“Atos Origin 2006 full year results”
Atos Origin, an international information technology services provider, today announced full results for the year ended 31 December 2006, confirming all the figures announced on 5 February 2007.
- Group revenues were EUR 5,397 million representing organic growth of +1.5%
- Operating Margin was EUR 247 million (4.6% of revenues)
- Impairment charge in the UK and in Italy for EUR 378 million
- Net loss of the period EUR 264 million after impairment charge
- Adjusted net income was EUR 110 million, or EUR 1.63 per share
- Underlying net debt reduced by EUR 120 million excluding the acquisition of Banksys and BCC
- Order entry of EUR 6.3 billion in 2006 representing a book to bill ratio of 116%
Operating Performance
2006 reported Group revenues reached EUR 5,397 million. On a constant scope and exchange rate basis, revenues for the period were up +1.5%. The Group operating margin in 2006 reached EUR 247 million at 4.6% of revenues compared to 7.3% in 2005. This performance is mainly due to delays in new business in the UK and a difficult market environment in Italy.
Net Income
Major reorganisation programmes are underway in both countries with the objective to return to good profitability.
At Group level the restructuring plans amounted to EUR 31 million in 2006. In line with the indications given on 5 February 2007 a total impairment charge of EUR 378 million has been taken on the UK and Italian goodwill and long-term assets.
Net financial expense amounted to EUR 11 million. The tax charge for 2006 was EUR 77 million resulting in an effective tax rate of 34.5%, before goodwill impairment.
The net loss for the period is EUR 264 million. Adjusted mainly for the significant impairment in the UK and Italy, adjusted net income amounts to EUR 110 million, or EUR 1.63 per share.
Net debt
With strong operating cash flow of EUR 370 million and after capital expenditure of EUR 212 million, or 3.9% of revenues, the underlying net debt at year end 2006 fell by EUR 120 million to EUR 60 million. After the net acquisition cost of Banksys and BCC, total net debt at year end reached EUR 360 million. At year end, the Group’s financial ratios remain substantially within its bank covenants.
Portfolio
By year end, all the major contracts in the UK pipeline had been signed and will start contributing progressively in 2007. As a result, order entry picked up significantly at the end of the year at EUR 6.3 billion in 2006, with a book to bill ratio of 116%. On top of the large UK contracts such as Department of Constitutional Affairs, NHS Scotland, National Farmers Union Mutual, Government Gateway portal, NHS Diagnostics and Rail Settlement Plan, there were some significant new contracts in the Netherlands for ING, Delta and Telegraaf, in Brazil for the Rio Pan-American Games and in China for ChemChina. All these contracts have been signed in the second half.
As a reminder announced on 5 February 2007
Transformation 3 O 3 Plan
A transformation programme has been launched with 3 Objectives over 3 years to accelerate the organic growth, improve efficiency and operate as a global company.
The Management Board has been strengthened by the arrival of Philippe Germond. A new Executive Committee has been created as the main operating body of Atos Origin to manage operations, service lines and functions. This will bring together the heads of the large countries, Atos Worldline, Group Sales, Global Service Lines and key functions. New managers have been appointed in the UK, Netherlands, Italy, Belgium, France, Group Sales and Finance.
In January, working groups defined the plans to accelerate organic growth, improve operational efficiency and operate as a global company in seven different domains:
- Industrialisation through standardisation of processes and tools within Systems Integration
- Systems Integration targeting 20% in offshore and nearshore by end 2009
- Creation of Managed Operations Global Factory to ensure standardised, consolidated global delivery
- Optimisation of Sales resources and development of solutions portfolio
- Global purchasing to reduce costs
- Stronger and more efficient key functions
- Accompanied by a strong Human Resources programme to attract, develop and retain best people.
The total cost of the transformation is estimated at EUR 270 million, of which EUR 160 million in 2007 (EUR 40 million in operating margin).
Objectives
The 2007 objectives of the Group are the achievement of a top line growth of 8.5%, the recovery in the operating margin in the UK and Italy, the execution of the transformation plan and the development of Atos Worldline, Atos Euronext Market Solutions and medical BPO. We expect an improvement in the operating margin rate before the costs of the transformation plan and positive free cashflow after restructuring.
Concerning this announcement, Bernard Bourigeaud, CEO of Atos Origin, declared: “2007 is going to be an exciting year. The focus of the year is to strengthen the management team, restore the profitability in the UK and Italy and execute the Transformation plan. Our goal is to double our operating margin in absolute value by 2009. ”
Next dates
15 May 2007, Announcement of 2007 first quarter revenue
23 June 2007, AGM
Disclaimer
This document contains further forward-looking statements that involve risks and uncertainties concerning the Group’s expected growth and profitability for 2007 and after. Actual events or results may differ from those described in this document due to a number of risks and uncertainties that are described within the 2005 annual report filed with the Autorités des Marchés Financiers (AMF) on May 15th, 2006 as a Document de Référence under the registration number : D06-402. All the definitions used in this document are in the 2006 annual report on the Atos Origin website.
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 EUR 5.4 billion and it employs 50,000 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, Atos Euronext Market Solutions, Atos Worldline and Atos Consulting.
Contact for Press:
Marie-Tatiana Collombert, Tel: +33 (0) 1 55 91 26 33, marie-tatiana.collombert@atosorigin.com
Contact for Investors:
Virginia Jeanson, Tel: +33 (0) 1 55 91 26 32, virginia.jeanson@atosorigin.com
Gilles Arditti, Tel: +33 (0) 1 55 91 28 83, gilles.arditti@atosorigin.com
Contact for Industry analysts:
Roger Cox, Tel: +44 (0) 77 33 313 251, roger.cox@atosorigin.com
Financial performance in 2006
| In EUR million | 2006 | 2005 |
| Revenues | 5,397 | 5,459 |
| OMDA | 446 | 499 |
| % of revenue | 8.3% | 9.1% |
| Operating Margin | 247 | 399 |
| % of revenue | 4.6% | 7.3% |
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| Impairment charge | (378) | (45) |
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| Net income (Group share) | (264) | 235 |
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| Adjusted net income (Group Share) (*) | 110 | 255 |
| Earnings per share (in euros) |
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| Basic EPS | (3.91) | 3.50 |
| Adjusted basic EPS | 1.63 | 3.79 |
| Net debt | 360 | 180 |
| Gearing (Net debt/Equity) | 20% | 9% |
| Leverage (Net debt/OMDA) | 0.81 | 0.36 |
