1.1. Software

INDEPENDENT RESEARCH IT Software & Services 30th June 2014 Marriages of convenience IT Software & Services

ALTEN NEUTRAL FV EUR36 Historical M&A deals in the IT sector show that the market has been Last Price EUR34.675 Market Cap. EUR1,151m picking up since the beginning of 2014. Software vendors are seeking ALTRAN TECHNOLOGIES BUY FV EUR9.4 Last Price EUR7.8 Market Cap. EUR1,364m growth opportunities, while consolidation in the services segment (Atos-

ATOS BUY FV EUR76 Bull, Sopra-Steria) is rather based on defensive deals. Our guess is that Last Price EUR61.6 Market Cap. EUR6,166m the next M&A deals will involve Sage, Indra, and Temenos.

AXWAY SOFTWARE BUY FV EUR33 Last Price EUR22.5 Market Cap. EUR462m  Greater activity in the M&A market in 2014 compared to 2013.

CAPGEMINI BUY FV EUR64 There were 5 transactions exceeding USD1bn in H1 2014, vs. only 1 in Last Price EUR52.48 Market Cap. EUR8,348m H1 2013. Catalysts are: 1) In the software segment, the strengthening of the DASSAULT SYSTEMES NEUTRAL FV EUR87 Last Price EUR94.05 Market Cap. EUR11,962m main cloud providers, and the growth in addressable markets; 2) In the IT

GROUPE STERIA Tender to the offer FV EUR22 services segment, defensive deals, which prevail as clients tend to seek cost- Last Price EUR19.41 Market Cap. EUR644m effective solutions.

INDRA SISTEMAS SELL FV EUR11 Last Price EUR13.06 Market Cap. EUR2,144m

SAGE GROUP NEUTRAL FV 400p  Atos-Bull: first marriage of convenience. We estimate that Atos’s Last Price 384.8p Market Cap. GBP4,206m takeover bid on Bull will have an accretive impact on Atos’s EPS of 15% in

SAP BUY FV EUR71 2015 and 17% in 2016, taking into account cost synergies of EUR80m. Last Price EUR56.32 Market Cap. EUR69,189m According to our valuation, net synergies amount to EUR2-3 per share. SOFTWARE AG BUY FV EUR34 Last Price EUR26.405 Market Cap. EUR2,296m

SOPRA GROUP BUY FV EUR105  Sopra-Steria: another marriage of convenience. We estimate that Sopra’s Last Price EUR80.87 Market Cap. EUR964m share exchange offer on Steria will have an accretive impact on Sopra’s EPS SWORD GROUP BUY FV EUR21 Last Price EUR18.45 Market Cap. EUR171m of 11% in 2015 and 18% in 2016, taking into account operational synergies

TEMENOS GROUP NEUTRAL FV CHF33 of EUR62m. In our views, this deal is both driven by a defensive strategy Last Price CHF34.3 Market Cap. CHF2,470m for the company and a wealth preservation strategy for its owners.

According to our valuation, net synergies amount to EUR8-9 per share.

 Our guesses for the next M&A deals are: Sage, Indra, and Temenos. 1) Sage and Temenos are, in our opinion, ideal targets for private equity funds, since they boast high profit margins, cash flow structurally higher than the EBITDA, and consistent profit distribution policies; 2) Indra is still a highly “political” case, but we do not rule out a separation between IT services and defence operations. Although their acquisition is unlikely,

Software AG and Altran should be closely monitored... just in case!

Analyst: Gregory Ramirez 33(0) 1 56 68 75 91 [email protected]

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IT Software & Services

Table of contents

1. Valuation ...... 3

1.1. Software ...... 3

1.2. IT Services...... 3 2. New momentum in the M&A market ...... 4

2.1. Greater market activity in 2014 versus 2013 ...... 4

2.2. Software: cloud and market expansion ...... 5

2.3. IT services: defensive consolidation + expansion ...... 9 3. Atos-Bull: first marriage of convenience ...... 13

3.1. Rationale for the deal ...... 13 3.1.1. Deal specifics ...... 13 3.1.2. Strategic relevance: cloud, big data and cyber security ...... 13 3.2. Expected synergies of EUR80m ...... 16

3.3. Accretive impact of at least 10% on EPS ...... 18 4. Sopra-Steria: another marriage of convenience ...... 20

4.1. Rationale for the deal ...... 20

4.1.1. Deal specifics ...... 20 4.1.2. Strategic interests: consolidation and owners’ interests ...... 21 4.2. Synergies of EUR62m put to the test ...... 23

4.3. Accretive impact of at least 20% on est. EPS ...... 26 5. And now who’s next? ...... 28

5.1. Sage Group (Neutral, FV 400p) ...... 28

5.2. Indra Sistemas (Sell, FV EUR11) ...... 28

5.3. Temenos Group (Neutral, FV 33CHF) ...... 29

5.4. Other potential targets ...... 30 5.4.1. Software AG (Buy, FV 34EUR)...... 30 5.4.2. Altran Technologies (Buy, FV 9.4EUR) ...... 30 Bryan Garnier stock rating system ...... 47

IT Software & Services

1. Valuation 1.1. Software

Fig. 1: Comparable companies – Software

Currency Rating Price Fair Market P/E (x) EV/Sales EV/EBIT

27/06/14 value cap (m) 2013 2014e 2015e 2013 2014e 2015e 2013 2014e 2015e SAP EUR BUY 56.3 71 69,150 17.1 16.4 14.5 4.2 3.9 3.4 13.0 11.8 10.2 Dassault Systèmes EUR NEUTRAL 94.1 87 11,962 24.6 25.0 22.2 5.1 4.8 4.2 16.3 15.9 13.5 Sage Group GBP/p NEUTRAL 384.8 400 4,206 17.5 17.0 15.7 3.3 3.4 3.1 12.1 12.3 11.1 Software AG EUR BUY 26.3 34 2,287 13.2 13.0 11.6 2.5 2.4 2.2 9.6 9.1 7.5 Temenos Group CHF NEUTRAL 34.3 33 2,470 31.2 26.2 22.1 6.1 5.6 4.8 23.2 19.9 16.7 Axway Software EUR BUY 22.5 33 462 10.7 13.7 11.4 1.9 1.8 1.5 12.0 11.1 8.2 Software median 20.7 19.5 17.2 4.2 4.0 3.6 14.8 13.8 11.8 Source: Thomson Reuters; Bryan, Garnier & Co ests.

1.2. IT Services

Fig. 2: Comparable companies – IT services and high-tech consulting

Currency Rating Price Fair Market P/E (x) EV/Sales EV/EBIT

27/06/14 value cap (m) 2013 2014e 2015e 2013 2014e 2015e 2013 2014e 2015e Capgemini EUR BUY 52.5 64 8,348 15.2 14.7 13.2 0.8 0.7 0.6 9.0 8.1 6.9 Atos EUR BUY 61.6 76 6,166 15.0 14.5 13.1 0.6 0.6 0.5 7.9 7.5 6.3 Indra Sistemas EUR SELL 13.1 11 2,144 17.6 18.4 15.4 0.9 0.9 0.8 12.2 11.8 10.1 Sopra Group EUR BUY 80.9 105 964 12.9 11.1 9.4 0.8 0.7 0.6 10.2 8.5 6.6 Groupe Steria EUR Tender to 19.4 22 644 12.9 11.0 9.0 0.5 0.5 0.4 7.9 7.3 6.1

Sword Group EUR BUY 18.5 21 171 31.3 15.5 14.1 1.2 1.1 1.0 9.3 7.3 6.5 IT Services median 15.1 14.6 13.2 0.8 0.7 0.6 9.1 7.8 6.6 Altran Technologies EUR BUY 7.8 9.4 1,364 14.7 12.6 10.3 0.9 0.8 0.7 9.7 8.4 6.5 Alten EUR NEUTRAL 34.7 36 1,151 14.5 13.8 12.0 0.9 0.8 0.7 9.1 8.3 7.0 High-tech median 14.5 13.8 12.0 0.9 0.8 0.7 9.1 8.3 7.0 Source: Thomson Reuters; Bryan, Garnier & Co ests.

IT Software & Services

2. New momentum in the M&A market 2.1. Greater market activity in 2014 versus 2013 5 M&A deals exceeding Mergers & acquisitions are a constant phenomenon in the IT industry, with around 10 deals USD1bn in Q1 2014 in Software and Services exceeding USD200m each year. Nevertheless, market activity vs. only 1 in Q1 2013 seemed greater in Q1 2014 than in Q1 2013, with as many as 5 transactions over USD1bn (Oracle/Micros, Open Text/GXS, Oracle/Responsys, SAP/Fieldglass, Advent International/Unit4), versus only 1 transaction in Q1 2013 (Bain Capital+Golden Gate Capital/BMC Software). This suggests that mergers & acquisitions in the IT industry are back on track after a weaker year 2013. Most acquisitions are taking place in the Software sector, although large transactions are making a strong comeback –especially in Europe– after three rather quiet years.

2005 was the year with the In Software, the years with the greatest number of M&A deals were 2000-01, 2004-08 and 2010- greatest number of M&A 12, with a peak in the number of deals exceeding USD1bn reached in 2012 (10 deals, of which 2 with deals in the software sector SAP and 2 with Oracle). In terms of total deal value, the most active years regarding transactions exceeding USD1bn were 2005 (est. USD30bn, with 2 major operations: Symantec /Veritas [IT storage management], and the LBO of SunGard [banking software systems] by a group of 8 private equity funds), 2011 (est. USD25bn, with HP/Autonomy and Intel/McAfee), and 2012 (est. USD25bn, with Cisco/NDS, SAP/Ariba, and SAP/SuccessFactors). 2013 ranked, together with 2001-02 and 2004, among the weakest years.

Fig. 3: Software – Number and total value of M&A deals > EUR1bn

12 35,000

10 30,000 25,000 8 20,000 6 15,000 4 10,000

2 5,000

0 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Nb of Software deals >USD1bn (left scale) Value (USDm) (right scale)

Source: Company Data; Bryan, Garnier & Co ests.

In IT services, medium-sized Due to the size of IT services firms, transactions exceeding EUR1bn are rare in this sector: transactions predominated usually 1 per year, except in 2005 (none), 2000 (5 deals), 2006 (2 deals), 2007 (3 deals) and 2011 (4 deals). In terms of total deal value, the most active years were 2000 (EUR21bn, with Cap Gemini/E&Y Consulting and Whittman-Hart/USWeb) and 2008 (EUR13bn, with the HP/EDS deal alone).

IT Software & Services

Fig. 4: IT Services – Number and total value of M&A deals > EUR1bn

5 25,000

4 20,000

3 15,000

2 10,000

1 5,000

0 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Nb of IT Services deals >USD1bn (left scale) Value (USDm) (right scale)

Source: Company Data; Bryan, Garnier & Co ests.

2.2. Software: cloud and market expansion In the last 3 years, SAP and After assessing historical acquisitions in the Software sector made in the past 3 years, our Oracle originated the largest conclusions are as follows: deals in the Software sector, with many acquisitions in the cloud segment, for which  SAP was the most active player in the past three years, with a total acquisition value of high multiples were paid USD10bn on deals exceeding USD1bn (Ariba, SuccessFactors, Hybris, Fieldglass), followed by Oracle with USD9.6bn (Micros, Taleo, Responsys, RightNow), Cisco with USD5bn (NDS), and Salesforce.com with USD2.5bn (ExactTarget). Regarding operations involving private equity funds, the largest deal exceeding USD1bn was the buyout of BMC Software by Bain Capital and Golden Gate Capital;

 About half (14) of the 33 acquisitions exceeding USD200m made since the beginning of 2012 have been buyouts of pure players in the cloud industry (by SAP, Oracle, Salesforce.com, Intuit, Microsoft, Adobe, IBM) aimed at taking positions in this market. The rest of transactions were prompted by a desire to diversify (Dassault Systèmes with 3 deals, PTC with Servigistics), to expand into a new country (Sage with Folhamatic in Brazil), or to increase market shares (Autodesk with Delcam);

 In the Software sector, valuation multiples can be divided into three categories: 1) The cloud, with EV/Sales multiples near 10x given the strong growth and low profitability of these companies (except for Ariba (SAP) whose operating margin attained about 20%) and often three-digit EV/EBIT multiples (when the companies are profitable); 2) Niche or traditional players acquired on 2x-5x EV/sales multiples and with EV/EBIT multiples around 25-50x; 3) Value stocks, highly sought after by private equity funds, such as BMC Software or Misys, with high operating margins and sustained turnover.

IT Software & Services

Fig. 5: Acquisitions in Software exceeding USD200m in 2014

Date Acquirer Target Price EV/Sales EV/EBIT 2014-H2 Oracle Micros Systems USD4,600m 3.6x 2013 20x 2013 2014-06 Intuit Check USD360m N/A N/A 2014-05 SAP Fieldglass USD1,000m 3.5x 2013 N/A 2014-04 Oracle BlueKai USD350m N/A N/A 2014-04 Dassault Systèmes Accelrys EUR550m 4.2x 2013 32x 2013 2014-03 Advent International (PE) Unit4 EUR1,150m 2.5x 2013 30x 2013 2014-02 Oracle Responsys USD1,500m 9.2x 2012 98x 2012 2014-02 Autodesk Delcam USD286m 4.6x 2012 35x 2012 2014-01 Open Text GXS Worldwide USD1,165m 2.4x 2012 14x 2012 2014-01 Dassault Systèmes Realtime Technology EUR170m 1.0x 2013 24x 2013

Source: Company Data; Bryan, Garnier & Co ests.

Fig. 6: Acquisitions in Software exceeding USD200m in 2013

Date Acquirer Target Price EV/Sales EV/EBIT 2013-08 SAP Hybris EUR1,034m 7.7x 2013 N/A 2013-07 Adobe Systems Neolane USD600m 10.1x 2012 N/A 2013-07 Salesforce.com ExactTarget USD2,584m 7.6x 2012 N/A 2013-07 Dassault Systèmes Apriso USD205m 4.1x 2012 35x 2012 2013-05 Bain/Golden Gate (PE) BMC Software EUR6,900m 2.9x 2013 8.6x 2013 2013-05 Intel Stonesoft USD389m 7.4x 2012 664x 2012 2013-02 Oracle Eloqua USD871m 12.2x 2012 N/A

Source: Company Data; Bryan, Garnier & Co ests.

Fig. 7: Acquisitions in Software exceeding USD200m in 2012

Date Acquirer Target Price EV/Sales EV/EBIT 2012-12 RedPrairie JDA Software Group USD1,900m 2.8x 2012 9x 2012 2012-12 IBM Kenexa USD1,300m 3.6x 2012 32x 2012 2012-11 Accenture NewsPage USD210m N/A N/A 2012-10 PTC Servigistics USD220m 2.8x 2011 50x 2011 2012-10 SAP Ariba EUR3,400m 8.1x 2012 40x 2012 2012-09 Dell Computer Quest Software USD2,400m 2.8x 2011 17x 2011 2012-07 Dassault Systèmes Gemcom Software EUR273m 4.2x 2011 N/A 2012-06 Microsoft Yammer USD1,200m N/A N/A 2012-06 Salesforce.com BuddyMedia USD736m N/A N/A 2012-06 Sage Group Folhamatic GBP191m 3.9x 2012 12x 2012 2012-05 Vista Equity Partners (PE) Misys GBP1,180m 2.7x 2012 13x 2012 2012-05 Intuit Demandforce USD424m 7.1x 2012 N/A 2012-04 Oracle Taleo USD2,000m 6.5x 2011 104x 2011 2012-03 Cisco Systems NDS Group USD5,000m 5.2x 2011 20x 2011 2012-02 SAP SuccessFactors EUR2,400m 10.2x 2011 430x 2011 2012-02 IBM Emptoris N/A N/A N/A

Source: Company Data; Bryan, Garnier & Co ests.

We consider the We consider that, despite the high number of transactions made over the last 10 years, the consolidation process in the consolidation process in the software sector is far from over. In our opinion, the three main software sector is far from drivers of this consolidation wave are: 1) Growth in the cloud segment, resulting in the complete. emergence, over the past 10 years, of innumerable companies which have adopted the

IT Software & Services

“Salesforce.com” model; 2) The need for certain developers to expand into markets adjacent to their core market in order to grow their addressable market; 3) The buyout of direct competitors in order to increase their market shares or establish their leadership.

Fig. 8: The three main drivers of software market consolidation

Cloud, Big data, Mobile, Enterprise Social Networks

Extending the addressable market Buying direct competition

Source: Bryan, Garnier & Co ests.

The cloud industry Acquisitions of In the cloud industry, SAP and Oracle are very inclined to grow through external growth as they non-diversified SaaS are finding it difficult to build a profitable cloud activity from scratch… where it took Salesforce.com companies have allowed 15 years to succeed. It is therefore understandable why both players relied on acquisitions from 2012 SAP and Oracle to keep up with Salesforce.com and to to radically change their business models, which were until then based on licence sales. Furthermore, shift their business model in the same way as the sector of enterprise software applications sold in the form of licences from traditional software consolidated about 10 years ago around SAP and Oracle –for the latter, mainly through the development towards the acquisition of PeopleSoft, JD Edwards and Siebel–, this same market, which has moved towards cloud industry the cloud since then, is very likely to experience a similar consolidation wave in the next 5 years as companies tend to prefer a consistent software suite over a combination of software packages from different developers (which implies substantial integration costs).

 Acquisitions have allowed SAP to become the No.2 global player in cloud-based applications –although three times smaller than Salesforce.com–, but with No.1 positions in human capital management (HCM) with SuccessFactors, in procurement management with Ariba, in temporary staff and contractor management with Fieldglass, and in multichannel commerce platforms with Hybris (whose sales were mostly derived from licences);

 Oracle, which has become the No.3 player in cloud-based applications right behind SAP, has mostly invested in marketing applications (Responsys, Eloqua, Vitrue, BlueKai), human capital management (Taleo, SelectMinds), customer service management (RightNow Technologies), project portfolio management (Instantis), and data analysis applications (DataRaker);

 Salesforce.com has complemented its leadership in the cloud industry and sales force automation (SFA) through around 30 acquisitions, the largest ones in marketing (ExactTarget, Radian6, Buddy Media) and performance management (Rypple);

IT Software & Services

 Smaller companies have also emerged in the cloud industry, e.g. Temenos, which acquired TriNovus (an American company specialised in Compliance and Core banking);

 In the cloud industry, many companies have opted for growing, exclusively or predominantly, through organic growth, like Sage, Software AG, Autodesk, Intuit, Tibco, or even Adobe (which, nevertheless, acquired marketing software developer Neolane).

There are many potential Overall, many potential targets remain in the cloud industry, especially among listed companies. medium-sized targets left In our opinion, while some of them may seem unreachable for now (Salesforce.com, Workday, in the cloud industry ServiceNow) or are too diversified (NetSuite), other companies are to be considered as prime targets due to their positioning as specialists: Concur Technologies (travel and expense management), ServiceNow (IT service management), DealerTrack (software for car dealers), RealPage (property management), Cvent (event management), Marketo (marketing software), E2open (procurement management), Jive Software (enterprise social networks), Callidus (CRM) or even Marin Software (advertisement management). The table below gives an idea of potential targets for the next few years.

