Atos SE · EURONEXT:ATO
Atos — Atos Origin — Q1 2008 Earnings Presentation
52 slides from Atos's earnings presentation, Apr 30, 2008
Slide 1: Atos Origin Q1 2008 Revenues
Atos Origin Q1 2008 Revenues Paris, 30 April 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. 29/04/2008 23:39 © 2006 Atos Origin. Private for the client. This report or any part of it, may not be c
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 » Q1 2008 Highlights » Q1 2008 Performance » Transformation Plan » Distinctive offers » 2008 Priorities and Outlook 3 Atos Origin Q1 2008 revenues / April 30, 2008
Slide 4: Q1 2008 Highlights
Q1 2008 Highlights » Strong revenue organic growth for the first quarter » Statutory Q1 2008 revenue including one month of Italy at EUR 1,424 M; organic growth at +5.3% » Excluding Italy and AEMS Exchange, revenue at EUR 1,356 M; organic growth at +5.9% » Commercial activity » Order entries increas
Slide 5: Commercial momentum confirmed: latest wins in Q1 2008
Commercial momentum confirmed : latest wins in Q1 2008 Customers Country Service Deals line Alstom France MS Support and multi-langage helpdesk Oil company France MS Infrastructure services MMA France CO Business consulting in the merger with Azur UK Health UK CO Project Management Ministry of Defen
Slide 6: Agenda
Agenda » Q1 2008 Highlights » Q1 2008 Performance » Transformation Plan » Distinctive offers » 2008 Priorities and Outlook 6 Atos Origin Q1 2008 revenues / April 30, 2008
Slide 7: Q1 2008 revenue organic growth excluding Italy and AEMS exchange at +5.9%
Q1 2008 revenue organic growth excluding Italy and AEMS exchange at +5.9%; above full year guidance Exchange 2007 % organic In € Million 2008 2007 ∆% Disposals rates proforma growth Statutory scope 1,424 1,435 -0.8% (35) (47) 1,353 +5.3% Italy (1 month in Q1 08 and 3 months in Q1 07) (20) (65) 44 (2
Slide 8: Q1 2008 revenue organic growth excluding Italy and AEMS Exchange
Q1 2008 revenue organic growth excluding Italy and AEMS Exchange +5.9% Organic growth (M€) 1,435 (65) 1,400 (54) +76 1,356 (33) (3) 1,280 1,300 1,200 1,100 1,000 Q1 07 Italy AEMS Exchange Other Q1 2007 Organic Q1 2008 reported Exchange rates disposals revenue growth excl. Italy revenue impact excl.
Slide 9: Continuous improvement of organic growth
Continuous improvement of organic growth 2006 IT Services market growth Western Europe (source Gartner) : +6.2% +6,6% 2007 IT Services market growth Western Europe +5,3% (source Gartner) : +5.9% +5,3% +3,2% +2,7% +2,5% +2,9% +0,4% -0,2% Q1'06 Q2'06 Q3'06 Q4'06 Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q1 2008 i
Slide 10: Higher Q1 organic growth in 2008 compared to the last two years
Higher Q1 organic growth in 2008 compared to the last two years Organic growth excl. Italy and 7.0% AEMS Exch. +5.9% 6.0% +5.3% 5.0% 4.0% 3.0% +2.7% +2.5% 2.0% 1.0% 0.0% Q1'06 Q1'07 Q1'08 Year-on-Year organic growth Start of the year above the total year guidance 10 Atos Origin Q1 2008 revenues / Ap
Slide 11: Q1 2008 Performance by service line
Q1 2008 Performance by service line Statutory scope Excluding Italy and AEMS Exchange (**) % organic % organic In € Million Q1 2008 Q1 2007 ?% Q1 2008 Q1 2007 ?% growth (*) growth (*) Consulting 88 95 -6.6% -3.3% 88 95 -6.6% -3.3% Systems Integration 574 584 -1.8% +6.8% 559 535 +4.5% +7.2% Managed O
Slide 12: Q1 2008 Performance by geographical area
Q1 2008 Performance by geographical area Statutory scope Excluding Italy and AEMS Exchange (**) % organic % organic In € Million Q1 2008 Q1 2007 ?% Q1 2008 Q1 2007 ?% growth (*) growth (*) France 426 398 +7.1% +7.5% 388 365 +6.3% +6.8% United Kingdom 245 273 -10.2% +1.1% 236 252 -6.3% +5.5% The Neth
Slide 13: Commercial dynamics confirmed: order entries growth of +11% vs Q1 2007
Commercial dynamics confirmed: order entries growth of +11% vs Q1 2007 (€ bn) Q1'08 1.43 Q1'07 1.30 Systems Managed Book to bill Total Group Consulting Integration Operations Q1 08 101% 113 % 114 % 89 % Q1 07 90% 95 % 114 % 71 % 13 Atos Origin Q1 2008 revenues / April 30, 2008
Slide 14: Headcount evolution
