Atos SE · EURONEXT:ATO
Atos — Atos Origin — H1 2006 Earnings Presentation
42 slides from Atos's earnings presentation, Sep 6, 2006
Slide 1: H1 2006 Results
H1 2006 Results Paris, 6 September 2006 Atos, Atos and fish symbol, Atos Origin and fish symbol, Atos Consulting, and the fish symbol itself are registered trademarks of Atos Origin SA. September 06 © 2006 Atos Origin. Private for the client. This report or any part of it, may not be copied, circula
Slide 2: Agenda
Agenda » GROUP ACHIEVEMENTS » H1 2006 BUSINESS PERFORMANCE » H1 2006 FINANCIAL PERFORMANCE » ACTION PLANS » STRATEGY – BUSINESS DEVELOPMENT » SUMMARY 2 H1 2006 Results – 06 September 2006
Slide 3: Financial highlights of H1 2006
Financial highlights of H1 2006 » Revenue slightly lower than our expectations at €2,696 M with organic growth at 2.9% » Operating margin at €139 M, 5.1% margin rate impacted by UK operations and Italian situation » Net income Group share at €10 M strongly impacted by impairment charge » Normalised
Slide 4: Business highlights in H1 2006
Business highlights in H1 2006 » The main signatures in renewals and new business in H1 were with clients such as : Symrise, Heijmans, Huntsman, Delta, Dutch Ministry of Defence, Mobistar, Wolters Kluwer, Nuon, Hong Kong Government, EDF, SFR, Club Avantage, EADS, Airbus, Electrocomponents, WM Morris
Slide 5: Agenda
Agenda » GROUP ACHIEVEMENTS » H1 2006 BUSINESS PERFORMANCE » H1 2006 FINANCIAL PERFORMANCE » ACTION PLANS » STRATEGY – BUSINESS DEVELOPMENT » SUMMARY 5 H1 2006 Results – 06 September 2006
Slide 6: Group profile
Group profile Revenues H1 2006: € 2.7 Bn BUSINESS MIX GEOGRAPHY INDUSTRY AP 2% Americas 3% Others (*) Consulting Other EMEA 1% 6% 8% Spain 6% France Retail 9% Public Sector France 30% & Utilities Systems Managed Italy 6% 28% 26% 27% Integration Operations Germany + CE Manufacturing 42% 50% 11% 20% U
Slide 7: 4th IT supplier in Western Europe
4th IT supplier in Western Europe Market size Weight Atos Origin Market In EUR million Ranking 2005 2005 2005 share 2005 France 16,718 13% 1,526 9,1% 2 United Kingdom 43,823 34% 1,164 2,7% 9 The Netherlands 8,812 7% 1,025 11,6% 1 Germany + Central Europe 27,897 21% 557 2,0% 8 Italy + Greece 9,585 7%
Slide 8: Strong clients base
Strong clients base 8 H1 2006 Results – 06 September 2006
Slide 9: Strong client base
Strong client base » Strong fertilization on existing clients » Top 100 accounts, well balanced by industry sector, represent more than 70% of revenues » Full backlog at the end of June at € 7.2 Bn, representing 1.4 years’ revenues » Full qualified pipeline at the end of June at € 2.8 Bn (excluding
Slide 10: Main commercial wins in H1
Main commercial wins in H1 SFR, EDF, Club Avantages, EADS, Airbus, Banque de France, Agence de l'eau France Seine Normandie, BNP-Paribas, Bibliothèque Nationale de France, Arcelor, Renault, Société Générale UK Crown Prosecution Services, South Wales Police, Electrocomponents, NHS United Walk-in Cent
Slide 11: Consulting
Consulting % % In € Millions H1 2006 H1 2005 Change Organic Revenue 206 227 -9.0% -6.9% Operating margin 22.8 33.9 -33% Operating margin rate 11.0% 14.9% -3.9 pts Headcount at closing (Jun/Dec) 2,776 2,734 +2% Operating margin before allocation of Group structures’ costs » Weak performance entirely
Slide 12: Systems Integration
Systems Integration % % In € Millions H1 2006 H1 2005 change Organic Revenue 1,131 1,134 -0.3% +3.4% Operating margin 34.7 65.7 -47% Operating margin rate 3.1% 5.8% -2.7 pts Headcount at closing (Jun/Dec) 24,218 23,721 +2% » Steady growth of +3.4%, with active new business Operating margin before al
Slide 13: Managed Operations
Managed Operations % % In € Millions H1 2006 H1 2005 change Organic Revenue 1,359 1,364 -0.4% +4.2% Operating margin 116.8 113.6 +3% Operating margin rate 8.6% 8.3% +0.3 pts Headcount at closing (Jun/Dec) 20,575 21,036 -2% » +4.2% organic revenue growth in H1 with a strong +8% in Q2 coming from all
Slide 14: Performance by service line
Performance by service line In € Millions Revenue Operating margin Employees H1 H1 % H1 H1 End of 2006 2005 (*) Organic 2006 2005 June 2006 Consulting 206 222 -6.9% 11.0% 14.9% 2,776 Systems Integration 1,131 1,094 +3.4% 3.1% 5.8% 24,218 Managed Operations 1,359 1,304 +4.2% 8.6% 8.3% 20,575 Corporat