Fig. 9: Market capitalisation of SaaS developers (USDm) – as of June 23, 2014

40,000 35,311 35,000

30,000

25,000

20,000 15,669 15,000 8,711 10,000 6,565 5,291 5,000 2,332 1,746 1,198 1,079 574 570 512 407 0 Cvent E2open Marketo NetSuite Workday RealPage Concur ServiceNow Dealertrack Technologies Jive Software Jive Technologies Marin Software Salesforce.com Callidus Software

Source: Thomson Reuters.

Expansion to adjacent markets Dassault Systèmes, The purpose of these deals is for acquirers to grow their addressable markets. Software AG and Axway Most acquisitions involving software vendors follow this logic, most often because their SaaS model have opted for expanding has become less relevant –as in the case of many infrastructure applications like that of Software AG– their addressable market , or is not developed enough –e.g. Dassault Systèmes. However, some acquisitions in the SaaS segment could be considered as a way to expand the addressable market.

 Since 2010, Dassault Systèmes has acquired numerous companies with a view to double its addressable market by 2021: for instance, Accelrys (scientific innovation lifecyle management, with a strong presence in the pharmaceutical and chemicals sectors), RTT (3D visualisation intended for sales and marketing professionals), Apriso (manufacturing operation management), Gemcom (modelling and simulation for the mining industry), or even Exalead (unstructured content and internet search tools and applications). Its competitor PTC did the same thing but, in our opinion, was less ambitious when choosing target companies

IT Software & Services

(Servigistics in maintenance management, and ThingWorx in tools for programming internet-of-things applications);

 Software AG has expanded its offering through acquisitions. In 2009, acquiring IDS Scheer allowed Software AG to become the worldwide leader in business process analysis, thanks to the ARIS platform. Terracotta has given the group access to the in-memory real-time data management segment. Seven other acquisitions have been made since 2011 with the goal of building a platform allowing big corporations and administrations to integrate their information systems into a public or private cloud, big data platform, and mobile devices. It is also a response to the acquisition policy implemented by Tibco, its competitor;

 Axway has expanded its product range in business data flow governance to API servers (in order to manage data exchange with mobile devices) through the acquisition of Vordel, while the recent acquisition of Systar allowed the expansion of its solutions to Business Activity Monitoring (BAM) and Operational Intelligence, in order to provide real-time automated dashboards monitoring business performance.

Acquisition of direct competitors The acquisition of direct This acquisition policy has fallen out of favour since the 2009 crisis, especially due to its competitors has become the inherent operational risks, as shown by the acquisition of Viveo by Temenos in France in 2010. exception again… for now Moreover, the number of development opportunities in the cloud, big data and mobile devices has reduced the appeal of this type of acquisitions that, in our opinion, are really justified when a software market moves into its final consolidation phase –as in 2003-05 for the ERP market or in 2007-08 for the business intelligence market.

Nevertheless, Sopra, through its subsidiary Sopra Banking Software, has continued to acquire competitors in order to become a major European player in banking software solutions (Delta-Informatique in 2011, Callataÿ & Wouters and Tieto UK in 2012, COR&FJA Banking Solutions in 2014), and bought HR Access for human resource management in 2013 (with a very

rapid improvement in its profitability).

2.3. IT services: defensive consolidation + expansion Transactions between IT After assessing historical acquisitions in the IT services sector made in the past 3 years, our services providers are conclusions are as follows: principally driven by a search for economies of scale  There are few deals involving large players every year (2 to 3 per year) due to several reasons: 1) The number of large IT services providers is still relatively limited in a low growth sector; 2) The 2008-09 crisis led IT services providers’ clients to focus on cost savings –and this phenomenon is still going on– which encouraged IT services providers to improve the competitiveness of their business model (offshore outsourcing, industrialisation, higher-value added services, strict control of activity rates, indirect costs optimisation, project margin monitoring), instead of running after geographic expansion or struggling to be the No.1 player.

 Although they benefit from higher margins compared to their European and American peers, large Indian players (TCS, Infosys, Wipro, Cognizant…) are very selective when choosing their targets: 1) they want to avoid margin dilution; 2) their search focuses on companies with a strong local presence, specialised in fields where their know-how is recognised (application

IT Software & Services

management services, BPO, ERP consulting…), and with clients who are very likely to be interested in offshore outsourcing.

 Operations on publicly traded companies (CGI/Logica, Sopra/Steria, Atos/Bull) are principally driven by a search for margin improvement that can be satisfied through cost synergies with a larger player.

 In our views, companies such as Accenture, IBM, HP, or even Capgemini, are able to carry out major acquisitions in the field of cloud-related services –in the way IBM did with SoftLayer in 2013– or BPO.

Fig. 10: Acquisitions in IT services exceeding USD200m in 2014

Date Acquirer Target Price EV/Sales EV/EBIT 2014-Q3 Atos Bull EUR410m 0.3x 2014 7.0x 2014 2014-Q3 Sopra Group Groupe Steria EUR670m 0.5x 2014 7.6x 2014 2014-01 NTT Data Everis Group EUR350m 0.6x 2013 N/A

Source: Company Data; Bryan, Garnier & Co ests.

Fig. 11: Acquisitions in IT services exceeding USD200m in 2013

Date Acquirer Target Price EV/Sales EV/EBIT 2013-12 Accenture Procurian USD386m N/A N/A 2013-07 IBM SoftLayer Technologies USD1,977m 4.5x 2013 N/A 2013-07 Accenture Acquity Group USD316m N/A N/A

Source: Company Data; Bryan, Garnier & Co ests.

Fig. 12: Acquisitions in IT services exceeding USD200m in 2012

Date Acquirer Target Price EV/Sales EV/EBIT 2012-10 Infosys Lodestone Holding CHF330m 1.6x 2011 N/A 2012-08 CGI Group Logica GBP1,728m 0.7x 2012 8.3x 2012

Source: Company Data; Bryan, Garnier & Co ests.

Defensive consolidation for addressing cost saving requirements The main reason behind mergers between IT services providers is that clients are more and The main reason behind more demanding when looking for cost savings. This search leads to an increasing need for mergers between IT services mass IT services. This phenomenon, which has been observed for several years, is becoming more providers is that clients are more and more demanding and more important as economic and technological evolutions develop and the sector is maturing. when looking for cost The situation has now reached such a state that in western countries the issue is not whether to keep savings certain IT tasks or to externalise them but to know to what extent it is suitable to externalise whole sets of IT tasks. Furthermore, for some years now, IT services firms have been affected by the conjunction of four simultaneous technological waves (cloud, big data, mobility, enterprise social networking) whose adoption led to the transformation of all industries. This transformation is apparent in different ways: 1) outsourcing of enterprise applications to public or private cloud platforms; 2) increasing use of mobile devices (smartphones, tablets) to access enterprise software; 3) analysis of large amounts of data or transactions in real time; 4) omni-channel marketing, i.e. the integration of sales channels and respective IT systems.

IT Software & Services

The business model of IT This trend is also redefining the relationship between IT services providers and their clients, services providers is shifting which is gradually shifting from system development/integration to services creation/ towards creating and provision. providing services

 In the field of system integration, a 3-year cycle of large ERP integration projects (2010-2012) has been replaced by another cycle related to cloud computing and mobility, with volumes of services which are up to 5 times lower than those of ERP’s. With traditional software, IT services providers’ business model includes more proprietary software components that are part of a comprehensive suite.

 In the field IT infrastructure management, traditional data centres are gradually being replaced by private or hybrid cloud services on standardised platforms.

 In the field IT application management, industrialisation is advancing to a higher level, and many applications can be hosted on a private or public cloud platform.

Fig. 13: The 3 consolidation drivers of the IT services sector

Defensive consolidation

Offshoring continental Europe Addressing the US market

Source: Bryan, Garnier & Co ests.

IT services providers must Overall, IT services providers require 3 types of transformations: evolve into: more industrialisation and offshore  Higher degree of industrialisation and offshore outsourcing, in order to absorb outsourcing, technological investment and productivity gains and price reductions demanded by clients. This is accomplished strengthening of strategic through a better optimisation of the pay scale aiming at reducing the average compensation, and partnerships with large IT through an improvement in gross project margins. suppliers  Technological investment by developing software components which can be integrated into projects and by creating virtual data centres.

 Strategic partnerships with the most important IT equipment and software vendors, as well as with cloud computing providers (Microsoft, SAP, Oracle, IBM, HP, EMC/VMware, etc.), in order to meet the clients’ demand for digital transformation.

IT Software & Services

M&A deals between In these conditions, medium-sized players are more likely to consider deals with larger IT services providers are players than in the past. These are the reasons why Steria and Sopra and Bull and Atos are coming more likely to succeed together. Knowing that a vast experience in the implementation of integration processes has nowadays than in the past because a vast experience in been accumulated in the IT services sector, we are quite confident about the success of the implementation of synergies. Deals which did not quite achieve their objectives (Capgemini/E&Y, Atos/KPMG, integration processes has Atos/Sema, Logica/CMG) happened a long time ago, when buyers and targets’ internal processes as been accumulated well as integration procedures were less standardised, and leverage was not as important as it is today (lean management, shared services centres, offshore outsourcing…). Besides, a distinction should be made between integration in a stable IT services market, and integration in a depressed market that is being turned upside down (bursting of the internet bubble). Moreover, there are now many examples of successful integration processes (Capgemini/Kanbay, Atos/SIS, CGI/Logica, Logica/Unilog…), which demonstrate they have not been a problem for several years.

Expanding into new markets Lastly, we believe that market penetration, which was the main driver of the consolidation only makes sense now for process in the sector in the 1990s-2000s, only makes sense now for Indian IT services Indian IT services providers providers –which are trying to take advantage of continental European firms’ opening to offshore (Europe) and for Atos (the US) outsourcing– and for a few European IT services providers –which are targeting the US in order to expand their offshore exposure.

 Indian IT services providers have not acquired many European companies, and when they did, they were very choosy: Infosys acquired Swiss-based Lodestone, TCS acquired French-based Alti (as well as Swiss-based banking software provider TKS/Teknosoft), HCL acquired UK-based Axon, and Cognizant acquired German-based C1 as well as small French-based consulting companies, Equinox and Galileo.

 In our opinion, Atos is the only European IT services firm that is considering acquiring an American company (in order to double its revenue in the US and to reach the EUR1.2bn mark in 2016). We believe such an acquisition would have a double interest: expanding client base in the US and increasing the share of offshore employees. When Capgemini acquired Kanbay (based in the US –HSBC was its main client at the time) and Steria acquired Xansa (based in the UK), it had the same objectives in mind. For Atos, which, according to the German press, is among the potential buyers of the IT Infrastructure division of Lufthansa Systems (estimated revenue of EUR250m in 2013 with a margin we estimate at 3.5%, and 1,400 employees), there are 2 potential targets: Syntel and iGate, if we exclude the “big 5” (Infosys, TCS, Wipro, Cognizant, and HCL) as well as other companies based solely in India (Hexaware, KPIT Cummins, NIIT). We believe Syntel is particularly attractive because it is a US-listed IT consulting firm founded in 1980 by an engineer of Indian origin with an offshore delivery model. It posted a revenue of USD825m in 2013 and an operating margin of 32.4%, but its market capitalisation stands at USD3.5bn (EUR2.6bn) –which we believe is a little too high for Atos. iGate, which was founded in 1986, has a market capitalisation of USD2bn (EUR1.5bn). After attempting to buy out Satyam, it acquired the Indian company Patni for USD1.2bn in 2011, thus benefiting from its offshore model. It recorded a revenue of USD1,151m in 2013 and an operating margin of 19.7%, and has 29,000 employees.

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3. Atos-Bull: first marriage of convenience 3.1. Rationale for the deal

3.1.1. Deal specifics 30% premium compared to Atos has launched a takeover bid on Bull at a price of EUR4.9 per share, which is 22% higher average price for the than Bull’s closing price of 23rd May 2014 (EUR4.01) and 30% higher than the weighted average 3 months preceding the price for the 3 months preceding the announcement (EUR3.77). Atos also will also be bidding for announcement of the takeover bid Bull’s convertible bonds (OCEANE-type bonds) at a price of EUR5.55 per bond. The whole bid implies a EUR620m market capitalisation for Bull, after conversion of all OCEANE bonds. In view of Bull’s net cash as of December 31, 2013 (EUR210m) and consensus estimates for 2014, enterprise value stands at EUR410m, which represents a 0.3x EV/Sales ratio and a 7x EV/EBIT ratio for 2014. This deal is conditional on at least 50% of Bull’s shares plus 1 share being tendered, and Atos intends to delist the Bull stock through a public repurchase offer. The bid was unanimously supported by Bull’s board of directors, while its main shareholders (Crescendo and Pothar, which hold a 24.2% stake in Bull and are owned by Bull’s CEO Philippe Vannier), Orange (8%), and the French public investment bank BPI (3.3%) –collectively adding up to 35.5%–, committed themselves to tender their shares. Therefore, at least 14.5% of share capital would have to be tendered for the deal to go through.

Enterprise value: The offer was launched on 27th June 2014 and will close on 31st July, and settlement should take place 2014 EV/Sales and in mid-August. If successful, the offer will be reopened in September. In case the conditions for a EV/EBIT ratios squeeze-out are not met (threshold of 95% of share capital), Atos is considering to merge with of 0.3x and 7x Bull no later than mid-2015 (conditional on 2/3 of Bull’s shares being tendered), forcing Atos to issue new shares in exchange for Bull’s remaining untendered shares. At a price of EUR4.9 per share, Bull’s tranche of capital between 67% and 100% is valued at EUR198m, which, based on Atos’s current share price, would require issuing no more than 3-3.5 million Atos shares, corresponding to a maximum dilution of around 3-4% on the company’s EPS.

3.1.2. Strategic relevance: cloud, big data and cyber security Bull has refocused on high- In 2013, Bull recorded sales of EUR1,262m (-1.8%) and an EBIT of EUR44.8m (3.6% of sales) performance computing, with a staff of 9,200 (including 58% in France). The group is organised in four divisions: cloud and IT security 1) Innovative Products, which specialises in the development of supercomputers and high-range servers for Bull and which is, by far, the division with the highest profit margin; 2) Computing Solutions, which specialises in building and managing critical infrastructures (data centres, supercomputing, cloud) and which is, by far, the top contributor to the group’s turnover (60%); 3) Business Integration Solutions, which specialises in consulting, integration and maintenance of business applications and which is the least profitable division for structural reasons; 4) Security Solutions, which specialises in design, consulting and integration, and IT security.

Fig. 14: Revenues and contribution margins of Bull’s divisions (2013)

FYE 31st Dec. (EURm) Innovative Products Computing Solutions Business Integration Solutions Security Solutions

Revenues 68.5 751.5 311.7 130

% of revenues 5% 60% 25% 10%

Contribution margin (%) 24.4% 8.6% 2.3% 7.2%

Source: Company Data.

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Focus on integrated We estimate that, in 2013, Bull recorded sales of EUR500m in outsourced IT management solutions (40%), EUR320m in System Consulting & Integration (25%), and EUR440m in Products (35%, hardware and software). However, Bull’s strategy is not to sell individual products and services but to offer integrated solutions.

Bull’s main problem lies in The takeover of Bull by Atos may seem risky at first glance, given Bull’s disappointing past the poor profit margins of its performance. Since the company came back to the stock market in 1997, it has had 5 CEOs and has service activities gone through two recapitalisations, several restructuration programmes, numerous changes in its fields of activity, and a few strategic plans (Horizon 2008, BullWay 2011-2013, 1Bull). The company has not really fulfilled the objectives of the BullWay strategic plan announced at the end of 2010, which were to reposition Bull as a European leader in critical services, to double its profitability (to EUR50-60m in 2013, vs. EUR44.8m actually recorded, implying a 3.6% EBIT margin) and to generate EUR1,350-1,450m in sales for 2013, vs. EUR1,262m actually recorded). In our view, Bull’s main problem is the poor profit margin of its division Business Integration Solutions, which might be due to its lack of critical size.

Fig. 15: Bull – Historical sales growth (at cc) and operating margin (2003-2013)

5% 4.5% 4.0% 0% 3.5% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 3.0% -5% 2.5% 2.0% -10% 1.5%

-15% 1.0% 0.5% -20% 0.0%

Organic growth (%) (left scale) Op. margin (%) (right scale)

Source: Company Data; Bryan, Garnier & Co ests.

Bull has some valuable Nevertheless, we believe that Bull also has some valuable strengths: favourable position in strength in the cloud, big the supercomputer market (global market share of around 5% and leader position in the European data and cyber security high-end market); strong expertise in security solutions (1,000 product and service experts); segments a pioneer strategy in the cloud sector (private cloud with Le Cloud by Bull, public cloud through a 20% stake in French cloud provider Numergy), and a portfolio of 1,900 patents (including 600 in the US) which has never been evaluated before. As a result, Atos is expected to take advantage of this know-how to implement it on a larger scale:

 The resulting company would be the European No.2 in cloud solutions (behind Amazon), with pro forma sales of EUR392m in cloud services –vs. EUR280m for Atos alone (European No.4 behind Amazon, Microsoft and IBM)–, including Bull’s contribution of EUR112m (European No.9, right behind Accenture, Salesforce.com, Google, and HP). Until now, Atos had its “Canopy” range, and will benefit from Bull’s know-how in security, PaaS platforms, SaaS, and security operations centres (SOC). Bull is also a private-, public- and hybrid-cloud provider, and supplies servers dedicated to private cloud infrastructures (Bullion range);

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 In the big data segment, Atos is expecting to profit from Bull’s expertise in high- performance computing (HPC or supercomputers) and in data analysis. After the merger, Atos would be able to offer end-to-end data computing and analysis solutions (hardware, infrastructure, software, services), just like IBM, Oracle or HP. Bull is a European leader in high-end supercomputers, with its Bullx product range used by the French nuclear energy committee CEA, ITER in Japan, the Jülich Research Centre, the Aachen Technical University and the University of Cologne (both in Germany), and the AWE (Atomic Weapons Establishment) in the UK. After acquiring Bull, Atos would generate sales of EUR200m in the big data segment, compared to 0 presently;

 In the cyber security segment, Atos’s sales of EUR160m in 2013 would almost double to EUR290m after the acquisition of Bull, which would generate EUR130m. Atos would integrate in particular Bull’s software suites Evidian and Amesys, specialising in cyber protection, electronic warfare and surveillance.

Atos would maintain the In the big data and cyber security segments, Atos intends to create a specialised company Bull brand in a specialised under the Bull brand, which would generate EUR490m in sales. On the other hand, the entity dedicated to big data turnover of Atos’s managed IT services division will benefit from a EUR500m contribution and cyber security from Bull (to EUR4,690m), especially in critical maintenance and mainframe support. In the System Integration segment, Bull’s contribution to sales of EUR320m (to EUR3,190m) will generate cross sales in the industrial, banking, defence and government sectors.

Fig. 16: Atos – 2013 sales by activity – reported (Atos) and pro forma (Atos+Bull)

Atos alone Atos+Bull

Systems Integration & Consulting 33% Systems Integration & Consulting 35% Managed Operations Managed 52% Operations 47%

Worldline 11%

Worldline Big data & Security 13% Cloud activities 5% 4%

Source: Company Data; Bryan, Garnier & Co ests.

