Atos Se · EURONEXT:ATO
Atos — Atos Origin — FY2004 Earnings Presentation
62 slides from Atos's earnings presentation, Mar 16, 2005
Slide 1: FY2004 results
FY FY2004 2004results results March March16, 16,2004 2005
Slide 2: Management Board
Management Board An experienced international team Bernard Bourigeaud CEO Xavier Flinois UK, Americas, Asia Pacific Global Markets, Key Accounts, Olympics Eric Guilhou CFO Dominique Illien France, Germany, Central Europe Managed Operations, AtosEuronext, Atos Worldline Wilbert Kieboom Benelux, Scand
Slide 3: Agenda
Agenda • GROUP ACHIEVEMENTS • 2004 BUSINESS PERFORMANCE • MERGER INTEGRATION • 2004 FINANCIAL PERFORMANCE • STRATEGY • OBJECTIVES FOR 2005 • SUMMARY 3 Turning Client Vision into Results
Slide 4: Highlights of 2004
Highlights of 2004 9 Revenue slightly better than expected at € 5.3 Bn 9 Key commercial wins and book to bill ratio of 135% 9 Operating profit at € 385 M : 7.3% operating margin 9 Improving margin trend from 5.0% in Q1 to 10.1% in Q4 9 Accretion of diluted EPS by 6% to € 3.43 9 Net debt well below o
Slide 5: Agenda
Agenda • GROUP ACHIEVEMENTS • 2004 BUSINESS PERFORMANCE • MERGER INTEGRATION • 2004 FINANCIAL PERFORMANCE • STRATEGY • OBJECTIVES FOR 2005 • SUMMARY 5 Turning Client Vision into Results
Slide 6: Revenue performance in 2004
Revenue performance in 2004 Organic growth better than expected % In € Millions FY04 FY03 Change Change Revenue 5,302 3,035 +2,267 +74,7% Acquisition : Sema Group 2,370 Revenue pro forma 5,302 5,405 -102 -1.9% Exchange rates -21 -0.4% At constant exchange rates -81 +0.4% Disposals -127 -2.4% Organic
Slide 7: An outstanding client base
An outstanding client base 9 Tier 1 accounts represent 48% of Group revenues 9 Tier 1 and Tier 2 accounts represent 67% of Group revenues 9 Full backlog end of Dec 2004 : € 6.8 Bn, representing 1.3 years’ revenues 9 Full pipeline end of Dec 2004 : € 2.4 Bn, representing 0.5 years’ revenues 9 Book to
Slide 8: Group Profile
Group Profile Business mix Geography Industry AP 3% Consulting Americas 5% Others (*) 8% 8% Other EMEA 5% Retail 7% France Public Sector Spain 5% 27% PILS (**) 8% & Utilities Systems Managed Italy 6% 27% Integration Operations Discrete Germany + CE 40% 52% Manufacturing 6% UK 12% Finance Benelux 23%
Slide 9: Quarterly Results
Quarterly Results Continuous improvement of profitability in 2004 1,600 12.0% 1,383 1,380 1,396 1,400 1,357 1,348 1,285 1,305 10.0% 1,253 1,200 10.1% 8.0% 1,000 7.6% 800 7.0% 6.9% 6.0% 600 5.9% 5.2% 4.8% 5.0% 4.0% 400 2.0% 200 0 0.0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2003 2004 Group Revenue (M€) Operating Mar
Slide 10: Consulting & Systems Integration
Consulting & Systems Integration Solid recovery in profitability % • Creation of Global Consulting & Global Systems Integration In € Millions 2004 2003 change organizations Revenue 2,537 2,706 -6.2% • All consulting practices rebranded as Atos Consulting: more than 2,000 consultants Income from oper
Slide 11: Consulting & Systems Integration
Consulting & Systems Integration Stable revenues in Q4 Strong improvement in margins 11 Turning Client Vision into Results
Slide 12: Managed Operations
Managed Operations Steady inflow of orders % In € Millions 2004 2003 change • Formation of Atos Worldline Revenue 2,765 2,699 +2,4% • Creation of Global Managed Operations organization Income from operations 264.1 267.9 -1% • 2004 organic revenue increase of 5.8% of which Operating margin 9.6% 9.9%
Slide 13: Managed Operations
Managed Operations Steady organic growth Improvement of margin rate 13 Turning Client Vision into Results
Slide 14: Performance by Service Line
