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 and Czech Republic, announced its financial figures today for the first half of 2009. As expected, the difficult business environment negatively impacted the earnings situation of BRAIN FORCE in the second quarter of 2009. In the period April to June 2009, Group revenues were down 21% to € 21.27 million. Operating EBITDA fell by 71% to € 0.65 million, and operating EBIT deteriorated to € -0.24 million, compared to € 1.25 million in the previous year. Accordingly, Group revenues contracted by 17% during the first six months of 2009 to € 43.56 million. Adjusted for BRAIN FORCE Hamburg, sold in 2008, the organic revenue decline was 14%.

Consistent implementation of cost reduction and restructuring measures

In the first half-year 2009, the revenue decline of € 8.71 million could be partially cushioned by tough cost savings and restructuring measures. Operating EBITDA was down 52% or € 2.04 million to € 1.85 million, and operating EBIT fell from € 1.86 million to € 0.02 million. “A total of € 1.08 million was recognized as non-recurring restructuring costs for the dismissal of employees during the first six months of 2009. After restructuring Group EBITDA amounted to € 0.78 million and EBIT totaled € -1.06 million in the first half of 2009. The financial result improved by 23% to € -0.33 million due to the optimization of inter-company financing and the reduction of working capital. The profit before tax amounted to € -1.38 million (previous year: € 1.44 million), and the profit after tax totaled € -1.60 million, compared to € 0.86 million in the first six months of 2008,” says Chief Financial Officer Thomas Melzer in commenting on the results presented today.

The targeted measures were not able to fully compensate for the revenue decline. Accordingly, BRAIN FORCE will report a negative operating EBIT in the short financial year ending September 30, 2009. In addition to the restructuring costs of € 1.08 million to date, an additional € 1.40 million may be required in the third quarter, corresponding to the total potential restructuring costs mentioned in the May report on the first quarter. Depending on impending decisions, the financial statements for the BRAIN FORCE Group as at September 30, 2009 will report an EBIT including restructuring costs of about € -4 million. It is important to note that the missing fourth quarter usually makes a significant earnings contribution to the entire year.

Clearly positive cash flow based on working capital project

“In expectation of a difficult market environment, we initiated measures at an early stage to guide the company relatively unscathed through the recessionary year 2009. This includes a series of consistently implemented measures to cut operating costs, the transfer of the Austrian companies to a much cheaper location, tough restructuring measures in Italy and short-time working in Germany,” says Günter Pridt, Chief Executive Officer of the BRAIN FORCE Group in describing the company’s strategy. On a Group-wide basis, 109 employees, or about 10% of the total staff, had to be dismissed. The Management Board of the BRAIN FORCE Group and the managing directors of the national subsidiaries have voluntarily accepted an approximately 10 to 15% cut in their fixed remuneration in order to send a clear signal regarding the necessity of reducing the cost basis. In addition, the holding company succeeded in reducing costs by € 0.65 million in the first half of 2009.

“At the same time, we initiated a Group-wide cash pooling system which significantly reduced interest expenses, and also implemented a project designed to optimize working capital within the Group. The positive impact of these measures is reflected in the cash flow from operating activities, which amounted to € 1.42 million in the second quarter or € 0.45 million for the first half of 2009 despite the negative earnings”, CFO Thomas Melzer adds in commenting on the successful projects. In addition, BRAIN FORCE also benefitted from an unexpected cash inflow amounting to about € 0.36 million (USD 0.50 million) from the sale of its stake in KEMP in the USA and the cancellation of the convertible bond in July. This will result in a book gain to the same amount, which will be recognized in the financial result for the third quarter.

BRAIN FORCE has a solid balance sheet structure and secured financing

“I confidently look ahead to the future thanks to the measures which have been implemented and the fact that the management and employees of the BRAIN FORCE Group are working efficiently together to pursue our business strategy. Nevertheless, we will have to continue adjusting to a difficult price level, even if demand does improve slightly in the months ahead,” according to CEO Günter Pridt. “BRAIN FORCE has a solid balance sheet structure and no foreseeable financing shortfall at the present time. Even in the difficult 2009 financial year, we have further improved our offerings in the Infrastructure Optimization and Business Solutions segments. Based on our tailor-made solutions we will further focus on deploying the IT resources of our customers in an optimal manner. Our declared goal is to position BRAIN FORCE to generate growth again after the end of the economic crisis”, he concludes.

The detailed First Six Months 2009 Report is now available for downloading here.

1) adjusted for non-recurring restructuring costs of € 1.08 million in 2009