Altran Capital Markets Day
The High Road, Altran 2022 June 2018
1 THE HIGH ROAD, ALTRAN 2022 – AGENDA
Our Industry Our Ambition 1. Shift happened 2. A new league player
Our Focus Our Commitment 3. Disciplined & phased execution 4. Superior & sustainable value creation
2 1.
Our Industry Shift happened
COMPELLING MARKET OPPORTUNITY
FAST EVOLVING COMPETITIVE LANDSCAPE
NEW TRENDS IN CLIENT BEHAVIOR 1. OUR INDUSTRY Compelling market opportunity Fast evolving competitive landscape New trends in client behavior 2. OUR AMBITION 3. OUR FOCUS 4. OUR COMMITMENT
ER&D SERVICES MARKET TO GROW C. +9% P.A. OVER 2017-22
ENGINEERING AND R&D (ER&D) SERVICES MARKET WILL GROW BY €85B BY 2022 4 KEY TRENDS FUELING MARKET GROWTH
GROWTH P.A. Avalanche of technology OVER 2017-22 1 disruptions Of which: • Europe +4-6% p.a. c.+9% • Americas +8-10% p.a. • Asia/RoW +9-11% p.a. €240bn Growth in Hi-tech industries, 2 US and Asia Externalization rate / +40-45 Outsourcing acceleration 3 Talents scarcity and supply/ +40-45 Underlying growth demand geographic mismatch €155bn (global R&D spend)
Clients’ deliberate and contrasted 4 approach to ER&D sourcing 2017 2022
Sources: OECD, IRI, IMF, International Management Consultants, Altran
4 1.
Our Industry Shift happened
COMPELLING MARKET OPPORTUNITY
FAST EVOLVING COMPETITIVE LANDSCAPE
NEW TRENDS IN CLIENT BEHAVIOR 1. OUR INDUSTRY Compelling market opportunity Fast evolving competitive landscape New trends in client behavior 2. OUR AMBITION 3. OUR FOCUS 4. OUR COMMITMENT
CALENDAR YEAR TWO DISTINCT GROUPS OF PLAYERS, MASSIVELY 2012 DOMINATED BY EUROPEANS
EBIT (%) Players in the engineering field (HfS Research, Zinnov) 28% TCS
23% Aricent Wipro
18% HCL
EPAM GlobalLogic 13%
Bertrandt Alten IAV 8% EDAG Altran AKKA Assystem
3% 35 45 55 65 75 85 95 105 140115 Revenue/FTE (USD k – reflecting percentage of offshore)
Sources: financial reports, estimates for GlobalLogic and IAV European multi-industry European mono-industry / mono-country
6 US hybrid India pure play 1. OUR INDUSTRY Compelling market opportunity Fast evolving competitive landscape New trends in client behavior 2. OUR AMBITION 3. OUR FOCUS 4. OUR COMMITMENT
CALENDAR YEAR OVER 5 YEARS, VERY CONTRASTED DYNAMICS HAVE 2017 REBALANCED THE COMPETITIVE LANDSCAPE
EBIT (%)
28%
TCS 23%
GlobalLogic HCL Aricent 18% Wipro EPAM Luxoft
13%
Altran Alten 8% Assystem AKKA Bertrandt EDAG IAV 3% 35 45 55 65 75 85 95 105 140115 Revenue/FTE (USD k – reflecting percentage of offshore)
Source: financial reports, estimates for GlobalLogic and IAV European multi-industry European mono-industry / mono-country
7 US hybrid India pure play 1. OUR INDUSTRY Compelling market opportunity Fast evolving competitive landscape New trends in client behavior 2. OUR AMBITION 3. OUR FOCUS 4. OUR COMMITMENT
CALENDAR YEAR OVER 5 YEARS, VERY CONTRASTED DYNAMICS HAVE 2017 REBALANCED THE COMPETITIVE LANDSCAPE
EBIT (%)
28%
23% Offshore players average +16% Rev. CAGR 2012-17
19% Altran 18% + Aricent
13% European players average +6% Rev. CAGR 2012-17
8% 7%
USD 57K USD 90K 3% 35 45 55 65 75 85 95 105 140115 Revenue/FTE (USD k – reflecting percentage of offshore)
Sources: financial reports, estimates for GlobalLogic and IAV Note: average bubble for European players includes: Alten, AKKA, Assystem, Bertrandt, EDAG, IAV, and for Offshore players: HCL, Wipro, TCS, EPAM, Luxoft, GlobalLogic
8 1. OUR INDUSTRY Compelling market opportunity Fast evolving competitive landscape New trends in client behavior 2. OUR AMBITION 3. OUR FOCUS 4. OUR COMMITMENT
ARICENT ACQUISITION: THE PERFECT FIT
PivotalPivotal USUS leader leader industriesindustries
UniqueUnique global global SuccessfulSuccessful deliverydelivery modelmodel IPIP model model
IconicIconic design design SeasonedSeasoned senior senior brandbrand leadershipleadership teamteam
9 1.
