Atos SE · EURONEXT:ATO
Atos — Atos Origin — FY2002 Earnings Presentation
39 slides from Atos's earnings presentation, Mar 12, 2003
Slide 1: FY 2002 results
FY 2002 results March 12, 2003
Slide 2: Agenda
Agenda • GROUP ACHIEVEMENTS • FY 2002 BUSINESS PERFORMANCE • YEAR 2003 OUTLOOK • STRATEGY 2 Turning Client Vision into Results
Slide 3: Highlights 2002
Highlights 2002 • Stable revenue in a difficult market • Operating profit of € 266 M (8.7% margin) • Net debt reduced to € 440 M in quarter 4 • Successful integration of KPN operations • Acquisition of Atos KPMG Consulting UK & NL • Strengthened market, solution and key account organisation • Contin
Slide 4: Atos Origin profile
Atos Origin profile End to end Global Well balanced offerings presence industry mix Americas Other Other 4% 6% Consulting A.P. Retail Public Financial 16% EMEA 2% & CPG Serv. 11% France services Managed On Line Germany 7% 4% 26% 31% Operations Services Process 7% 48% Systems 10% Ind. 12% Intégration
Slide 5: Agenda
Agenda • GROUP ACHIEVEMENTS • FY 2002 BUSINESS PERFORMANCE • YEAR 2003 OUTLOOK • STRATEGY 5 Turning Client Vision into Results
Slide 6: Financial performance
Financial performance FY 2002 FY 2001 % change In € Millions Revenue 3,043 3,038 +0.2% Income from operations 265.6 261.2 +1.7% Operating margin 8.7% 8.6% Net income before non recurring items and goodwill 180.0 149.2 +20.6% Net income (Group share) 70.8 123.0 -42.4% In € EPS before non recurring it
Slide 7: Quarterly Results
Quarterly Results Profitability sustained in a difficult market 840 9.5% 8.9% 9.0% 9.1% 820 8.8% 9.0% 8.4% 8.8% 800 8.5% 8.2% 780 8.0% 8.0% 760 7.5% 740 7.0% 720 6.5% 700 6.0% 680 5.5% 757 761 723 797 749 738 734 822 660 5.0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2001 2002 Group Revenue (M€) Operating Margin 7 Tu
Slide 8: Net Income
Net Income (M€) FY02 FY01 Comments Income From Operations 266 261 Financial costs remain stable excluding Net financial expenses (27) (10) special items and AKC* financing Non-recurring items (71) (3) Cost of restructuring Tax deductibility of restructuring and Corporate income tax (47) (84) additio
Slide 9: Restructuring
Restructuring 2001 Plan People S1 2002 Q3 2002 Q4 2002 2003 1st plan Q4 01 528 374 2nd plan Q1 02 466 302 1,504 3rd plan Q2 02 293 4th plan Q3 02 776 813 5th plan Q4 02 770 1,344 YTD June YTD Sept YTD Dec Total 2,833 374 676 1,489 1,344 2001 2002 2003 (10) P&L impact (M€) (71) (52) (89) Cash Impact
Slide 10: Changing the skills base
Changing the skills base 4% increase of revenue per head Dec. 31, 2002 Dec. 31, 2001 1,657 (517) KPN EUS 2,673 KPN SWH (Leavers) (1,489) new hirings Restructuring Atos 28,602 KPMG 26,278 Consulting Staff reduction New skills into the Group Sub- 2,134 940 contractors 10 Turning Client Vision into Res
Slide 11: Cash Flow
Cash Flow (M€) FY02 FY01 Comments 12.6% of revenues Net cash from operating activities 382 397 Change in working cap. : +51 M€ Capital expenditure (102) (139) From 4.6% to 3.4% of revenues Net cash from current operations 280 258 Reorganisation and restructuring (73) (140) Origin fair value adjustme
Slide 12: Balance Sheet
Balance Sheet M€ Dec 31, 2002 June 30, 2002 Dec 31, 2001 Goodwill 1,029 402 405 Other fixed assets 271 324 366 Working capital 191 212 193 Capital employed 1,491 938 965 Equity 784 538 479 Provisions 267 219 251 Net debt 440 181 235 Sources of Capital 1,491 938 965 Working Capital / Revenue 6.3% 7.1
Slide 13: Debt Calendar
Debt Calendar Funds available to meet repayment commitments (M€) 2002 2003 2004 2005 >2005 Convertible bonds (173) - (173) - - Long-term borrowings (637) (100) (156) (152) (229) Finance leases & other borrowing (52) (35) (5) (2) (10) Total borrowings (862) (135) (334) (154) (239) • Cash currently av