Performance by Service Line Corporate costs reduced to 1.3% of Group revenues In € Millions Revenue Operating margin Employees % % End of Dec 2004 2003 2004 2003 Change Organic 2004 Consulting & Systems Integration 2,537 2,706 -6.2% -4.0% 7.6% 5.9% 24,938 Managed Operations 2,765 2,699 +2.4% +5.8% 9
Slide 15: Performance by Geography
Performance by Geography Profitability improvement in all main geographic areas In € Millions Revenue Operating margin Employees % % End of Dec 2004 2003 2004 2003 Change Organic 2004 France 1,410 1,445 -2.4% +0.2% 8.6% 8.1% 12,523 United Kingdom 1,222 1,133 +7.9% +5.8% 9.6% 7.9% 6,658 The Netherlan
Slide 16: Performance by Industry Sector
Performance by Industry Sector Well balanced major client coverage by Industry Sector % coverage Revenue Revenue of Sector Industry Sector % organic revenues by by Sector growth key clients 76% Public Sector & Utilities 1,461 +14% 76% Telecoms & Media 1,018 -5% 61% Financial Services 987 -5% 56% Dis
Slide 17: Major wins 2004
Major wins 2004 Renault, Rhodia, CNAMTS, Crédit Lyonnais, EDF, Fortis, RTE, France Auchan, Finance Ministry, Speed Radars, Exane, SIA, TDF BP, IND, MOD, DW P, NHS Scotland, DEFRA, Brake Bros, United Kingdom Network Rail, Schlumberger, Virgin Mobile, AT&T, LCH Clearnet, Vodafone, VOSA, ABN Amro, TNT
Slide 18: Business Process Outsourcing UK Dept for Work and Pensions
Business Process Outsourcing UK Dept for Work and Pensions The Win • Successful renewal following competitive tender • Initial 7 years contract awarded (with extension options up to 5 further years) Our Solution – faster, better, value for money • Year on year service improvement in turnaround times
Slide 19: Preferred Application Management Partner for Renault worldwide
Preferred Application Management Partner for Renault worldwide Challenges • Transform IT management practice and reduce costs at the same time • Support Renault’s international development • Rationalize Systems Integration providers • Build on operational excellence to facilitate innovation and IT –
Slide 20: Philips Global Workplace Solution GLOW-project
Philips Global Workplace Solution GLOW-project Business Challenges • Transform the current office automation organization into Global Shared Services • Optimize and standardize the life-cycle management process of office automation commodity products • Realize overall cost reductions for IT managed
Slide 21: Philips Solution characteristics
Philips Solution characteristics Service Desk LAN Services • Multilingual support (> 16 languages) • LAN Monitoring • Global integrated Service Desk (5 locations) • > 5,000 Switches • Follow the sun 24/7 • All switches SNMP manageable • > 1 million Contacts / year • Level 0 support deployed Managed
Slide 22: E-Plus - Full IT Outsourcing
E-Plus - Full IT Outsourcing Business Challenges • Increase efficiency of IT (Time-to-Market) • Reduce operational and innovation costs • Modernize IT Service landscape • Optimize IT processes Our Solution • Take over full responsibility for infrastructure and application management • Prime responsi
Slide 23: Atos Origin and LCH-Clearnet global outsourcing model
Atos Origin and LCH-Clearnet entering into a global outsourcing model Business Challenges • Integrate UK and Continental Europe Clearing market model following LCH and Clearnet merger • Harmonise the business processes LCH.Clearnet is the leading independent central • Enable LCH.Clearnet to decrease
Slide 24: Rhodia Infrastructure Outsourcing
Rhodia Infrastructure Outsourcing Business Challenges • Rationalize IT processes to increase the company competitiveness • Reduce costs but maintain a high quality service • Bring to operations the flexibility required by their activities Solutions • Servers / Desktops / LAN management in more than
Slide 25: Contrado - Netherlands Outsourcing KPN's customer contact software unit
