ARMADA OAO: revenue surges 27% in 2011, net profit rises 31%
EquityStory.RS, LLC-News: ARMADA OAO / Key word(s): Final
Results/Mergers & Acquisitions
ARMADA OAO: revenue surges 27% in 2011, net profit rises 31%
04.04.2012 / 10:20
---------------------------------------------------------------------
ARMADA'S REVENUE SURGES 27% IN 2011, NET PROFIT RISES 31%
OAO ARMADA (MICEX-RTS: ARMD) hereby releases its audited financial IFRS
results for FY11 ended December 31, 2011.
Key highlights:
- ARMADA's revenue increases 27% in 2011, EBITDA rises 38%
- EBITDA margin rises to 12.2% (from 11.2%)
- Net profit margin comes in at 10.6%
- In 2011 ARMADA acquired PMT, a software developer of hospital
information systems
- ARMADA's cash position stood at RUB 1,215m as for December 31, 2011
- ARMADA forecasts organic revenue growth in the range of 25-30% in 2012,
as well as one or two M&A deals involving companies with revenue in a
range of USD 5m-10m.
'ARMADA successfully fulfilled its development plan for 2011, ramping up
revenue and profitability in line with the outlook released by management.
In 2012, we will strive to generate further organic growth of revenue of
the group of companies by 25-30% and to raise profitability further. In the
M&A segment the focus will be on acquiring controlling stakes in small
cost-effective software and IT service companies with unique products or
services with the potential to expand ARMADA's business. One or two
acquisitions of companies with revenue in the range of USD 5m-10m are on
the agenda for 2012,' Chairman of ARMADA's Board of Directors Alexey
Kuzovkin said.
Headline financial indicators, RUB m
^
2011 2010 Growth, %
Revenue*, including: 4,656 3,656 27%
Software Development and Implementation 2,082 1,348 54%
IT Services 2,574 2,308 12%
EBITDA 566 410 38%
EBITDA margin, % 12.2% 11.2%
Net profit * 492 377 31%
Net profit margin, % 10.6% 10.3%
°
* the Group's consolidated audited statement under IFRS.
ARMADA'S REVENUE RISES 27% IN 2011
ARMADA Group's consolidated IFRS revenue for 2011 climbed 27% to RUB
4,656m. Organic business development contributed 25% growth. Another 2%
came from PMT's revenue consolidated to the Group's results since the date
of acquisition by ARMADA in May 2011.
ARMADA'S EBITDA MARGIN CLIMBED 12.2% FROM 11.2%
EBITDA rose 38% from RUB 410m to RUB 566m, while EBITDA margin jumped from
11.2% to 12.2%. EBITDA margin growth to 15-16% over the next few years is
one of ARMADA Group's strategic targets.
The key profitability growth driver is a change in the revenue mix where
the high-margin Software development segment climbed up to 45% of the total
group's revenue (37% in 2010). Organic business development expanded the
software's share to 43%. Another 2% came from PMT's revenue consolidated as
part of the Group's results since the date of its acquisition by ARMADA in
May 2011.
The second profitability growth driver is a decrease in the share of
hardware revenues in the mix to 33% from 35% in 2010 (a part of system
integration contracts).
Revenue breakdown by segment, RUB m
^
Segment Share of total
revenue revenue, %
Software Development and
Implementation 2,082 45%
Services, including: 2,574 55%
IT outsourcing 311 7%
System integration 1,989 43%
Consulting 122 2%
Training 152 3%
°
TOTAL HEADCOUNT ORGANICALLY WENT UP 10%
ARMADA Group's headcount, if taken without PMT's acquisition, went up 10% -
from 738 employees in 2010 to 809 employees in 2011. Total headcount
including PMT stands at 897 employees as of December 31, 2011.
ARMADA HAS A WELL-DIVERSIFIED CLIENT BASE
The largest client in terms of revenue in 2011 accounted for 8% of the
Group's consolidated revenue. He is followed by three clients with a share
of 4%, 3% and 2% who are then followed by 1500+ clients with a share of
less than 1% each in ARMADA's consolidated revenue.
ARMADA's client breakdown in 2011, RUB m
^
Segment revenue Share of total revenue, %
Government bodies 2,554 55%
Financial organizations 278 6%
Energy 204 4%
Other sectors 1,620 35%
°
The public segment of the Russian IT market is the largest, with a share of
nearly 30%. According to the Russian Communications and Mass Media Ministry
and CNews analytics[1], annual expenditure by government bodies on IT could
reach some RUB 170bn in 2011. The share of government bodies' orders in
ARMADA's revenue equaled 55% in 2011, including 13% coming from regional
government information system development projects.
