Atos Origin 1st Half Results for 2002.Business Editors & High-Tech Writers PARIS Paris, in Greek mythology Paris or Alexander, in Greek mythology, son of Priam and Hecuba and brother of Hector. Because it was prophesied that he would cause the destruction of Troy, Paris was abandoned on Mt. & AMSTERDAM, Holland--(BUSINESS WIRE)--Sept. 11, 2002 Operating Margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: Increases From 8.5% To 9.1% Atos Origin Atos Origin, SA (Euronext: ATO) is an international IT corporation which operates in 40 countries worldwide, with over 50,000 employees. The corporate headquarters are located in Paris, France and Zaventem, Belgium. (OTC OTC See: Over-the-counter. OTC See over-the-counter market (OTC). :ATSSF), a leading international information technology services provider, today announced interim results for the six months ended June 30, 2002. Reported revenues fell 2% to EUR EUR In currencies, this is the abbreviation for the Euro. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 1,487 million, but were nearly 2% higher on a constant scope and exchange rate basis. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. rose 4.8%, to EUR 135 million, giving an operating margin of 9.1%, compared with 8.5% in the same period last year. Earnings per share before goodwill amortization and non-recurring items rose 7.5% to EUR 1.90 for the half-year.
In Euro Millions HY 2002 HY 2001 % change
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Revenue 1,486.7 1,518.0 -2.1%
Revenue (constant scope basis) 1,486.7 1,459.8 +1.8%
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Income from Operations 135.1 128.9 +4.8%
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Operating margin % 9.1% 8.5%
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Net Income 61.2 67.3 -9.1%
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(a)EPS before Goodwill (Euros) 1.90 1.76 +7.5%
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(a)EPS after Goodwill (Euros) 1.40 1.54 -9.2%
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(a) EPS is stated before/after Goodwill Amortization and non-recurring
items
Statement by Bernard Bourigeaud, Chairman of the Management Board and Chief Executive Officer: Half-Year Results Our results for the first half of 2002 demonstrate clearly the adverse impact of market conditions. Revenues in the Consulting and Systems Integration business were 14.5% lower in the first half, compared with H1 2001. However, our Managed Services An umbrella term for third-party monitoring and maintaining of computers, networks and software. The actual equipment may be inhouse or at the third-party's facilities, but the "managed" implies an ongoing effort; for example, making sure the equipment is running at a certain quality business, which is based on long-term contracts with recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. revenue streams, grew by more than 22%, heavily underpinned by the new KPN KPN Koninklijke PTT Nederland (Royal Dutch Telecom) KPN Konfederacja Polski Niepodleglej (Polish conservative party) contracts. Consequently, reported revenues were only 2% down. On a constant scope and exchange rate basis, total group revenues were nearly 2% higher compared with the same period in 2001. The group's operating margin for the first half increased from 8.5% to 9.1%, which demonstrates the continuing importance of cost control. The original Atos-Origin merger re-structuring program was completed early in the year, but since last November we have been cutting costs further in response to market conditions, ensuring in particular that our staff resources are effectively deployed throughout the business. While the market remains in its current state, we will continue to focus on tight control of our cost base in pursuit of our principal operational goal, which is to raise operating margins. Atos KPMG KPMG Klynveld Peat Marwick Goerdeler (accounting firm) KPMG Kaiser Permanente Medical Group KPMG Keiner Prüft Mehr Genau (German) KPMG Kommen Prüfen Meckern Gehen Consulting in the UK and The Netherlands In spite of the difficult trading conditions, volatility provides opportunity and in the first half we announced the acquisition of KPMG Consulting in the UK and The Netherlands, which was completed on August 16, 2002. We are delighted to welcome the partners and staff of KPMG Consulting to Atos Origin and I am quite certain that they will be a valuable, and valued, addition to the company. The new business will trade as Atos KPMG Consulting in both the UK and The Netherlands. Like systems integration, the consulting market remains tough and appears unlikely to recover significantly in the near future; nevertheless I believe that we have acted at an appropriate time. The price that we paid was reasonable and we are well positioned to benefit from a market upturn, particularly in terms of cross-selling opportunities and through our ability to offer a comprehensive - Design, Build and Run - set of services to our clients. Going forward, we intend to report Consulting as a separate service line from Systems Integration, while Managed Services and On-Line Services will be reported under the heading Managed Operations. The Managed Operations business, together with application maintenance in Systems Integration, will mean that nearly 50% of our revenues will be recurring in future, thereby providing strong visibility and stability. Strategy The KPMG Consulting transaction takes us a considerable way towards satisfying two of our three major strategic ambitions, by increasing significantly our presence in the important UK market and establishing a substantial base of consulting operations for the first time. Balance Sheet Our Balance Sheet remains strong and I am pleased to announce that we have signed a new syndicated loan Syndicated Loan A very large loan in which a group of banks work together to provide funds for one borrower. There is usually one lead bank that takes a small percentage of the loan and syndicates the rest to other banks. Notes: Also known as a "syndicated bank