Our Industry Shift happened
COMPELLING MARKET OPPORTUNITY
FAST EVOLVING COMPETITIVE LANDSCAPE
NEW TRENDS IN CLIENT BEHAVIOR 1. OUR INDUSTRY Compelling market opportunity Fast evolving competitive landscape New trends in client behavior 2. OUR AMBITION 3. OUR FOCUS 4. OUR COMMITMENT
CLIENTS ARE INCREASINGLY APPLYING A DELIBERATE AND RATIONAL APPROACH TO THEIR R&D
CORE CONTEXT Success increases competitive differentiation All other activities
MISSION CRITICAL Deploy Manage & optimize Failure is material at scale key processes to current performance Flow of innovation
SUPPORTING
All other Innovate Extract, outsource activities fast & redeploy
Sources: Geoffrey Moore, Altran
11 1. OUR INDUSTRY Compelling market opportunity Fast evolving competitive landscape New trends in client behavior 2. OUR AMBITION 3. OUR FOCUS 4. OUR COMMITMENT
CLIENTS ARE FORCING A SHIFT IN THE COMPETITIVE LANDSCAPE
CORE CONTEXT Success increases competitive differentiation All other activities
MISSION CRITICAL
Failure is Mainstream ER&D services material to current performance
High-value services Industrialized services SUPPORTING Early-stage innovation Transformation & outsourcing All other Disruptive technologies Factories & automation activities Digital & human-centered design Global pool of talents
12 1. OUR INDUSTRY Compelling market opportunity Fast evolving competitive landscape New trends in client behavior 2. OUR AMBITION 3. OUR FOCUS 4. OUR COMMITMENT
OVERTHEMULTIPLE ACQUISITION THE CLIENTLAST 3 YEARS,SUCCESSESOF ARICENT ALTRAN VALIDATEHAS HAS GIVEN SHARPENED OUR SCALE APPROACH TO ITS OUR MODELS TO GAIN A FIRST MOVER ADVANTAGE
CORE CONTEXT Success increases competitive differentiation All other activities
MISSION Altran Service Lines CRITICAL
Failure is material to current performance
North Am. Altran World-Class Centers Semicon. Altran Industrialized Leader GlobalShore® SUPPORTING
All other
activities Design venture
Altran + Aricent World-Class Altran + Aricent Centers Industrialized GlobalShore®
13 2.