Slide 14: Gearing
Gearing M€ Well within borrowing covenants Limit 900 90% 800 77% 100% 80% 71% 700 70% 600 49% 60% 500 56% 50% 37% 400 40% 39% 300 34% 30% 27% 200 20% 100 10% 0 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2001 2002 Net Debt (M€) Equity (M€) Gearing Net debt / 0.4 0.3 0.7 0.6 0.5 0.5 1.6 1.0 2.0 Ebitda 14 Turning Clie
Slide 15: Provisions
Provisions Total : 405 M € M&A Acquisition 160 Total : 267 M € AO Merger Total : 251 M € 24 25 6 41 Fair Value Origin 129 75 86 58 Operating Provisions 60 93 109 56 Pensions Dec. 31st 2000 Dec. 31st 2001 Dec. 31st 2002 15 Turning Client Vision into Results
Slide 16: Consulting
Consulting A major strategic move FY In € Millions • Integration of Atos KPMG Consulting 2002 UK & NL completed Revenue 175 Income from operations 16.0 • AKC consolidated from Sept. 1, 2002 Operating margin 9.2% • New organisation Headcount at year end 2,383 • Soft consulting market France • Extensi
Slide 17: Systems Integration
Systems Integration Continuous adjustment to market conditions FY FY In € Millions % change • Soft market conditions in the Netherlands, 2002 2001 Belgium, Italy, Germany and Americas Revenue 1,243 1,470 -15% Income from operations 65.9 128.2 -49% • Strengthened partnerships with SAP, Operating marg
Slide 18: Managed Operations
Managed Operations 12% revenue increase on a constant scope basis FY FY In € Millions % change 2002 2001 • Overall revenue growth in countries with Revenue 1,626 1,548 +5% critical mass Income from operations 213.6 172.7 +24% • New contracts with KPN Operating margin 13.1% 11.2% +1.9 pt Headcount at
Slide 19: Global presence
Global presence All regions remain profitable Revenue Operating margin Employees FY FY % FY FY In € Millions Year end 2002 2002 2001 change 2002 2001 France 1,086 1,089 -0.3% 10.7% 9.8% 8,685 The Netherlands 913 798 +14% 13.6% 14.7% 9,019 United Kingdom 238 160 +49% 5.4% 8.1% 2,139 Other EMEA 610 71
Slide 20: 2002 business performance
2002 business performance • Top 42 key accounts – Represent more than 55% of revenue – Achieved a 17% growth excluding Philips • Philips 20% lower at € 420 M (14% of group revenue) • KPN has become No. 2 client • Lower revenue from Euronext • Numerous significant wins 20 Turning Client Vision into R
Slide 21: Recent wins
Recent wins France, Italy, Latin America TotalFinaElf, EDF, Pechiney, Thalys, BNP Paribas, Banco de Espana, Cegetel, San Paolo Invest, Telefonica, Georgia Pacific, BSN Glass Pack, EADS, Ugine, ENEL, Santander, Wolters Kluwers, Arval, Crédit Lyonnais, France Telecom, Minist. De l'Agricul., ABN Am The
Slide 22: Global markets
Global markets Financial Discrete Telecoms, Process CPG & Public Other Services Manufact. Utilities, Industries Retail sector Media 828 792 790 723 684 506 429 375 240 201 173 147 125 70 Group revenue (M€) : FY 2001 FY 2002 22 Turning Client Vision into Results
Slide 23: Agenda
Agenda • GROUP ACHIEVEMENTS • FY 2002 BUSINESS PERFORMANCE • YEAR 2003 OUTLOOK • STRATEGY 23 Turning Client Vision into Results
Slide 24: 2003 business outlook
2003 business outlook • Sluggish demand still generates tough pricing pressure – Large clients have further to reduce their IT budgets – Favouring smaller projects with immediate ROI – Selecting fewer providers with enlarged client share • Consulting and Systems Integration : still no sign of recove
Slide 25: General environment
General environment • Most consultancies now allied with IT corporations • IT environment still moving : further consolidation to happen • Development of offshore and nearshore resourcing 25 Turning Client Vision into Results
Slide 26: Board of management