facility. facility for EUR 840 million with a group of nine European banks, which consolidates existing facilities and will ensure that the company has adequate financial resources for its foreseeable business needs. At June 30, 2002, the group's net borrowings amounted to EUR 181 million, compared with EUR 235 million at last year-end. Now that the Atos-Origin merger re-structuring program is complete, I expect the company to generate strong free cash flow from its day-to-day activities. We have already generated sufficient cash in the past 12 months to pay for the acquisition of the KPN data center contract. The total cash cost of the acquisition of KPMG Consulting in the UK and The Netherlands was EUR 475 million, including both transaction costs Transaction Costs Costs incurred when buying or selling securities. These include brokers' commissions and spreads (the difference between the price the dealer paid for a security and the price they can sell it). and EUR 31 million debt at KPMG Consulting in The Netherlands, giving pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma net borrowings of EUR 656 million at June 30, 2002. Since that date, we have paid EUR 32 million for the assets and business of KPN SoftwareHouse, to which I refer later. At the same time we have recently realized just over EUR 34 million, net of tax, from the sale of our stake in SNT SNT Safer Neighbourhood Team (UK) SNT Scalable Network Technologies, Inc. SNT Syntrophin SNT Serial Number Tracking SNT Surgical Navigation Technologies (Medtronic) SNT Serum Neutralization Test Group, which was acquired as partial consideration for the disposal in 2001 of our French customer contact center business. Net borrowings therefore stand at EUR 660 million at the end of August 2002 and the new bank facility provides adequate resources to take advantage of new opportunities that may arise, including further major outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. deals. New Business We have now signed a third major outsourcing contract with KPN - SoftwareHouse - under which Atos Origin will take over nearly 600 staff at KPN who are engaged in system management and application development activities within the KPN organization. There are close links between SoftwareHouse and the activities of KPN data center, which Atos Origin took over in October last year. Work under the new contract has already commenced and revenues, which we expect to exceed EUR 60 million per annum Per annum Yearly. , will be consolidated with effect from September 1, 2002. The emphasis on our large account program continued to produce success. On a like for like basis, revenues from the 42 key global accounts increased by over 20% in the first half of 2002 (excluding Philips), compared with the same period last year. I believe that KPMG Consulting will help to strengthen our client base and that strong relationships with clients are essential to provide better visibility and stability, especially in the difficult trading conditions that currently prevail. Outlook The company does not expect any recovery in the Consulting and Systems Integration market this year and we therefore anticipate only a small increase in the group's existing total revenue base in 2002, compared with 2001, on a constant scope basis. Since the acquisition of KPMG Consulting UK and The Netherlands was closed in mid-August, their results will now be consolidated with effect from September 1, 2002. Overall, we therefore expect an increase of 3-5% in revenues for the full year 2002, including KPMG Consulting. We are making excellent progress with the on-going process of reducing our cost base and streamlining operations, but the continuing weakness and lack of visibility in the consulting and systems integration markets is likely to limit the progress in reported profitability. In spite of the fact that the third quarter includes the traditionally weak summer vacation Summer vacation (also called summer holidays or summer break) is a vacation in the summertime between school years in which students are off for 3 months, depending on the country and district. period, we expect to maintain our current level of operating margin at 9.1% in the second half of 2002. About Atos Origin Atos Origin is an international information technology services provider. Its business is turning client vision into results through the application of consulting, systems integration and managed operations, including outsourcing and on-line services. In August 2002, Atos Origin acquired KPMG Consulting in the UK and The Netherlands, which now trade as Atos KPMG Consulting. The company generates annual revenues in excess of EUR 3.5 billion and employs 30,000 staff in 30 countries. The Group's client list includes major companies such as ABN-Amro, Akzo-Nobel, Alstom, BNP Paribas BNP Paribas (Euronext: BNP, TYO: 8665 ) is one of the main banks in Europe and France. It was created on 23 May 2000 through the merger of Banque Nationale de Paris (BNP) and Paribas. , British Petroleum, Euronext, Fiat, ICI (language) ICI - An extensible, interpretated language by Tim Long with syntax similar to C. ICI adds high-level garbage-collected associative data structures, exception handling, sets, regular expressions, and dynamic arrays. , ING, KPN, Lucent, Philips, Renault, Royal Bank of Scotland
The Royal Bank of Scotland Plc (Scottish Gaelic: Banca Rìoghail na h-Alba , Saudi Aramco Saudi Aramco, the state-owned national oil company of Saudi Arabia, is the largest oil corporation in the world and the world's largest in terms of proven crude oil reserves and production. , Shell, UBS-Warburg, Unilever, Vivendi Universal, Vodafone and Wolters Kluwer Wolters Kluwer N.V. (Euronext: WKL) is a leading global information services and publishing company. The company provides products and services for professionals in the health, tax, accounting, corporate, financial services, legal and regulatory, and education sectors. . For more information, please visit the company's web site at http://www.atosorigin.com |
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