Atos SE · EURONEXT:ATO
Atos — Atos Origin — Q3 2008 Earnings Presentation
44 slides from Atos's earnings presentation, Oct 31, 2008
Slide 1: Atos Origin Q3 2008 revenues
Atos Origin Q3 2008 revenues Management Board Conference call Paris, 31 October 2008 Atos, Atos and fish symbol, Atos Origin and fish symbol, Atos Consulting, and the fish symbol itself are registered trademarks of Atos Origin SA. 31/10/2008 00:11 © 2006 Atos Origin. Private for the client. This rep
Slide 2: Disclaimers
Disclaimers » This presentation contains further forward-looking statements that involve risks and uncertainties concerning the Group’s expected growth and profitability for 2008. Actual events or results may differ from those described in this presentation due to a number of risks and uncertainties
Slide 3: Agenda
Agenda » Q3 2008 Highlights » Q3 2008 Financial Performance » Outcome of strategic review » Focus on operational improvement » Group actions vs new environment » Market exposure » Objectives 2008 3 Atos Origin Q3 2008 revenues / 31 October 2008
Slide 4: Q3 2008 Highlights
Q3 2008 Highlights » Revenue organic growth in the quarter on track with full year guidance above +5% » Statutory Q3 2008 revenue including one month of AEMS Exchange at EUR 1,353 M; organic growth of +5.5% » New scope revenue excluding AEMS Exchange at EUR 1,329 M and organic growth at +5.3% » YTD
Slide 5: Main wins in third quarter 2008
Main wins in third quarter 2008 Customers Country Service Deals line Interelectra Belgium SI,MO Clearinghouse solution. Michelin France SI Software development Utilities company France MO Worldwide ERP monitoring, administration and hosting. Public Sector France SI SAP HR Implementation Employment A
Slide 6: Order entry and book to bill ratio
Order entry and book to bill ratio YTD Sept 3,5 +10% YTD Sept 3,9 Q3 08 flat H1 08 at +14% 0,0 1,0 2,0 3,0 4,0 (€ bn) 2008 2007 NB: figures based on new scope at same exchange rates Systems Managed Book to bill Total Group Consulting Integration Operations YTD Sept 08 95% 98 % 97 % 93 % YTD Sept 07
Slide 7: Agenda
Agenda » Q3 2008 highlights » Q3 2008 Financial Performance » Outcome of strategic review » Focus on operational improvement » Group actions vs new environment » Market exposure » Objectives 2008 7 Atos Origin Q3 2008 revenues / 31 October 2008
Slide 8: Q3 2008 revenue organic growth at +5.3%
Q3 2008 revenue organic growth at +5.3% Exchange 2007 % organic In € Million 2008 2007 Δ% Disposals rates proforma growth Statutory scope 1,353 1,418 -4.6% (41) (95) 1,282 +5.5% Italy (no revenue in 2008 and 3 months in 2007) 0 (58) 58 0 AEMS Exchange (1 month in 08 and 3 months in 07) (24) (57) 1 3
Slide 9: YTD September 2008 revenue organic growth at +6.3%
YTD September 2008 revenue organic growth at +6.3% Exchange 2007 % organic In € Million 2008 2007 Δ% Disposals rates proforma growth Statutory scope 4,217 4,308 -2.1% (121) (212) 3,975 +6.1% Italy (1 month in 2008 and 9 months in 2007) (20) (192) 171 (21) AEMS Exchange (7 months in 08 and 9 mths in
Slide 10: YTD Sept 2008 revenue organic growth
YTD Sept 2008 revenue organic growth +6.3% In MEur Organic growth 4,308 (192) (165) +242 4,072 (117) (4) 4,000 3,830 3,500 3,000 2,500 2,000 YTD Sept 07 Italy AEMS Exchange Other YTD Sept 07 Organic YTD Sept 08 reported Exchange rates impact disposals revenue growth excl. Italy revenue excl. Italy a
Slide 11: Revenue organic growth evolution by quarter
Revenue organic growth evolution by quarter IT Services market growth Western +7,7% IT Services market growth Western Europe Europe : +5.9% (*) +6.2% (*) +6,6% +5,9% +5,3% +5,3% +3,2% IT Services market in Western Europe: +4.8% (*) +2,7% +2,5% +2,9% +0,4% -0,2% Q1'06 Q2'06 Q3'06 Q4'06 Q1'07 Q2'07 Q3