Slide 15: Performance by geographical area
Performance by geographical area In € Millions Revenue Operating margin Employees H1 H1 % H1 H1 End of 2006 2005 (*) Organic 2006 2005 June 2006 France 809 731 +10.6% 6.5% 7.7% 14,336 United Kingdom 541 587 -7.8% 5.1% 8.3% 6,385 The Netherlands 519 505 +2.8% 10.3% 11.7% 8,273 Germany + Central Europ
Slide 16: Agenda
Agenda » GROUP ACHIEVEMENTS » H1 2006 BUSINESS PERFORMANCE » H1 2006 FINANCIAL PERFORMANCE » ACTION PLANS » STRATEGY – BUSINESS DEVELOPMENT » SUMMARY 16 H1 2006 Results – 06 September 2006
Slide 17: Revenue performance in H1 2006
Revenue performance in H1 2006 » Disposals of Nordic and Middle-East operations » Exchange rates impact from dollar-linked currencies and Brazilian real % In € Millions H1 2006 H1 2005 Change Revenue reported for H1 2005 2,696 2,725 -1.1% Disposals -119 Exchange Rate impact +12 Organic growth 2,696
Slide 18: Quarterly results
Quarterly results 1,370 1,356 1,354 1,342 1,312 1,307 7.7% 7.0% 5.7% 5.1% 5.2% Q1 05 Q2 05 Q1 06 Q2 06 Operating Margin Rate Impact of disposals and exchange rates Group Revenue (M€) at constant scope and exchange rates » Excluding the impact of the new estimate of the costs to complete in SI in the
Slide 19: Income statement
Income statement H1 H1 In € million Comments 2006 2005 Revenue 2,696 2,725 +2.9% organic growth OMDA 222 217 8.2% of revenues Operating margin 139 183 5.1% of revenues Reorganisation and rationalisation (8) (36) Limited reorganisation Gain (loss) on disposals (1) 52 54M€ Nordic business in 2005 Impa
Slide 20: Cash flow statement
Cash flow statement In € Millions H1 2006 H1 2005 Comments Cash from operating activities 189 157 7.0% of revenues, +20% increase Income tax paid (9) 1 Tax payment more in H2 Change in working capital (197) (106) DSO 69 days / seasonality effect Net cash from operating activities (17) 53 Capital exp
Slide 21: Balance sheet
Balance sheet 30 June 31 December In € Millions 2006 2005 Goodwill 2,093 2,172 Fixed assets 479 432 Working capital 248 67 Deferred tax 240 245 Net assets held for sale 21 Capital employed 3,059 2,937 Equity 2,024 2,027 Pensions 491 478 Current Provisions 87 105 Non-current Provisions 132 148 Net de
Slide 22: Bank covenants
Bank covenants Substantially within existing bank covenants » Leverage ratio (net debt / OMDA) H1 2006: 0.7 covenant < 2,5 » Interest cover (operating margin / cost of debt) H1 2006: 12x covenant > 4x 2 500 Equity Net debt Gearing 25% 20% 2 027 2 024 2 000 20% 1 812 16% 1 500 15% 1 000 9% 10% 500 36
Slide 23: Agenda
Agenda » GROUP ACHIEVEMENTS » H1 2006 BUSINESS PERFORMANCE » H1 2006 FINANCIAL PERFORMANCE » ACTION PLANS » STRATEGY – BUSINESS DEVELOPMENT » SUMMARY 23 H1 2006 Results – 06 September 2006
Slide 24: UK action plan
UK action plan » Atos Origin UK was engaged since 2 years in a major business reorganisation to create a fully-fledged “design, build and operate” organization, while establishing 4 service lines Consulting Systems Integration Managed operations BPO Medical services dual positioning: “best-i
Slide 25: Italian action plan
Italian action plan Italian restructuring to ensure sustainable profitability in the future » Deterioration of market environment » Despite H1 organic revenue growth in Italy +4%, inadequate profitability » Discussions with the working parties this summer » Implementation of restructuring programme
Slide 26: Agenda
Agenda » GROUP ACHIEVEMENTS » H1 2006 BUSINESS PERFORMANCE » H1 2006 FINANCIAL PERFORMANCE » ACTION PLANS » STRATEGY – BUSINESS DEVELOPMENT » SUMMARY 26 H1 2006 Results – 06 September 2006
Slide 27: A 3-pillar strategy
A 3-pillar strategy Strategic Focus Development Axes Strong Focus on Key Accounts Offshore Strategy Operational efficiency Follow customer needs Develop Asian footprint Comprehensive European & Asian Service Geographic Offering Focus Specialised Activities Consulting Capital Markets & Exchanges Syst
Slide 28: Clients: creating long-term relationships & partnerships
Clients : creating long-term relationships & partnerships » Continued focus on growing our key accounts » Accompany our clients as they globalize » Emphasis on long-term relationships » Leverage strong industry sector focus and experience Revenue breakdown by client Management Board Key Accounts Oth
