%55.818.3*13.4*24%24%60-65 TV17.1-2.46*-5*-24.33.9*1.8*7%30-35 Total79.719.810.413%109.429.620.829%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

19 REVENUE, EBITDA AND PROFIT AFTER TAX (MLN USD) * * Including IT acquisitions 19

20 Thank you! RBC Information Systems 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 companys latest Annual Report at RBC assumes no obligation to update any forward-looking information contained in this presentation. 20

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