1)       H1 2009-2010: activity down 17% in like-for-like structural terms

Inbox (VSE) division below expectations / IT Solutions (SME) division sees growth of 8%

Over the first half-year of its new 2009/2010 financial year, from 1 July 2009 to 31 December 2009, Risc Group generated revenue of €33.6m, down 16.6% compared to the same period of the previous year.

Notes:

1)     These figures take into account any adjustments linked to the application of IFRS standards over each period;

2)    To recap:

-         The Inbox division covers the business with VSEs – 5 to 100 IT positions – and performs its activity in France and Europe;

-         The IT Solutions division's activity represents sales to SMEs, with more than 100 IT positions, and is conducted by Risc Group IT Solutions (ex Ornis), Backup Avenue and monDSI in France and Risc Group IT Solutions UK (ex Clunk Click) in the UK.

This UK company was part of the Inbox division the previous year.

Comments on Activity:

Overall, compared to the same period the previous year, activity has seen a sharp drop in the Inbox division, down 32%, while the IT Solutions division has witnessed growth of 8%.

Inbox

After a first quarter which saw a 23% downturn, the Inbox division published overall activity during the second quarter down 38%.

Abroad, after an already disappointing first quarter, fundamental restructuring measures were taken so as to reduce areas of loss.

Thus the German and Italian subsidiaries which had not achieved their sales targets for the past 18 months, were lain dormant over the second quarter, and will restrict their activity to managing and renewing their customer bases. Staff numbers at both of these subsidiaries were cut as a result. Similarly, the Spanish subsidiary, which has suffered seriously from the crisis since the first quarter of 2009-2010, reduced to three its number of sales outlets (compared to five previously). Belgium also suffered over the half-year, with a 20% drop in activity.

In France, the delay recorded comes both from the economic climate which remains unfavourable to VSE markets, and from insufficient commercial productivity. Management undertook a substantial restructuring plan regarding the financial balance in the Inbox France division, the aim of which is to give priority to quality over quantity (see point 2).

IT Solutions

Despite the difficulties encountered in the quest for new contracts, the IT Solutions division has been able to make progress, relying on the recurring nature of its contracts, with overall growth of 8%, of which 6% in France, which represents 94% of the division's revenue.

However, the IT Solutions division must improve its commercial productivity, specifically in terms of its existing base. To do so, a widespread infrastructure optimisation program has been implemented to improve the quality of service provided to customers.

2)       The restructuring plan for the group's financial balance

Restructuring of the Inbox division's foreign subsidiaries, loss-making for over 12 months, was launched over the second half-year from July to December 2009 (see point 1 above), with an overall reduction of some 190 staff.

In France, the financial balance restructuring plan will entail the creation of a job security plan which was approved by the Board of Directors today.

This plan, presented today to the Works Council, schedules the complete removal of 146 positions in France.

3)       A new strategy for the group

After an in-depth general review of all subsidiaries, Risc Group's new management team has now outlined the main thrust of its new strategy.

Risc Group's current activity is to be specialised by occupation, around four main divisions:

-         Risc Group is to become the publisher of the BACKUPIA backup software package, a new version of which will be marketed during 2010, while continuing to perform its support functions on behalf of its subsidiaries.

-         Risc Group IT Solutions (ex Ornis) will see its occupation evolve towards Vertical Cloud Computing, gradually taking over SAAS management of investments held by STS Group in its digital confidence platforms, which are to date operational in around ten countries. The digital security range marketed by Risc Group will enhance the digital confidence range already offered by these platforms, and will make Risc Group IT Solutions the leading world-wide operator in this sector.

Thanks to recurring revenues of some €30m, showing steady growth of around 10% per year, Risc Group IT Solutions will apply for quotation on the NYSE Euronext Marché libre at the end of March 2010, with the aim of obtaining its transfer to the NYSE Euronext ALTERNEXT market by the end of 2010. This transaction will be accompanied by the opening of its capital to one or more industrial partners, with Risc Group continuing to hold a majority share in the capital of Risc Group IT Solutions.

-         The Inbox activity, which markets digital backup and security solutions based on a direct sales model, will become a subsidiary during 2010. This operation may be followed by the opening of its capital to industrial partners who wish to market their solutions to Inbox customers, a division which already has 25,000 contracts (with Risc Group continuing to hold a majority share).

-         Backup Avenue will pool the activities of monDSI (Risc Group's historical activity in the SAAS domain) and Risc Group IT Solutions UK in England (ex Clunk Click) so as to develop its SAAS digital security and confidence range in its partner network, which already boasts around one hundred distributors.

This strategic repositioning of Risc Group is based specifically on the creation of a restructuring plan of its major financial balance, implementation of which will occur over the first calendar half-year 2010.

Given the restructuring measures already taken at the end of 2009, Risc Group's total staff will drop from 653 at 30 June 2009 to around 320 employees.

Once this major balance restructuring plan has ended, the new management's aim is to publish a positive operating result for every legal entity within Risc Group.

At this time, Bernard Calvignac, Chief Executive Officer, stated that:

"As a new shareholder, we wanted to examine in details Risc Group's activities, in order to strengthen our first impressions. This analysis has taken up all of our time since our arrival in the Board of Directors, and allowed us to draw two conclusions.

The first is about the necessary restructuring plan, which was already launched by the previous management team, and which, however painful it may be, is essential in order to return to a more flexible structure, which is better adapted to the economic climate. Our aim will be to move towards better quality and less quantity, with a demand for profitability rather than growth which is too fast. Quality is set to become the watchword at Risc, and the first to benefit from this will be the group's customers as a whole. To this end, a group quality department has now been created.

The second is about  the relevance of potential synergies between Risc and STS in the 'Vertical Cloud Computing' domain.

On the one hand, Risc Inbox will provide accelerated distribution potential for all the group's products, while STS will contribute to Backupia's performance improvement thanks to its publishing know-how.

On the other, STS will provide Risc Group IT Solutions with the development potential of its Joint Ventures in digital confidence, while Risc Group IT Solutions will supply these Joint Ventures with its operational services and managed infrastructures.

We will go into more depth regarding this strategic positioning when the half-yearly results are published on 18 March 2010."

Risc Group reminds readers that the half-yearly results to 31 December 2009 will be published on Thursday 18 March 2010 before stock-market opening, and that half-yearly financial information from 1 July to 31 December 2009 will be available on the group's website on Thursday 18 March 2010 after stock-market closing.