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    ATO   FR0000051732

ATOS SE

(ATO)
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Real-time Euronext Paris  -  11:38 2022-09-30 am EDT
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AtoS : Amendment to the 2021 Universal Registration Document (including the 2022 half-year financial report)

08/05/2022 | 12:26pm EDT

Amendment to the 2021 Universal

Registration Document (URD)

Including the 2022

half-year financial report

Only the French version of the amendment to the 2021 Universal Registration Document has been submitted to the Autorité des Marchés Financier (AMF). It is therefore the only version that is legally binding.

This amendment to the Universal Registration Document was filed on August 5, 2022 with the AMF in its capacity as the competent authority under Regulation (EU) 2017/1129, without prior approval in accordance with Article 9 of that Regulation.

The French version of the Universal Registration Document may be used for the purpose of a public offering of financial securities or the admission of financial securities for trading on a regulated market if it is supplemented by a securities note and, as the case may be, a summary and all amendments made to the Universal Registration Document. The resulting set of documents is approved by the AMF in accordance with Regulation (EU) 2017/1129.

This amendment updates and should be read together with the 2021 Universal Registration Document filed with the AMF on April 6, 2022 under registration number D.22-0247.

A cross-reference table is included in this amendment to allow readers to locate easily the information required under Appendices of 1 and 2 of Commision Delegated Regulation (EU) 2019/980 of March 14, 2019, in accordance with the structure of the Universal Registration Document and the information that has been updated or modified.

The 2021 Universal Registration Document and this amendment are available on the Atos website (www.atos.net), in the Investors / Regulated Information section, and on the AMF website (www.amf- france.org).

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Content

1.

ACTIVITY REPORT ..............................................................................................

4

1.1.

Envisioned spin-off project .......................................................................................................

4

1.2.

Atos Executive Board ................................................................................................................

7

1.3. Atos in the first half of 2022 .....................................................................................................

8

1.4.

Operational review .................................................................................................................

12

1.4.1. Statutory to constant scope and exchange rates reconciliation.............................................

12

1.4.2.

Performance by Business ................................................................................................

14

1.4.3. Performance by Regional Business Units ...........................................................................

15

1.4.4.

Portfolio ........................................................................................................................

16

1.4.5.

Human ressources .........................................................................................................

17

1.5.

2022 objectives ......................................................................................................................

18

1.6.

Risk Factors ............................................................................................................................

19

1.7.

Claims and litigations .............................................................................................................

20

1.7.1.

Tax claims.....................................................................................................................

20

1.7.2.

Commercial claims .........................................................................................................

20

1.7.3.

Labor claims..................................................................................................................

21

1.7.4. Representation & Warranty claims....................................................................................

21

1.7.5.

Miscellaneous ................................................................................................................

21

1.8.

Related parties .......................................................................................................................

21

2.

FINANCIAL STATEMENTS..................................................................................

22

2.1. Financial review......................................................................................................................

22

2.1.1.

Income statement..........................................................................................................

22

2.1.2. Cash Flow and net cash ..................................................................................................

25

2.1.3.

Bank covenant...............................................................................................................

27

2.2. Interim condensed consolidated financial statements ............................................................

28

2.2.1. Interim condensed consolidated income statement.............................................................

28

2.2.2. Interim condensed consolidated statement of comprehensive income ...................................

29

2.2.3. Interim condensed consolidated statement of financial position............................................

30

2.2.4. Interim condensed consolidated cash flow statement..........................................................

31

2.2.5. Interim consolidated statement of changes in shareholders' equity.......................................

32

2.2.6.

Notes to the interim condensed consolidated financial statements ........................................

33

2.3. Statutory auditors' Review Report on the half-yearly financial information for the period from

January 1 to June 30, 2022.....................................................................................................

55

3. PERSON RESPONSIBLE .....................................................................................

57

3.1. Person responsible for the amendment to the Universal Registration Document....................

57

3.2. Statement of the person responsible for the amendment to the Universal Registration

Document ...............................................................................................................................

57

3.3. For the audit ...........................................................................................................................

57

4. CORPORATE GOVERNANCE AND ADDITIONAL INFORMATION ..........................

58

4.1. Composition of the Board of Directors ....................................................................................