Slide 12: Momentum of organic growth in 2008 compared to the last two years sustained
Momentum of organic growth in 2008 compared to the last two years sustained 8,0% +7.7% 7,0% +6.6% +5.9% 6,0% +5.3% 5,0% 4,0% +3.2% +2.7% +2.9% 3,0% +2.5% 2,0% Q1 Q2 Q3 Q1 Q2 Q3 1,0% Q1 Q2 Q3 Q1 Q2 Q1 Q2 Q3 Q1 Q2 Q3 0,0% -0.2% -1,0% 2008 2006 2007 -2,0% Year-on year organic growth (At constant scope
Slide 13: Q3 2008 revenue performance by service line
Q3 2008 revenue performance by service line Statutory scope Excluding Italy and AEMS Exchange Q3 2008 Q3 2007 % organic Q3 2008 Q3 2007 % organic In € Million Δ% Δ% growth growth Consulting 84 79 +6.6% +11.2% 84 79 +6.6% +11.2% Systems Integration 521 549 -5.1% +5.2% 521 508 +2.5% +5.2% Managed Oper
Slide 14: YTD September 2008 revenue performance by service line
YTD September 2008 revenue performance by service line Statutory scope Excluding Italy and AEMS Exchange YTD Sept YTD Sept % organic YTD Sept YTD Sept % organic In € Million 2008 2007 Δ% 2008 2007 Δ% growth growth Consulting 262 268 -2.0% +2.1% 262 268 -2.0% +2.1% Systems Integration 1,651 1,717 -3.
Slide 15: Q3 2008 revenue performance by geographical area
Q3 2008 revenue performance by geographical area Statutory scope Excluding Italy and AEMS Exchange Q3 2008 Q3 2007 % organic Q3 2008 Q3 2007 % organic In € Million Δ% Δ% growth growth France 391 395 -1.0% +6.0% 376 353 +6.6% +6.7% United Kingdom 236 261 -9.4% +10.3% 228 247 -7.8% +7.9% The Netherlan
Slide 16: YTD September 2008 revenue performance by geographical area
YTD September 2008 revenue performance by geographical area Statutory scope Excluding Italy and AEMS Exchange YTD Sept YTD Sept % organic YTD Sept YTD Sept % organic In € Million Δ% Δ% 2008 2007 growth 2008 2007 growth France 1,251 1,202 +4.1% +6.6% 1,156 1,084 +6.6% +6.9% United Kingdom 744 789 -5.
Slide 17: Net debt evolution
Net debt evolution (M€) 600 509 514 490 500 409 400 300 200 100 0 June September 2007 2008 » AEMS Exchange: EUR 142 M cash received in Q3 2008 » Dividends payment for EUR 28 M in July 2008 17 Atos Origin Q3 2008 revenues / 31 October 2008
Slide 18: Headcount evolution
Headcount evolution » Change in scope relates to Italy (2,443 staff), AEMS Exchange (424) » YTD September 08 hirings: +8,700 new employees with +2,600 in Q1, +3,000 in Q2 and 3,100 in Q3 » Staff attrition stable compared to end of June 2008 at 13.5% 51,704 (2,887) +8,753 51,358 (4,910) 50,000 (1,302
Slide 19: Staff by geographical area
Staff by geographical area Closing Closing Change since opening 1/1/08 Sept 2008 Dec 2007 France 15,341 15,275 +66 +0.4% United Kingdom 6,314 6,022 +292 +4.8% The Netherlands 8,329 8,398 (69) -0.8% Germany + Central Europe 4,248 4,076 +172 +4.2% Rest of EMEA 8,784 8,131 +653 +8.0% Spain Americas 3,1
Slide 20: Offshore / Nearshore: above 4,000 staff
Offshore / Nearshore: above 4,000 staff » Total offshore / nearshore increase by +500 staff during Q3 08 » Offshore / Nearshore: from 3% of total staff in December 2006 to 8% in September 2008 (Staff) Dec 2006 Dec 2007 Sept 2008 Total offshore 1,487 2,549 3,458 India 1,282 2,266 3,139 Other 205 283
Slide 21: Agenda
Agenda » Q3 2008 highlights » Q3 2008 Financial Performance » Outcome of strategic review » Focus on operational improvement » Group actions vs new environment » Market exposure » Objectives 2008 21 Atos Origin Q3 2008 revenues / 31 October 2008
Slide 22: Strategic Review
