Atos Origin Annual Report 2006 1/183
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ADVANCE YOUR BUSINESS 2006 ANNUAL REPORT This document is a full free translation of the original French text. The original document has been filed with the Autorité des Marchés Financiers (AMF) on 6 April 2007, in accordance with article 212-13 of the AMF’s general regulations. After filing, this document as a Reference Document could be used to support a financial operation if accompanied by a prospectus duly approved by the AMF. Atos Origin Annual Report 2006 1/183 CONTENTS 1 BUSINESS PROFILE...................................................................................................................... 3 2 BOILERPLATE ............................................................................................................................... 4 3 FINANCIAL PERFORMANCE IN 2006 .......................................................................................... 5 4 CEO MESSAGE .............................................................................................................................. 7 5 GOVERNANCE ............................................................................................................................. 10 6 STOCK MARKET OVERVIEW ..................................................................................................... 12 7 FORMATION OF THE GROUP..................................................................................................... 14 8 THE IT SERVICES MARKET........................................................................................................ 15 9 STRATEGY – ORGANISATION – OUTLOOK............................................................................. 21 10 CONSULTING ............................................................................................................................... 26 11 SYSTEMS INTEGRATION............................................................................................................ 28 12 MANAGED OPERATIONS ........................................................................................................... 30 13 CORPORATE SOCIAL RESPONSIBILITY .................................................................................. 35 14 HUMAN RESOURCES.................................................................................................................. 37 15 OPERATIONAL REVIEW ............................................................................................................. 44 16 FINANCIAL REVIEW .................................................................................................................... 58 17 FINANCIAL STATEMENTS.......................................................................................................... 65 18 RISK ANALYSIS ......................................................................................................................... 121 19 CORPORATE GOVERNANCE................................................................................................... 125 20 RESOLUTIONS........................................................................................................................... 144 21 LEGAL INFORMATION .............................................................................................................. 146 22 COMMON STOCK EVOLUTION AND SHARE PERFORMANCE ............................................ 153 23 SHAREHOLDER RELATIONS ................................................................................................... 166 24 GLOSSARY – DEFINITIONS...................................................................................................... 169 25 PERSONS RESPONSIBLE FOR THE DOCUMENT AND THE AUDIT OF THE FINANCIAL STATEMENTS........................................................................................................ 174 26 AMF CROSS-REFERENCE TABLE........................................................................................... 176 27 FULL INDEX................................................................................................................................ 179 28 CONTACTS................................................................................................................................. 182 29 LOCATIONS................................................................................................................................ 183 Atos Origin Annual Report 2006 2/183 1 BUSINESS PROFILE Atos Origin is a leading European information technology services company, generating annual revenues of EUR 5.4 billion and employing 50,000 people in 40 countries. The Group has grown by acquisition from a strong French base in IT outsourcing, to become a leading European IT Services player with a global footprint providing a full range of consulting, systems integration and outsourcing capabilities through a combination of local, near-shore and off-shore platforms. The Group’s mission is to advance the performance of its clients by offering innovative solutions that deliver measurable business value through a design, build and operate approach over the long-term. Predominantly based in Europe, more than 60% of the Group’s revenues are generated from recurrent applications management and infrastructure outsourcing contracts, including three niche expertises; capital markets (Atos Euronext Market Solutions), payment systems (Atos Worldline) and medical BPO. 2006 Managed Services 8% Managed Operations 50% including Atos Euronext Market Solutions Managed Services, AEMS, Atos 33% Atos Worldline Worldline and Medical BPO 26% Medical BPO Systems Integration 42% including Application Management Application Management 6% Systems Integration 16% 7% Consulting 8% 4% Consulting 2006 France 7% 6% Benelux 5% 31% United Kingdom 11% Germany and Central Europe Italy 19% 21% Spain Others The Group’s clients operate in both the public and private sectors, in a wide and evenly-spread range of industries. 2006 6% Public Sector and Utilities 9% 27% Finance Manufacturing 18% Telecoms and Media 21% 19% Retail and CPG Others In reaction to the disappointing 2006 results, a strategic review of the organisation was launched to identify a transformation plan to boost the Group’s capacity to accelerate organic growth and improve operational efficiency and operate as a global company. In 2007, Management’s priority will be to execute the 3O3 transformation plan launched on 5 February 2007. Business development will be focused on the immediate opportunities in the niche businesses with : • the extension of AEMS’ scope following the merger between Euronext and the NYSE, • the Atos Worldline SEPA-led consolidation in payment systems and • the start-up of two new Diagnostics contracts in medical BPO in the United Kingdom. Atos Origin Annual Report 2006 3/183 2 BOILERPLATE 2.1 OUR MISSION “Advance your business” with Atos Origin Atos Origin’s mission is to advance the performance of our customers by offering innovative solutions that deliver measurable business value. Through developing long-term relationships with our clients we are better able to understand their strategic vision and help them implement solutions that deliver improved efficiency and productivity gains. 2.2 OUR CORE VALUES Atos Origin has a set of core values and behaviours that determine our culture –a multi-cultural, multi- disciplined environment in which everyone is focused on helping our clients deal with the rigors of modern business. Customer Dedication We listen. We devote energy to understanding clients' needs and challenges and commit to solving them. It's an essential part of building trust, building relationships and building business. Commitment to Execute We do what we say. We deliver results to our clients on time, on budget and to agreed quality standards. Conviviality We consider work a social place, with room for humour and warmth. We need to have fun together. Entrepreneurship and Team Spirit As a team, we share knowledge and think ahead to be creative and to find new opportunities. We manage the present and plan for the future. Profitability We are acutely aware that everything we do impacts upon our profitability, which is the foundation to secure our future. 2.3 LIVING OUR VALUES Our activities and many of the services we provide are integral to people’s lives. The dynamic values that run throughout Atos Origin unify a diverse team of people and form the basis for our actions, our attitudes, our behaviour and ultimately our sustained success. They drive the way in which we interact with clients, alliance partners, suppliers, shareholders, communities, and with each other. Atos Origin’s corporate values embrace the diversity and individuality of all our employees. This reflects our desire to participate in society as a responsible corporate citizen. It also makes good business sense for our people to feel comfortable about who they are, provided they are excellent at their jobs and perform to the highest standards. As well as encouraging our people to live our corporate values, we expect them to act with courage, loyalty and intellectual honesty. • The Group insists that all employees agree to abide by a Code of Ethics that prohibits all forms of illegal or immoral behaviour. The Code is monitored as part of the Group's corporate governance procedures and the detailed terms of the Code are set out in the section “Corporate Governance” later. • The Group monitors the standards adopted by our main suppliers and associates to ensure that their standards of behaviour match our own.