Atos Se · EURONEXT:ATO
Atos — Atos Origin — Merger or Acquisition (January 2004)
41 slides from Atos's merger presentation, Jan 22, 2004
Slide 1: Investor Presentation
Investor Presentation January 22nd, 2004
Slide 2: Agenda
Agenda • ATOS ORIGIN 2003 STAND ALONE PERFORMANCE • OVERVIEW OF SEMA GROUP • STRATEGIC RATIONALE AND PROFILE OF COMBINED ENTITY • PERFORMANCE ENHANCEMENTS AND MERGER EXECUTION • TRANSACTION STRUCTURE • STRATEGY AND CONCLUSION • APPENDICES 2 Turning Client Vision into Results
Slide 3: Atos Origin 2003 Stand Alone Results
Atos Origin 2003 Stand Alone Results • Preliminary and unaudited results at this stage • Revenue slightly down on 2002, at €3,030M • Operating margin of 8.2% • Details by service line and geography released today • Net debt fell significantly to €270M • Full audited results will be published on Marc
Slide 4: Atos Origin 2003 Stand Alone By Service Line
Atos Origin 2003 Stand Alone By Service Line 2003 2002 % Revenue Growth M€ Revenue IFO % Margin Revenue IFO % Margin Total Organic** Consulting 364 26.6 7.3% 175 16.0 9.2% 108% -21.2% Systems Integration 1,091 56.0 5.1% 1,243 65.9 5.3% -12.3% -9.6% Managed Operations 1,576 197.8 12.6% 1,626 213.6 13
Slide 5: Agenda
Agenda • ATOS ORIGIN 2003 STAND ALONE PERFORMANCE • OVERVIEW OF SEMA GROUP • STRATEGIC RATIONALE AND PROFILE OF COMBINED ENTITY • PERFORMANCE ENHANCEMENTS AND MERGER EXECUTION • TRANSACTION STRUCTURE • STRATEGY AND CONCLUSION • APPENDICES 5 Turning Client Vision into Results
Slide 6: Sema Group at a Glance
Sema Group at a Glance • Established in 1958 • Consulting, Systems Integration and Managed Operations with global capability • Global presence with European focus: strong positions in the UK, France, Italy, Spain and Asia Pacific • Effective management of complex systems integration projects • Solut
Slide 7: Sema Group Overview
Sema Group Overview Service Line Geography Industry High Consulting AP Tech/CPG & 5% 5% France Retail/Others Telecom Americas 17% 13% 19% Managed 13% Benelux Oil & Systems Operations Other EMEA Gas/Utilities 2% Finance Integration 47% 11% 16% 13% 48% Spain UK Transport Italy 34% 8% 8% Public 8% Sect
Slide 8: Some Reference Activities
Some Reference Activities Clients Region Projects Metropolitan Police UK Managed Services Dept. of Work & Pensions UK Business Process Outsourcing of claimant exams Telecom Worldwide Billing systems for 60M mobile customers British Rail UK National ticketing reconciliation system Scottish NHS UK Inf
Slide 9: Agenda
Agenda • ATOS ORIGIN 2003 STAND ALONE PERFORMANCE • OVERVIEW OF SEMA GROUP • STRATEGIC RATIONALE AND PROFILE OF COMBINED ENTITY • PERFORMANCE ENHANCEMENTS AND MERGER EXECUTION • TRANSACTION STRUCTURE • STRATEGY AND CONCLUSION • APPENDICES 9 Turning Client Vision into Results
Slide 10: Creating a World-wide IT Services Leader
Atos Origin Sema Group • 2003 revenue: €3,030M • 2003 revenue: €2,372M • Current staff: 26,473 • Current staff: 20,844 Creating a World-wide IT Services Leader New Co • 2003 revenue: €5,402 • Current staff: 47,317 • More than 50 countries 10 Turning Client Vision into Results
Slide 11: Create the n°1 Listed European IT Services Company
Create the n°1 Listed European IT Services Company (in B€) 9.6 6.7 5.3 4.6 4.1 4.0 3.5 3.4 2.7 2.6 2.4 IBM EDS T-Systems New Co Accenture CGEY SBS HP CSC Atos Origin LogicaCMG Source: PAC, July 2003 and Atos Origin based on 2002 European IT Services revenue 11 Turning Client Vision into Results
Slide 12: A Transformational Move
A Transformational Move • Reaching critical size in the UK (n°4 player) with strong brand recognition Leading • Strengthened presence in France (n°1 player) Country • Leader in the Netherlands Presence • Critical mass in Spain (n°3) and Italy (n°4) • Improved position in Asia Pacific and North Ameri
Slide 13: Aligned with Atos Origin's Strategy
Aligned with Atos Origin’s Strategy • Ideally positioned in the UK, France and NL Public Sector markets • Access to the top European deals Attractive • Great strength in the healthcare sector Revenue • Develop further business with Liffe and Clearnet/London Clearing House Synergies • Consulting and
Slide 14: Geographic Profile
