First half 2011 results

AtoS is ahead of schedule in the integration of SIS and fully operational to deliver the merger synergies. Therefore, full year operating margin guidance raised to 6.2 per cent End Quote

(1888PressRelease) July 27, 2011 - AtoS, an international information technology services company, today announced its results for the first half of 2011. Thanks to the TOP transformation Program, which is now in its third year, operating margin was EUR 166 million, representing 6.7 per cent of revenue compared to 6.0 per cent in the first half of 2010. The operating margin increased by +11 per cent in the first half of 2011. Revenue was EUR 2,476 million, representing -0.7 per cent. Net Income Group share stood at EUR 100 million, up +66 per cent compared to the first half of 2010.

Thierry Breton, Chairman and CEO, said: “During the first half of 2011, as planned, we have been able to further improve the operating margin for the fifth semester in a row, while at the same time preparing the integration of SIS. The new Group, with its very large customer base, is ready to improve its competitiveness. Furthermore, the new AtoS is already fully operational to roll out the TOP² Program and to deliver synergies ahead of schedule, allowing us to increase the operating margin forecast for the full year.”

Performance by Service Line
In Managed Services, operating margin was EUR 63 million, stable compared to the first half of 2010, and representing 6.9 per cent of revenue. This level of profitability was maintained thanks to the industrialization of the activity through Global Delivery Lines. Profitability in France, Spain and Other Countries improved. In Benelux, profitability remained above 10 per cent.
Revenue was EUR 906 million, up +0.6 per cent compared to the first half of 2010. In the UK, revenue grew +6.6 per cent as a result of new orders in the public sector, following the end of the moratorium with the UK Cabinet Office. Revenue in Other Countries, mainly Asia and the Americas, grew +5.9 per cent while in France and Benelux it was down by around -2 per cent.

In Systems Integration, operating margin was EUR 42 million, an improvement of +130 basis points compared to the first half of 2010 and representing 4.8 per cent of revenue. As planned, operating margin in Germany/CEMA and Spain returned to positive compared to the first half of 2010, to represent respectively 3.5 and 0.6 per cent of revenue. Profitability increased in France to 5.0 per cent of revenue and remained strong in the UK at 8.0 per cent. The operating margin rate in the Benelux declined to 4.0 per cent, where the economic environment continued to be tough with high price pressure.
In order to improve profitability in Systems Integration, the Group continued to apply strict criteria for gross margin to new deals, especially in France and the UK. As a result, revenue in Systems Integration declined by -2.6 per cent.
Revenue increased in Germany, led by the Telecom & Media market with new projects. Revenue was down in CEMA, mainly due to the telecom market in South Africa.
In Spain revenue remained stable after the strong decline in 2010. In Benelux, revenue decline was stabilized at -0.9 per cent.

In Hi-Tech Transactional Services (HTTS), the operating margin rate was 15.3 per cent of revenue compared to 15.8 per cent in the first half of 2010. The Group continued to invest in new countries for this Service Line such as the Netherlands, the UK, Spain and Asia, in order to build the sales and delivery infrastructure to leverage the existing AtoS customer base in these countries. The Service Line continued also to invest heavily in project development.
Revenue reached EUR 524 million, up +3.3 per cent compared to the first half of 2010. Growth came from payment services which posted +6.3 per cent growth and from e-Services which grew +4.4 per cent. However, Financial Markets revenue reached EUR 45 million, down -18 per cent, still affected by delays due to software developments to implement new offerings for the investment banks.

In Consulting, operating margin returned to positive at 2.8 per cent after a loss in the first half of 2010. The improvement was led by France, which reported a double digit operating margin rate, and by Spain where there was a return to almost break even.
Revenue reached EUR 91 million, a decline of -16.9 per cent compared to the first half of 2010. Most of the decline came from the Netherlands where the new management appointed at the beginning of this year continued to focus on operational efficiency, on new offerings, and on workforce management to increase the utilization rate.

In Medical BPO, operating margin remained flat at EUR 8.6 million, representing more than 10 per cent rate. Revenue slightly increased to EUR 81 million, due to higher volumes with its large customers.

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