Atos SE · EURONEXT:ATO
Atos — Atos Origin — FY2005 Earnings Presentation
54 slides from Atos's earnings presentation, Mar 8, 2006
Slide 1: 2005 Full Year Results
2005 Full Year Results 8 March 2006
Slide 2: Management Board
Management Board Chairman of the Management Board Bernard Bourigeaud Atos Euronext Market Solutions and Chief Executive Officer United Kingdom, North America Xavier Flinois Global Markets, Global Accounts, Olympics and Asia-Pacific Finance, HR, IT, Purchasing, Legal, Internal Eric Guilhou Chief Fina
Slide 3: Torino 2006 Olympic Winter Games
Torino 2006 Olympic Winter Games “Today, technology has become crucial for the success of the Olympic Games. Atos Origin’s long-term commitment to implementing and integrating the technology consortiums behind each organizing committee is essential to bringing the Olympic Games to the world.” “Our W
Slide 4: Agenda
Agenda • 2005 GROUP ACHIEVEMENTS • 2005 BUSINESS PERFORMANCE • 2005 FINANCIAL PERFORMANCE • STRATEGY – BUSINESS DEVELOPMENT • 2006 OUTLOOK • SUMMARY 4 Turning Client Vision into Results
Slide 5: Financial highlights of 2005
Financial highlights of 2005 All key financial targets met 9 Group revenues were EUR 5,459 million, representing organic growth of 8.0% 9 Operating margin increased organically by 14% (7.6% margin) 9 Net income was EUR 235 million (4.3% of revenue) 9 Earnings per share grew by 104% to EUR 3.50 9 Net
Slide 6: Business highlights of 2005
Business highlights of 2005 9 Critical contract renewals secured (Department for Work and Pensions, Network Rail, etc) 9 Major new contract signings (Renault, LCH-Clearnet, Premiere, Britannic, Region Sicilia, Symrise, Base, etc) 9 Extension of the venture relationship with Euronext, to form Atos Eu
Slide 7: Agenda
Agenda • 2005 GROUP ACHIEVEMENTS • 2005 BUSINESS PERFORMANCE • 2005 FINANCIAL PERFORMANCE • STRATEGY – BUSINESS DEVELOPMENT • 2006 OUTLOOK • SUMMARY 7 Turning Client Vision into Results
Slide 8: Group Profile
Group Profile Business mix Geography Industry AP 3% Americas 4% Others 6% Consulting 8% Other EMEA 2% Process Spain 5% Industries 8% France Public Sector Italy 6% 28% & Utilities Retail 10% Systems Managed Germany + CE 26% Integration Operations 10% Discrete 41% 51% Manufacturing Telecom & UK 12% 21
Slide 9: Western Europe IT Services market
Western Europe IT Services market Top 5 position Market size Atos Origin Market In EUR million Ranking 2005 2005 share 2005 France 14,955 1,526 10.2% 2 United Kingdom 41,422 1,164 2.8% 9 The Netherlands 7,750 1,025 13.2% 1 Germany + Central Europe 24,969 557 2.2% 7 Italy + Greece 8,868 300 3.4% 6 Sp
Slide 10: An outstanding client base
An outstanding client base 9 Top 30 accounts (53% of Group revenues), delivering 12% growth Focus is paying off : > 1/3 of our Tier 1 accounts grew more than 15% in 2005 Upside : 40% of our Tier 1 accounts have less than 10% market share of our customer’s IT spend 13 key clients with annual re
Slide 11: Global Service lines
Global Service lines Portfolio management and Development xx Strategy and business performance • Select offerings with relevant solutions, alliances and • Set strategic guidelines for budgets and business partnerships plans, by service line • Push differentiated / value added and standardised • Mana
Slide 12: Consulting
Consulting Strong revenue growth and profitability % % • Consulting leading the market recovery In EUR million 2005 2004 Change Organic Revenue 449 401 +12.1% +12.8% • Consulting creating business synergies in Systems Integration and Managed Operations Operating margin 66.5 38.4 +73% +73% Operating
Slide 13: Global Consulting: managing large transformation projects
Global Consulting: managing large transformation projects Market context Atos Origin‘s strengths • Commercial and public sector service • Atos Origin has critical size in consulting delivery is increasingly driven by IT following the acquisition of KPMG Consulting • High level Consulting is essentia
Slide 14: Systems Integration
Systems Integration Strong recovery of business • Confirmation of the positive trend seen in 2004 % % In EUR million 2005 2004 change Organic • Providing resources to help clients integrate IT Revenue 2,254 2,132 +5.7% +8.7% effectively and reduce the total cost of IT ownership Operating margin 139.