Strategic Review » Two months intensive process led by the Strategic Committee and the Management Board » Kick-Off on 7 July 2008, 3 weeks after the AGM of 12 June 2008 » Constructive and open process to assess the various strategic options and define clear priorities for the Group » Review of vario
Slide 23: Focus the company on high margin, recurring cash flow businesses
Focus the company on high margin, recurring cash flow businesses » Organic growth, few key acquisitions and new outsourcing 1. Become the European leader business with large volume transaction customers in transaction processing » Ambition to reach in 3 years revenue of EUR 1.5 Bn with an operating
Slide 24: Focus on core geographies and activities
Focus on core geographies and activities Divestments of non core geographies Scope: geographies involved are mainly outside Europe Key Figures (in M€) FY 2007 FY 2008 (e) Revenue 268 249 % Operating Margin 5.0 slightly <0 24 Atos Origin Q3 2008 revenues / 31 October 2008
Slide 25: Accelerate operational improvement
Accelerate operational improvement » Pursued effort on 3o3 operational transformation » Industrialization initiatives (CMMi, tooling) » Push towards offshore » Mainframe consolidation » Increased cost reduction through purchasing » Maintain emphasis on additional identified improvement areas » Turna
Slide 26: Agenda
Agenda » Q3 2008 highlights » Q3 2008 Financial Performance » Outcome of strategic review » Focus on operational improvement » Group actions vs new environment » Market exposure » Objectives 2008 26 Atos Origin Q3 2008 revenues / 31 October 2008
Slide 27: Industrialization CMMI Roll-out: key for productivity
Industrialization CMMI Roll-out: key for productivity » Mid ‘07: 2.750 CMMI3 in Europe » YE ‘07: 7.550 CMMI3+ worldwide » Q3 ’08: 8.550 CMMI3+ worldwide » YE’ 09: 13.300 CMMI3+ (all close-, near- and offshore centers) 3,000 100 1,500 Brazil 3, 150 300 500 CMMI5, Q3 CMMI 3, Q3 27 Atos Origin Q3 2008
Slide 28: Industrialization – increasing users of standard tools
Industrialization – increasing users of standard tools Staff in Software Development & Users of Tooling Maintenance Centers Shared Service Center 74% 26% 41% Penetration % 0% 28 Atos Origin Q3 2008 revenues / 31 October 2008
Slide 29: Managed Services Global Factory – mainframe optimization
Managed Services Global Factory – mainframe optimization (at current volumes) Consolidation of MIPS in Germany 27,300 25,000 UK FR II FR I FR I Already done in Q3 3 800 Mips 16,650 Italy NL 12,500 End 2006 End 2007 End 2008 End 2009 » Mainframe project is on track. The transfer from France (part 1)
Slide 30: Global purchasing to reduce costs
Global purchasing to reduce costs 95% 90% 78% 61% External spend covered by 45% Purchasing 55% 50% 50% 44% Spend in the yearly action plan scope 20% 2006 2007 sept-08 Target end Target end 2008 2009 » Results from increased scope: • Building lease negotiation, EUR 2 M cost reduction • Software speci
Slide 31: Agenda
Agenda » Q3 2008 highlights » Q3 2008 Financial Performance » Outcome of strategic review » Focus on operational improvement » Group actions vs new environment » Market exposure » Objectives 2008 31 Atos Origin Q3 2008 revenues / 31 October 2008
Slide 32: Group actions launched early September 2008
Group actions launched early September 2008 Actions on revenue Actions on costs Actions on staff » Sales push plan » Low margin contracts » Decrease of subcos improvement » Accelerated streamlining » Push increase of offshore » Tight control on all indirect » Specific caution on direct » Chase up un
Slide 33: Actions on Cash
