Atos SE · EURONEXT:ATO
Atos — Atos Origin — H1 2003 Earnings Presentation
34 slides from Atos's earnings presentation, 2003
Slide 1: H1 2003 Results
H1 2003 Results Bernard Bourigeaud
Slide 2: Agenda
Agenda • GROUP ACHIEVEMENTS • H1 2003 BUSINESS PERFORMANCE • YEAR 2003 OUTLOOK • STRATEGY 2 Turning Client Vision into Results
Slide 3: Group Achievements
Group Achievements • Revenue growth of 3.8% • Operating profit of € 123M (7.9% margin) • Improving margin trend from 7.4% in Q1 to 8.5% in Q2 • Net debt reduced to € 386 M • Continuous & encouraging inflow of orders with a book-to-bill ratio of 108% • Consulting has expanded our range of services an
Slide 4: Atos Origin Profile
Atos Origin Profile End to end Global Well balanced offerings presence industry mix Americas Others 3% 5% Consulting Retail EMEA Asia Pacific 7% Financial 13% 11% 2% Public Sector Services Germany France 8% 26% Managed 7% 35% Process Systems Industries Operations UK Integration 11% 51% 11% 36% Telco
Slide 5: Agenda
Agenda • GROUP ACHIEVEMENTS • H1 2003 BUSINESS PERFORMANCE • YEAR 2003 OUTLOOK • STRATEGY 5 Turning Client Vision into Results
Slide 6: Financial Performance
Financial Performance H1 2003 H1 2002 Change H2 2002 In € Millions Revenue 1543.1 1486.7 +3.8% 1556.2 Income from operations 122.6 135.1 -9.2% 130.5 Operating margin 7.9% 9.1% 8.4% Net income before non recurring items & goodw ill 78.4 83.1 -5.7% 96.9 EPS* before goodw ill and non recurring items (i
Slide 7: Quarterly Results
Quarterly Results Sustained Profitability 9,1% 8,8% 900 8,0% 8,5% 9,0% 9,0% 800 7,4% 8,0% 700 7,0% 600 6,0% 500 5,0% 400 4,0% 300 3,0% 200 2,0% 100 1,0% 749 738 734 822 781 763 0 0,0% Q1 Q2 Q3 Q4 Q1 Q2 2002 2003 Group Revenue (M€) Operating Margin 7 Turning Client Vision into Results
Slide 8: Net Income
Net Income H1 H1 In € Millions Comments FY03 FY02 Income From Operations 123 135 Net financial expenses (12) (7) Increase due to AKC* financing. Cost of debt stable Non-recurring items (25) (10) Cost of restructuring Corporate income tax (25) (40) Tax deductibility of restructuring costs and goodwil
Slide 9: Restructuring
Restructuring Q1 Q2 H2 Beyond 2001 2002 Plan People 2003 2003 2003 2003 1 504 1 489 Plan end of Dec 02 1 344 381 352 Update in Q2 03 230 648 193 Total end of period 1 574 733 1 381 1 574 H1 2003 2003 2004 (10) (71) P&L impact (M€) (23) (58) 0 (89) (67) Cash Impact (M€) (47) (90) (14) 49 Provisions a
Slide 10: Changing the skills base
Changing the skills base 3% increase of revenue per head sequentially Dec. 31, 2002 June 30, 2003 (1 032) 200 (733) 771 (Leavers) New Restructuring Hiring contracts 28,602 Replacement of subco 27,808 Staff reduction New skills into the Group Subcontractors : stable at about 4% of productive staff 10
Slide 11: Cash Flow
Cash Flow H1 FY03 H1 FY02 Comments In € Millions Net cash from operating activities* 147 155 Change in working capital 29 (29) DSO 67 days Net cash from operating activities after WK 176 126 11.4% of revenue (+40%) Capital expenditure (37) (52) 2.4% of revenue (-29%) Net cash from current operations
Slide 12: Balance Sheet Performance
Balance Sheet Performance In € Millions June 30, 2003 Dec 31, 2002 June 30, 2002 Goodwill 976 1 029 402 Other fixed assets 236 271 324 Working capital 187 191 209 Capital employed 1 398 1 491 935 Equity 775 784 535 Provisions 238 267 219 Net debt 386 440 181 Capital alloted 1 398 1 491 935 Working C
Slide 13: Debt Calendar
