“Atos Origin full year 2010 results”

TOP program ahead of schedule
Group well positioned to boost integration of Siemens IT Solutions

Net Income Group Share: EUR 116 million up +265 per cent
Operating Margin: EUR 337 million; 6.7 per cent up +107 basis points

Operating Cash Flow: EUR 143 million up +22 per cent
Revenue: EUR 5,021 million; down -3.5 per cent
Book to bill ratio: 111 per cent full year; fourth quarter at 125 per cent
Order Entry: EUR 5.6 billion up +7 per cent
Net debt: EUR 139 million after EUR 143 million on acquisitions

Atos Origin, an international IT services company, today announced its 2010 annual results. Thanks to the continued roll-out of the TOP Program, Operating Margin was EUR 337 million, representing +6.7 per cent of revenue compared to +5.7 per cent in 2009. The Operating Margin increased by +15 per cent in 2010. Revenue was EUR 5,021 million, representing a decline of -3.5 per cent. During the fourth quarter, revenue decline was limited to -1.2 per cent and excluding the impact of Arcandor, revenue was flat with a return to growth for the first time in the last two years in most of the geographies. Net Income stood at EUR 116 million, up +265 per cent compared to 2009.

Thierry Breton, Chairman and CEO of Atos Origin said: “In 2010, we achieved our objectives and exceeded the high end of our operating margin guidance. This result clearly shows that we are ahead in the TOP Program. This positions the Group in the best conditions to boost the integration of Siemens IT Solutions and Services (SIS) by accelerating the implementation of TOP² Program in the future New Company. We will continue to invest in sales, innovation and talent, for the benefit of our customers, while driving out costs and increasing our profitability thanks to a further acceleration of TOP and the expected improvement of SIS. We are confident in 2011 and beyond.”

TOP Program: Our know-how and experience to prepare the SIS integration

For the second year, the TOP Program contributed significantly in 2010 to the improvement of the Operating Margin.

In the tough economic environment of the last two years, TOP Program, the transformation plan of the Group, largely contributed to the increase of the Operating Margin from 4.8 per cent in 2008 to 6.7 per cent in 2010. This performance was reached despite an overall declining market.

As part of the TOP Program, the Group implemented in 2010 several initiatives to increase revenue and return to growth under its TOP sales projects. It also reinforced its corporate responsibility through the Sustainability program and achieved the B+ level for its first GRI report. Finally, the Group continued to attract and retain key talents while implementing new ways of working through its program for “Well Being at Work”.

Lean management contributed to the increase of the operational performance through a better quality of services for customers and the optimization of staff deployment. At the end of December 2010, 9,000 staff in Managed Services were using these techniques daily.

The binding agreement with Siemens was signed on February 1st 2011 for the acquisition of SIS following the opinion provided by the European Work Council and the approval by the Board of Directors of Atos Origin.

TOP² Program will be rolled out within SIS as soon as the acquisition is completed (expected 1st July). Before the anti-trust approval and the formal closing of the deal, integration initiatives, fully compliant, are structured around 24 workstreams. These include 12 transversal workstreams (Service Line, Growth, Purchasing, IT, Finance, HR,…) and 12 TOP² initiatives to improve operational efficiency of merged entities (Industrialization, G&A optimization, Standard of living, Capital expenditure,…) already started. Workstream leaders from Atos Origin and SIS have been appointed and the integration program was launched on January 27th 2011.

Performance by Service Line

In Managed Services, as a result of industrializing the activity through global delivery lines, Operating Margin reached EUR 146 million, representing 7.9 per cent of revenue compared to 5.3 per cent in 2009.

Revenue for the full year was EUR 1,847 million, down -5.0 per cent compared to 2009. Two thirds of the decline was the result of the planned ramp down of activity with Arcandor and the remaining part was a consequence of the UK Public sector moratorium which ended in the last quarter.

During the fourth quarter, there was a slight decline in revenue of -0.8 per cent. Excluding the impact of Arcandor, revenue grew +2.5 per cent, thanks to Benelux and Asia. Excluding Arcandor, revenue in Germany was flat. France and the United Kingdom declined slightly, -5 per cent and -3 per cent respectively.

