“Atos Origin full year results for 2004”

Paris, 16 March 2005

Strong financial performance in a year of merger Atos Origin, a leading international information technology services provider, today announced audited results for the year ended December 31st, 2004. These are the first full annual results to be published since the acquisition of Sema Group from Schlumberger on January 1st, 2004.

Group revenues were ahead of expectations, at EUR 5,302 million, an increase of 75% compared with 2003, prior to the acquisition of Sema Group. That represents an organic increase of just under 1% compared with the pro forma revenues of the combined Group for the same period in 2003, on a constant scope and exchange rate basis. The operating profit was EUR 385 million, yielding an operating margin of 7.3% (2003 – 5.9% on a pro forma basis). Net income before goodwill amortization and non-recurring items (net of tax) was EUR 231 million, giving diluted earnings per share of EUR 3.43 compared with 3.24 in 2003, an accretion of 6%. The opening net debt of EUR 698 million immediately following the acquisition of Sema Group fell to EUR 491 million at December 31st, 2004.

In EUR millions 2004 2003 %Change
Revenue 5,302 3,035 +75%
Income from operations 385 248 +55%
Operating margin 7.3% 8.2%
Net income before non recurring items and goodwill amortization (c) 231 153 +51%
Net income (loss) – Group Share 11 (169)
Basic EPS (a) 0.16 (3.72)
Diluted EPS before non recurring items and goodwill amortization (b) (c) 3.43 3.24 +6%
Net debt to equity ratio 32% 46%
Employees (at December 31st) 46,584 26,473

(a) In euros, based on a weighted average number of shares
(b) In euros, based on a diluted weighted average number of shares
(c) Net of tax

Extract from the Chief Executive's review of 2004

During the second half of 2004, there was clear evidence that the global IT services market is growing once again. Within Europe particularly we have seen this in our expanding order pipeline and in the plans and expectations of our clients. In the third and fourth quarters of 2004 the Group reported a return to organic growth for the first time in more than three years and this is encouraging, both for our staff and for shareholders.

The Integration of Sema Group
During 2004 we put into action our plans to manage the newly expanded business. We established a commercial go-to-market strategy focussed on 100 key clients, from whom we currently derive more than 65% of Group revenues and with whom I believe there is potential to do very much more business in future. We have refocused our service line operations, launching our consulting activities worldwide under the Atos Consulting brand and bringing together the card payment and internet processing businesses in a single organisation – Atos Worldline – which has good growth potential for the future. Internally, we have created Global Consulting and Systems Integration and Global Managed Services organisations to ensure better control and coordination by business line and to focus the future development of our service offerings. In each of our service lines - Consulting, Systems Integration and Managed Operations - we have carried out an extensive review of our sales offerings and we are intent on driving the business towards specialized high-end solution offerings areas and away from the commoditized end of the market.

The successful reorganisation of our go-to-market strategy began delivering results in the second half of 2004, during which we signed a steady and significant stream of new orders, including the largest outsourcing contract ever won by the Group - taking over a substantial part of the IT infrastructure of KarstadtQuelle. That contract will be worth at least EUR 1.2 billion over the next 8 years, probably more. Other significant orders were signed with Rhodia, Schenker, the UK Immigration Service, LCH-Clearnet and last week with Renault. We also very successfully ran the IT operations for the Athens Olympic Games and are currently preparing for the winter Olympic Games in Turin next year and the summer Games in Beijing in 2008.

The integration of Sema Group is effectively complete. We have still to finalise a number of business disposals and to consolidate some data centre capacity, but decisions in these areas have been taken and action is in the hands of capable operational management.

Trading in 2004
The financial targets we communicated to the market at the beginning of the year proved to be very accurate. Group revenue amounted to EUR 5,302 million, which was slightly higher than in the previous financial year on a constant scope and exchange rate basis. The operating profit was EUR 385 million, representing a margin of 7.3%, compared with 5.9% for the combined group on a pro forma basis in 2003. That was in line with our stated target of achieving a margin of at least 7% and was largely due to a substantial restructuring of the combined business last year, which will result in a further improvement in profitability in 2005. This positions the group to take full advantage of the new market cycle.

From a cash point of view, net debt was reduced from EUR 698 million just after the acquisition of Sema Group, to EUR 491 at December 31st, 2004. This was in spite of incurring restructuring payments of EUR 157 million during the year and includes nearly EUR 260 million of cash flow from current operations.

Following the acquisition of Sema Group, we stated that the Group intends to dispose of low margin and/or non-core businesses with annual revenues of up to EUR 500 million. During 2004, we disposed of five businesses with annual revenues of around EUR 200 million, for a cash consideration of EUR 167 million. That included the substantial and capital-intensive Cellnet operation in the US, which was generating annual revenues of approximately EUR 150 million. There are further actions to be taken and we have already completed the sale of PA-konsult in Sweden early this year.

Based on a weighted average of 67,473,784 shares in the period (diluted basis), earnings per share before amortization of goodwill and non-recurring items, net of tax, were EUR 3.43. That represents an accretion of 6% compared with 2003 on a statutory basis and is in line with the commitment made at the shareholders' meeting held on January 22nd, 2004.

Trading Outlook for 2005
In 2005 the Group will continue to focus on achieving organic growth, as we did in 2004, ensuring that we execute properly on large contracts and provide our clients with the highest levels of service. We have also to complete the program of business disposals on which we embarked last year.

Based on a clear recovery in the market, on the steady flow of new orders announced since the beginning of the second half of 2004 and an increase in our pipeline of order opportunities, the Group expects to be able to achieve organic revenue growth of at least 5% in 2005 on a constant scope and exchange rate basis. In terms of profitability, the action plan undertaken in 2004 will continue to drive the Group's operating margin upward, and we expect the operating profit margin for 2005 to be in the range 7.5 – 8.0%.

Given the improved level of profitability and a reduction in the cash cost of restructuring, the Group expects net debt to fall to EUR 350 million by the end of 2005, excluding any further proceeds from business disposals.

The Olympic Games
The successful delivery of services at the Athens Olympic Games in 2004 and our on-going contracts covering the Turin Winter Olympic Games (2006) and Beijing Games (2008) are a powerful demonstration of the Group's brand and international visibility. We hosted many of our clients in Athens last year, to show them how Atos Origin manages large-scale and time-critical integration projects securely and effectively. This has already resulted in more business for the Group. Above all, it generated an enormous sense of purpose and achievement for the 3,000 staff directly involved in the Games and it has produced strong motivation and pride throughout the Group. We are inspired by the Olympic spirit and delighted about our long-term relationship with the Olympic movement.

About Atos Origin
Atos Origin is an international information technology services company. Its business is turning client vision into results through the application of consulting, systems integration and managed operations. The company's annual revenues are more than EUR 5 billion and it employs over 46,000 people in 40 countries. Atos Origin is the Worldwide Information Technology Partner for the Olympic Games and has a client base of international blue-chip companies across all sectors. Atos Origin is quoted on the Paris Eurolist Market and trades as Atos Origin, AtosEuronext, Atos Worldline and Atos Consulting.

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