PARIS, February 15 /PRNewswire-FirstCall/ -- Full-year 2007 financial highlights:
PARIS, February 15 /PRNewswire-FirstCall/ — Full-year 2007 financial highlights:
– Consolidated revenues of EUR1,117.0 million, an increase of 2.6% at comparable structure(1) compared to 2006, including 14.7% growth in Services activities, 2% growth in the Maintenance business and a 5% decline in Products
– Gross margin of EUR275.3 million, representing 24.7% of revenues, 0.1 percentage point lower than 2006; gross margin for the Services business improved by 1.9 points as a result of improvement initiatives, particularly in France
– EBIT (see glossary) of EUR25.0 million, ahead of target
– Operating profit of EUR9.9 million, including provisions for restructuring intended to support the group's continued transformation; this compares with a loss of (EUR16.5) million in 2006
– Net income, at EUR4.6 million, compares with a net loss (group share) of (EUR17.1) million in 2006
– Group net cash (see glossary) of EUR192.5 million at 31 December 2007; a positive operating cashflow of EUR2 million
Outlook: Thanks to the group's good sales performance in the fourth quarter of 2007, backlog increased at the end of 2007. Nevertheless, because of the current uncertainties in the macro-economic environment, the group has a target EBIT (see glossary) of between EUR23 million and EUR27 million for the 2008 financial year. Starting with the announcement of its first quarter revenues for 2008, Bull plans to adopt a new segmentation of its business activities, in order to better reflect the group and its offerings.
Financial highlights for Q4 2007(2):
– Consolidated revenues EUR323.4 million, representing a slight fall of 0.8% at comparable structure(3), with 14.8% growth in Services activities
Bull – the expert in open, flexible and secure information systems and one of Europe's leading players in the IT industry – today announces its full-year results for 2007. Bull's Board of Directors (Euronext Paris: BULL approved the consolidated accounts for the financial year ended 31 December 2007.
Full-year revenues for 2007 were EUR1,117.0 million, representing 2.6% growth compared with 2006 at comparable structure(1). Published revenues for 2006 were EUR1,146.5 million; the recast of these figures concerns the group's Italian and Portuguese subsidiaries, sold in Q4 2006 and Q2 2007 respectively. The contribution to revenues from companies acquired during the course of 2007 was EUR29.6 million. Gross margin was EUR275.3 million, or 24.7% of revenues, compared with EUR284 million or 24.8% of revenues in the previous year. EBIT (see glossary) was EUR25.0 million, an increase of 27% compared with 2006. EBIT was also ahead of the target published in February 2007 and subsequently updated in October 2007. Net income was EUR4.6 million. This includes, in particular, provisions aimed on the one hand at supporting the group's continued transformation program, and on the other, at capitalizing on the significant improvements already made during 2006. In 2006, group share of net income was a loss of (EUR17.1) million.
Didier Lamouche, Bull Chairman and CEO, comments: "We have achieved our key objective for 2007 which was to deliver EBIT in excess of EUR22 million. This performance was the result of maintaining our established positions in our infrastructure-related businesses and significant operational improvements in our Services activities in France."
"We set ourselves three operational goals at the start of 2007. First, the recovery of our Maintenance business – which this year has recorded a growth in revenues for the first time in many years. Secondly, in our Products business, we confirmed our leading position in the High-Performance Computing (HPC) market, both through our successes in sales and our acquisition of Serviware. In addition, our partnership with IBM, with whom we have already been collaborating for more than 15 years, was enhanced in the area of open UNIX(R) servers. As a result, this is one of the longest collaborative alliances in our industry. And finally, in the Services business we have continued – for a number of quarters – to record growth rates well ahead of the market, in line with our strategy. The fundamental actions we have taken to improve the profitability of this part of the business have already resulted in an improvement of almost 2 percentage points in the gross margin."
Financial results for 2007
Year-on-year comparisons have been made with the figures published for the 2006 financial year, except where specifically indicated, in which case they have been made at comparable structure(1). The latter excludes the contributions made by the Italian and Portuguese businesses, sold in Q4 2006 and Q2 2007 respectively.
Order intake grew by 7.4% compared with 2006, with a marked acceleration in the second half of the year, when orders taken were 20.1% higher than for the same period in 2006. Orders relating to Services activities recorded a significant rise, with 16.9% for the year (+39.5% in the second half and +48% in Q4). Orders related to the Product business saw a slight fall of 4.4% for 2007, despite an improvement in the second half of the year: orders for this part of the business grew by 1.2% over the whole of the second half and by 8% in Q4 (unaudited figures).
