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Russian RNT Navigation Technologies

Company

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The company specialized in development, production and implementation of a satellite system GPS/ GLONASS- monitoring and control of transport "Autotracker".

Competitors: Navigation-Information Systems

Owners:
Management - 52%
VTB - Vneshtorgbank - 30,7%
Address on MICEX - 18%
Revenue

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Assets

Owners

+ Russian Navigation Technologies (RNT)
+ Management
+ Address on MICEX

RNT delivers terminals for monitoring and control of transport – they are installed in vehicles and on communication channels transfer to the telematic server and to the dispatching centers of users information on location and movement of objects and also state-of-health data of its main systems.

Performance Indicators

2014: Bankruptcy and external control

The Russian Navigation Technologies (RNT) company which was engaged in development and production of monitoring systems of GPS / "GLONASS" and management systems for Avtotreker transport submitted in the spring of 2014 to Arbitration court of Moscow the statement for bankruptcy, follows from documents on the website of court. The arbitration of Moscow introduced on July 3, 2014 a monitoring procedure concerning JSC "Russian Navigation Technologies".

2013: RNT promptly loses revenue and increases losses

In the 2013th losses reached 478 million rubles, and accounts payable — 181.5 million rubles. As a result under pressure from partners and creditors the company was forced to initiate insolvency proceeding.

In 9 months 2013 revenue of RNT made 143.7 million rubles, having reduced more than twice in relation to the same period of 2012, follows from the quarterly report of the company published in November. Net loss of RNT at the same time increased approximately by 6.6 times, having reached 77.5 million rubles.

Decrease in the size of revenue is caused by negative market reaction on acceptance of the regulatory legal acts regulating the market of the systems of satellite monitoring of transport in the form of decrease in demand for systems, speaks in the quarterly report of RNT.

In the same place it is noted that significant decrease in demand began in the second half of 2012 when became effective the order of Ministry of Transport approving requirements to different elements of a system of satellite monitoring. Along with it the duty to equip separate categories of transport with tachographs for drivers who, in addition to basic function, also have GLONASS or a GLONASS/GPS module was also approved. Except these regulations also the implementation of the ERA-GLONASS state program which is also providing obligatory equipment of transport the systems of satellite monitoring continues.

"Adjournment of equipment of the transport park the monitoring equipment before introduction of determinancy regarding the categories of transport which are subject to equipment and structure of the equipment which needs to be installed on the corresponding vehicles became reaction of consumers to adoption of the specified regulations", - it is summarized in the report of RNT.

The company adds that these circumstances could not but affect its financial results and that demand for monitoring systems completely was not recovered still.

In relation to not too optimistic financial results for 2012 in RNT said earlier that in the circumstances the Board of Directors set for company management the tasks of growth of revenue, expansions of focus on small and medium business and also expansions of a product line of the company taking into account new market realities.

In the November quarterly report of the company it is specified that in the 3rd quarter 2013 the company was engaged in development of a new product line and also began registration of the developed computer programs, improvement of onboard blocks, peripheral sensors, personal devices of monitoring, etc. Among new "accents" of RNT in the report designates development of self-contained units of monitoring and devices for monitoring of personnel.

In 2013 RNT also continued to develop foreign economic activity, it is specified in the report. Last year the company founded the joint venture in Brazil for promotion of the products and services in the countries of Latin America.

The Deputy CEO of Omnicomm company, one of competitors of RNT,Stanislav Yemelyanov notes that as of fall of 2013 some players in the market of monitoring systems of transport say about decrease in demand, others - that it does not grow, remains at the level of last year.

"As for our activity, at Omnicomm in 9 months 2013 in comparison with 9 months 2012 revenue grew by 31%, and profit - for 21%. At the same time revenue gain on GLONASS/GPS terminals made 100%", - he says.

2012: RNT became unprofitable, the CEO left

Revenue of RNT in 2012 made 435.2 million rubles, having reduced almost by 30% in relation to 2011. Instead of the profit observed the previous year the company suffered losses in the amount of 47.6 million rubles, said in its financial statement published in June, 2013 by RNT showed net losses in the amount of 136 million rubles.

Basic reason of such results in RNT call the changes which happened in the legislation concerning the market of satellite monitoring of transport in connection with which "demand for these goods and services was postponed until complete implementation of the adopted orders and stabilization of a situation in the market".

