IBS Group Reports Operating Results for the Third Quarter and Nine Months Ended December 31, 2013
RAMSEY, the Isle of Man, February 27, 2014 /PRNewswire/ --
Please refer to the relevant legal information at the end of this document
IBS Group Holding Limited (IBSG:GR; IBSGq.DE), a leading software developer and IT services provider in Central and Eastern Europe, today announced its preliminary unaudited operating results for the third quarter and nine months ended December 31, 2013 (3Q and 9M FYE March 31, 2014).
9M FYE March 31, 2014 highlights
- Consolidated revenues for the first nine months of FYE March 31, 2014 amounted to US$667.7 mn, a decline of 0.6% y-o-y.
- IT Services segment revenues for the nine months of FYE March 31, 2014 amounted to US$319.1 mn, a decline of 18.3% y-o-y; revenues expressed in RUB terms totalled 10,386 mn, a decrease of 13.3%.
- Software Development segment revenues for the nine months of FYE March 31, 2014 were US$292.1 mn, an increase of 27.7% y-o-y.
- Revenues from Russian operations amounted to US$391.2 mn in the nine months of FYE March 31, 2014, a decline of 14.5% y-o-y, while our combined revenues from North American and European operations reached US$276.5 mn, an increase of 28.9% y-o-y.
- Our headcount reached 9,890 employees, an increase of 16.7% y-o-y.
- The net cash position stands at US$46.6 mn, an increase of US$59.5 mn y-o-y.
Consolidated revenues by segment [*]
3Q FYE 3Q FYE 9M 9M
March March FYE FYE
31, 31, Change March March Change
31, 31,
US$ mn 2014 2013 y-o-y 2014 2013 y-o-y
Consolidated revenues 294.1 294.1 0.0% 667.7 671.9 -0.6%
IT Services segment 160.2 189.7 -15.5% 319.1 390.5 -18.3%
IT Services segment, RUB
mn 5 236.4 5 619.7 -6.8% 10 386 11 977 -13.3%
Software Development
segment 110.6 83.5 32.4% 292.1 228.7 27.7%
Corporate, other and
eliminations 23.3 20.9 11.5% 56.5 52.7 7.2%
* Source: management accounts
Consolidated revenues for the first nine months of FYE March 31, 2014 amounted to US$667.7 mn, a decline of 0.6% y-o-y, at the same time consolidated revenues for the third quarter of FYE March 31, 2014 amounted to US$294.1 mn and remained flat y-o-y. Weak Russian IT services consumption persisted in the third quarter of the financial year, which is reflected in the weak revenues in the IT Services segment. At the same time our Software Development segment benefitted from clients' budget spend improvements, ongoing transformation of our business model to managed services and accelerating demand for sophisticated outsourcing services.
IT Services segment revenues for the nine months of FYE March 31, 2014 amounted to US$319.1 mn, a decline of 18.3% y-o-y; revenues expressed in RUB terms totalled 10,386 mn, a decrease of 13.3%. The segment's revenues for the third quarter amounted to US$160.2 mn, a decline of 15.5% y-o-y in US$ terms and 6.8% in RUB terms respectively. In both periods revenues were negatively affected by depreciation of RUB vs. USD.
Software Development segment revenues for the nine months of FYE March 31, 2014 were US$292.1 mn, an increase of 27.7% y-o-y. The segment's revenues for the third quarter amounted to US$110.6 mn, an increase of 32.4% y-o-y.
Consolidated revenues by geography *
9M FYE Share 9M FYE Share
of of Change
March 31, total March 31, total
US$ mn 2014 revenue 2013 revenue y-o-y
Revenues generated in
Russia 391.2 58.6% 457.4 68.1% -14.5%
Revenues generated in
Europe 134.6 20.2% 108.8 16.2% 23.7%
Revenues generated in
North America 141.9 21.2% 105.7 15.7% 34.2%
* Source: management accounts; customer geography determined by the location of clients' key decision makers
Revenues from Russian operations amounted to US$391.2 mn in the nine months of FYE March 31, 2014, a decline of 14.5% y-o-y. Revenues generated in Europe amounted to US$134.6 mn, an increase of 23.7% y-o-y, and now account for 20.2% of the Group revenues. Revenues generated in North America increased to US$141.9 mn, up 34.2% y-o-y, and now account for 21.2% of the Group revenues. The growth in European and North American consolidated revenues is attributed to the Software Development segment.
Headcount *
Change
December December September Change
Number of employees 31, 2013 31, 2012 y-o-y 30, 2013 q-o-q
Group headcount 9,890 8,473 16.7% 9,509 4.0%
IT Services segment 2,242 2,464 -9.0% 2,336 -4.0%
Software Development
segment 7,273 5,671 28.2% 6,803 6.9%
Corporate and other 375 338 10.9% 370 1.4%
* Source: management accounts
Our headcount reached 9,890 employees, an increase of 16.7% y-o-y. In the IT Services segment, the number of employees declined by 9.0% y-o-y to 2,242 IT professionals as we continued to undertake restructuring measures faced with lacklustre demand for our services in Russia. In the Software Development segment, the number of employees amounted to 7,273, an increase of 1,602 IT professionals y-o-y.
Debt *
December December Change
US$ mn 31, 2013 31, 2012 y-o-y September 30 Change q-o-q
2013
Total debt 57.8 54.3 3.5 80.5 -22.7
Current debt 56.0 33.4 22.6 58.8 -2.8
Non-current
debt 1.8 20.9 -19.1 21.7 -19.9
Net debt -46.6 12.9 -59.5 -13.6 -33.0
* Source: management accounts
Our total debt amounted to US$57.8 mn as of December 31, 2013, up US$3.5 mn y-o-y and a US$22.7 mn decline q-o-q. The net cash position stands at US$46.6 mn, an increase of US$59.5 mn y-o-y.
Outlook
We reiterate our full year consolidated revenues growth guidance to be in the range of 2-5% as measured in US$ terms.
Anatoly Karachinsky, President of IBS Group, commented:
"For the last nine months the Software Development segment has yet again demonstrated impressive performance both in growth and margins. This segment has continuously increased its product portfolio offering the market innovative proprietary Horizon and iStockTrack, as well as introducing new AllView and Ulmo solutions for our automotive and telecom customers, respectively. Our footprint is expanding - we are happy to announce that the 20th Luxoft office has been opened in Sofia, Bulgaria.
The Russian business of IBS Group is still under the pressure of deteriorating macroeconomic environment, which is reflected in the IT Services segment financials. Restructuring in the segment aimed to maximise our effort in the highest-margin and most promising IT areas has continued."
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 9,800 people worldwide. In the year ended March 31, 2013, the Group reported US GAAP consolidated revenues of US$870.3 mn. 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)
For more information about IBS Group please visit http://www.ibsgr.com
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