Consolidated revenues were EUR1,117.0 million, 2.6% higher than in 2006 at comparable structure(1) with a 14.7% increase in the Services business, 2.0% growth in Maintenance activities, and a slight fall in the Products business
The Services business continued to grow at a significantly higher rate than the market, recording revenues of EUR386.1 million, representing a 14.7% increase for 2007 at comparable structure(1). Revenues for the Products business were EUR493.3 million, a 5% fall at comparable structure(1), as a result of the slow-down in sales of the UNIX(R) range of services, despite a positive turnaround in Q4. However, continued good sales performances for our proprietary GCOS systems on the one hand, and the dynamic growth of the new Bull HPC (High-Performance Computing) offerings (further strengthened during the course of the second half by the acquisition of Serviware) on the other, had a positive impact on revenues.
For its part, the Maintenance business recorded revenues of EUR237.6 million, representing a growth rate of 2% at comparable structure(1) compared with 2006. This recovery confirms the relevance of the actions taken over the past two years – most notably the establishment of a centralized organization structure, replication of best practices and development of new, differentiated offerings.
Geographic breakdown of consolidated revenues for 2007 showed little change. France's contribution to overall revenues increased slightly, to 47.7%. Western Europe (excluding France), fell to 26.8%, reflecting the disposal of the Italian and Portuguese businesses. Eastern and Central Europe fell slightly to 7.5%, while the USA remained stable at 5.0%. South America accounted for 3.8% of revenues: stable in terms of absolute value, and representing a slight fall in overall percentage of revenues. Finally, the rest of the world grew to 9.0% of revenues, thanks to a strong sales performance in North Africa and the Middle East.
Gross margin was EUR275.3 million, or 24.7% of revenues, representing a fall of 0.1 percentage points compared with 2006. Gross margin in the Services business improved by 1.9 percentage points as a result of actions taken, particularly in France. Improvements in margin were even more noticeable in the second half of the year, with a 2.1 percentage point increase
Gross margin for the Services business was 13% in the second half of 2007, representing an increase of 2.1 percentage points compared with the published figure for the same period in 2006. Over the whole financial year it improved by 1.9 percentage points compared with the published figure for 2006. This performance is the result of the program of fundamental actions launched two years ago, focused particularly in France, where the annual average utilization rate in Services reached 79% in 2007, a 2 point improvement compared with 2006. Gross margin in the Products business was EUR159.4 million, or 32.3% of revenues: a fall of 0.3 percentage points compared with 2006. Cost reduction initiatives undertaken in the second half of the year resulted in an improvement to 32.8%, compared with a margin of 31.5% recorded for Products in the second half of 2006. In 2007, the gross margin in the Maintenance business improved from 28.3% to 28.4%, as a result of specific initiatives undertaken by a dedicated team since Q1 2006. These actions have resulted both in an improvement in the margin for activities linked to the installed base of proprietary servers, on the one hand, and on the other, an extension of the offering with the launch of new value-added services.
EBIT (see glossary) was EUR25.0 million, higher than the target first published in February 2007 and subsequently updated in October 2007
EBIT of EUR25.0 million for 2007 compares with the EUR19.7 million recorded in 2006, representing a 27% improvement. This is an increase both in absolute value and in percentage of revenues, with lower Selling, General and Administrative costs contributing to this improvement.
The latter were EUR205.3 million for 2007, or 18.4% of revenues, compared with EUR217.7 million, or 19.0% of revenues, in 2006. General and Administrative costs fell sharply, by 10.3 % between 2006 and 2007. As for R&D expenditure, this represented 4.0% of revenues in 2007; the same percentage as in 2006.
Operating profit of EUR9.9 million includes provisions for the continued restructuring and transformation of the group, and compares with a loss of (EUR16.5) million in 2006
Operating profits take into account provisions for restructuring, as well as the impact of the disposals of Bull Portugal and Maine CI, the sale of the latter having been finalized at the beginning of 2008.
Net income of EUR4.6 million compares with a loss of (EUR17.1) million in 2006 (group share)
Net income for 2007 includes net financing costs of (EUR2.4) million, as well as a taxation charge of (EUR2.9) million.