The company explained TAdviser that mean the order of Ministry of Transport No. 285 on the approval of the requirements to navigation aids intended for obligatory equipment of the transport of category M used for transportation of passengers, and category N, used for transportation of dangerous loads which became effective in 2012. It includes, among other, the list of new technical requirements to systems and the equipment of satellite navigation.

"This order became effective within promoting of use of GLONASS system, however at the time of a release of the order producers of monitoring systems faced mismatch of the made equipment to new requirements, - explained TAdviser in RNT. – Naturally, all manufacturing companies a paramount task for themselves delivered completion of the made equipment under requirements of the order. Today most of them has the products conforming to these requirements in the line".

The second reason of pent-up demand can be considered reaction of the companies - potential clients, believe in RNT: "many companies, watching new regulations decided to postpone equipment to later period, being afraid of emergence of new requirements from the state", speak in the company.

Against the background of negative financial results the post of the CEO was left by the cofounder of RNTIvan Nechayev holding this position since summer of 2011.

"I made the decision to leave because now business of RNT passed into that stage when to be engaged also in operational management, and it is impossible to define the development strategy of the company, - he explained this step. - I outgrew this business in that type in what it is now".

At the beginning of 2013 Vitaly Kalyagin, before within three years RNT directing department of international sales was appointed the new CEO. Ivan Nechayev remained in the company and now supervises development of large strategic projects in allied industries of telematics and also is a member of its Board of Directors.

RNT note that in the circumstances the Board of Directors set for company management the tasks of growth of revenue, expansions of focus on small and medium business and also expansions of a product line of the company taking into account new market realities.

In one of main competitors of RNT –Omnicomm companies – recognize that one of market problems is the insufficient reasonableness of the legal acts regulating it for today and also inconsistency in control of their execution, however note that at the same time turnover of their own business in 2012 grew by 50%, up to 765 million rubles.

"We estimate the annual growth of the market at 40-50% within the next four-five years, - the Deputy CEO of OmnicommStanislav Yemelyanov told TAdviser. - And there will be it as in case of economic growth and, as a result, continuation of programs of state support of GLONASS, and in case of the recession forcing business stronger to save and more actively to implement technical means necessary for this purpose".

Obligatory equipment by monitoring systems of passenger transport and the cars transporting dangerous loads will give a considerable impulse to the market, he adds.

Revenue of one more of the largest players of the market -"Telematics M2M" - at the end of 2012 grew almost by 15%, up to 3.453 billion rubles. At the same time at the beginning of 2013 representatives of the company stated expectations that the market of transport telematics and satellite navigation will grow at the rates of 20-30% a year at least on condition of the stable growth of the available market segments.

2011: Growth of turnover - 47%

  • The consolidated revenue of the company increased by 47% – to 664.8 million rubles (about 22 million US dollars);
  • Net profit (total return) increased up to 67.6 million rubles (about 2.3 million US dollars) that there is 18% above than the level of 2010; the volume of a gross profit according to the results of reporting year grew by 60% – to 309.5 million rubles;
  • Revenue from sales abroad increased to 16.5 million rubles that there is 180% above than the level of 2010. Development of the international presence – one of the main theses of the Investment memorandum;
  • Cumulative equity exceeds obligations more than by 3 times. The equity share in total assets of RNT still prevails and reached 75% by the end of 2011;
  • For the purpose of ensuring requirements of the growing business in 2011 additional workforce recruiting was carried out. For 12/31/2011 the payroll number of employees was 201 persons that is 46% more than an indicator for 12/31/2010;
  • In 2011 more than 55 thousand sets of the equipment are produced that is 37% higher than an indicator of 2010.

Structure of the consolidated revenue on regions:

Million rub 2011 2010 Change, %
Russia 663,2 440,3 +51%
Foreign countries 16,5 5,9 +180%
Results 679,6 446,2 +52%

Sales proceeds abroad showed to +180% growth in comparison with a similar indicator of 2010 that it became possible thanks to progress of the company on acceleration of an exit to international markets. Sales in Russia increased by +51% in a year.

