"Atos Origin 2007 third quarter revenue announcement"
Third quarter revenue up +11.1% year-on-year
Atos Origin, today announces revenue for the three months ended 30 September 2007.
- Strong Q3 2007 revenue organic growth: +6.6%
- Full-year 2007 revenue organic growth guidance confirmed at +4.0%
- Order entries growth by +9.0% YTD September 2007
- 3O3 Transformation plan on track: first tangible effects in offshoring and purchasing
Commenting on the 2007 third quarter revenue, Philippe Germond Chairman of the Board and CEO of Atos Origin said: “ The third quarter 2007 performance is an important step for Atos Origin. Indeed, with a +6.6% revenue organic growth for the third quarter we have reached, for the year-to-date, an organic growth in line with the +4.0% organic growth target set for the full year 2007. Our clients’ renewed trust and the excellent mobilization of our staff worldwide are strong and positive signals for the future of the Group. Moreover, the 3O3 Transformation Plan is on track, starting to bear fruits and creating value. We are fully confident in our ability to reach the objectives of revenue organic growth at +4.0%, and operating margin we set for 2007 ”.
Revenue
The Group achieved unaudited consolidated revenue of EUR 1,418 million in Q3 2007 compared to EUR 1,277 million for the equivalent period last year, up by +11.1% . At constant scope and exchange rates, revenue organic growth was +6.6% . During the quarter, the services revenue growth excluding purchases for re-selling was +13.3 %, representing an organic increase of +9.3% .
On a year-to-date basis, revenue increased by +8.4% , organically by +4.0% for total revenue and +7.1% for services revenue, confirming the Group guidance for 2007 of +4.0% revenue organic growth.
Managed Operations: solid organic growth, up +10.3%
With 55% of total Q3 07 revenue, Managed Operations achieved a solid organic growth of +10.3% , with double digit growth in several countries such as the United Kingdom, The Netherlands, Spain and Belgium.
On a year-to-date basis, revenue organic growth was +5.5%.
The good performance of the United Kingdom confirmed the expected effect from the ramp-up of the new large contracts signed during the second semester of 2006.
Atos Worldline continued to develop and reached a very good +8.1% organic growth for the third quarter 2007. The integration of Banksys contributed at the expected level of revenue with EUR 70 million in the quarter.
Systems Integration: strong utilisation rate
With 39% of Q3 2007 total revenue and a global utilisation rate of 81%, Systems Integration achieved an organic growth of +6.1% mainly led by The Netherlands, Germany and Central Europe, Americas and Asia Pacific.
France showed a better performance with a +3.4% organic growth compared to a decrease of
-0.5% during the first half of 2007. Following the restructuring, revenue decreased in the United Kingdom and Italy respectively by -4.3% and -11.3% and had a negative effect of -4 points on the organic growth of Systems Integration.
On a year-to-date basis, revenue grew organically by +4.6%.
Consulting: new management and standardized practices in process
With 6% of Q3 2007 total revenue, Consulting saw a decrease of -18.5% on a year-on-year basis and -16.2% at constant scope and exchange rates.
France and The Netherlands remained affected by staff attrition and lower level of utilization than last year. In the United Kingdom, the level of order entries and utilization were not satisfactory while an organic decrease was expected further to the restructuring.
On a year-to-date, revenue organic decrease was -9.6%.
New Management appointed in May in France and in October in the United Kingdom are currently implementing proactive short term sales initiatives jointly with Systems Integration. The Consulting Management in France, the United Kingdom and in The Netherlands are also currently defining medium term common standardized consulting practices and offers to be sold in each of our major European countries.
Portfolio: strong backlog increase illustrating the commercial dynamic
During the third quarter of 2007, the Group won in France several major contracts mainly in the public sector for Consulting, in the telecom sector for Systems Integration and Managed Services and in the banking for Consulting and Managed Services. In Germany, a large application management contract was signed with Dresdner Bank and in The Netherlands an outsourcing contract was renewed with KPN for a three-year period. In the United Kingdom, new contracts were signed for Managed Operations in the financial services for Capita Life and Pensions market and NFU Mutual, in the health sector with the NHS and in the public sector extensions with DCA/Ministry of Justice
For the first nine months of 2007 the order entry increased by +9% compared to the same period in 2006.
The full backlog at the end of September 2007 reached EUR 7.6 billion representing 1.3 year of revenue and increased by +9.6% compared to the level reached at the end of September 2006.
The backlog for 2008 revenue reached EUR 2.5 billion up by +14% compared to the backlog for 2007 revenue reached at the end of September 2006.
The full qualified pipeline stands at EUR 2.6 billion of which the portion for 2008 revenue shows an increase by +8% compared to the pipeline at the end of September 2006 for 2007 revenue.
The book to bill ratio in Q3 2007 was 90% and year-to-date September 2007 was 88% at the same level than year-to-date September 2006.
3O3 Transformation Plan: on-track
The Transformation Plan continued to progress in most of the initiatives during Q3 2007.
The Offshore initiative is unfolding according to the initial plan, with an acceleration of the level of hirings. At the end of September 2007, the Group reached over 2,700 staff offshore and nearshore with more than 2,100 staff working in India for offshoring activities. Worldwide, this represents an increase of 1,100 recruitments compared to December 2006 and the Group targets the doubling of offshore resources in 2007. During the third quarter of 2007, the average net staff increase was 148 per month vs 117 per month in H1 2007. This trend comforts the target of 8,000 people offshore and nearshore at the end of 2009.
