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, was well prepared when it entered the expected difficult 2009 financial year, following the record results the company achieved in 2008. Nevertheless, the Group is not immune to the negative effects of the global financial and economic crisis, posting a decline in revenues and earnings in the first three months of 2009. “However, we began early to counteract the significantly deteriorating market situation by consistently taking advantage of savings potentials”, says Günter Pridt, Chief Executive Officer of the BRAIN FORCE Group.

Positive operating result despite restructuring costs

In the first quarter of 2009, Group revenues decreased by 12% to € 22.29 million. EBITDA amounted to € 1.05 million, a drop of 35% from the previous year, and EBIT fell from € 0.61 million to € 0.11 million. The operating result of the first three months includes restructuring costs totaling € 0.15 million. All Group companies were subject to the revenue and earnings decrease, which can be attributed to customer restraint in respect to IT investments manifested at the beginning of the year. “In the light of the particularly difficult economic situation in Germany, the 14% EBIT decline of our largest geographical segment to € 0.52 million was kept within reasonable limits. Within the context of considerably weakened demand, the operating result generated in Italy (South West Europe segment) was also relatively good, decreasing by 17% to € 0.46 million. In contrast, Central East Europe posted a negative operating result of € -0.40 million (previous year: € -0.02 million) due to missing license sales. Despite a 24% drop in revenues, our subsidiary in the Netherlands (North Europe segment) still managed to generate a slightly positive EBIT of € 0.02 million, down from € 0.32 million in the first quarter of the preceding year”, says Chief Financial Officer Thomas Melzer in explaining the figures presented today.

Slightly negative profit after tax in the first quarter

Due to the optimization of internal financing processes, the financial result improved slightly from € -0.17 to -0.15 million. As a result, profit before tax amounted to € -0.04 million, down from € +0.16 million in the previous year. Profit after tax totaled € -0.33 million, down from € +0.16 million in the comparable period of 2008. The corresponding earnings per share for the first quarter of 2009 amounted to € -0.02 per share (previous year: € +0.01).

Persistent cost savings and further restructuring depending on market situation

In expectation of a difficult market environment, the management of the BRAIN FORCE Group 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 current operating costs as well as the relocation of the Austrian companies to more favorably priced offices. Ongoing capacity adjustments with subcontractors are enabling the company to partially compensate for revenue declines. “We also set up a Group-wide cash pool for the purpose of internal liquidity equalization, and launched a project to optimize working capital in the BRAIN FORCE Group. In addition, we developed scenarios together with our local management directors featuring short-time work and as a final resort a downsizing of staff depending on the further development of revenues in the course of 2009. From today’s perspective, restructuring costs ranging between € 0.7 and 2.5 million will be required in the second and third quarters of the 2009 financial year“, explains Günter Pridt in describing the planned measures.

Target for 2009: positive operating result

The management of the BRAIN FORCE Group confidently looks ahead to the future thanks to the restructuring and optimization of Group operations implemented in 2007 and 2008, but still has to continue adjusting to a difficult market environment in the coming quarters. “BRAIN FORCE boasts a solid balance sheet structure and has no foreseeable financing shortfalls from today’s point of view, even in respect to the implementation of the planned restructuring measures“, says Thomas Melzer. For this reason, the Group’s target continues to be the achievement of a positive operating result (excluding restructuring costs), and to position the company to generate long-term growth after the end of the economic crisis. “In the current financial year we will focus on sustainably improving the cost structure of the BRAIN FORCE Group and optimizing the cash flow from operating activities. And we will assist our customers to efficiently deploy their IT resources by developing tailor-made solutions”, CEO Günter Pridt concludes.

The report on the first quarter of 2009 is available here for downloading.