“2015 annual results”
Bezons, February 24, 2016
All 2015 objectives achieved
- Net income group share: +53% at € 406 million; Earnings per Share: +50%
- Revenue: +18% year-on-year at € 10,686 million
- Operating margin: 8.3% of revenue
- Record order entry: € 11.2 billion, up +23%
- High momentum in Q4 with 118% book to bill
- Free cash flow above objective: € 450 million
- Proposed dividend up +38% at € 1.10 per share
- Significant further improvements in 2016
Atos, a global leader in digital services, today announces its 2015 annual results. Revenue was € 10,686 million, up +18% year-on-year and +0.4% organically. Operating margin was € 883.7 million, representing 8.3% of revenue, compared to 7.1% in 2014 at constant scope and exchange rates. Order entry was € 11.2 billion leading to a book to bill ratio of 105%. Full backlog increased by €+2.9 billion to € 19.1 billion, representing 1.7 year of revenue. Net cash position was € 593 million at the end of 2015. Free cash flow was € 450 million in 2015 compared to € 367 million in 2014. Net income was € 437 million, up +55% year-on-year and net income Group share was € 406 million, up +53% compared to 2014.
Thierry Breton, Chairman and CEO said: “In 2015 the Group achieved all its financial commitments. It also reinforced its position as an international leader in digital services with all the required technologies and skills to be the trusted partner for the digital transformation of large organizations.
In 2015, we reported a record order entry exceeding € 11 billion. With a strong commercial momentum in Q4 and the visibility provided by 75% of our revenue generated through multi-year contracts, we are well positioned in 2016 to continue improving our positive revenue growth and to substantially increase our profitability and our cash generation - notably through a significant reduction in restructuring charges -.
2015 has been a very good year for Atos and we expect 2016 to be even better in all our measurement criteria. We anticipate an increase of our net income by at least +30% in 2016. Therefore, the Board of Directors has decided to propose a dividend on 2015 results of € 1.10 per share, up +38%."
|In € Million||FY 2015||FY 2014||change|
|% of statutory revenue||8.3%||7.8%||+51 bps|
|Net income Group share||406.2||265.2||+53.2%|
|% of statutory revenue||3.8%||2.9%||+87 bps|
|Free cash flow||450||367||+22.7%|
Revenue: to continue to improve organic growth compared to 2015. Objective of a revenue growth at constant exchange rates above +8%.
Operating margin: between 9.0% and 9.5% of revenue*.
Free cash flow: circa € 550 million**.
The figures above include Unify Managed Services from February 1st, 2016 and exclude Equens contribution.
* excluding the amortization of equity based compensation plans representing circa 30 basis points in 2015 and 2016e
** excluding proceeds from equity based compensation which represented € 57 million in 2015 and circa € 50 million in 2016e
2015 performance by Service Line
|In € Million||FY 2015||FY 2014*||% organic||% yoy||FY 2015||FY 2014*||FY 2015||FY 2014*|
|Consulting & Systems Integration||3,255||3,328||-2.2%||-3.8%||207.2||200.7||6.4%||6.0%|
|Big Data & Cyber-security||597||562||+6.2%||+149.0%||102.5||77.3||17.2%||13.8%|
* at constant scope and exchange rates
** Corporate costs exclude Global Service Lines costs allocated to the Services Lines
Managed Services revenue was € 5,658 million, +23.6% year-on-year. At constant scope and exchange rates, revenue grew by +0.4%. The Service Line continued to successfully drive the transition of its customers to hybrid cloud infrastructures resulting in positive organic growth, thanks to an increase in volumes and gains in market share globally compensating for the decrease in the unit price. Growth primarily materialized in the UK in Public & Health, in Asia Pacific particularly thanks to higher volumes in Financial Services, and to a lesser extent with new contracts in Central & Eastern Europe, in India, and in Iberia. Finally, revenue in North America returned to growth during the second half of the year.
Operating margin was € 501.8 million, representing 8.9% of revenue compared to 7.6% in 2014 at constant scope and exchange rates. Operating margin increased in the United Kingdom thanks to revenue growth and strong operational savings. In North America profitability was up with project margin improvement on large contracts, strong actions on direct and indirect costs including the first results from the integration of Xerox ITO. Profitability also improved in Germany thanks to strong improvement in delivery costs and in France due to the materialization of the cost synergies following the acquisition of Bull.
