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IBS Group Reports Operating Results for the Quarter Ended June 30, 2012


News provided by

IBS Group Holding Limited

04 Sep, 2012, 11:00 GMT

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RAMSEY, the Isle of Man, September 4, 2012 /PRNewswire/ --

Please refer to relevant legal information at the end of the document

IBS Group Holding Limited (IBSG:GR; IBSGq.DE), a leading software development and IT services provider in Central and Eastern Europe, has announced today its preliminary unaudited operating results for the quarter ended June 30, 2012 (1Q FYE March 2013).

Highlights

  • Consolidated revenues amounted US$165.4 mn, a decline of 2.5% y-o-y, which was mostly driven by FX volatility across geographies where the Group operates, and deconsolidation of non-core business in the IT Services segment.
  • International revenues (ex-Russia) amounted to US$66.9 mn, and now account for 40.5% of consolidated Group revenues against 33.6% a year ago.
  • Total headcount reached 8,363 employees, an increase of 9.6% y-o-y, which is attributable to Software Development segment expanding delivery centers in Eastern Europe.
  • Total debt amounted to US$62.4 mn, a decline of US$3.1 mn y-o-y, with the net debt position largely unchanged.
  • Consolidated revenues growth guidance for FYE March 31, 2013 is maintained in the range of 9-15%.

Consolidated revenues by segment *

                                     1Q FYE March 1Q FYE March
    US$, mn                              2013       2012[1]    Change y-o-y
 
    Consolidated revenues               165.4        169.6        -2.5%
    IT Services segment                  78.5         92.6        -15.2%
    IT Services segment, RUB mn         2,500        2,476         0.9%
    Software Development segment         71.0         61.8        14.9%
    Corporate, other and
    eliminations                         15.9         15.2         4.6%

* Source: preliminary unaudited management accounts.

1. Consolidated and IT Services segment revenue  in 1Q FYE March 2012 quarter is adjusted for results of OOO Borlas Group

Consolidated revenues amounted US$165.4 mn, a decrease of 2.5% y-o-y.

The IT Services segment revenues amounted US$78.5 mn, a decline of 15.2% y-o-y. In February 2012 the Group finalized transaction which resulted in the increase of interest in IT Services segment by 14.09% to 97.02%, and deconsolidation of OOO Borlas Group which added US$7mn of segment's revenue in 1Q FYE March 2012. Adjusted for depreciation of RUB vs. US$ in respective periods, segment's revenues would increase by 0.9%. We reiterate our full year revenues growth guidance for the segment in the range of 6-12%.

The Software Development segment revenues climbed to US$71.0 mn, an increase of 14.9% y-o-y owing to sustained demand for advanced software engineering services from clients in Western Europe and North America. The growth rates were most aggressive in several key verticals, such as telecom, automotive, and technology, however, were tempered by depreciation of EUR vs. USD in respective quarters. We reiterate our full year revenues growth guidance for the segment in the range of 18-23%.

Consolidated revenues by geography *

                                             Share            Share   Change
                                    1Q FYE    of     1Q FYE    of       in
                                    March    total   March    total  absolute
    US$ mn                           2013   revenue   2012   revenue  result
 
    Revenues generated in Russia     98.5    59.5%   117.2    66.4%   -16.0%
    Revenues generated in Europe     33.5    20.3%    30.8    17.4%    8.8%
    Revenues generated in North
    America                          33.4    20.2%    28.6    16.2%   16.8%

* Source: preliminary unaudited management accounts, customer geography determined based on the location of clients key decision maker.

Revenues from Russian operations totaled US$98.5 mn, a decline of 16% y-o-y mostly driven by currency fluctuations in respective periods and deconsolidation of non-core business in IT Services segment.

Revenues generated in Europe totaled US$33.5 mn, an increase of 8.8% y-o-y and now account for 20.3% of the Group revenues. Revenues generated in North America amounted US$33.4 mn, up 16.8% y-o-y and now account for 20.2% of the Group revenues. The revenue growth in both geographies was driven by the business activity picking up in the Software Development segment.

Headcount *

                                            June
                                 June 30,   30,   Change March 31,  Change
    Number of employees            2012     2011  y-o-y     2012    q-o-q
    Group                         8,363    7,631   9.6%    8,252     1.3%
    IT Services segment           2,526    2,804  -9.9%    2,668    -5.3%
    Software Development
    segment                       5,528    4,506  22.7%    5,277     4.8%
    Corporate and other            309      321   -3.7%     307      0.7%

* Source: preliminary unaudited management accounts.