Our Ambition A new league player 1. OUR INDUSTRY 2. OUR AMBITION Best-of-breed synergetic service models High-growth industries Geographic leadership 3. OUR FOCUS 4. OUR COMMITMENT
THE HIGH ROAD, ALTRAN 2022
BEST-OF-BREED SYNERGETIC SERVICE MODELS Elevate our service models to best match client demand & capture value
HIGH-GROWTH INDUSTRIES Expand our footprint in fast growing and pivotal industries
GEOGRAPHIC LEADERSHIP Demonstrate our leadership position in North America
15 1. OUR INDUSTRY 2. OUR AMBITION Best-of-breed synergetic service models High-growth industries Geographic leadership 3. OUR FOCUS 4. OUR COMMITMENT
THE HIGH ROAD, ALTRAN 2022
BEST-OF-BREED SYNERGETIC SERVICE MODELS Elevate our service models to best match client demand & capture value
HIGH-GROWTH INDUSTRIES Expand our footprint in fast growing and pivotal industries
GEOGRAPHIC LEADERSHIP Demonstrate our leadership position in North America
16 1. OUR INDUSTRY 2. OUR AMBITION Best-of-breed synergetic service models High-growth industries Geographic leadership 3. OUR FOCUS 4. OUR COMMITMENT
ELEVATE OUR SERVICE MODELS TO BEST MATCH CLIENT DEMAND & REALIZE VALUE
02 Excel in Mainstream ER&D services
€1.9bn in 2017*
Mainstream ER&D services
Mainstream ER&D services
High-value services Industrialized services
High-value services Industrialized services 01 03
Deploy global High-value portfolio Leverage Industrialized GlobalShore®
€0.4bn €0.6bn in 2017* in 2017*
Note: (*) Pro-forma of Aricent acquisition
17 1. OUR INDUSTRY 2. OUR AMBITION Best-of-breed synergetic service models High-growth industries Geographic leadership 3. OUR FOCUS 4. OUR COMMITMENT
1. DEPLOY GLOBAL HIGH-VALUE PORTFOLIO
UNMATCHED PORTFOLIO OF HIGH-VALUE BRANDS & EXPERTISE
WE WILL…
. Develop synergies across these proven- WORLD CLASS CENTERS track record entities . Focus our senior global sales team (c. 100 FTE) to High-value portfolio sales . Drive accountability through a specific P&L INNOVATION PRACTICES & SOFTWARE FRAMEWORKS . Continuously enrich the portfolio with new disruptive technologies
Ambition: €0.4bn c. €0.6bn in 2017* in 2022 +9-10% CAGR (*) Pro-forma of Aricent acquisition 18 organic 1. OUR INDUSTRY 2. OUR AMBITION Best-of-breed synergetic service models High-growth industries Geographic leadership 3. OUR FOCUS 4. OUR COMMITMENT
02 1. OUR HIGH-VALUE PORTFOLIO ADDRESSES ATTRACTIVE MARKET SEGMENTS
ALTRAN PORTFOLIO MAPPING FAST-GROWING HIGH-VALUE DOMAINS
Software Analytics & AI Frameworks Integrated design Advanced SW development
Industrial IoT >40% Advanced software development Integrated design
Next gen Connectivity Software frameworks
Analytics & AI Altran marginAltran direct
Industrial Internet of Things <40%
Next Gen Connectivity
<10% p.a. >= 10% p.a. Market growth
19 1. OUR INDUSTRY 2. OUR AMBITION Best-of-breed synergetic service models High-growth industries Geographic leadership 3. OUR FOCUS 4. OUR COMMITMENT
2. EXCEL IN MAINSTREAM ER&D SERVICES
b WE WILL… a Mainstream ER&D services . Capture & scale profitable opportunities deriving from High-value services
a c .b Maintain focus & business discipline through High-value Industrialized strengthened governance services services .c Leverage the model as a platform to transform clients’ R&D through Industrialized services
€1.9bn c. €2.5bn Ambition: in 2017* in 2022 +5-6% CAGR organic (*) Pro-forma of Aricent acquisition 20 1. OUR INDUSTRY 2. OUR AMBITION Best-of-breed synergetic service models High-growth industries Geographic leadership 3. OUR FOCUS 4. OUR COMMITMENT
2. EXCEL IN MAINSTREAM ER&D SERVICES
Value for customer ADM EVOLUTION IN FRANCE Mainstream ER&D services
+15% p.a.
