“Atos Origin – Full Year Results for 2002: Results on target. Net debt at EUR 440 Million”

Paris/Amsterdam - March 12th, 2003

Atos Origin, a leading international information technology services provider, today confirmed that revenues for the year ended December 31st, 2002 amounted to EUR 3,043 million, compared with EUR 3,038 million in 2001. The reported figure included four months' revenue from Atos KPMG Consulting. The Group's operating margin of 8.7% was in line with target and slightly higher than in 2001. Net income of EUR 180 million before non-recurring items and goodwill amortization was 21% higher, mainly due to a lower tax charge. After non-recurring items and goodwill amortization, net income was EUR 71 million, representing earnings per share of EUR 1.61.


In Euro Millions
FY 2002
FY 2001
% Change
Revenue
3,043
3,038
+0.2%
Income from operations
265.6
(8.7%)
261.2
(8.6%)
+1.7%
Net Income
(before non-recurring items and goodwill amortization)
180.0
149.2
+20.6%
Net Income
(after non-recurring items and goodwill amortization)
70.8 123.0 -42.4%

In Euro

EPS
(before non-recurring items and goodwill amortization)
4.09
3.41
+20.2%
EPS
(after non-recurring items and goodwill amortization)
1.61
2.81
-42.6%

Extracts from the statement by Bernard Bourigeaud, Chairman of the Management Board and Chief Executive Officer:

"Acquisition of Atos KPMG Consulting during a difficult trading period"
In 2002, we made another important strategic move, expanding our consulting capability through the acquisition of KPMG Consulting in the United Kingdom and The Netherlands. We have successfully completed the integration of those businesses into our operations, retaining the independent strengths of both consulting and service delivery but linking the two, driving synergies through our key client, global market and country management programs. Atos KPMG Consulting has brought to Atos Origin high-level strategic skills, solutions and experience that will be invaluable in the future.

At the same time, throughout the Group we have had to contend with the most difficult trading conditions in the IT services industry for a decade. Much of the year was focussed on ensuring that our operations continue to achieve reasonable profitability and generate strong cash flow, and on making sure that the Group is fully prepared for the future.

"Results on Target, Net Debt at EUR 440 million
Total Group revenue for the financial year ended December 31st, 2002 was EUR 3,043 million, which was marginally higher than the figure reported in 2001. Taking into account the consolidation of Atos KPMG Consulting from September 2002 onwards, less the disposal of non-core activities in the previous year, the base business actually declined by 1%. Nevertheless, I regard that as a satisfactory outcome in a market where Consulting and Systems Integration suffered significant volume and price pressure. Once again, our Managed Operations business provided a solid base and grew significantly, thanks in particular to the successful integration of the KPN contracts. The base of long-term contracts in Managed Operations, together with recurring application management business in Systems Integration, comprise more than 50% of the Group's annual revenues.

A vital and continuing feature of the year's results was the decisive cost management action that we undertook. In Atos Origin as in the industry as a whole, this involved reducing sharply the number of people that we employ, both permanent staff and subcontractors, to match lower demand. However, it has enabled the Group to maintain a reasonable level of productivity and adequate profitability. The restructuring program will continue in 2003. It remains an essential part of changing our skills base and ensuring that we are lean and fully able to address the future with confidence.

The result of action to reduce costs throughout the business was that the Group's operating margin increased to 8.7%. Net income was EUR 180 million (before goodwill amortization and the non-recurring costs of restructuring) which was 21% higher than in 2001, particularly due to a lower tax charge. After non-recurring costs of EUR 71 million and goodwill amortization of EUR 38 million, Group net income was EUR 71 million, representing earnings per share of EUR 1.61

One of the most important features of 2002 was the generation of EUR 280 million free cash flow from operations*, with tight control of capital expenditure and a particularly strong working capital performance in the second half. The Group also disposed of non-core assets that more than adequately financed the restructuring costs we had to bear in the current market conditions. Net debt fell sharply in the final quarter, amounting to EUR 440 million at December 31st, 2002.

[* free cash flow from operations - after capital expenditure, before restructuring]

By maintaining profitability and tight financial management, the Group will continue to be cash generative in 2003. Gearing has fallen quickly as a result of the tight management of our asset base and cash resources, and we therefore feel well able to meet our financial commitments and to fund further expansion of the business.

Strategy

Our strategy has not changed. We remain dedicated to meeting the needs of all our clients and the acquisition of Atos KPMG Consulting has enabled us to strengthen enormously our global market, solution and key client management organizations. Long-term relationships with our clients lie at the heart of our business. In that respect I am delighted to announce that our Preferred Supplier Relationship Agreement with Philips, which covers many individual contracts with different maturity dates, will be extended for a period of three years, with effect from September 1st, 2003.

We intend to expand our activities further within the main IT service markets of Europe, especially in the UK and Germany. In the UK, this will be achieved organically, with a focus on expanding our presence in outsourcing. In Germany, we are interested in creating partnerships with the IT departments of large industrial and commercial organizations. The objective is to establish a balanced presence in Europe, ensuring that there is a substantial proportion of recurring revenue business in each country, such as we have already established in France and The Netherlands.

We have been pro-active in our cost management throughout the present market cycle but do not intend to stop there. Our primary criteria for assessing costs is their benefit for our clients. This means not simply reducing indirect and overhead costs, but simplifying our organizational structures, increasing staff flexibility, utilizing offshore resources where appropriate, and using our knowledge base more effectively.

Outlook

The full year impact of consolidating Atos KPMG Consulting, combined with a reasonable number of prospects currently in the order pipeline, should enable the Group to achieve modest revenue growth in 2003. However, the Consulting and Systems Integration markets remain tough. Although there are some signs of stabilization in both volumes and prices, we do not at this time expect any significant recovery in the European IT Service market during 2003 and visibility remains low. Similarly, competition in the Managed Operations market has intensified during the current downturn. We have a solid existing base of revenue in the Managed Operations area, but significant growth in 2003 will be determined by the outcome of large contract opportunities on which we are working, where the bid processes are long.

We are currently targeting to achieve a similar level of operating profit this year, although political and market circumstances are highly uncertain at this moment in time.

On the above basis, the Group expects to reduce gearing to well below 50% by December 31st, 2003.

We have a clear strategy, a balanced mix of service offerings, strong client relationships and a stable international management team. In spite of the difficult market conditions, I believe that the Group is well positioned within the industry."

About Atos Origin
Atos Origin is an international information technology services provider. Its business is turning client vision into results through the application of consulting, systems integration and managed operations, including outsourcing and on-line services. In August 2002, Atos Origin acquired KPMG Consulting in the UK and The Netherlands, trading as Atos KPMG Consulting. The company generates annual revenues of EUR 3.2 billion and employs 28,000 staff in 30 countries. The Group's client list includes major companies such as ABN AMRO, Akzo-Nobel, Alstom,
BNP Paribas, BP, Euronext, Fiat, ICI, ING, KPN, Lucent, Philips, Renault,
Royal Bank of Scotland, Saudi Aramco, Shell, UBS Warburg, Unilever, Vivendi Universal, Vodafone and Wolters Kluwer.

Press Contacts:
Marie-Tatiana Collombert
+ 33 (1) 49 00 96 33
marie-tatiana.collombert@atosorigin.com

Investors Contact:
John White
+ 33 (1) 49 00 96 64
john.white@atosorigin.com