“Third quarter 2009 revenue at EUR 1 229 million”
Paris – 16 October 2009
Organic decrease of -5.6 per cent
Net debt reduced to EUR 293 million
2009 Objectives confirmed
- Year-to-date revenue at EUR 3 818 million ; a slight organic decrease of -3.4 per cent compared to 2008;
- Net debt reduced to EUR 293 million compared to EUR 409 million on 30 September 2008 ;
- Year-to-date order entries at EUR 4 billion, up +5 per cent compared to last year; book to bill ratio at 104 per cent;
- Roll-out of the TOP Program.
Today, Atos Origin, an international IT services company, reported revenue of EUR 1 229 million for the third quarter 2009 representing a decrease of -5.6 per cent at same scope and same exchange rates. Year-to-date 2009 revenue reached EUR 3 818 million representing an organic decrease of -3.4 per cent.
Thierry Breton – Chairman and CEO of Atos Origin declared: “During the third quarter we continued to apply the operational discipline which is mandatory for the good execution of the TOP program. Thanks to the first results observed, I am confident in the capability of the Company to reach its objectives this year and to pursue its operating margin improvement by 2011. In the meantime, the Group has started to redefine its offerings portfolio with a strong focus on innovation and with the involvement of its new Scientific Committee in order to help its clients in the transformation of their information systems.”
2008 proforma revenue excludes the changes in scope related to the disposals made in 2008: AEMS in the third quarter, Thailand, Mexico and Technical Automation in The Netherlands in the fourth quarter, representing a total of EUR 34 million. It also excludes the impact from exchange rates mainly due to the fall of the British pound compared to the Euro, representing a total of EUR 18 million.
During the third quarter this year, the Managed Operations activities (Managed Services, High Technology Transactions Services and Medical BPO) reported revenue of EUR 740 million, up organically by +3.6 per cent compared to the third quarter last year.
Revenue for Consulting and Systems Integration activities reached EUR 488 million, representing an organic decrease of -16.7 per cent compared to the same period in 2008.
Revenue by service line
Consulting revenue reached EUR 54 million, with a sequential decrease of -12 per cent compared to the second quarter of 2009. Early in April this year, the Group had announced that tough market conditions would persist throughout the year in Consulting and has therefore progressively reduced the number of staff in order to protect the operating margin. In addition, some large customers have delayed or cancelled decisions on consulting projects and consequently, the service line has reported a strong organic decrease in revenue for this quarter.
During the first nine months of 2009, Consulting revenue reached EUR 187 million, representing an organic decrease of -26 per cent compared to the same period last year.
Systems Integration revenue was EUR 435 million during the third quarter, a sequential decrease of -8 per cent compared to the second quarter of 2009 and an organic decrease of -14 per cent compared to the third quarter of 2008. Anticipating the decrease in sales volumes together with pricing pressures in Systems Integration, particularly in time and materials, the Group significantly reduced the number of staff in the countries most affected: The Netherlands and Spain.
During the first nine months of 2009, total revenue for Systems Integration was EUR 1 409 million, an organic decrease of -10.7 per cent
In Managed Operations (Managed Services, High Technology Transactions Services and Medical BPO), revenue for the third quarter was EUR 740 million, representing an organic growth of +3.6 per cent. This performance was realised mainly thanks to the contribution of the Managed Services business line growth in the United Kingdom, in France and in the Global Business Unit for the Rest of the world.
During the fist nine months of 2009, total revenue for Managed Operations was EUR 2 222 million, an organic growth of +4.8 per cent compared to the same period last year.
Revenue by Global Business Unit
Since announcing the first half results for 2009, and consistent with the IFRS 8 rule, the Group presents the geographical segmentation in line with operational management, i.e. by Group Business Unit (GBU) and not only by geographical area.
During the third quarter 2009, revenue by GBU was:
- The United Kingdom reported strong growth at +12.3 per cent thanks to the contribution of Managed Services and Medical BPO activities ;
- Atos Worldline reported limited growth of +0.7 per cent, the growth was +3.1 per cent excluding Financial Markets;
- Benelux reported a decline of -18 per cent affected by the weight of cyclical activities such as Consulting and time and materials;
- The other GBUs reported an organic decrease of between -6 per cent and -11 per cent.
During the first nine months of the year, the organic decline in Group revenue was limited to -3.4 per cent thanks to the growth in the United Kingdom at +8.3 per cent and for Atos Worldline at +4 per cent. During the same period, France and the GBU for the Rest of the World contained the decrease in revenue respectively to -3.3 per cent and -4.9 per cent.
Total order entries for the first nine months of 2009 reached EUR 4 billion up by +5 per cent compared to the same period last year. The book to bill ratio was 104 per cent year-to-date compared to 96 per cent last year, thanks to a higher volume of sales in Managed Operations. By service line, the book to bill ratio was 96 per cent for Consulting (99 per cent as at 30 September 2008), 96 per cent in Systems Integration (98 per cent in 2008) and 110 per cent in Managed Services (97 per cent in 2008) and 130 per cent for High Technology Transactional Services (97 per cent in 2008).
During the third quarter, the order entries were EUR 1 088 million representing a book to bill ratio of 88 per cent, same as for the third quarter last year.