Consulting & Systems Integration
Revenue in Consulting & Systems Integration was € 3,255 million, up +3.8% year-on-year and down -2.2% at constant scope and exchange rates. The dynamic fostered by the new management is driving the return to organic growth. In Germany the situation improved during the second half of the year. Revenue grew in France thanks to several new projects with public administrations and in Central & Eastern Europe. In the UK, a strong consulting activity in the Defense sector partly compensated for the ending of some Systems Integration contracts in the public sector. In Benelux & The Nordics, revenue was almost stable, except in the telco sector where the market has not yet picked-up.
Operating margin was € 207.2 million, representing 6.4% of revenue. The improvement of +40 basis points compared to 2014 at constant scope and exchange rates resulted from a better management of projects, stronger workforce management as well as cost synergies resulting from the Bull integration.
Big Data & Cybersecurity
Revenue in Big Data & Cybersecurity was € 597 million in 2015, up +6.2% organically compared to 2014. Demand was very strong in the Security practice, most particularly for encryption and access management solutions as well as for high speed computing supporting the growing Big Data processing and real time demand of our clients.
Operating margin was € 102.5 million, representing 17.2% of revenue. This improvement of +340 basis points compared to 2014 at constant scope and exchange rates came from the significant revenue growth, as well as cost synergies resulting from the Bull integration.
From a contributive perspective to Atos, Worldline revenue was € 1,176 million, improving by +4.7% organically. On a standalone basis, revenue reached € 1,227 million in 2015, up +4.4% at constant scope and exchange rates. Revenue growth mainly came from a strong increase in the volume of online transactions in Commercial Acquiring, from the dynamism of Online Banking Services with new contracts signed combined with volumes continuing to increase, and from double-digit growth rate in Mobility & e-Transactional Services.
OMDA increased by +50 basis points on a standalone basis as planned, reaching € 235.3 million and 19.2% of revenue, operating margin was € 174.9 million, or 14.9% of revenue. In 2015, Worldline benefitted from the successful launch of its new product offerings and pursued actions to increase its competitiveness and operational efficiency through the “TEAM” program.
A detailed presentation of Worldline 2015 performance is available at worldline.com, in the investors section.
2015 performance by Business Unit
|In € million||FY 2015||FY 2014*||% organic||% yoy||FY 2015||FY 2014*||FY 2015||FY 2014*|
|United-Kingdom & Ireland||1,930||1,829||+5.5%||+13.1%||213.5||159.1||11.1%||8.7%|
|Benelux & The Nordics||1,055||1,098||-3.9%||+1.7%||97.9||125.4||9.3%||11.4%|
|Other Business Units||1,951||1,931||+1.0%||+13.5%||142.0||153.3||7.3%||7.9%|
* At onstant scope and exchange rates
** Global structures include the Global Services Lines costs not allocated to the Group Business Unit and the Corporates costs
Large geographies such as Germany, Benelux & The Nordics, and North America significantly improved their revenue evolution during the second part of the year:
- Germany improved its revenue trend (from -7.9% in H1 to -1.4% in H2) thanks to strong actions from the new management;
- Benelux & The Nordics (from -6.1% in H1 to -1.8% in H2) improved the trend quarter after quarter and benefited from sales in Big Data & Cybersecurity in the public sector in Belgium;
- North America (from -7.6% in H1 to flat in H2) thanks to the new commercial dynamics following the acquisition of Xerox ITO.
In 2015, the main contributors to Group revenue growth were the United Kingdom and Worldline, and to a lesser extent, France and “Other Business Units”:
- United Kingdom posted a strong +5.5% organic revenue performance thanks to the dynamic in Managed Services;
- Worldline continued to contribute to the Group organic growth with a steady +4.7% over the year;
- France with +1.1% organic revenue growth in H2, grew in Big Data & Cybersecurity and in Systems Integration;
- “Other Business Units” also contributed to Group revenue growth, thanks to Asia Pacific with a strong activity notably in Public & Health, and in Latin America in Financial Services and in Manufacturing, Retail & Transport.