58

4.2. Appointment of a new Chief Executive Officer and of a Deputy Chief Executive Officer ..........

64

4.3. Annual General Meeting held on May 18, 2022 .......................................................................

66

4.4. Compensation and stock ownership for executive corporate officers......................................

67

4.4.1. Compensation for the executive corporate officers .............................................................

67

4.4.2. Performance shares and free shares allocation plans decided on May 18, 2022 and June, 13

2022 ............................................................................................................................

71

4.4.3. Revision of the performance conditions of the performance share plan dated July 27, 2021.....

74

  1. Non-achievementof the performance condition of the stock options plan dated July 24, 2019 . 74
  2. Shares granted for free to executive corporate officer since January 1, 2022 - AMF Table N°6 74
  3. Performance shares that have become available since January 1, 2022, for executive corporate

officers - AMF Table N°7

................................................................................................. 75

4.4.7.

AMF Table N°11 .............................................................................................................

75

4.5. Common Stock Evolution ........................................................................................................

76

4.5.1.

Basic data .....................................................................................................................

76

4.5.2.

Dividend .......................................................................................................................

77

4.5.3.

Common stock...............................................................................................................

77

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5. APPENDICES.....................................................................................................

83

5.1.

Contacts..................................................................................................................................

83

5.2.

Financial calendar...................................................................................................................

83

5.3. Amendment to the 2021 Universal Registration Document cross-reference table...................

83

5.4. Cross-reference table for the Half-Yearly Financial Report .....................................................

86

5.5.

Full index ................................................................................................................................

87

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1. Activity Report

1.1. Envisioned spin-off project

On June 14, 2022, Atos announced during a Capital Markets Day that it is studying a separation into two publicly listed companies:

1. SpinCo : a leading player positioned in the high-growth digital transformation, big data and cybersecurity markets

SpinCo would be positioned in high growth markets, driven by the shift to public cloud, increasing need for cybersecurity, big data and analytics going mainstream, and the development of smart applications. SpinCo would be led by a seasoned management team with a successful track record, under the leadership of Philippe Oliva and Anil Agrawal as CFO. In 2021, the SpinCo perimeter generated €4.9 billion revenue, a 7.8% operating margin and a c. €150 million free cash flow before interest and tax. SpinCo would bring together two of Atos' existing business lines:

  • Digital: with c. 50,000 experts2 and strong partnerships with hyperscalers and market leading software vendors, Digital partners with customers in their digital journey to help them transform their businesses. In a fast-growing market supported by the shift to cloud and an increasing demand for digital transformation, Digital is well positioned to grow. Led by Rakesh Khanna, Digital generated €3.5 billion in revenue and a high single-digit operating margin in 2021. Digital's 2022- 2026 acceleration plan, for a total cost of c. €370 million over the period, would aim at improving its sales performance in order to unlock growth potential, and transforming its delivery model in order to enhance profitability.
  • Big Data and Security (BDS): with c. 9,000 highly talented experts2, BDS is the trusted partner
    for secure data intelligence, through two activities: Digital Security and Advanced Computing. Recognized by Gartner as the #1 player in Managed Security Services worldwide and by Hyperion as the #3 player worldwide in Supercomputing, BDS enjoys a strong position in its markets, to capitalize on a growing demand for cybersecurity and advanced computing products and services. Led by Jean-Philippe Poirault, BDS generated €1.4 billion in revenue and a midsingle-digit operating margin in 2021 (driven down by the Advanced Computing division while Digital Security stood at a high-single digit). Investments in BDS over 2022-2026, for a total amount of c. €40 million, would aim at accelerating growth, notably by repositioning its advanced computing portfolio, and stepping up operating margin, through renewed growth and improved cost base.

SpinCo would benefit from strong commercial and managerial synergy opportunities between its two business lines, in particular with the fertilization of Digital's customer base by BDS and with a joint go-to- market strategy. In total, SpinCo's acceleration plan is expected to represent an investment of €0.4 billion over the next five years. This is expected to allow SpinCo to deliver c. 7% organic growth on average over 2022-2026 (starting from an expected €5.3 billion in 2022), to gradually improve its operating margin to 12% in 2026 and generate €700 million in free cash flow before interest and tax, corresponding to a 75% to 80% OMDA conversion1. SpinCo's leverage target would be below 3.0x OMDA as of 2024.

