H1 2018 results

BezonsJuly 23, 2018

Disclaimer▶This document contains forward-looking statements that involve risks and uncertainties, including references, concerning the Group's
expected growth and profitability in the future which may significantly impact the expected performance indicated in the forward-looking
statements. These risks and uncertainties are linked to factors out of the control of the Company and not precisely estimated, such as
market conditions or competitors behaviors. Any forward-looking statements made in this document are statements about Atos’ beliefs
and expectations and should be evaluated as such. Forward-looking statements include statements that may relate to Atos’ plans,
objectives, strategies, goals, future events, future revenues or synergies, or performance, and other information that is not historicalinformation. Actual events or results may differ from those described in this document due to a number of risks and uncertainties thatare described within the 2017 Registration Document filed with the Autorité des Marchés Financiers (AMF) on February 26, 2018 under
the registration number: D.18-0074. Atos does not undertake, and specifically disclaims, any obligation or responsibility to update oramend any of the information above except as otherwise required by law. This document does not contain or constitute an offer of Atos’shares for sale or an invitation or inducement to invest in Atos’ shares in France, the United States of America or any other jurisdiction.
Starting January 1, 2018, dividends paid to non-controlling interests are not anymore a Free Cash Flow item but reported in line
‘Dividends paid’.
▶Revenue organic growth is presented at constant scope and exchange rates, and restated for the impact of IFRS 15. Starting January
1st, 2018, dividends paid to non-controlling interests are not anymore a Free Cash Flow item but reported in line ‘Dividends paid’.
▶Business Units include Germany, North America (USA, Canada, and Mexico), France, United Kingdom & Ireland, Worldline,
Benelux & The Nordics (Belgium, Denmark, Estonia, Finland, Lithuania, Luxembourg, The Netherlands, Poland, Russia, and Sweden),and Other Business Units including Central & Eastern Europe (Austria, Bulgaria, Croatia, Czech Republic, Greece, Hungary, Israel,
Italy, Romania, Serbia, Slovakia and Switzerland), Iberia (Spain and Portugal), Asia-Pacific (Australia, China, Hong Kong, India,
Indonesia, Japan, Malaysia, New Zealand, Philippines, Singapore, Taiwan, and Thailand), South America (Argentina, Brazil, Colombia,
and Uruguay), Middle East & Africa (Algeria, Benin, Burkina Faso, Egypt, Gabon, Ivory Coast, Kingdom of Saudi Arabia, Lebanon,
Madagascar, Mali, Mauritius, Morocco, Qatar, Senegal, South Africa, Tunisia, Turkey and UAE), Major Events, Global Cloud hub, andGlobal Delivery Centers.
2 | Atos – H1 2018 results

Agenda1.H1 2018 highlights
2.Financial & operational performance
3.Acquisition of Syntel
4.Conclusion and Q&A
3 | Atos – H1 2018 results

H1 2018 highlights
Thierry Breton
Chairman & CEO

H1 2018 key figures (1/2)

Revenue

Order entry€6,005m€7.1bn

+3.4% at constant exchange rates+1.7% organicallyBook to Bill 117%

Operating margin

Total number of employees€545m

96,103

9.1% of revenue-2.4% over H1 2018

5 | Atos – H1 2018 results

H1 2018 key figures (2/2)

Net income Group share

Basic Earnings Per Share+7.7% year-on-year+7.5% year-on-year

Free cash flow

Net cash position

€228m

€180m

6 | Atos – H1 2018 results

€2.16

€351m

Q2 Commercial activity: A record level of booking
above 4 billion euros
Q2 2018 Book to Bill134%

of which North
America at

190%

GlobalEuropeantelco

SAP HANA
DigitalWorkplace

Codex

Asian
oil
distributor

CyberSecurity
7 | Atos – H1 2018 results

Major
Asian
bank

Orchestrated
Hybrid Cloud

Global media andentertainment
company

North American
financial service
company

French video
US financial, Global leader
documentary
property &in consumer
organisation consumer analytics goods
European global airlinesGroup2018 Objectives

Revenueorganic growth
OperatingmarginFree cash flow

8 | Atos – H1 2018 results+2% to +3%

10.5% to 11%
of revenuec. 60%of operating margin

A key transformational acquisition

joining
Major breakthrough in Atos capabilities
Completes its
Digital offerings,
covering 100% IT
needs of ourclients (CMO,
CTO,CIO)

9 | Atos – H1 2018 results&

Accelerates todeliver industry
leading margin in
Business &Platform Solutions&

Upscales
North America
andBanking, Finance,& Insurance
verticalsFinancial performance
Elie Girard
Group CFO