The acquisition of Bull will Finally, from a geographic standpoint, the acquisition of Bull will strengthen Atos’s position strengthen Atos’s position in in the French market. In France, Atos’s turnover went down by 9.5% in 2013 (excluding Worldline), France (doubling of sales) with -9.9% in System Integration (lower sales to the public sector, projects coming to an end in and in other geographic areas (Spain, Poland, Africa, and Financial Services), -7.8% in managed IT services (terminated contracts and lower sales to some Brazil) clients), and -8.5% in Technological Consulting & Services (lower sales in the banking and public sectors). Thanks to Bull, Atos’s turnover in France will double to EUR2.1bn vs. EUR1bn previously and the group might theoretically become the No.2 player in the French IT Services market (excluding hardware and software), behind Capgemini but in front of IBM. Besides, Bull will strengthen Atos’s presence in new geographic areas such as Spain, Poland, Africa, and Brazil. Overall, Bull has a physical presence in 20 countries in Europe, 10 in Africa, 6 in the Americas (the US, Canada, 4 in Latin America) and 6 in Asia.

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Fig. 17: Atos – 2013 sales by country – reported (Atos) and pro forma (Atos+Bull) (ex. Worldline)

Atos alone Atos+Bull

Benelux & the France Benelux & the France Nordics 14% Nordics 22% 14% 15%

Central & Eastern UK Europe Central & Eastern 20% 12% Europe 10% UK 17% North America North America 8% 6% Iberia Iberia 4% 4% Germany Other BUs Other BUs 6% Germany 7% 22% 19%

Source: Company Data; Bryan, Garnier & Co ests. 3.2. Expected synergies of EUR80m Atos is expecting an Through its integration into the Atos group, Bull should improve its operational efficiency, accretive impact on EPS in reduce overheads and optimise procurement, resulting in an accretive impact on Atos’s EPS excess of 10% after 24 as early as the first year, which should exceed 10% after 24 months. According to Atos, no social months thanks to the acquisition of Bull plan is to be expected in France, and staff reductions should occur by attrition. Moreover, competitiveness and margin problems inherited from Bull’s historical employment conditions (collective agreement for the metalworking industry) are being solved. In 2009, Bull managed to shift its employees in the Service segment to the “Syntec Numérique” convention but the rest of the staff maintained their historical employment conditions. In January 2014, the management announced the termination of most labour agreements governing organisational matters as well as the organisation of working time and on-call duty, which should help improve profitability (consultations with trade unions started in March).

Atos estimates that cost synergies could reach EUR80m p.a. 24 months after the integration, which should happen at the end of July 2014. This cost reduction would represent 0.8% of sales By 2016, cost synergies of EUR80m p.a. from the 1Bull and 0.9% of operating costs for the company resulting from the merger. Cost synergies will strategic plan, indirect costs, gradually build up as follows: EUR10m in 2014, EUR50m in 2015, and EUR80m in 2016. procurement and real estate should be generated Fig. 18: Expected synergies for Atos+Bull (EURm)

900

800 30 12.5 7.5 30 700 47 600

500

400 772 691 645 300

200

100

0 Atos 2013 Bull 2013 Atos+Bull pro 1Bull plan SG&A Procurement Real estate Atos+Bull pro forma 2013 forma 2013 wi th s y n er gies

Source: Company Data.

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 EUR30m from the speeding up of the 1Bull plan (6 months ahead of schedule), which targeted a 7% EBIT margin for 2017. To achieve this objective, Atos would have to raise Bull’s EBIT to around EUR75m in 2016 vs. EUR44.8m in 2013. In its original version presented in January 2014, this plan targeted the following margin gains: 0.7ppt due to the transformation of or withdrawal from non-strategic or dilutive activities accounting for over EUR150m of sales; 0.5-1.5ppt through high-value added activities (secure cloud, high- performance computing appliances, pay-per-use platforms); and 0.7ppt through a better delivery in the Service segment (doubling of resources in service centres, improved utilisation rates, lean management, employee incentive programmes). The plan also established a target for fixed costs reduction of EUR30m p.a. (organisational simplification, unification of business structures, centralisation of non-billable resources by geographic clusters, rationalisation of the company’s premises). All of this should be offset by a slight pressure on margins;

 EUR30m from the optimisation of indirect costs, through the pooling of Atos’s and Bull’s international operations, mainly in support functions. Bull’s indirect costs (SG&A costs), which accounted for 16.8% of sales in 2013, are well higher than Atos’s (est. 9.5-10% for 2014), and are expected to go down to 15.5% in 2016. However, Bull’s gross margin is 5% higher at 21.5% vs. 17.5% for Atos, due to the nature of its products;

 EUR20m from procurement (EUR12.5m) and real estate (EUR7.5m) through: 1) Real-estate optimisation programme (alignment with Atos’s standards, potential business site consolidation), considering that Bull’s most extensive offices are found in Clayes-sous-Bois, Massy, Saint-Ouen (Paris), Angers/Trélazé, Echirolles (Grenoble), Hemel Hampstead (London), and Phoenix (Arizona); 2) Creation of a list of common suppliers for hardware (storage, networks, servers), including Bull itself.

We estimate net potential Non-recurring costs associated with synergies (EUR45m) should reach EUR10m in 2014, synergies at EUR2.5 per EUR25m in 2015, and EUR10m in 2016, while EUR50-60m in restructuring costs related to the share 1Bull strategy plan will be booked in Bull’s accounts on 30th June 2014, right before its entry into Atos’s scope of consolidation. Nevertheless, nearly all of the latter costs will be cashed out by Atos, which will pay EUR10m in H2 2014 (of the EUR20m Bull would have had to pay in 2014), EUR25m in 2015 and up to EUR15m in 2016. Overall, assuming annual synergies of EUR80m with a discount rate of 10.9%, we estimate the gross present value of synergies at EUR341m (EUR3.3 per share) and synergies net of implementation costs at EUR260m (EUR2.5 per share). Fig. 19: Valuation of costs synergies for Atos+Bull

in EURm (FYE 31/12) 2013 2014e 2015e 2016e 2017e 2018e 2019e 2020e 2021e 2022e 2023e 2024e Gross cost synergies 0.0 10.0 50.0 80.0 80.0 80.0 80.0 80.0 80.0 80.0 80.0 80.0 Non-recurring costs 0.0 -20.0 -50.0 -25.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Net cost synergies 0.0 -10.0 0.0 55.0 80.0 80.0 80.0 80.0 80.0 80.0 80.0 80.0 Theoretical tax rate 27.1% 32.5% 32.5% 32.5% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% Theoretical tax 0.0 3.3 16.3 26.0 28.0 28.0 28.0 28.0 28.0 28.0 28.0 28.0 Free cash flow 0.0 -13.3 -16.3 29.0 52.0 52.0 52.0 52.0 52.0 52.0 52.0 52.0 Discounted free cash flows 0.0 -12.6 -13.9 22.4 36.2 32.6 29.4 26.5 23.9 21.6 19.5 17.5 Sum of discounted FCF 185.7 Terminal value 74.2 Total value 259.9 Diluted nbr of shares (m) 103.81 Valuation per share (EUR) 2.5

Source: Company Data; Bryan, Garnier & Co ests.

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3.3. Accretive impact of at least 10% on EPS By acquiring Bull, Atos According to Atos, acquiring Bull would have an accretive impact on EPS in 2015, exceeding would be able to achieve 10% from 2016, which implies a 24-month integration period. In 2016, Atos would thus be able results in the upper range of its objectives for 2016 to achieve results in the upper range of its objectives, i.e. operating margin of 8.5-9.5% (7.3-8.3% defined in November 2013 from IT services, i.e. excluding Worldline) and a free cash flow of EUR450-500m.

In the long term, the deal In 2013, pro forma consolidated accounts for Atos+Bull would have shown sales of EUR9,877m and could increase Atos’s an operating margin of 7% (vs. 7.5% for Atos alone and 3.6% for Bull alone). We estimate that if operating margin by 0.3% cost synergies of EUR80m expected by Atos for the end of 2016 had been achieved on 2013 pro forma accounts, the operating margin for this group would have been 7.8%, implying a 0.3ppt accretive impact. Last, the deal should have no impact on Atos’s 2014 free cash flow and a slightly positive impact in 2015, and it should have a full positive impact in 2016, once almost all exceptional costs have been paid for.

Estimated synergies do not The accretive impact on EPS of at least 10% estimated by Atos for 2015-16 does not take into take in account: utilisation of account several elements: tax loss carryforwards, sales synergies, and potential withdrawal from  The potential positive effect of the utilisation of EUR1,929m in tax loss carryforwards non-strategic activities (that can be carried forward indefinitely), including EUR1.6bn in France and the remainder in Germany. While Atos generates a 7.5% operating margin in Germany (2013) and will be able to rapidly utilise Bull’s EUR300m credit balance, it seems too early to anticipate the utilisation of these carryforwards in France due to: very low profitability in Atos’s (ex-Worldline) and Bull’s French operations after deducting corporate costs and some exceptional costs; the impossibility to set them off against Atos Worldline; French tax regulations in force since 2014 which prohibit setting off tax carryforwards against more than 50% of taxable profits;

 Potential sales synergies (> 1%) from combining cloud, big data, cyber security, managed IT services, and System Integration solutions. 1) In the cloud segment, Atos would be able to offer Bull’s “Agarik” PaaS to its clients in every European country where the group already operates; 2) In the big data segment, Bull’s supercomputers could benefit from new sales opportunities thanks to its access to Atos’s client base; 3) In the cyber security segment, Atos could profit from Bull’s expertise and solutions, especially in countries where Bull does not operate; 4) In the managed IT services segment, Bull should benefit from Atos’ decision to substitute Bull for IBM as a server provider, which should limit the reduction in sales of its Escala Unix server range; 5) In the System Integration segment, Bull provides Atos with new opportunities in the defence, public and banking sectors;

 Potential withdrawal from or disposal of operations in non-strategic countries, in line with the 1Bull plan and with additional opportunities that could emerge from the merger with Atos. At this stage, no operations have been transferred and no indication concerning such potential decisions has been officially given, although we believe the main goal is to rationalise the marketing strategy, especially by taking advantage of Atos’s current geographic footprint.

Our maximum DCF-based Overall, we estimate that the integration with Bull will have the following impacts on Atos: fair value for Atos is EUR80 (vs. EUR76) after acquiring  Accretive impact on EPS (excluding synergies) of 8% in 2015 and 7% in 2016 (operating Bull margin of 8% in 2015 and 8.5% in 2016), with a maximum DCF-based fair value (discount rate of 10.9%) of EUR77 per share.

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 Accretive impact on EPS (including synergies) of 15% in 2015 and 17% in 2016 (operating margin of 8.5% in 2015 and 9.5% in 2016), with a maximum DCF-based fair value (discount rate of 10.9%) of EUR80 per share.

Fig. 20: Our estimates for Atos alone

FYE 31st Dec. (EURm) 2013 2014e 2015e 2016e Revenues 8615 8596 8819 9102 % chg -2.6% -0.2% 2.6% 3.2% Adj. operating profit 662 677 748 835 Adj. operating margin (%) 7.7% 7.9% 8.5% 9.2% Adj. net profit 423 438 488 550 No. of diluted shares 102.9 103.3 103.6 103.8 Adj. EPS (EUR) 4.11 4.24 4.71 5.30

Source: Company Data; Bryan, Garnier & Co ests.

Fig. 21: Our estimates for Atos+Bull excluding cost synergies

FYE 31st Dec. (EURm) 2013 2014e 2015e 2016e Revenues 8615 9231 10099 10392 % chg -2.6% 7.2% 9.4% 2.9% Adj. operating profit 662 706 809 902 Adj. operating margin (%) 7.7% 7.6% 8.0% 8.7% Adj. net profit 423 454 525 591 No. of diluted shares 102.9 103.3 103.6 103.8 Adj. EPS (EUR) 4.11 4.39 5.07 5.69 EPS accretion (%) 4% 8% 7%

Source: Company Data; Bryan, Garnier & Co ests.

Fig. 22: Our estimates for Atos+Bull including cost synergies

FYE 31st Dec. (EURm) 2013 2014e 2015e 2016e Revenues 8615 9231 10099 10392 % chg -2.6% 7.2% 9.4% 2.9% Adj. operating profit 662 716 860 984 Adj. operating margin (%) 7.7% 7.8% 8.5% 9.5% Adj. net profit 423 460 559 646 No. of diluted shares 102.9 103.3 103.6 103.8 Adj. EPS (EUR) 4.11 4.46 5.40 6.22 EPS accretion (%) 5% 15% 17%

Source: Company Data; Bryan, Garnier & Co ests.

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4. Sopra-Steria: another marriage of convenience 4.1. Rationale for the deal

4.1.1. Deal specifics The “Sopra-Steria” group On 8th April 2014, Sopra and Steria announced their intention to merge in a bid to create the th would become the 4 IT 4th IT services group in France (with an estimated market share of 5.5%) and the 10th in Europe services provider in France (with an estimated market share of 1.5%), aiming to generate EUR4bn of combined revenues in and the 10th in Europe 2017 and an operating margin of at least 10%. The proposed merger, having been approved by the boards of directors of both companies as well as the general partner of Steria (Soderi, representing former and current employee shareholders), provides for an exchange ratio of one Sopra share for four Steria shares. The share exchange offer is now conditional on: 1) A success threshold of at least 60% of Steria’s shares being tendered; 2) Approval of the merger by the European Commission. The offer opened on 26th June 2014 and will close on 30th July, and settlement should take place by mid-August. If successful, the offer will be reopened in mid-August and closed at the beginning of September. Assuming that at least two-thirds of Steria share capital is tendered to the offer, Sopra is committed to entering into a merger by absorption of Steria with the same exchange ratios, resulting in the automatic delisting of the Steria shares.

If the offer is successful, the ownership structure of the future Sopra-Steria Group will be as follows: an agreement between Sopra GMT (the holding company controlling Sopra), the co-founders of Sopra (Pierre Pasquier and François Odin) and the management with 22%, Geninfo (Société Générale, a Sopra shareholder since 1996) with 7%, FCPE Steria with 7%, other former and current Steria employee shareholders with 3% and a free float of 61%. In addition, a 5-year shareholders’ agreement will be entered into by Sopra GMT and Soderi. Lastly, the board of directors of the Sopra-Steria group –which will be chaired by Pierre Pasquier (Sopra), assisted by François Odin (Sopra) and Eric Hayat (Steria)– should comprise an equal number of directors (four) representing Sopra GMT and Steria (with one chosen by Soderi and another by FCPE Steriactions), 1 or 2 Geninfo employee representatives and between 4 and 6 independent members.

Fig. 23: Sopra’s ownership structure: before and after share exchange with Steria

Sopra alone Sopra+Steria

Sopra GMT + Pasquier + Odin + Sopra GMT + Management Pasquier + Odin + 22% Management 35%

Geninfo Free float 7% 53% Free float 61% FCPE Steria 7% Other Steria Geninfo employees 12% 3%

Source: Company Data.

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Soderi, General Partner of Steria and Sopra, which had been conducting exclusive negotiations for several months, Steria, delivered its verdict rejected Atos’s proposal of EUR22 per share in cash. Atos nonetheless maintained its offer, despite it being perceived by Sopra and Steria as a hostile bid designed to destabilise the shareholders. This proposal would have been beneficial to Steria’s shareholders, receiving EUR22 per share (compared to around EUR20 at current market price), and would have allowed turning the page on several years of disappointing performance in the stock market. From the point of view of an Atos shareholder, the company’s management maintained that the cost synergies would have been greater than the EUR62m promised by Sopra, in particular on account of strong synergies in France. In addition, based on the 2012 Gartner rankings, an Atos-Steria merger would have allowed Atos to advance from No.3 in France (with a 5.7% market share) to No.2 (with 7.9%) behind Capgemini (9.4%), moving in front of IBM (6.1%), and in Europe from No.4 (3.7%) to No.2 (4.6%), moving in front of HP (4.3%) and Accenture (3.8%) but remaining behind IBM (6.7%).

In any event, even if a hypothetical cash offer of EUR22 per Steria share would have been more favourable than a lower-priced share exchange offer, Atos could not have acquired Steria without Soderi’s approval. However, Soderi voted massively in favor of a merger with Sopra. We believe that the only “last stand” possible would be to block the merger by more than one- third of Steria’s share capital not tendered to the share exchange offer -which seems to us highly unlikely.

4.1.2. Strategic interests: consolidation and owners’ interests A defensive consolidation We look at this Sopra-Steria merger from three different perspectives: strategy and a change in dimension for the  A defensive consolidation strategy which will enable Sopra and Steria to become a European company… a wealth preservation strategy for its IT services group boasting 35,000 employees, with a critical mass, (EUR3.1bn of combined pro owners forma revenues in 2013) and a full range of services to better meet the needs of key accounts and public sector institutions. In this way, Sopra will benefit from Steria’s market presence in the UK (particularly with the public sector), in Germany, Scandinavia, in outsourced infrastructure management, in BPO (Business Process Outsourcing, renamed by Steria as BPS, for Business Process Solutions), and its presence in the UK as an offshore outsourcing company. Similarly, Steria will benefit from Sopra’s strong presence in software Solutions (Banking and Human Resources, and to a lesser degree, Real Estate), its good geographical balance in France, its outstanding application services, and its offshore outsourcing capacities for France;

 A wealth preservation strategy. The CEO and co-founder of Sopra, Pierre Pasquier, soon to celebrate his 79th birthday, will be able to continue to lead the Group for at least the next two to three years. By merging with Steria, he can extend Sopra’s culture of independence, retain control of capital thanks to the shareholders’ agreement between Sopra GMT and Soderi, avail himself of a better management team taken from both companies, and create more favourable conditions for the transmission of his estate;

 A change in dimension for Steria, with the end of the legal constraints of the limited partnership, which was established after the retirement of the founder Jean Carteron as an anti-takeover weapon shortly before the IPO in 1999, greater financial flexibility, and the opportunity to obtain better margins. Thus, the employee-shareholding model, which is so important to Steria, will be allowed to continue in a more traditional way.

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It should be reminded that Steria has experienced a bumpy ride since 2008.

 Originally focusing on the French market, Steria expanded its activities internationally through the acquisitions of Bull Integris Europe in 2001 (UK, Germany, Scandinavia, Spain, Belgium, Switzerland) Mummert in 2005 (Germany), and Xansa in 2007 (UK, strong presence as offshore outsourcing company). While the acquisition of Xansa turned out to be a success in terms of cost synergies (meeting the 2010 target of EUR53m, at a cost EUR10m lower than the initial estimate of EUR49m), it did not allow developing the offshore outsourcing model outside the UK –French and German clients were not ready for it– and, at the time, the deal was not financed under good conditions due to the subprime mortgage crisis;

 France, which had been making encouraging headway until 2007, was never able to reap the benefits of the transformation of the group (industrialisation, Shared Services Centres, nearshore outsourcing, offshore outsourcing, areas of excellence...). Indeed, while in France it posted an operating margin of 8.7% in 2005, 9.3% in 2006 and 9.7% in 2007, it sank to between 5.7% and 6.5% over 2008-12, and even slumped to 4.2% in 2013 due to the suspension by the French government of the Ecotaxe contract. A turnaround program known as “Ere 2016”, targeting a 7% operating margin in France in 2016, was behind schedule due to talks with the trade unions.

 2013 was a particularly frustrating year, with all of Steria’s efforts focused on two contracts: the Ecotaxe project in France and the SSCL joint venture in the UK. The build-up of the cloud infrastructure for the Ecotaxe project required the efforts of engineers who were initially assigned to other recently-signed outsourced IT management contracts. As a result, the company was forced to hire costly subcontractors to fulfil the obligations from these previous contracts, thus explaining a 2% drop in the operating margin for infrastructure management in 2013. The outlook is better for 2014, with positive sales momentum of between 6% and 8% at constant currency thanks to the SSCL contract (contribution: est. EUR100m).