Actions on Cash » Reduction of CAPEX : strict control process both at Global and Local level. Objective from 5.5% to 4.5% of revenue in 2009 » RFP to outsource datacenter operative assets (“box”, power, cooling, network, security) » Objective: financing assets of one datacenter in France before year
Slide 34: Management actions on internal governance
Management actions on internal governance » Executive assessments on top 50 managers of the Group » Review of operational staff and managers’ scorecard (more than 16,000 headcount) to align their focus on new environment » Continue and reinforce control on Human Resources: hirings and subcos » Speed
Slide 35: Agenda
Agenda » Q3 2008 highlights » Q3 2008 Financial Performance » Outcome of strategic review » Focus on operational improvement » Group actions vs new environment » Market exposure » Objectives 2008 35 Atos Origin Q3 2008 revenues / 31 October 2008
Slide 36: Revenue profile by industry sector
Revenue profile by industry sector Group revenue profile by sector – YTD Sept '08 Other 4% Atos Energy Utilities Public Wordline, 9% Sector MS in Retail Germany 25% 10% and France Telecoms 15% Financial Services Atos Worldline and 22% Manufact. Retail banking 15% 36 Atos Origin Q3 2008 revenues / 31
Slide 37: Revenue profile and growth sensitivity
Revenue profile and growth sensitivity Cons. 6% AWL & BPO Group revenue 17% profile by business SI Prof. Serv. YTD Sept '08 13% SI Projects 13% Managed Services 68 % recurring SI Appl. Mgmt 37% revenues 14% Consulting Systems Integration Managed Operations Group aggregate Growth Prof. Projects Appli
Slide 38: Financing
Financing » Credit lines and leverage ratio - EUR 1.2 billion credit lines until May 2011, with EUR 1.1 billion until May 2012 - Current leverage (Net debt / EBITDA) below 1 vs covenant below 2.5 » In the current financial environment, Atos Origin has no short term issue of financing » Significant p
Slide 39: Agenda
Agenda » Q3 2008 highlights » Q3 2008 Financial Performance » Outcome of strategic review » Focus on operational improvement » Group actions vs new environment » Market exposure » Objectives 2008 39 Atos Origin Q3 2008 revenues / 31 October 2008
Slide 40: Revenue objective for 2008
Revenue objective for 2008 2008 revenue coverage as of Sept 08 2007 revenue coverage as of Sept 07 4% 1% 4% 2% Backlog Backlog Pipe Pipe To find To find 95% 94% Objective of full year 2008 revenue organic growth above +5% confirmed 40 Atos Origin Q3 2008 revenues / 31 October 2008
Slide 41: Objectives for 2008
Objectives for 2008 » Excluding Italy and AEMS Exchange disposed this year: - Full year revenue organic growth above +5% - On the scope representing more than 95% of total revenue (excluding non core geographies being divested), the Group should reach an operating margin at 5.5 per cent, an improvem
Slide 42: Questions
Questions Paris, 31 October 2008 Atos, Atos and fish symbol, Atos Origin and fish symbol, Atos Consulting, and the fish symbol itself are registered trademarks of Atos Origin SA. 31/10/2008 00:11 © 2006 Atos Origin. Private for the client. This report or any part of it, may not be copied, circulated
Slide 43: Contacts and agenda
Contacts and agenda Gilles Arditti – Head of Investor Relations – gilles.arditti@atosorigin.com or investors@atosorigin.com 5 February 2009 Fourth Quarter 2008 revenue 17 February 2009 Annual Results 2008 43 Atos Origin Q3 2008 revenues / 31 October 2008
Slide 44: Atos Origin Q3 2008 revenues
Atos Origin Q3 2008 revenues Management Board Conference call Paris, 31 October 2008 Atos, Atos and fish symbol, Atos Origin and fish symbol, Atos Consulting, and the fish symbol itself are registered trademarks of Atos Origin SA. 31/10/2008 00:11 © 2006 Atos Origin. Private for the client. This rep