-1%
p.a. Industrialized Efficiency Industrialized
Altran Delivery Models Altran as an Altran as a Altran as a Altran as a Project/ ADM1 ADM2/3/4 Industrialized time & material Work package Managed services Globalshore® provider (ADM1) provider (ADM2) provider (ADM3/4) provider 2013 2017
21 1. OUR INDUSTRY 2. OUR AMBITION Best-of-breed synergetic service models High-growth industries Geographic leadership 3. OUR FOCUS 4. OUR COMMITMENT
3. LEVERAGE INDUSTRIALIZED GLOBALSHORE®
SCALING TO C. 25,000 ENGINEERS BY 2022
WE WILL…
. Seize global opportunities linked to clients’ transformation
. Co-develop tailored delivery centers with strategic clients
. Position as the preferred ER&D services partner to bridge talent geographic mismatch
c. 25,000 . Drive standardization & software automation Near/offshore towards next level of industrialization c. 16,000 engineers ~500
2015 2018 2022 €0.6bn c. €0.9bn 3 Global Delivery centers 5 Global Delivery centers 6 Global Delivery centers Ambition: in 2017* in 2022 3% of total workforce 36% of total workforce +8-10% CAGR (*) Pro-forma of Aricent acquisition organic 22 1. OUR INDUSTRY 2. OUR AMBITION Best-of-breed synergetic service models High-growth industries Geographic leadership 3. OUR FOCUS 4. OUR COMMITMENT
3. BRIDGING THE GEO MISMATCH IN TALENT SUPPLY/DEMAND
Russia Germany 454K China 1.3M France €30B €65B 130K 168K €175bn €320B 238K Ukraine Japan €105bn €45B
United States Korea 1.5M
Key India Business expenditures on €xbn R&D (2017, top 6 countries) # of engineering graduates per xM year (2015, top 6 countries)
of the R&D budget of engineers are spent in the US, But only are graduated ~60% Western Europe ~20% in these geographies Sources: World Economic Forum, OECD, IRI, IMF, International Management Consultants, Altran and Japan
23 1. OUR INDUSTRY 2. OUR AMBITION Best-of-breed synergetic service models High-growth industries Geographic leadership 3. OUR FOCUS 4. OUR COMMITMENT
FROM €2.9B PRO-FORMA IN 2017… TO €4.0B IN 2022 (ORGANIC)
02 Excel in Mainstream ER&D services
€1.9bn c. €2.5bn in 2022 in 2017* +5-6% CAGR organic
Mainstream ER&D services
High-value Industrialized services services 01 03
Deploy global High-value portfolio Leverage Industrialized GlobalShore®
€0.4bn c. €0.6bn €0.6bn c. €0.9bn in 2017* in 2022 in 2017* in 2022 +9-10% +8-10% CAGR CAGR organic organic
24 (*) Pro-forma of Aricent acquisition 1. OUR INDUSTRY 2. OUR AMBITION Best-of-breed synergetic service models High-growth industries Geographic leadership 3. OUR FOCUS 4. OUR COMMITMENT
THE HIGH ROAD, ALTRAN 2022
BEST-OF-BREED SYNERGETIC SERVICE MODELS Elevate our service models to best match client demand & capture value
HIGH-GROWTH INDUSTRIES Expand our footprint in fast growing and pivotal industries
GEOGRAPHIC LEADERSHIP Demonstrate our leadership position in North America
25 1. OUR INDUSTRY 2. OUR AMBITION Best-of-breed synergetic service models High-growth industries Geographic leadership 3. OUR FOCUS 4. OUR COMMITMENT
EXPAND FOOTPRINT IN HIGH GROWTH INDUSTRIES
MARKET: STRONG GROWTH IN HI-TECH INDUSTRIES EXPAND IN FAST GROWING INDUSTRIES LEVERAGING SYNERGIES WITH ARICENT ER&D services market growth (2017-22, annual growth)
Software & Internet vertical c. €4.0bn Become a leading edge Software Product Engineering company
>12% • Software & Internet Semiconductor & Electronics Other Position as the preferred transformation partner for • Semiconductor & Electronics €2.9bn industries chipmakers and leverage capabilities across other industries • Automotive % 8-12 • Life Sciences Automotive • Next gen communications Other industries Accelerate on next gen car (UX, ADAS and Connectivity) • Railway Win large deals on complete vehicle development 5-8% • Industries • Aerospace & Defense c. 52% Next gen communications of rev. • Legacy communications +c. €750m Lead in next gen technologies (5G, SDN/NFV, IoT, edge < % 5 • Energy c. 44% organic computing…) of rev. Life Sciences Accelerate development and leverage High-value brands Altran 2017 PF Altran 2022