Another 17% of ARMADA's revenue was contributed by contracts with
state-owned companies in various sectors of the economy (finance, energy,
oil and gas, healthcare, etc.).
In total, revenue from government bodies and state-owned companies
(so-called 'state customers') in ARMADA's revenue mix is 72% in 2011,
almost unchanged from 70% in 2010, which is in line with the company's
development strategy aimed at gaining leadership in this segment.
Software development for government bodies has long been ARMADA's core
competency. ARMADA worked in tandem with more than 60 federal agencies and
more than 250 state-owned companies.
In the IT Services segment, ARMADA phased in a number of infrastructure
projects for the Central Bank of Russia, Home Credit and Finance Bank, BSGV
(Rosbank), Priorbank (Raiffeisen group), TNK-BP, MRSK Siberia, MRSK Ural,
MRSK Center and Azbuka Vkusa supermarket chain, to name but a few.
ARMADA has consistently scaled up the range of available project management
services. The company's customers include Volga Dnepr, TNK-BP, Severstal,
Yulmart, MaRussia Motors, and Evraz Group S.A. ARMADA has been successful
in implementing educational programs and to date over 40,000 specialists
have completed a project management course.
The acquisition of PMT (Post Modern Technology, a software developer of
hospital information system MEDIALOG) in 2011 allowed ARMADA to enlarge its
footprint in the segment of medical information systems. PMT holds
leadership in the healthcare IT market in Russia and aims to command a
major market share of the state healthcare upgrade project which is
expected to get under way in 2012.
ANALYSTS FORECAST 11-14% GROWTH OF THE IT MARKET IN RUSSIA IN 2012
According to an estimate released by Russia's Communications Ministry[2],
the Russian IT market gained 14.6% in value to RUB 649bn in 2011. This is
equal to USD 20bn in dollar terms at the exchange rate as of the end of the
year[3].
The value of the Russian IT market rose in 2011 according to IDC[4], and
was worth about USD 29bn, growing 20% y-o-y. Sales volumes of tablet
computers, smartphones and other such devices are included in IDC's
hardware market segment, which accounts for 62% of the total IT market. IT
Services segment has been estimated at USD 5.8bn (20% of the IT market) and
Software at USD 3.4bn (12% of the IT market).
A similar estimate of ARMADA's core market segments (Software development
and IT Services) was made by French research and consulting company PAC[5].
IT services in 2011 would account for RUB 192bn (about USD 6bn) and
software segment amounted to RUB 96bn (about USD 3bn), according to PAC.
IDC forecasts the value Russian IT market to reach USD 33bn in 2012, which
implies 14% growth y-o-y. PAC analysts issued guidance of an 11% growth
rate.
PAC analytics also pointed out that the Russian joint Software development
and IT services market has robust long-term potential, by comparing per
capita expenses in this industry in Western Europe, where they stand at EUR
431, and Russia, where they total EUR 38.
This more than tenfold difference reflects the tremendous development
potential for ARMADA's priority markets. As of year-end 2011, ARMADA held a
2.2% share of the software development market and about a 1% share of the
IT services market in Russia.
OUTLOOK FOR 2012: 25-30% ORGANIC REVENUE GROWTH PLUS NEW M&A DEALS
ARMADA's management team in 2012 will endeavor to achieve organic growth of
the company's revenue at a rate of 25-30% and grow EBITDA margin to a level
higher than 12.2% achieved in 2011.
ARMADA has substantial cash resources and a pipeline of potential targets
for new M&A deals. Its cash position equals RUB 1,215m as of December 31,
2011. RUB 635m of this cash are proceeds less costs from secondary public
offering (SPO) held by ARMADA in April 2011.
The efforts of ARMADA's management team in 2012 will focus on purchasing
controlling stakes in small software and service companies with revenues in
the range of USD 5m-10m, profitability over current one of ARMADA,
leadership positions in their market segments congenial to ARMADA's
business. Priority market segments include transport, public utilities
sector, corporate cloud services and other sectors.
One or two such M&A deals are slated for execution in 2012.
