"Solid 2008 First Half Results"

Future scope revenue at EUR 2,745 million;
Organic growth at +6.8 per cent, Q2 at +7.7 per cent
Operating Margin at EUR 123 million, an increase by +11 per cent
Order entries at EUR 2,694 million, up by +14 per cent

• Total revenue reached EUR 2,864 million; a +6.4 per cent organic growth
• Net income at EUR 125 million; an increase by +118 per cent
• Net debt at EUR 514 million

Full year 2008 guidance increased for revenue organic growth above +5 per cent, operating margin rate and net debt objectives confirmed.

Atos Origin, a leading IT services company, today announced its 2008 first half results. On the future scope excluding Italy sold at 31 January 2008 and AEMS Exchange, disposal expected to be finalised in third quarter 2008, first half revenue amounted to EUR 2,745 million representing an organic growth of +6.8 per cent. The revenue organic growth accelerated in Q2 2008 with +7.7 per cent after Q1 at +5.9 per cent. The operating margin reached EUR 123 million representing 4.5 per cent of revenue and an increase by +11 per cent compared to the first half of 2007 (+15 per cent increase at constant currency exchange rates).

 

First half total revenue including one month of Italy and six months of AEMS Exchange was EUR 2,864 million, with an organic growth of +6.4 per cent. Operating margin was EUR 124 million; representing 4.3 per cent of revenue.

 

Philippe Germond – CEO of Atos Origin said: “During the first half of 2008, we benefited from our long term relationships with our customers providing them with innovative new services. We confirmed a strong commercial momentum with a double digit order entries growth and we clearly came back to a revenue organic growth above the IT services market. Therefore we have reached the first objective of our transformation plan and we continue to focus on the operational profitability improvement and the cash generation. Our 50,000 employees remain deeply involved in delivering value for our customers and, in turn, for our shareholders.”

 

Revenue by service line

After organic growth of +5.9 per cent in H2 2007, H1 2008 organic growth remained strong both on total revenue with +6.4 per cent and on the future scope with +6.8 per cent.

 

This performance came mainly from both Systems Integration and Managed Operations.

 

Systems Integration continued to improve quarter after quarter and recorded a solid +7.5 per cent organic growth in H1 2008. This performance was led by the United Kingdom (+11 per cent), Germany (+23 per cent) and rest of EMEA (+16 per cent).

 

Managed operations achieved a +7.4 per cent organic growth benefiting from a robust +9.8 per cent organic growth for Atos Worldline compared to +5.0 per cent organic growth full year 2007, and from +6.6 per cent for the rest of the Managed Operations activities. This performance was led by France (+8 per cent), the United Kingdom (+19 per cent), Asia Pacific (+46 per cent) and rest of EMEA (+13 per cent). The Netherlands and Germany had stable revenue in the first half compared to the same period last year.

 

Consulting continued to show a recovery trend. The organic decrease was -1.6 per cent in H1 2008 and was flat in Q2 2008 after -3.3 per cent in Q1 2008, -6.3 per cent in Q4 2007 and -16.2 per cent in Q3 2007. Consulting in France reached a +13 per cent organic growth in H1 2008 while the United Kingdom and The Netherlands were still decreasing.

 

Revenue by geographical area

All geographies showed a solid organic growth above +7 per cent with two exceptions: The Netherlands with an organic decrease by -1.4 per cent are still affected by KPN in H1 which as expected represented a negative 6 points effect. In the Americas, the one-off 2007 Panamerican games in Brazil had an effect of EUR 28 million in 2008 whereas the total revenue decrease for the Americas was EUR -23 million.

 

Operating performance

In H1 2008, on the future scope, the operating margin reached EUR 123 million at 4.5 per cent of revenue compared to EUR 111 million in H1 2007 (EUR 107 million at constant exchange rates in H1 2007).

 

The improvement mainly came from the United Kingdom achieving 6.2 per cent operating margin compared to 2.2 per cent in H1 2007 and from Atos Worldline increasing its operating margin by +2 points. France, Germany and rest of EMEA had also margin improvement. Asia Pacific was affected by an overrun project in Thailand for EUR 3 million and also EMEA for an amount of EUR 3.6 million in Turkey.

 

In The Netherlands, the operating margin, as expected, was affected by the KPN ramp-down which has not been fully compensated by the ramp-up of new contracts.

 

Operating income and net income

The operating income was EUR 191 million after rationalization and reorganization for EUR 6 million mainly in France, and a EUR 64 million positive impact coming from the United Kingdom pensions plan amendment following the agreement reached with the two major United Kingdom pension trustee Boards.