Fig. 24: Steria – Historical sales growth (at cc) and operating margin (2003 -2013)

8% 9% 8% 6% 7% 4% 6% 5% 2% 4% 0% 3% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2% -2% 1% -4% 0%

Organic growth (%) (left scale) Op. margin (%) (right scale)

Source: Company Data; Bryan, Garnier & Co ests. An equitable distribution of Finally, this project has often been presented as a “merger of equals”. From the shareholders’ managerial tasks between standpoint, this is not entirely mathematically correct, since Sopra’s shareholders will hold 60% Sopra and Steria of the Sopra-Steria Group while Steria’s shareholders will only hold 40%. In contrast, from a managerial point of view, we notice an equitable distribution between the future ex-Sopras and the future ex-Sterias: the future organisational chart shows little overlap in management; all of Steria’s top-tier executives have been included, and Sopra has placed its senior managers in key positions:

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 Top management. François Enaud, CEO of Steria since 1997, will serve as CEO, and will be assisted by Pierre Pasquier, current Chairman of the Board of Sopra, as Chairman of the Board of the resulting group. The latter has expressed his desire to remain in this position at least until the end of the synergy process. Since 2011, Vincent Paris has been a member of the Executive Committee of and has headed Sopra’s French operations. In addition, he has served as acting CEO since the departure of Pascal Leroy at the end of April 2014 and is now expected to serve as Deputy CEO of the Group.

 Key corporate functions. Laurent Lemaire (CFO of Steria since 2007) will serve as CFO, Laurent Giovachini (advisor to the Chairman Pierre Pasquier since 2013, ex-Chairman and CEO of CS Systèmes d'Information) will serve as COO, Xavier Pecquet (Key Account Manager at Sopra) will serve as CCO (Chief Customer Officer), Christophe de Tapol (Director of Sopra France) will serve as Chief Strategy Officer, and Patricia Langrand will serve as Executive Vice President in charge of Business Development and Marketing (the same position she has held at Steria since 2011);

 Business units, France and Spain have been assigned to Vincent Paris, the UK and Asia to John Torrie (Steria’s UK CEO since 2007, as a result of the acquisition of Xansa), European Development to Pierre-Yves Commanay (CEO of Sopra UK since 2009, and CEO of International Operations since 2012) and Kjell Rusti (CEO of Steria Norway since 2002, as a result of the acquisition of Bull Integris), while Olivier Vallet (CEO of Steria France since 2008) will be in charge of Solutions & Infrastructure Management France, and Sopra Banking Software will continue to be led by Jean-Paul Bourbon (an “old-timer” at Sopra) and Eric Pasquier (the son of Pierre Pasquier and until recently the CEO of Sopra Spain).

4.2. Synergies of EUR62m put to the test EUR62m of operational On 8th April 2014, Sopra and Steria announced operational synergies estimated at EUR62m by synergies by the end of 2016, the end of 2016, representing 1.6% of combined pro forma sales projected for the resulting group in mainly in France 2016 (est. revenues of EUR4bn). Half of these synergies are expected by the end of 2015 and the other half by 2016.

 Synergies include: 1) Revenue synergies, including cross-selling of the respective Sopra and Steria products and services (shift of legacy systems towards IT infrastructure and application management, provision of solutions for the banking and HR sectors, utilisation of Steria’s BPO capabilities to Sopra’s banking and HR solutions, at a geographic level), and expanding the group’s offering into global markets; 2) Operational synergies from the optimisation of industry efficiency and operational leverage on service centers, the pooling of procurement, asset optimisation (headquarters and premises), optimisation of the use of subcontractors, and the pooling of resources.

 50% of synergies are expected to come from operations and the back office, compared to 50% from procurement, dedicated IT infrastructure, property, and internal IT;

 Most of the synergies will be achieved in France, but do not take into account the turnaround program “Ere 2016”. We understand that Steria has suspended its implementation for one year, hoping to calm down the unions and waiting to provide opportunities for the

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employees in the future organization. “Ere 2016” initially aimed to reduce costs by EUR16-20m in France to obtain an operating margin of 7% by 2016 (and 6% by 2015). It anticipated potential cost savings of EUR5m in 2014 (net savings of EUR1m on EUR10m of bonuses, EUR1m on EUR6m of pay increases, EUR1m on EUR2m of past savings, EUR1m on EUR7m due to growth recovery in outsourced IT management, and EUR1m on the EUR3m of revenue growth). In 2015, gross savings should stand at EUR10m.

We estimate the expected Sopra and Steria estimate total integration costs at EUR65m, representing around EUR20m net synergies at EUR8.5 for 2014, an additional EUR20m for 2015, and the rest in 2016. These costs should all be recorded per share as exceptional on the Sopra-Steria group’s income statement. Overall, assuming annual synergies of EUR62m with a discount rate of 11.9%, we estimate the gross present value of synergies at EUR228m (EUR11.2/share) and synergies net of costs at EUR174m (EUR8.5/share). Fig. 25: Valuation of cost synergies for Sopra+Steria

in EURm (FYE 31/12) 2013 2014e 2015e 2016e 2017e 2018e 2019e 2020e 2021e 2022e 2023e 2024e Gross cost synergies 0.0 0.0 31.0 62.0 62.0 62.0 62.0 62.0 62.0 62.0 62.0 62.0 Non-recurring costs 0.0 -20.0 -20.0 -25.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Net cost synergies 0.0 -20.0 11.0 37.0 62.0 62.0 62.0 62.0 62.0 62.0 62.0 62.0 Theoretical tax rate 34.0% 36.8% 35.8% 35.1% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% Theoretical tax 0.0 0.0 11.1 21.8 21.7 21.7 21.7 21.7 21.7 21.7 21.7 21.7 Free cash flow 0.0 -20.0 -0.1 15.2 40.3 40.3 40.3 40.3 40.3 40.3 40.3 40.3 Discounted free cash flows 0.0 -18.9 -0.1 11.5 27.2 24.3 21.7 19.4 17.3 15.4 13.8 12.3 Sum of discounted FCF 131.5 Terminal value 42.2 Total value 173.7 Diluted nbr of shares (m) 20.36 Valuation per share (EUR) 8.5

Source: Company Data; Bryan, Garnier & Co ests. Geographic coverage A stronger position in the It seems clear that the merger with Steria enables Sopra to benefit from a significant presence UK, Germany and in the UK, with a strong position in the public sector representing about 2/3 of sales in this country. Scandinavia In Germany, Sopra will benefit from Steria’s market presence, most notably in the Banking segment, with potential synergies with Sopra Banking Software since the acquisition of COR&FJA at the beginning of 2014 –whereas Sopra only generates revenues of EUR10.6m with one client (Airbus Group). Finally, it will enable Sopra to establish a market presence in Scandinavia, with particular strength in the public sector in Norway. Fig. 26: Sopra – 2013 sales by country – reported (Sopra) and pro forma (Sopra+Steria)

Sopra alone Sopra+Steria

UK 26% France 67% UK 9%

France Germany Spain 47% 6% 8%

Spain 3% Other Europe 15% Other Europe Rest of World Rest of World 15% 3% 1%

Source: Company Data; Bryan, Garnier & Co ests.

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 In France, an overwhelming percentage of Steria’s revenues was generated in the Paris region (80%), while Sopra had better-balanced revenues (47% Paris, 53% other regions). The resulting group will generate 60% if its revenue in the Paris region, compared to 40% in other regions. Steria is present in 16 towns and cities, with a concentration in Paris (2,700 employees), Toulouse (1,200) and Nantes (500), with an exclusive market presence in Roanne (300). For its part, Sopra is present in France in 16 cities, on 32 sites, with a concentration in Paris (2,700), Toulouse (1,200), Lyon (800), Lille (800), and Nantes (500), with an exclusive market presence in Niort, Toulon, Annecy, Clermont-Ferrand, Le Mans, Tours, Rodez, Rouen, Metz, Nancy, and Albi. We can therefore imagine that there is the potential to consolidate the sites in numerous cities, and to develop activity in others.

 In the United Kingdom, Steria generates ten times more revenues than Sopra (excluding Banking Software). In our opinion, there are many consolidation possibilities for the different sites, with a joint presence in London, Birmingham, Manchester, Edinburgh, and Belfast. Steria has an exclusive presence in Hemel Hampstead, Chatham, Reading, and Warrington, while Sopra has an exclusive presence in Bristol, Chester, Glasgow, Horsham, Leeds, Oxford, Sheffield, Sunderland, and Dunstable.

 In Germany, Steria has a stronger presence, namely in Hamburg, Cologne, Frankfurt, Munich, Leipzig, and Berlin, while Sopra is present in Hamburg, Frankfurt and Munich.

 In Benelux, both companies are present in Brussels and Luxembourg.

 In Switzerland, Sopra was present in Geneva and Lausanne, and Steria had, in addition to these cities, a presence near Zurich, Basel and Bern.

Range of services Sopra would acquire The merger between Sopra and Steria will enable Sopra, whose expertise was historically outsourcing infrastructure considered to be in development and integration, and as a leader in outsourced application management and BPO management and IT Solutions (Banking, HR, Real Estate), to widen its range of services in capabilities. outsourced infrastructure management and BPO services (renamed BPS at Steria, standing for Business Process Solutions), two areas which the company had previously refused to explore. Steria’s expertise in BPO services, a legacy from its acquisition of Xansa, led the company to become one of the leading players in this area in the UK (No. 2 in the finance, procurement and payroll segments), with the following contracts: 1) The NHS Shared Business Services (NHS SBS), a 50/50 joint venture with the NHS (National Health Service) providing back office services to 35% of NHS trusts, for more than GBP100m per year; 2) SSCL (Shares Services Connected Ltd), a 75/25 joint venture with the Cabinet Office, a GBP1bn contract over 10 years; 3) The Police of Cleveland (Yorkshire), a GBP175m contract over 10 years signed in 2009 providing back office outsourcing services; 4) BT, an applications outsourcing contract for finance and accounting (F&A) and payroll services.

Steria Solutions could Additionally, even if the approach was more specific than that of Sopra, Steria itself developed benefit from greater leverage solutions for the police as well as biometric, payment, insurance, energy and transport solutions. While it remains difficult to evaluate the potential of each one, it cannot be denied that potential does exist as proven by the most important contracts obtained by Steria. For example, SteriaSTORM, a 24/7 emergency services command and control solution, is used by 40% of police forces in the UK and by 100% of the Swedish police force. In Transport, the Traffic/Parking/TaxiExpert solutions allow monitoring road traffic, public car parks and taxis (Ile-de-France highways, Copenhagen’s ring road, Zurich and London Heathrow airports...); Steria’s

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Airport Information and Management System (Manag’Airport) is used by numerous airports not only in France but also abroad (Bristol); and other solutions have been developed in the field of machine-to-machine (M2M) with Smart Driving for optimizing route selection. Finally, for payment services, Steria has developed an e-ticketing and secure e-payment platform (Stecard).

Fig. 27: Sopra – 2013 sales by activity – reported (Sopra) and pro forma (Sopra+Steria)

Sopra Sopra+Steria

Application Managed management operations 30% 17%

Consulting & Systems Integration 39%

Consulting & Systems Application Integration management 45% 21%

Solutions 25% Solutions & BPS 23%

Source: Company Data; Bryan, Garnier & Co ests.

4.3. Accretive impact of at least 20% on est. EPS With Steria, the accretive According to Sopra, the merger with Steria would have an accretive impact on EPS impact on Sopra’s EPS is (before integration costs and amortisation of intangibles acquired) of 5% in 2015, and more estimated at 5% by 2015 and than 20% in 2016, and this in despite of a 70% increase in the number of outstanding Sopra shares. more than 20% in 2016. This scenario is based on pro forma revenues of between EUR3.3-3.4bn in 2014 (+6-10%, with +5.6% at constant currency) and revenues of EUR4bn (around +8% p.a., with continued organic growth around 5-6%) and an operating margin of 10% in 2016 – which would be helped by accretive acquisitions in the Solutions segment, where there is a potential for double-digit margins. Despite the combination of Steria’s balance sheet with its own, Sopra anticipates a pro forma net debt/EBITDA ratio of 1.2x by the end of 2014 (vs. 1.4x by the end of 2013).

Including synergies, In 2013, pro forma consolidated accounts for Sopra+Steria would have shown sales of EUR3.1bn operating margin should and an operating margin of 7.1% (vs. 8.1% for Sopra alone and 6.3% for Steria alone). We estimate reach 10% by 2016. that if operational synergies of EUR62m expected by Sopra for the end of 2016 had been achieved on the 2013 pro forma, the operating margin of this group would have been 9.1%, implying a 1ppt accretive impact in EPS.

Based on our DCF Based on our outlook for Sopra and Steria, we have tried to calculate, as an initial approach, calculations, we believe that the impact of the merger on our adjusted EPS estimates, excluding and including synergies. Sopra could reach a We have taken the position that the “Ere 2016” program (with its expected positive impact as early as maximum fair-value of EUR119 with Steria the end of 2014) was postponed indefinitely at Steria, and that it would be included in the EUR62m in (vs. EUR105 previously) synergies provided for within the framework of the merger. Our financial forecast also assumes that of the EUR31m of expected synergies in 2015, only 30% would actually be achieved over the course of the year, that of the EUR62m in synergies expected in 2016, only 65% would actually be achieved over the course of the year, and that one would have to wait until 2017 to achieve 100% of the expected synergies. To conclude, the impact of the merger would be as follows:

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 Accretive impact on EPS (excluding synergies) of 7% in 2015 and a 5% in 2016 (operating margin of 8.6% in 2015 and 9% in 2016), with a maximum DCF-based fair value (discount rate of 10.7%) of EUR112 per share.

 Accretive impact on EPS (including synergies) of 11% in 2015 and 18% in 2016 (with an operating margin of 8.8% for 2015 and 10.1% for 2016), with a maximum DCF-based fair value (discount rate of 10.7%) of EUR119 per share.

Fig. 28: Our estimates for Sopra alone

FYE 31st Dec. (EURm) 2013 2014e 2015e 2016e Revenues 1349 1470 1571 1655 % chg 10.9% 8.9% 6.9% 5.3% Adj. operating profit 109 128 149 166 Adj. operating margin (%) 8.1% 8.7% 9.5% 10.0% Adj. net profit 75 87 103 118 No. of diluted shares 12.0 12.0 12.0 12.1 Adj. EPS (EUR) 6.26 7.23 8.60 9.79

Source: Company Data; Bryan, Garnier & Co ests.

Fig. 29: Our estimates for Sopra+Steria excluding cost synergies

FYE 31st Dec. (EURm) 2013 2014e 2015e 2016e Revenues 1349 2427 3528 3690 % chg 10.9% 79.9% 45.4% 4.6% Adj. operating profit 109 208 302 331 Adj. operating margin (%) 8.1% 8.6% 8.6% 9.0% Adj. net profit 75 129 187 210 No. of diluted shares 12.0 16.1 20.3 20.4 Adj. EPS (EUR) 6.26 7.98 9.22 10.31 EPS accretion (%) 10% 7% 5%

Source: Company Data; Bryan, Garnier & Co ests.

Fig. 30: Our estimates for Sopra+Steria including cost synergies

FYE 31st Dec. (EURm) 2013 2014e 2015e 2016e Revenues 1349 2427 3528 3690 % chg 10.9% 79.9% 45.4% 4.6% Adj. operating profit 109 208 311 371 Adj. operating margin (%) 8.1% 8.6% 8.8% 10.1% Adj. net profit 75 129 193 236 No. of diluted shares 12.0 16.1 20.3 20.4 Adj. EPS (EUR) 6.26 7.98 9.541 11.60 EPS accretion (%) 10% 11% 18%

Source: Company Data; Bryan, Garnier & Co ests.

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5. And now who’s next? We attempted to identify which companies within our research universe might be the next potential takeover targets and we found out that Sage, Indra and Temenos are the most vulnerable companies for the next 3 years, even though this conclusion is merely based on our assumptions.

5.1. Sage Group (Neutral, FV 400p) Sage does not offer We consider that Sage’s strategy implemented at the end of 2010 by CEO Guy Berruyer –who significant operating is due to retire by the end of March 2015– only allows for low operating leverage: leverage anymore  Portfolio shift towards growing products (which led to the disposal of non-strategic assets for approximately GBP300m) is almost complete.

 Sales organic growth, which currently stands at 5%, is close to the optimal level of 6% expected for 2016. In our opinion, it will be difficult to achieve higher growth since licence sales are structurally low and partially cannibalised by recurrent contracts and since the penetration rate of premium support contracts is already high (85% in America).

 Operating margin implies relatively limited operating leverage in the medium term, around 1 to 1.5ppt according to our estimates, taking into account R&D and marketing investments required to shift the traditional software business model to cloud computing and mobility.

 Very few takeovers since 2006 (except Folhamatic in Brazil in 2012) due to the high prices demanded by sellers and to competition from private equity funds.

 Balance sheet optimisation. Sage’s new CFO, Steve Hare, who took office in January 2014, suggested, during the announcement of the half-year results last May, that balance sheet and cost structure could be further optimised. At this stage, we believe however that the effects of such an optimisation would be incremental and would not constitute a real break.

In our opinion, Sage is an We therefore see little room for improvement considering Sage’s stock price history –unless a ideal target for private equity major change is made by the future CEO, who will probably be hired through an internal recruitment funds process. We anticipate that stock price increases will be mostly due to the distribution of excess cash to stockholders (GBP572m in share buybacks and GBP200m in cash dividends since the end of 2011), bearing in mind that operating cash flow is structurally higher than EBITDA. We therefore consider that Sage is an ideal target for private equity funds, all the more so in view of its free float of 100%.

5.2. Indra Sistemas (Sell, FV EUR11) The Spanish government’s In August 2013, the Spanish government, through its investment vehicle SEPI (Sociedad Estatal stake in Indra is under de Participaciones Industriales), acquired BFA’s 20.1% stake in Indra at a price of EUR10.19 per question share (BFA is the holding company controlling Bankia). This transaction may be seen as step backward since Indra was founded in 1993 by the Spanish government headed by Felipe Gonzalez with the objective of creating a leader in the defence industry, before it decided to offload 25% of its shares to Thales in 1995 and the remainder during the IPO in 1999. Indra is still present in the

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defence and security sector (including defence electronics through the Eurofighter programme) –both in Spain and in international markets–, which accounts for 17% of its sales, including about 10% in the defence sector alone.

Since summer 2013, Since summer 2013, Indra has regained credibility in the markets thanks to: 1) lower interest Indra has regained credibility rates of Spanish treasury bonds; 2) disappearance of the risk of a massive sell-off (BFA’s and in the markets Liberbank’s stakes); 3) stabilisation of profit margins and higher organic growth since the beginning of 2014; and 4) new management focus on free cash flow (with an annual target above EUR100m for the first time, i.e. at least 3.5% of sales for 2014 and a medium-term objective of 5% of sales, vs. only EUR52m in 2013 and EUR39m in 2012.)

Despite the promising signs mentioned above, we believe that Indra’s operating margin must recover faster (only 7.8% in 2013 vs. 11.6% in 2009) and that its net debt must be reduced as soon as possible (EUR607m at the end of March 2014, i.e. 2.2x EBITDA and 53% of shareholders’ equity). As a result of its free cash flow improvement plan, Indra should reach a net debt ratio of 24% by the end of 2016 (i.e. 1x EBIDTA). We think, however, that its operating margin will not improve before 2015 due to persistent pressure on prices in Spain and to a recovery of profitability in Brazil slower than was expected when Politec was acquired in 2011.

