Interview - Edouard Laurent, CFO, Bull Group
We follow the underlying trend which favours high centralisation
Can you give us the key facts and figures about your company?
Our company, which was founded early in the 1930s, now specialises in secure critical digital systems, with five high added value markets: simulation - for example, the Atomic Energy Commission uses our powerful systems to virtually reproduce nuclear explosions, - cloud computing, data centres, facility management and security. Bull’s key clients are in the tertiary sector, with nearly one third of the revenue, ahead of banks and insurance companies. Our turnover, roughly 1.3bn euros, stems from France for about 50% and for about 30% in the other European countries, though the company, with a headcount of about 9,000, is present in fifty countries with a hundred or so subsidiaries. Bull, with a capital of about 400m euros, is listed in section B (mid-caps) of the Euronext Paris stock exchange.
What organisational model does the Treasury follow?
We follow the current underlying trend which favours a high centralisation of operations. All our French subsidiaries as well as the majority of Western European ones are involved in a daily process of automatic centralisation of their cash reserves with the Group’s parent company. The other subsidiaries regularly transfer their available excess cash to the parent company. Moreover, we limit the peripheral flows towards the centre thanks to large scale netting. Centralisation is also the golden rule concerning financing and investments, subject to local regulatory constraints.
What type of funding do you use?
Our corporate funding is ensured by a factoring programme that complies with the balance top-up process. This programme, with an average exposure of about a hundred million euros, is de-consolidated and concerns all of our French trade debt obligations as well as part of our Belgian ones. At the same time we have a loan with a union of five key financial institutions, with a five-year maturity period, which we negotiated in January, 2011. We have used 35 out of the 50m euros that this variable rate loan represents. This loan is not hedged by market operations because of the amount of our investments which naturally serves as a hedge against the risk of higher interest rates.
Did the economic crisis make the cost of guarantees more expensive, something that your profession often uses?
From our point of view, the trend we have seen in the past few years points to price stability, at least if we are talking about countries that are not weathering a critical economic or financial situation.
And for investments, what is at stake here and what products do you use?
Our investment exposure hovers in a range of 100 to 200m euros depending on the seasonality of our activity. Part of these liquid assets are safely invested in money market funds in four different trust companies after the 2007 public tender carried out with Bfinance Consulting. The remaining amount is invested in fixed-term deposits or accounts where we can always access the funds within forty-eight hours. These supports have allowed us to have more attractive yields than those paid by money market funds over the past few quarters.
You said that the interest rate risk was not hedged. What about the other risks?
We have to manage a large exchange rate risk because, in our sector, many purchases are paid for in dollars. We decided to consult a specialised company, Forex Finance, in this field, which supports us in defining our annual strategies and ensures valorisation of our portfolios as well as reporting in the field of IFRS standards.
How did you tackle the end of Etebac and the changeover to European payment methods?
Concerning bank communication, in 2011 we chose SWIFTNet, in our corporate service: the subsidiaries are also progressively rolling this out. As for SEPA, we had anticipated the change by a very early compliance with our IT systems. And we were right here, because this was a very time-consuming process, especially as we had made the choice to update our suppliers’ contact information ourselves. Today all the direct French wire transfers comply with the European format, and the subsidiaries are gradually changing over to SEPA when they use the shared inter-bank communication tool.
What is the size of your Treasury department?
The department that I manage is composed of four people including myself. It is a part of a much bigger department, the Finance and Treasury division that is managed by Eric Duchêne.
Can you tell us a bit about your education and professional background?
I did a technical Bachelor’s Degree at University Paris XIII in Villetaneuse followed by a Master’s Degree in management at the Paris I Panthéon-Sorbonne University. I began working in accounting for my first job, in the company in which I currently work for. I started working in the Treasury department in the back office, and became our Group Treasury Manager in 2007.