Contrado - Netherlands Outsourcing KPN’s customer contact software unit Business Challenges • Achieve a standard mode of order entry for all products and services (cost-reduction). • Enabling web based customer self-service for all products and services (increased customer satisfaction) • Seamless i
Slide 26: Manulife Japan Data Center Outsourcing
Manulife Japan Data Center Outsourcing Business Challenges • Decision to outsource all Data Centre Operations for mainframe & midrange systems, running insurance management & back office applications • Reduce cost and implement industry standard management practices and disaster recovery Manulife Fi
Slide 27: Automated Speed Control Processing System
Automated Speed Control Processing System Challenges Automated Control Project Management • Reduce number of accidents by decreasing the driving speed in order to reduce the number of injuries and deaths • Reduce fines administrative treatment time Solutions • Set up of 1,000 on-line radars with our
Slide 28: Agenda
Agenda • GROUP ACHIEVEMENTS • 2004 BUSINESS PERFORMANCE • MERGER INTEGRATION • 2004 FINANCIAL PERFORMANCE • STRATEGY • OBJECTIVES FOR 2005 • SUMMARY 28 Turning Client Vision into Results
Slide 29: Successful Mergers & Acquisitions
Successful Mergers & Acquisitions 9 Businesses must be complementary, with no overlap 9 Strategy must be clear and non-core activities divested 9 Management structure must be decided quickly, with no compromise 9 Intense communication of structure and objectives internally 9 Intense communication to
Slide 30: Merger Integration
Merger Integration Visible benefits from the integration in H2 2004 9 Implementation of “Go to Market” strategy 9 Strengthening of global support functions 9 Increasing commercial opportunities and steady inflow or new orders 9 Streamlining of operations through the disposal of low-margin activities
Slide 31: Go to Market strategy
Go to Market strategy Key actions executed during the course of 2004 9 Creation of Global Consulting & Systems Integration: Core offerings reviewed and defined Atos Consulting rebranded 9 Creation of Global Managed Operations: Definition of core offerings Launch of Atos Worldline Formation
Slide 32: Measuring success
Measuring success 9 Setting challenging financial targets, and achieving them 9 Retaining key clients during and after integration 9 Achieving commercial contract wins 9 Retaining key management and staff 9 Staff satisfaction survey 32 Turning Client Vision into Results
Slide 33: Agenda
Agenda • GROUP ACHIEVEMENTS • 2004 BUSINESS PERFORMANCE • MERGER INTEGRATION • 2004 FINANCIAL PERFORMANCE • STRATEGY • OBJECTIVES FOR 2005 • SUMMARY 33 Turning Client Vision into Results
Slide 34: Net Income
Net Income In € Millions FY2004 FY2003 Comments Revenue 5,302 3,035 EBITDA 440 345 +28%, 8% of revenue Income From Operations 385 248 +55% Net financial expenses (49) (27) Average rate 5.0% vs 4.6% Corporate income tax (52) (41) Effective tax rate 31% vs 29% Minority interests (7) (11) Net income be
Slide 35: Balance Sheet
Balance Sheet Atos Origin Sema Acquisition Opening Dec. 31st, In € Millions Dec. 31st, Jan. 1st, Jan. 1st, Jan 1st, 2004 2003 2004 2004 2004 Goodwill 742 1,414 2,156 2,031 Other fixed assets 201 144 345 387 Working capital 146 303 448 416 Operational working capital 64 133 197 141 Deferred tax 82 17
Slide 36: Provision movements
Provision movements Dec 31st, Jan 1st, Dec 31st, In € Millions Change Scope Rates P&L Cash 2003 2004 2004 Pensions 105 414 515 100 111 1 70 -82 Fair value adjustments 18 29 14 -15 0 0 0 -15 Reorganization 23 34 51 17 0 0 75 -58 Rationalization 20 66 50 -16 -5 -1 9 -19 Project commitments 28 168 100
Slide 37: Cash Flow