Constant scope and exchange rates figures
reconciliation
In € million

H1 2018

H1 2017
restated fromIFRS 15
6,007-202

Statutory revenue
Exchange rates effect6,005

Revenue at constant exchange rates

6,005

5,805

6,005

104
-6
5,903

Scope effectExchange rates effect on acquired/disposed perimeters
Revenue at constant scope and exchange rates
Statutory operating margin
Scope effectExchange rates effectOperating margin at constant scope and exchange rates
as % of revenue

545

545
9.1%

538
10
-26
523
8.9%

% change

H1 2017reported

-0.0%

6,311
-214

+3.4%

6,097

+1.7%

104
-6
6,195

+1.3%

+4.3%

538
10
-26
523
8.4%

▶ Exchange rates effect mainly came from the American dollar and to a lesser extent from the British
pound and South American currencies depreciating versus Euro.
▶ Scope effect mostly related to the acquisitions of CVC, the healthcare consulting firms in North America,and payment companies by Worldline.
11 | Atos – H1 2018 results

H1 2018 performance by Division▶ Business & Platform Solutions, Big Data &Cybersecurity, and Worldline: revenue in linewith the 3 year plan and operating margin
improvement▶ Infrastructure & Data Management impacted
by a challenging situation in North America

RevenueIn € million

Infrastructure & Data Management
Business & Platform Solutions
Big Data & Cybersecurity
Corporate costs
Worldline
Total

12 | Atos – H1 2018 results

7%

Business & Platform Solutions
53%

H1 2017*

3,163
1,617
429

3,216
1,555
379

Organic
evolution
-1.7%
+4.0%
+13.1%

797
6,005

753
5,903

+5.9%
+1.7%

Big Data & Cybersecurity

27%

Worldline

Operating margin

H1 2018* At constant scope and exchange rates, and restated for IFRS 15

Infrastructure & DataManagement

13%

Operating m argin %H1 2018

H1 2017*

H1 2018

H1 2017*

282
119
52
-37
129
545

312
99
42
-46
117
523

8.9%
7.4%
12.1%
-0.7%
16.2%
9.1%

9.7%
6.4%
11.0%
-0.9%
15.5%
8.9%

Infrastructure & Data Management▶ Revenue supported by Orchestrated Hybrid
Cloud and Digital Workplace

North America
14%

27%

7%

Germany
United Kingdom & Ireland

9%

Benelux & The Nordics
20%

22%

FranceOther countries

En millions d'euros

Revenue
Operating margin
Operating margin rate

H1 2018

H1 2017*

3,163
282
8.9%

3,216
312
9.7%

* At constant scope and exchange rates, and restated for IFRS 15
13 | Atos – H1 2018 results

Organic
evolution-1.7%

Business & Platform Solutions▶ Solid trend in revenue fueled by an increasing
demand for digital projects▶ All Markets contributed to revenue growth▶ Better revenue mix positively impacted theoperating margin.

France27%

32%

Benelux & The Nordics
19%

10%
12%

En millions d'euros

Revenue
Operating margin
Operating margin rate

H1 2018

H1 2017*

1,617
119
7.4%

1,555
99
6.4%

* At constant scope and exchange rates, and restated for IFRS 15
14 | Atos – H1 2018 results

Germany

United Kingdom & Ireland
Other countries

Organic
evolution+4.0%

Big Data & Cybersecurity▶ Continuous strong momentum in Big Datawith increasing HPC and Bullion sales▶ Increasing demand for Managed Security
Services▶ Pursue its geographical extension outside
France as well as to the private sector▶ Operating margin improvement while
investing in innovation
En millions d'euros

Revenue
Operating margin
Operating margin rate

FranceGermany

29%

38%
North America
United Kingdom & Ireland

6%
13%

14%

H1 2018

H1 2017*

429
52
12.1%

379
42
11.0%

* At constant scope and exchange rates, and restated for IFRS 15
15 | Atos – H1 2018 results

Other countries

Organic
evolution+13.1%

Worldline▶ Growing trend of each Business Line fueledby transaction volumes and new projects▶ Operational profitability increased led by
Financial Processing▶ Operating margin up +160 bp excluding
pension one-off

France23%

20%

Allemagne

6%Pays-Bas

22%

12%
13%

En millions d'euros

Revenue
Operating margin
Operating margin rate

H1 2018

H1 2017*

797
129
16.2%

753
117
15.5%

* At constant scope and exchange rates, and restated for IFRS 15
16 | Atos – H1 2018 results

