CS first half 2008 results


Strong revenues growth in France : +10.5%
Operating margin affected by two particular events :
. Exceptional marketing & sales investments on international markets
. Excess costs due to delays on a U.S. project
Return to profitability expected for second half 2008


The CS Board Meeting, held on August 29, 2008 and chaired by Mr. Yazid Sabeg, approved the Company financial statements for first half 2008.

First half 2008 results

Sans titre

€million

H1 2007*

2007

H1 2008

Revenues

110,3

225,4

114,7

Operating margin
% of revenues

7,9
7.2%

13,6
6,1%

-1,2
-1.1%

Operating income

7.8

13,1

-1.3

Before-tax income from ongoing operations
% of revenues

5,9
5.3%

9,8
4.4%

-3.0
-2.6%

Net income from discontinued operations

-4.6

37.8

0.3

Net income, CS Group share

1.9

49.9

-2.2


The CS group reported consolidated revenues of €114.7 for first half 2008, with organic growth at 4% (4.2% like-to-like) from year ago level. In France, revenues were up 10.5% at €88.5 million. Abroad, revenues (integrating the export part of French companies) were €26.2 million, representing 23% of total revenues and showing a dynamic trend of export businesses (+10%).

Thanks to a great increase (+27%) in new orders in the second quarter, total order intakes reached €114.4 million during first half, bringing the book-to-bill ratio to 1 and the backlog to almost 16 months of revenues. This evolution confirmed the Group good performances on its markets.

The Group performances on H1 were affected by two exceptional events leading to a deterioration of the operating margin. Actually, during this period, the Group made significant marketing & sales efforts for large-scale export projects. Moreover, negotiations for excess costs delays in a U.S. project did not comeoff as of June 30th.

As already announced in first half 2008 revenues publication, H1 operating margin was therefore affected by these events. It accounted for €–1.2 million, –1.1% of revenues, compared to € 5.7 million (5% of revenues) for last semester.

Taking into account the financial income of € -1.7 million (€ -1.9 million for H1 2007), the impact of differed taxes and the income of discontinued operations (€ 0.3 million), the net income (CS Group share) was €-2.2 million in H1 2008, compared to € 1.9 million for H1 2007.
The €0.4 million cash flow (compared to €10.2 million proforma H1 2007), along with change in the Working Capital Requirements (€+16.4 million) and net disbursements on financing activities of € 2.4 million, generated a negative Free Cash-flow of € 18.7 million.

The net cash was €+36.8 million at June 30, 2008, compared to € 27.2 million at June 30, 2007, excluding borrowings over and under one year (respectively € 17.2 million and € 18.3 million).

The WCR was positive with €6.5 million compared to €3.9 million in H1 2007. The gearing was -22% compared to –42% on December 31, 2007.

At June 30, 2008, consolidated shareholder equity amounted to € 88.9 million.

Information by geographic zone :

French companies

Sans titre

€ million

H1 2007*

2007

H1 2008

Revenues

97.9

202.0

108.1

Operating margin
% of revenues

7.3
7.5%

13.0
6.4%

2.1
2.0%


In France, H1-2008 Grouprevenues strongly increased by 10% to €88.5 million. The export part of Frenchcompanies increased as well by 10%. The French companies operating margin wasimpacted by important marketing & sales effort abroad.



Foreign companies



Sans titre

€ million

H1 2007*

2007

H1 2008

Revenues

12.4

23.3

6.5

Operating margin
% of revenues

0.6
4.6%

0.6
2.8%

-3.4
NA


Foreign companies' global performances were penalized by the U.S.subsidiary results in terms of revenues (€ -5.1 million) as well as interms of operating margin (€ -4.1 million). This was linked to thealready mentioned U.S. project, despite steady operating margins from other foreign subsidiaries.  



Outlook :



The performances of first half 2008 are not representative of  the underlying  trendsguiding the evolution of the group. For H2 2008, the Group expects toreap the rewards of its marketing and sales efforts abroad, andforecasts to restore a positive operating margin.




"CSreaffirms its positioning as prime contractor for large missioncritical systems and its strategic will of international development.The very favorable reception from large international clients showedthe relevance of CS offer for which significant marketing & salesefforts were made by the Group this half year. During this second half,we will focus on converting these sales investmentsinto large-scale projects. At the same time, we are adapting ourinternal operating processes to the new company profile in order toensure the structural improvement of our operating margin." DeclaresEric Blanc-Garin, CS Chief Executive Officer.

*2007 H1 figures restated to take into account the divestment of the IT infrastructure division, in compliance with IFRS 5



CS (CEO, Éric Blanc-Garin) is a major player in the design, integration and operation of mission critical systems. CS is listed on the Euronext Paris stock market - Compartment B – and is part of the CAC Small 90, CAC Mid&Small 190 and SBF 250 indices (Shares: Euroclear 7896 / ISIN FR 0007317813).
For more information: www.c-s.fr

Press relations
CS Communication & Systèmes
Barbara Goarant
Tel.: +33 (0)1 41 28 46 94

Investor relations
CS Communication & Systèmes
Hugues Rougier
Tel.: +33 (0)1 41 28 44 44