The Spanish government’s In our view, the Spanish government’s stake in Indra is a temporary situation due to the objective to consolidate the failure to find a substitute for BFA and aimed at avoiding entrusting “sensitive” businesses to defence industry might have foreign companies, according to the wish of Spanish Minister of Defence Pedro Morenés, whose an impact on Indra objective was also to consolidate the Spanish defence sector, just as the French (with Thales, Safran and DCNS) or the Italian government (with Finmeccanica) did in the past as they were facing tight defence budgets. Under these circumstances, one of the options considered by the government was a merger between Indra and Navantia, the company responsible for Spanish military dockyards, which is fully owned by SEPI.

Our preferred scenario: In this context, we do not exclude a strategic partnership (for example, consortium or joint Indra getting rid of its venture) between Indra, Navantia and possibly other providers, according to which all of “sensitive” business units Indra’s defence-related business units could eventually be transferred to this new entity. and considering a potential merger with another Conversely, IT services not related to “sensitive” sectors should logically become IT services company independent, potentially through a merger with another IT services company.

5.3. Temenos Group (Neutral, FV 33CHF) In our opinion, Temenos’ is Since Temenos’ free float is 99%, this Swiss Core Banking software developer is theoretically the type of company that vulnerable to takeover bids. In our opinion, it is the type of company that private equity funds are private equity funds are usually interested in, for the following reasons: typically interested in

 A leadership position in its market (Core banking software systems), with an estimated market share of 25%. Its competitors (Oracle, Infosys, TCS, SAP, Misys, FIS…) are not “specialised” in this market and do not offer the same level of operational coverage as Temenos, especially because, in 5 years, Temenos restructured its products around software components instead of modules. This improved its credibility with “tier-1” banks which, instead of changing their whole Core banking systems, prefer a flexible integration with their internal software systems;

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 An operating cash flow constantly over 100% of EBITDA. In 2013, Temenos generated an operating cash flow of USD169.3m, or 119% of EBITDA. Days of sales outstanding (DSO) changed from 28 to 198 days as a result of its strategy of entrusting software-related services to partners, and the company intends to reduce DSO to 10-15 days per year;

 A financial strategy which is starting to head towards share buyback, with USD54m already bought back in 2013 and launching of a new buyback programme for USD120m or 3.8 million shares (5.4% of capital). These shares will be eligible for cancellation until the general meeting of May/June 2015. Temenos’s net debt as of March 31, 2014 is USD96.2m, or 0.6x EBITDA. After deducting treasury shares, net debt amounts to USD37.5m, or 0.3x EBITDA. Therefore, in the absence of a significant acquisition, further share buyback programmes are to be expected in the future;

 Private equity funds’ attraction to financial software developers. Misys, the British developer that Temenos wanted to acquire at the beginning of 2012 by exchange of shares, was finally taken over by Vista Equity Partners for GBP1,180m after a long stock market battle. In 2005, the acquisition of the American SunGard was the greatest private equity deal in the sector, as it was taken over by 8 funds for USD11.3bn.

5.4. Other potential targets

5.4.1. Software AG (Buy, FV 34EUR) Software AG: the Stiftung in Software AG is 29% owned by the Software AG Stiftung (Stiftung is a foundation in German) question constituted in 1969 by Software AG’s founder Peter Schnell, who is now 76 years old; it is one of the biggest private foundations in Germany. The management has always defended the group’s independence, in particular with the objective of becoming one the main software developers in the world, as well as a true European alternative to Microsoft, IBM, and Oracle in the field of infrastructure software.

Given the identity of Software AG’s main shareholder, it does not seem like an easy target. In our opinion, the company will remain independent in future years, although no scenario can be ruled out.

5.4.2. Altran Technologies (Buy, FV 9.4EUR) Question marks on Altran: There are two potential question marks concerning Altran: Apax’s stake and whether or not the IT activity should be  Ownership structure, with the presence of Apax Partners since 2007, through the holding maintained within the Group Altrafin Participations. It holds a 15.7% stake in Altran (20.6% of voting rights). Together with the founders (who do not have dividend rights) and managers (via Altimus), it represents 24.9% of shareholders’ equity and 29.8% of voting rights. The question is: will Apax remain as Altran shareholder in the next 5 years?

 Business portfolio. Altran’s has some IT services activities that are basically directed to banks. It does not provide business management-related IT services but applications specifically designed for risk management or trading rooms. Will Altran maintain these activities?

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Alten Simplified Profit & Loss Account (EURm) 2011 2012 2013 2014e 2015e 2016e Revenues 1,066 1,198 1,216 1,369 1,449 1,526 37.33 Change (%) 16.3% 12.4% 1.5% 12.6% 5.8% 5.4% lfl change (%) 14.5% 8.7% 0.5% 1.2% 4.1% 5.4% Adjusted EBITDA 117 129 128 140 155 167 32.33 Depreciation & amortisation (9.0) (8.0) (11.0) (10.0) (10.0) (10.0) Adjusted EBIT 108 121 118 130 145 157

27.33 EBIT 95.0 116 111 122 144 157 Change (%) 7.9% 22.1% -4.8% 10.2% 18.3% 8.8% Financial results (1.0) (1.0) (3.0) (2.0) (1.0) (1.0) 22.33 Pre-Tax profits 94.0 115 108 120 143 156 Exceptionals 0.0 0.0 0.0 0.0 0.0 0.0 Tax (35.0) (39.0) (36.0) (43.0) (48.0) (53.0) 17.33 Profits from associates 1.0 2.0 2.0 2.0 2.0 2.0 24/06/11 24/12/11 24/06/12 24/12/12 24/06/13 24/12/13 24/06/14 ALTEN Source Thomson Reuters Minority interests 0.0 0.0 0.0 0.0 0.0 0.0 Net profit 60.0 78.0 74.0 79.0 97.0 106 Restated net profit 70.0 81.0 80.0 85.0 98.0 106 Change (%) 20.7% 15.7% -1.2% 6.3% 15.3% 8.2%

Cash Flow Statement (EURm) Operating cash flows 78.0 92.0 81.0 92.0 105 114 Change in working capital (10.0) (12.0) 13.0 (10.0) (1.0) (4.0) Capex, net (9.0) (9.0) (7.0) (9.0) (9.0) (9.0) Financial investments, net (10.0) (2.0) 0.0 0.0 0.0 0.0 Acquisitions, net (16.0) (23.0) (46.0) (49.0) 0.0 0.0 Dividends (35.0) (32.0) (32.0) (33.0) (33.0) (33.0) Other (2.0) (10.0) 9.0 (1.0) 0.0 0.0 Net debt (43.0) (58.0) (74.0) (68.0) (130) (198) Free Cash flow 59.0 71.0 87.0 73.0 95.0 101

Balance Sheet (EURm) Tangible fixed assets 13.0 14.0 18.0 18.0 17.0 16.0 Intangibles assets & goodwill 194 211 237 286 286 285 Investments 28.0 32.0 44.0 46.0 48.0 51.0 Deferred tax assets 9.0 10.0 9.0 9.0 9.0 9.0 Current assets 421 443 453 501 523 546 Cash & equivalents 60.0 67.0 97.0 97.0 159 227 Total assets 724 776 857 957 1,041 1,135 Shareholders' equity 399 447 502 549 613 687 Ratings Provisions 18.0 20.0 22.0 30.0 30.0 30.0 Date Ratings Price Deferred tax liabilities 0.0 0.0 0.0 0.0 0.0 0.0 30/04/13 NEUTRAL EUR30.75 L & ST Debt 17.0 9.0 23.0 29.0 29.0 29.0 04/03/11 BUY EUR26.08 Current liabilities 291 300 310 349 370 390 28/07/08 SELL EUR24.54 Total Liabilities 724 776 857 957 1,041 1,135 19/04/07 BUY EUR29.6 Capital employed 356 389 428 481 483 489

Ratios Target Price Operating margin 10.20 10.10 9.70 9.50 10.00 10.30 Date Target price Tax rate 37.20 33.90 33.30 35.80 33.60 34.00 27/02/14 EUR36 Net margin 5.50 6.40 5.90 5.60 6.60 6.80 03/02/14 EUR35 ROE (after tax) 15.00 17.40 14.70 14.40 15.80 15.40 16/01/14 EUR37 ROCE (after tax) 20.40 21.00 18.90 17.90 20.00 21.20 10/01/14 EUR36 Gearing -11.00 -13.00 -15.00 -12.00 -21.00 -29.00 26/09/13 EUR32 Pay out ratio 54.10 41.30 44.60 41.80 34.00 31.20 26/07/13 EUR28 Number of shares, diluted 32.60 32.80 33.60 33.70 33.70 33.70 30/04/13 EUR30 28/02/13 EUR37 Data per Share (EUR) 14/01/13 EUR33 EPS 1.85 2.42 2.24 2.39 2.94 3.21 08/11/12 EUR29 Restated EPS 2.14 2.48 2.39 2.51 2.90 3.16 26/09/12 EUR28 % change 21.6% 15.9% -3.6% 5.0% 15.5% 9.0% EPS bef. GDW 2.14 2.48 2.39 2.51 2.90 3.16 01/03/12 EUR27 BVPS 12.24 13.63 14.94 16.29 18.19 20.39 29/09/11 EUR26 Operating cash flows 2.39 2.80 2.41 2.73 3.12 3.38 01/09/11 EUR29 FCF 1.81 2.16 2.59 2.17 2.82 3.00 11/05/11 EUR34 Net dividend 1.00 1.00 1.00 1.00 1.00 1.00 04/03/11 EUR31

Source: Company Data; Bryan, Garnier & Co ests.

IT Software & Services

Altran Technologies Simplified Profit & Loss Account 2011 2012 2013 2014e 2015e 2016e 8.51 Revenues 1,420 1,456 1,633 1,771 1,873 1,973 Change (%) -1.2% 2.6% 12.2% 8.5% 5.7% 5.3% 7.51 lfl change (%) 8.6% 4.3% 1.7% 3.9% 5.0% 5.3% Adjusted EBITDA 134 140 152 183 215 236 6.51 Depreciation & amortisation (21.0) (15.0) (9.0) (14.0) (15.0) (16.0) Adjusted EBIT 113 125 144 168 200 221 5.51 EBIT 50.0 111 105 151 190 210 Change (%) 187% 120% -5.3% 43.2% 25.9% 10.8% 4.51 Financial results (28.0) (21.0) (13.0) (11.0) (9.0) (6.0) Pre-Tax profits 22.0 90.0 92.0 140 181 204 3.51 Exceptionals (51.0) (3.0) 0.0 0.0 0.0 0.0 Tax (18.0) (23.0) (26.0) (42.0) (55.0) (63.0) 2.51 Profits from associates 0.0 0.0 0.0 0.0 0.0 0.0 24/06/11 24/12/11 24/06/12 24/12/12 24/06/13 24/12/13 24/06/14 Minority interests 0.0 0.0 0.0 0.0 0.0 0.0 ALTRAN TECHNOLOGIES Source Thomson Reuters Net profit (46.0) 65.0 66.0 97.0 125 141 Restated net profit 58.0 83.0 92.0 110 133 149 Change (%) 132% 43.1% 10.8% 19.6% 20.9% 12.0%

Cash Flow Statement (EURm) Operating cash flows 58.0 87.0 80.0 113 143 159 Change in working capital (16.0) (30.0) 76.0 (11.0) (4.0) (10.0) Capex, net (24.0) (25.0) (28.0) (20.0) (20.0) (20.0) Financial investments, net (12.0) 5.0 (1.0) 0.0 0.0 0.0 Acquisitions, net (1.0) (1.0) (93.0) (83.0) (7.0) 0.0 Dividends 0.0 0.0 (15.0) (19.0) (23.0) (24.0) Other (33.0) (45.0) 195 10.0 12.0 2.0 Net debt 195 169 30.0 41.0 (61.0) (168) Free Cash flow 18.0 32.0 128 82.0 119 129

Balance Sheet (EURm) Tangible fixed assets 29.0 38.0 41.0 43.0 44.0 45.0 Intangibles assets & goodwill 326 335 472 562 566 563 Investments 21.0 25.0 43.0 43.0 43.0 43.0 Deferred tax assets 99.0 105 104 104 104 104 Ratings Current assets 521 554 474 510 534 562 Date Ratings Price Cash & equivalents 187 178 323 323 425 532 07/02/11 BUY EUR4.189 Total assets 1,183 1,236 1,458 1,586 1,716 1,850 04/05/09 SELL EUR2.437 Shareholders' equity 406 476 654 732 834 941 04/01/08 BUY EUR3.7792 Provisions 61.0 63.0 72.0 87.0 95.0 103 19/04/07 SELL EUR6.5493 Deferred tax liabilities 4.0 4.0 7.0 7.0 7.0 7.0 L & ST Debt 382 347 353 364 364 364 Current liabilities 330 346 371 396 416 435 Target Price Total Liabilities 1,183 1,236 1,458 1,586 1,716 1,850 Date Target price Capital employed 601 645 684 773 773 773 08/04/14 EUR9.4 14/03/14 EUR9.3 Ratios 07/02/14 EUR8.6 Operating margin 8.00 8.60 8.80 9.50 10.70 11.20 31/01/14 EUR8.2 Tax rate 81.80 25.60 28.30 30.00 30.40 30.90 10/01/14 EUR8.5 Net margin 0.40 4.60 4.00 5.50 6.70 7.10 -11.30 13.70 10.10 13.30 15.00 15.00 14/10/13 EUR8 ROE (after tax) ROCE (after tax) 14.80 15.10 16.90 15.90 18.40 20.20 02/05/13 EUR7.3 Gearing 48.00 36.00 5.00 6.00 -7.00 -18.00 14/01/13 EUR7.5 Pay out ratio NM 20.00 28.90 23.60 19.40 19.80 24/12/12 EUR7.3 Number of shares, diluted 179 177 176 176 176 176 01/11/12 EUR5.9

31/08/12 EUR5.6 Data per Share (EUR) 13/03/12 EUR5.4 EPS (0.32) 0.45 0.38 0.55 0.72 0.81 03/11/11 EUR4.8 Restated EPS 0.32 0.47 0.53 0.62 0.76 0.84 01/09/11 EUR5.5 % change 129% 46.9% 12.8% 17.0% 22.6% 10.5% 02/05/11 EUR6.5 EPS bef. GDW 0.32 0.47 0.53 0.62 0.76 0.84 14/03/11 EUR5.8 BVPS 2.27 2.68 3.72 4.15 4.73 5.33 07/02/11 EUR4.9 Operating cash flows 0.32 0.49 0.46 0.64 0.81 0.90 FCF 0.10 0.18 0.73 0.47 0.68 0.73 Net dividend 0.0 0.09 0.11 0.13 0.14 0.16

Source: Company Data; Bryan, Garnier & Co ests.

IT Software & Services

Atos Simplified Profit & Loss Account 2011 2012 2013 2014e 2015e 2016e Revenues 6,813 8,844 8,615 8,596 8,819 9,102 Change (%) 35.7% 29.8% -2.6% -0.2% 2.6% 3.2% 69.64 lfl change (%) 0.3% 0.8% -0.9% 0.4% 2.6% 3.2% Adjusted EBITDA 658 835 948 932 1,038 1,145 64.64 Depreciation & amortisation (225) (238) (286) (255) (290) (310) 59.64 Adjusted EBIT 433 597 662 677 748 835

54.64 EBIT 348 381 417 509 589 687 Change (%) 72.9% 9.7% 9.2% 22.1% 15.8% 16.6% 49.64 Financial results (35.0) (52.0) (63.0) (17.0) (13.0) (8.0) 44.64 Pre-Tax profits 313 329 354 492 576 679 Exceptionals 0.0 0.0 0.0 0.0 0.0 0.0 39.64 Tax (129) (103) (96.0) (160) (187) (221) 34.64 Profits from associates 0.0 1.0 2.0 2.0 2.0 2.0

29.64 Minority interests 1.0 4.0 (2.0) 7.0 7.0 7.0 24/06/11 24/12/11 24/06/12 24/12/12 24/06/13 24/12/13 24/06/14 Net profit 182 224 262 327 383 452 ATOS Source Thomson Reuters Restated net profit 244 372 423 438 488 550 Change (%) 10.9% 52.5% 13.7% 3.5% 11.4% 12.7%

Cash Flow Statement (EURm) Operating cash flows 397 489 502 651 701 783 Change in working capital 98.0 82.0 111 92.0 77.0 21.0 Capex, net (249) (290) (306) (380) (380) (380) Financial investments, net 3.0 22.0 8.0 0.0 0.0 0.0 Acquisitions, net 30.0 98.0 (26.0) 0.0 0.0 0.0 Dividends (37.0) (16.0) (23.0) (70.0) (80.0) (90.0) Other 32.0 (50.0) (134) 25.0 22.0 18.0 Net debt 142 (232) (905) (1,120) (1,460) (1,812) Free Cash flow 246 281 307 363 398 424

Balance Sheet (EURm) Tangible fixed assets 680 668 619 694 769 826 Intangibles assets & goodwill 2,454 2,406 2,361 2,322 2,282 2,241 Investments 580 399 377 378 380 381 Deferred tax assets 381 363 337 337 337 337 Current assets 2,504 2,454 2,203 2,072 2,064 2,130 Cash & equivalents 767 1,160 1,306 1,521 1,861 2,213 Total assets 7,367 7,449 7,202 7,324 7,693 8,128 Shareholders' equity 2,329 2,379 2,939 3,255 3,565 3,935 Provisions 1,244 1,143 1,026 870 859 838

Deferred tax liabilities 245 192 148 148 148 148 Ratings L & ST Debt 909 928 401 401 401 401 Date Ratings Price Current liabilities 2,641 2,807 2,689 2,651 2,720 2,807 13/12/13 BUY EUR62.03 Total Liabilities 7,367 7,449 7,202 7,324 7,693 8,128 21/02/12 NEUTRAL EUR43.54 Capital employed 2,471 2,147 2,034 2,135 2,105 2,123 22/02/08 BUY EUR34.71 Ratios Target Price Operating margin 6.40 6.80 7.70 7.90 8.50 9.20 Date Target price Tax rate 41.20 31.30 27.10 32.50 32.50 32.50 20/01/14 EUR76 Net margin 2.70 2.60 3.00 3.80 4.40 5.00 10/01/14 EUR77 ROE (after tax) 7.80 9.40 8.90 10.00 10.70 11.50 13/12/13 EUR75 ROCE (after tax) 11.80 22.60 27.30 24.00 26.50 28.80 Gearing 6.00 -10.00 -31.00 -34.00 -41.00 -46.00 18/11/13 EUR68 Pay out ratio 21.10 22.80 25.90 24.50 23.60 22.20 14/01/13 EUR60 Number of shares, diluted 98.20 103 103 103 104 104 28/11/12 EUR56

26/10/12 EUR53 Data per Share (EUR) 30/07/12 EUR50 EPS 2.37 2.63 2.70 3.26 3.82 4.51 26/06/12 EUR49 Restated EPS 2.72 3.60 4.11 4.24 4.71 5.30 26/03/12 EUR48 % change 0.4% 32.4% 14.2% 3.2% 11.1% 12.5% 21/02/12 EUR45 EPS bef. GDW 2.72 3.60 4.11 4.24 4.71 5.30 05/09/11 EUR39 BVPS 23.72 23.01 28.56 31.51 34.41 37.91 08/07/11 EUR45 Operating cash flows 4.04 4.73 4.88 6.30 6.77 7.54 10/05/11 EUR50 FCF 2.51 2.72 2.98 3.51 3.84 4.08 Net dividend 0.50 0.60 0.70 0.80 0.90 1.00

Source: Company Data; Bryan, Garnier & Co ests.

