The third quarter was still characterized by the difficult economic environment, similar to the previous six months. While several industries achieved perceptible increases in their order intake in recent months, at best the situation with respect to the business areas of the BRAIN FORCE GROUP can be described as stabilization at a low level. “Our operating revenue and earnings development continues to be adversely affected by low proceeds from license sales and price pressure in the service business. For this reason, we determinedly continued with the implementation of the previously-announced restructuring measures in the third quarter, in order to quickly and sustainably improve the company’s operating performance. Because of the book gains derived from the strategic transactions concluded in the first quarter, we can report clearly positive earnings in the first nine months of our fiscal year despite high restructuring costs”, says Michael Hofer, Chief Executive Officer of BRAIN FORCE HOLDING AG.
Group revenues in the third quarter were down 21% to € 16.57 million. Operating EBIT (before non-recurring expenses and income) fell from € -0.01 to -0.41 million. Accordingly, total Group revenues in the first three quarters of the 2009/10 financial year declined by 23%, to € 53.97 million. Adjusted for the already-mentioned transactions, the organic revenue drop in the first nine months was 18%. Due to weak license sales, ongoing price pressure and the partial under-utilization of salaried IT consultants, particularly in Germany and the Netherlands, the operating EBITDA of the BRAIN FORCE Group decreased from € 4.42 to 1.14 million, and operating EBIT from € 1.67 to -1.09 million. “However, it is important to note that BRAIN FORCE had not yet been impacted by the economic crisis in the first quarter of the previous financial year (October to December 2008), and succeeded in generating record earnings at that time”, Michael Hofer adds.
Restructuring costs of € 1.82 million have been incurred in the current financial year, which were significantly overcompensated by the book gain of € 2.47 million derived from the sale of the Professional Services business in Austria and the realization of hidden reserves of € 3.86 million within the context of the initial at-equity consolidation of SolveDirect. “In total the BRAIN FORCE Group generated an EBITDA of € 5.65 million, an EBIT of € 3.42 million and a net profit of € 1.71 million in the first nine months”, says Thomas Melzer, Chief Financial Officer of BRAIN FORCE HOLDING AG in summarizing the company’s overall performance.
In order to effectively counteract the significant revenue decline, the number of salaried employees was reduced by about 200 people (or about 30% of total staff) between the end of 2008 and June 2010. In turn, this will lead to a decrease in personnel expenses of approximately € 10 million annually. Additional savings were realized by short-time working in Germany as well as a downward adjustment in the number of free-lance employees and all other cost items. “These were painful but necessary measures to put the company on a sound financial basis with respect to costs”, Thomas Melzer explains.
In the 2009/10 financial year, BRAIN FORCE continues to expect Group revenues of about € 70 million and a clearly positive EBIT, taking into account non-recurring restructuring costs of € 1.82 million and book gains of € 6.33 million. “From today’s perspective, we anticipate a more favorable economic environment starting in September and an upswing in business after the summer holiday months of July and August. From that point in time the BRAIN FORCE Group should be able to generate sustainably positive operating results due to its considerably streamlined cost structure”, CEO Michael Hofer concludes.
The detailed Report on the 3rd quarter of 2009/10 is now available for downloading here.
Earnings data 1) | Oct. 2009 to | Oct. 2008 to | Chg.% | |
Revenues | € million | 53.97 | 70.49 | -23 |
EBITDA | € million | 5.65 | 3.35 | +69 |
Operating EBITDA 2) | € million | 1.14 | 4.42 | -74 |
EBIT | € million | 3.42 | 0.59 | >100 |
Operating EBIT 2) | € million | -1.09 | 1.67 | >100 |
Profit before tax | € million | 1.76 | -0.53 | >100 |
Profit before tax | € million | 1.89 | -4.30 | >100 |
Employees 3) | 800 | 1,085 | -26 |
Balance sheet data | 30.6.2010 | 30.9.2009 | Chg.% | |
Equity | € million | 21.02 | 19.31 | +9 |
Net debt | € million | 8.67 | 5.65 | +54 |
Working capital | € million | 3.74 | 2.83 | +32 |
| Equity ratio | % | 39 | 35 | - |
Gearing | % | 41 | 29 | - |
1) Earnings data refers to results from continuing operations
2) Adjusted for non-recurring expenses and income
3) Average number of employees (salaried and free-lance) during the period