ABOUT ARMADA
ARMADA OAO (MICEX-RTS: ARMD) is a leading software developer and IT
services provider in Russia. The company has been operating on the Russian
IT market for over 15 years and focuses on solutions for the public sector
and corporate clients. The company was involved in developing several
government information resources, including the Government Services Portal,
the unified interdepartmental information system and other solutions. More
than 300 federal and regional government bodies, as well as over 1,500
corporates, including 75 companies on the top 100 list of Russian companies
are ARMADA's customers.
Website: www.armadaitgroup.com
Bloomberg, Reuters: ARMD RU
CONTACT:
Dmitry Chursin
Head of Investor Relations at ARMADA OAO
Tel: +7 (495) 797-6020
E-mail: IR@armd.ru
NOTES:
[1] CNews Magazine, No. 51, 2010
[2] Central Bank of Russia on December 31, 2011 exchange rate RUB 32.1961
per dollar.
[3] Russian Ministry of Communications and Mass Media, December 2011.
[4] IDC in the Vedomosti newspaper, April 2012.
[5] Pierre Audoin Consultants, Software and IT Services (SITS) Research,
April 2011.
DISCLAIMER
Certain statements contained herein may constitute forecasts or other
'forward-looking statements' regarding planned events or ARMADA's future
performance. Such forward-looking statements are signaled through the use
of such markers as 'expected,' 'assumed,' 'according to forecasts,'
'estimated,' 'intention,' 'will be,' 'could be,' 'may,' or 'likely,'
whether in positive or negative form, as well as other similar expressions.
There is a whole number of factors that can cause a material difference
between the forecasts and forward-looking statements, and the actual
results. The company does not plan or undertake publicly to revisit such
forward-looking statements in order to bring them up to date with the
events or circumstances that occurred after the publication hereof or to
take into account unpredictable events.
End of Corporate News
---------------------------------------------------------------------
04.04.2012 Dissemination of a Corporate News, transmitted by
EquityStory.RS, LLC - a company of EquityStory AG.
The issuer is solely responsible for the content of this announcement.
EquityStory.RS, LLC's Distribution Services include Regulatory
Announcements, Financial/Corporate News and Press Releases.
Media archive at www.dgap-medientreff.de and www.dgap.de
---------------------------------------------------------------------
163862 04.04.2012
EquityStory.RS, LLC-News: ARMADA OAO / Key word(s): Final
Results/Mergers & Acquisitions
ARMADA OAO: revenue surges 27% in 2011, net profit rises 31%
04.04.2012 / 10:20
---------------------------------------------------------------------
ARMADA'S REVENUE SURGES 27% IN 2011, NET PROFIT RISES 31%
OAO ARMADA (MICEX-RTS: ARMD) hereby releases its audited financial IFRS
results for FY11 ended December 31, 2011.
Key highlights:
- ARMADA's revenue increases 27% in 2011, EBITDA rises 38%
- EBITDA margin rises to 12.2% (from 11.2%)
- Net profit margin comes in at 10.6%
- In 2011 ARMADA acquired PMT, a software developer of hospital
information systems
- ARMADA's cash position stood at RUB 1,215m as for December 31, 2011
- ARMADA forecasts organic revenue growth in the range of 25-30% in 2012,
as well as one or two M&A deals involving companies with revenue in a
range of USD 5m-10m.
'ARMADA successfully fulfilled its development plan for 2011, ramping up
revenue and profitability in line with the outlook released by management.
In 2012, we will strive to generate further organic growth of revenue of
the group of companies by 25-30% and to raise profitability further. In the
M&A segment the focus will be on acquiring controlling stakes in small
cost-effective software and IT service companies with unique products or
services with the potential to expand ARMADA's business. One or two
acquisitions of companies with revenue in the range of USD 5m-10m are on
the agenda for 2012,' Chairman of ARMADA's Board of Directors Alexey
Kuzovkin said.
Headline financial indicators, RUB m
^
2011 2010 Growth, %
Revenue*, including: 4,656 3,656 27%
Software Development and Implementation 2,082 1,348 54%
IT Services 2,574 2,308 12%
EBITDA 566 410 38%
EBITDA margin, % 12.2% 11.2%
Net profit * 492 377 31%
Net profit margin, % 10.6% 10.3%
°
* the Group's consolidated audited statement under IFRS.