In 2015, the Group generated the expected cost synergies following the acquisition of Bull which was particularly visible in France and in Global structures with a strong margin improvement. The Group continued to execute the TOP Tier One Program through industrialization, global delivery from offshore locations, and continuous optimization of G&A. As part of this program, the Group also continued to optimize its pension schemes. This resulted in a positive effect of € 38 million disclosed in H1 for Germany and Global structures, and € 36 million in H2 in the UK, compared to € 50 million in the Netherlands in H2 last year.
In 2015, the Group order entry totaled € 11,214 million, up +23% year-on-year, representing a book to bill ratio of 105% and a record fourth quarter at 118%.
The main contracts signed in Q4 2015 were in Managed Services, with for example the Royal Mail in the UK, DCNS in France, and the renewals of contracts with a leading automotive company in Germany and with Electrocomponents in the UK. Several contracts were also renewed in the US, such as with a global investment firm, a medical research company, and a health insurer. Main new contracts in Consulting & Systems Integration were in Germany with Nokia and Justice Authorities, while Big Data & Cyber-security signed new contracts with the CEA (Commission for Atomic Energy and Alternative Energies) in France, and in the public sector in Switzerland and in Belgium. Worldline sales dynamic was also strong in particular with the renewal of all issuing processing contracts that had reached their term.
In line with the dynamic commercial activity, the full backlog at the end of December 2015 increased by €+2.9 billion year-on-year, including the integration of Xerox ITO, and amounted to € 19.1 billion, representing 1.7 year of revenue. The full qualified pipeline was € 6.2 billion at the end of 2015, +12.5% compared to the end of December 2014, attributable to the integration of Xerox ITO. It represented 6.6 months of revenue.
Operating income and net income
Operating income in 2015 was € 589 million resulting from the following items:
Costs for staff reorganization, rationalization, and integration amounted to € 190 million compared to € 171 million in 2014. The majority of these expenses, including the remaining Bull-related costs, were initiated during the first half of the year in order to maximize cost savings effect. Therefore, costs in the second half reduced to € 74 million compared to € 116 million during the first part of the year.
€ 72 million were recorded as amortization of the SIS, Bull and Xerox ITO customer relationships recorded as part of the Purchase Price Allocation (PPA). Other items charge was €-33 million, a reduction of € 7 million compared to prior year which mainly included for €-5 million the last part of the indemnity related to the early termination of the WCA contract for DWP.
Net financial result was improved by € 7 million at €-45 million, including the cost of the straight bond issued in June 2015. Total tax charge was € 110 million, representing an effective tax rate of 20.2%, -660 basis points compared to 2014 mainly thanks the Tax Losses Carried Forward acquired from Bull.
Non-controlling interests amounted to € 31 million and were related to the minority shareholders in Worldline. Therefore, the net income Group share reached € 406 million, +53% compared to € 265 million in 2014.
Basic EPS Group share was € 4.01, +50% compared to € 2.67 in 2014 and diluted EPS Group share was € 3.98, +51% compared to € 2.64 in 2014.
Net cash and free cash flow
OMDA was € 1,200 million representing 11.2% of revenue, compared to € 919 million in 2014.
As planned, total cash out for reorganization, rationalization, and integration was € 238 million, as a consequence of the synergy plan on Bull and the adaptation of the Group workforce in continental Europe. In 2015, capital expenditures totaled € 441 million, representing 4.1% of revenue.
Working capital improved by € 49 million, entirely during the first half of the year and mostly related to Bull working capital optimization. Cash-out for financial costs was € 17 million (€ 15 million in 2014) and tax paid was € 106 million compared to € 120 million in 2014.
Other items totaled € 3 million, a decrease by €-21 million of which €-17 million less proceeds from equity based compensation (€ 57 million vs. 74 million prior year).
As a result, the Group free cash flow totaled € 450 million in 2015 compared to € 367 million in 2014.
Excluding the proceeds from the exercise of equity-based compensation, Group free cash flow increased by € 100 million at € 393 million.
The Group paid € 812 million to acquire Xerox ITO and consolidated € 48 million of Xerox ITO debt net at closing.
The cash-out resulting from the option for the payment in cash of dividend on 2014 results was € 31 million.
As a result, Group net cash position as of December 31, 2015 was € 593 million, compared to € 989 million on December 31, 2014.