BelgiqueRoyaume-Uni
Autres pays

Organic
evolution+5.9%

H1 2018 performance by Business Unit
▶ Strong performance in the UK&I given the complex environment▶ Sound growth in both France and Germany▶ While North America remained challenging throughout H1

RevenueIn € million

Germany
North America
FranceUnited Kingdom & Ireland
Benelux & The Nordics
Other Business Units
Global structures**
Worldline
Total

Operating margin

H1 2018

H1 2017*

Organic
evolution

1,057
967
841
826
510
1,008

1,034
1,001
816
818
515
967

+2.2%
-3.4%
+3.1%
+0.9%
-0.9%
+4.2%

797
6,005

753
5,903

+5.9%
+1.7%

Operating m argin %H1 2018

H1 2017*

H1 2018

H1 2017*

68
89
61
89
39
111
-41
129
545

72
108
58
81
46
87
-47
117
523

6.4%
9.3%
7.3%
10.7%
7.7%
11.0%
-0.8%
16.2%
9.1%

7.0%
10.8%
7.1%
9.9%
9.0%
9.0%
-0.9%
15.5%
8.9%

* At constant scope and exchange rates, and restated for IFRS 15** Global structures include the IT Services Divisions global costs not allocated to the Business Units and Corporate costs. Worldline holds

17 | Atos – H1 2018 results

H1 2018 headcount evolution+800+5,707-5,977

97,267

Headcount asof 31/12/17▶ Adaptation of hiring toautomation androbotization-1,692
96,103

Scope

18 | Atos – H1 2018 results

HiringLeavers▶ Focus of hiring on
Atos Digital
Transformation
Factory skills▶ Continued increasein training andcertification in
Restructuring Headcount asdigital& dismissals of 30/06/18

Income statement
In € million

H1 2018

H1 2017reported

Revenue

6,005

6,007

Operating margin% of revenue

545
9.1%

538
9.0%

Reorganization, Rationalisation, Integration & acquisition costs
Amortization of intangible assets (PPA from acquisitions)
Equity based compensation
Others

-83
-57
-39
-24

-82
-62
-45
-22

Operating income

342

327

Net financial expenses

-21

-32

Profit before tax

321

295

-59
-18.3%-56-18.9%Net income

262

239

Non-controlling interests

-35

-28

Net income Group share

228

211

Tax charge
Effective tax rate

19 | Atos – H1 2018 results

Cash flow statement
In € million

Operating Margin before Depreciation & Amortization

H1 2018

H1 2017

721

712

12.0%

11.9%

Capital Expenditures
Change in working capital requirement
Cash from operations
Reorganisation, Rationalisation & Integration
Taxes paid
Net cost of financial debt paid
Other changes
Free cash flow
Net acquisitions/disposals
Capital increase
Share buy-backDividends paid to the owners of the parent
Change in net cash
Impact of foreign exchange rate fluctuation
Unify closing net debt

-223
-140
358
-85
-57
-9
-28
180
-24
13
-50
-70
49
-5

-235
-37
439
-101
-64
-13
-20
242
-12
31
-8
-168
86
-72
-101

Opening net cash / debt

307

430

Closing net cash

351

342

as a % of revenue

20 | Atos – H1 2018 results

Net cash evolution

-24

+13
-70

+180

-50

-5
351

307

Net cash
31/12/17

21 | Atos – H1 2018 results

Free
cash
flow

Acquisitions

Capitalincrease

Dividend
paid

Share
buy-back

FX ratefluctuation
effectNet cash
30/06/18

Syntel:A transformational acquisition
for Atos

A compelling match with Atos to enhance its
digital transformation factory
A powerful suite of digital and proprietary solutions recognized by top
analysts as being among the most advanced: cloud, social media, mobile,
analytics, IoT, and automation at c. 40% of Syntel’s revenue

1

joining

2

Atos’ Business & Platform Solutions strengthening with best-in-classdelivery platform generating the highest margin of the industry

3

Strong agile resource planning process for fast deployment“Syntel X.0”: Agile culture + Competency building + Potential building

4

5
23 | Atos – H1 2018 results

Foundation for significant revenue and cost synergies

Double digit EPS accretion as soon as year 11
Strong double digit EPS accretion when run-rate synergies reached²
1
2

Post expected implementation costs and before purchase price accounting impact
Before purchase price accounting impact