Sources: OECD, IRI, IMF, International Management Consultants, Altran
26 1. OUR INDUSTRY 2. OUR AMBITION Best-of-breed synergetic service models High-growth industries Geographic leadership 3. OUR FOCUS 4. OUR COMMITMENT
SEMICONDUCTOR, SOFTWARE & COMMUNICATIONS CAPABILITIES BECOME PIVOTAL ACROSS INDUSTRIES
SEMICONDUCTOR SOFTWARE & COMMUNICATIONS AUTOMOTIVE ENERGY AEROSPACE & LIFE SCIENCES … & ELECTRONICS INTERNET DEFENSE
Proliferation Software eating Massive NEW USES CASES: of electronics the world connectivity devices Autonomous cars Real time remote In-flight Remote GPU control connectivity diagnosis V2X / Car Asset tracking Advanced Smart health Connectivity infotainment applications Predictive Mobility maintenance Satellite Platforms constellation
Digital transformation & Industry 4.0
IoT – Connectivity – 5G
Software products, applications & platforms – Cloud, data & AI
Platforms & sensors – New computing architectures
27 1. OUR INDUSTRY 2. OUR AMBITION Best-of-breed synergetic service models High-growth industries Geographic leadership 3. OUR FOCUS 4. OUR COMMITMENT
UNMATCHED COMBINED OFFERING TO ADDRESS NEXT GEN CAR CHALLENGES
HMI Connectivity Telematics ADAS
Software Frameworks
Mobile Apps
In-Vehicle Infotainment
Silicon Design H/W Design Platform S/W Cloud & Analytics
System Integration & End-to-end Validation
28 1. OUR INDUSTRY 2. OUR AMBITION Best-of-breed synergetic service models High-growth industries Geographic leadership 3. OUR FOCUS 4. OUR COMMITMENT
SEMICONDUCTOR BECOMING PERVASIVE
EVOLUTION OF SEMICONDUCTOR R&D SPEND ACROSS INDUSTRY VERTICALS (USD BN)
2017-23 CAGR: ~18% ~25% ~22% ~31% ~67% ~17% ~21%
7.2 Rise of connected devices across industries is pushing 4.6 companies to design custom chipsets
2.7 2.4 2.2
1.2 1.0 0.7 0.8 0.5 0.2 0.1 0.2 0.3
Consumer Automotive Telecom & Medical Device Software & Industrial Aerospace and Electronics Networking Internet Defense (Data Center)
Sources: Zinnov 2017 2023
29 1. OUR INDUSTRY 2. OUR AMBITION Best-of-breed synergetic service models High-growth industries Geographic leadership 3. OUR FOCUS 4. OUR COMMITMENT
THE HIGH ROAD, ALTRAN 2022
BEST-OF-BREED SYNERGETIC SERVICE MODELS Elevate our service models to best match client demand & capture value
HIGH-GROWTH INDUSTRIES Expand our footprint in fast growing and pivotal industries
GEOGRAPHIC LEADERSHIP Demonstrate our leadership position in North America
30 1. OUR INDUSTRY 2. OUR AMBITION Best-of-breed synergetic service models High-growth industries Geographic leadership 3. OUR FOCUS 4. OUR COMMITMENT
GEOGRAPHIC LEADERSHIP
2017 MARKET: 2017 MARKET: 2017 MARKET: €65bn €40bn €50bn +8-10% CAGR +4-6% CAGR +9-11% CAGR
Demonstrate our leadership Strengthen #1 position Selective expansion position in North America in Europe in Asia Deploy a multi-industry ER&D services leader Deploy the Altran service models at scale Establish platform for growth in China on leveraging a premier global delivery in all geographic clusters selected domains
Leverage our leading position in Achieve profit turnaround in Germany Initiate development in adjacent Asian Communications and Semiconductor markets Reach next level of operational Accelerate development in Automotive, excellence Software / Internet and Life Sciences
31 1. OUR INDUSTRY 2. OUR AMBITION Best-of-breed synergetic service models High-growth industries Geographic leadership 3. OUR FOCUS 4. OUR COMMITMENT
2015-2018: WE HAVE EXECUTED A DISCIPLINED USA BUILD-UP…
2014 2015 2016 2017 2018