Group net cash (see glossary) stood at EUR192.5 million at 31 December 2007; with a positive operating cashflow of EUR2 million over the year
Operating cash inflow for 2007 was EUR2 million, despite a EUR23.7 million increase in working capital requirements and investments totalling EUR16.9 million, a result of the growth in Services activities. This growth consumes working capital, particularly contracts billed under time-and-materials arrangements and certain large-scale systems integration projects in France and the USA where customer payments are only obtained at the end of the project. Over the same period, non-recurring items generated a cash outflow of (EUR34.6) million including, most notably, acquisition costs of (EUR18.4) million and restructuring costs of (EUR14.4) million.
The gross cash balance (see glossary) increased by EUR17.2 million compared with December 2006, to stand at EUR332.2 million.
Following the crisis in the financial markets in summer 2007, the majority of cash investments in dynamic OPCVM funds were sold over the course of the second half of the year, to be replaced by higher yielding banking investments. These sales enabled the group to record a significant capital gain for the 2007 financial year.
Fourth quarter revenues for 2007(2)
Revenues, which fell slightly by -0.8% at comparable structure(3), were EUR323.4 million, with a 14.8% increase in the Services business
Revenues at comparable structure(3) fell slightly. Sales of Bull products, particularly those linked to the Group's strategic HPC and storage offerings grew during the quarter. The 11.3% fall in revenues from Products compared with the same period in 2006 is largely explained by the anticipated fall in sales of third-party products, the result of a deliberate refocusing of the sales force from the middle of the year towards higher added value Bull offerings. The increase in revenues from Services activities was once again outstanding (+14.8% at comparable structure(3)), confirming the successful delivery of the growth strategy for this part of the business. Revenues from the Maintenance business increased by 2.7% compared with the same period in 2006 at comparable structure(3), again proving that the actions taken to support the recovery of these activities since 2006 were appropriate and successful.
Group financial position
The group's financial position remains healthy. The cash picture demonstrates marked seasonal variations, as it has in previous years. The end of December traditionally marks a high point in terms of cash held, mirroring the changes in revenues, which are unevenly distributed across the two quarters in the second half of the year. Performance in terms of debt recovery was especially good, with accelerated collections of around EUR20 million.
The Group now employs 7,775 staff: 37% of employees have been with the company for less than three years
This change highlights the rapid transformation that Bull is currently undergoing. During 2007, Bull recruited 1,021 people, in line with its plans. Amongst these new recruits, 395 were in France, helping to strengthen the group's skills in order to meet its customers' changing needs and reducing the average cost of resources.
Key highlights in the second half of 2007(4)
In 2007, Bull speeded up its commercial development and further strengthened its offerings in its major target areas for growth.
So, for example, in the area of High-Performance Computing (HPC), the performance and competitiveness of the solutions designed and integrated by Bull are now recognized by over 100 customers in 15 countries, across three continents and in all the main market sectors: confirming the success of the strategy set in motion by the Group only four years previously. In 2007, Bull solutions were chosen by numerous university research centers in France, Germany and Brazil. And towards the end of the year Bull was selected by Cardiff University – one of the leading research centers in the UK – to provide an HPC solution to support a range of advanced research projects, enabling researchers to tackle problems of prodigious size and complexity. In October, Bull announced the acquisition of Serviware – the leading French HPC solutions integrator. In R&D, Bull strengthened its partnerships with numerous industrial companies and university research centers, notably with the launch of the POPS (or Peta-Operations Per Second) project, aimed at developing the next generation of intensive computing applications, designed to run on the very large, Petaflop-scale computers of the future.
In order to ensure that its platforms are versatile in terms of the choice of microprocessor, Bull has chosen to focus its investment on Intel's Quickpath technology. This will enable Bull to design and build a platform capable of incorporating both Intel's microprocessor technologies: Itanium(R) and Xeon(R). This means customers will be free to select whichever microprocessor they prefer, independent of the platform: giving Bull's systems a competitive edge.
In Open Source – an area where Bull has been a pioneer and achieved high recognition among the global community – the Group strengthened its NovaForge(TM) offering: an innovative shared development platform based on Open Source. JonAS 5, a new-generation application server designed for critical applications, has been unveiled, having been developed as part of the Group's work within the OW2 consortium. Bull has also been heavily involved in the launch of the QualiPSo consortium, as one of the founder members. The consortium brings together major IT industry players, small to medium-sized enterprises, government institutions and European, Brazilian and Asian research establishments. The objective of QualiPSo is to design and deploy the technologies, processes and policies to facilitate the development and utilization of Open Source components.