Structure of the consolidated revenue on types of activity:

Million rub 2011 2010 Change, %
Sale of the equipment 573,5 N / d N / d
Service (implementation, installation, training, installation) 85,9 N / d N / d
A subscription fee (the repeating payments) 20,2 N / d N / d
Total 679,6 446,2 + 52%

The company at the end of 2011 increased a total quantity of the made equipment sets to 157 thousand units, having shown +55% growth in comparison with 2010.

Despite the high competition, the company could keep the achieved rates on new equipment installations which is going to continue to increase in the next years. In 2011 the GLONASS/GPS system of monitoring of Avtotreker transport equipped about 42 thousand units of motor transport.

The total quantity of the Russian certified dealers of the company also continues to grow: for the end of their 2011 there were 95. Considerably the international partner network of the company extended: at the moment the number of dealers in the FSU and beyond keeps 24 companies. The number of regions of the Russian Federation where the Avtotreker system actively moves ahead, increased to 54, number of foreign countries – up to 22. Today RNT develops the presence in such countries as Ukraine, Belarus, Uzbekistan, Tajikistan, Kazakhstan, Azerbaijan, Kyrgyzstan, Egypt, Mongolia, Brazil and others. In a number of foreign countries pilot zones are unrolled and partnership forms.

The number of the companies users of the Avtotreker system for the end of 2011 was about 4000.

Board members

Satovsky Boris Lvovich

History

2000

RNT is created in 2000 by students of MIPT

2008

In 2008 and 2009 of RNT received two rounds of investments from "Venture VTB Fund" which is under control of the Russian Venture Capital Company (RVCC). The company was going to carry out expansion on international markets, to develop network of representations and to start operator model of sales, having provided access to dispatching office and servers for the companies of small and medium business.

2009: Revenue of 220 million rub

Revenue of the company in 2009 made 220 million rubles, an indicator of EBITDA (revenue before payment of taxes and depreciation expenses) – 44 million rubles, net profit – 32 million rubles. For the end of 2009 of RNT implemented 60 thousand sets Avtotreker. The company, by own estimates, occupies 24% of the Russian market of monitoring systems of motor transport, entering together with M2M Telematics and Navigator Technology (the developer of "a Single National Dispatching System") into "the big three" of suppliers.

2010: The IPO on MICEX

June: Announcement of the IPO

In June, 2010. Announced "Russian Navigation Technologies" (RNT) application for the admission of its ordinary shares to biddings on MICEX in the sector of the innovation and growing companies. The bid book for investors will open on June 18 and will be closed at the beginning of July. 3.25 million actions at the price from 80 up to 117.5 rub for an action will be offered to investors, all company is estimated at 1.28 - 1.88 billion rubles of RNT is going to gain from 281.6 to 413.6 million rubles from the IPO.

The Otkrytiye financial company acts as the organizer of the IPO, the financial advisor - VTB Capital. Other structure of the VTB Group controlled by the state - "VTB - Asset management" - since 2008 is a shareholder of RNT and more than 35% of its stocks through the fund joint with "Russian Venture Capital Company" (RVCC) own. Management of RNT possesses more than 60% of stocks of the companies. During the IPO shareholders are not going to sell own shares, but in connection with carrying out an additional issue a share of management to be reduced to 52%, VTB – to about 30%.

Technically the IPO will be carried out using the Cyprus offshore of Fiazior Holding which is a holder of 30% of stocks RNT now. Having sold the packet at the exchange, Fiazor will spend all proceeds for the redemption on the closed subscription of additional issue of shares of RNT. Thus, money from share placing completely will pass into RNT. After carrying out an additional issue of free float RNT will make 18.03% of stocks.

The similar scheme is called "old for new" and are used with the purpose to avoid regulatory problems, the chief explained department of investment of FC Otcrytiye Alexander Laputin. "If additional issue of shares of RNT would be placed at the exchange directly, it would be necessary to sustain the 30th day pause between share placing and an opportunity to sell them at the exchange, - Laputin says. - At placement we are guided, first of all, by private investors, it was inconvenient to them to maintain such pause".

Share placing of RNT will become the Russia's first implementation of the classical venture theory when the company which went through all stages of a technology startup enters the public market, the Head of Department of the venture funding "VTB Asset management" Aydar Kaliyev noted. Besides, it will be the first project financed by RVC which went public. At the same time VTB is not going to redeem shares during the IPO, Kaliyev told CNews.