The total headcount was 91,322 at the end of December 2015, compared to 85,865 at the end of December 2014. The increase of +6.4% of the Group workforce was mainly due to the circa 9,500 staff from Xerox ITO who joined the Group on July 1st, 2015 and from the ones who exited following the outsourcing of on-site services activities in France and the early termination of the WCA contract with the DWP in the United Kingdom.
Attrition was 12.1% at Group level of which 21.2% in offshore countries.
The number of direct employees at the end of December 2015 was 85,558, representing 93.7% of the total Group headcount at the end of 2015, compared to 92.1% at the end of 2014. Indirect staff decreased by -15% year-on-year, in line with the continuous optimization of the indirect workforce.
Number of staff in offshore countries increased by +37% year-on-year, reaching 24,744 people by the end of December 2015 (including circa 4,200 staff from Xerox ITO). The majority of the offshore workforce is located in India, the rest being mainly in Eastern Europe. Offshore for Systems Integration represented 43% of direct staff in line with the objective to reach 50% by the end of 2016.
During its meeting held on February 23, 2016, the Board of Directors decided to propose at the next Annual General Meeting of Shareholders a dividend in 2016 on the 2015 results of € 1.10 per share, up +38% compared to prior year.
Today, Wednesday, February 24, 2016, Atos' Chairman and CEO, Thierry Breton; together with Charles Dehelly, Group Senior Executive Vice President in charge of Global Operations; Michel-Alain Proch, Group Senior Executive Vice President and CEO North America Operations; Elie Girard, Chief Financial Officer; and Patrick Adiba, Chief Commercial Officer, will comment on Atos' 2015 annual results and answer questions from the financial community during a conference call in English starting at 8:00 am (CET - Paris).
You can join the webcast of the conference:
- by telephone with the dial-in:
|France||+ 33 1 76 77 22 27||code 3664742|
|UK||+ 44 20 3427 1919||code 3664742|
|US||+ 1 212 444 0481||code 3664742|
- by smartphones or tablets through the scan of:
The 2015 financial report including the operational review, the financial review, and the Group's financial data relating to the financial year ended December 31, 2015 will be available tomorrow, Thursday February 25, 2016 on atos.net, in the Investors section.
For more information, please contact:
+33 1 73 26 00 66
+33 1 73 26 02 27
+33 1 73 26 16 80
|April 21, 2016||First quarter 2016 revenue|
|May 26, 2016||Annual General Meeting|
|July 27, 2016||First half 2016 results|
|October 20, 2016||Third quarter 2016 revenue|
Audit procedures on the consolidated financial statements have been performed. The audit report will be issued after the finalization of the specific verifications required by French law and of procedures for the purposes of the Registration Document filing.
Change of free cash flow and operating margin new definition
The Group decided to change the free cash flow and operating margin definitions with the objective to exclude equity based compensation effects on the performance, in conformity with market practice.
As such, Group free cash flow excludes proceeds from equity based compensation and operating margin excludes the amortization cost of equity based compensation plans.
Revenue and operating margin at constant scope and exchange rates reconciliation
|In € million||FY 2015||FY 2014||% change|
|Exchange rates effect||373|
|Revenue at constant scope and exchange rates||10,686||10,648||+0.4.%|
|Exchange rates effect||45.1|
|Operating margin at constant scope and exchange rates||883.7||756.1||+16.9%|
|as % of revenue||8.3%||7.1%|
Scope effects on revenue amounted to € 1,223 million and are mainly related to the positive contributions of Bull (8 months additional contribution for € 697 million), Xerox ITO (6 months for € 637 million), and Cambridge Technology Partners (€ 13 million). Revenue basis was retreated from €-82 million following the early termination of the DWP WCA contract initiated by Atos and from €-41 million for the sale of on-site services activity in France to Manpower.
Exchange rates effect accounted for a total of € 373 million in revenue, mainly coming from the British pound (+11% year-on-year), the US dollar (+19%), and the Swiss Franc (+14%).
Net scope effect on operating margin amounted to € 9.0 million and exchange rates effect accounted for € 45.1 million.
