Shareholders
Press Release
Paris, 18 March 2010
2009 Annual results
Encouraging initial results of the strategic plan
Withdrawal from Italy
The board of directors of the GFI Informatique Group, at its meeting of 17 March 2010 chaired by Vincent Rouaix, approved the consolidated financial statements for 2009, as presented in the Annex.
The financial statements reflect the strategic repositioning plan launched under the direction of the new chairman. Undertaken since his appointment in May 2009, the plan’s aim is to position the group in a higher value-added segment of the market in the medium term and to help it withstand the crisis which has hit the IT services sector in Europe.
A new phase in this plan was achieved yesterday with the Chairman’s announcement to the Board of the signing of the sale of the Group’s Italian operations. Concluded with an Italian industrial firm, this divested business delivered revenues of €41 million.
In application of IFRS 5, the Group’s German and Italian subsidiaries, which were sold in March 2010, are recorded in the financial statements as "operations held for sale". The consolidated financial statements have been audited and the report of certification will be issued after the procedures for publishing the annual financial report have been finalised.
1Annual sales before applying IFRS 5 totaled 726.4 million euros in 2009 and 768.1 million euros in 2008.
2Operating profit from continuing operations before amortisation of intangible assets associated with purchase price allocation.
Commenting on these results, Vincent Rouaix, Chairman and CEO of GFI Informatique, stated: “The strategic reorientation plan presented last July is proceeding as planned. The divestments we wished to make in Germany and Italy have been accomplished. The sectoral reorganisation and managerial reinforcement are now completed and are generating the first concreter commercial results. In an economic context that remains challenging, the Group will continue with the implementation of its plan with a view to improving its margins and playing an active role in the consolidation of its market”.
A YEAR OF PROFOUND CHANGE
The implementation of its strategic plan has resulted in just a few months in the repositioning of the Group’s operations in France and generated encouraging initial sales results.
Internationally, the Group has decided to concentrate on markets in which it can rapidly build synergies with its French base and gain market share. This strategy led the Group to sell its non-strategic operations in Germany and Italy. These subsidiaries had suffered severely from the crisis in 2009, and their contribution to the earnings of the Group were small or negative.
STRONG RESILIENCE IN OPERATING PROFITS
In 2009, GFI Informatique, like the rest of the IT sector, suffered the effects of the financial crisis. Despite this unfavourable economic climate, the Group showed resilience in its strategic markets. The decline in revenues was -2.7% (-6.7% organically), and operating profit from continuing operations came to 5% of revenues.
Before applying IFRS 5 (i.e., including operations in Germany and Italy), the decline in revenues came to -5.4 % (-9.0% organically) and adjusted operating profit from continuing operations was 4%, justifying the policy of disengagement pursued by the Group.
France
Sales in France held reasonably firm, and the decline in revenues (-5.5%) was in line with the market average. With more than €486 million in revenues and €23,0 million in operating profit from continuing operations before overhead and €19,1 afterwards, France provided a solid base for the Group.
The reorganisation of French operations, which repositioned the Group’s offerings based on a sectoral approach, has been well received both internally and by customers. This perception is confirmed by recent marketing successes – the French Ministry of Justice, STX, Bouygues Telecom, EDF, BPCE – and by partnerships signed with Temenos and Clear2Pay in the banking sector and Microsoft for editing in the public sector.
In the earnings statement, all income and expenses are combined in a single line: “profit from operations in the procès of being sold.” A reconciliation table for the 2007 and 2008 financial years is provided in the appendix.
International
Although revenues in Spain declined by 7.5% to €70.8 million, operating profit from continuing operations showed strong resistance given the local economic environment, at €2.8 million.
Revenues in Portugal increased by 4.8% thanks to strong sales in electronic banking, with revenues of €32 million generating operating profit from continuing operations of €0.2 million. Sales at Belux fell by 9.1% to €16.8 million, with operating profit from continuing operations of €0.5 million.
