IBS Group Reports Operating Results for the Second Quarter and Six Months Ended September 30, 2013

Dec 02, 2013, 05:47 ET from IBS Group Holding Ltd

RAMSEY, the Isle of Man, December 2, 2013 /PRNewswire/ --

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 second quarter and six months ended September 30, 2013 (2Q and 1H FYE March 31, 2014).

1H FYE March 31, 2014 highlights

  • Consolidated revenues for the first half of FYE March 31, 2014 amounted to US$373.6 mn, a decrease of 1.1% y-o-y.
  • Revenues in the IT Services segment came to US$158.9 mn, down 20.9% y-o-y. The segment's revenues in RUB amounted to 5,150 mn, a decline of 19% y-o-y.
  • Revenues in the Software Development segment amounted to US$181.4 mn, up 25.0%.
  • Group revenues generated in Europe and North America amounted to US$172.4 mn and now account for 46.2% of consolidated revenues against 25.5% a year ago.
  • Our headcount reached 9,509, as we added 700 IT professionals on a net basis over the course of the year.
  • Total debt amounted to US$80.5 mn, an increase of US$13.1 mn y-o-y. We accumulated a net cash position of US$13.6 mn mostly due to the successful placement of Luxoft shares on NYSE in June 2013.

Consolidated revenues by segment [*]

                                                     1H    1H
                               2Q FYE 2Q FYE         FYE   FYE
                               March  March         March March
                                31,    31,   Change  31,   31,  Change
    US$ mn                      2014   2013  y-o-y  2014  2013  y-o-y

    Consolidated revenues      208.0  212.6  -2.2%  373.6 377.8 -1.1%
    IT Services segment         92.9  122.3  -24.0% 158.9 200.8 -20.9%
    IT Services segment, RUB
    mn                         3 052  3 877  -21.3% 5 150 6 357 -19.0%
    Software Development
    segment                     97.7   74.1  31.8%  181.4 145.1 25.0%
    Corporate, other and
    eliminations                17.4   16.2   7.4%  33.3  31.9   4.4%

* Source: management accounts

Consolidated revenues for the first half of FYE March 31, 2014 amounted to US$373.6 mn, a decrease of 1.1% y-o-y, while consolidated revenues for the second quarter of FYE March 31, 2014 amounted to US$208.0 mn, a decline of 2.2% y-o-y, reflecting two opposite trends: one being a fragile IT market environment in Russia and the other - mirroring a stronger demand for IT outsourcing services globally.

IT Services segment revenues for the first half of FYE March 31, 2014 amounted to US$158.9 mn, a decline of 20.9% y-o-y, revenues expressed in RUB terms totalled 5,150 mn, a decrease of 19.0%. The segment's revenues for the second quarter amounted to US$92.9 mn, a decline of 24% y-o-y in US$ terms and 21.3% in RUB terms respectively.

Software Development segment revenues for the first half of FYE March 31, 2014 were US$181.4 mn, an increase of 25% y-o-y. Segment's revenues for the second quarter amounted to US$97.7 mn, an increase of 31.8% y-o-y.

Consolidated revenues by geography *

                                        Share             Share
                              1H FYE     of     1H FYE     of    Change in
                             March 31,  total  March 31,  total  absolute
    US$ mn                     2014    revenue   2013    revenue  result

    Revenues generated in
    Russia                     201.1    53.8%    240.4    63.7%   -16.3%
    Revenues generated in
    Europe                     87.0     23.3%    70.1     18.5%    24.1%
    Revenues generated in
    North America              85.5     22.9%    67.3     17.8%    26.8%

* Source: management accounts; customer geography determined by the location of clients' key decision makers

Revenues from Russian operations amounted to US$201.1 mn in the first half of FYE March 31, 2014, a decline of 16.3% y-o-y. Revenues generated in Europe amounted to US$87.0 mn, an increase of 24.1% y-o-y, and now account for 23.3% of the Group revenues. Revenues generated in North America increased to US$85.5 mn, up 26.8% y-o-y and now account for 22.9% of the Group revenues. The growth of consolidated revenues outside of Russia is attributed to the Software Development segment.

Headcount *

                          September    September
                             30,          30,      Change              Change
                                                            June 30,
    Number of employees      2013         2012     y-o-y      2013      q-o-q

    Group headcount         9,509        8,372     13.6%     8,809      7.9%
    IT Services segment     2,336        2,456     -4.9%     2,290      2.0%
    Software Development
    segment                 6,803        5,569     22.2%     6,161      10.4%
    Corporate and other      370          347       6.6%      358       3.4%

* Source: management accounts

Our headcount totaled 9,509 employees. In the IT Services segment, the number of employees declined by 4.9% y-o-y to 2,336 IT professionals as a result of business restructuring undertaken throughout the previous financial year. Our headcount in the IT   Services segment remained flat q-o-q, stabilizing at current levels. In the Software Development segment, the number of employees amounted to 6,803, an increase of 1,234 IT professionals y-o-y and 642 IT professionals q-o-q.

Debt *

                      September  September Change
    US$ mn            30, 2013   30, 2012  y-o-y  June 30, 2013  Change q-o-q

    Total debt          80.5       67.4     13.1    78.6        1.9
    Current debt        58.8       45.8     13.0    56.6        2.2
    Non-current debt    21.7       21.6     0.1     22.0        -0.3
    Net debt            -13.6      53.7    -67.3    56.5       -70.1

* Source: management accounts

Our total debt amounted to US$80.5 mn as of September 30, 2013, up US$13.1 mn y-o-y and US$1.9 mn q-o-q. The net cash position stands at US$13.6 mn, an increase of US$53.7 mn
y-o-y and US$70.1 mn q-o-q. Our transition to net cash position is mostly attributable to the cash proceeds from the Luxoft IPO conducted on NYSE in June 2013.


Following weak results in our IT Services segment in the first half of FYE March 31, 2014, we now anticipate that our full year consolidated revenues growth will be in the range of 2-5% as measured in US$ terms.

Anatoly Karachinsky, President of IBS Group, commented:

"Our results in the first half of the year reflect mixed market environment for the Group's primary segments. Our Software Development segment, which reported one of the best second quarters and best half year results in its history, is growing rapidly, capitalizing on the current technological trends and successfully developing a pool of high-potential clients, tapping demand for IT outsourcing in the financial and automotive industry verticals and investing into the existing solutions. Our IT Services segment is facing a tough domestic IT market where corporate clients are scaling back investments, including launch of large-scale IT projects, amid uncertainties prevailing in the economy. This is particularly true for our business applications line, while performance of our infrastructure line is well within our expectations."

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 9,500 people worldwide. In the year ended March 31, 2013, the Group reported US GAAP consolidated revenues of US$870.3 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)


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