Headcount evolution » Change in scope relates to Italy (2,477 staff) » Hiring: +2,600 new employees in Q1 08 » Staff attrition pursue the decrease at 14.3% in Q1 2008 compared to 15.3% in Q1 2007 and 14.6% for FY 2007 51,704 (2,443) (1,683) +2,620 49,785 (413) Staff as of 31 Change in Leavers Lay-of
Slide 15: Staff by geographical area
Staff by geographical area Closing Closing % Total Change since opening Mar 2008 Dec 2007 France 15,537 15,528 31% +9 +0.1% United Kingdom 6,219 6,179 12% +40 +0.6% The Netherlands 8,313 8,398 17% (85) -1.0% Germany + Central Europe 4,120 4,076 8% +44 +1.1% Rest of EMEA 8,461 8,186 17% 274 +3.4% Ame
Slide 16: Attrition rate
Attrition rate » A decrease by more than one point in each service line compared to one year ago 29.0% 28% 26.0% 26.9% 26.7% 23.8% 24.7% 23% 23.3% 21.4% 18% 16.2% 15.9% 15.9% 15.8% 15.3% 13.2% 13.4% 14.3% 12.4% 15.3% 14.9% 14.6% 13% 14.8% 12.7% 12.6% 12.7% 12.6% 12.5% 11.6% 11.7% 12.2% 9.8% 10.5% 10
Slide 17: Staff evolution in low cost countries
Staff evolution in low cost countries India » Strong increase with more than 5,470 staff at 31 March 2008; breaking the 10% barrier with Brazil 11% of total staff Morocco » Objective to double from 2007 to 2009 confirmed; 10% to 20% of total staff in low Poland cost countries China » Acceleration of
Slide 18: Unfolding of the Consulting Action Plan (1/2)
Unfolding of the Consulting Action Plan (1/2) In € Million Q1 2008 Q1 2007 % Organic Revenue 88.4 94.7 -3.3% UK UK Order Entry 100 90 +12% 29% Book to bill ratio 113% 95% » Order entries increasing in Q1 2008 by +12%: France +25%, UK -5%, The Netherlands +23%, Spain & Belgium +5% » Revenue decrease
Slide 19: Unfolding of the Consulting Action Plan (2/2)
Unfolding of the Consulting Action Plan (2/2) » France - Turnaround performed with +11% revenue growth - Significant pipeline increase with mostly ACSIMO deals - Strong sector focused Go-To-Market jointly with Systems Integration and Managed Operations; book to bill at 119% » United Kingdom - New Ma
Slide 20: Pensions Agreements reached
Pensions Agreements reached » United Kingdom » The Group finalised its agreements with UK pension Trustees on 31 March 2008 (« Deed of Amendment ») - Defined benefit accrual of the two company defined benefits plans stopped effective 1 April 2008 and replaced by defined contribution plans with bette
Slide 21: Net debt evolution
Net debt evolution (M€) 450 411 400 360 350 338 304 300 250 200 150 100 50 0 Dec'06 Mar'07 Dec'07 Mar'08 Strong performance in working capital High level of CAPEX for industrialization and datacenters Q1 2008 Italy: cash received in January 2008 21 Atos Origin Q1 2008 revenues / April 30, 2008
Slide 22: Agenda
Agenda » Q1 2008 Highlights » Q1 2008 Performance » Transformation Plan » Distinctive offers » 2008 Priorities and Outlook 22 Atos Origin Q1 2008 revenues / April 30, 2008
Slide 23: Industrialization Initiative
Industrialization Initiative Projects in Productivity Better costing / sizing of Database fixed-price & AM projects Staff in Software Increased Output Development Centers Productivity (Function Points / h) Usage of the Tooling Improved Quality Shared Service Center Less rework & overruns » AO SI Bus
Slide 24: Industrialization Initiative
Industrialization Initiative 10,000 Staff in Software Development & Maintenance Centers 88 % 9,000 82 % 8,000 7,000 60 % # Staff 6,000 5,000 41 % 0.105 Productivity (FP / h) 4,000 Penetration % 3,000 0.1 2,000 Function Points/h Q1'07 Q3'07 Q1'08 Q3'08 Q1'09 Q3'09 0.095 Plan Actuals Forecast Users of
Slide 25: Offshoring: Increase Near-/Offshore ratios
Offshoring: Increase Near- /Offshore ratios 1% 5% % Near- & Offshore Staff in SI Spain 1% 6.5% 15% France 1% 13.4% 20% Germany & CE 10% 19.8% 35% UK 5% 17.2% 28% The Netherlands 45% 48.2% 50% US 5.5% 11.3% 25% Group 0% 10% 20% 30% 40% 50% 60% 3o3 Baseline (end 2006) Status end Q1'08 Target end 2009
Slide 26: Off- & Closeshoring Evolution
Off- & Closeshoring Evolution 10 000 9 523 9 000 7 942 8 000 8 000 7 000 6 348 6 100 6 000 5 321 4 946 5 000 4 000 3 402 3 001 3 000 1 935 2 000 1 585 969 1 000 0 2006 2007 2008 2009 SI Off-/Nearshore Total Off-/Nearshore Staff closeshore % off-/nearshore (SI) % closeshore (SI) » After 100 % growth
