OREANDA-NEWS. September 13, 2013. IBS Group Holding Limited (IBSG:GR; IBSGq.DE), a leading software developer and IT services provider in Central and Eastern Europe, announced its preliminary unaudited operating results for the three months ended June 30, 2013 (1Q FYE March 31, 2014).

1Q FYE March 31, 2014 highlights

Consolidated revenues amounted to USD 165.6 mn with revenues remaining almost flat y-o-y. In the IT Services segment revenues were USD 66.0 mn, down 15.7% y-o-y, while in the Software Development segment revenues came to USD 83.8, up 18.0% y-o-y.

Our headcount increased by 5.2% y-o-y to 8,809, due to further expansion of delivery centers in Software Development segment.

Total debt amounted to USD 78.6 mn, up USD 16.2 mn y-o-y. The net debt position came to USD 56.5 mn, an increase of USD 15.6 mn y-o-y.

IT Services segment revenues for the first quarter of FYE March 31, 2014 amounted to US\\$66.0 mn, a decrease of 15.7% y-o-y. The segment’s revenues in Russian Rubles amounted to RUR2,096 mn, a decline of 14.9% y-o-y. Decline in revenues is largely explained by further deterioration of demand on the Russian IT services market.

Software Development segment revenues for the first quarter of FYE March 31, 2014 were US\\$83.8 mn, an increase of 18.0% y-o-y. Revenues increase is driven by the global clients, accelerating implementation of the new projects which were postponed from the last year.

Revenues from Russian operations amounted to USD 85.2mn for the first quarter of FYE March 31, 2014, a decline of 13.2% y-o-y, due to the decrease of revenues in IT Services segment. Revenues generated in Europe amounted to USD 40.5 mn, an increase of 20.5% y-o-y, and now account for 24.4% of the consolidated revenues. Revenues generated in North America increased to US\\$39.9mn, up 19.8% y-o-y and now account for 24.1% of the consolidated revenues. Combined revenues of European and North American operations of Software Development segment now account for 48.5% of the consolidated revenues.

Our total headcount reached 8,809 employees. In the Software Development segment, the number of employees amounted to 6,161 an increase of 633 IT professionals y-o-y and 315 q-o-q, due to the further rise of demand for Software Development segment’s services. In the IT Services segment, the number of employees declined to 2,290 IT professionals, a decrease of 236 IT professionals y-o-y and 107 q-o-q, due to our ongoing restructuring measures in the segment instigated by softening Russian IT market.

Our total debt amounted to USD 78.6 mn as of June 30, 2013, up USD 16.2 mn y-o-y and USD 22.3 mn q-o-q, driven by the increase of the current debt used for working capital financing of Software Development and IT Services segments. The net debt position was USD 56.5 mn, an increase of USD 15.6 mn y-o-y and USD 15.4 mn q-o-q.

Outlook
We reiterate our guidance for the consolidated revenues in the FYE March 31, 2014 to increase in the range of 7-10% in USD terms.

Anatoly Karachinsky, President of IBS Group commented,

“The weak performance in IT Services segment is due to the extremely unfavourable conditions in the Russian IT market slowing down on the backdrop of Russian economy. However, for software development this was one of the best 1Q’s ever. Even with the traditional seasonal decline factored in, the segment has shown robust growth driven by the western markets upturn and recovery of IT market, along with our last year investments into the quality of services and customer relationship building which are now starting to pay off.