Board of management Board Member Responsibility Territories Bernard Bourigeaud CEO Jeremy Anderson UK Eric Guilhou CFO Dominique Illien France, Italy, Iberia, Latin America Wilbert Kieboom The Netherlands, Belux Tim Lomax North America, Asia-Pacific, Middle East, Nordic Jans Tielman HR & Comms Germa
Slide 27: Business model
Business model Global market leaders Telecom Financial CPG Discrete Process Public Utilities services Retail manufacturing Industries Sector Media 50 key account managers International International Consulting Consulting Managed Managed Operations Operations SI SI Global Global Competencies Competen
Slide 28: Global markets
Global markets Strengthened organisation Telecom, Global Financial Discrete Process CPG/Retail Utilities, Public sector Market Services Manufacturing Industries Media Banking CPG High-Tech Chemicals Telecom Healthcare Insurance Retail Automotive Oil & Gas Utilities Defense Sub- Engineering & Pharmac
Slide 29: 50 key accounts
50 key accounts Financial services Process industries CPG - Retail ABN AMRO Akzo Nobel PPR Fortis ICI Procter & Gamble ING DSM Unilever BNP-Paribas Sabic Boots Crédit Lyonnais Saudi Aramco HSBC-CCF Exxon Mobil Société Générale Shell Caisse d'Epargne / CDC TotalFinaElf Crédit Agricole Telecom, Utilit
Slide 30: Preferred supply agreement
Preferred supply agreement "Philips and Atos Origin have decided to extend their relationship for a period of 3 years. As the largest IT service provider to Philips, Atos Origin will continue to deliver competitive services across the globe and assist Philips in the further optimisation of its IT en
Slide 31: Atos KPMG Consulting
Atos KPMG Consulting A major strategic move • Playing a major role in the market, solution and key client structure • Joint client initiatives (Euronext Liffe) • Specialist skills and experience (Finance, Public Sector) • Strong ERP alliances (Oracle, Peoplesoft) • Expert solutions (IT integration f
Slide 32: FY2003 financial outlook
FY2003 financial outlook • Modest revenue increase – Full year impact of Atos KPMG Consulting – Disposal of Document and Check Processing businesses in Q2 • Targeting a similar level of operating profit – Low visibility in Consulting and Systems Integration – A highly uncertain political and market
Slide 33: Profit & Cash
Profit & Cash • Managing tightly key profit drivers – Further staff restructuring – Elimination of sub-contractors – Accelerate purchasing efficiency • Cash management – Keep low working capital requirements – Capex to remain tightly controlled in 2003 – Disposal of non-core assets 33 Turning Client
Slide 34: Agenda
Agenda • GROUP ACHIEVEMENTS • FY 2002 BUSINESS PERFORMANCE • YEAR 2003 OUTLOOK • STRATEGY 34 Turning Client Vision into Results
Slide 35: 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 35 Turning Client Vision into Results
Slide 36: 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 36 Turning Client Vision into Results
Slide 37: Execution of our strategy
Execution of our strategy Action plan 2003 • Meet our financial targets • Take full advantage of Atos KPMG Consulting’s synergies • Partner Philips, KPN, Euronext in their strategy • Grow key accounts • Further develop our recurring business • Strengthen our positions in the UK and Germany • Continu
Slide 38: 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 38 Turning Client Vision into Results
Slide 39: Provisions
Provisions Release Dec 31, Dec 31, Profit & Release (M€) Change Scope with cash 2002 2001 Loss with cash in future Origin Fair Value 41 75 (34) (17) - (16) (2) adjustment Atos Origin merger 6 25 (19) (1) - (14) (4) restructuring Other M&A restructuring 24 - 24 25 9 (10) - (KPMG acquisition) Operatin