Sales in Canada recovered during the second half, with revenues of €52 million. This represented growth of 43.7%, although revenues declined by 26.9 in organic terms after including the acquisitions of Bell and Fortsum. Operating profit from continuing operations represented 12% of revenues, or €6.3 million.
Morocco, also affected by the crisis, nevertheless registered continued organic growth (+7.2%), with revenues of €4.5 million and operating profit from continuing operations of €0.8 million.
Operations sold: Germany and Italy
Sales in Germany and Italy declined by 12% and 33% respectively compared to the preceding year. Applying IFRS 5, these operations, which were sold in March 2010, are treated as discontinued operations in the financial statements for 31 December 2009.
The income figures for the discontinued operations include the capital loss on the sales.
For Germany, the income from the discontinued operations totalled €-9.3 million, most of which was the capital loss on the sale. The sale generated receipts of €5.2 million in cash for shares, current account and net cash in the company.
For Italy, the income from the operations sold totalled €-42.0 million. This figure included net earnings for the year, which registered a large loss (€-10 million), depreciation of goodwill (€-20.2 million), and provisions for additional losses including recapitalisation before sale (€-3.5 million).
The review of the financial statements of GFI Italy resulted in adjustments to the financial statements for 2006, 2007 and 2008 amounting to €2.9 million, €3.3 million and €0.3 million respectively. In accordance with IAS 8, these corrections, essentially the result of erroneous advances to suppliers, have been made retrospectively.
Heavy non-operating expenses
The Group incurred €29.3 million in non-operating expenses, consisting essentially of €9.0 million in restructuring costs principally concerning France and Spain, €6.2 million in depreciation of Spanish goodwill reflecting the local economic situation, €3.7 million to settle disputes with the company Engineering, and €9.8 million in recovery of sales tax by the government. This longstanding dispute with the government was strongly contested by the Company, but as a matter of prudence, provisions were constituted when the government began the process of collection.
Control of net debt
On 31 December 2009, net debt stood at €95 million, a figure in line with the level on 31 Decembr 2008 but considerably below the level on 30 June 2009.
Net cash flows generated by operations increased strongly to €47.7 million, compared to €33.4 in the previous year, thanks to a strong improvement in working capital requirements. Investments accounted for nearly €10 million, the acquisition of Fortsum in Canada accounted for €20,2 million, and dividend payments accounted for €11.9 million.
ENCOURAGING OUTLOOK DESPITE AN ENVIRONMENT THAT WILL REMAIN CHALLENGING IN 2010
Revenues in 2010 should continue to be affected by the difficult economic climate, particularly in the first half. Despite this unfavourable environment, the Group should begin to benefit from the reorganisation carried out in 2009, and expects to strengthen its market position with higher value-added offerings in France and abroad.
While remaining cautious about the outlook, the Group has set itself the goal of improving profitability in 2010, while continuing to reduce its debt so that it can take advantage of opportunities for acquisitions that may appear.
As part of the cost control programme initiated in 2009, the Company will consolidate its seven Paris facilities at a single site in Saint-Ouen during the summer of 2010. This move will also accelerate the achievement of internal synergies by mobilising teams around a unifying development programme that should be very promising for our customers.
About GFI Informatique
GFI is a major player in the IT services sector in Southern Europe, offering five strategic services: consulting, ERP integration, engineering, infrastructures and production, and software solutions. The Group maintains 11 skills centres, two national service centres and three 3 off-shore centres.
GFI Informatique is listed on Euronext Paris and NYSE Euronext (Compartment C)
ISIN code: FR0004038099.
Investor relations |
Economic and financial press relations |
Cyril MALHER |
Alix Heriard Dubreuil |
Appendices
P/L (IFRS 5 presentation)
Balance sheet (IFRS 5 presentation)
Cash Flows Statement (IFRS 5 presentation)
P/L reconciliation with IFRS 5 and IAS 8 application
Balance Sheet reconciliation with IAS 8 and IFRS 5
