OREANDA-NEWS. December 12, 2012. RBC OJSC (MICEX-RTS: RBCM) hereby releases unaudited consolidated financial results for the third quarter and the first nine months of 2012.

"RBC's revenue rose 25% in the third quarter. Organic growth amounted to 3% owing to slower growth of the Russian advertising market witnessed starting September. As a result, traditionally low sales of advertising in summer were not offset by high sales in September as was the case in 2011. The key driver of organic revenue growth in the third quarter was strong advertising sales of RBC TV due to further increase in the sell-out ratio. Considering the changed market environment, we have revised down full-year revenue growth guidance. We expected our consolidated revenue to rise by about 30% earlier, whereas now we expect it to increase by about 25%. One of the priority goals for the management next year will be to ensure the growth of revenue from RBC's main assets above the average market level. We plan to achieve this goal by continuing our efforts to diversify content in accordance with the consumers' demands, roll out additional online services, expand into regions, and improve the efficiency of advertising sales, including on mobile devices.

RBC's management has completed the audit of assets and commenced the optimization of the asset portfolio in Q3 in order to improve the efficiency of business and increase its profitability in all segments. Thus, a number of loss-making Internet startups were shut down during the reporting period. Additionally, RBC offloaded non-core online payment system RBK Money. These efforts, as well as synergy from the consolidation of RU-CENTER and cost optimization, made it possible to raise the profitability of RBC's business and expect a 30% increase in full-year EBITDA. The key target for 2013 is to ensure that loss-making media assets swing to profit as measured by EBITDA.

In general, we are confident about the future, because we get with market trends and know how to streamline RBC's business in order to fortify its positions as the market leader in the Russian business content segment and a leading Russian Internet company," RBC CEO Sergey Lavrukhin said.

The company's financial results in Q3 and 9M

Million rubles

Q3 2012

Q3 2011

Change

9M 2012

9M 2011

Change

Revenue

1,247

1,001

25%

3,754

2,960

27%

Internet

849

640

33%

2,576

1,904

35%

Advertising

431

437

-1%

1,485

1,341

11%

Services

418

203

106%

1,091

563

94%

including RU-CENTER3

220

—

—

396

—

—

Television

178

130

37%

541

386

40%

Printed publications

220

231

-5%

636

671

-5%

Business publications4

81

87

-7%

246

260

-5%

Salon Press Publishing House

138

145

-5%

390

411

-5%

Operating expenses

1,174

1,120

5%

3,719

3,059

22%

EBITDA

73

-116

163%

35

-98

136%

Revenue and EBITDA. RBC's consolidated EBITDA increased 25% year-on-year to RUB 1.247bn in Q3 2012. The increase in revenue is attributable to higher sales of advertising on RBC TV as well as to stronger positions in Internet services achieved largely due to RU-CENTER's acquisition. Revenue grew 27% to RUB 3.754bn during the first nine months of 2012.

EBITDA came in at RUB 73m in Q3. The company began cost optimization in this period by getting rid of loss-making and unpromising projects, creating better synergy among company units in terms of content generation and advertising sales, and organizational restructuring. This work and integration of profitable RU-CENTER enabled the company to offset the H1 loss and achieve an EBITDA of RUB 35m for the first nine months of 2012.

Internet. RBC's Internet revenue jumped 33% year-on-year to RUB 849m in Q3. Advertising sales notched down by 1% year-on-year due to slower growth of media advertising market seen from September, owing to the ban on the advertising of alcoholic products imposed in late July among other factors. Revenue from additional online services amounted to RUB 418m in Q3, soaring 106% year-on-year. This growth is primarily attributable to the successful integration of RU-CENTER. The sale of RBK Money electronic payment system negatively impacted the revenue from additional Internet services. RBK Money's financial results were included in the consolidated report until July 1, 2012. The Internet revenue totaled RUB 2.576bn during the first nine months of 2012, up 35% year-on-year.

The aggregate audience of RBC's Internet resources stood at 57.7m users as of September 30. The audience of Russia's largest business information portal Rbc.ru edged up 1% due to the high base effect of September 2011 and reached 17.6m users. Interest in news increased substantially in early fall 2011 amid deteriorating macroeconomic environment, in particular in Europe and the U.S., and political activity ahead of parliamentary elections in Russia.