Slide 29: In a highly fragmented payment landscape mature for consolidation
In a highly fragmented payment landscape mature for consolidation… Most processors are euroConex IPSO Voca Link euroConex TSYS Certegy domestic players and Certegy First Data nowhere near critical Experian TSYS mass today PMJ Luottokunta Payment processors will be under increased price-quality press
Slide 30: Introduction of a Single Euro Payments Area (SEPA)
Introduction of a Single Euro Payments Area (SEPA) SEPA will drive the consolidation of the payment industry Market context Strategic ambitions of SEPA Expected impact of SEPA » A unique payment zone » Payments are big business: allowing to deliver a better Implementation Implementation of costs of
Slide 31: Combining strengths
Combining strengths Deal overview » Acquisition of Banksys & BCC » Cash transaction for undisclosed amount » Acquired business (2005): » Under condition of Competition Authorities revenues €309 M Belgian GAAP » We become a shareholder in a JV for pan- 1,100 employees european processing (SINSYS)
Slide 32: Build the #1 Payment Processor in Europe
Build the #1 Payment Processor in Europe » Transaction volume to 10 billion per annum » Strong presence in core countries » Major European banks as key clients » High quality end-to-end service offering » Key partners » Strong partner in regulatory and standards committees 32 H1 2006 Results – 06 Se
Slide 33: Recent market evolutions
Recent market evolutions Recent market evolutions create opportunities for commercial players Recent Evolutions Impacts » National Health Service (NHS) » Private healthcare market is with a yearly budget over €110 bn, developing dominates the UK health services » Growth opportunities available for m
Slide 34: Atos Origin Medical Services: some figures
Atos Origin Medical Services: some figures » Preventive care for over 500 000 employees : UK’s largest Occupational Health service provider » Over 470 employed Healthcare Professionals » Over 2,000 associate doctors and nurses » 250 medical centres across the UK » 750,000 capability assessments fo
Slide 35: Why we are unique
Why were are unique » Only UK Company that delivers Consulting, IT and Healthcare BPO » True National Scale and Capability We deliver anywhere » Size and Quality of our employed medical workforce High Quality of Outcomes for the customer » E enablement of our Service Delivery Platform Speed of
Slide 36: Four types of Medical Services
Four types of Medical Services Diagnostics Diagnostics Occupational Occupational Medical Medical NHS NHS Walk-in Walk-in Centers Centers Centers Centers Health Health Assessments Assessments • Primary care • Managing Town- • Proactive • General Incapacity centres in busy Centre Technical prevention
Slide 37: Atos Euronext Market Solutions
Atos Euronext Market Solutions Leading technology provider to capital markets » Major expansion of the partnership with Euronext and creation of a new company, Atos Euronext Market Solutions (AEMS), in July 2005 » Atos Origin and Euronext both contribute additional assets and business to the JV Op
Slide 38: Agenda
Agenda » GROUP ACHIEVEMENTS » H1 2006 BUSINESS PERFORMANCE » H1 2006 FINANCIAL PERFORMANCE » ACTION PLANS » STRATEGY – BUSINESS DEVELOPMENT » SUMMARY 38 H1 2006 Results – 06 September 2006
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 H1 2006 Results – 06 September 2006
Slide 40: H1 2006 Results
H1 2006 Results Paris, 6 September 2006 Atos, Atos and fish symbol, Atos Origin and fish symbol, Atos Consulting, and the fish symbol itself are registered trademarks of Atos Origin SA. September 06 © 2006 Atos Origin. Private for the client. This report or any part of it, may not be copied, circula
Slide 41: Agenda: Appendix
Agenda » APPENDIX 41 H1 2006 Results – 06 September 2006
Slide 42: Staff evolution
Staff evolution » Underlying stability compared with +3% revenue growth » Hiring : 4,600 new employees, 10% of opening workforce, in line with the level of last year » Staff turnover at 11.7% in H1-06 compared with 10.5% in 2005 » Decrease of subcontractors from 7.0% in Dec-05 to 6.5% in June-06 Ope