Overview of Syntel
Global brand andlong-term clients
Founded in

Listed on

1980 NASDAQ
since 1997

2017

Revenue

$924m
EBIT

$236m

(25.5% margin)
24 | Atos – H1 2018 results−−−

High value services
Executive suite relationships
1,000+ customer-focused leaders

Highly sophisticatedecosystem for digitaltransformation−−−

23,000 business technologists
Software assets / IP
in-house automation tool
Chennai

Scalability and competency building−−−

Scalable world-class campuses >50,000 seats
Syntel University
Syntel X.0 creating future-ready workforce

PuneTransaction overview: a straightforward
acquisition
Key terms• Atos to acquire Syntel inan all-cash transaction at$41.0 per share,
representing
approximately $3. 4bn• c. 14% premium over thelast 30 trading days
volume weighted average
share price of Syntel

Structure & Timing• Friendly transaction,
unanimously approved by bothcompanies’ Boards of Directors
and fully supported by Syntel
management• One step cash merger
requiring >50% AGM votes• Written voting agreementswith Syntel shareholders
including founders on 51% of
the share capital• Customary closing conditions

25 | Atos – H1 2018 results

July 2018

Signing

Early Q4 2018

Anti-trust
clearance

Q4 2018

Expectedclosing of thetransaction

A well-balanced portfolio, highly complementary
to Atos
1

Healthy revenue mix and strong expertisein the Banking and Financial Services sector

2

Digital Services incl. Automation represent
c. 40% of revenue

2017A revenue by segment

Manufacturing
5%

Insurance
15%

Strong North American presence
North America represents c. 90% of revenue

4

Healthcare &Life Sciences18%

26 | Atos – H1 2018 results

3
Banking &Financial
Services
43%

Retail,Logistics &Telecom
18%

Significant basis for Digital Transformation

Strong basis to leverage Atos’ European large
customer base
Rolling out state-of-the art Syntel offerings

Best-in-class digital solutions further accelerate
digital transformation capabilities
1

Customer Experience527 | Atos – H1 2018 results

2

Cloud

Process Digitization

6

3

Automation

Data & Insights

7

4Connected Solutions

Robotization

Analysts recognize the power of Syntel’s value
proposition“Syntel’s MIII (manage, migrate, andmodernize) framework is a leader in
Integrated Transformation through Cloud
Migration”“The breadth of SyntBots’ capability means that the platform isrelevant to multiple use cases – sometimes dozens – within asingle customer environment”“SyntBots offers an integrated Service
Delivery Automation solution including RPA, autonomics,
analytics, and AI features such as NLP, computer vision andmachine learning”“Syntel takes a different approach than many of its
competitors by linking its automation framework to abroader digital transformation strategy”

28 | Atos – H1 2018 results“Top 3 IT & BPO Service Providers that own
Automation Software”“Syntel’s services are powered by the SyntBots
intelligent automation platform, which uses
cognitive computing and AI to transform IT
operations, DevSecOps, legacy modernization andbusiness processes across the enterprise”“Syntel has solid capabilities in Digital One,a cross-industry digital transformation service, and its
holistic SyntBots platform cutting across the traditionalorganizational stovepipes””A pioneer of holistic IT automation with SyntBots andvery strong focus in the banking sector””SyntBots stand out as a early example of a holistic AI
platform”

Industry focus: deep expertise across verticals% of 2017
RevenueKeyhighlights

DirectStaff

Banking &Financial Services

Healthcare &Life Sciences

Retail, Logistics
and Telecom

Insurance

Manufacturing

43%

18%

18%

15%

5%

 Banking, Cards &Payments &Capital Markets

 Patient Lifecycle:
Payer and
Provider Modernization and
DigitalTransformation

 P&C, Life, Annuity& Retirements

 Automotive &Industry

 Compliance:
Pharma andMedical Devices

 Best inTechnology Awardfor “Digital Sales
Solution” atleading retailer 12/30 Top
Insurers and 3/5
Top Brokers

 Industry
Solutions:
Warranty
Analytics, IoT Smart Appliances

 Digital
Transformation
Partner Deep industry
know-how

11,400+29 | Atos – H1 2018 results

 IP around
Healthcare
Products

3,100+

 Fastest growing
Vertical

3,100+

 IP aroundInsurance
Products

2,300+

 #1 “2017 Service
Partner Award for
Global Auto
Manufacturer”

550+

Compelling revenue synergy opportunities
Opportunities

1

2

3

Synergies impacts

Leverage Syntel portfolio in particular
digital services, intelligent automation
and IT modernization into Atos’ Clients
into North America and Europe