In Systems Integration, Operating Margin rate reached EUR 70 million, a slight decrease from 4.3 per cent to 4.0 per cent, mainly due to the situation in Spain in the first half of 2010, and in GCEMA. Operating Margin improved in France and Other Countries and remained almost stable in Benelux. The United Kingdom increased Operating Margin and reached 10 per cent.

Revenue was EUR 1,771 million, a decline of -4.7 per cent. On a full year basis, France grew +3.0 per cent and Other Countries +2.2 per cent with +10 per cent in Asia. Benelux and the United Kingdom declined respectively by -8 per cent and -10 per cent.

During the fourth quarter, France and Benelux posted growth of +1.4 per cent and +2.5 per cent respectively, Asia and Americas grew +21.3 per cent and +5.5 per cent. Revenue in Germany was stable while CEMA declined with less business in South Africa and Turkey in the Telecommunications sector. In the United Kingdom revenue declined due to the moratorium in the Public sector. As a result, revenue in Systems Integration decreased -4.2 per cent.

In Hi-Tech Transactional Services (HTTS), the Operating Margin was up at 16.6 per cent with an increase in both Payments and Electronic Services.

HTTS reported revenue of EUR 1,035 million, up +4.4 per cent. Payments posted a growth of +6.7 per cent and Electronic Services of +4.2 per cent while Financial Markets declined as anticipated, following the reorganization of this division inherited from Atos Euronext. In the new geographies, revenue increased to EUR 92 million in the United Kingdom, EUR 36 million in Asia and EUR 25 million in Spain.

Including Venture Infotek, revenue growth in the fourth quarter was +7.5 per cent, above the +5.5 per cent achieved in the third quarter and the +2.2 per cent in the first half of 2010.

In Consulting, revenue reached EUR 208 million, representing 4 per cent of total revenue, a decline of -16 per cent. France returned to growth and the United Kingdom was almost flat. Revenue decline was concentrated in the Netherlands where a new management is now in place, and in Spain, still impacted by a strong price pressure. As a result, Operating Margin reached EUR -5 million, despite an improvement in France and Asia.

In Medical BPO, Operating Margin remained almost stable at around 12 per cent in 2010. Revenue slightly increased at EUR 160 million.

Performance by Global Business Unit (GBU)

Revenue in France was EUR 1,133 million representing a return to growth thanks to the cyclical activities. In Systems Integration revenue grew in Energy & Utilities, Financial Services and the Telecom, while it was flat in Manufacturing and more challenging in the Public sector. The activity in Managed Services declined -3 per cent due to a lack of cross-selling on existing contracts directly impacting the Operating Margin which declined by EUR 10 million.

The Benelux improved its Operating Margin rate by +140 basis points, thanks to Managed Services with the implementation of the global delivery model.
Revenue was down -5.9 per cent at EUR 938 million due to the cyclical activities. However, after a decline of -11 per cent in the first semester, revenue stabilized in the second half of the year compared to the second semester of 2009.

In the United Kingdom, Operating Margin rate remained around 9 per cent at EUR 77 million. The strong management on resources and on TOP Program has offset a fall in revenue from the Public Sector, particularly in the third quarter.
Revenue was EUR 904 million. The decline was limited to -3.5 per cent thanks to HTTS and BPO Medical. During the fourth quarter, revenue in the United Kingdom posted a +1 per cent showing a return to growth.

Atos Worldline increased its Operating Margin rate to 17.4 per cent compared to 15.8 per cent in 2009. This improvement came mainly from an increase in revenue in Payments Services combined with a strict control on cost.
Revenue grew +2.7 per cent at EUR 867 million with an acceleration in the second half of the year after +0.9 per cent for the first half of 2010. For the full year 2010, the Payments business grew +4.5 per cent and Electronic Services +4.4 per cent, offsetting the expected decline in Financial Markets.