Bull has also strengthened its ability to deliver major systems integration contracts: a further affirmation of Bull's positioning and its offerings. The State of California has chosen Bull to deploy a comprehensive Business Intelligence solution designed to help more efficiently manage Medicaid, the healthcare program, confirming Bull's positioning as the nations leading BI solution provider in the public sector health and human space. The Group has been chosen by the French State financial IT agency (AIFE) to supply infrastructure and security solutions for the Chorus program, the French government's future financial management application. Finally, as part of the Group's move to reposition itself as offering high added-value systems integration for complex solutions, Bull has announced that the Australian Post Office has chosen its subsidiary AVI – a leading provider of postal automation solutions – to upgrade its address recognition and mail automation capabilities for processing the country's letter mail.
Starting with the announcement of its Q1 2008 revenues, Bull plans to adopt a new segmentation of its business activities
To better reflect its current business activities, Bull is planning to adopt a new segmentation, which describes its offerings more effectively, in line with the criteria set by the market in which it operates.
The new 'Services and Solutions' segment, will incorporate all the activities related to the services business: consulting, systems integration and outsourcing services, application licenses for Bull and third-party products, and IT security and sector-specific software solutions. This way of presenting the services and solutions activities will bring Bull in line with other companies operating in the same sector.
A new 'Hardware & Systems Solutions' segment reflects the company's evolution away from being simply a manufacturer to being the architect of integrated solutions. It will cover integrated solutions based on Bull technologies and/or servers (GCOS, Escala and NovaScale), including the company's growth offerings in HPC (High-Performance Computing) and storage. Revenues from Bull hardware provided as part of systems integration contracts will continue to be recorded by this business segment.
The 'Fulfillment & Other Products' segment will cover IT and computing items produced by third parties – not forming part of the Bull catalogue – but sold by Bull to meet its customers' demands. This non-strategic offering is considered necessary in order to optimize customer relations. Isolating this business in its own dedicated segment should make it easier to understand.
And finally, the 'Maintenance & Product Related Services (PRS)' segment will continue to be where maintenance activities relating to both Bull and third-party products is recorded.
As Didier Lamouche emphasizes: "In operational terms, 2007 saw the ramp-up in our growth offerings such as HPC, and our efforts to improve margins in the Services business bear fruit. At the strategic level, we are aggressively continuing our repositioning by on the one hand divesting ourselves of non-strategic businesses in Portugal and France, and on the other through the acquisitions of Siconet and Serviware, both destined to enhance our strategic offerings. Benefiting from the resulting synergies, we should succeed in doubling the revenues from Bull's HPC offering in the coming twelve months. We will continue the process of transforming the Group in this way throughout 2008."
Outlook: Target for Group EBIT set at between EUR23 million and EUR27 million for 2008
Thanks to the Group's good sales performance in the fourth quarter of 2007, backlog increased at the end of 2007. Nevertheless, taking into account the current uncertainties in the macro-economic climate, the Group is setting its target EBIT for the 2008 financial year at between EUR23 million and EUR27 million with the target for the second half of the year being higher than for the first half. The key success factors when it comes to achieving these objectives will be to continue to improve margins in Services and grow the sales of integrated products, such as High-Performance Computing and storage.
EBIT: Earnings before Interest and Taxes, non-operating and non-recurring items and contribution of equity affiliates.
Gross cash: Cash and cash equivalents including marketable securities available for sale, deposits and guarantees.
Net cash: Gross cash minus financial debt.
Financial debt: Financing linked to receivables sold with recourse, bank loans and bonds.
Capital expenditure: Acquisition of assets by Bull for its own account or for the account of customers of managed services.
About Bull, Architect of an Open World(TM)
As one of the leading European IT companies, Bull delivers open, flexible and secure information systems. The group helps public and private sector customers transform their information systems, applying its know-how and expertise in three main areas:
– Capitalizing on its extensive mainframe experience, Bull designs and produces robust, innovative and open servers, based on industry-standard technologies;
– Building on its alliances with leading ISVs and long-standing involvement with Open Source, Bull develops and implements flexible and interoperable application infrastructures which give business processes the freedom to evolve;
– Bringing together recognized expertise in end-to-end IT security, Bull secures data and exchanges that are so critical in preserving customers' business integrity.
Bull has a particularly strong presence in the public, healthcare, finance, telecommunications, manufacturing and defense sectors. Its distribution network and business partners cover more than 60 countries worldwide.
For more information visit: http://www.bull.com
This Press release includes and is based, inter alia, on forward-looking information and statements that are subject to risks and uncertainties that could cause expected results to differ.