Run-raterevenuesynergies$250m
to be achieved by
2021

New Global capabilities to capture
large End-to-End Digital
Transformation projects

Associatedoperatingmargin run-rate
impact$50m

PhasingOver half of it to beachieved during thefirst two years post
closing

Leverage Atos portfolio into Syntel
Base with Cybersecurity, Big data, IDM
and other Atos services

30 | Atos – H1 2018 results

Source: Company filling and synergy framework assumptions
USD/EUR FX exchange rate of 0.85

$120m run-rate cost synergies identified to beachieved by end of 2021
Opportunities

Roll-out of Syntel’s delivery
model over large Atos B&PS
customer accounts
Capacity utilization, agility, offshore
leverage, and enhanced scale bycity in India

G&A rationalization
Real estate management,
procurement, and G&A optimization

Synergies impacts$120m in total run-rate costsynergies
31 | Atos – H1 2018 results

Cost synergies to be achieved
with a linear phasingIntegration approach: full leverage of Syntel modelfor Atos B&PS towards industry leading margin

Factory
Syntelway ofworking

Reverse integration of Atos B&PS
large global contracts into Syntel model

Strong acceleration of
the transformation plan of B&PS

New
business
Delivering industry leading margin

32 | Atos – H1 2018 results

Source: Company filling and synergy framework assumptions

Atos + Syntel: Financial Profile (before synergies)
2017 pro forma
financials

Atos1

Syntel2

Combined

Revenue€11.9bn€0.8bn€12.7bn

Share of B&PS inrevenue

26%

100%

31%

Share of North
America in revenue

16%

89%

21%

Operatingmargin€1.3bn€0.2bn€1.5bnOperating Margin(% of sales)

10.6%

25%

11.5%

33 | Atos – H1 2018 results

1
2

Excluding SIX payments services acquisition effects
USD/EUR FX exchange rate at 0.85

More balanced footprint: gain scale in India and North
America and reinforce Business & Platform Solutions
Breakdown of employees by geography post-transaction
Total Group
employees:c.119,000

Breakdown of direct employees bydivision post-transaction

Big Data &Cybersec.
4%

EuropeNorth America>13,000

Rest of theworld>27,000

34 | Atos – H1 2018 results>46,500

India>32,500

Business &Platform
Services
47%

Worldline
8%

Infrast. & Data
Mgmt
41%

Strong financial position
Proforma net debt/OMDA leverage ratio evolution

Adequate financing package
Strong deleveraging trend reaching a level below
0.5x by 2020▶

Proven track record of transformational
acquisition integration and optimal financing

Acquisition package

35 | Atos – H1 2018 results▶

Financing package fully underwritten by BNPParibas and JP Morgan▶

Mix of euro/dollar and maturities to optimize
liquidity and capital structure▶

Average cost of euro/dollar debt undercurrent market conditions at c. 2%▶

No additional covenant

Maintained flexibility
Bank covenant headroom

Maintained flexibility
and liquidity

Significant headroom under our 2.5x financial covenantfollowing the acquisition

Preserved flexibility for Atos tofurther implement its strategy

Headroom:c. €1.7bn

Proforma net
debt

June 201836 | Atos – H1 2018 results

Covenantlevel at 2.5x
OMDA

Headroom:c. €3.5bn▶ Continued financial andoperational discipline on
both acquisitions andintegrations

Net debt▶ Proforma leverage wellwithin existing debt
covenant

December 2019

Conclusion
and Q&A

Thierry Breton
Chairman & CEO

A compelling match with Atos to enhance its
digital business

A powerful suite of digital and proprietary solutions to address the full needs and IT budgetof our clients from CMO, CTO and CIO.

Best in class B&PS delivery platform to compete profitably against main industry leaders

Fully positioned to meet fast growing customer digital demand in North America andEurope: end-to-end capabilities and full business complementarities

Top class management secured. CEO Rakesh Khanna to become Atos Excom member.

38 | Atos – H1 2018 results

Strong value creationCompelling value creation potential for Atos’ shareholders through costs and revenue
synergies identified through operational excellence and cross-selling opportunities

Operating margin target of current 3YP “2019 Ambition” moving from c.11.5% to c.12.5%,
development of synergies to add to another 100 bps at the end of the next 3YPDouble digit EPS accretion as soon as year 11
Strong double digit EPS accretion when run-rate synergies reached²

39 | Atos – H1 2018 results

1
2

Post expected implementation costs and before purchase price accounting impact
Before purchase price accounting impact

?
Q&A

?

Thanks

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