IT Software & Services

Axway Software

28.89 Simplified Profit & Loss Account 2011 2012 2013 2014e 2015e 2016e Revenues 217 224 238 268 303 335 26.89 Change (%) 4.2% 3.3% 5.9% 12.8% 13.1% 10.6% 24.89 lfl change (%) 5.7% -1.6% 3.7% 7.2% 9.7% 10.6%

22.89 Adjusted EBITDA 38.2 39.9 41.8 48.5 59.9 73.0 Depreciation & amortisation (2.9) (4.9) (4.3) (5.5) (6.0) (6.0) 20.89 Adjusted EBIT 35.3 35.0 37.5 43.0 53.9 67.0 18.89 EBIT 29.3 28.8 27.2 36.5 45.9 59.0

16.89 Change (%) 14.8% -2.0% -5.5% 34.2% 25.9% 28.5% Financial results (2.7) (0.11) (1.3) (0.71) (1.0) (0.52) 14.89 Pre-Tax profits 26.7 28.6 25.8 35.7 44.9 58.5 12.89 Exceptionals 0.0 0.0 0.0 0.0 0.0 0.0

10.89 Tax (5.2) (4.0) 9.8 (7.4) (10.4) (14.7) 24/06/11 24/12/11 24/06/12 24/12/12 24/06/13 24/12/13 24/06/14 Profits from associates 0.0 0.0 0.0 0.0 0.0 0.0 Source Thomson Reuters AXWAY SOFTWARE Minority interests 0.00 0.0 0.0 0.0 0.0 0.0 Net profit 21.5 24.7 35.6 28.3 34.5 43.8 Restated net profit 26.4 29.0 43.0 33.8 41.5 50.8 Change (%) 5.5% 10.1% 48.2% -21.4% 22.8% 22.2%

Cash Flow Statement (EURm) Operating cash flows 27.3 30.8 31.9 39.0 47.2 56.4 Change in working capital 8.1 (10.8) (3.6) 0.90 0.89 1.3 Capex, net (3.4) (6.2) (3.2) (6.5) (7.0) (7.0) Financial investments, net (0.17) 0.03 (0.11) 0.0 0.0 0.0 Acquisitions, net 0.0 (39.4) (0.27) (51.0) 0.0 0.0 Dividends (21.8) (5.0) (7.1) (8.1) (9.2) (10.4) Other (69.2) 40.0 (6.0) 0.0 0.0 0.0 Net debt (21.3) 6.8 (11.2) 14.5 (17.3) (57.7) Free Cash flow 31.9 13.9 25.1 33.4 41.1 50.7

Balance Sheet (EURm) Tangible fixed assets 4.9 6.3 6.3 7.6 8.9 10.2 Intangibles assets & goodwill 189 228 218 264 257 250 Investments 0.82 0.83 0.94 0.94 0.94 0.94 Deferred tax assets 14.5 17.7 30.6 30.6 30.6 30.6 Current assets 71.5 89.4 86.9 96.2 107 117 Cash & equivalents 23.8 35.4 49.2 49.2 81.1 121 Total assets 304 377 392 448 485 530 Shareholders' equity 213 234 258 279 304 337 Ratings Provisions 6.9 8.1 8.6 8.6 8.6 8.6 Date Ratings Price Deferred tax liabilities 7.0 6.9 6.9 6.9 6.9 6.9 L & ST Debt 2.5 42.1 38.0 63.7 63.7 63.7 13/11/13 BUY EUR22.9 Current liabilities 74.6 86.1 80.1 90.3 102 113 Total Liabilities 304 377 392 448 485 530 Target Price Capital employed 192 241 247 293 287 280

Date Target price Ratios 29/04/14 EUR33 Operating margin 16.25 15.59 15.78 16.05 17.80 19.99 20/02/14 EUR32 Tax rate 19.53 13.88 -37.77 20.81 23.09 25.16 Net margin 9.88 10.99 14.99 10.57 11.39 13.05 10/01/14 EUR29 ROE (after tax) 10.05 10.54 13.78 10.16 11.36 12.97 13/11/13 EUR28 ROCE (after tax) 15.44 12.87 19.25 12.08 15.14 18.67 Gearing -9.98 2.89 -4.33 5.22 -5.71 -17.11

Pay out ratio 23.48 28.84 22.83 32.50 30.00 26.00 Number of shares, diluted 20.54 20.48 20.52 20.52 21.00 21.47

Data per Share (EUR) EPS 1.06 1.21 1.75 1.39 1.70 2.15 Restated EPS 1.28 1.42 2.10 1.65 1.98 2.36 % change -17.1% 10.5% 47.9% -21.4% 20.0% 19.5% EPS bef. GDW 1.28 1.42 2.10 1.65 1.98 2.36 BVPS 10.39 11.42 12.59 13.57 14.47 15.71 Operating cash flows 1.33 1.51 1.55 1.90 2.25 2.63 FCF 1.56 0.68 1.22 1.63 1.96 2.36 Net dividend 0.25 0.35 0.40 0.45 0.51 0.56

Source: Company Data; Bryan, Garnier & Co ests.

IT Software & Services

Capgemini Simplified Profit & Loss Account 2011 2012 2013 2014e 2015e 2016e 57.04 Revenues 9,693 10,264 10,092 10,292 10,683 11,099

52.04 Change (%) 11.5% 5.9% -1.7% 2.0% 3.8% 3.9% lfl change (%) 5.6% 1.2% 0.9% 2.8% 3.4% 3.9% 47.04 Adjusted EBITDA 893 1,093 1,093 1,154 1,245 1,358 Depreciation & amortisation (155) (264) (236) (240) (245) (245) 42.04 Adjusted EBIT 738 829 857 914 1000 1,113

37.04 EBIT 595 606 720 788 874 987 Change (%) 21.7% 1.8% 18.8% 9.5% 10.9% 13.0% 32.04 Financial results (105) (127) (102) (79.6) (66.5) (60.5) Pre-Tax profits 490 479 618 709 807 927 27.04 Exceptionals 0.0 0.0 0.0 0.0 0.0 0.0

22.04 Tax (101) (135) (182) (234) (266) (306) 24/06/11 24/12/11 24/06/12 24/12/12 24/06/13 24/12/13 24/06/14 Profits from associates 0.0 0.0 (1.0) 0.0 0.0 0.0 Source Thomson Reuters CAP GEMINI Minority interests (15.0) (9.0) (7.0) 4.0 5.0 5.0 Net profit 404 353 442 471 536 616 Restated net profit 516 520 547 569 634 714 Change (%) 44.9% 0.7% 5.3% 3.9% 11.5% 12.6%

Cash Flow Statement (EURm) Operating cash flows 639 511 547 872 957 1,046 Change in working capital (290) 52.0 (121) (71.4) 7.4 59.4 Capex, net (155) (172) (280) (240) (240) (240) Financial investments, net 10.0 (2.0) (3.0) 0.0 0.0 0.0 Acquisitions, net (554) (32.0) (4.0) (88.0) 0.0 0.0 Dividends (154) (154) (157) (175) (176) (176) Other 394 (735) (267) (29.7) (49.3) (49.3) Net debt (459) (868) (676) (944) (1,463) (2,123) Free Cash flow 194 391 146 561 724 866

Balance Sheet (EURm) Tangible fixed assets 547 542 494 454 410 365 Intangibles assets & goodwill 3,922 3,894 3,767 3,860 3,864 3,869 Investments 119 98.0 153 157 162 167 Deferred tax assets 1,020 1,059 1,023 975 913 842 Current assets 3,110 2,959 3,024 3,132 3,223 3,291 Ratings Cash & equivalents 2,296 2,098 1,715 1,983 2,502 3,162 Total assets 11,014 10,650 10,176 10,561 11,074 11,696 Date Ratings Price Shareholders' equity 4,283 4,529 4,491 4,789 5,154 5,599 20/07/07 BUY EUR55.95 Provisions 1,162 1,249 1,289 1,339 1,389 1,439 Deferred tax liabilities 183 163 158 158 158 158 L & ST Debt 1,837 1,230 1,039 1,039 1,039 1,039 Target Price Current liabilities 3,549 3,479 3,199 3,236 3,334 3,462 Date Target price Total Liabilities 11,014 10,650 10,176 10,561 11,074 11,696 08/05/14 EUR64 Capital employed 3,824 3,661 3,815 3,846 3,691 3,476

21/02/14 EUR63 Ratios 10/01/14 EUR58 Operating margin 7.61 8.08 8.49 8.88 9.36 10.03 Tax rate 20.61 28.18 29.45 33.00 33.00 33.00 28/10/13 EUR54 Net margin 4.17 3.44 4.38 4.57 5.02 5.55 26/07/13 EUR50 ROE (after tax) 9.43 7.79 9.84 9.83 10.40 11.00 28/05/13 EUR49 ROCE (after tax) 16.22 18.29 17.05 17.11 19.35 22.72 Gearing -10.72 -19.17 -15.05 -19.71 -28.38 -37.91 21/02/13 EUR47 Pay out ratio 38.56 45.83 39.12 37.01 32.51 28.28 14/01/13 EUR45 Number of shares, diluted 186 181 160 161 162 162 09/01/13 EUR44 Data per Share (EUR) 22/10/12 EUR42 EPS 2.59 2.18 2.81 2.97 3.38 3.89 22/03/12 EUR39 Restated EPS 2.77 2.88 3.46 3.57 3.96 4.46 % change 45.4% 3.9% 20.3% 3.1% 11.0% 12.6% 17/02/12 EUR36 EPS bef. GDW 2.77 2.88 3.46 3.57 3.96 4.46 05/09/11 EUR34 BVPS 22.97 25.08 28.06 29.71 31.84 34.59 11/07/11 EUR46 Operating cash flows 3.43 2.83 3.42 5.41 5.91 6.46 FCF 1.04 2.17 0.91 3.48 4.48 5.35

Net dividend 1.00 1.00 1.10 1.10 1.10 1.10

Source: Company Data; Bryan, Garnier & Co ests.

IT Software & Services

Dassault Systèmes Simplified Profit & Loss Account 2011 2012 2013 2014e 2015e 2016e 99.65 Revenues 1,783 2,028 2,066 2,291 2,480 2,708 Change (%) 14.0% 13.8% 1.9% 10.9% 8.2% 9.2% lfl change (%) 9.0% 8.0% 3.0% 5.0% 7.6% 9.2% 89.65 Adjusted EBITDA 567 661 687 727 819 923 Depreciation & amortisation (28.7) (38.4) (40.4) (42.5) (44.0) (47.0) 79.65 Adjusted EBIT 539 622 646 685 775 876 EBIT 428 501 503 535 619 720 69.65 Change (%) 32.9% 17.1% 0.4% 6.3% 15.8% 16.3% Financial results 0.38 18.1 18.0 (4.0) (7.5) (9.5) 59.65 Pre-Tax profits 428 519 521 531 612 711 Exceptionals 0.0 0.0 0.0 0.0 0.0 0.0

49.65 Tax (139) (180) (166) (186) (208) (242) 24/06/11 24/12/11 24/06/12 24/12/12 24/06/13 24/12/13 24/06/14 Profits from associates 0.72 0.0 0.0 0.50 0.50 0.50 Source Thomson Reuters DASSAULT SYSTEMES Minority interests 1.3 4.0 2.9 2.6 2.9 2.9 Net profit 289 335 352 343 401 467 Restated net profit 402 454 488 485 550 614 Change (%) 16.9% 12.9% 7.6% -0.6% 13.3% 11.6%

Cash Flow Statement (EURm) Operating cash flows 452 505 524 524 590 659 Change in working capital (1.5) 61.2 (16.8) 41.7 38.6 46.7 Capex, net (71.4) (40.6) (41.6) (46.0) (52.0) (62.0) Financial investments, net (104) 108 86.4 (48.8) 0.0 0.0 Acquisitions, net (37.4) (281) (213) (665) 0.0 0.0 Dividends (65.8) (87.8) (34.8) (106) (103) (120) Other (1.4) (281) 292 (25.9) (46.5) (48.6) Net debt (1,122) (1,255) (1,424) (1,058) (1,486) (1,960) Free Cash flow 380 526 465 520 577 643

Balance Sheet (EURm) Tangible fixed assets 107 108 100 119 142 174 Intangibles assets & goodwill 1,242 1,460 1,532 2,072 1,940 1,808 Investments 28.6 39.8 (46.6) 4.8 7.7 10.6 Deferred tax assets 83.0 65.3 182 182 182 182 Current assets 634 612 616 683 736 800 Ratings Cash & equivalents 1,423 1,319 1,804 1,804 2,231 2,706 Total assets 3,517 3,604 4,188 4,865 5,240 5,680 Date Ratings Price Shareholders' equity 2,084 2,381 2,624 2,826 3,110 3,440 01/11/11 NEUTRAL EUR60.97 Provisions 98.4 101 108 108 108 108 02/04/09 BUY EUR30.075 Deferred tax liabilities 59.4 76.9 76.9 76.9 76.9 76.9 L & ST Debt 301 63.8 380 746 746 746

Current liabilities 974 981 999 1,108 1,199 1,310 Target Price Total Liabilities 3,517 3,604 4,188 4,865 5,240 5,680 Date Target price Capital employed 962 1,126 1,200 1,768 1,625 1,480

07/02/14 EUR87 Ratios 10/01/14 EUR98 Operating margin 30.21 30.68 31.27 29.88 31.26 32.36 Tax rate 32.34 34.72 31.82 35.00 34.00 34.00 06/12/13 EUR90 Net margin 16.22 16.51 17.05 14.96 16.18 17.23 25/10/13 EUR88 ROE (after tax) 13.88 14.06 13.43 12.13 12.90 13.57 15/10/13 EUR89 ROCE (after tax) 41.61 39.72 40.39 28.15 34.78 42.71 Gearing -53.83 -52.72 -54.25 -37.43 -47.76 -56.98 26/07/13 EUR96 Pay out ratio 29.56 30.00 30.00 30.00 30.00 30.00 30/05/13 EUR91 Number of shares, diluted 127 126 128 129 130 130 08/02/13 EUR86 Data per Share (EUR) 14/01/13 EUR91 EPS 2.37 2.69 2.79 2.72 3.18 3.70 26/10/12 EUR83 Restated EPS 3.18 3.61 3.83 3.76 4.23 4.73 % change 17.7% 13.4% 6.2% -1.8% 12.6% 11.6% 27/07/12 EUR81 EPS bef. GDW 3.18 3.61 3.83 3.76 4.23 4.73 27/04/12 EUR79 BVPS 16.47 18.91 20.58 21.90 23.95 26.49 04/04/12 EUR72 Operating cash flows 3.57 4.01 4.11 4.06 4.55 5.07 FCF 3.00 4.17 3.65 4.03 4.44 4.95 01/11/11 EUR65 Net dividend 0.70 0.81 0.84 0.82 0.95 1.11 15/09/11 EUR60 11/02/11 EUR67 Source: Company Data; Bryan, Garnier & Co ests.

IT Software & Services

Groupe Steria

Simplified Profit & Loss Account 2011 2012 2013 2014e 2015e 2016e 19.89 Revenues 1,748 1,827 1,755 1,870 1,939 2,016 Change (%) 3.2% 4.6% -4.0% 6.6% 3.7% 4.0% 17.89 lfl change (%) 3.3% 2.4% -1.8% 7.1% 3.7% 4.0% Adjusted EBITDA 154 149 138 155 174 191 15.89 Depreciation & amortisation (24.0) (32.0) (28.0) (33.0) (33.0) (34.0) Adjusted EBIT 130 117 110 123 141 157

13.89 EBIT 82.0 73.0 54.0 84.0 112 134 Change (%) 0.1% -11.4% -25.8% 55.1% 34.0% 19.8%

11.89 Financial results (7.0) (8.0) (26.0) (21.0) (19.0) (18.0) Pre-Tax profits 75.0 65.0 28.0 63.0 93.0 116

9.89 Exceptionals 0.0 (15.0) 0.0 0.0 0.0 0.0 24/06/11 24/12/11 24/06/12 24/12/12 24/06/13 24/12/13 24/06/14 Tax (21.0) (12.0) (15.0) (19.0) (29.0) (36.0) GROUPE STERIA SCA Source Thomson Reuters Profits from associates 2.0 0.0 0.0 0.0 0.0 0.0 Minority interests 0.0 2.0 4.0 9.0 10.0 12.0 Net profit 55.0 36.0 9.0 34.0 54.0 69.0 Restated net profit 94.0 89.0 51.0 59.0 72.0 83.0 Change (%) 36.2% -5.3% -42.7% 15.7% 22.0% 15.3%

Cash Flow Statement (EURm) Operating cash flows 82.0 66.0 38.0 52.0 84.0 112 Change in working capital (44.0) (15.0) 82.0 (64.0) (7.0) (7.0) Capex, net (33.0) (17.0) (30.0) (28.0) (29.0) (30.0) Financial investments, net (3.0) 0.0 1.0 (20.0) (10.0) 0.0 Acquisitions, net (1.0) (7.0) 0.0 0.0 0.0 0.0 Dividends (15.0) (19.0) (12.0) (3.0) (7.0) (11.0) Other 1.0 (9.0) (169) 28.0 18.0 6.0 Net debt 126 143 224 260 211 141 Free Cash flow 5.0 34.0 90.0 (40.0) 48.0 75.0

Balance Sheet (EURm) Tangible fixed assets 59.0 60.0 53.0 40.0 27.0 15.0 Intangibles assets & goodwill 816 882 862 866 870 875 Investments 84.0 84.0 13.0 34.0 44.0 44.0 Deferred tax assets 27.0 43.0 96.0 46.0 46.0 46.0 Ratings Current assets 581 583 534 625 643 663 Date Ratings Price Cash & equivalents 170 146 209 209 258 328 09/04/14 Tender to the EUR15.74 Total assets 1,737 1,797 1,767 1,819 1,888 1,970 offer Shareholders' equity 766 815 393 433 490 560 03/11/11 BUY EUR13.1 Provisions 89.0 86.0 328 278 278 278 13/07/11 NEUTRAL EUR18.84 Deferred tax liabilities 21.0 21.0 2.0 2.0 2.0 2.0 11/03/11 BUY EUR13.1 L & ST Debt 296 289 433 469 469 469 19/04/07 BUY EUR45.44 Current liabilities 565 587 611 639 649 662 Total Liabilities 1,737 1,797 1,767 1,819 1,888 1,970 892 958 617 693 701 701 Target Price Capital employed

