Difficult business environment in the third quarter, as expected
As expected, the difficult economic environment and the holiday season had a negative impact on the earnings situation of BRAIN FORCE in the third quarter. Moreover, as of September 30, 2009, BRAIN FORCE closed its branch office in Berlin which had posted losses for many years. Revenues from continuing operations in the period July to September 2009 declined 27% to € 18.71 million. Operating EBITDA was down from € 1.80 to -0.99 million, and operating EBIT fell from € 0.87 to -1.88 million in the same period. Accordingly, Group revenues decreased by 20% in the short fiscal year 2009, to € 61.69 million. Adjusted for BRAIN FORCE Hamburg, sold in 2008, the organic revenue decline amounted to 17%.In the first nine months, the revenue decline of € 15.31 million could be partially compensated by tough cost reduction and restructuring measures. Operating EBITDA was down 80% to € 1.18 million and operating EBIT fell from € 3.00 to -1.50 million. “During the fiscal year 2009 non-recurring restructuring costs of € 1.38 million occurred from continuing operations. After restructuring, Group EBITDA totaled € -0.20 million and EBIT amounted to € -2.89 million”, says Chief Financial Officer Thomas Melzer, commenting on the preliminary results from continuing operations.
Consistent restructuring and closing of the Berlin branch office
“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. In addition to a series of consistently implemented cost cutting measures in our operating business and the transfer of the Austrian companies to a much cheaper office building, this includes tough restructuring measures in Italy, the closing of the Berlin branch office and short-time working in Germany”, says Günter Pridt, Member of the Management Board of the BRAIN FORCE Group, in describing the focal points of the optimization drive. On a Group-wide basis, 146 employees, or about 13% of the total staff, had to be dismissed. The holding company also succeeded in reducing costs by € 0.92 million in the short fiscal year 2009. In addition, a cash pool and a project to optimize working capital was implemented. In July, BRAIN FORCE also benefitted from an unexpected cash inflow amounting to about € 0.36 million (USD 0.50 million) from the sale of its KEMP stake in the USA, and the cancellation of the convertible bond. This resulted in a third-quarter book gain to the same amount, which is recognized in the financial result.BRAIN FORCE has a solid balance sheet structure and secured financing
“We have intensively worked together with our operational management and employees in recent months to restructure and optimize our product portfolio, in order to position the company to generate profitable growth again after the end of the economic crisis“, says Günter Pridt looking ahead. “Despite a net profit after tax of € -4.8 million including restructuring costs and discontinued operations, a positive cash flow from operating activities of about € 1 million was generated in the past financial year. As at September 30, 2009, BRAIN FORCE has sufficient cash of more than € 5.5 million at its disposal, net debt amounts to ca. € 5.6 million and the equity ratio declined only slightly from 36% to 35% compared to December 31, 2008. The company continues to boast a solid balance sheet structure and has no foreseeable financing shortfall”, Chief Financial Officer Thomas Melzer adds.Target for the 2009/10 financial year: positive operating results
Following the restructuring implemented in past months, the BRAIN FORCE management will change to a pro-active growth strategy in the new financial year. “We will also position ourselves now in Germany and Austria as the specialist for IT infrastructure optimization, particularly software packaging and the Windows 7 rollout, based on our Dutch product and service portfolio. We have already received a large software packaging order in Germany. In addition, we are developing a powerful business unit in Austria for ERP solutions on the basis of MS Dynamics NAV and AX, and are speeding up the expansion of our SolveDirect service management solutions on the U.S. market, after successively implementing several projects for a global producer of network solutions”, according to Michael Hofer, the successor to Günter Pridt as Chief Executive Officer, commenting on the strategic priorities of the BRAIN FORCE Group. “On the one hand we are expecting the order intake to slightly recover in the months ahead, on the other hand we are still facing a tough pricing environment. Through our restructuring efforts in the past nine months, we reduced the cost basis by about € 20 million compared to the 2008 financial year, in order to more effectively cope with lower Group revenues. In this way, we aim to generate positive operating results in the 2009/10 financial year”, Michael Hofer concludes.Preliminary results 2009 (short fiscal year)
Annual earnings data | 1-9/2009 | 1-9/2008 | Chg. % | 1-12/2008 | ||
| Revenues | € million | 61.69 | 77.00 | -20 | 104.51 | |
| EBITDA | € million | -0.20 | 5.94 | >100 | 8.19 | |
| Operating EBITDA1) | € million | 1.18 | 5.94 | -80 | 8.19 | |
| EBIT | € million | -2.89 | 3.00 | >100 | 4.30 | |
| Operating EBIT1) | € million | -1.50 | 3.00 | >100 | 4.30 | |
| Employees (average) | FTE | 1,034 | 1,136 | -9 | 1,153 | |
| Employees (ultimo) | FTE | 983 | 1,123 | -12 | 1,129 | |
Q3 earnings data | 7-9/2009 | 7-9/2008 | Chg. % | |||
| Revenues | € million | 18.71 | 25.61 | -27 | ||
| EBITDA | € million | -1.29 | 1.80 | >100 | ||
| Operating EBITDA1) | € million | -0.99 | 1.80 | >100 | ||
| EBIT | € million | -2.18 | 0.87 | >100 | ||
| Operating EBIT1) | € million | -1.88 | 0.87 | >100 |
Note:
The earnings data provided in the tables above represent results from continuing operations. The previous year’s figures differ from those reported in 2008 due to the closing of the company’s branch office in Berlin, which must be defined as a discontinued operation pursuant to IFRS.
1) Adjusted for non-recurring restructuring costs in 2009