Following a negative Operating Margin in the first half, Spain returned to break even in the second half. The new management team implemented staff restructuring, adjusted the cost base and reinforced the control of fixed price projects.
Revenue declined -10.4 per cent in 2010 at EUR 300 million. Most of the revenue generated in Spain was in Systems Integration and Consulting which suffered from the tough economic environment. In the fourth quarter, revenue declined by -9.4 per cent after -13.6 per cent in the third quarter.

In Germany/CEMA, the Operating Margin declined by EUR 12 million, reaching 2.2 per cent of revenue. Germany fell by only EUR 3 million despite the revenue drop with Arcandor while CEMA was impacted by specific projects in South Africa, Turkey and Switzerland in the Telecommunications sector. These projects also impacted the revenue in these countries.
Excluding Arcandor ramp down, GCEMA revenue was down -6 per cent and almost flat in Germany.

In Other Countries which are mainly Asia and the Americas, Operating Margin rate significantly increased from 2 per cent to 13 per cent of revenue. The improvement came from EUR 17 million additional margin in Asia on large Managed Services contracts and from a tight management in South America leading to an increase of EUR 14 million. The Indian operations also contributed to the improvement of the Operating Margin.
Other Countries reported revenue of EUR 405 million, representing +5.6 per cent organic growth. The Group had a strong development in Asia and in the Offshore countries with double digit growth. Revenue from the Olympic Games also contributed to the growth of this area. During the fourth quarter, revenue growth was +4.7 per cent.

The cost of Global Functions (Global Delivery Lines and Corporate Central) continued to benefit from the TOP Program and the implementation of Lean Management and Activity Value Analysis (AVA). Costs were down -18 per cent to EUR 79 million. Half of the reduction was on Central Corporate costs and the other half came from a transfer of Global Delivery Lines costs to the GBUs.

Operating Income and Net Income

Operating Income was EUR 200 million after EUR 65 million of expenses for staff reorganization and EUR 39 million for rationalization of premises. During the first half of the year, the Group booked a depreciation of goodwill for EUR 25 million to take into account the evolution of the operations in Spain.

Financial Result was a charge of EUR 24 million, total tax charge was EUR 58 million and minority interests totaled EUR 2 million.

Therefore, the Net Income Group share reached EUR 116 million compared to EUR 32 million statutory in 2009.

Normalized Net Income (before unusual, abnormal and infrequent items net of tax) reached EUR 218 million representing an increase of +11 per cent compared to EUR 197 million reached in 2009.

Basic Earnings Per Share was EUR 1.67 and diluted EPS was EUR 1.64.

Normalized Basic EPS reached EUR 3.15 in 2010 compared to EUR 2.87 in 2009.

Net debt and Operating Cash Flow

Group Net Debt as of 31 December 2010 was EUR 139 million, at the same level compared to 31 December 2009. This amount takes into account the EUR 143 million cash outflow for the acquisitions of the year: Shere in the United Kingdom, the minority interests of Atos Worldline Processing in Germany and Venture Infotek in India.

OMDA increased by EUR 32 million to EUR 532 million representing 11 per cent of revenue.

Staff restructuring represented EUR 100 million cash out. Rationalization of offices represented EUR 68 million related to the closure of offices.

Thanks to the actions led by the Group within the TOP Program, Working Capital improved by EUR 53 million with a DSO reduced by 8 days to 49 days, and Capital Expenditure was EUR 176 million representing 3.5 per cent of revenue compared to 3.9 per cent in 2009.

As a result, the Operating Cash Flow increased to EUR 143 million in 2010 compared to EUR 117 million in 2009 and a negative EUR -52 million in 2008.

Dividend

During its meeting held on 15 February 2011, the Board of Directors decided to propose at the next Ordinary Shareholders Meeting to pay a dividend of 0.50 euro per share in 2011 on the 2010 results.

Commercial activity

Group Order Entries totaled EUR 5,590 million in 2010, representing +7 per cent growth. The Book to Bill ratio was 111 per cent, compared to 100 per cent in 2009.

During the fourth quarter of 2010, the Group reached a 125 per cent Book to Bill ratio with EUR 1,650 million Order Entry, representing an increase of +39 per cent compared to the fourth quarter of 2009.