2. TFCo (Atos): leader in Managed Infrastructure Services, Digital Workplace and Professional Services

TFCo (Atos) would consist of Atos' Tech Foundations business line, focused on designing, building and managing complex and vital information systems worldwide. Led by Nourdine Bihmane and Darren Pilcher as CFO, Tech Foundations is positioned on the infrastructure and private cloud market, which is currently experiencing a mix shift from traditional to next generation infrastructure. With c. 48,000 employees2 across the world and serving more than 1,200 customers across geographies and industries, Tech Foundations generated, in 2021 (excluding UCC), €5.4 billion in revenue, a -1.1% operating margin and a €-507 million free cash flow before interest and tax (including an exceptional €-180 million cash out related to the funding of a restructuring plan in Germany and working capital normalization for around €-200 million).

  1. Expressed in percentage of OMDA pre-IFRS 16
  2. Indicative and provisional figure as c. 6,000 Atos employees are still in the process of being allocated. If a
    decision is made to move forward with the envisaged project, full allocation is expected to be completed at the close of the project.

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In order to adapt to the shifting market trends described above, TFCo would implement an ambitious turnaround plan that would ultimately reposition the business for growth, profitability and cash generation. This plan, for a total cost of €1.1 billion over the 2022- 2026 period, is articulated around 3 key steps:

  • Refocus: rationalizing the activity portfolio to pave the way for transformation, by exiting non- strategic businesses and turning around or exiting negative margin accounts;
  • Recover: resetting the cost structure by addressing structural issues across right shoring, age pyramid, reducing third-party spending and consolidating data centers and facilities to drive cost savings;
  • Rebound: stabilize revenue and then pivot to growth, thanks to the development of next generation offerings and investments in sales capabilities.

TFCo is expected to generate c. €5.0 billion in revenue in 2022 (excluding UCC). As the turnaround plan is being executed, revenue is expected to decrease to c. €4.1 billion in 2024 before stabilizing in 2025 and resuming a growth trajectory form 2026 onwards. Operating margin is expected to turn positive in 2025 and to exceed 5% in 2026. Free cash flow before interest and tax is expected at €150 million in 2026 and growing around €50 million per year thereafter, which would enable TFCo to have a solid stand-alone path or participate in industry consolidation.

The contemplated project would maximize value for all Atos' stakeholders by:

  • Creating two companies, with an increased focus on their respective strategies and markets, each with a dedicated management team, the agility to better serve their customers and to execute their respective transformation plans;
  • Providing each company with an adequate capital structure adapted to its respective growth and cash generation profile;
  • Unlocking value of SpinCo by creating a publicly listed company exposed to highgrowth and high- margin markets;
  • Supporting TFCo's transformation and fully financing its turnaround, thereby restoring its financial performance, while keeping optionality to participate in market consolidation;
  • Creating a wealth of professional development opportunities for employees.

Financing of Atos' transformation plan successfully secured

Atos announced on June 14, 2022, that Should the Group decide to move forward with this project, the total funding needs for the 2022-2023 period, until the contemplated separation would become effective, are estimated to be around €1.6 billion. This amount assumes that the realization of the proceeds expected from a contemplated non-core businesses disposal program (mostly within SpinCo), for €0.7 billion. On June 14, 2022, Atos has completed the sale of its entire stake in Worldline of c. 7 million shares representing c. 2.5% of Worldline's share capital. The sale was carried out by way of an accelerated book building to institutional investors. The net proceeds from this transaction amounted to c. 220 million euros.

On July 13, 2022, S&P Global lowered Atos' credit rating to BB. This new rating, which takes into account the envisioned transformation plan presented on June 14, still provides a favorable framework for the setup of an adequate and sustainable capital structure. It also allows Atos to continue to have access to a wide range of debt financing instruments, thus maintaining the flexibility needed to optimize its capital structure.

As highlighted by S&P Global's statement, Atos' liquidity is strong and its financial policy is supportive. In particular, S&P Global stated that Atos' planned liquidity should provide the Group with the means to deliver its transformation plan.

On July 29, Atos successfully finalized an agreement for a new debt package, which provides the Group with the funding it needs during the interim period before the envisioned separation into two listed companies, and significantly reinforces its liquidity.

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This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

AtoS SE published this content on 05 August 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 05 August 2022 16:25:11 UTC.


© Publicnow 2022
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Capitalization 959 M 936 M 936 M
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