Slide 27: MS Global Factory Initiative – mainframe optimization
MS Global Factory Initiative – mainframe optimization (at current volumes) Consolidation of MIPS in Germany From 48% to 96% of Atos Origin Mainframe Capacity in Europe 24,500 23,450 FR II FR I 16,650 Italy NL 12,500 End 2006 End 2007 End 2008 End 2009 » Mainframe project is on track. The transfer fr
Slide 28: MS Global Factory Initiative – datacenter optimization
MS Global Factory Initiative – datacenter optimization » Focus on twin data centers » Rationalization and closing of data centers » Data centers extensions for additional business 64,000 m² 14,070 m² 40% 8,990 m² 58,920 m² 21% Done 2007 Plan 08 & 09 End 2006 Datacenter Datacenter Target end 2009 Clo
Slide 29: Purchasing Initiative
Purchasing Initiative » Effective move from one shot and individual purchasing actions to a balanced mix between global and local Project Completion KPI Baseline End End Target Target Description / Comments End 2006 2007 Q1 2008 End 2008 End 2009 Strategic buyers as a Strategic buyer = person in per
Slide 30: Selected achievements Q1 2008
Selected achievements Q1 2008 » Hardware components integrated in Atos Origin products » Storage components for services delivered in the UK » Various actions in the Housing & Logistics category 30 Atos Origin Q1 2008 revenues / April 30, 2008
Slide 31: Agenda
Agenda » Q1 2008 Highlights » Q1 2008 Performance » Transformation Plan » Distinctive offers » 2008 Priorities and outlook 31 Atos Origin Q1 2008 revenues / April 30, 2008
Slide 32: Distinctive Offers
Distinctive Offers Status Distinctive Offers focus announced in December 2007 Business outcome focus Cross-service line – ACSIMO Pan European High growth and return Leverage partnerships Global Distinctive Offers 9 offers identified in 2007 for further global development Implementation well underway
Slide 33: Examples of Global Distinctive Offer Wins In Q1 2008
Examples of Global Distinctive Offer Wins In Q1 2008 Distinctive Key Company Country Delivery Model Offer Partner MMT Chem China China SAP Design/Build/Operate ECM ING Netherlands Documentum Design/Build/Operate Intelligent Netherlands Vodafone Ericsson Design/Build Network and Greece Telecom Design
Slide 34: Agenda
Agenda » Q1 2008 Highlights » Q1 2008 Performance » Transformation Plan » Distinctive offers » 2008 priorities and outlook 34 Atos Origin Q1 2008 revenues / April 30, 2008
Slide 35: 2008 priorities: sales and market
2008 priorities: sales and market » Shorten time to market and drive innovation » Leverage replicable solutions across market sectors » Leverage knowledge sharing through Global centres of excellence » Leverage distinctive offerings on top of mainstream which are strategic for coming years (e.g. Wor
Slide 36: 2008 priorities: business efficiency and costs reduction
2008 priorities: business efficiency and costs reduction » Boost performance and capacity of total group » Operational excellence x business efficiency = operational improvement - Industrialization - Increased offshore leverage - Reshaping pyramid in Consulting and SI - Reduce cost structure (corpor
Slide 37: 2008 priorities: business development
2008 priorities: business development » Continue profitable growth through ACSIMO model » Majority of recurring business » Economically resilient business model » Continue investment in payment processing (Worldline) » Expand specialized BPO (speed control systems, health business, e-government) » G
Slide 38: Backlog coverage on 2008 revenue
Backlog coverage on 2008 revenue 2007 Revenue coverage as of Dec 06 2008 revenue coverage as Dec 07 (new scope) 28% 27% Backlog Backlog Pipe Pipe To find 54% To find 57% 16% 18% 2007 revenue coverage as of Mar 07 2008 revenue coverage as of Mar 08 15% 18% 13% Backlog Backlog 13% Pipe Pipe To find To
Slide 39: 2008 Revenue Organic Growth objective
2008 Revenue Organic Growth objective (on future scope) Q1 revenue organic growth: +5.9% 2008 revenue organic growth Q1 order entry growth: +11% maintained at +4% with comfort Better coverage by +3 points at 72% 39 Atos Origin Q1 2008 revenues / April 30, 2008
