Atos Se · EURONEXT:ATO
Atos — Atos Origin — FY2003 Earnings Presentation
39 slides from Atos's earnings presentation, Mar 10, 2004
Slide 1: FY 2003 results
FY 2003 results March 10, 2004
Slide 2: Management Board
Management Board Member Responsibility Coordination Bernard Bourigeaud CEO Xavier Flinois UK, Americas, Asia Pacific Global Markets, Key Accounts/Olympics Eric Guilhou CFO Dominique Illien France, Central Europe Managed Operations, Atos Euronext, Worldline Wilbert Kieboom Benelux, ICA, Scandinavia C
Slide 3: Agenda
Agenda • GROUP ACHIEVEMENTS • 2003 BUSINESS PERFORMANCE (PRE-SEMA) • THE NEW GROUP IN 2004 • SUMMARY 3 Turning Client Vision into Results
Slide 4: Highlights of 2003
Highlights of 2003 • Stable revenue in a difficult market at €3,035 M • Operating profit of 8.2% • Improving margin trend (8.4% in H2) • Net debt significantly reduced to €266 M • Continuous streamlining of operations • Acquisition of Sema Group 4 Turning Client Vision into Results
Slide 5: Agenda
Agenda • GROUP ACHIEVEMENTS • 2003 BUSINESS PERFORMANCE (PRE-SEMA) • THE NEW GROUP IN 2004 • SUMMARY 5 Turning Client Vision into Results
Slide 6: Financial performance
Financial performance FY 2003 FY 2002 % change In € Millions Revenue 3,035 3,043 -0.3% Income from operations 248 266 -6.7% Operating margin 8.2% 8.7% Net income before goodwill 114 109 +4% Net income (Group share) (169) 71 EPS (in €) (3.72) 1.61 Net debt 266 440 6 Turning Client Vision into Results
Slide 7: Quarterly Results
Quarterly Results Profitability sustained in a difficult market 840 10,0% 9,6% 9,5% 820 9,1% 9,0% 8,8% 800 9,0% 8,6% 8,0% 8,5% 780 8,0% 760 7,3% 7,1% 7,5% 740 7,0% 720 6,5% 700 6,0% 680 5,5% 749 738 734 822 780 763 717 775 660 5,0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2002 2003 Group Revenue (M€) Operating Margi
Slide 8: Consulting
Consulting Strengthening our positioning FY • Atos KPMG Consulting is enhancing the In € Millions 2003 Group’s profile in UK & NLs and Revenue 363 increasingly elsewhere in the Group Income from operations 26.5 Operating margin 7.3% • Business synergies Headcount at year end 1,934 • Bid costs affect
Slide 9: Systems Integration
Systems Integration Continuous adjustment to market conditions FY FY • Pricing pressure persisted in 2003 but In € Millions % change 2003 2002 volume levels starting to improve in Q4 Revenue 1,089 1,243 -12% 2003 Income from operations 55.6 65.9 -16% Operating margin 5.1% 5.3% -0.2 pt • ERP operatio
Slide 10: Managed Operations
Managed Operations Steady inflow of orders In € Millions FY FY % change • Steady flow of mid-size contract 2003 2002 signings. Pipeline improving also Revenue 1,582 1,625 -2.7% Income from operations 198.7 213.6 -7% • Creation of Wordline division Operating margin 12.6% 13.1% -0.5 pt Headcount at ye
Slide 11: Performance by Service Line
Performance by Service Line In € Millions Revenue Operating margin Employees FY FY % % FY FY Year end 2003 2002 change Organic 2003 2002 2003 Consulting 363 174 +108% -20.3% 7.3% 9.2% 1,934 Systems Integration 1,089 1,243 -12.4% -9.4% 5.1% 5.3% 12,671 Managed Operations 1,582 1,625 -2.7% -0.3% 12.6%
Slide 12: Performance by Geography
Performance by Geography All regions remain profitable Revenue Operating margin Employees FY FY % % FY FY Year end In € Millions 2003 2002 change organic 2003 2002 2003 France 1,050 1,086 -3% -2% 10.8% 10.7% 7,894 The Netherlands 961 913 5% -4% 11.9% 13.6% 8,424 United Kingdom 331 238 39% -15% 4.7%
Slide 13: Main clients
Main clients Top 50 represent 55% of Group revenues • Philips 23% lower at € 323 M Philips now represents 11% of Group revenues Renewal of Preferred Supply Agreement from Sep.1st, 2003 for 3 years Target of €320M in 2004 • KPN KPN +5% growth 11% of Group revenues • Euronext Euronext –8
Slide 14: Recent wins
