Referring to EU regulation No. 596/2014, which provides that issuers shall inform the public as soon as possible of inside information directly relevant to them, Atos announces today that the objectives communicated to the market on July 12, 2021 will not be met due to several significant effects described herein below.
The figures in this press release, including the revenue growth at constant currency, operating margin rate and free cash flow for the year 2021, are not finalized at this stage nor audited. The detailed full year figures for 2021, including potential impairment further to the assessment of the recoverable amount of assets, will be published as planned on February 28, 2022 (after market close).
Rodolphe Belmer, Atos CEO, said: “I joined the Company last week, at the time when the figures were being collected and consolidated. The current state of financial insight leads us to the obligation to issue a profit warning today due to the significant variance in the financial KPIs. However, most of the items underlying this severe gap are non-recurring. In particular, the large gap in Free Cash Flow mostly stems from working capital.
I am convinced that the Company has the necessary assets and all the talents to operate a swift turnaround. In this context, I will present at the end of February a new organization to the Board of Directors, and in Q2 a plan that will demonstrate the drivers of this turnaround and the focus on profitable growth and value creation.”
Revenue growth
Revenue in 2021 reached c. € 10.8 billion, a decrease of c. -2.4% at constant currency.
The variance compared to the full-year objective of “stable” revenue came from:
- The unexpected reassessment of the cost to go on transformation, replatforming and operations of a financial services BPO contract, signed in 2018 for 15 years with a large UK financial institution, leading to a major revision of the completion rate on the project, at the end of December 2021, and therefore translating into a negative revenue impact in 2021.Impact on full-year revenue growth: c. 70 bps;
- Big Data/HPCs and Unified Communications & Collaboration project slippages from end of 2021 to 2022 due to supply chain challenges as well as to customer postponements in Public Sector & Defense in the Netherlands and the UK.Impact on full-year revenue growth: c. 90 bps;
- Delay to 2022 of final agreements with several large customers to get compensated for extra work performed in 2021. These amendments, expected to be signed in December, would have led to additional revenue in 2021.Impact on full-year revenue growth: 30 bps; and
- The reduced level of low margin hardware and software resale in December 2021.Impact on full-year revenue growth: c. 50 bps.
Operating margin
Operating margin amounted to c. 4% of revenue in 2021. The variance compared to the objective of c. 6% came mostly from:
- The reduction of the revenue booked and additional costs in 2021 on the large BPO contract in the UK mentioned above.Impact on operating margin rate: c. 90 bps;
Additionally, the run phase of the BPO contract on the remaining next 12 years requires the provision of c. € 65 million for future losses under “Other Operating Income and Expenses”.
- Project slippages to 2022 due to supply chain challenges as well as to customer postponements.Impact on operating margin rate: c. 30 bps;
- Delay to 2022 of final agreements with several large customers as mentioned above to get compensated for extra work performed in 2021.
Impact on operating margin rate: c. 30 bps; and - Higher costs than anticipated in 2021 on settlements to close disputes with several customers at year-end.Impact on operating margin rate: c. 40 bps.
Free Cash Flow
Free Cash Flow is estimated at c. €-420 million. The variance compared to the objective of positive free cash flow is mostly due to working capital and in particular to:
- € 200 million from accelerated supplier payments at the end of 2021, as a result of unforeseen pressure from critical suppliers and subcontractors in the final weeks of 2021;
- € 150 million of customer collections postponed from end of 2021 to 2022 due to the late acceptance of projects by several customers which ultimately prevented collection by year-end;
- € 60 million, of which € 30 million related to advance payments from customers and € 30 million impact from the large BPO contract in the UK mentioned herein above; and
- € 30 million from the lower level of sales of receivables.
As a reminder, the full year Free Cash Flow figure of €-420 million also comprises the impact of the German turnaround plan for €-180 million and a reduction of advance payments from customers for €-200 million, as communicated on July 12, 2021.
The Net Debt at the end of December 2021 is expected to be at c. €-1.2 billion leading to a Net Debt on OMDA (under IFRS) ratio of c. 1.1. Taking into account the Worldline shares covering the Optional Exchange Bond, Net Debt on OMDA ratio is estimated at c. 0.8.
The objectives for 2022 will be published on February 28, 2022 at the occasion of the full-year 2021 results release.
Appendix
|
2021 Objectives |
2021 Provisional figures |
|
|
Revenue growth at constant currency |
Stable |
c. -2.4% |
|
% Operating Margin to revenue |
c. 6% |
c. 4% |
|
Free Cash Flow |
Positive |
c. €-420 million |
Conference call
The Management of Atos invites you to an international conference call, on Monday, January 10, 2022 at 08:00 am (CET – Paris) chaired by Rodolphe Belmer, CEO.
After the conference, a replay of the webcast will be available on atos.net, in the Investors section.
Forthcoming events
- February 28, 2022 (After Market Close) Full Year 2021 results
- April 27, 2022 (Before Market Opening) First Quarter 2022 revenue
- May 18, 2022 Annual General Meeting
- July 27, 2022 (Before Market Opening) First semester 2022 results
