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

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.

SOURCE IBS Group Holding Ltd




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