Contract signatures in the third quarter 2009 include:
- The Netherlands - Managed Services contracts with Univé-VGZ-IZA-Trias in Financial services and Norfolkline in Transport,
- United Kingdom - Managed Services contracts with the Home Office in Public sector and Network Rail in Transport and a Systems Integration contract with Go Ahead Group also in Transport,
- France - Managed Services contracts with Vivendi Group in Media and in Systems Integration with EDF in Energy and Utilities and Ministère de l'Intérieur in Public sector,
- Germany / Central Europe - renewal of the Managed Services contracts with Zumtobel in Austria and Lekkerland in the manufacturing and retail sectors respectively;
- Belgium - Systems Integration contract in the Public sector with an European institution;
- Spain - Consulting contract in the aeronautics industry;
- Atos Worldline renewed its contracts with LCH Clearnet and Comdirect as well as signing new contracts for e-services with a major retail group and with a national railways network.
At 30 September 2009, the full backlog was EUR 7.3 billion representing 1.4 year of revenue.
The full qualified pipeline was EUR 2.8 billion at 30 September 2009, an increase up +10 per cent compared to the end of September last year thanks mainly to Managed Operations.
Group net debt on 30 September 2009 was reduced to EUR 293 million compared to EUR 409 million at the end of September last year and EUR 328 million on 30 June 2009.
This reduction is the result of strong actions led by the TOP Program in order to decrease the working capital. A stronger focus on collections of receivables has reduced the Group DSO by 7 days compared to September 2008.
A tighter management control of capital expenditure has been reinforced. As a result, the level of capital expenditure has been reduced by around EUR 40 million compared to September 2008.
The reorganisation and rationalisation program resulted in a cash outflow of EUR 102 million for the first nine months of the year.
As decided, a scheme for variable remuneration based on half-year objectives has been implemented at the beginning of the year and resulted, for the first half of 2009, in a cash outflow of EUR 44 million in the third quarter 2009.
The reduction of net debt during the third quarter by EUR 35 million includes these EUR 44 million.
The number of employees at the end of September 2009 was 48 884 compared to 49 407 at the end of June and 50 975 at the end of 2008.
The Group's current policy to freeze recruitment has continued during the third quarter with the exception of recently graduated engineers in all the Global Business Units and in offshore / nearshore countries, particularly India. This policy allows the Group to maintain and to renew critical skills.
Therefore, the number of new recruits joining the Group in the third quarter was around 1,000 of which 200 were in India. The attrition rate has remained stable at 7.3 per cent since the beginning of the year.
Staff on the bench, mainly in Systems Integration, has reduced to 999 compared to 1 044 on 30 June 2009 and 1 606 at the beginning of the year. This decrease is the result of the Group Management policy to re-skill employees to meet market needs and to replace subcontractors by newly trained engineers.
As a result of the Group policy, the number of subcontractors has been reduced significantly from 3 900 on 1 January this year to 2 000 at the end of September. This reduction is fully in line with the Group objective communicated earlier this year on 18 February.
During the third quarter, the Group has pursued its reorganisation and rationalisation program. 1 900 people have left the company since the beginning of the year in accordance with the full year objective.
During the third quarter, the roll-out of the TOP Program has continued through its 21 projects resulting in a continued decrease of the cost base.
During the first nine months of the year, main savings were on rent and lease (annual basis EUR 260 million) which dropped by 17 per cent compared to the same period in 2008, travelling (annual basis EUR 130 million) were down 21 per cent, external expenses such as insurance, marketing and communication, fees… (annual basis EUR 110 million) have been reduced by 25 per cent.
Considering an economic environment which remains difficult, the priorities for 2009 are improving the operating margin and generating free cash flow.
The objectives communicated by the Group on 18 February 2009 are confirmed:
- slight organic decrease of revenue;
- increase in the operating margin rate by 50 to 100 basis points compared to 2008, i.e. between 5.3 per cent and 5.8 per cent;
- slight positive cash flow.
A webcast in English will be held today 16 October at 9:30 am, CET time.
17 February 2010 : 2009 Annual Results
Global Business Units include France (France and French subsidiary in Morocco), United Kingdom, Benelux (The Netherlands, Belgium and Luxembourg), Atos Worldline (French, German and Belgium subsidiaries), GCEMA (Germany Central Europe with Austria, Poland, and Mediterranean countries and Africa which include South Africa, Greece, Turkey and Switzerland), Iberia / South America (Spain, Portugal, Argentina, Brazil and Columbia), and Rest of the World (Asia Pacific including China, Hong Kong, Singapore, Malaysia, Indonesia, Taiwan, Japan as well as North America, India, Major Events and Middle East with Dubai).
Revenue organic growth is presented at 2009 scope and exchange rates.
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 2008 annual report filed with the Autorités des Marchés Financiers (AMF) on 9 April 2009 as a Document de Référence under the registration number: D09-251. The update of the 2008 Reference Document has been filed to the AMF on 31 July 2009 under the registration D.09-251 A 01.
About Atos Origin
Atos Origin is a leading international information technology (IT) services company, providing hi-tech transactional services, consulting, systems integration and managed operations to deliver business outcomes globally. The company's annual revenues are EUR 5.5 billion and it employs 50,000 people. Atos Origin is the Worldwide Information Technology Partner for the Olympic Games and has a client base of international companies across all sectors. Atos Origin is quoted on the Paris Eurolist Market and trades as Atos Origin, Atos Worldline and Atos Consulting.
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Year-to-date September 2009 revenue performance
Revenue performance by service line
Revenue performance by Global Business Unit