ACADEMIA

Revenues for the first half of 2007 totaled EUR550.2 million, representing a fall of 1.6% compared with the published figure for the same period in 2006. Nevertheless, at comparable structure, revenues grew by 4.6%. Gross margin was EUR135.1 million, representing 24.6% of revenues, versus with EUR141.3 million, or 25.3% of revenues for the same period in the previous year. EBIT (see glossary) was EUR9.5 million, representing 1.7% of revenues. This compares with the published EBIT figure for the first half of 2006, of EUR9.3 million. Operating profit was EUR7.2 million, versus a loss of EUR2.8 million published for the same period in the previous year. Bull recorded net income of EUR4.5 million, up 15%. Commenting on these results, Didier Lamouche, Bull's Chairman and CEO, said: "In the first half of this year, the growth in our revenues at comparable structure, and the fact that we have maintained a good level of operating profit, reflect the continuing benefits of the action plan we launched in the second half of 2006." "We are continuing to refocus our portfolio of activities with, on the one hand, the sale of our Portuguese subsidiary whose offering no longer fitted with our strategic priorities, and on the other hand, the acquisition of the Spanish IT services company Siconet, whose skills and customer base will significantly strengthen our Services business. In the area of infrastructure solutions, we fundamentally overhauled our product range during the first six months of 2007: a move that puts us in a favorable position for the coming business quarters." Financial results for the first six months of 2007 Unless otherwise indicated, year-on-year comparisons are made between equivalent six-month periods and on the basis of a comparable structure. Consolidated revenues at comparable structure up 4.6% to EUR550.2 million, versus EUR525.8 million for the same period in 2006; the published figure for the first six months of 2006 was EUR559.2 million. Revenues from the Group's three main business activities - Services and Solutions, Maintenance, and Products - either grew or remained stable. The acquisitions made by the Group in 2006 contributed to revenue growth to the extent of 1.3 points. At comparable structure, revenues from Services and Solutions grew by 13.5%, while those from the Maintenance business increased by 3.2%. The Group's Services and Solutions business posted growth of 13.5 %, still above the market trend, with revenues of EUR173 million at their highest level since 2003. The Maintenance business, which recorded growth of 3.8% in Q1, continued its progress in Q2. Overall the increase in revenues from Maintenance was 3.2% across the first six months of 2007, confirming that the Group's actions taken in 2006 - to introduce a new worldwide organization and differentiating offerings - were appropriate. At comparable structure, revenues from Products activities remained stable versus the first half of 2006, with growth of 2.9% recorded in Q2 2007. Revenues from the Products business in the first half of 2007 remained stable, at EUR257 million, whereas they were in decline both in the first six months of 2006 (in comparison with the first half of 2005) and in the second half of 2006 (compared with the same period in 2005). Gross margin of EUR135.1 million, representing 24.6% of revenues, is 0.7 percentage points lower than the published figure for the same period in 2006, due to a changing Products/Services business mix. The strong growth (+13,5%) of the services and solutions activity, of which the margin rate is 11,2%, and the stability of the products activity, of which the margin rate is 32,0%, explain the 0.7 point fall in gross margin. It is worth noting that Services and Solutions margins improved by 0.8 point in the first half of 2007 compared with the same period in 2006. EBIT (see glossary) of EUR9.5 million, representing 1.7% of revenues, while the published figure for 2006 was EUR9.3 million. Selling, general and administrative expenses - expressed as a percentage of revenues - fell by 0.7 percentage points, to EUR102.3 million as against the figure of EUR108.0 million published in 2006. R&D expenses fell slightly from the figure of EUR24.1 million published for the first half of 2006, to EUR 23.0 million for H1 2007. EBIT (see glossary) was EUR9.5 million, compared with the EUR9.3 million published for the first six months of 2006. Operating profit was EUR7.2 million, compared with the operating loss of EUR2.8 million published for the same period in 2006. Net income was EUR4.5 million, representing a 15% increase on the figure published for H1 2006. Net income includes products and non-recurring operational expenses of EUR4.1 million, consisting mainly of the capital gain realized on the sale of Bull Portugal and a capital gain on the sale of shares in Arkoon. Net income also includes a restructuring charge of EUR6.4 million intended to help the Group in continuing to reduce its cost base. The increase in net financial charges compared with 2006 is explained by a reduction in deposit notes, which have been partly replaced since November 2006 by OPCVM notes. Fair value adjustments regarding these notes at the end of June 2007 amount to approximately EUR1.7 million in shareholders' equity. Group net cash (see glossary) stood at EUR189 million, as at 30 June 2007. The unfavorable change in working capital requirements during the period, which was anticipated, led to a negative operating cashflow of EUR15.5 million. The working capital increase reflects most notably costs on a systems integration contract in the US for which the payment will not be forthcoming until 2008, on the one hand, and on the other by the partial delivery of a High-Performance Computing (HPC) contract in France. During the same period, non-recurring items linked to acquisitions and restructuring costs resulted in cash outflow of EUR20.7 million. As at the end of June 2007, gross cash (see glossary) stood at EUR286.1 million, and net cash (see glossary) at EUR189.0 million. Key highlights from the first six months of 2007 Bull focused resolutely on pursuing its strategy during the first half of 2007, combining the very best in IT services and open technologies, bringing together open servers, its in-depth expertise in complex infrastructures and business-critical applications, High-Performance Computing (HPC) and Open Source. Servers: major innovations delivering better performance for lower energy consumption In the enterprise server market, Bull launched new and innovative technologies that consume less energy and reduce CO2 emissions, while at the same time delivering improved performance, particularly with the introduction of new-generation Intel quad-core processors into its NovaScale range of servers, bringing a noticeable improvement in performance-per-watt ratios. Bull also launched the NovaScale R422 server for HPC applications, featuring