BRAIN FORCE HOLDING AG (Vienna Stock Exchange: BFC, Reuters: BFC.VI), a leading IT service company with business operations in Austria, Germany, Switzerland, Italy, Netherlands and the Czech Republic, published its consolidated financial statements for 2008 today, confirming the preliminary results already announced on February 10, 2009. BRAIN FORCE can look back at one of the most successful years in its corporate history.

Record revenues and best operational performance

Group revenues surpassed the EUR 100 million threshold for the first time, increasing 8% to EUR 106.21 million. In particular, the operational performance was outstanding. EBITDA amounted to EUR 7.79 million in 2008, compared to EUR 0.35 million in 2007. EBIT improved to EUR 3.83 million, up from a loss of EUR 16.68 million reported in the restructuring year 2007. “We outperformed our own guidance forecasting an EBIT of EUR 2 to 3 million, and achieved the highest operating results in the 25 year history of BRAIN FORCE”, says BRAIN FORCE CEO Günter Pridt.

All national subsidiaries achieved significant growth

In Germany, the company’s largest market, revenues climbed 10% to EUR 51.25 million, with EBIT up to EUR +2.47 million from EUR –11.51 million in the previous year. BRAIN FORCE generated revenue growth of 5% in Central East Europe, to EUR 15.48 million, and also succeeded in achieving a positive EBIT of EUR 0.50 million, compared to EUR -0.18 million in the preceding year. North Europe improved considerably, posting a 17% rise in revenues to EUR 11.06 million, with EBIT climbing to EUR +0.40 million following a loss of EUR -1.74 million in 2007. BRAIN FORCE increased revenues in South West Europe by 4% to EUR 28.42 million and EBIT from EUR 0.86 to 1.07 million. “After the restructuring year 2007, all national subsidiaries generated very solid results”, adds Günter Pridt.

Strong improvement in operating cash flow and high level of cash

“It must be particularly emphasized that the Group’s cash flow from operating activities improved from EUR -2.02 to +6.28 million, enabling the company to reduce net debt from EUR 6.53 to 4.89 million as at December 31, 2008”, says Thomas Melzer, BRAIN FORCE CFO. At the reporting date, the balance sheet total was EUR 66.31 million, Group equity amounted to EUR 24.15 million, and the equity ratio improved from 35 to 36% year-on-year. Cash and cash equivalents at December 31, 2008 amounted to EUR 8.80 million, and gearing (ratio of net debt to equity) was reduced from 25 to 20%. “All indicators show that BRAIN FORCE is economically successful and has a healthy balance sheet”, according to Thomas Melzer.

One-off non-cash effects burden net result

Despite the good operational performance, the Group had to report a negative profit after tax for the 2008 financial year of EUR -2.10 million, which can be attributed to two non-recurring effects. For one thing, the convertible bond of Kemp Technologies Inc. (New York) which the previous managing board had subscribed to, was completely written off, burdening the financial result to the amount of EUR 0.63 million. On the other hand, following an amendment to Germany’s Corporate Tax Law, the tax loss carry-forwards for the German subsidiary were eliminated after the takeover of BRAIN FORCE by BF Informationstechnologie-Beteiligungsgesellschaft m.b.H. (BFIB), thus requiring the company to increase deferred tax expenses by EUR 2.90 million. “Both steps are not cash-effective, and thus can be relatively easily managed. Also our financing has not been negatively impacted, and is secured”, explains CFO Thomas Melzer. The Management Board will propose to the Annual General Meeting on May 14, 2009 that no dividend be distributed for the 2008 financial year, in order to ensure that sufficient liquidity is available to implement the Group’s business strategy.

Difficult economic conditions expected throughout 2009

The general uncertainty in respect to future economic developments in the upcoming quarters is clearly obvious. BRAIN FORCE anticipates a very difficult business environment. Therefore the company is preparing for a decline in revenues in all national subsidiaries on the basis of persistent cost optimization, and has initiated further restructuring measures. “Currently it is not possible to make a serious forecast regarding the development of revenues and operating results of BRAIN FORCE in2009. However, we are well positioned and have no financing shortfall at present. Our target is to achieve positive operating results in 2009 and position the Group to generate long-term growth. In 2009 we will primarily concentrate on optimizing the operating cash flow”, concludes CEO Günter Pridt.

BRAIN FORCE key figures for 2008

¹⁾ Cash flow from operating activities less cash flow from investing activities plus acquisitions

²⁾ Including payments with own shares

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

⁴⁾ FFO = Funds from Operations = Gross cash flow