New contracts and renewals were signed during the last quarter of 2010, particularly in the Public Sector and in Manufacturing.
France signed a new contract in Infrastructure Management with Rexel, with EADS in Product Lifecycle Management (PLM), and in Managed Services with DGAC.
In the United Kingdom, renewals with the Public Sector were signed as expected in Medical BPO, with the Department for Work and Pensions and with Royal Mail. Managed Services contracts were also agreed with the Home Office and NHS Scotland.
In the Netherlands, Managed Services contracts were signed in the Public Sector and in Systems Integration with Philips, ING, ABN AMRO and Achmea.
Atos Worldline signed payments processing and acquiring contracts with ING, Cortal Consors and ABN AMRO.
In Germany, the contract with Karstadt was renewed by the new owner until the end of 2012. The German operations also signed a contract with Neckermann for extended services.
The sales activity restarted in Spain through contract signatures in Systems Integration in the Telcos and in the Banking sectors.
The Group also renewed its contracts with Petrobras in Brazil and Vodacom in South Africa.

In HTTS, a good commercial activity pursued in the United Kingdom through contracts signed with Leaseplan, and East Coast Main Line in Transport, and in Asia in Payments. First contracts leveraging Atos Worldline assets and capabilities were signed with Rabobank in the Netherlands and Nomura in the United Kingdom.

At the end of 2010, full backlog was EUR 7.5 billion representing 1.5 year of revenue, an increase of +8 per cent compared to 31 December 2009.

The full qualified pipeline at 31 December 2010 was EUR 2.7 billion, almost the same level as at 30 June 2010, but lower compared to the EUR 3.0 billion one year ago.

Human Resources

Total number of Group employees was 48,278 at the end of December 2010, slightly down compared to 49,036 at the end of December 2009.

The number of indirect staff continued to decrease through the Activity Value Analysis process implemented within the Group as part of the TOP Program. Indirect staff was 4,522 at the end of December 2010 (9 per cent of total staff), compared to 5,094 at the end of 2009 (10 per cent of total staff).

Direct staff was almost flat over the course of the year and was 43,756 at the end of December 2010.

Almost 6,000 engineers were recruited in 2010 of which 3,500 were hired in the second half of the year. 60 per cent of the new joiners are located in the emerging markets such as India, Morocco and South America.

The attrition rate increased to 10.1 per cent compared to 7.0 per cent in December 2009. The breakdown was 8.8 per cent in the first half of 2010 and 11.3 per cent in the second half.

The number of dismissals and restructuring was 2,184 employees, in line with the Group expectations.

The number of external subcontractors was 2,455 at the end of 2010, in line with the Group policy to be around 5 per cent of total staff.

For Consulting and Systems Integration activities, the bench has been reduced to 621 employees (3 per cent of total Consulting and Systems Integration direct staff) compared to 749 at the end of 2009. This decline is the result of the efforts provided by the Group during the last two years to re skill internal staff and to encourage mobility.

2011 Objectives

Revenue

Considering the outcome from its large customers and an improving economic environment, the Group expects to return to a slight organic growth in 2011.

Operating margin

Operating Margin rate target is to increase by +50 to +100 basis points in 2011, third year of the three-year transformation plan, and therefore to be in the range of 7.2 to 7.7 per cent.

Cash Flow

The Operating Cash Flow is expected to increase again by +20 per cent in 2011 compared to 2010.

Consolidation of SIS

The figures above are for Atos Origin in its current scope before the planned consolidation of SIS expected as of 1 July 2011 (subject to anti-trust clearance and Shareholders’ approval). As soon as the transaction is completed, the new guidance for the year 2011 will include SIS (6 months expected in the second half of the year), and is expected to be in line with the figures already provided on 15 December 2010, date of the announcement:

“The financial targets for Atos Origin are based on the following assumptions:

No major change in market conditions
Full execution of the TOP² Program and combination synergies
No significant delay in Siemens IT Solutions and Services integration

For 2011, with 12 months for Atos Origin (January to December) and six months for Siemens IT Solutions and Services (July to December), these targets are the following:

Revenue evolution in line with market growth
An Operating Margin at circa 6 per cent
A Neutral EPS effect compared to Atos Origin standalone
A Cash Flow* slightly higher than Atos Origin standalone in 2011.”
* before dividends and acquisitions / disposals.