FY 2015 revenue by Market
|In € million||FY 2015||FY 2014*||% organic|
|Manufacturing, Retail & Transportation||3,634||3,696||-1.7%|
|Public & Health||3,089||2,849||+8.4%|
|Telcos, Media & Utilities||2,084||2,217||-6.0%|
* At constant scope and exchange rates
Q4 2015 revenue by Service Lines
|In € million||Q4 2015||Q4 2014*||% organic|
|Consulting & Systems Integration||869||882||-1.5%|
|Big Data & Cyber-security||213||194||+10.2%|
* At constant scope and exchange rates
Q4 2015 revenue by Business Unit
|In € million||Q4 2015||Q4 2014*||% organic|
|United Kingdom & Ireland||477||488||-2,3%|
|Benelux & The Nordics||287||287||+0.1%|
|Other Business Units||553||551||+0.4%|
* At constant scope and exchange rates
Q4 2015 revenue by Market
|In € million||Q4 2015||Q4 2014*||% organic|
|Manufacturing, Retail & Transportation||1,056||1,074||-1.6%|
|Public & Health||909||854||+6.5%|
|Telcos, Media & Utilities||553||584||-5.4%|
* At constant scope and exchange rates
Atos SE (Societas Europaea) is a leader in digital services with pro forma annual revenue of circa € 12 billion and circa 100,000 employees in 72 countries. Serving a global client base, the Group provides Consulting & Systems Integration services, Managed Services & BPO, Cloud operations, Big Data & Cyber-security solutions, as well as transactional services through Worldline, the European leader in the payments and transactional services industry. With its deep technology expertise and industry knowledge, the Group works with clients across different business sectors: Defense, Financial Services, Health, Manufacturing, Media, Utilities, Public sector, Retail, Telecommunications, and Transportation.
Atos is focused on business technology that powers progress and helps organizations to create their firm of the future. The Group is the Worldwide Information Technology Partner for the Olympic & Paralympic Games and is listed on the Euronext Paris market. Atos operates under the brands Atos, Atos Consulting, Atos Worldgrid, Bull, Canopy, Unify and Worldline.
For more information, visit: atos.net.
This document contains forward-looking statements that involve risks and uncertainties, including references, concerning the Group's expected growth and profitability in the future which may significantly impact the expected performance indicated in the forward-looking statements. These risks and uncertainties are linked to factors out of the control of the Company and not precisely estimated, such as market conditions or competitors behaviors. Any forward-looking statements made in this document are statements about Atos' beliefs and expectations and should be evaluated as such. Forward-looking statements include statements that may relate to Atos' plans, objectives, strategies, goals, future events, future revenues or synergies, or performance, and other information that is not historical information. 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 2014 Registration Document filed with the Autorité des Marchés Financiers (AMF) on April 1st, 2015 under the registration number: D15-0277 and its update filed with the Autorité des Marchés Financiers (AMF) on August 7, 2015 under the registration number: D. 15-0277-A01. Atos does not undertake, and specifically disclaims, any obligation or responsibility to update or amend any of the information above except as otherwise required by law. This document does not contain or constitute an offer of Atos' shares for sale or an invitation or inducement to invest in Atos' shares in France, the United States of America or any other jurisdiction.
Revenue organic growth is presented at constant scope and exchange rates.
Business Units include Germany, France, United-Kingdom & Ireland, Benelux & The Nordics (BTN: The Netherlands, Belgium, Luxembourg, Denmark, Finland, Sweden, and Estonia), Worldline, North America (USA and Canada), and Other Business Units including Central & Eastern Europe (CEE: Austria, Bulgaria, Croatia, Cyprus, Czech Republic, Greece, Hungary, Italy, Lithuania, Poland, Romania, Russia, Serbia, Slovakia, Slovenia, Switzerland and Turkey), Iberia (Spain, Portugal, and Andorra), Asia-Pacific (Australia, China, Hong Kong, Indonesia, Japan, Korea, Malaysia, New Zealand, Philippines, Singapore, Taiwan and Thailand), Latin America (Brazil, Argentina, Mexico, Colombia, Chile, Guatemala, Jamaica, Peru, and Uruguay), India, Middle East & Africa (IMEA: Algeria, Benin, Burkina Faso, Egypt, Gabon, Israel, India, Ivory Coast, Lebanon, Madagascar, Mali, Mauritius, Morocco, Qatar, Saudi Arabia, Senegal, South Africa and UAE), Major Events, and Cloud & Enterprise Software.