Slide 15: Global Systems Integration
Global Systems Integration Market context Atos Origin‘s strengths • Globalization: clients are globalising their • Atos Origin has a leading position in the businesses and require providers with global European IT services market, supported by reach, leading to consolidation in the IT services flexi
Slide 16: Managed Operations
Managed Operations Sustained visibility and profitability In EUR million 2005 2004 % % • European market for outsourcing developing rapidly change Organic Revenue 2,756 2,716 +1.5% +6.8% • Increase in the volume of mid-size contracts, which Operating margin 275.8 262.8 +5% +12% plays to Atos Origin
Slide 17: Managed Operations: a cornerstone of our business model
Managed Operations: a cornerstone of our business model since the beginning Market context Atos Origin‘s strengths • Long-term recurring revenue • Historic presence and experience in streams, providing business stability outsourcing since the formation of • European market for outsourcing Atos Origi
Slide 18: Performance by Service Line
Performance by Service Line Corporate costs reduced to nearly 1% of Group revenues In EUR million Revenue Operating margin Employees 2005 2004 (*) % Organic 2005 2004 (*) Dec 2005 Consulting 449 398 +12.8% 14.8% 9.6% 2,734 Systems Integration 2,254 2,074 +8.7% 6.2% 7.2% 23,721 Managed Operations 2,7
Slide 19: Performance by Geography
Performance by Geography Good profitability in all main geographies In EUR million Revenue Operating margin Employees 2005 2004 (*) % Organic 2005 2004 (*) Dec 2005 France 1,526 1,367 +11.6% 7.3% 8.9% 13,886 United Kingdom 1,164 1,212 -4.0% 9.9% 9.6% 6,873 The Netherlands 1,025 977 +4.9% 14.7% 12.8%
Slide 20: Major wins in 2005
Major wins in 2005 SNC, Barclays Bank, Renault, ANPE, PSA Peugeot, Citröen, Colas, AG2R-ISICA Fund, France Bouygues Telecom,Total, Société Générale, EDF, SFR Transport Direct, United Biscuits, Central Trains, Lewisham Council, Britannic, Network United Kingdom Rail, British Energy, Department for Wo
Slide 21: Client base (examples)
Client base (examples) 21 Turning Client Vision into Results
Slide 22: Agenda
Agenda • 2005 GROUP ACHIEVEMENTS • 2005 BUSINESS PERFORMANCE • 2005 FINANCIAL PERFORMANCE • STRATEGY – BUSINESS DEVELOPMENT • 2006 OUTLOOK • SUMMARY 22 Turning Client Vision into Results
Slide 23: 2005 Financial Highlights
2005 Financial Highlights All 2005 financial targets achieved 9 Organic revenue growth of +8.0% 9 Organic operating margin growth of +14% (7.6% margin rate) 9 Normalised net income (before unusual items net of tax) at € 269M, an increase of +13% 9 Net cash flow of € 311M 9 Return On Capital Employed
Slide 24: IFRS transition
IFRS transition IFRS standard conversion project 9 Calendar of transition : in line with AMF recommendation and Syntec approach 2004 financial accounts presented in accordance with French principles Q1 2005 revenues published under IAS / IFRS rules (May 2005) Communication of the financial imp
Slide 25: Revenue performance in 2005
Revenue performance in 2005 Organic growth in line with 2005 guidance % In EUR million 2005 2004 Change Revenue reported in 2004 5,302 IFRS impact -53 Growth 5,459 5,249 +4.0% Disposals -200 Exchange Rate impact 4 Organic growth 5,459 5,053 +8.0% 25 Turning Client Vision into Results
Slide 26: Operating margin performance in 2005
Operating margin performance in 2005 Strong increase in operating margin in 2005 % In EUR million 2005 2004 Change Operating margin reported in 2004 384.8 IFRS impact -1.5 Growth 413.0 383.3 +8% Disposals -20.9 Exchange Rate impact -0.3 Organic growth 413.0 362.1 +14% Operating margin rate 7.6% 7.2%
Slide 27: Quarterly Results
Quarterly Results Positive trend on revenues & profitability 1,440 1,370 1,351 1,356 1,277 1,293 Revenue in EUR million 1,243 10.5% 9.6% 1,182 7.7% 7.2% 6.6% 6.1% Operating margin 5.7% in % of revenue 5.1% Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Impact of disposals and exchange rates Organic