Slide 40: Outlook
OUTLOOK 2008 Objectives » Excluding Italy and AEMS Exchange, full year revenue organic growth confirmed at +4% as communicated on 15 February 2008 » Operating Margin rate confirmed at 5.6% after operating costs of Transformation Plan, an increase by +100 points basis on new scope (excluding Italy an
Slide 41: Roadmap 2008-2011
Roadmap 2008-2011 2007 2008 2009 2010 2011 303 Plan Distinctive Offerings SEPA Consolidation: Atos Wordline as a consolidator in Europe and develop in Asia Acquisition of small and medium sized IT companies complementing geographies and offerings Atos Origin again as a consolidator company in the IT
Slide 42: Shareholder value creation
Shareholder value creation Transformation plan Recovery in the UK OM rate increase of +250 basis points by 2009 Organic growth OMDA improvement Strong increase of free End of restructuring cash-flow by 2010 Capex decrease » Dividend policy - First time in 2008: EUR 0.40 per share - Dividend policy t
Slide 43: Appendices: Distinctive offers
Appendices: Distinctive offers Paris, 30 April 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. 29/04/2008 23:39 © 2006 Atos Origin. Private for the client. This report or any part of it, may not be
Slide 44: Nuclear Instrumentation and Control
Nuclear Instrumentation and Control Demand Retrofit: Market Size estimated at 225 M€/year. New Build: 6 new units per year in the next 5 years. Market Size estimated at 300 M€/year Distinctive Offer Status Strong competence center in Grenoble New partnership established with Invensys Best-of-breed p
Slide 45: Telecoms
Telecoms Convergence, Billing, Intelligent Network, Business Support Demand Convergent Billing: Market Size in Europe 200M€/year, NGIN: Market Size in Europe: EUR 200 M/year, Business Support: Market Size-new projects EUR 600M in Europe including Billing/CRM. Growing in Asia/EMA. Distinctive Offer S
Slide 46: SAP Banking
SAP Banking Demand Germany: Market Size 1,4 Bn€ over the next 5 years. Rest of Europe (UK, NL, FR, SP) and Asia: Market Size estimated at > 5 B€. Distinctive Offer Status Global SAP Banking Competence Centre located in Germany supported by strong expertise in Spain and France New partnership in prog
Slide 47: SAP Maximise Manufacturing Together
SAP Maximise Manufacturing Together Demand US, Western Europe and China’s SAP ecosystem in manufacturing: Market Size estimated at 4 Bn€; Distinctive Offer Status 5 Centers of Excellence - Chemicals, Automotive, High Tech, CPG, Oil and Gas Partnership with SAP for MMT Good qualified pipeline New win
Slide 48: SAP Transformation
SAP Transformation Demand Market Size: 20000+ upgrades, 3Bn€/year Distinctive Offer Status Strong SAP Competence Center Over 3000 SAP resources Well established and comprehensive set of industrialised packaged upgrade services Established alliances with SAP and HP Good qualified pipeline Over 100 up
Slide 49: Enterprise Content Management
Enterprise Content Management Demand Compliance, archiving, cost control, collaboration, tractability and security needs: ECM Market Size estimated at 5 b€ Distinctive Offer Status Market leader in the Netherlands Key expertise in Documentum, FileNet and Sharepoint Established alliances with IBM, EC
Slide 50: Payments
Payments Demand Card Payment Processing: Market Size 8 B€ in 2008 growing. Non Card Payment: Market Size; 70 B€ including Credit Transfer /Direct Debit at 8 B€. About 48 B€ addressable for a player such as Atos Origin Distinctive Offer Status Established market leader in Europe Transaction based ser
Slide 51: E-CRM and E-Services
E-CRM and E-Services Demand Projects can be huge. New build growth is 7% in CRM, while system enhancement is estimated at double digit growth; Public sector: e citizen e government, Private sector: retail, telecom, utilities, finance, cpg, Distinctive Offer Status Established competence centers Esta
Slide 52: Questions
Questions Paris, 30 April 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. 29/04/2008 23:39 © 2006 Atos Origin. Private for the client. This report or any part of it, may not be copied, circulated,