RBC continued to improve the quality of content, expand the range of topics covered and functionalities of its Internet resources. Changes have been made to the newspaper website Rbcdaily.ru, automobile news portal Autonews.ru, sports website Rbc.sport.ru, and real estate website Rbc.realty.ru. The plan for 2013 includes revamping the content and visual features of all of RBC's key business Internet resources in order to scale up their position on the market and raise their monetization. Other plans include rolling out several new online content services meeting the demands of RBC's audience and congenial to existing business projects. The group's total capex is expected to amount to 8%-9% of consolidated revenue in 2013, and the bulk of this investment will go towards the Internet segment.

RBC's management completed the audit of asset portfolio during the reporting period and commenced its optimization. A number of small non-business startups, including Ogorod, BidontheCity, and Zayavka, were shut down as part of the optimization. Also, RBC closed a transaction in early September to sell a 74% interest in RBK Money payment system. The Board of Directors considered the asset to be non-core for the company earlier. The value of the deal amounted to USD 8.4m.

The integration of RU-CENTER with Hosting Community (a unit of RBC) continued in Q3. The structure of the company is being optimized, key services with overlapping functions (back office, customer support, project development) are being merged, and business processes are being standardized. The integration of RU-CENTER is expected to be finalized by mid-2013. The strategic goal of the merged Hosting Community Group is to establish a universal provider for IT departments of small and medium-sized companies and offer them a full range of required solutions. To accomplish this goal, Hosting Community has been active in developing additional services. Specifically, it has rolled out a Website constructor (a service to create websites optimized for search engines) and goMobi service (creation of websites adjusted for mobile devices). Additionally, RU-CENTER has launched a new service called Worldwide Domains, which gives Russian users and organizations an opportunity to register their domain names in more than 300 domain zones all over the world. This project has been awarded the Runet Prize 2012 in the category of innovations and technologies.

Television. RBC TV's revenue climbed 37% year-on-year to RUB 178m on the back of a nearly 40% surge in the sell-out ratio, which is attributable to growing audience numbers and the launch of an updated programming grid. In the first nine months of 2012, RBC TV's revenue went up 40% to RUB 541m.

As of the end of September, RBC TV's monthly audience in Russia stood at 19.7m viewers, up 22% year-on-year, while its daily audience rose 14% to 2.5m viewers.

During the reporting period, the project to switch RBC TV to a new technology platform was completed, paving the way to a 16:9 widescreen broadcasting format, tapeless workflow solutions, equipment upgrades, and implementing 3D and 4D graphics software. In addition, RBC TV's studio was merged with the newsroom into a single complex in order to fast-track news stories on the air.

Moreover, RBC TV's broadcasting design has been improved. In September, a redesigned studio was launched alongside a new graphic design for the channel. A new programming grid has also been introduced with new themed programs and a number of special projects featuring high-profile Russian business and public figures. In addition, the weekend programming grid was updated, leading to higher audience numbers. RBC TV's daily audience on weekends surged 18% year-on-year in September 2012.

Printed Publications. Revenue from RBC's printed publications amounted to RUB 220m in the third quarter, down 5% year-on-year. The downturn in revenue from both business and interior design publications is mainly attributable to a deceleration of the advertising market in the printed media segment. In the first nine months of 2012, revenue from RBC's printed publications amounted to RUB 636m, down from 671m in the year-earlier period. However, taking into account actual advertising sales in the fourth quarter, revenue from RBC's printed publications is expected to exceed 2011 results.

According to a print media audience measurement survey for May-October 2012, average issue readership (AIR) of RBC daily newspaper amounted to 90,000 readers, up 18% year-on-year, while RBC magazine has reached an AIR of 345,000 in Moscow, up 5%. Consequently, RBC daily is among the top 3 most popular business newspapers in Moscow, and RBC magazine is keeping the lead among business publications in Moscow.

Outlook for 2012. A deceleration of the Russian media industry prompted a revision by RBC management of the revenue guidance for 2012 slightly down. RBC's consolidated revenue is now expected to grow about 25%, down from approximately 30% under earlier projections. At the same time, as a result of efficient cost management, RBC expects EBITDA to advance 30% in full-year 2012.