Good corporate development in the first six months
In the first half of 2008 revenues of the BRAIN FORCE Group rose by 9% to EUR 52.26 million. SolveDirect, acquired in July 2007, contributed EUR 2.59 million to revenues, whereas organic growth was 4%. ”The higher revenues and above all the focus on our profitable, promising business areas also laid the groundwork for a significant improvement in earnings“, said Günter Pridt, Chief Executive Officer. Compared to the previous year EBITDA climbed 200% in the first six months of 2008 to EUR 3.90 million, whereas Group EBIT rose to EUR 1.86 million, compared to the negative operating result of EUR -10.74 million generated in the first half-year 2007, which included unscheduled write-offs amounting to EUR 9.29 million. Profit before tax in the first half of 2008 was EUR 1.44 million (H1 2007: EUR -10.95 million), and profit after tax reached EUR 0.86 million (H1 2007: EUR -10.69 million).
Strong performance in Germany and North Europe in H1 2008
“This good earnings development in the current financial year is chiefly related to the results generated in Germany and North Europe, two regions which significantly increased EBITDA and EBIT. The operating result in the Professional and Payroll Services segment in Austria also posted a considerable improvement”, CEO Günter Pridt explained. In contrast, the high expectations for the Service Management business area were not fulfilled, although there was a noticeable upturn in the second quarter. The operating performance of South West Europe remained below the previous year, which is due to further restructuring in the Technology and Infrastructure segment, as well as the initial invoicing of brand licensing costs from the holding company to the operational units.
Very good second quarter
During the second quarter total revenues of the BRAIN FORCE Group climbed 11% to EUR 26.93 million, and in terms of earnings development the second quarter of 2008 ranks among the most profitable periods in the company’s history. Double-digit growth was posted by the Region Central and Eastern Europe up 31% to EUR 4.07 million, South West Europe, which improved revenues by 10% to EUR 7.61 million, and North Europe, with revenues climbing 24% to EUR 2.94 million. Revenues in Germany rose 5% to EUR 12.31 million. “Beside top-line growth the increase in profitability was particularly pleasing,” commented Günter Pridt in pointing to the significant improvement. In the second quarter of 2008 EBITDA of the BRAIN FORCE Group amounted to EUR 2.28 million, which represents a rise of 150% compared to the previous year’s level of EUR 0.90 million. The Group’s EBIT also increased considerably to EUR 1.25 million, up from EUR -10.05 million in the second quarter of 2007.
Strong improvement of cash flow and optimised balance sheet
The cash flow from operating activities improved from EUR -1.87 million to 0.48 million in the first half of 2008. This development can be primarily attributed to higher earnings as well as increased prepayments received for future services. The cash flow from investing activities amounted to EUR -4.04 million, of which EUR -2.34 million related to earn-out payments in respect to the past acquisitions of SolveDirect, Austria and BRAIN FORCE B.V., Netherlands. A total of EUR 1.26 million was used for proprietary developments and other investments.
As of June 30, 2008 total equity of the BRAIN FORCE Group reached EUR 27.12 million and the equity ratio rose to 38%, up from 35% as at December 31, 2007. This improvement is chiefly related to the higher level of earnings. Net debt as at June 30, 2008 was EUR 9.62 million, up from EUR 6.53 million as at December 31, 2007. This increase is due to the payment of the earn-out components from previous periods. Gearing (proportion of net debt to equity) in the BRAIN FORCE Group equalled 35% at the balance sheet date of June 30, 2008.
Optimistic for the 2008 financial year
BRAIN FORCE is optimistic concerning the further development of operating results. “From today’s point of view, I can confirm our previous guidance envisioning Group revenues of at least EUR 100 million, an EBITDA of EUR 6 to 7 million and an EBIT of EUR 2 to 3 million. From an operational point of view, it is even likely that we will surpass these targets”, says an optimistic Günter Pridt. “However, we are not in a position to exclude the necessity of potential further restructuring measures and depreciation as a means of dealing with past burdens. A corresponding decision will first be made after the end of the third quarter“, CEO Pridt adds. On November 12, 2008 BRAIN FORCE will announce its preliminary results for the third quarter, and also provide a more specific outlook for the 2008 financial year and initial earnings guidance for 2009.
The detailed First Six Months 2008 Report is now available here for download.