The analyst of Finam Tatyana Menkova calls adequate expectations of RNT from the IPO. "It is obvious that in assessment high growth rates of revenue of RNT (50%), low penetration of solutions for satellite monitoring and scheduling of motor transport in the Russian market (3%) and also the expected high dynamics of the market are put, - the analyst says. - At the same time a situation in the stock market now though nervous, but in general favorable, and RNT have no direct analogs among the securities which are trading in Russia".

RNT will allocate proceeds for expansion on the new markets and fixing of the positions in Russia. "The market of navigation services is in initial stage, but we expect that in the future tracking will become the same mass product, as well as cellular communication, - the chief executive of RNT Ivan Nechayev told CNews. - At the same time in the market the operator model of provision of services which we intend to build at the expense of the involved investments will dominate".

July: Results of the IPO

On July 7, 2010 "The Russian navigation technologies" carried out initial public offering (IPO) on the Moscow Interbank Currency Exchange (MICE). Now shares will be traded in the sector of the innovation and growing companies. The organizer of placement the broker house Opening, as co-organizers - Finam and Alor-invest, the financial adviser - VTB Capital acted. Support to placement was given by Rusnano state corporation.

During placement 3.5 million shares at the price of 85.23 rub for an action were sold, the company thus attracted 300 million rubles. Capitalization of RNT made 1.663 billion rubles. The price at which shares were sold is close to the lower edge of a corridor of placement - from 80 to 117.5 rub for an action. For all placement it was going to gain from 281.6 million rub to 413.6 million rubles.

Before carrying out the IPO VTB-asset management owned 35% of stocks of the company and 60% managers of RNT owned. After carrying out the IPO a controlling stake (52%) RNT will remain at management of the company led by Boris Satovsky, VTB will have 30.7%, 18% of stocks will address at the exchange.

About 70% of placed shares purchased institutional investors, 30% - private. According to the president of Finam Vladislav Kochetkov, for the IPO with participation of institutions the placement close to the lower edge of a price band is normal though among clients of Finam there were persons interested to acquire shares and at the maximum price in 117 rub.

Among share purchasers there were no state structures, the managing director of Opening Yana Tulchinskaya assured. It was confirmed by representatives of VTB and Rusnano. But among share purchasers there were many clients of Sberbank and VTB, Kochetkov adds.

Meanwhile the head of the Innovation institute at MIPT Yury Ammosov notes the small volume of the carried-out placement. Capitalization of RNT made about $54 million, during placement less than $10 million were attracted, at the same time in Silicon Valley the new project only at a stage of the venture funding attracts on average $20-40 million. "In my opinion, it does not make sense to carry out the IPO at capitalization less than $150 million because as in a case with RNT, the normal volume of the transaction with actions in several hundred thousands of dollars will be several percent from free float of the company, - Ammosov considers. - Most likely, VTB needed a project output to the exchange for demonstration of success of the venture funding".

70% of the means of RNT obtained from the IPO will direct to sales increase at the expense of an exit to international markets, the adjacent markets and development of operator model, 30% - on R&D and patenting of technologies. At the expense of it revenue of RNT by 2014 will have to grow to 1.928 billion rubles from 210 million rubles in 2009, an indicator of EBITDA – from 45 million rubles to 482 million rubles. At the same time the level of income from service maintenance which is now insignificant value will grow to 8% of total sales.

Growth of revenue twice

In 2010 the company achieved doubling of financial performance, and the shown growth rates significantly exceeded the management expectations sounded at an output of the company to the IPO last year.

As of the end of 2010 the financial position of the company is stable – it has a considerable negative net debt (-222,992 thousand rubles). Chances of RNT of profitable participation in the further growth of the market are supported as technological leadership (in 2010 the newest platform of the equipment AT-10 is put in production), and considerable joint-stock financing in volume of more than 2/3 means attracted during the IPO – at the insignificant level of the saved-up debt.

