Armada Boosts Its EBITDA in H1 to 10% Notwithstanding Crisis
OREANDA-NEWS. On 06 August 2009 was announced, that ARMADA delivers sound results, with EBITDA surging to RUB 73m despite the ongoing crisis.
Revenue stands at RUB 748m for the first half of 2009, down 37% due primarily to the shutdown of low-margin projects. (Historically, the first half generates from 15% to 23% of the annual turnover).
Costs were reduced by 45%.
Driven by the adopted measures, the EBITDA margin is tipped to expand to 12—16% in 2009.
ARMADA expects its operating cash flow to be comparable to EBITDA by the end of 2009.
The company has zero debt.
ARMADA plans to continue with its M&A strategy.
„Revenue for the first half of 2009 stood at RUB 748m, a decrease of 37% from the same figure in 2008 induced by the general market situation and the shutdown of certain low-margin projects by the company. In a changing environment, the company elected not to continue with certain works under such projects, which ultimately helped it make its cost reduction program even more efficient.“
„With the cost reduction measures in place, ARMADA is planning to finish with a considerable boost to its EBITDA margin, which is set to rise to 12—16% in 2009. Revenue is likely to fluctuate within RUB 4bn-5bn in 2009. With the company’s stable order book, cost optimization completed successfully, lack of debts and no need for external long-term financing, ARMADA is well on track to increase its profitability,“ said Chairman of ARMADA’s Board of Directors Alexei Kuzovkin, commenting on the results.
ARMADA boosts its EBITDA in H1 2009 to 10% notwithstanding crisis
Business Highlights:
ARMADA delivers sound results, with EBITDA surging to RUB 73m despite the ongoing crisis.
Revenue stands at RUB 748m for the first half of 2009, down 37% due primarily to the shutdown of low-margin projects. (Historically, the first half generates from 15% to 23% of the annual turnover).
Costs were reduced by 45%.
Driven by the adopted measures, the EBITDA margin is tipped to expand to 12—16% in 2009.
ARMADA expects its operating cash flow to be comparable to EBITDA by the end of 2009.
The company has zero debt.
ARMADA plans to continue with its M&A strategy.
„Revenue for the first half of 2009 stood at RUB 748m, a decrease of 37% from the same figure in 2008 induced by the general market situation and the shutdown of certain low-margin projects by the company. In a changing environment, the company elected not to continue with certain works under such projects, which ultimately helped it make its cost reduction program even more efficient.“
„With the cost reduction measures in place, ARMADA is planning to finish with a considerable boost to its EBITDA margin, which is set to rise to 12—16% in 2009. Revenue is likely to fluctuate within RUB 4bn-5bn in 2009. With the company’s stable order book, cost optimization completed successfully, lack of debts and no need for external long-term financing, ARMADA is well on track to increase its profitability,“ said Chairman of ARMADA’s Board of Directors Alexei Kuzovkin, commenting on the results.
Revenue
The company’s revenue stood at RUB 748m for the first half of 2009, 37% below the same period in the previous year. The drop is associated with the downturn on the IT market and the partial shutdown of low-margin projects.
As before, contracts with government agencies dominated the company’s revenue structure, bringing in upward of 75% of proceeds. Just like earlier, however, none of ARMADA’s major clients generated more than 7% of its total revenue.
In the first half of 2009, most companies and government agencies hammered out budgets for the year in light of the crisis, which slashed the spending on information technologies. ARMADA expects the IT market to revive in the second half of 2009, particularly in the government-driven segment.
Costs
To minimize the negative effects of macroeconomic factors on the company’s financial standing, ARMADA resorted to a number of measures to streamline its cost structure.
The company implemented cost optimization and staff reduction programs, revised the terms for engaging subcontractors and cut administrative and organizational expenses. The cost optimization program resulted in a 45% cut in the company’s expenses.
Software Development and Implementation
This line of business reconfirmed its reputation as a leading segment in terms of its development rate, generating a revenue of RUB 171m in the first half of 2009, which shows the least change in the wake of new macroeconomic conditions (a decline of 33%). This segment is essentially represented by ARMADA Soft and ETC.
In the first quarter of 2009, ARMADA won the tender for the support and maintenance of the Technological Portal of Moscow and signed a number of other maintenance agreements. Meanwhile, in the second quarter, the company won an open tender staged by the Federal Medical and Biological Agency of Russia for the implementation of a single integrated information system for medical and social expertise institutions. The idea of subsequently using this experience on a nationwide scale is currently under review. In particular, another 12 Russian regions may open similar medical and social expertise centers in 2010, and by the end of 2011 such centers may appear in all regions of
By the same token, in the second quarter the company won various tenders for the development of new software for such customers as the Federal Migration Service and Federal Service for Hydrometeorology and Environmental Monitoring.
An annual rating of
ARMADA’s solution won in the
IT Services
The revenue from the IT services reached RUB 196m in the first half of 2009, down 36% from RUB 308m in the same period a year earlier. Within the ARMADA structure, the segment is represented by Soyuzinform and PM Expert acquired by the holding in 2007.
Soyuzinform signed a number of new agreements for providing IT services to such major entities as the Supreme Arbitration Court of the
ARMADA extended its existing agreements with major government organizations to which the company has been providing IT outsourcing services by means of complete maintenance of the IT infrastructure. The following customers have been choosing ARMADA’s specialists for years now: the Russian Finance Ministry, the Federal Treasury, and others.
Hardware solutions
Revenue from ARMADA’s Hardware Solutions segment amounted to RUB 381m in the first half of 2009, which is a 38% decline year-on-year. At the same time, the segment’s share in ARMADA’s total revenue shrank slightly to 51% in the first half of 2009 compared to the same period in 2008. The segment is represented by Helios IT-Solutions in ARMADA’s structure.
During the reporting period, the company won a tender and signed an agreement for a supply of personal computers for Sberbank’s regional offices. According to the signed document, the required equipment will be provided during 2009 and 2010. Furthermore, ARMADA was able to secure new corporate clients, such as KMB Bank and VTB Insurance.
M&A Strategy
The development of companies acquired by ARMADA in 2007 (Soyuzinform, PM Expert and ETC) generated 26% of the group’s aggregate revenue in the first half of 2009. The contributions from these companies increased from 24% the previous year — a clear sign of their successful expansion and integration in the group.
Integration processes within ARMADA are an integral part of the company’s core activities. With this in mind, an annual audit in the sphere of quality of services was carried out at ARMADA in the second quarter of 2009, and the company’s quality management system certificate was upgraded to DIN EN ISO 9001:2008. This testifies to not only the high quality of design, development, implementation and maintenance of IT solutions, but also the efficient management of the IT assets of companies incorporated in ARMADA.
The company is poised to persist with its M&A strategy in 2009. It is currently in talks with various IT companies over mergers. The management team believes that the current environment offers great opportunities for buying up assets with huge growth potential at very attractive prices.
Shares
In the second quarter of 2009, Chairman of the Board of Directors of OAO ARMADA Alexei Kuzovkin hiked up his stake in the company’s share capital by 8.4%. ARMADA’s management team now holds a total of roughly 12% of the company’s shares.
Forecast for 2009
Depending on the general market situation, ARMADA’s revenue is projected to reach between RUB 4bn and RUB 5bn. At the same time, the EBITDA margin is projected to expand to 12—16%.
„I am positive that after the economy bottoms out, ARMADA, as one of the few public IT companies in
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