 

Net financial expenses amounted to EUR 7 million, tax charge was EUR 56 million, representing an effective tax rate of 30.6 per cent and minority interests of EUR 3 million. As a result, the net income Group share was EUR 125 million compared with EUR 57 million in H1 2007.

 

Net debt

The net debt was EUR 514 million at the end of June 2008 compared to EUR 338 million at the end of December 2007 and EUR 509 million at the end of June 2007. This amount includes the cash out made in Q2 2008 related to the United Kingdom pensions plan amendment (EUR -66 million) and the cash in coming from the sale of Italy in Q1 2008 (EUR 38 million).

As anticipated, the level of capital expenditure was EUR 141 million including EUR 20 million for Atos Euronext Market Solutions and EUR 21 million for investments on the 3O3 Transformation Plan.

 

Strong actions have been pursued to reduce change in working capital. The seasonal increase in the first half of the year was limited to EUR 106 million.

 

Portfolio: confirmation of a strong commercial momentum

Based on the future scope, the total order entry reached EUR 2,694 million during the first half of 2008, +14 per cent growth compared to the first half 2007 (+17 per cent at constant exchange rates) with +11 per cent in Q1 and +17 per cent growth in Q2.

 

The H1 2008 order entry represented a book to bill ratio of 98 per cent compared to 89 per cent in H1 2007. During the last twelve months period, the book to bill ratio was 114 per cent.

 

In H1 2008, the order entry was signed with more added value and therefore with a higher average gross margin than in the past years.

 

During the second quarter of 2008, the Group won several key contracts including ERDF/EDF, and Biometric Passports for the Government in France, NXP and Nuon in the Netherlands, major contracts in the public and private sectors in the United Kingdom, Neckermann in Germany, two major contracts in the banking in Spain, as well as Bank of China in China.

 

3O3 Transformation Plan

The Transformation Plan continued to progress on all the initiatives. In Offshoring / Nearshoring, staff increased by +20% compared to end of December 2007. Recruitments made by the Group were mainly done on offshoring / nearshoring and closeshoring.

 

The consolidation of mainframes is close to completion in France and additional local datacenters have been closed. In Industrialization, the roll-out of the standardised processes and tooling resulted in more than 3,300 users of the shared service centers.

 

The operating costs of the transformation plan were EUR 27 million during H1 2008 compared to EUR 11 million in H1 2007 according to the ramp-up of the plan which started to deliver savings for an amount of EUR 20 million in H1 2008.

 

2008 Objectives

Excluding Italy sold in January 2008, and AEMS Exchange to be transferred to NYSE Euronext in Q3 2008, the 2008 objectives for the Group are the following:

• Revenue organic above +5 per cent (increase compared to initial guidance of +4 per cent)
• Improvement of the operating margin to reach 5.6 per cent after operating costs of Transformation Plan compared to 4.6 per cent in 2007
• Net debt reduction of EUR 100 million compared to December 2007 after dividends, cash out for the pensions in the UK and proceeds from disposals Italy and AEMS Exchange

 

The 2008 half year report in English will be available on our website today afternoon 

 

Forthcoming announcements

30 October 2008	Third quarter revenue
17 February 2009	2008 Annual results

 

Disclaimer

The document contains further forward-looking statements that involve risks and uncertainties concerning the Group’s expected growth and profitability in the future. 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 2007 annual report filed with the Autorités des Marchés Financiers (AMF) on 9 April 2008 as a Document de Référence under the registration number: D08-218.

 

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 revenue is EUR 5.8 billion and it employs 50,000 professionals 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 Worldline and Atos Consulting.

 

Press contact:
Marie-Tatiana Collombert
Tel. : +33 (0) 1 55 91 26 33
marie-tatiana.collombert@atosorigin.com

 

Investor contact :
Gilles Arditti
Tel. : +33 (0) 1 55 91 28 83
gilles.arditti@atosorigin.com

First half 2008 Income statement

 

In EUR million	H1 2008	H1 2007	% Organic Change (*)
Revenue future scope	2,745	2,651	+6.8%
Operating Margin future scope	123.1	110.6	+11.3%
% of revenue	4.5%	4.2%
Operating margin Italy	(1.1)	(5.3)
Operating Margin AEMS Exchange	2.2	12.3
Operating margin statutory scope	124.2	117.7
% of revenue	4.3%	4.1%
Operating Income	191.0	107.7
% of revenue	6.7%	3.7%
Net income (Group share)	124.7	57.3	+117.6%
Adjusted net income (Group Share)(**)	76.2	63.5	+20.0%
% of revenue	2.7%	2.2%
Net debt	514	509

(*) Organic change only for revenue and operating margin
(**) Adjusted net income: Group share of net income before unusual, abnormal and infrequent items (net of tax)

Revenue organic growth

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Financial performance by service line

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Financial performance by geographical area

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