Key indicators of activity of RNT in 2010:

  • Revenue of the company increased more than by 2.1 times – to 446.2 million rubles (or about 14.7 million US dollars);
  • Net profit (total return) increased up to 78.1 million rubles (2.6 million US dollars) that there is 2.1 times above than the level of 2009; the volume of a gross profit according to the results of reporting year grew by 72.6% – to 206.6 million rubles;
  • In July, 2010 JSC RNT became the first Russian venture capital company which came for the IPO (MICEX); sale of 18.03% of a share in the company allowed to attract capital stock in the amount of 300 million rubles;
  • The debt grew slightly (+7.1%) – to 7.4 million rubles; the net debt is considerable negative value, as well as the previous year;
  • Cumulative equity exceeds obligations by 3.9 times. The equity share in total assets of RNT reached by the end of 2010 79.6% – against 68.1% the previous year that there is 1.6 times above than the level of previous year;
  • In 2010 the company achieved growth of value of revenue falling on one employee to 3,514 thousand rubles (+154.1% to the level of 2009);
  • Increase in reporting year of the total revenue and EBITDA falling on one set equipment set became important confirmation of growth of efficiency of activity of RNT. Growth of indicators was 24.3% and 15.3%, respectively.

One of the main trends of 2010 for RNT – business development in public sector. Sales increase of the company in this segment (new connections) in 2010 increased by 9.6 times in comparison with 2009. Thus, by quantity of the set sets (19,250 pieces) the sales level of RNT in a public sector became comparable to sales holds the market leadership in a corporate segment (20,426 pieces) where RNT is traditional within the last several years.

Income in a segment of state customers forms, mainly, at the expense of large customers today. For RNT the aggressive input in a segment became possible for a variety of reasons: (i) active support of state programs by the company in the field of implementation in Russia of GLONASS technologies and existence of a successful business model on monetization of participation in such programs; (ii) high reputation of technical solutions of the company, their scales and potential of scalability, capability, record for the Russian market, to solve the most wide range of tasks of clients; (iii) contract performance with the advanced quality level and responsibility to clients; (iv) acquisition of necessary experience of participation and victories in open tenders that is provided by the team of specialists in interaction which is finally created in 2010 as a part of the front office with state structures and tender work.

The main efforts of the company in the second half of 2010 were directed to satisfaction of strongly increased demand from a public sector. It allowed to increase considerably indicators on total sales, however led to decrease in a share of subscriber sales in revenue.

At the end of 2010 the level of concentration of the customer base increased: 80% of revenue were the share of 37 clients (88 clients in 2009). Concentration of the customer base grew for the order account by deployment of the large dispatching centers, including, – from customers from a public sector.

Annual growth of functionality of the solutions implemented at customers becomes an important factor of growth of revenue and maintenance of attractive marginality of business. This trend is characteristic not only of new, but also of the clients attracted earlier. Transition of the company from use of a former technology platform to new, much more modern and shirokofunktsionalny – AT-10, should strengthen this trend.

In structure of turnover of the company the share of implementations of the typified and industry solutions approached 50%. Following this trend, the company is going to complete the formation of a complete packet of industry solutions in 2011. The offer to the market of ready-made industry solutions will allow to reduce in the future considerably an implementation time of monitoring systems of transport at the enterprises and also to expand functionality of the implemented solutions and to increase marginality of projects.

In 2010 the company began to perform sales outside the Russian Federation: revenue share from external sales made 1.3%. Growth of this indicator will be promoted by aggressive entry of the company into the markets of a number of foreign countries in the near future. Now selection of local partners and formation of necessary infrastructure is performed.

2011

  • Obtaining certificate of conformity of the quality management system (QMS) to requirements of GOST P ISO standard 9001-2008 (ISO 9001:2008). The certificate of conformity (registration No. ROSS RU.S.04ShA.CK.0304) is issued by Head Certification body "Evrostandart-sertifika" (Evrostandart-sertifika OS) of a voluntary System of certification of the systems of management, products, works and services of "Interserttest". The certificate is valid till March 24, 2014. The received certificate certifies what in RNT meets the requirements of the specified standard quality management systems of the provided communication services and telematics and also the wholesale supplies of an electronic equipment. Besides, the certificate covers activity in the field of geodesy and cartography, the works connected with use of the data which are the state secret. The certificate obliges to support RNT compliance of the quality management system to requirements of ISO 9001 and to annually undergo the corresponding inspection control in Evrostandart-sertifika Certification body.