Recent wins France, Italy, Latin America Redcats/PPR, Linedata, Pechiney, VU Cegetel, Société Générale, BNP Paribas, Snecma, Auchan, CIC Securities, Canal+ The Netherlands, Belgium Philips, KPN, DAF, VGZ, D-Reizen, Vitens, DSM, Rabobank, Akzo Nobel, Ministerie van Defensie, Ahold European Sourcing,
Slide 15: Net Income
Net Income (M€) FY03 FY02 Comments Income From Operations 248 266 Net financial expenses (27) (27) Average rate from 5.0% to 4.6% Non-recurring items (55) (71) Cost of restructuring Corporate income tax (41) (47) Notional tax rate from 30.3% to 29.3% Minority interests (11) (11) Net income before go
Slide 16: Cash Flow
Cash Flow (M€) FY03 FY02 Comments Net cash from operating activities 268 331 8.8% of revenues Change in working capital 80 51 DSO from 68 to 57 days Capital expenditure (70) (102) From 3.4% to 2.3% of revenues Net cash from current operations 277 280 9.1% of revenues Reorganisation and restructuring
Slide 17: Balance Sheet
Balance Sheet (M€) Dec 31, 2003 June 30, 2003 Dec 31, 2002 Goodwill 742 976 1 029 Other fixed assets 201 235 271 Working capital 146 187 191 Capital employed 1,089 1,398 1,491 Equity 584 775 784 Provisions 239 238 267 Net debt 266 386 440 Sources of Capital 1,089 1,398 1,491 Working Capital / Revenu
Slide 18: Staff evolution
Staff evolution -7% decrease of total staff +3% increase of revenue per head Dec. 31, 2002 Dec. 31, 2003 (1,044) Change in 300 perimeter (2,004) New 28,602 Leavers 1,963 contracts (1,344) Replacement 26,473 Restructuring Hiring of subco Staff reduction New skills into the Group Subcontractors : stab
Slide 19: Agenda
Agenda • GROUP ACHIEVEMENTS • 2003 BUSINESS PERFORMANCE (PRE-SEMA) • THE NEW GROUP IN 2004 • SUMMARY 19 Turning Client Vision into Results
Slide 20: Creating a World-wide IT Services Leader
Atos Origin Sema Group • 2003 revenue: €3,035M • 2003 revenue: €2,371M • Operating margin: 8.2% • Operating margin: 3.1% • Current staff: 26,473 • Current staff: 20,844 Creating a World-wide IT Services Leader New Co • 2003 revenue: €5,406M • Operating margin: 6.0% • Current staff: 47,317 • More tha
Slide 21: Profile
Profile Business mix Geography Industry Americas Consulting 7% AP 9% 3% Other EMEA Telecom High 6% France Tech/CPG & 18% Spain 27% Retail/Others 5% Systems Managed Italy 27% Integration Operations 6% Finance 41% 50% Oil & 20% Germany + CE Benelux Gas/Utilities 5% Of which 20% 12% Public UK Sector re
Slide 22: 2004 Objectives
2004 Objectives • Integrate the businesses • Execute our disposal program • Meet our financial targets 22 Turning Client Vision into Results
Slide 23: Action Plan
Action Plan Strong track record in mergers • Strong complementarity / fit – Top line synergies – Margin improvement • Clear strategic intent / clear disposal strategy – Industry sectors – Clients – Skills & offerings – Disposals • Management structure must be clear • Communication – Internal – Marke
Slide 24: Go to Market
Go to Market 26/9/03 29/1/04 10/3/04 PRE CLOSURE POST CLOSURE PLANS Board level appointments Level 1 appointments Organisation Level 2 appointments Level 3 appointments Operating Model in place Customer roadshows Global accounts-Tiers 1 and 2 agreed Global account directors app
Slide 25: Regions
Regions 26/9/03 29/1/04 10/3/04 PRE CLOSURE POST CLOSURE PLANS Level 1 Day 1 organisation Re-structuring appointments Launch communications Alignment of Terms Workers council signoff and conditions Organisation Induction to AO Staff objectives set Initial tax optimisation P
Slide 26: Business Management
Business Management 26/9/03 29/1/04 10/3/04 PRE CLOSURE POST CLOSURE PLANS Network separation from Schlumberger Physical separation atosorigin.com email for Sema staff from Schlumberger IT Enhancement of AO Transitional Services Agreement IT infrastructure Integration plan finalize
Slide 27: Combined performance 2003