Slide 28: Net Income
Net Income Substantial increase in net income In EUR million 2005 2004 Comments Revenue 5,459 5,249 +8.0% organic growth OMDA 499 435 9.1% of revenues Operating margin 413 383 +14% organic growth, +0.4 pts of rate Reorganisation and rationalisation (56) (149) 48M€ reorganisation / 8M€ rationalisatio
Slide 29: Earning Per Share
Earning Per Share Basic EPS accretion of 104% In EUR million 2005 2004 Comments Net income Group share 235 113 +108% growth Normalised Net income Group share (*) 269 237 +13% growth Weighted average number of shares (millions) 67.17 65.82 Basic EPS (euros) 3.50 1.72 Accretion of 104% Normalised basi
Slide 30: Cash Flow
Cash Flow Net debt reduced to € 180 M In EUR million 2005 2004 Comments Cash from operating activities (*) 516 403 9.4% of revenues (vs 7.7%) Income tax paid (29) (55) Benefit from French tax consolidation Change in working capital 27 96 DSO 63 days Net cash from operating activities (*) 514 443 9.4
Slide 31: Balance Sheet
Balance Sheet Gearing reduced to 9% and ROCE increased to 40% In EUR million 31 Dec 2005 31 Dec 2004 Goodwill 2,172 2,242 Fixed assets 432 295 Working capital 67 135 Deferred tax 245 279 Net assets held for sale 21 19 Capital employed 2,937 2,970 Equity 2,027 1,635 Pensions 478 515 Current Provision
Slide 32: 2005 Net Debt evolution
2005 Net Debt evolution Substantially within existing bank covenants Leverage Ratio (Net debt / OMDA) End 2005 : 0.4 covenant < 2.5 Interest Cover (Operating margin / Cost of debt) End 2005 : 17x covenant > 4x 600 In EUR million 500 518 492 400 363 300 291 200 180 100 0 Dec 2004 Mar 2005 Jun 200
Slide 33: Staff movements
Staff movements Improvement in productivity 9 Revenue growth +4% higher than net increase of staff +2% 9 Gross hiring +9,500 in 2005 compared with +6,600 in 2004 9 Of which 700 staff taken-over from major contracts 9 Staff turnover at 10.5% in 2005 compared with 8.7% in 2004 9 Good utilisation rates
Slide 34: Key HR messages
Key HR messages Effective HR management is essential for the Group’s development and success 9 Recruit the professionals for today’s need and future growth 9 Identify & Develop our key expertise and leaders for the future 9 Reward by offering a competitive compensation package 9 Retain by proposing
Slide 35: Share Ownership
Share Ownership 100% free float achieved 70 000 000 Shares in issue 15% 60 000 000 32% 32% 50 000 000 40 000 000 45% 29% 100% 100% 30 000 000 85% 68% 20 000 000 55% 39% 10 000 000 0 Dec 2003 Jan 2004 June 2004 Dec 2004 July 2005 Dec 2005 Free float Philips Schlumberger 35 Turning Client Vision into
Slide 36: Agenda
Agenda • 2005 GROUP ACHIEVEMENTS • 2005 BUSINESS PERFORMANCE • 2005 FINANCIAL PERFORMANCE • STRATEGY – BUSINESS DEVELOPMENT • 2006 OUTLOOK • SUMMARY 36 Turning Client Vision into Results
Slide 37: Atos Euronext Market Solutions
Atos Euronext Market Solutions Creation of the leading technology provider to capital markets 9 Major expansion of the partnership with Euronext and creation of a new company, Atos Euronext Market Solutions (AEMS), in July 2005 9 Atos Origin and Euronext both contribute additional assets and busines
Slide 38: Atos Worldline
Atos Worldline Key features 9 Major European IT Service provider : France, UK, Germany, Austria 9 Services and solutions dedicated to Payment and Information flows, through: Payment Card Processing and related services Customer Relationship Management Services Multi Channel Contact (Internet a
Slide 39: Atos Worldline Facts and Figures
Atos Worldline Facts and Figures 20 million 50 million 19 million 500 million 7 million Internet E-shopping Loyalty Cards Loyalty card payment cards payments transactions operated transactions operated 250 million 35 different 1 billion POS 24 million authorisations types of PoS transactions withdra
Slide 40: Healthcare