Geographic Profile Atos Origin Sema Group New Co Americas Spain 3% Americas 2% AP 7% AP AP Italy Other 2% 3% 5% France Other EMEA 4% EMEA Americas 17% Germany 2% 6% France 13% Spain + CE France 27% Benelux 5% 7% 35% Other EMEA 2% Italy 11% UK 6% 11% Spain UK Germany + CE Italy 34% Benelux 8% 5% Bene
Slide 15: World-wide Presence
World-wide Presence Nordic UK 1,670 7,000 Benelux 9,450 France Central Europe 12,570 2,660 North America Spain Italy 1,750 4,900 3,300 Asia/Pacific 2,050 Middle East & Africa 670 South America 1,300 Total Employees 47,300 Note : Based on preliminary 2003 unaudited figures 15 Turning Client Vision in
Slide 16: Business Mix
Business Mix Atos Origin Sema Group New Co Consulting Consulting Consulting 5% 9% 12% Managed Managed Managed Systems Operations Systems Operations Systems Operations Integration 47% Integration 50% Integration 52% 36% 48% 41% More than 55% recurring business at Newco Note : Based on preliminary 200
Slide 17: Industry Profile
Industry Profile Atos Origin Sema Group New Co High Tech/CPG & Telecom Retail/Others Telecom Telecom High High 16% 13% 18% 19% Tech/CPG & Tech/CPG & Oil & Retail/Others Retail/Others Gas/Utilities 27% Finance 38% Finance 16% Finance 13% Oil & 25% 20% Transport Gas/Utilities Oil & 8% Public 13% Publi
Slide 18: Agenda
Agenda • ATOS ORIGIN 2003 STAND ALONE PERFORMANCE • OVERVIEW OF SEMA GROUP • STRATEGIC RATIONALE AND PROFILE OF COMBINED ENTITY • PERFORMANCE ENHANCEMENTS AND MERGER EXECUTION • TRANSACTION STRUCTURE • STRATEGY AND CONCLUSION • APPENDICES 18 Turning Client Vision into Results
Slide 19: 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 20: 2003 Merger Execution plan
2003 Merger Execution plan • Deal announcement 9 September 22, 2003 • Top management structure 9 Day 1 • 1st line of management 9 End of October • Internal roadshows 9 October • Key client visits 9 October - November • Full commercial review 9 October • Budget process 9 November • Operational system
Slide 21: 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 22: 2004-2005 Merger Execution Plan
2004-2005 Merger Execution Plan • Revenue synergies • Accelerated integration plan – Global Accounts Program – 4 Regional Programs – 3 Corporate Programs (Finance, HR, IT) • Annualised cost savings estimated to exceed €200M per annum by 2006 • Disposal of businesses with cumulative revenues of up to
Slide 23: Revenue Synergies
Revenue Synergies • Access to the largest deal opportunities in Europe • Provide outsourcing capability in the UK and in Asia Pacific • Exploit Atos KPMG Consulting profile in the UK • Leverage leadership in financial services and telecom • Improve market share at large clients • Bring wider range o
Slide 24: Merger Restructuring
Merger Restructuring Accelerated Program • Go-to-market strategy – Global MS and C&SI offerings launched in Q1 2004 • Operations management – Detail operational structure in place at closing – Accelerated staff optimisation • Premises and data centre rationalisation – To be fully identified in H1 20
Slide 25: Guidance For 2004
Guidance For 2004 • Market sentiment improving slowly • Actual client IT spending still constrained • No significant improvement expected in H1 2004 • Combined reported revenues expected to be stable in 2004 compared with 2003 on a constant scope and exchange rate basis • Combined operating margin t
Slide 26: Agenda
Agenda • ATOS ORIGIN 2003 STAND ALONE PERFORMANCE • OVERVIEW OF SEMA GROUP • STRATEGIC RATIONALE AND PROFILE OF COMBINED ENTITY • PERFORMANCE ENHANCEMENTS AND MERGER EXECUTION • TRANSACTION STRUCTURE • STRATEGY AND CONCLUSION • APPENDICES 26 Turning Client Vision into Results
Slide 27: Transaction Summary
Transaction Summary Consideration • Total consideration of €1,287M based on 20-Day volume weighted average price of Atos Origin up to Friday September 19, 2003 (€45.95) comprised of : – 19.3 million Atos Origin shares (19.0 million newly issued and 0.3 million Atos Origin treasury shares) – €400 M c
Slide 28: Share Ownership
Share Ownership Before closing After closing % of % of % of % of Shares voting Shares voting capital capital rights rights Philips 21,321,043 44.5% 44.8% 21,321,043 31.9% 31.9% Schlumberger 19,300,000 28.9% 28.9% Threadneedle 2,398,047 5.0% 5.0% 2,398,047 3.6% 3.6% Treasury 301,293 0.6% 1,293 0.0% 0