Cash Flow In € Millions FY2004 Comments Cash from operating activities 327 6.2% of revenues Change in working capital 74 DSO 64 days Net cash from operating activities 402 7.6% of revenues Capital expenditure (137) 2.6% of revenues Net cash from current operations 264 5.0% of revenues Reorganization
Slide 38: 2004 Net Debt evolution
2004 Net Debt evolution € million 750 700 650 600 698 703 550 676 500 562 450 491 400 Jan Mar June Sep Dec Leverage Ratio (Net debt / EBITDA) Dec-04 : 1.12 covenant <1.75 Interest Cover Ratio (EBITA / Net interest) FY04 : 10.3 covenant >5 38 Turning Client Vision into Results
Slide 39: Business disposals
Business disposals Over 40% of disposal program completed In € million Deconsolidation Revenue Sales Proceeds Cash received in Date 2003 2004 Consideration / Sales 2004 Cellnet 01/08/2004 156 75 157 1.1 157 Convergent 01/07/2004 13 4 4 0.4 3 Priority Call Managt 01/08/2004 11 6 5 0.5 1 Australia 01/
Slide 40: Merger plan
Merger plan Costs in line with initial plan Costs Initial plan New plan In € millions FY04 FY04 Reorganization (112) (110) Rationalization (8) (15) Integration (30) (23) Total (150) (149) Cash Initial plan New plan In € millions FY04 FY04 Reorganization (130) (96) Rationalization (10) (23) Integrati
Slide 41: Reorganization plan
Reorganization plan Status of restructuring plans at the end of 2004 Initial plan FY04 FY05 Total Staff reduction (out) 2,333 130 2,463 Costs (112) (112) Cash (130) (8) (138) Actual plan FY04 FY05 Total Staff reduction (out) 1,766 734 2,500 Costs (110) (110) Cash (96) (51) (147) 41 Turning Client Vi
Slide 42: Staff evolution
Staff evolution Successful merger reorganization Dec. 31st, 2003 Dec. 31st, 2004 (551) 5,445 1,200 19,620 Disposals (3,837) Outsourcing (1,766) Hiring Leavers contracts Sema Restructuring Group 46,584 Staff turnover at 8.7% 26,473 Indirect staff ratio at 11.6% Revenue per head at 118 K€ Subcontracto
Slide 43: Savings
Savings Steady effect of Group’s restructuring and integration plan In % Q1 Q2 Q3 Q4 H1 H2 FY Margin rate 2003 4.8% 5.9% 5.2% 7.6% 5.4% 6.4% 5.9% Margin rate 2004 5.0% 7.0% 6.9% 10.1% 6.0% 8.5% 7.3% Savings +0.1% +1.1% +1.7% +2.5% +0.6% +2.1% +1.4% 11% Margin Rate FY03 Margin Rate FY04 10.1% 10% 9%
Slide 44: Share Ownership
Share Ownership +116% of free float in one year 70 000 000 Shares in issue 15% 60 000 000 32% 32% 50 000 000 40 000 000 45% 29% 30 000 000 85% 68% 20 000 000 55% 39% 10 000 000 0 Jan Jun Dec Dec Free float Schlumberger Philips 44 Turning Client Vision into Results
Slide 45: IFRS transition
IFRS transition IFRS standard conversion project 9 Status of the project : diagnosis, implementation and deployment done 9 Management Reporting & Consolidation systems adapted 9 Training sessions held, accounting handbook proposed, intranet dedicated 9 Internal and external communications launched 9
Slide 46: IFRS transition
IFRS transition IFRS standard conversion project 9 Presentation of financial statements Balance sheet : current / non current items Disappearance of non recurring items Recommendation of CNC on presentation will be followed 9 Segment information : segment 1 Geographical Area / segment 2 Servic
Slide 47: Agenda
Agenda • GROUP ACHIEVEMENTS • 2004 BUSINESS PERFORMANCE • MERGER INTEGRATION • 2004 FINANCIAL PERFORMANCE • STRATEGY • OBJECTIVES FOR 2005 • SUMMARY 47 Turning Client Vision into Results
Slide 48: 2004 Market Structure Europe
2004 Market Structure Europe In € Millions Gartner Market size Atos Origin Market M€ % 2004 % revenues share C&SI ex Application Management 63,814 53% 37% 2.8% MO ie Application Management 55,818 47% 63% 5.4% Europe market size 119,632 100% 100% 4.0% United Kingdom 38,010 32% 25% 3.2% Germany + Cent
Slide 49: Strategy - Consulting