tech Divestment of non- core utilities + business (US subsidiary)
BUILDING A FOOTPRINT ACROSS THE USA… …CONNECTED TO GLOBAL TALENT POOLS
West Coast Central East Coast c. USD 800m India Ukraine Mexico Revenues in 2017 PF*
Automotice Aerospace
(*) Including revenues generated by Cambridge Consultants and Tessella in the US
32 1. OUR INDUSTRY 2. OUR AMBITION Best-of-breed synergetic service models High-growth industries Geographic leadership 3. OUR FOCUS 4. OUR COMMITMENT
…TO BE INTEGRATED IN A MULTI-INDUSTRY LEADER WITH A PREMIER GLOBAL DELIVERY
Altran North America /
Communications Semiconductor Software & Automotive Life Sciences … & Electronics Internet
tech Cross-industry footprint
Industrialized India Ukraine Mexico US services
Synergetic collaboration with High-value entities:
33 1. OUR INDUSTRY 2. OUR AMBITION Best-of-breed synergetic service models High-growth industries Geographic leadership 3. OUR FOCUS 4. OUR COMMITMENT
ALTRAN NORTH AMERICA UNIQUELY POSITIONED TO CAPTURE PROFITABLE GROWTH
REVENUES GENERATED IN NORTH AMERICA*
WE WILL… c. USD 1.2bn +8-9% CAGR . Aggressively pivot investments to digital and organic next gen capabilities . Drive client centricity and growth c. USD 800m culture . Win & develop the best design and engineering talent . Relentlessly drive cost and revenue synergies through integration c. USD 90m
2014 2017 2022
(*) Continued operations only; including revenues generated by Cambridge Consultants and Tessella in the US
34 1. OUR INDUSTRY 2. OUR AMBITION Best-of-breed synergetic service models High-growth industries Geographic leadership 3. OUR FOCUS 4. OUR COMMITMENT
THE HIGH ROAD, ALTRAN 2022: TOPLINE EXPANSION
BEST-OF-BREED HIGH-GROWTH INDUSTRIES SYNERGETIC SERVICE MODELS c. +10% CAGR organic +€0.3bn c. +€750m in high-growth industries by 2022 +€0.2bn +€0.6bn
€4.0bn €2.9bn GEOGRAPHIC LEADERSHIP IN NA +8-9% CAGR organic Altran Mainstream High-value Industrialized 2022 c. +USD 400m by 2022 ER&D services services 2017* services ambition
(*) Pro-forma of Aricent acquisition
35 3.
Our Focus Disciplined & phased execution 1. OUR INDUSTRY 2. OUR AMBITION 3. OUR FOCUS Phased Convergence Organization Leadership bench Operational Excellence 4. OUR COMMITMENT
1. PHASED CONVERGENCE 2. ORGANIZATION Phased, focused & de-risked execution of the Sharpened organization Convergence program with Aricent focusing on execution
EXECUTION & IMPLEMENTATION
3. LEADERSHIP BENCH 4. OPERATIONAL EXCELLENCE Diverse and seasoned leadership bench Disciplined approach and to support the implementation operational focus
37 1. OUR INDUSTRY 2. OUR AMBITION 3. OUR FOCUS Phased Convergence Organization Leadership bench Operational Excellence 4. OUR COMMITMENT 01 CONVERGENCE PROGRAM
PRINCIPLES EXECUTION BLOCKS
Phased Clients & Go-to-Market
Focused High Value Mainstream Industrialized Services ER&D Services GlobalShore®
De-risked Target Talent US build-up Synergies Operating Model management integration
…Enabling plan execution, synergies capture Cash Legal & Tax Group ERP Shared and convergence towards target operating model Generation Structure & Systems Services
H2 2018 2019 2020 Sequence highlights Clients & Go-to-market unified Service models aligned Target operating model rolled-out US build-up integrated Synergies totally delivered Talent management unified Group ERP running Legal & Tax Structure simplified
38 1. OUR INDUSTRY 2. OUR AMBITION 3. OUR FOCUS Phased Convergence Organization Leadership bench Operational Excellence 4. OUR COMMITMENT
01 100-DAY CEO REPORT: ASSUMPTIONS CONFIRMED
Deep-seated shared vision Leadership All senior leaders in position & accountable – zero departure Confirmation of the strength of Aricent management team