Date Target price Ratios 09/04/14 EUR22 Operating margin 7.40 6.40 6.30 6.60 7.30 7.80 03/03/14 EUR17 Tax rate 28.00 18.50 53.60 30.20 31.20 31.00 23/01/14 EUR18 Net margin 3.10 2.90 0.70 2.30 3.30 4.00 10/01/14 EUR19 ROE (after tax) 7.20 4.40 2.30 7.90 11.00 12.30 05/11/13 EUR18 ROCE (after tax) 12.10 10.90 14.60 14.40 15.30 16.60 31/10/13 EUR17 Gearing 16.00 18.00 57.00 60.00 43.00 25.00 30/07/13 EUR15 Pay out ratio 19.70 17.90 37.00 20.40 20.20 20.20 14/01/13 EUR16 Number of shares, diluted 35.20 36.30 33.50 33.60 33.60 33.60 03/12/12 EUR14 Data per Share (EUR) 31/07/12 EUR18 30/07/12 Under review EPS 1.78 1.12 0.27 1.03 1.63 2.08 07/03/12 EUR21 Restated EPS 2.66 2.45 1.51 1.77 2.15 2.47 29.8% -7.9% -38.4% 17.2% 21.5% 14.9% 03/11/11 EUR18 % change EPS bef. GDW 2.66 2.45 1.51 1.77 2.15 2.47 13/07/11 EUR20 BVPS 21.76 22.45 11.73 12.89 14.58 16.67 01/03/11 EUR27 Operating cash flows 2.33 1.82 1.13 1.55 2.50 3.33

FCF 0.14 0.94 2.69 -1.19 1.43 2.23 Net dividend 0.35 0.20 0.10 0.21 0.33 0.42

Source: Company Data; Bryan, Garnier & Co ests

IT Software & Services

Indra Sistemas 14.98 Simplified Profit & Loss Account 2011 2012 2013 2014e 2015e 2016e 13.98 Revenues 2,689 2,941 2,914 2,945 3,087 3,259 12.98 Change (%) 5.1% 9.4% -0.9% 1.0% 4.8% 5.6% lfl change (%) 2.7% 1.0% 3.0% 4.6% 5.0% 5.6% 11.98 Adjusted EBITDA 322 305 278 283 317 359 10.98 Depreciation & amortisation (47.0) (56.0) (52.0) (53.0) (58.0) (58.0) 9.98 Adjusted EBIT 275 249 226 230 259 301 268 217 198 215 259 301 8.98 EBIT Change (%) 6.3% -18.9% -8.7% 8.6% 20.3% 16.0% 7.98 Financial results (36.0) (53.0) (64.0) (61.0) (56.0) (50.0) 6.98 Pre-Tax profits 232 164 134 154 203 251

5.98 Exceptionals 0.0 0.0 0.0 0.0 0.0 0.0 24/06/11 24/12/11 24/06/12 24/12/12 24/06/13 24/12/13 24/06/14 Tax (52.0) (36.0) (30.0) (35.0) (49.0) (60.0) INDRA SISTEMAS Source Thomson Reuters Profits from associates 1.0 (1.0) 12.0 1.0 1.0 1.0 Minority interests 0.0 (5.0) 1.0 3.0 3.0 3.0 Net profit 181 133 116 118 153 189 Restated net profit 186 151 135 129 155 191 Change (%) -10.1% -18.8% -10.6% -4.4% 20.2% 23.2%

Cash Flow Statement (EURm) Operating cash flows 249 231 187 246 278 308 Change in working capital (152) (78.0) (35.0) 22.0 21.0 19.0 Capex, net (125) (86.0) (42.0) (81.0) (80.0) (78.0) Financial investments, net 22.0 9.0 2.0 0.0 0.0 0.0 Acquisitions, net (48.0) (51.0) (28.0) (98.0) 0.0 0.0 Dividends (111) (109) (56.0) (56.0) (56.0) (61.0) Other 124 61.0 264 (73.0) (65.0) (59.0) Net debt 514 633 623 565 467 339 Free Cash flow (28.0) 67.0 110 187 219 249

Balance Sheet (EURm) Tangible fixed assets 172 166 144 120 91.0 62.0 Intangibles assets & goodwill 868 926 892 944 995 1,044 Investments 77.0 78.0 87.0 88.0 88.0 89.0 Deferred tax assets 138 164 175 175 175 175 Ratings Current assets 2,189 2,352 2,204 2,187 2,239 2,308 Date Ratings Price Cash & equivalents 82.0 70.0 363 363 461 589 03/02/09 SELL EUR15.65 Total assets 3,525 3,756 3,865 3,877 4,049 4,267 Shareholders' equity 1,067 1,110 1,135 1,199 1,299 1,429 Target Price Provisions 109 75.0 99.0 99.0 99.0 99.0 Date Target price Deferred tax liabilities 80.0 98.0 104 104 104 104 27/02/14 EUR11 L & ST Debt 596 703 986 928 928 928 Current liabilities 1,673 1,771 1,541 1,546 1,619 1,707 10/01/14 EUR10 Total Liabilities 3,525 3,756 3,865 3,877 4,049 4,267 01/11/13 EUR9.6 Capital employed 1,581 1,743 1,758 1,764 1,766 1,768 26/07/13 EUR9.3

10/05/13 EUR8.8 Ratios 01/03/13 EUR8.6 Operating margin 10.20 8.50 7.80 7.80 8.40 9.20 14/01/13 EUR9.5 Tax rate 22.40 22.00 22.40 22.70 24.10 23.90 27/07/12 EUR8.2 Net margin 6.70 4.50 4.00 4.00 5.00 5.80 30/03/12 EUR9 ROE (after tax) 17.00 12.00 10.20 9.80 11.80 13.20 22/09/11 EUR10 ROCE (after tax) 13.60 11.70 10.50 10.30 11.10 13.00 25/01/11 EUR12 Gearing 48.00 57.00 55.00 47.00 36.00 24.00 Pay out ratio 61.80 42.00 47.90 47.20 39.80 40.00 Number of shares, diluted 165 165 182 182 182 182 Data per Share (EUR)

EPS 1.10 0.81 0.71 0.72 0.93 1.15 Restated EPS 1.13 0.92 0.74 0.71 0.85 1.05 % change -10.3% -18.6% -19.6% -4.1% 19.7% 23.5% EPS bef. GDW 1.13 0.92 0.74 0.71 0.85 1.05 BVPS 6.47 6.73 6.25 6.60 7.15 7.87 Operating cash flows 1.51 1.40 1.03 1.35 1.53 1.70 FCF (0.17) 0.41 0.61 1.03 1.21 1.37 Net dividend 0.68 0.34 0.34 0.34 0.37 0.46

Source: Company Data; Bryan, Garnier & Co ests.

IT Software & Services

Sage Group

427.11 Simplified Profit & Loss Account 2011 2012 2013 2014e 2015e 2016e Revenues 1,334 1,340 1,376 1,325 1,397 1,486 Change (%) -7.0% 0.5% 2.7% -3.7% 5.5% 6.4% 377.11 lfl change (%) 4.0% 2.0% 4.3% 5.2% 6.1% 6.4% Adjusted EBITDA 388 400 399 391 418 450 Depreciation & amortisation (20.0) (21.7) (20.0) (22.5) (23.0) (23.0) 327.11 Adjusted EBIT 368 378 379 369 395 427 EBIT 343 345 181 351 376 408 Change (%) 4.0% 0.5% -47.7% 94.6% 7.1% 8.4% 277.11 Financial results (79.5) 47.2 (13.8) (19.4) (16.8) (13.8) Pre-Tax profits 264 392 167 332 359 394

227.11 Exceptionals (67.0) 57.8 0.0 0.0 0.0 0.0 24/06/11 24/12/11 24/06/12 24/12/12 24/06/13 24/12/13 24/06/1 Tax (74.8) (95.4) (117) (92.9) (101) (110) SAGE GROUP Source Thomson Reuters Profits from associates 0.0 0.0 0.0 0.0 0.0 0.0 Minority interests 0.0 0.10 1.1 1.6 1.9 2.3 Net profit 189 297 49.0 237 257 281 Restated net profit 282 271 247 254 275 300 Change (%) 3.1% -3.8% -8.9% 3.1% 8.3% 8.9%

Cash Flow Statement (GBPm) Operating cash flows 335 279 284 278 299 324 Change in working capital (19.7) (3.9) 2.4 (23.7) 19.2 24.2 Capex, net (29.9) (29.5) (19.0) (25.9) (26.0) (26.0) Financial investments, net 1.9 2.6 (4.6) 0.90 0.0 0.0 Acquisitions, net 0.60 36.2 66.7 (28.3) 0.0 0.0 Dividends (104) (137) (321) (126) (133) (139) Other (85.6) 10.9 263 (2.4) (2.5) (3.2) Net debt 61.3 162 384 342 185 4.6 Free Cash flow 285 245 267 228 293 322

Balance Sheet (GBPm) Tangible fixed assets 146 142 129 123 117 111 Intangibles assets & goodwill 1,854 1,954 1,629 1,644 1,630 1,615 Investments 0.0 0.0 0.0 0.70 2.6 4.9 Deferred tax assets 20.7 10.0 18.7 18.7 18.7 18.7 Ratings Current assets 539 327 313 307 330 358 Date Ratings Price Cash & equivalents 183 61.6 101 143 300 480 24/09/12 NEUTRAL 324.8p Total assets 2,743 2,495 2,190 2,237 2,398 2,587 21/09/12 Under 319.4p Shareholders' equity 1,708 1,377 870 947 1,066 1,203 review Provisions 11.7 14.3 12.9 12.9 12.9 12.9 04/06/12 BUY 248.8p Deferred tax liabilities 14.7 29.5 23.1 23.1 23.1 23.1 04/05/11 NEUTRAL 286.4p L & ST Debt 244 223 485 485 485 485 06/05/09 BUY 196p Current liabilities 765 851 799 769 811 863 12/09/08 SELL 210.5p Total Liabilities 2,743 2,495 2,190 2,237 2,398 2,587 Capital employed 1,769 1,539 1,255 1,289 1,251 1,208

Target Price Ratios Date Target price Operating margin 27.61 28.23 27.52 27.83 28.27 28.71 09/05/14 400p Tax rate 28.35 24.33 69.95 28.00 28.00 28.00 10/01/14 410p Net margin 14.17 22.13 3.56 17.91 18.38 18.93 05/12/13 395p ROE (after tax) 11.07 21.54 5.63 25.07 24.08 23.37 04/07/13 365p ROCE (after tax) 15.43 19.07 20.54 21.00 23.18 25.88 09/05/13 355p Gearing 3.59 11.73 44.15 36.16 17.33 0.38 18/02/13 330p Pay out ratio 71.84 128 257 55.86 54.22 51.96 14/01/13 340p Number of shares, diluted 1,272 1,271 1,121 1,121 1,122 1,123 24/09/12 320p Data per Share (p) 21/06/12 310p 10/05/12 300p EPS 14.28 22.31 4.40 21.28 23.02 25.22 18/01/12 310p Restated EPS 22.14 21.31 21.99 22.67 24.52 26.70 3.1% -3.7% 3.2% 3.1% 8.2% 8.9% 01/12/11 300p % change EPS bef. GDW 22.14 21.31 21.99 22.67 24.52 26.70 23/09/11 280p BVPS 134 108 77.62 84.44 94.98 107 04/05/11 300p Operating cash flows 26.32 21.93 25.31 24.76 26.68 28.89 FCF 22.42 19.30 23.83 20.33 26.07 28.73 Net dividend 10.26 28.56 11.32 11.89 12.48 13.10

Source: Company Data; Bryan, Garnier & Co ests.

IT Software & Services

SAP Simplified Profit & Loss Account 2011 2012 2013 2014e 2015e 2016e 63.57 Revenues 14,233 16,222 16,818 17,807 19,387 20,973 Change (%) 14.2% 14.0% 3.7% 5.9% 8.9% 8.2% 58.57 lfl change (%) 12.0% 7.0% 5.0% 6.0% 7.0% 8.2% Adjusted EBITDA 4,946 5,434 5,821 6,250 6,948 7,707 53.57 Depreciation & amortisation (276) (326) (396) (440) (490) (550) Adjusted EBIT 4,670 5,108 5,425 5,810 6,458 7,157 48.57 EBIT 4,880 4,064 4,482 4,630 5,558 6,257 Change (%) 88.5% -16.7% 10.3% 3.3% 20.0% 12.6% 43.57 Financial results (116) (241) (83.0) (64.8) (43.4) (30.4)

38.57 Pre-Tax profits 4,764 3,823 4,399 4,565 5,514 6,227 Exceptionals 0.0 0.0 0.0 0.0 0.0 0.0

33.57 Tax (1,322) (996) (1,069) (1,187) (1,434) (1,619) 24/06/11 24/12/11 24/06/12 24/12/12 24/06/13 24/12/13 24/06/14 Profits from associates 0.0 0.0 0.0 0.0 0.0 0.0 Source Thomson Reuters SAP (XET) Minority interests 1.0 0.0 (1.0) 3.0 3.0 3.0 Net profit 3,441 2,827 3,331 3,375 4,077 4,605 Restated net profit 3,503 3,700 4,148 4,345 4,885 5,412 Change (%) 26.4% 5.6% 12.1% 4.8% 12.4% 10.8%

Cash Flow Statement (EURm) Operating cash flows 4,491 3,661 4,130 4,767 5,356 5,944 Change in working capital (715) (9.0) (298) (42.4) 59.5 59.7 Capex, net (390) (504) (512) (585) (600) (615) Financial investments, net (647) 632 (109) 0.0 0.0 0.0 Acquisitions, net (216) (5,924) (1,160) (750) 0.0 0.0 Dividends (713) (1,310) (1,013) (1,229) (1,384) (1,529) Other (415) 912 (813) (258) (186) (186) Net debt (1,525) 2,618 1,507 (396) (3,642) (7,315) Free Cash flow 3,386 3,148 3,320 4,139 4,816 5,388

Balance Sheet (EURm) Tangible fixed assets 1,551 1,710 1,820 1,965 2,075 2,140 Intangibles assets & goodwill 10,733 16,508 16,644 16,824 16,224 15,624 Investments 538 633 606 606 606 606 Deferred tax assets 466 655 613 613 613 613 Current assets 4,182 4,735 4,913 5,286 5,755 6,226 Ratings Cash & equivalents 5,781 2,629 2,999 4,402 7,148 10,321 Date Ratings Price Total assets 23,251 26,870 27,595 29,696 32,421 35,530 27/11/09 BUY EUR32.09 Shareholders' equity 12,711 14,174 16,099 18,249 20,946 24,024 Provisions 819 1,326 920 1,040 1,040 1,040 Target Price Deferred tax liabilities 477 572 444 444 444 444 Date Target price L & ST Debt 4,256 5,247 4,506 4,006 3,506 3,006 22/01/14 EUR71 Current liabilities 4,988 5,551 5,626 5,957 6,485 7,016 10/01/14 EUR74 Total Liabilities 23,251 26,870 27,595 29,696 32,421 35,530 19/07/13 EUR69 Capital employed 11,186 16,792 17,606 17,853 17,304 16,709 16/05/13 EUR73 Ratios 16/01/13 EUR70 Operating margin 32.81 31.49 32.26 32.63 33.31 34.13 14/01/13 EUR72 Tax rate 27.75 26.05 24.30 26.00 26.00 26.00 08/01/13 EUR69 Net margin 24.18 17.43 19.81 18.96 21.03 21.96 05/10/12 EUR62 ROE (after tax) 27.07 19.95 20.69 18.50 19.47 19.17 25/07/12 EUR60 ROCE (after tax) 29.63 24.19 24.65 25.82 28.98 33.10 07/03/12 EUR58 Gearing -12.00 18.47 9.36 -2.17 -17.39 -30.45 07/02/12 EUR54 Pay out ratio 39.26 36.93 36.88 41.00 37.50 37.00 17/10/11 EUR47 Number of shares, diluted 1,261 1,261 1,261 1,261 1,261 1,261 12/09/11 EUR45 Data per Share (EUR) 26/01/11 EUR50

EPS 2.80 2.30 2.71 2.75 3.32 3.75 Restated EPS 2.78 2.93 3.29 3.44 3.87 4.29 % change 26.2% 5.6% 12.1% 4.8% 12.4% 10.8% EPS bef. GDW 2.78 2.93 3.29 3.44 3.87 4.29 BVPS 10.08 11.24 12.76 14.47 16.61 19.05 Operating cash flows 3.56 2.90 3.27 3.78 4.25 4.71 FCF 2.68 2.50 2.63 3.28 3.82 4.27 Net dividend 1.10 0.85 1.00 1.13 1.24 1.39

Source: Company Data; Bryan, Garnier & Co ests.

IT Software & Services

SOFTWARE AG Simplified Profit & Loss Account 2011 2012 2013 2014e 2015e 2016e 41.58 Revenues 1,098 1,047 973 945 987 1,068 Change (%) -1.9% -4.6% -7.1% -2.8% 4.4% 8.2% -0.7% -8.1% -5.0% 3.1% 7.4% 8.2% 36.58 lfl change (%) Adjusted EBITDA 321 308 264 268 300 343 Depreciation & amortisation (13.4) (12.9) (12.9) (12.6) (12.6) (12.6) 31.58 Adjusted EBIT 308 295 251 255 287 330 EBIT 269 248 206 219 254 297 Change (%) 0.2% -7.8% -17.2% 6.7% 15.7% 17.0% 26.58 Financial results (9.9) (8.8) (8.4) (7.0) (4.9) (3.0) Pre-Tax profits 259 240 197 212 249 294

21.58 Exceptionals 0.0 0.0 0.0 0.0 0.0 0.0 24/06/11 24/12/11 24/06/12 24/12/12 24/06/13 24/12/13 24/06/14 Tax (82.1) (74.8) (63.1) (69.0) (80.8) (95.4) SOFTWARE (XET) Source Thomson Reuters Profits from associates 0.0 0.0 0.0 0.0 0.0 0.0 Minority interests 0.25 0.17 0.18 0.20 0.30 0.30 Net profit 177 165 134 143 168 198 Restated net profit 214 209 178 180 201 232 Change (%) -1.8% -2.6% -14.6% 1.2% 11.7% 15.1%

Cash Flow Statement (EURm) Operating cash flows 182 214 193 192 213 244 Change in working capital 16.4 (29.9) (21.0) (0.00) (1.6) (5.6) Capex, net (12.5) (12.6) (12.7) (13.0) (14.0) (14.0) Financial investments, net 1.5 (1.1) (56.6) (2.7) 0.0 0.0 Acquisitions, net (59.2) (18.0) (106) 18.2 0.0 0.0 Dividends (37.2) (40.1) (38.3) (40.0) (40.0) (41.9) Other 8.0 (16.2) 330 (10.6) (14.1) 27.8 Net debt 60.9 (49.6) 107 18.3 (140) (365) Free Cash flow 186 172 159 179 198 224

Balance Sheet (EURm) Tangible fixed assets 65.4 64.0 64.5 64.9 66.3 67.7 Intangibles assets & goodwill 1,000 971 1,041 989 960 931 Investments 3.4 10.3 4.5 7.2 7.2 7.2 Deferred tax assets 18.7 16.7 16.3 16.3 16.3 16.3 Ratings Current assets 376 394 364 357 369 396 Date Ratings Price 19/07/13 BUY EUR25.82 Cash & equivalents 216 316 506 580 724 934 15/07/11 SELL EUR35.2 Total assets 1,681 1,772 1,997 2,014 2,143 2,352 27/04/11 NEUTRAL EUR42.183 Shareholders' equity 951 1,060 966 998 1,126 1,324 21/09/09 BUY EUR19.537 Provisions 133 151 142 149 154 159 27/01/09 SELL EUR15.127 Deferred tax liabilities 36.7 26.8 22.6 22.6 22.6 22.6 11/07/07 BUY EUR24.6 L & ST Debt 277 266 613 598 583 568

282 268 254 247 257 278 Target Price Current liabilities Date Target price Total Liabilities 1,681 1,772 1,997 2,014 2,143 2,352 10/01/14 EUR34 Capital employed 1,012 1,010 1,072 1,017 986 959 25/10/13 EUR32 26/07/13 EUR30 Ratios 19/07/13 EUR32 Operating margin 28.02 28.14 25.80 27.02 29.10 30.93 26/04/13 EUR28 31.66 31.25 32.01 32.50 32.50 32.50 30/01/13 EUR30 Tax rate 14/01/13 EUR32 Net margin 16.11 15.71 13.76 15.14 16.98 18.54 31/10/12 EUR28 ROE (after tax) 18.60 15.52 13.86 14.33 14.88 14.94 15/10/12 EUR29 ROCE (after tax) 22.02 21.53 17.31 18.14 20.79 24.39 30/04/12 EUR25 Gearing 6.40 -4.68 11.07 1.83 -12.47 -27.59 12/01/12 EUR22 Pay out ratio 22.57 24.30 29.87 27.94 25.00 25.00 20/09/11 EUR26 Number of shares, diluted 88.79 88.77 88.77 88.77 88.77 88.77 15/07/11 EUR31 Data per Share (EUR) 27/04/11 EUR44

EPS 2.04 1.89 1.54 1.65 1.93 2.28 Restated EPS 2.41 2.35 2.01 2.03 2.27 2.61 % change -4.7% -2.6% -14.6% 1.2% 11.7% 15.1% EPS bef. GDW 2.41 2.35 2.01 2.03 2.27 2.61 BVPS 10.72 11.94 10.88 11.25 12.69 14.92 Operating cash flows 2.05 2.42 2.17 2.17 2.40 2.75 FCF 2.10 1.94 1.79 2.02 2.23 2.52 Net dividend 0.46 0.46 0.46 0.46 0.48 0.57

Source: Company Data; Bryan, Garnier & Co ests.