Although Bull believes that its expectations and the information in this Press release were based upon reasonable assumptions at the time when they were made, it can give no assurance that those expectations will be achieved or that the expected results will be as set out in this Press release. Neither Bull nor any other company within the Bull Group is making any representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the information in the Press release, and neither Bull, any other company within the Bull Group nor any of their directors, officers or employees will have any liability to you or any other persons resulting from your use of the information in the Press release.
Full year 2007 key figures: Income statement EUR millions 2006 2007 published figures Revenue, of which 1,146.5 100% 1,117.0 100% Products* 539.6 47.1% 493.3 44.2% Maintenance* 247.2 21.6% 237.6 21.3% Services* 359.7 31.4% 386.1 34.6% Gross margin, of which 284.0 24.8% 275.3 24.7% Products** 175.8 32.6% 159.4 32.3% Maintenance** 69.9 28.3% 67.5 28.4% Services** 38.2 10.6% 48.4 12.5% EBIT (see glossary) 19.7 1.7% 25.0 2.2% Operating profit (16.5) (1.4%) 9.9 0.8% Net income (groupe share) (17.1) (1.5%) 4.6 0.4%
* percentages express the revenues for each segment as a proportion of consolidated revenue
** percentages express the rate of gross margin for each segment (gross margin for the segment compared with the revenues for the segment)
Numbers may not add up to 100% due to rounding. Cashflow EUR millions 2006 2007 published figures EBIT 19.7 25.0 Depreciation 19.5 21.8 Variation in 14.8 (23.7) working capital Capital expenditure (21.0) (16.9) Financial expenses (1.7) (1.3) Taxes paid (2.8) (2.9) Cashflow from 28.5 2.0 operations Capital receipts (35.1) (34.6) Gross cash position 315.0 332.2 Net cash position 225.1 192.5 Geographic split of revenues EUR millions 2006 2007 published figures France 531 46.3% 533 47.7% Western Europe (excluding France) 350 30.4% 300 26.9% Eastern and Central Europe 93 8.1% 84 7.5% USA 57 5.0% 56 5.0% South America 43 4.2% 43 3.8% Rest of the World 75 6.5% 100 9.0% Total 1,147 100% 1,117 100% Second half of 2007 key figures: Income statement EUR millions Second half of 2006 Second half of published figures 2007 Revenue, of which 587.4 100% 566.8 100% Products* 274.8 46.8% 241.4 42.6% Maintenance* 123.5 21.0% 117.2 20.7% Services* 189.0 32.2% 208.2 36.7% Gross margin, of which 142.7 24.3% 140.3 24.8% Products** 86.5 31.5% 79.2 32.8% Maintenance** 35.6 28.9% 34.0 29.0% Services** 20.5 10.9% 27.2 13.0% EBIT (see glossary) 10.4 1.8% 15.5 2.7%
* percentages express the revenues for each segment as a proportion of consolidated revenue
** percentages express the rate of gross margin for each segment (gross margin for the segment compared with the revenues for the segment)
Numbers may not add up to 100% due to rounding. Q4 2007 key figures (unaudited) EUR millions Q4 2006 Q4 2007 Published figures Revenues, of which 336.4 100% 323.4 100% Products 170.5 50.6% 148.2 45.8% Maintenance 62.3 18.5% 60.8 18.8% Services 103.7 30.8% 114.4 35.4%
Numbers may not add up to 100% due to rounding.
(1) Comparable structure: Figures for 2006 have been recast to exclude its Italian business (divested in Q4 2006) and its Portuguese subsidiary (divested in Q2 2007). The contribution to revenue from companies acquired in 2007 is EUR29.6 million.
(2) Quarterly figures are unaudited
(3) Comparable structure: The figures for Q4 2007 have been recast to account for the effect of the sales of the Italian and Portuguese businesses. The contribution to revenue from companies acquired in 2007 is EUR15.9 million in Q4 2007 (unaudited figures).
(4) Unaudited data Investor Relations contacts: Bull: Peter Campbell Tel: +33-1-30-80-32-36 email@example.com Financial Dynamics: Laurence Borbalan / Valery Lepinette Tel: +33-1-47-03-68-10 firstname.lastname@example.org email@example.com Press contacts: Bull: Anne Marie Jourdain Tel: +33-1-30-80-32-52 firstname.lastname@example.org Financial Dynamics: Tiphaine Bannelier / Elodie Marchand Tel: +33-1-47-03-68-10 email@example.com / firstname.lastname@example.org