BRAIN FORCE reports significant revenue and earnings improvement in Q1/2008 BRAIN FORCE

27.05.2008

BRAIN FORCE reports significant revenue and earnings improvement in Q1/2008

The performance of BRAIN FORCE Holding AG in the first quarter 2008 represents a further important step towards a turnaround. The company posted revenues of EUR 25.33 million, an increase of 8% year-on-year despite the restructuring measures initiated in the fall of 2007 (Q1 2007: EUR 23.56 million). Group EBITDA (operating result before depreciation and amortisation) rose to EUR 1.62 million, up more than 300% from the previous year?s level of EUR 0.40 million. BRAIN FORCE converted the negative EBIT of EUR ?0.69 million in the previous year to a positive EBIT of EUR 0.61 million in the first quarter of 2008. As a result, the EBIT margin rose 5 percentage points, improving from -3% to over +2%. Profit after tax amounted to EUR 159,129, up from EUR ?1.17 million in Q1 2007. This corresponds to earnings per share of EUR 0.01 (previous year: EUR ?0.08).

From a regional perspective, it is important to note the considerable improvement in the profitability of BRAIN FORCE in Germany, the core market of the Group. German revenues totalled EUR 11.77 million in the first quarter 2008 (up +6% year-on-year; 46% of Group sales), whereas revenues of the Region Central and Eastern Europe, including Austria, amounted to EUR 3.66 million (+23%), or 14% of Group sales. However, the profitability of this region was negatively impacted by the weak performance of SolveDirect, acquired by BRAIN FORCE in 2007, whose earnings were significantly below expectations. The Region South West Europe (including Italy) developed as planned, posting EUR 6.99 million in revenues (-4% year-on-year due to the give-up of low-margin areas), contributing 28% of the Group total. The development of the Region North Europe was also very favourable, with revenues climbing by 29%, to EUR 2.92 million, or a 12% share of group sales.

?The new strategy focusing on profitable business areas is beginning to bear fruit, and we are on the right track to demonstrate the success of our turnaround efforts in the current financial year. This has been demonstrated by our performance in the first quarter 2008?, says Günter Pridt, Chief Executive Officer of BRAIN FORCE Holding AG, in commenting on the results presented today.

BRAIN FORCE continues to have a sound balance sheet structure as at March 31, 2008. Total equity amounted to EUR 26.43 million, virtually unchanged compared to the end of 2007. Net debt was EUR 7.34 million, which represents a gearing (proportion of net debt to equity) of only 28%.

Thomas Melzer, Chief Financial Officer of BRAIN FORCE since April 2008, agrees with the assessment of his fellow board member. ?Earnings development and the current balance sheet are a solid basis upon which to grow the company. Employees and management know their targets. Everyone is pulling in the same direction to improve the profitability of the company on a lasting basis?.

For the year 2008 as a whole, the Managing Board continues to expect revenues in excess of EUR 100 million, as well as an EBIT of EUR 2 to 3 million. ?From today?s perspective, these goals seem to be quite realistic, and I am confident we will achieve them. However, I would like to point out that we will have to carry out a series of further optimisation measures at SolveDirect in order to sustainably ensure the ambitious medium-term business planning. Otherwise we run the risk that we will have to implement extraordinary write-offs for this subsidiary due to the high acquisition costs and the resulting balance sheet values?.

The detailed quarterly report is now available at Investors where you can also find information on tomorrow?s Annual General Meeting of BRAIN FORCE Holding AG.

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