BRAIN FORCE announces positive results for the first half-year 2009/10

BRAIN FORCE HOLDING AG (Vienna Stock Exchange: BFC, Reuters: BFC.VI), a leading IT services provider with business operations in Austria, Germany, Switzerland, Italy, the Netherlands, Czech Republic and Slovakia announced its business results today for the first half of the 2009/10 financial year (October 1, 2009 to March 31, 2010).

In particular, the second quarter (January to March 2010) was negatively impacted by a difficult business environment in the IT sector. This was mainly reflected by lower proceeds from license sales and price pressure in the service area. From an operational perspective, the first half-year showed a decline in revenue. From a strategic view, this period featured three important transactions: the sale of the Professional Services business in Austria, the agreement with a venture capital fund to finance the expansion of SolveDirect in the USA, and the acquisition of Inisys, an ERP company for Microsoft Dynamics solutions in Austria. “On the basis of the book gains from the first two transactions, we are able to report clearly positive earnings in the first half of the 2009/10 financial year despite high restructuring costs”, says Michael Hofer, Chief Executive Officer of BRAIN FORCE HOLDING AG.

In the first half-year 2009/10, Group revenues were down 24% to € 37.4 million. Adjusted for the above-mentioned transactions, the organic revenue decline amounted to 20%. Operating EBITDA of the BRAIN FORCE Group (before non-recurring expenses and income) fell from € 3.56 to 0.89 million, and operating EBIT deteriorated from € 1.68 to -0.68 million. “It is important to bear in mind that we generated record earnings in the prior-year period October to December 2008 when BRAIN FORCE was still untouched by the economic crisis”, Michael Hofer adds.

Restructuring costs totaling € 1.97 million in the second quarter of the current financial year were incurred for the measures already announced in the last quarterly report. However, these costs were clearly overcompensated by the book gain of € 2.47 million from the sale of the Professional Services business in Austria, and the realization of a hidden reserve of € 3.86 million linked to the initial at-equity consolidation of SolveDirect. “On balance, the BRAIN FORCE Group generated an EBITDA of € 5.25 million, an EBIT of € 3.68 million and a profit after tax of € 2.24 million”, says Thomas Melzer, Chief Financial Officer of BRAIN FORCE HOLDING AG in summarizing the results for the first six months of the 2009/10 financial year.

In order to effectively deal with the revenue decline, BRAIN FORCE has reduced the number of salaried employees by 165 people (about 24% of staff) since the end of 2008. This includes the most recent job dismissals at the Frankfurt office and in the Netherlands. All in all, these measures trim personnel expenses by € 9.44 million annually. Additional savings were realized by cutting back on the number of free-lance employees and all other cost items. “These measures were painful but absolutely necessary in order to put the company on a sound cost basis for the long-term. The sale of the Professional Services business in Austria enables us to finance the acquisition of Inisys in February and the restructuring costs from own funds. As at March 31, 2010, our equity ratio is a solid 40% and gearing amounts to 26%”, Thomas Melzer explains.

In the 2009/10 financial year, BRAIN FORCE expects revenues to reach a level of about € 70 million as well as a clearly positive EBIT, including non-recurring restructuring costs of € 1.97 million and book gains of € 6.33 million.

“From now on, we are refocusing our efforts to generating growth.The first step in this direction was taken with the acquisition of Inisys. Our goals are to facilitate an intensive know-how transfer between our subsidiaries in Austria and Italy, exploit cross-selling potential and cost synergies and further expand our partnership with Microsoft,” says Michael Hofer, outlining the strategic direction of the company. The cooperation is proceeding well, and the project pipeline in Austria is promising. BRAIN FORCE will position itself as the pre-eminent solutions provider for process and infrastructure optimization in all its national markets. “Our particular emphasis will be on smart consulting to reduce the IT and organizational costs of our customers. We expect this positioning to result in strong recognition of the BRAIN FORCE brand in the future as well as above-average revenue and earnings growth”, says Chief Executive Officer Hofer, optimistic about the Group’s future development.

3) Average number of employees (salaried and free-lance) during the period