Healthcare Expanding presence in the Healthcare sector 9 Major BPO contract renewal with the UK Dept. for Work and Pensions 9 Similar BPO wins at UK Department of Trade, Criminal Justice System 9 Significant opportunities with the UK National Health Service (NHS) 9 Large upcoming bid opportunity wit
Slide 41: Offshore- Nearshore
Offshore- Nearshore Apply global sourced services to our “Design-Build-Operate” approach 9 Driven by the need to be highly cost efficient 9 Optimising costs and delivery flexibility 9 Rigorous quality compliant with industry best practices and standards 9 Important to look closely at the service mix
Slide 42: The Sourcing Power Grid
The Sourcing Power Grid capacity available at international centers NOW Nearshore Nearshore Onshore Near shore Groningen Warsaw Time zone Utrecht Customer intimacy Easier travel Europe High end skills Cultural similarities Nearshore Fast turn around Rennes Nearshore Bois Naples Seclin Grenoble North
Slide 43: Strategy: Business mix Design, build and operate
Strategy : Business mix Design, build and operate Understand our clients’ business Consulting Implement business solutions Manage long-term relationships & application management with clients Integration IT outsourcing and processing 43 Turning Client Vision into Results
Slide 44: Regional Strategy
Regional Strategy Europe remains the primary target market 9 To become the No. 1 European IT services provider 9 Need to grow further in Germany and the United Kingdom 9 Increasing emphasis on building operations in Asia Pacific China is the focal point for commercial growth India will be the fo
Slide 45: Agenda
Agenda • 2005 GROUP ACHIEVEMENTS • 2005 BUSINESS PERFORMANCE • 2005 FINANCIAL PERFORMANCE • STRATEGY – BUSINESS DEVELOPMENT • 2006 OUTLOOK • SUMMARY 45 Turning Client Vision into Results
Slide 46: Guidance for 2006
Guidance for 2006 9 Focus on achieving organic growth Based on current order book and pipeline prospects Underlying growth in the European IT services market of 4% Atos Origin organic revenue growth expected to be in the order of 5% 9 Further improvement of operating margin expected Ramp-up
Slide 47: Agenda
Agenda • 2005 GROUP ACHIEVEMENTS • 2005 BUSINESS PERFORMANCE • 2005 FINANCIAL PERFORMANCE • STRATEGY – BUSINESS DEVELOPMENT • 2006 OUTLOOK • SUMMARY 47 Turning Client Vision into Results
Slide 48: A client-centric company with global operations
A client-centric company with global operations 9 Clear strategy 9 Solid business mix 9 Balanced industry sector mix 9 Strong client base 9 Stable and international management team 48 Turning Client Vision into Results
Slide 49: Appendices
Agenda • APPENDICES 49 Turning Client Vision into Results
Slide 50: Debt repayment schedule
Debt repayment schedule Short-term cash available / Long-term debt repayment In EUR million Dec. Dec. Non Repayment schedule Current 2004 2005 current 2006 2007 2008 >2008 Finance leases 16 60 27 33 27 20 10 3 Bank loans 769 456 6 450 6 3 2 445 Securitization 133 141 141 141 Other borrowings 39 51 2
Slide 51: Business disposals
Business disposals €500M revenue base disposal program completed In EUR million Deconsolidation Revenue Sale Multiple Date 2003 2004 2005 Consideration of Sales Cellnet 01/08/2004 156 75 157 1.1 Convergent 01/07/2004 13 4 4 0.4 Priority Call Managt 01/08/2004 11 6 5 0.5 Australia 01/10/2004 24 12 1
Slide 52: Common Stock
Common Stock Potential increase of common stock from stock options only 31 Dec 31 Dec 2004 2005 Philips 10,321,043 - Treasury stock 1,293 1,293 0% Public 56,615,918 67,362,172 100% Common stock 66,938,254 67,363,465 100% Potential dilution from stock options 6,145,432 8% of Total potential common st
Slide 53: Provision movements
Provision movements Change of which 31 Dec 2005 Income 31 Dec 31 Dec Scope & Non- In EUR million Change statement Cash Current (b) 2004 2005 Rates current (a) Fair value adjustments 14 -14 -1 0 -12 Reorganization 51 31 -20 -4 35 -52 31 Rationalization 50 44 -6 5 5 -16 8 36 Project commitments 100 66
Slide 54: FY 2005 results 8 March 2006
WORLDWIDE IT PARTNER FY 2005 results 8 March 2006