  • In May, 2011 "Russian Navigation Technologies" (RNT) M2M telematics" addressed FAS with the complaint on ", suspecting her of violation of the law about protection of the competition. According to in the companies, M2M Telematics extends among potential clients and partners the presentation where affirms that her main colleagues on the market conduct unfair competition and use "pseudo-equipment" with GLONASS. In the document under the Telematics M2M logo about which there is a speech the RNT navigation terminals (Avtotreker brand), Lasso (terminals for it are also made by RNT), Tekhnoky (AUTOGRAPH brand), Ekoel (GT brand), etc. are considered. With reference to data from the report of "experts of a system of the voluntary certification BASIS created by GLONASS Association / GNSS-forum", in the presentation "examples of unfair deliveries" of navigation equipment are described.

So, authors of the presentation, for example, claim that RNT connects blocks in the terminals an additional cable and an adhesive tape that reduces reliability of operation of the equipment. Besides, the attention that in the RNT terminal two navigation antennas instead of one are used and that "the close arrangement of antennas worsens signal pick-up from two satellite systems" is paid. The same problems are attributed also to the terminal from Tekhnoky. Concerning the Ekoel terminal it is said that there in general there is no module GLONASS as such. In "M2M to telematics" refused comments. RNT deny use of an adhesive tape for production and installation of the terminals.

  • In May, 2011 the company announced that the history of its creation and development in the form of a business case is included in the training program Stanford and some other the universities of the USA. Now on this example the American students will be able to get acquainted with technology of start of successful innovation startups in Russia, their "cultivation" to a status of steadily developing international business and an output of the company to the IPO. Business case RNT is included in the report of Global Enterpreneurship and the Successful Growth Strategies of Early-Stage Companies on the most high-growth companies in everything mire1 which presentation took place at the World Economic Forum in Davos (2011).

The report includes several tens of the companies busy in the innovation and traditional industries of world economy. The Russian business in this document, along with RNT, is presented by four more companies working in the following areas: information security, production of an electrical equipment, infrastructure of "cloud" calculations, personal hygiene means based on biological and active a component.

  • On June 23, 2011 JSC "Russian Navigation Technologies" announces that at an extraordinary meeting of shareholders of the company Boris Satovsky's resignation is accepted, and Ivan Nechayev is appointed the new CEO of RNT.

2013: Vitaly Kalyagin is the new CEO

In June, 2013 RNT announced that Ivan Nechayev left the CEO's post. Instead of it Vitaly Kalyagin, before within three years RNT directing department of international sales was appointed to this position.

Ivan Nechayev at the same time remained the board member of the company and now supervises development of large strategic projects in allied industries of telematics.

"I made the decision to leave because now business of RNT passed into that stage when to be engaged also in operational management, and it is impossible to define the development strategy of the company, - he explained this step. - I outgrew this business in that type in what it is now".

Branches

November, 2010 - the representation in Kiev is open. It was promoted by the positive processes happening in the real sector of economy of Ukraine, widespread introduction at the enterprises of the modern systems of management, sharp demand growth (often exceeding possibilities of the local companies providers) on solutions in the field of a GLONASS/GPS of monitoring of transport. Creation of representation - the next step to implementations of the long-term strategy of RNT announced in February, 2010 on expansion of presence in the perspective markets of the CIS and foreign countries. Attracted the means necessary for implementation of these plans, RNT during the share placing which took place in the summer of 2010 on MICEX (sector of the innovation and growing companies). The representation created based on Trek-Avto, the largest partner of RNT in Ukraine will promote on local market of solutions based on the GLONASS/GPS system of monitoring and control of Avtotreker transport.


In addition to Russia the company works in 9 countries: Ukraine, Belarus, Uzbekistan, Tajikistan, Kazakhstan, Azerbaijan, Kyrgyzstan, Egypt and Mongolia. Only 1.3% fell to their share in sales pattern of the company in 2010. Other markets for which the company expects to come in the near future – Latin America and the countries of Africa.

March, 2012 - the representation in Brazil is open - the new foreign representative office of RNT is a Gisline Rastreamento private company in which 51% belong to RNT, and 49% – to private investors. The headquarters is in São Paulo, in the center of the largest industrial, financial and transport hub of Brazil. Already today RNT estimates opportunities for creation of equipment manufacturing in the territory of Brazil – for local market and export to the Countries of Merkosula (the common area of trade for the countries of Latin America). At the same time the Brazilian representative office will remain the center of sales for all continent – because of essential tax benefits, geographical proximity of the countries and also their cultural and historical unity.