“Atos Origin – Pre-Closing Update”
Atos Origin, a leading international information technology services provider, today issued a pre-closing update on trading for the year ending December 31st, 2003 and announced details concerning completion of the acquisition of SchlumbergerSema.
Based on trading during October and November 2003, the group’s expectations for 2003, as stated during the 3rd Quarter revenue announcement in November, have not changed. Reported revenues for the 12 months ending December 31st, 2003 are expected to be marginally lower than in 2002. The group remains focussed on profitability and cash flow and expects the operating margin for 2003 to exceed 8%. The performance in reducing borrowings has also been good and year-end net debt will be below EUR 350 million.
Earlier this year, we indicated to the market that we would make an assessment of the carrying value of goodwill at year-end in respect of Atos KPMG Consulting, under the requirements of IAS 36. The justification for that acquisition was strategic, based on driving top line growth in the medium-long term. The group remains confident that the rationale for the acquisition is justified and sales synergies have been achieved across the group in 2003. However, based on current market conditions, and before taking into account the additional benefits that we expect to accrue from the acquisition of SchlumbergerSema, the group has decided to take a goodwill impairment charge of EUR 224 million in its accounts for the year ending December 31st, 2003.
In connection with the acquisition of SchlumbergerSema, we consider it important to include preliminary details of the group’s results for the year ending December 31st, 2003 in the prospectus (Document E) to be issued to shareholders. Consequently, Document E will incorporate preliminary revenue and profitability for 2003, and will be issued on or around January 15th, 2004. The shareholder meeting to approve the acquisition of SchlumbergerSema has now been scheduled for Thursday, January 22nd, 2004 and closing is expected at the end of that month.
Recent trading results from SchlumbergerSema indicate that their restructuring program and trading in the 4th Quarter of 2003 are progressing according to plan. We have already announced details of the corporate and country organization structures for the new group, which will take effect at closing. Both sides are working to prepare for completion and to finalize the program of integration and restructuring, details of which will be communicated at the shareholder meeting in January.
Atos Origin is currently completing its 2004 Budget process. The group continues to believe that the IT services market is stabilizing after a two-year recession. There are signs of recovery in certain parts of the market, although that recovery is variable and we believe that trading in the first half of 2004 will remain tough in Europe, where the majority of the group’s activities are located. Guidance for 2004 will also be given at the shareholder meeting on January 22nd, 2004.
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 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, British Petroleum, Euronext, Fiat, ICI, ING, KPN, Lucent, Philips, Renault, Royal Bank of Scotland, Saudi Aramco, Shell, UBS, Unilever, Vivendi Universal, Vodafone and Wolters Kluwer.
On September 22nd, 2003, Atos Origin announced that it has signed an agreement to acquire the IT services activities of SchlumbergerSema from Schlumberger. The agreement, which is expected to be completed at the end of January 2004, will create one of the leading global IT services companies, with combined annual revenues in excess of Eur 5 billion.
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