Atos Origin Full Year Results for 2004; Strong Financial Performance in a Year of Merger

Business Wire, March 16, 2005

PARIS -- Atos Origin, a leading international information technology services provider, today announced audited results for the year ended December 31st, 2004. These are the first full annual results to be published since the acquisition of Sema Group from Schlumberger on January 1st, 2004.

Group revenues were ahead of expectations, at EUR 5,302 million, an increase of 75% compared with 2003, prior to the acquisition of Sema Group. That represents an organic increase of just under 1% compared with the pro forma revenues of the combined Group for the same period in 2003, on a constant scope and exchange rate basis. The operating profit was EUR 385 million, yielding an operating margin of 7.3% (2003 - 5.9% on a pro forma basis). Net income before goodwill amortization and non-recurring items (net of tax) was EUR 231 million, giving diluted earnings per share of EUR 3.43 compared with 3.24 in 2003, an accretion of 6%. The opening net debt of EUR 698 million immediately following the acquisition of Sema Group fell to EUR 491 million at December 31st, 2004.

In EUR millions                              2004     2003   %Change
------------------------------------------ -------- -------- ---------

Revenue                                      5,302    3,035        75%
Income from operations                         385      248        55%
                                           -------- --------
Operating margin                               7.3%     8.2%
                                           -------- --------
Net income before non recurring items and
 goodwill amortization (c)                     231      153        51%
Net income (loss) - Group Share                 11     (169)

Basic EPS (a)                                 0.16    (3.72)
Diluted EPS before non recurring items and
 goodwill amortization (b) (c)                3.43     3.24         6%

Net debt to equity ratio                        32%      46%
Employees (at December 31st)                46,584   26,473
------------------------------------------ -------- -------- ---------

(a) In euros, based on a weighted average number of shares

(b) In euros, based on a diluted weighted average number of shares

(c) Net of tax

Extract from the Chief Executive's review of 2004

Introduction

During the second half of 2004, there was clear evidence that the global IT services market is growing once again. Within Europe particularly we have seen this in our expanding order pipeline and in the plans and expectations of our clients. In the third and fourth quarters of 2004 the Group reported a return to organic growth for the first time in more than three years and this is encouraging, both for our staff and for shareholders.

The Integration of Sema Group

During 2004 we put into action our plans to manage the newly expanded business. We established a commercial go-to-market strategy focussed on 100 key clients, from whom we currently derive more than 65% of Group revenues and with whom I believe there is potential to do very much more business in future. We have refocused our service line operations, launching our consulting activities worldwide under the Atos Consulting brand and bringing together the card payment and internet processing businesses in a single organisation -- Atos Worldline -- which has good growth potential for the future. Internally, we have created Global Consulting and Systems Integration and Global Managed Services organisations to ensure better control and coordination by business line and to focus the future development of our service offerings. In each of our service lines -- Consulting, Systems Integration and Managed Operations -- we have carried out an extensive review of our sales offerings and we are intent on driving the business towards specialized high-end solution offerings areas and away from the commoditized end of the market.

The successful reorganisation of our go-to-market strategy began delivering results in the second half of 2004, during which we signed a steady and significant stream of new orders, including the largest outsourcing contract ever won by the Group -- taking over a substantial part of the IT infrastructure of KarstadtQuelle. That contract will be worth at least EUR 1.2 billion over the next 8 years, probably more. Other significant orders were signed with Rhodia, Schenker, the UK Immigration Service, LCH-Clearnet and last week with Renault. We also very successfully ran the IT operations for the Athens Olympics Games and are currently preparing for the winter Olympics in Turin next year and the summer Games in Beijing in 2008.

The integration of Sema Group is effectively complete. We have still to finalise a number of business disposals and to consolidate some data centre capacity, but decisions in these areas have been taken and action is in the hands of capable operational management.

Trading in 2004

The financial targets we communicated to the market at the beginning of the year proved to be very accurate. Group revenue amounted to EUR 5,302 million, which was slightly higher than in the previous financial year on a constant scope and exchange rate basis. The operating profit was EUR 385 million, representing a margin of 7.3%, compared with 5.9% for the combined group on a pro forma basis in 2003. That was in line with our stated target of achieving a margin of at least 7% and was largely due to a substantial restructuring of the combined business last year, which will result in a further improvement in profitability in 2005. This positions the group to take full advantage of the new market cycle.