The purchasing action plan is now being executed through a new Chief Purchasing Officer who joined the Group at the beginning of September 2007. A series of globally driven actions are in progress in the main areas of purchasing where e-auctions are launched. Several important tenders and negotiation should be finalised before the end of the year.
Net debt
Net debt was EUR 490 million at the end of September 2007, compared to EUR 509 million in June 2007 and EUR 360 million in December 2006. With the seasonal decrease in the working capital during the last quarter each year, the Group maintains its objective of a net debt at the end of 2007 at the same level than December 2006.
Outlook 2007: objectives confirmed
The Group confirms the objective of revenue organic growth at +4.0% for 2007.
The Group confirms the guidance provided at the beginning of the year of an operating margin slightly above 2006 in absolute value and a margin rate before operating transformation costs above 2006.
The level of order entries reached for the first nine months of 2007, the backlog and the pipeline solidify the assumptions for organic growth taken in the Transformation Plan.
Forthcoming announcement
| 31st January 2008 15th February 2008 |
Fourth quarter 2007 revenue
Announcement of 2007 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 2006 annual report filed with the Autorités des Marchés Financiers (AMF) on 6 April 2007 as a Document de Référence under the registration number: D07-302.
Figures presented for September 2007 unaudited.
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 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.
For further information please consult the company’s website at: http://www.atosorigin.com/
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
ANALYSIS OF Q3 2007 REPORTED REVENUE
| Analysis of revenue performance |
3 months ended 30 September 2007 |
| EUR million | Q3 2007 | Q3 2006 | % Change |
| Reported third quarter revenue |
1,418 |
1,277 |
+11.1% |
| Acquisitions |
(70) |
|
|
| Disposals |
|
(7) |
|
| Currency translation and other |
|
(5) |
|
| Organic revenue growth |
1,348 |
1,265 |
+6.6% |
| By Service Line |
3 months ended 30 September 2007 |
| In EUR million | Q3 2007 | Q3 2006 | % Change reported | % Change organic (*) |
| Consulting |
79 |
97 |
-18.5% |
-16.2% |
| Systems Integration |
549 |
523 |
+5.0% |
+6.1% |
| Managed Operations |
790 |
657 |
+20.2% |
+10.3% |
| Total Group revenue |
1,418 |
1,277 |
+11.1% |
+6.6% |
(*) Organic growth: at constant scope and exchange rates
| By Geography |
3 months ended 30 September 2007 |
| In EUR million | Q3 2007 | Q3 2006 | % Change reported | % Change organic (*) |
| France |
395 |
392 |
+0.8% |
+1.8% |
| United Kingdom |
261 |
235 |
+10.8% |
+10.7% |
| The Netherlands |
263 |
250 |
+5.3% |
+5.3% |
| Germany + Central Europe |
152 |
147 |
+3.2% |
+5.8% |
| Rest of EMEA |
247 |
171 |
+44.6% |
+4.4% |
| Americas |
64 |
48 |
+33.4% |
+40.2% |
| Asia Pacific |
36 |
34 |
+7.6% |
+11.8% |
| Total Group revenue |
1,418 |
1,277 |
+11.1% |
+6.6% |
(*) Organic growth at constant scope and exchange rates
ANALYSIS OF FIRST 9 MONTHS 2007 REPORTED REVENUE
| Analysis of revenue performance |
9 months ended 30 September 2007 |
| EUR million | 2007 | 2006 | % Change |
| Reported nine months revenue |
4,308 |
3,972 |
+8.4% |
| Acquisitions |
(206) |
|
|
| Disposals |
|
(18) |
|
| Currency translation and other |
|
(9) |
|
| Organic revenue growth |
4,102 |
3,946 |
+4.0% |
| By Service Line |
9 months ended 30 September 2007 |
| In EUR million | 2007 | 2006 | % Change reported | % Change organic (*) |
| Consulting |
268 |
303 |
-11.6% |
-9.6% |
| Systems Integration |
1,717 |
1,653 |
+3.8% |
+4.6% |
| Managed Operations |
2,323 |
2,016 |
+15.2% |
+5.5% |
| Total Group revenue |
4,308 |
3,972 |
+8.4% |
+4.0% |
(*) Organic growth: at constant scope and exchange rates
| By Geography |
9 months ended 30 September 2007 |
| In EUR million | 2007 | 2006 | % Change reported | % Change organic (*) |
| France |
1,202 |
1,201 |
+0.1% |
+0.8% |
| United Kingdom |
789 |
777 |
+1.6% |
+0.3% |
| The Netherlands |
810 |
768 |
+5.5% |
+5.5% |
| Germany + Central Europe |
445 |
436 |
+1.8% |
+4.1% |
| Rest of EMEA |
770 |
545 |
+41.2% |
+4.4% |
| Americas |
182 |
146 |
+24.5% |
+33.2% |
| Asia Pacific |
110 |
99 |
+11.7% |
+17.0% |
| Total Group revenue |
4,308 |
3,972 |
+8.4% |
+4.0% |
(*) Organic growth: at constant scope and exchange rates