Slide 29: Liquidity Agreement
Liquidity Agreement* • Schlumberger, Philips and Atos Origin have signed a Liquidity Agreement regarding the potential future sale of Atos Origin shares on the open market – After closing of the Sema Group transaction, Schlumberger may decrease its shareholding in Atos Origin to around 19%**, depend
Slide 30: Transaction Financing
Transaction Financing • New €900 M facility fully syndicated by ABN Amro, BNP Paribas and Lehman New Repayment Schedule – Combined Entity Brothers 350 (in M€) • 18-month grace period on existing facility • 3 tranches, repaid over 5 years 225 225 173 • Covenants: – Net Debt / EBITDA < 1.75x until end
Slide 31: Agenda
Agenda • ATOS ORIGIN 2003 STAND ALONE PERFORMANCE • OVERVIEW OF SEMA GROUP • STRATEGIC RATIONALE AND PROFILE OF COMBINED ENTITY • PERFORMANCE ENHANCEMENTS AND MERGER EXECUTION • TRANSACTION STRUCTURE • STRATEGY AND CONCLUSION • APPENDICES 31 Turning Client Vision into Results
Slide 32: Strategy
Strategy • End to end service offerings • Balanced mix of consulting, build and run • Capitalise on industry sector knowledge • Develop a focused consulting practice • Focus on clients • Leverage strong HR management Build on global presence 32 Turning Client Vision into Results
Slide 33: Strategy: Business Mix
Strategy: Business Mix Manage long-term relationships with clients 60% revenue IT outsourcing & processing Understand our clients’ business 20% revenue Consulting Implement business solutions 20% revenue Integration 33 Turning Client Vision into Results
Slide 34: Wrap Up on The Merger
Wrap Up on The Merger • Creating a European IT leader and a global player • Very complementary operations • Well balanced business mix, industry presence, and large client base • Great reputation for technology and innovation in the IT industry • Sema Group’s recognised excellence in complex Systems
Slide 35: Agenda
Agenda • ATOS ORIGIN 2003 STAND ALONE PERFORMANCE • OVERVIEW OF SEMA GROUP • STRATEGIC RATIONALE AND PROFILE OF COMBINED ENTITY • PERFORMANCE ENHANCEMENTS AND MERGER EXECUTION • TRANSACTION STRUCTURE • STRATEGY AND CONCLUSION • APPENDICES 35 Turning Client Vision into Results
Slide 36: Combined P&L
Combined P&L In € Million H1 FY03 FY02 Atos Se ma Acquisition Total Atos Se ma Acquisition Total O rigin Group impact Proforma O rigin Group impact Proforma Re ve nue 1,543.1 1,197.2 2,740.3 3,042.9 2,562.8 5,605.7 Ebitda 178.1 83.3 261.4 388.6 145.3 533.9 Income from ope rations 122.6 24.4 147.0 26
Slide 37: Combined Balance Sheet
Combined Balance Sheet In € Million H1 FY03 FY02 Atos Se ma Acquisition Total Atos Se ma Acquisition Total O rigin Group impact Proforma O rigin Group impact Proforma Goodwill 976 765 1,741 1,029 786 1,815 O the r fixe d asse ts 235 488 723 271 521 792 Working capital 187 300 487 191 264 455 Capital
Slide 38: Combined Revenue & EBIT by Service Line FY03
Combined Revenue & EBIT by Service Line FY03 In € Millions Revenue FY03 EBIT FY03 % Margin FY03 Atos Sema Atos Sema Atos Sema New co New co New co Origin Group Origin Group Origin Group Consulting & Systems Integration 1 454,4 1 255,1 2 709,5 82,5 77,3 159,7 5,7% 6,2% 5,9% Managed Operations 1 575,9
Slide 39: Combined Revenue by Country FY02 -FY03
Combined Revenue by Country FY02 -FY03 In € Millions Revenue FY03 Revenue FY02 % growth Atos Sema Atos Sema Atos Sema New co New co New co Origin Group Origin Group Origin Group France 1,045.7 396.7 1,442.5 1,086.2 469.3 1,555.5 -3.7% -15.5% -7.3% UK 331.3 801.2 1,132.5 238.4 771.4 1,009.8 39.0% 3.9
Slide 40: Combined Revenue & EBIT by Country FY02 - H1 FY03 (1)
Combined Revenue & EBIT by Country FY02 - H1 FY03 (1) In € Millions Revenue EBIT EBIT margin H1 FY03 FY02 H1 FY03 FY02 H1 FY03 FY02 France 726.2 1,555.5 55.2 159.9 7.6% 10.3% UK 574.5 1,009.8 39.9 124.1 7.0% 12.3% Benelux 550.4 1,056.2 61.2 129.7 11.1% 12.3% Italy 153.7 389.8 4.8 24.7 3.1% 6.3% Spai
Slide 41: Combined Revenue & EBIT by Country FY02 - H1 FY03 (2)
Combined Revenue & EBIT by Country FY02 - H1 FY03 (2) In € Millions Revenue H1 FY03 Revenue FY02 EBIT margin H1 FY03 EBIT margin FY02 Atos Sema Atos Sema Atos Sema Atos Sema New co New co New co New co Origin Group Origin Group Origin Group Origin Group France 531.5 194.8 726.2 1,086.2 469.3 1,555.5