Debt Calendar Funds available to meet repayment commitments Falling due within June 30, In € Millions 1 year 2 years 3 years >3 years 2003 Convertible bonds (173) - (173) - - Long-term borrowings (585) (99) (157) (153) (177) Finance leases & other borrowing (52) (32) (4) (3) (13) Total borrowings (8
Slide 14: Gearing
Gearing Banks M€ financial Well within borrowing covenants covenants 900 90% 800 77% 80% 100% 700 70% 56% 600 60% 500 55% 50% 39% 50% 400 40% 300 34% 30% 200 20% 100 10% 0 0% Q1 Q2 Q3 Q4 Q1 Q2 2002 2003 Net Debt (M€) Equity (M€) Gearing Net debt / 0.5 0.5 1.6 1.0 1.2 1.0 2.0 Ebitda 14 Turning Client
Slide 15: Provisions
Provisions Total : 267 M€ Total : 238 M€ 24 4 M&A Acquisition 6 6 41 38 AO Merger 86 71 Fair Value Origin Operating 120 Provisions 109 Pensions Dec. 31st 2002 June 30th 2003 15 Turning Client Vision into Results
Slide 16: Share ownership structure
t % % % % % % %%% k 3 s 3 7 6 2 8 6 . 089 c Turning Client Vision into Results Share ownership structure u 0 . . . . . .0.3 . o t g 0 4 5 5 0 0 5 3 s u 2 4 3 % % A , 3 0 n . 2 0 o h r t 9 1 m e 6 t f m A 1 o c l a i t % % % % % % n 4 1 6 9 7 3 e t 3 . . . . . . 8 o e 0 8 6 5 0 0 p n 0 4 3 % u 2 0 f
Slide 17: Consulting
Consulting Strengthening our positioning In € Millions H1 2003 H1 2002 Change H2 2002 • Atos KPMG Consulting is enhancing the Group’s profile in Revenue 196 12 162 UK & NLs Income from operations 13.0 3.7 12.4 Operating margin 6.6% 30.2% 7.6% • Significant bid opportunities and Headcount at period-e
Slide 18: Synergies Atos Origin - Atos KPMG Consulting
Synergies Atos Origin - Atos KPMG Consulting Examples of Synergies : Bids won UK Netherlands • Ministry of Justice • Virgin Mobile • Ministry of Agriculture • Synetix • Vitens • Huntsman Petrochemicals Atos KPMG Consulting’s • Ministry of Education • Vantico influence on • Akzo Nobel • Vodafone Atos
Slide 19: UK National Health Service
UK National Health Service • Atos Origin is partnering IBM • Bidding to be a Local Service Provider (LSP) • Bidding to be the National Application Service Provider (NASP) • Revenues could be significant and long-term • Too early to discuss revenue expectations • Decisions expected late 2003 19 Turni
Slide 20: Systems Integration
Systems Integration Continuous adjustment to market conditions • Some pricing pressure persists In € Millions H1 2003 H1 2002 Change H2 2002 but volume levels starting to improve in Q2 2003 Revenue 555 647 -14.2% 596 Income from operations 27.4 45.9 -40% 20.1 • Utilization rate improved to 77% in Op
Slide 21: Managed Operations
Managed Operations Encouraging inflow of orders In € Millions H1 2003 H1 2002 Change H2 2002 • Steady flow of mid-size contract signings. Book-to bill ratio of 115. Revenue 793 827 -4.2% 798 Pipeline improving also Income from operations 96.3 103.5 -7% 110.1 Operating margin 12.2% 12.5% -0.3 pt 13.8
Slide 22: Global Presence
Global Presence All countries remain profitable Revenue Operating margin Employees Period- In € Millions H1 2003 H1 2002 change H1 2003 H1 2002 end France 532 543 -2.2% 10.5% 10.6% 8,678 The Netherlands 482 441 +9.5% 11.4% 14.0% 8,623 UK 171 71 +139% 2.7% 7.8% 2,015 EMEA 289 326 -11.1% 6.2% 6.7% 6,2
Slide 23: Markets drivers
Markets drivers • General economic recovery • Basel II 4 0 3 • Sarbanne-Oxley 3 5 3 • International Accounting Standards 3 0 4 • Improving Telco sector • Increased Public Sector 1 8 0 in UK and NLs 1 2 0 1 0 8 7 5 Telecoms, Financial Discrete Process Public CPG & Utilities, Other Services Manufact.