IT Software & Services

SOPRA GROUP Simplified Profit & Loss Account 2011 2012 2013 2014e 2015e 2016e 93.61 Revenues 1,050 1,217 1,349 1,470 1,571 1,655 Change (%) -10.2% 15.9% 10.9% 8.9% 6.9% 5.3% 83.61 lfl change (%) 8.0% 2.4% 4.3% 4.5% 5.4% 5.4% Adjusted EBITDA 106 127 131 148 169 186 73.61 Depreciation & amortisation (13.6) (17.0) (21.3) (20.0) (20.0) (20.0) Adjusted EBIT 92.5 110 109 128 149 166 63.61 EBIT 97.9 91.3 104 122 143 160 Change (%) -10.4% -6.8% 13.8% 17.4% 17.1% 11.7% 53.61 Financial results (3.5) (8.2) (8.4) (4.9) (4.2) (3.1)

43.61 Pre-Tax profits 94.4 83.1 95.5 117 139 157 Exceptionals (1.4) 0.0 0.0 0.0 0.0 0.0

33.61 Tax (36.2) (33.5) (32.5) (43.1) (49.6) (55.0) 24/06/11 24/12/11 24/06/12 24/12/12 24/06/13 24/12/13 24/06/14 Profits from associates 6.0 6.1 8.4 7.7 9.3 11.4 SOPRA GROUP Source Thomson Reuters Minority interests 0.0 0.0 0.0 0.70 0.70 0.70 Net profit 62.9 55.6 71.4 81.0 97.7 112 Restated net profit 74.2 67.7 74.8 87.0 104 118 Change (%) -8.0% -8.7% 10.5% 16.2% 19.3% 14.1%

Cash Flow Statement (EURm) Operating cash flows 61.8 70.4 56.9 84.8 115 127 Change in working capital (1.3) (8.6) (1.7) (2.0) (0.78) (0.64) Capex, net (10.0) (3.7) (20.9) (11.0) (11.0) (11.0) Financial investments, net 52.2 1.2 0.98 0.0 0.0 0.0 Acquisitions, net (29.8) (175) 41.0 (58.0) 0.0 0.0 Dividends (56.1) (22.6) (20.2) (22.6) (25.0) (28.5) Other (54.1) 124 (8.1) 0.50 (14.5) (14.5) Net debt 46.4 204 155 126 25.2 (84.5) Free Cash flow 50.5 58.1 34.3 71.7 103 116

Balance Sheet (EURm) Tangible fixed assets 39.6 39.2 56.7 48.7 40.7 32.7 Intangibles assets & goodwill 194 374 369 390 353 317 Investments 112 118 122 137 154 173 Deferred tax assets 21.0 34.5 34.5 34.5 34.5 34.5 Current assets 371 418 482 526 563 593 Ratings Cash & equivalents 33.3 47.4 104 141 241 351 Date Ratings Price Total assets 770 1,031 1,168 1,277 1,387 1,501 26/11/08 BUY EUR21.78 Shareholders' equity 274 305 358 417 490 575 Provisions 45.8 55.3 60.6 60.6 60.6 60.6 Target Price Deferred tax liabilities 0.08 18.0 18.0 18.0 18.0 18.0 Date Target price L & ST Debt 79.7 251 258 267 267 267 25/04/14 EUR105 Current liabilities 371 401 473 515 551 580 20/02/14 EUR101 Total Liabilities 770 1,031 1,168 1,277 1,387 1,501 10/01/14 EUR85 Capital employed 320 509 513 543 516 490

15/11/13 EUR76 Ratios 24/09/13 EUR75 Operating margin 8.80 9.01 8.10 8.71 9.47 10.00 14/06/13 EUR70 Tax rate 38.31 40.38 34.03 36.83 35.76 35.11 13/06/13 Under review Net margin 5.99 4.57 5.29 5.51 6.22 6.79 03/06/13 EUR78 ROE (after tax) 22.95 18.21 19.95 19.42 19.93 19.54 21/02/13 EUR75 ROCE (after tax) 17.13 14.40 14.46 15.30 18.96 22.34 15/02/13 EUR68 Gearing 16.94 66.85 43.20 30.20 5.15 -14.70 14/01/13 EUR56 Pay out ratio 35.84 36.37 31.65 30.84 29.21 29.65 07/11/12 EUR48 Number of shares, diluted 11.91 11.95 11.96 11.98 12.01 12.06 28/09/12 EUR47 Data per Share (EUR) 02/08/12 EUR50 22/06/12 EUR58 EPS 5.30 4.67 6.00 6.81 8.22 9.44 20/02/12 EUR61 Restated EPS 6.23 5.67 6.26 7.26 8.64 9.81 % change -9.0% -9.0% 10.4% 16.0% 18.9% 13.6% 03/11/11 EUR53 EPS bef. GDW 6.23 5.67 6.26 7.26 8.64 9.81 02/09/11 EUR57 BVPS 22.99 25.55 29.94 34.82 40.84 47.67 20/06/11 EUR67 Operating cash flows 5.19 5.89 4.76 7.08 9.57 10.56 22/02/11 EUR86 FCF 4.24 4.87 2.87 5.99 8.59 9.60 Net dividend 1.90 1.70 1.90 2.10 2.40 2.80

Source: Company Data; Bryan, Garnier & Co ests.

IT Software & Services

SWORD GROUP

Simplified Profit & Loss Account 2011 2012 2013 2014e 2015e 2016e 19.24 Revenues 156 118 107 116 123 134 Change (%) -15.7% -24.5% -9.7% 9.2% 5.8% 8.6% 17.24 lfl change (%) 9.0% 8.7% 3.6% 6.4% 8.2% 8.6% Adjusted EBITDA 26.0 16.0 16.0 20.0 22.0 24.0 15.24 Depreciation & amortisation (3.0) (2.0) (2.0) (3.0) (3.0) (3.0) Adjusted EBIT 23.0 15.0 14.0 17.0 19.0 21.0 13.24 EBIT 11.0 27.0 22.0 14.0 19.0 21.0 Change (%) -66.7% 142% -19.9% -36.5% 34.7% 11.5% 11.24 Financial results (5.0) (7.0) (3.0) 0.0 0.0 0.0 Pre-Tax profits 6.0 20.0 19.0 14.0 19.0 21.0

9.24 Exceptionals 0.0 0.0 0.0 0.0 0.0 0.0 24/06/11 24/12/11 24/06/12 24/12/12 24/06/13 24/12/13 24/06/14 Tax (5.0) (4.0) (4.0) (4.0) (6.0) (6.0) SWORD GROUP Source Thomson Reuters Profits from associates 0.0 0.0 0.0 0.0 0.0 0.0 Minority interests 0.0 0.0 1.0 1.0 1.0 1.0 Net profit 1.0 16.0 15.0 9.0 12.0 14.0 Restated net profit 17.0 8.0 6.0 11.0 12.0 14.0 Change (%) -29.2% -52.9% -25.0% 83.3% 9.1% 16.7%

Cash Flow Statement (EURm) Operating cash flows 10.0 2.0 4.0 14.0 15.0 17.0 Change in working capital 6.0 2.0 (4.0) 10.0 2.0 2.0 Capex, net (6.0) (6.0) (3.0) (4.0) (4.0) (4.0) Financial investments, net 0.0 (5.0) 30.0 0.0 0.0 0.0 Acquisitions, net 95.0 60.0 (9.0) 7.0 0.0 0.0 Dividends (22.0) (13.0) (7.0) (9.0) (9.0) (9.0) Other 0.0 (25.0) (26.0) (2.0) 0.0 0.0 Net debt (9.0) (48.0) (41.0) (47.0) (48.0) (51.0) Free Cash flow 10.0 (2.0) (3.0) 20.0 13.0 15.0

Balance Sheet (EURm) Tangible fixed assets 3.0 3.0 4.0 4.0 4.0 4.0 Intangibles assets & goodwill 97.0 66.0 84.0 86.0 88.0 90.0 Investments 30.0 26.0 6.0 8.0 10.0 12.0 Deferred tax assets 1.0 1.0 3.0 3.0 3.0 3.0 Ratings Current assets 59.0 46.0 54.0 49.0 51.0 55.0 Date Ratings Price Cash & equivalents 112 126 110 116 117 120 21/03/14 BUY EUR17.85 Total assets 301 267 260 266 273 283 23/01/14 end of EUR18 Shareholders' equity 130 138 152 152 156 161 coverage Provisions 2.0 4.0 1.0 1.0 1.0 1.0 19/04/07 BUY EUR42.49 Deferred tax liabilities 0.0 0.0 0.0 0.0 0.0 0.0 L & ST Debt 103 78.0 69.0 69.0 69.0 69.0 Target Price Current liabilities 66.0 48.0 38.0 43.0 47.0 52.0 Date Target price Total Liabilities 301 267 260 266 273 283 21/03/14 EUR21 Capital employed 121 90.0 111 105 108 110 23/01/14 EUR0 Ratios 10/01/14 EUR20 Operating margin 14.80 12.70 13.30 14.60 15.20 15.60 06/01/14 EUR19 Tax rate 83.30 20.00 21.10 28.60 31.60 28.60 24/10/13 EUR18 Net margin 0.60 13.60 14.00 7.80 9.80 10.40 10/10/13 EUR19 ROE (after tax) 0.80 11.60 9.90 5.90 7.70 8.70 24/01/13 EUR18 ROCE (after tax) 13.70 8.30 8.00 12.40 12.00 13.60 14/01/13 EUR19 Gearing -7.00 -35.00 -27.00 -31.00 -31.00 -32.00 31/07/12 EUR17 Pay out ratio 986 78.90 64.10 104 76.90 67.10 29/03/12 EUR16 Number of shares, diluted 9.50 9.50 9.50 9.50 9.50 9.50 26/01/12 EUR15 Data per Share (EUR) 09/09/11 EUR17

EPS 0.14 1.75 1.56 0.96 1.30 1.49 Restated EPS 1.88 0.86 0.59 1.19 1.31 1.49 % change -25.7% -54.3% -31.4% 102% 10.1% 13.7% EPS bef. GDW 1.88 0.86 0.59 1.19 1.31 1.49 BVPS 13.68 14.53 16.00 16.00 16.42 16.95 Operating cash flows 1.05 0.21 0.42 1.47 1.58 1.79 FCF 1.05 (0.21) (0.32) 2.11 1.37 1.58 Net dividend 1.38 1.38 1.00 1.00 1.00 1.00

Source: Company Data; Bryan, Garnier & Co ests.

IT Software & Services

TEMENOS GROUP 35.04 Income Statement (USDm) 2011 2012 2013 2014e 2015e 2016e Revenues 473 450 468 502 560 631 Change (%) 5.7% -4.9% 3.9% 7.3% 11.5% 12.8% 30.04 lfl change (%) -5.0% -3.0% 2.0% 7.8% 11.5% 12.8% Adjusted EBITDA 129 129 160 180 204 231 25.04 Depreciation & amortisation (29.1) (34.3) (36.7) (39.5) (42.0) (44.0) Adjusted EBIT 99.6 94.9 124 140 162 187 EBIT (2.0) 48.1 93.5 114 136 162 20.04 Change (%) -103% -% 94.3% 22.3% 19.1% 18.6% Financial results (14.0) (11.3) (11.1) (9.5) (7.3) (6.0) 15.04 Pre-Tax profits (16.1) 36.8 82.4 105 129 156 Exceptionals 0.0 0.0 0.0 0.0 0.0 0.0

10.04 Tax (12.2) (12.6) (14.2) (18.9) (23.2) (28.0) 24/06/11 24/12/11 24/06/12 24/12/12 24/06/13 24/12/13 24/06/14 Profits from associates 0.0 0.0 0.0 0.0 0.0 0.0 TEMENOS GROUP Source Thomson Reuters Minority interests (0.06) 0.0 0.0 0.40 0.40 0.40 Net profit (28.3) 24.2 68.2 85.6 105 127 Restated net profit 44.4 59.3 92.8 108 127 149 Change (%) -59.3% 33.5% 56.5% 15.9% 18.3% 17.2%

Cash Flow Statement (USDm) Operating cash flows 51.7 94.6 152 146 169 192 Change in working capital 47.1 (7.6) 9.7 13.5 7.1 8.6 Capex, net (48.4) (51.5) (50.3) (47.3) (45.8) (45.8) Financial investments, net 0.23 (9.9) (6.2) (0.49) 0.0 0.0 Acquisitions, net (1.1) (16.7) (12.4) 0.0 0.0 0.0 Dividends 0.0 0.0 (20.4) (35.6) (43.0) (43.0) Other 59.0 (46.2) (20.6) (0.50) 0.0 35.1 Net debt 98.8 96.6 97.4 21.4 (65.5) (213) Free Cash flow 50.5 35.5 111 113 130 155

Balance Sheet (US$m) Tangible fixed assets 13.2 13.8 12.9 9.3 5.7 1.7 Intangibles assets & goodwill 404 436 475 474 468 461 Investments 0.0 0.0 0.0 0.49 0.49 0.49 Deferred tax assets 33.8 30.3 24.8 24.8 24.8 24.8 Current assets 349 305 291 297 322 352 Ratings Cash & equivalents 155 118 116 192 279 426 Date Ratings Price Total assets 955 903 920 997 1,100 1,267 06/03/14 NEUTRAL CHF31.2 Shareholders' equity 348 387 408 466 537 665 04/02/13 BUY CHF18.1 Provisions 3.8 4.1 4.1 4.1 4.1 4.1 12/03/12 SELL CHF16.2 Deferred tax liabilities 8.4 6.3 2.8 2.8 2.8 2.8 08/02/12 Under CHF19.25 L & ST Debt 254 214 213 213 213 213 review Current liabilities 341 291 292 311 343 382 18/07/11 SELL CHF18 Total Liabilities 955 903 920 997 1,100 1,267 22/05/09 BUY CHF16.4 Capital employed 447 483 506 488 472 452

Target Price Financial Ratios Operating margin 21.03 21.08 26.46 27.92 28.95 29.68 Date Target price Tax rate -76.08 34.31 17.23 18.00 18.00 18.00 17/06/14 CHF33 Net margin -5.97 5.37 14.58 17.05 18.82 20.14 19/02/14 CHF32 ROE (after tax) -8.11 6.25 16.71 18.36 19.61 19.14 10/01/14 CHF31 ROCE (after tax) 19.09 16.67 21.40 24.59 29.20 35.07 21/05/13 CHF28 Gearing 28.38 24.98 23.87 4.59 -12.19 -32.02 25/03/13 CHF26 Pay out ratio NM 89.44 42.23 40.82 39.82 32.97 04/02/13 CHF24 Number of shares, diluted 79.36 75.32 75.32 73.19 73.19 73.19 14/01/13 CHF16 Data per Share (USD) 12/07/12 CHF12 25/04/12 CHF15 EPS (0.39) 0.34 0.95 1.23 1.51 1.82 12/03/12 CHF14 Restated EPS 0.56 0.79 1.23 1.47 1.74 2.04 08/02/12 Under review % change -55.4% 40.7% 56.5% 19.3% 18.3% 17.2% 16/09/11 CHF 15 EPS bef. GDW 0.56 0.79 1.23 1.47 1.74 2.04 18/07/11 CHF 17 BVPS 4.39 5.13 5.42 6.37 7.34 9.08 Operating cash flows 0.65 1.26 2.02 2.00 2.30 2.63 20/04/11 CHF 37 FCF 0.64 0.47 1.48 1.54 1.77 2.12 Net dividend 0.0 0.30 0.40 0.50 0.60 0.60

Source: Company Data; Bryan, Garnier & Co ests.

IT Software & Services

Bryan Garnier stock rating system For the purposes of this Report, the Bryan Garnier stock rating system is defined as follows: Stock rating Positive opinion for a stock where we expect a favourable performance in absolute terms over a period of 6 months from the publication of a BUY recommendation. This opinion is based not only on the FV (the potential upside based on valuation), but also takes into account a number of elements including a SWOT analysis, positive momentum, technical aspects and the sector backdrop. Every subsequent published update on the stock will feature an introduction outlining the key reasons behind the opinion. Opinion recommending not to trade in a stock short-term, neither as a BUYER or a SELLER, due to a specific set of factors. This view is intended to NEUTRAL be temporary. It may reflect different situations, but in particular those where a fair value shows no significant potential or where an upcoming binary event constitutes a high-risk that is difficult to quantify. Every subsequent published update on the stock will feature an introduction outlining the key reasons behind the opinion. Negative opinion for a stock where we expect an unfavourable performance in absolute terms over a period of 6 months from the publication of a SELL recommendation. This opinion is based not only on the FV (the potential downside based on valuation), but also takes into account a number of elements including a SWOT analysis, positive momentum, technical aspects and the sector backdrop. Every subsequent published update on the stock will feature an introduction outlining the key reasons behind the opinion. Distribution of stock ratings

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Important information This report is prepared by Bryan Garnier & Co Limited, registered in England no 3034095 and is being distributed only to clients of Bryan Garnier & Co Limited (the "Firm"). Bryan Garnier & Co Limited is authorised and regulated by the Financial Conduct Authority (the "FCA") and is a member of the London Stock Exchange. Registered address : 53 Chandos Place WC2N 4HS. This Report is provided for information purposes only and does not constitute an offer, or a solicitation of an offer, to buy or sell relevant securities, including securities mentioned in this Report and options, warrants or rights to or interests in any such securities. This Report is for general circulation to clients of the Firm and as such is not, and should not be construed as, investment advice or a personal recommendation. No account is taken of the investment objectives, financial situation or particular needs of any person. 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