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Atos Origin 2006 First Half Earnings Announcement

15.09.2006

2006 first half operating margin of 5.1%; 2006 organic revenue growth objective confirmed at +3%

Paris, 6 September 2006
Atos Origin, a leading international information technology services provider, today announced that for the six months ended 30 June 2006 organic revenue growth was +2.9%, generating an operating margin of 5.1% and a normalised net income of EUR 86 million.

Financial Performance for the First Half 2006, ended 30 June 2006:

Revenue (in EUR million)

• First Half 2006
  2,696
• First Half 2005
  2,725

Operating margin (in EUR million)

• First Half 2006
  139 (5.1% of revenue)
• First Half 2005
  183 (6.7% of revenue)

Normalised net income (Group share) (in EUR million)

• First Half 2006
  86
• First Half 2005
  112

Net income (Group share) (in EUR million)

• First Half 2006
  10
• First Half 2005
  121

Normalised basic EPS (euros) (in EUR million)

• First Half 2006
  1.28
• First Half 2005
  1.68

Basic EPS (euros) (in EUR million)

• First Half 2006
  0.15
• First Half 2005
  1.81

Bernard Bourigeaud, CEO, declares:
“Since our July announcement, we have been active. In the UK, a new organisation has been launched, 3 new consulting partners have been recruited and we are progressing rapidly towards signing some large contracts – we have currently preferred bidder status on EUR 900 million total contract value. In Italy, given that the outlook is really tough, we took the decision to undertake a restructuring of our Italian operations to ensure that the future profitability improves, despite the market environment. We are now ready to launch the programme after discussions with the worker councils this summer. A new simplified organisation is already in place. In addition, we have made an impairment of our goodwill. We are preparing for a rebound in growth and profitability in 2007.”

In July, the Group issued two important announcements, the Half Year revenues, including a downgrade of our previous guidance, and the acquisition of Banksys and Bank Card Company (BCC). The short-term miss in our guidance, concentrated in the UK, does not affect the Group’s capacity or determination to develop its business, particularly in its speciality businesses which are stock exchanges, payment systems and medical BPO, and win new contracts.

1st half 2006 operating performance confirmed
Group revenues for the first half of 2006 amounted to EUR 2,696 million, representing an organic increase of +2.9% compared with the same period last year on a constant scope and exchange rate basis, with a slight acceleration in the second quarter, as expected, to +3.2% after +2.7% in the first quarter. Nevertheless, the second quarter performance was lower than our initial target, due to slower than expected new business in the United Kingdom. In the rest of the world, revenue growth was exactly in line with our expectations, up +6.0%. The first half operating margin was 5.1% due to the new estimate of costs to complete of several public sector legacy contracts in the United Kingdom of EUR 25 million. For the rest of the Group, progress is in line with our expectations. Non-recurring items amounted to EUR 80 million, including an impairment charge of the Group’s Italian goodwill of EUR 60 million. After taxes, interest charges and minority interests, net income Group share came to EUR 10 million. Normalised net income Group share and basic EPS was EUR 86 million and EUR 1.28 respectively. Cash flow from operating activities before working capital increased +20% to reach EUR 189 million, or 7.0% of revenues, in the first half 2006, compared with 5.8% in first half 2005. This performance is temporarily offset by an increase in working capital of around EUR 197 million in the period due to seasonal effects, as last year at the same period. After inclusion of other cash items, net debt at 30 June 2006 was EUR 326 million versus EUR 363 million at 30 June 2005.