ARMADA'S REVENUE RISES 27% IN 2011
ARMADA Group's consolidated IFRS revenue for 2011 climbed 27% to RUB
4,656m. Organic business development contributed 25% growth. Another 2%
came from PMT's revenue consolidated to the Group's results since the date
of acquisition by ARMADA in May 2011.
ARMADA'S EBITDA MARGIN CLIMBED 12.2% FROM 11.2%
EBITDA rose 38% from RUB 410m to RUB 566m, while EBITDA margin jumped from
11.2% to 12.2%. EBITDA margin growth to 15-16% over the next few years is
one of ARMADA Group's strategic targets.
The key profitability growth driver is a change in the revenue mix where
the high-margin Software development segment climbed up to 45% of the total
group's revenue (37% in 2010). Organic business development expanded the
software's share to 43%. Another 2% came from PMT's revenue consolidated as
part of the Group's results since the date of its acquisition by ARMADA in
May 2011.
The second profitability growth driver is a decrease in the share of
hardware revenues in the mix to 33% from 35% in 2010 (a part of system
integration contracts).
Revenue breakdown by segment, RUB m
^
Segment Share of total
revenue revenue, %
Software Development and
Implementation 2,082 45%
Services, including: 2,574 55%
IT outsourcing 311 7%
System integration 1,989 43%
Consulting 122 2%
Training 152 3%
°
TOTAL HEADCOUNT ORGANICALLY WENT UP 10%
ARMADA Group's headcount, if taken without PMT's acquisition, went up 10% -
from 738 employees in 2010 to 809 employees in 2011. Total headcount
including PMT stands at 897 employees as of December 31, 2011.
ARMADA HAS A WELL-DIVERSIFIED CLIENT BASE
The largest client in terms of revenue in 2011 accounted for 8% of the
Group's consolidated revenue. He is followed by three clients with a share
of 4%, 3% and 2% who are then followed by 1500+ clients with a share of
less than 1% each in ARMADA's consolidated revenue.
ARMADA's client breakdown in 2011, RUB m
^
Segment revenue Share of total revenue, %
Government bodies 2,554 55%
Financial organizations 278 6%
Energy 204 4%
Other sectors 1,620 35%
°
The public segment of the Russian IT market is the largest, with a share of
nearly 30%. According to the Russian Communications and Mass Media Ministry
and CNews analytics[1], annual expenditure by government bodies on IT could
reach some RUB 170bn in 2011. The share of government bodies' orders in
ARMADA's revenue equaled 55% in 2011, including 13% coming from regional
government information system development projects.
Another 17% of ARMADA's revenue was contributed by contracts with
state-owned companies in various sectors of the economy (finance, energy,
oil and gas, healthcare, etc.).
In total, revenue from government bodies and state-owned companies
(so-called 'state customers') in ARMADA's revenue mix is 72% in 2011,
almost unchanged from 70% in 2010, which is in line with the company's
development strategy aimed at gaining leadership in this segment.
Software development for government bodies has long been ARMADA's core
competency. ARMADA worked in tandem with more than 60 federal agencies and
more than 250 state-owned companies.
In the IT Services segment, ARMADA phased in a number of infrastructure
projects for the Central Bank of Russia, Home Credit and Finance Bank, BSGV
(Rosbank), Priorbank (Raiffeisen group), TNK-BP, MRSK Siberia, MRSK Ural,
MRSK Center and Azbuka Vkusa supermarket chain, to name but a few.
ARMADA has consistently scaled up the range of available project management
services. The company's customers include Volga Dnepr, TNK-BP, Severstal,
Yulmart, MaRussia Motors, and Evraz Group S.A. ARMADA has been successful
in implementing educational programs and to date over 40,000 specialists
have completed a project management course.
The acquisition of PMT (Post Modern Technology, a software developer of
hospital information system MEDIALOG) in 2011 allowed ARMADA to enlarge its
footprint in the segment of medical information systems. PMT holds
leadership in the healthcare IT market in Russia and aims to command a
major market share of the state healthcare upgrade project which is
expected to get under way in 2012.
ANALYSTS FORECAST 11-14% GROWTH OF THE IT MARKET IN RUSSIA IN 2012
According to an estimate released by Russia's Communications Ministry[2],
the Russian IT market gained 14.6% in value to RUB 649bn in 2011. This is
equal to USD 20bn in dollar terms at the exchange rate as of the end of the
year[3].