A webcast in English will be held today 16 February at 9:00 am, CET time.

The operational review with the complete financial statements section of the 2010 annual report in English will be available today on the Company’s website

Forthcoming events

5 May 2011	First quarter 2011 revenue
27 July 2011	First half year 2011 results

Disclaimers

Atos Origin, scope at 16 February 2011: 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 2009 Reference Document filed with the Autorité des Marchés Financiers (AMF) on 1 April 2010 under the registration number: D10-0199 and updated on 30 July 2010 under the registration number: D10-0199-1. The audit procedures on the consolidated financial statements have been performed. The audit report will be issued after the verification of the information presented in the Group’s management report.

Expected combined Group Atos Origin / Siemens IT Solutions and Services: Any statements made in this document that are not statements of historical fact, including statements about Atos Origin’ beliefs and expectations and statements about Atos Origin’ proposed acquisition of the Siemens IT services activities, are forward-looking statements and should be evaluated as such. Forward-looking statements include statements that may relate to Atos Origin’ plans, objectives, strategies, goals, future events, future revenues or synergies, or performance, and other information that is not historical information.
Such forward-looking statements reflect Atos Origin’s current analysis and expectations at he date of this document, based on reasonable assumptions and on the financials of Siemens as from market authorities and the approval of the shareholders of Atos Origin, or an inability to obtain them on the terms proposed or on the anticipated schedule. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained in the relevant securities regulatory filings and financial statements of each of Atos Origin and Siemens.
Atos Origin 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.

About Atos Origin

Atos Origin is a leading international Information Technology (IT) services company, providing Hi-Tech Transactional Services, Consulting, Systems Integration and Managed Services to deliver business outcomes globally. The company’s annual revenues are EUR 5.0 billion and it employs 49,000 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.

Press contact
Caroline Crouch,
Tel +44 77 333 100 86,
caroline.crouch@atosorigin.com

Investor Relations contact
Gilles Arditti,
Tel: +33 (0) 1 73 26 00 66,
gilles.arditti@atosorigin.com

Appendix

Full Year 2010 Performance by Service Line

	Revenue			Operating Margin		Operating Margin %
In EUR Million	FY 2010	FY 2009	% growth	FY 2010	FY 2009	FY 2010	FY 2009
Managed Services	1,847	1,945	-5.0%	146	104	+7.9%	+5.3%
Systems Integration	1,771	1,859	-4.8%	70	80	+4.0%	+4.3%
HTTS	1,035	991	+4.4%	171	158	+16.6%	+16.0%
Consulting	208	247	-16.0%	-5	2	-2.6%	+0.9%
Medical BPO	160	159	+0.6%	18	20	+11.6%	+12.7%
Corporate Central (*)				-63	-71	-1.3%	-1.4%

Total Group	5,021	5,202	-3.5%	337	294	+6.7%	+5.7%

(*) Corporate Central excludes Global Delivery Lines costs allocated to service lines

Full Year 2010 Performance by Global Business Unit

	Total Revenue			Operating Margin		Operating Margin %
In EUR Million	FY 2010	FY 2009	% growth	FY 2010	FY 2009	FY 2010	FY 2009
France	1,133	1,128	+0.4%	45	47	+3.9%	+4.2%
Benelux	938	997	-5.9%	92	84	+9.9%	+8.4%
United Kingdom	904	937	-3.5%	77	85	+8.5%	+9.1%
Atos Worldline	867	844	+2.7%	150	133	+17.4%	+15.8%
Germany/CEMA	475	578	-17.8%	10	23	+2.2%	+3.9%
Spain	300	334	-10.4%	-10	12	-3.3%	+3.5%
Other countries	405	384	+5.6%	52	7	+12.7%	+1.8%
GDL costs (*)				-16	-26	-0.3%	-0.5%
Corporate Central (*)				-63	-71	-1.3%	-1.4%
Total Group	5,021	5,202	-3.5%	337	294	+6.7%	+5.7%