The Group's total headcount rose by 9.6% y-o-y to 8,363 employees. In line with our strategy to focus on the efficiency of IT Services segment, we further streamlined our operations which resulted in 5.3% q-o-q decline in number of employees with headcount now standing at 2,526. Our Software Development segment continued to expand delivery centers mostly in Ukraine and other Eastern European locations that increased headcount by 4.8% q-o-q to 5,528.

Debt *

                                                March
                     June 30, June 30,  Change   31,   Change
    US$ mn             2012     2011    y-o-y   2012   q-o-q
    Total debt         62.4     65.6     -3.1   42.5    19.9
    Current debt       42.0     40.7     1.3    20.9    21.1
    Non-current debt   20.4     24.9     -4.4   21.6    -1.2
    Net debt           40.9     40.3     0.6    24.0    17.0

* Source: preliminary unaudited management accounts.

Group's total debt declined by US$3.1 mn y-o-y to US$62.4 mn, while net debt position remained mostly unchanged. Over the last quarter Group's debt position increased by US$19.9 mn, and net debt position increased by US$17mn - both are attributable to seasonal rise of working capital requirements in the IT Services segment.

Comment from President    

Anatoly Karachinsky, President of IBS Group said, "The current febrile economic climate affecting the European, US, and as a result Russian markets has given way to weakened growth in the IT-market. However, having taken steps to factor this into our forecast, I am pleased to report that first quarter results sit well within the projected figures. The software development segment is still showing a double-digit growth, and indicative of a wider long-term trend, aimed at offshore model of utilising IT-services. If uncertainty grows, this segment is likely to be further losing momentum, however. While it is indisputable that the performance of the IT-segment has been impacted by the recent volatility of the RUB/USD rate and the deconsolidation of non-core businesses, on a comparable basis, rouble revenues within the segment have remained robust."

About IBS Group Holding Limited

IBS Group is a leading software development and IT services provider in Central and Eastern Europe. Through its two principal subsidiaries, Luxoft and IBS IT Services, it offers a wide variety of information technology services, such as software development and IT services outsourcing, IT infrastructure and business applications implementation. IBS Group has business operations in Russia, Ukraine, Romania, Poland, Germany, Switzerland, the UK, the USA, Vietnam and Singapore. IBS Group employs more than 8,300 people worldwide. In the year ended March 31, 2012, the Group reported US GAAP consolidated revenues of USD816.3 million. IBS Group's Global Depositary Receipts are listed on the Regulated Market (General Standard) at the Frankfurt Stock Exchange (Bloomberg: IBSG:GR; Reuters: IBSGq.F)

Disclaimer

The information contained in this release is not for publication, distribution or release, directly or indirectly, in the United States of America (including its territories and possessions, any states of the United States and the District of Columbia) or any other jurisdiction where such distribution is unlawful. Such release does not constitute an offer for the sale of securities in the United States of America, Canada, Australia, Japan or in any other jurisdiction in which an offer is subject to legal restrictions.

The information communicated in this document contains certain statements that are or may be projections or forward looking. These statements typically contain the words "anticipate", "believe", "intend", "estimate", "expect", "plan", "project" and words of similar meaning. By their nature, forward-looking statements are not statements of historical fact and reflect the current assessments, views, assumptions and beliefs made by the Company's management according to the information available at the time made about future events, operating performance, financial condition, business strategy, the Company's plans and objectives for future operations and the industry in which the Company operates. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors, any of which can lead to the actual results of operations, profitability, performance, profits or achievements of the Company to be materially different from the results of operations, profitability, performance, profits or achievements of the Company expressed or implied by these forward-looking statements. Factors that could cause the actual results to differ materially from those contained in projections or forward-looking statements of the Company may include, among others, general economic and competitive environment conditions in the markets in which the Company operates as well as many other risks affecting the Company and its operations. In view of these risks, uncertainties and other factors, you should not place undue reliance on these forward-looking statements.

The Company undertakes no obligation to review, update, amend or revise any of its forward-looking statements, whether as a result of new information, future events or developments or otherwise, or to reflect actual results, changes in assumptions or changes in factors affecting these statements. There may be additional material risks that are currently not considered to be material or of which the Company and its advisors or representatives are unaware. All subsequent written and oral forward-looking statements attributable to the Company, and those acting on its behalf, are expressly qualified in their entirety by the foregoing.

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