Slide 24: Key Accounts program
Key Accounts program • Top 50 key accounts Key Account program increased to 50 clients with 9 from AKC Key Accounts represent more than 55% of revenue • Philips 16% lower sequentially at € 170 M (low range of the budget) Philips now represents 11% of Group revenue Renewal of Preferred Supp
Slide 25: Recent wins
Recent wins France, Italy, Latin America Redcats/PPR, Linedata, Pechiney, VU Cegetel, Société Générale, BNP Paribas, Snecma, Auchan, CIC Securities The Netherlands, Belgium Philips, KPN, DAF, VGZ, D-Reizen, Vitens, DSM, Rabobank, Ministerie van Defensie, Ahold European Sourcing UK Brakes, Dept for I
Slide 26: Order book
Order book Full Order Book-to- Revenue Full backlog backlog entry bill In € Millions Dec. 02 H1-03 H1-03 June 03 In years H1-03 Consulting 126 195 -195 126 0.3 100% Systems Integration 553 554 -555 552 0.5 100% Managed Operations 2 907 912 -793 3 027 1.9 115% Total Group 3 587 1 661 -1 543 3 704 1.2
Slide 27: Agenda
Agenda • GROUP ACHIEVEMENTS • H1 2003 BUSINESS PERFORMANCE • YEAR 2003 OUTLOOK • STRATEGY 27 Turning Client Vision into Results
Slide 28: FY2003 financial outlook
FY2003 financial outlook • Modest revenue increase (before exchange rate impact) – Full year impact of Atos KPMG Consulting • Operating profit – Organizational streamlining and tight costs control – Bid and new contract start-up costs and IAS pension provisions – Targeting an operating margin in exc
Slide 29: Agenda
Agenda • GROUP ACHIEVEMENTS • FY 2002 BUSINESS PERFORMANCE • YEAR 2003 OUTLOOK • STRATEGY 29 Turning Client Vision into Results
Slide 30: Strategy
Strategy • End to end service offerings • Balanced mix of consulting, build and run • Capitalize on industry sector knowledge • Develop a focused consulting practice • Focus on clients • Leverage strong HR management Build on global presence 30 Turning Client Vision into Results
Slide 31: Strategy: Business mix
Strategy : Business mix 60% revenue Manage long-term relationships with clients IT outsourcing & processing Understand our clients’ business 20% revenue Consulting Implement business solutions 20% revenue Integration 31 Turning Client Vision into Results
Slide 32: 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 32 Turning Client Vision into Results
Slide 33: Annex
Annex 33 Turning Client Vision into Results
Slide 34: Provisions
Provisions Variance Analysis Release June Dec Release In € Millions Change Scope P&L with cash 30, 2003 31, 2002 with cash in future Origin fair value adjustments 38 41 -3 1 -5 Atos Origin merger 6 6 0 1 -1 0 Other M&A restructuring 4 24 -20 -1 4 -24 Operating provisions 71 86 -15 3 12 -30 0 Pension