Powerful complementarity on technology, innovation and IP Offerings & Straight convergence of our global delivery models Operations Promising client feedback & pipeline building
Synergies outlook confirmed by management Synergies & Potential for further SG&A optimization de-risking Very minimal overlap de-risking Convergence
39 1. OUR INDUSTRY 2. OUR AMBITION 3. OUR FOCUS Phased Convergence Organization Leadership bench Operational Excellence 4. OUR COMMITMENT
01 STRONG COMMERCIAL MOMENTUM IS MATERIALIZING
EARLY SUCCESSES RECORDED SOLID PIPE DEVELOPMENT
6 common engagements signed: 40+ opportunities jointly addressed:
5 amounting to c. €10m Over €100m total contract value
1 landmark project in excess of €100m Several tangible deals total contract value over 3 years on transformation services
VALIDATES OUR TOPLINE SYNERGIES ASSUMPTIONS (€150M)
40 1. OUR INDUSTRY 2. OUR AMBITION 3. OUR FOCUS Phased Convergence Organization Leadership bench Operational Excellence 4. OUR COMMITMENT
02 OPERATIONS: SHARPENED ORGANIZATION FOCUSING ON EXECUTION
Daniel CHAFFRAIX Pascal BRIER
Dominique CERUTTI Frank KERN
DELIVERY & TECHNOLOGY & TRANSFORMATION INNOVATION
Europe COO SVP Industry global William ROZÉ leaders • Global delivery • Technology & • Performance & business discipline innovation
Cyril ROGER • Excel in mainstream ER&D services • Group “Convergence” EUROPE • Enable High-value/industrialized • Grow High-value program • High-value business services and industrialized development services • Delivery synergies NA COO Rick PADINHA • Topline synergies • Altran / Aricent docking
• Performance & business discipline
Laila WORRELL • US build-up integration
NORTH NORTH SVP Industry global AMERICA • Cost synergies leaders
41 1. OUR INDUSTRY 2. OUR AMBITION 3. OUR FOCUS Phased Convergence Organization Leadership bench Operational Excellence 4. OUR COMMITMENT
03 DIVERSE AND SEASONED LEADERSHIP BENCH (EXTRACT)
Pascal BRIER Cyril ROGER Laila WORRELL Daniel CHAFFRAIX Albin JACQUEMONT Microsoft, AT&T Segula Accenture, BCG IBM, Capgemini Carrefour, Suez
Technology & Innovation Industries & Operations Transformation & Delivery Finance
Keith WILLIAMS Walid NEGM William ROZÉ J.R. MAGARZO Rick PADINHA Helen CHERRÉ Sanjeev VARMA Olivier SERGENT Praxis HIS Accenture Altran EY, Capgemini IBM Airbus Sopra Steria Technip, Nokia
Corinne JOUANNY Eric JOHNSON Harry WEST Thierry VOISIN Dan DARGHAM Harmeet CHAUHAN Mark PHILLIPS Meryem CHAMI 2014 Engineering IBM Continuum Capgemini IBM HCL, Microsoft IBM OCP woman of the year
Glenn HOOGERWERF Eric WILKINSON Dietmar WENDT M. PATRIGNANI Scott HOUGHTON Mohan RANGAN Chandra REDDY … HCL BP IBM, T-Systems Altran AMD, Hughes Software Wipro Open-Silicon
42 1. OUR INDUSTRY 2. OUR AMBITION 3. OUR FOCUS Phased Convergence Organization Leadership bench Operational Excellence 4. OUR COMMITMENT
04 OPERATIONAL EXCELLENCE STILL A LEVER FOR MATERIAL MARGIN IMPROVEMENT
ASSESSMENT TO DATE NEW EXECUTION GOVERNANCE: JULY 2018
. Business discipline delegated to 20+ countries, . Group COO, North America driving to contrasted business performance . Group COO, Europe . Group Program Office, Global
3 TOP PRIORITIES
Mainstream business Complex Program Germany turnaround excellence & performance Task force Talent acquisition
43 1. OUR INDUSTRY 2. OUR AMBITION 3. OUR FOCUS Phased Convergence Organization Leadership bench Operational Excellence 4. OUR COMMITMENT
04 REINFORCED GERMANY MANAGEMENT (2018)
Cyril Roger William Rozé Europe Europe operations
Werner Ferreira Oliver Wyman Germany CEO Dr. Lutz Jaede = Newly appointed = Group support
Turnaround and change management Go to market and operations Operational excellence Auto Aero
Alexander Jean-Philippe Dr. Alexander Helen Cherré Gentemann Schmitt Bödcher Program Organization & Automotive Aeronautics Group expert Transformation Operations Operations support