The value of the Russian IT market rose in 2011 according to IDC[4], and
was worth about USD 29bn, growing 20% y-o-y. Sales volumes of tablet
computers, smartphones and other such devices are included in IDC's
hardware market segment, which accounts for 62% of the total IT market. IT
Services segment has been estimated at USD 5.8bn (20% of the IT market) and
Software at USD 3.4bn (12% of the IT market).
A similar estimate of ARMADA's core market segments (Software development
and IT Services) was made by French research and consulting company PAC[5].
IT services in 2011 would account for RUB 192bn (about USD 6bn) and
software segment amounted to RUB 96bn (about USD 3bn), according to PAC.
IDC forecasts the value Russian IT market to reach USD 33bn in 2012, which
implies 14% growth y-o-y. PAC analysts issued guidance of an 11% growth
rate.
PAC analytics also pointed out that the Russian joint Software development
and IT services market has robust long-term potential, by comparing per
capita expenses in this industry in Western Europe, where they stand at EUR
431, and Russia, where they total EUR 38.
This more than tenfold difference reflects the tremendous development
potential for ARMADA's priority markets. As of year-end 2011, ARMADA held a
2.2% share of the software development market and about a 1% share of the
IT services market in Russia.
OUTLOOK FOR 2012: 25-30% ORGANIC REVENUE GROWTH PLUS NEW M&A DEALS
ARMADA's management team in 2012 will endeavor to achieve organic growth of
the company's revenue at a rate of 25-30% and grow EBITDA margin to a level
higher than 12.2% achieved in 2011.
ARMADA has substantial cash resources and a pipeline of potential targets
for new M&A deals. Its cash position equals RUB 1,215m as of December 31,
2011. RUB 635m of this cash are proceeds less costs from secondary public
offering (SPO) held by ARMADA in April 2011.
The efforts of ARMADA's management team in 2012 will focus on purchasing
controlling stakes in small software and service companies with revenues in
the range of USD 5m-10m, profitability over current one of ARMADA,
leadership positions in their market segments congenial to ARMADA's
business. Priority market segments include transport, public utilities
sector, corporate cloud services and other sectors.
One or two such M&A deals are slated for execution in 2012.
ABOUT ARMADA
ARMADA OAO (MICEX-RTS: ARMD) is a leading software developer and IT
services provider in Russia. The company has been operating on the Russian
IT market for over 15 years and focuses on solutions for the public sector
and corporate clients. The company was involved in developing several
government information resources, including the Government Services Portal,
the unified interdepartmental information system and other solutions. More
than 300 federal and regional government bodies, as well as over 1,500
corporates, including 75 companies on the top 100 list of Russian companies
are ARMADA's customers.
Website: www.armadaitgroup.com
Bloomberg, Reuters: ARMD RU
CONTACT:
Dmitry Chursin
Head of Investor Relations at ARMADA OAO
Tel: +7 (495) 797-6020
E-mail: IR@armd.ru
NOTES:
[1] CNews Magazine, No. 51, 2010
[2] Central Bank of Russia on December 31, 2011 exchange rate RUB 32.1961
per dollar.
[3] Russian Ministry of Communications and Mass Media, December 2011.
[4] IDC in the Vedomosti newspaper, April 2012.
[5] Pierre Audoin Consultants, Software and IT Services (SITS) Research,
April 2011.
DISCLAIMER
Certain statements contained herein may constitute forecasts or other
'forward-looking statements' regarding planned events or ARMADA's future
performance. Such forward-looking statements are signaled through the use
of such markers as 'expected,' 'assumed,' 'according to forecasts,'
'estimated,' 'intention,' 'will be,' 'could be,' 'may,' or 'likely,'
whether in positive or negative form, as well as other similar expressions.
There is a whole number of factors that can cause a material difference
between the forecasts and forward-looking statements, and the actual
results. The company does not plan or undertake publicly to revisit such
forward-looking statements in order to bring them up to date with the
events or circumstances that occurred after the publication hereof or to
take into account unpredictable events.
End of Corporate News
---------------------------------------------------------------------
04.04.2012 Dissemination of a Corporate News, transmitted by
EquityStory.RS, LLC - a company of EquityStory AG.
The issuer is solely responsible for the content of this announcement.
EquityStory.RS, LLC's Distribution Services include Regulatory
Announcements, Financial/Corporate News and Press Releases.
Media archive at www.dgap-medientreff.de and www.dgap.de
---------------------------------------------------------------------
163862 04.04.2012