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Atos: jumped 7.6%, backed by a 23.4% Worldline distribution plan

(Update: detailed information on the Worldline distribution of securities project, statements by the CEO and CFO on the results and distribution of Worldline securities, information on the strategic plan, reaction of the stock market, analysts' comments, context)

PARIS (Agefi-Dow Jones). The digital services company Atos jumped on the stock market on Wednesday after numerous announcements, including a project to distribute 23.4% of the shares of its subsidiary company specializing in payments to Worldline shareholders. The team, led by Thierry Breton, also achieved its goals by 2021 and published unaudited results for 2018.

At the Paris Stock Exchange, Atos share rose by 7.6% to 81.38 euros, rising to the highest level of SBF 120, while Worldline, which is losing 2.9%, blames the second largest decline in the index.

Invest Securities analysts believe that the announcement of the project to distribute securities Worldline – is a "pleasant surprise." UBS, which also welcomes this news, expects that Atos will have to restore confidence in its performance abilities to ensure a continuous improvement in the price of its shares.

The group, led by Thierry Breton, said that its board of directors decided at its next general meeting on April 30 to offer its shareholders to distribute about 23.4% of the share capital of Worldline, which he owns. currently 50.8%.

“After this transaction, Atos will retain about 27.4% of Worldline’s share capital, and Worldline buyback will increase by 22.3% to 45.7%,” Atos said in a statement. After this distribution, Worldline will be consolidated with Atos financial statements, and the remaining share will be recorded as a financial asset.

Atos shareholders will receive two Worldline shares for five owned shares. “The technical terms of the proposed transaction are currently being revised and will be subject to a shareholder vote,” said Athos. In connection with the date of the general meeting, Atos expects that the date of issue and payment of distribution will take place in the first half of May.

"Industrial" solution

“As part of a project to distribute 23.4% of Worldline's share capital to Atos shareholders, we are creating two purely global players with increased strategic and financial flexibility,” said Thierry Breton, CEO of Atos, quoted by the communiqué.

As for management, Thierry Breton will retain his status as non-executive chairman of Worldline, and Gilles Grapinet will remain the company's chief executive officer, but from February 1 he will not hold any posts at Atos. The number of Atos directors on Worldline will be increased by five.

During a conference with journalists, Atos Finance Director Eli Girard explained that “acquisitions in 2018 gave the two companies a size that justifies the fact that the two companies continue their journey in“ autonomous mode ”(separately, Ed).” He explained that this decision was primarily an “industrial solution”.

In 2018, Atos acquired American Syntel for $ 3.4 billion to strengthen and diversify in the United States, while Worldline bought a branch of the payment services of the Swiss SIX group for $ 2.3 billion. Euro. The last transaction was mainly carried out with shares, with the result that SIX became the second largest shareholder of Worldline with about 27% of the capital.

New plan called "Advance 2021"

Atos also unveiled its new three-year strategic plan called Advance 2021. Excluding the consolidation of Worldline’s financial statements, a digital services company expects organic growth to be between 3–4% between 2019 and 2021, and an operating margin of about 13% of net sales. business by 2021, and also available cash flows from 1.2 to 1.3 billion euros in 2021.

Excluding Worldline, Atos expects organic growth in revenue from 2% to 3% in 2019–2021, operating margin at 11 11.5% of sales in 2021, and cash flow will also be available. from 0.8 to 0.9 billion euros in 2021.

Atos expects to achieve in 2019 a double-digit operating margin for infrastructure and data management, which represents more than half of its revenues. It is expected that in this division the average annual growth in the next three years will be approximately 1% by 2021. In the Business & Platform Solutions division, the average annual organic growth is expected to be approximately 5% in 2019-2021, and the average operating margin is between 13 and 14% in 2021. It is expected that the division of Big Data and Cyberscurit will have a two-digit average annual growth rate in the period 2019-2021, while maintaining the level of operating margin at about 15%.

The group expects to pay dividends in the amount of 25-30% of the net profit relating to the group for the period 2019-2021.

To achieve these goals, Atos intends to use several levers. In particular, the group wants to accelerate the transition of its customers to the cloud / hybrid cloud, as well as to transform their infrastructure and data management activities into new sources of growth, such as the Internet of Things.

For its part, Worldline also announced its goals. The payment company focuses on organic growth of 7–8% over the period 2019–2021, increasing the gross operating surplus (EBIT) by 400–500 basis points in 2021 by about 21%. ”Worldline also intends to generate cash flow available in 2021 year, amounting to 370,410 million euros.

Morgan Stanley believes that these prospects, better than their forecasts, can be positively perceived by investors.

Confirmed goals for 2019

Atos also announced its results in 2018 based on unaudited data, confirming its targets for 2019. Last year, Atos turnover reached 12.26 billion euros against 12.11 billion euros. in 2017, reflecting organic growth of 1.2%.

The group's net profit is estimated at between 625 and 650 million euros, notes Atos. Operating margin declined 50 basis points to 10.3%. Eli Girard explained that this margin decrease was “solely due to income expectations,” which were only offset by two-thirds of the cost structure group.

In 2019, Atos is committed to organic revenue growth from 2% to 3%, operating margin from 11.5% to 12% and available cash flow of 0.91 billion euros. Outside Worldline, Atos expects organic revenue growth from 1% to 2%, return on sales will be about 10.5% of sales, and cash flow – 0.6%, 7 billion euros.

Worldline, for its part, recorded organic growth of 6.2% with a turnover of 1.72 billion euros in 2018. Gross operating income was 391 million euros, an increase of 11%. , 2% for a margin representing 22.7% of sales, up to 100 basis points.

-Julien Marion, Agefi-Dow Jones; +33 (0) 1 41 27 47 94; ed: VLV

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