Dominique Giles Guidicelli Marcus Brink Michael Vaubel Automotive Airbus Hoffmann HR & Social Sales Operations ANÜ transformation
Clemens von Ulrich Schmitt Braunmühl Finance & German Automotive Administration Global Accounts
44 1. OUR INDUSTRY 2. OUR AMBITION 3. OUR FOCUS Phased Convergence Organization Leadership bench Operational Excellence 4. OUR COMMITMENT
04 2018-20 GERMANY TURNAROUND EXECUTION PATH
German cluster German cluster Group KPIs YE 2017 min. target 2020 YE 2017 Improvement levers
• Utilization task force to restore invoicing rate from 81% to c. 85% (group benchmark at 88%)
• Reinforced program management to optimize Gross margin (%) c. 21% c. 25% c. 29% delivery • Increase share of Industrialized GlobalShore®
• Prioritize profitable projects and increase DSR
SG&A • G&A transformation to converge towards Group (%) c. 22% c. 19% c. 18% benchmark
EBIT (%) c. -1% c. 6%
45 From Ignition…
…To The High Road STATUS OF ALTRAN 2020. IGNITION PRIOR TO ARICENT ACQUISITION
ON TRACK TO €3B REVENUES IN 2020 ON TRACK TO 13% EBIT IN 2020
Achieved Ignition 2020 target 13% 2015-2017 Drivers: • 7,000 HC offshore +70bps • 7 WCCs (= Germany at 12.6% Economic • SG&A improvement > 6% EBIT) 4.5% p.a. 5.7% p.a. by model Growth 12.3% 10.8%
c. 50% after 2 +50bps p.a. Acquisitions €500m years 9.6% (– 10bps buffer p.a.)
Drivers: • 12,000 HC offshore +60bps p.a. • 10-12 WCCs • SG&A improvement by model 2015 2016 2017 2020
47 4.
Our Commitment Superior & sustainable value creation 1. OUR INDUSTRY 2. OUR AMBITION 3. OUR FOCUS 4. OUR COMMITMENT
2022 FINANCIAL OBJECTIVES: FOCUS ON PROFITABLE GROWTH AND DELEVERAGING
Revenues c. €4.0bn At constant perimeter Leverage <1.5x Operating Margin* c. 14.5% Earnings per x2 share vs. 2017 Free Cash Flow** c. 9% (incl. financing costs) of Revenues
*Operating Margin is defined as Operating Income plus Amortization of intangibles assets arising from business combinations plus Non-recurring items plus Share-based compensation. ** Free Cash Flow (incl. financing costs) defined as Operating Margin plus Depreciation & Amortization (D&A), plus or minus the impact of Non-cash P&L, plus or minus the Cash impact on non-recurring, plus or minus the Decrease/increase of working capital, minus Tax paid, minus Capital expenditures net of fixed assets sale proceeds, minus Cash financing costs, minus impact of cash commitments from large software outsourcing deals.
49 1. OUR INDUSTRY 2. OUR AMBITION 3. OUR FOCUS 4. OUR COMMITMENT
2017-2022 OPERATING MARGIN BRIDGE
+200 bps -100 bps
+70 bps -150 bps +100 bps -30 bps ~14.5%
+100 bps
12.6%
Remix Units 2017 PF Reduction of Mainstream SG&A & 2022 High-Value & Performance Software deals Fix Business cost Contingency Operating Industrialized Mainstream Operating High-Value Germany ® weight pressure synergies Margin GlobalShore IGS Margin
50 1. OUR INDUSTRY 2. OUR AMBITION 3. OUR FOCUS 4. OUR COMMITMENT
BALANCED CAPITAL DEPLOYMENT ENABLING DELEVERAGING
Enable the integration, capture synergies and cost savings Pay financial costs (decreasing with deleveraging) Support business expansion with working capital Extinguish Aricent cash commitments (decreasing each Invest with discipline in the business (capital intensity year and ending in 2021) c.2% of revenues over the plan / D&A c. 2% of revenues) Revamp tax structure and benefit from improving tax environment Taxes and financial Reinvestment commitments
Shareholder Value Creation
Prioritize deleveraging: below 2.5x in 2020 and below 1.5x in 2022 Maintain cash above EUR 250m and gradually repay debt Return value to shareholders in line with past practice
51 CLOSING REMARKS
THE HIGH ROAD, ALTRAN 2022
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