exceptional computing density that ensures optimum use of space and power utilization, contributing to sustainability. In addition, Bull enhanced its fault-tolerant NovaScale Microsoft Windows server offering and introduced the first Escala servers equipped with the new POWER6 processor, designed in partnership with IBM to support data center applications. Finally, Bull once again proved its extensive expertise in Business Intelligence infrastructure solutions, by delivering the industry's best price/performance ratio with a Bull NovaScale server running Microsoft SQL Server 2005. Services: further success in business-critical applications and complex infrastructures Bull confirmed its desire to grow its services business aggressively in specific segments and growth markets. In line with this move, Bull announced the acquisition of the Spanish IT services company Siconet, which specializes in consulting, systems integration, software development and technical support. In France, Bull along with its partners, was chosen by the French Finance Ministry's financial information technology agency (AIFE) to carry out development work for the Chorus program - the State's future financial management application - and maintain the system in an operational condition; in one of the largest infrastructure services and national security tenders ever awarded. Chorus will handle government budget expenditures, non-tax receipts and accounting functions. It will be deployed in all the French government's centralized and local administrative organizations by the year 2010. In the US, Bull further strengthened its position as the number one supplier of Business Intelligence services to public healthcare services, after the State of California chose Bull BI solutions to support its Medicaid program. With this new contract, Bull BI solutions now help to manage Medicaid programs that cover one in four Medicaid recipients in the US (some 15 million people) and account for more than a third of all Medicaid spending (Source: Kaiser Commission on Medicaid Services). Finally, Bull announced that it had signed an agreement with the government of Morocco to create a dedicated offshore services center at the Casashore offshoring park. The new center will be dedicated to prime contractor and integration projects in the telecoms sector, as well as to e-government projects: activities where Bull Morocco can capitalize on a number of recent success stories to become a market leader. New successes and new partnerships confirm Bull's breakthrough in High-Performance Computing High-Performance Computing (HPC) remains one of the Group's strategic areas for growth. In the area of scientific research, Bull and the University of Dusseldorf announced a two-year collaboration to mark the deployment of a NovaScale supercomputer at the University's Center of Information and Communication Technologies (ZIM). The cooperative venture will involve the design of future HPC systems in the areas of visualization technologies, software components and HPC clustering technologies. In addition, the German federal scientific computing network D-Grid will also now feature a Bull supercomputer, to be hosted at the Leibniz University in Hanover. Its computing power will be available to higher education and research centers throughout Germany. In industry, Bull supercomputers have been chosen by Quadrics for the new HPC center at Alenia Aeronautica, a subsidiary of the Finmeccanica group, as well as by Alcan, who chose its new Bull HPC infrastructure for its scalable power, small footprint and reduced electrical power consumption. Strengthening its partnerships in HPC technologies, Bull announced the creation of TALOS (Technologies for Advanced Large Scale Open Supercomputing), in partnership with the French Atomic Energy Commission (CEA), the German National High-Performance Computing Center (HLRS), Intel and Quadrics. The aim of TALOS is to accelerate the development of HPC solutions in Europe. Bull is also a key member of the ParMA consortium (Parallel Programming for Multi-core Architectures), which brings together major industry players and research centers specializing in HPC in Germany, Spain, France and the UK. ParMA's main objective is to help the HPC community make the most of the rapid evolution in processors, by developing innovative, flexible and open technologies that capitalize on all the benefits of multi-core architectures. Open Source dynamic consolidated During the first half of 2007, Bull once again demonstrated its capabilities in innovative Open Source software development, capitalizing on its own pool of experts in this area as well as the global network of partnerships it has succeeded in building. At the Linux Solutions event in Paris, Bull launched NovaForge, an innovative collaborative software development platform, based on Open Source, designed to reduce the development workload and reduce risks, in order to optimize the management of project timescales, improve the quality of the software being delivered and make it easier for the various players involved to buy into the project. Bull also agreed a technological and commercial partnership with SpikeSource, a leading supplier of enterprise Open Source solutions, with the aim of jointly accelerating the adoption of Open Source applications by business. Finally, in order to support the development of local players in the IT industry (including SMEs, software publishers, and major systems integrators and manufacturers), Bull has joined forces with major players in Europe, China and Brazil to launch QualiPSo, a 'quality platform' dedicated to the development of Open Source software: a key driver for growth and competitiveness in their respective industries. QualiPSO is now the largest Open Source initiative funded by the European Community. Outlook The Group confirms that its EBIT (see glossary) for the 2007 financial year is expected to be between EUR 20 million and EUR 24 million, as announced in February 2007. The key factors for achieving this objective will be to continue to stabilize the Maintenance business, to improve margins in Services, and to grow the sales of open servers. Glossary: Clause de Retour a Meilleure Fortune (CRMF) or profit sharing agreement: In return for the forgiveness of a shareholder's loan, Bull agreed in 2004 to pay annually to the French State a portion of pre-tax profits (EBT) between 2005 and 2012 on condition that (i) EBT for the year is at least EUR10 million; (ii) operating cashflow for the year after restructuring payments exceeds EUR10 million; (iii) shareholders' equity does not fall below EUR10 million by application of the clause. If any of these conditions are not met, no payment is due for that period. Please refer to Bull's annual report for a full description of the CRMF. 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: 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.