Atos Origin 2006 First 9 Months Revenues Announcement
9-Month Organic growth at +1.9%
Paris, 31 October 2006 - Atos Origin, a leading international information technology services provider, today announced that unaudited revenues for the nine months ended 30 September 2006 amounted to EUR 3,972 million, showing +1.9% organic increase on a constant scope and exchange rate basis.
Revenue Performance for 1st nine months
Reported Group revenues for the first 9 months ended 30 September 2006 were EUR 3,972 million, compared with EUR 4,019 million for the equivalent period last year. After adjusting for disposals, mainly Nordic and Middle East activities, for EUR 132 million, and at constant exchange rates, the Group generated organic growth of +1.9%, + 5.7% excluding the UK.
Euro Millions | 9M 2006 revenues | 9M 2005 revenues | % change
Revenues | 3,972 | 4,019 | -1.2%
Disposals | - | -132 | -
Exchange Rate impact | - | 11 | -
Organic revenues growth (*) | 3,972 | 3,897 | +1.9%
(*) Organic growth at constant scope and exchange rates
The appendix to this statement provides an analysis of revenues by service line and geographic area for the 1st nine months and the 3rd quarter.
Revenue Performance for Q3 2006
The Third quarter has suffered from a further decline in revenues in the UK, falling below estimates. The action plan is being implemented but the results are taking longer to come through. On the other hand, as in the first two quarters of the year, the rest of the Group is generating growth of more than 5%. Revenues for the 3rd quarter 2006 ended 30 September 2006 amounted to EUR 1,276 million, down 1.3 %. After adjusting for disposals and exchange rate fluctuations, Q3 organic growth was -0.2%, of which -18% in the UK and +5.1% in the rest of the world.
In Q3 2006, Consulting excluding the UK was up 13.3% organically.
Double digit growth both in Q3 and on a nine months basis, has been achieved with strong growth in each country. The growth has been sustained by increased utilization rate and staff capacity.
In Q3 2006, Systems Integration excluding the UK organic growth was +4.1%.
In France, Germany and EMEA, generally, there was strong growth while the Netherlands declined by 2%. In Italy there was a slight decline due to the focus on executing the restructuring and reorganization plan. Growth in the period was due to better volumes, with prices remaining broadly stable.
In Q3 2006, Managed Operations excluding the UK organic growth reached +4.9%.
In France growth declined to +2%, as the Euronext.Liffe contract (booked in France) is now in the comparable figure for 2005 (starting in Q3 2005) as a result of a good level of fertilization on existing clients. In Netherlands revenues were up +7%, thanks to both strong business fertilization and new signatures coming into revenues. In Germany and Central Europe, activity remained good but with slower growth than previous quarters, while the pipeline includes several large opportunities.
In Q3 2006, the UK activities were down 18.1%. Half of the decline was due to the loss of the Metropolitan Police contract and the expected ramp down of the major MOD contract, as explained since the beginning of the year. The other half of the decline was generalized across all three service lines, with each one being down about 10%. This is due to the less favourable Euronext comparison, as expected, and weak short-term order entry in consulting and systems integration, delays in final negotiations on the key Systems Integration difficult contracts and postponement of a few projects into Q4.
Nevertheless, since September, contractual progress on new signatures in the UK has been good with final signatures amounting to EUR 1 billion from Government Gateway, Rail Settlement Plan, NHS Scotland, NFUM, and DCA infrastructure. The two regional NHS Diagnostics Centres are still in preferred bidder status but should be signed in the coming weeks.
Outlook for the remainder of 2006
As a consequence, 2006 organic revenue growth will be around +1.5%, or +4.5% excluding the UK.
The operating margin for the full year 2006 will be impacted by
* lower order-intake on short term new business in Consulting and Systems integration particularly in the UK,
* further delays in negotiations on some of the difficult contracts in the UK,
* effective disturbance caused by the focus on the Italian reorganization,
* higher attrition than expected, partly compensated by an intensive recruitment programme.
Management Board changes
In light of the current situation, the decision has been taken to tighten the Top Management team and increase the areas of responsibility of Dominique Illien and Wilbert Kieboom.
The Management Board will be composed, as of today, of
* Bernard Bourigeaud, CEO, Chairman of the Management Board, taking also direct responsibility for Global Sales, Accounts and Markets as well as for the Olympic Games projects and Atos Euronext Market Solutions,
* Dominique Illien, responsible for France, Germany, Central Europe, Southern Europe, Mediterranean, Africa and South America, and for the Global Managed Operations service line,
* Wilbert Kieboom, responsible for the Netherlands, Belgium, Luxemburg, the UK, North America and Asia Pacific, for the Global Consulting & Systems Integration service lines, and for Marketing
* Eric Guilhou, CFO, responsible for all functions of the group.
* Xavier Flinois and Gianni Linari continue to report directly to Bernard Bourigeaud.
Beyond this evolution at Management Board level, Atos Origin Top Management is currently leading a review of the group’s structure and organization, in order to further improve its organic growth capabilities and operational efficiency. The resulting transformation plan will be communicated in January 2007, together with the outlook for 2007.
We are confident that Atos Origin has the resources to continue to play an important role in the European IT Services space.
31 January 2007 Announcement of 2006 Q4 revenues
A conference call in English will be held at 10.30 am, CET time, to discuss these figures.
The call is accessible on www.atosorigin.com
This document contains unaudited figures.
This document contains further forward-looking statements that involve risks and uncertainties concerning the Group’s expected growth and profitability for the second half of the year 2006. 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 2005 annual report filed with the Autorités des Marchés Financiers (AMF) on May 15th, 2006 as a Document de Référence under the registration number : D06-402.
Glossary of terms used in the press release
External revenue. External revenue represents Atos Origin sales to third parties (excluding VAT, nil margin pass-through revenue).
Order entry / bookings. The total value of contracts (TCV), orders or amendments signed during a defined period. When an offer is won (contract signed), the total contract value is added to the backlog and the order entry is recognised.
Organic growth. Organic growth represents the % growth of a unit based on a constant scope and exchange rates basis.
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 revenues are more than EUR 5.5 billion and it employs over 47,000 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.
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