Combined performance 2003 (M€) Revenue FY03 % Margin FY03 Atos New % % Atos New Sema Sema Origin co change Organic Origin co C&SI 1,453 1,255 2,708 -4.4% -8.5% 5.6% 6.2% 5.9% MO 1,582 1,116 2,698 -2.7% +1.6% 12.6% 6.4% 10.0% Corporate -1.1% -3.1% -2.0% Total 3,035 2,371 5,406 -3.6% -3.5% 8.2% 3.1% 6
Slide 28: Combined performance 2003
Combined performance 2003 (M€) Revenue FY03 % Margin FY03 Atos New % % Atos New Sema Sema Origin co change Organic Origin co France 1,050 397 1,446 -7.0% -6.5% 10.8% 0,9% 8.1% UK 331 801 1,132 +12.1% +8.2% 4.7% 9,2% 7.9% The Netherlands 961 5 967 +5.0% -4.0% 11.9% 15.1% 11.9% MEA 561 732 1293 -7.9%
Slide 29: Improvement top priorities
Improvement top priorities Sema is a high quality company – Large scale project integration skills – Better margin rate than Atos Origin in UK, Italy, Spain, Asia-Pacific The opportunities for improvement are : • Operational – Sema France margin rate at 0.9% (vs 10.8% for Atos Origin) – Sema MO marg
Slide 30: Merger Restructuring
Merger Restructuring Accelerated Program • Staff restructuring in certain countries • Premises and data centre rationalisation – 35 premises identified as of today to be closed – 9 data centers identified as of today to be closed • Purchasing optimisation • Administrative programs – 3 Corporate prog
Slide 31: Staff Restructuring
Staff Restructuring 2002 2003 2004 2005 1,489 Staff reduction 1,344 2,333 130 (71) P&L impact (M€) (52) (112) (67) Cash Impact (M€) (81) (130) (8) Pro forma Prov. Dec. 2003 (M€) 26 31 Turning Client Vision into Results
Slide 32: Transaction Financing
Transaction Financing Tranches A&B • New €900 M facility fully syndicated by 0 ABN Amro, BNP Paribas and Lehman Brothers Tranche C 650 650 • 18-month grace period on existing facility 550 • 3 tranches, repaid over 5 years 450 350 250 250 125 • Covenants: – Net Debt / EBITDA 2003 2004 2005 2006 2007
Slide 33: Opening Net Debt: New repayment schedule
Opening Net Debt New repayment schedule Funds available to meet repayment commitments (M€) Dec. 2003 Repayment schedule AO Sema Total 2004 2005 2006 >2007 Convertible bonds (173) (173) (173) - - - Long-term borrowings (569) (554) (1 123) (309) (183) (179) (452) Finance leases & other borrowing (48)
Slide 34: Share Ownership
Share Ownership Before closing After closing After sale % of % of % of Shares Shares Shares capital capital capital Philips 21,321,043 44.6% 21,321,043 31.9% 21,321,043 31.9% Schlumberger 19,300,000 28.9% 9,700,000 14.5% Treasury 301,293 0.6% 1,293 0.0% 1,293 0.0% Public 26,247,297 54.8% 26,247,297
Slide 35: Agenda
Agenda • GROUP ACHIEVEMENTS • 2003 BUSINESS PERFORMANCE (PRE-SEMA) • THE NEW GROUP IN 2004 • SUMMARY 35 Turning Client Vision into Results
Slide 36: Guidance For 2004
Guidance For 2004 • Market sentiment improving slowly • Actual client IT spending still constrained in Europe • Reported revenues expected to be stable in 2004 compared with 2003 on a constant scope and exchange rate basis • Combined operating margin targeted to exceed 7% for 2004 • Net debt below 6
Slide 37: Strategy
Strategy • End to end service offerings • Balanced mix of consulting, build and run • Capitalize on industry sector knowledge • Develop a focused consulting practice • Focus on clients • Leverage strong HR management Build on global presence 37 Turning Client Vision into Results
Slide 38: Strategy: Business mix
Strategy : Business mix Manage long-term relationships with clients 60% revenue IT outsourcing and processing & Application management Understand our clients’ business 20% revenue Consulting Implement business solutions 20% revenue Integration 38 Turning Client Vision into Results
Slide 39: A client-centric company with global operations
A client-centric company with global operations • Clear strategy • Solid business mix • Balanced industry sector mix • Strong client base • Stable and international management team 39 Turning Client Vision into Results