Strategy - Consulting Atos Consulting 9 Consulting brings the knowledge of our client’s business 9 Focus on IT-related business consulting Helping clients with their business and IT strategy Providing operational transformation to address efficiency Designing and implementing processes and tec
Slide 50: Strategy - Systems Integration
Strategy - Systems Integration Delivering clarity from complexity 9 To sell and install solutions for clients ERP systems (strong partnerships with SAP, Oracle) Technology solutions Key offerings in security, RFID, Business Intelligence, VOIP 9 Increase the proportion of recurring application
Slide 51: The Sourcing Power Grid
The Sourcing Power Grid capacity available at international centers NOW Offshore Nearshore Nearshore Lower costs Groningen. Warsaw Capacity Utrecht Nearshore Time to market Nearshore Grenoble Quality Rennes Nearshore Nearshore Naples Madrid. Barcelona Offshore Offshore Mumbai Kuala Lumpur Near shore
Slide 52: Strategy - Managed Operations
Strategy - Managed Operations Strategic alternatives addressing cost & risk 9 The focal point for long-term relationships with clients 9 Market in Europe growing faster than in US 9 Develop new offerings – utility computing / NGDT (V2) 9 Implement global delivery model 9 Further consolidate data cen
Slide 53: Data Center Locations
UK / Scandinavia Data Center Locations Greenwood House Birmingham Cannock, Stockholm Eindhoven Benelux Zavantem Gronigen Bossum Andover Amsterdam Birmingham Germany / Austria Hamburg Bielefeld Frankfurt Bitterfeld France Essen Leipzig Dorbim Seclin Nuremberg Linz vendome Aachen Paris Arlington Hong
Slide 54: Facts & Figures by Service Lines
Facts & Figures by Service Lines Mainframes On-line Services 46 Data Centers and Multimedia 180 OS/390 15 million Loyalty Cards >50.000 MIPS €4 billion transactions/day 700 Web-Sites hosted Distributed Systems 10,000+ midrange servers (Unix, NT, AS/400, VMS) Global Network 150,000+ ERP users in 50 c
Slide 55: Strategy - Atos Worldline
Strategy - Atos Worldline 9 A major European player in payment and internet processing services 9 Capture major outsourcing opportunities 9 Extend the Group’s geographical presence 9 Extend services into transport, retail, oil-gas, telco, media 9 Build on technology innovation in the sector 9 Develo
Slide 56: Strategy - Key Accounts
Strategy - Key Accounts Creating long-term relationships & partnerships 9 Continue to focus on growing our key accounts 9 Accompany our clients as they globalize Shared investment with clients for the future Bring innovation to clients 9 Increase market share at client accounts 9 Emphasis on lon
Slide 57: Agenda
Agenda • GROUP ACHIEVEMENTS • 2004 BUSINESS PERFORMANCE • MERGER INTEGRATION • 2004 FINANCIAL PERFORMANCE • STRATEGY • OBJECTIVES FOR 2005 • SUMMARY 57 Turning Client Vision into Results
Slide 58: Guidance For 2005
Guidance For 2005 9 Focus on achieving organic growth Recovery of the market Based on steady inflow of new orders in 2004 and increase in pipeline Organic revenue growth expected to be at least 5% 9 Operating margin targeted in the range 7.5% - 8.0% 9 Net debt target : € 350 M by December 31st
Slide 59: Agenda
Agenda • GROUP ACHIEVEMENTS • 2004 BUSINESS PERFORMANCE • MERGER INTEGRATION • 2004 FINANCIAL PERFORMANCE • STRATEGY • OBJECTIVES FOR 2005 • SUMMARY 59 Turning Client Vision into Results
Slide 60: Strategy: Business mix
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 60 Turning Client Vision into Results
Slide 61: Strategy
Strategy 9 Focus on clients / Global sourcing 9 Leverage strong HR management 9 Become n°1 in Europe 9 With a top 3 position in each major European market 9 China is the focal point for Asia-Pacific 9 India is the focal point for offshore support 61 Turning Client Vision into Results
Slide 62: 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 62 Turning Client Vision into Results