Bezons, August 8, 2018. Atos, a global leader in digital transformation, today would like to react to the note issued by the sell-side analyst from Credit Suisse which has downgraded its recommendation on Atos' stock.
The Group fully disagrees with the approach taken by Credit Suisse which suggests that the customer financial arrangements (accords financiers sur grands comptes clients), part of Atos ongoing business for years, have been implemented to artificially increase the Free Cash Flow. Indeed, they have been put in place for years in order to manage the working capital requirement by compensating more favorable billing and payment terms conditions granted to some customers. Therefore, looking at the sole customer financial arrangements without considering more favorable billing and payment terms conditions granted to some customers does not make any sense.
Thus, to fulfill commercial requirements, the Company has progressively granted more favorable billing and payment terms conditions for its customers at the time of the contract negotiations. In order to compensate this effect on the working capital requirement, the Group put in place specific customer financial arrangements consisting in sales of receivables with no recourse to compensate the increase of the underlying Days Sales Outstanding (DSO, délai de règlement clients).
Indeed, without customer financial arrangements, the underlying DSO would have increased by 6 days between 2014 and 2017 from 50 to 56 days. In the meantime, the impact on the DSO from customer financial arrangements increased from 12 to 21 days. As a result, the effective DSO remained roughly stable from 38 to 35 days over the period.
In 2017, while the underlying DSO increased by 8 days, the Company mostly compensated it with 6 days from customer financial arrangements.
The Company will continue to manage as it has always done it the level of customer financial arrangements taking into account the granted customer billing and payment conditions.
Finally, for the avoidance of doubt, customer financial arrangements have always been disclosed by Atos each year in the annual and half year reports of the Company in addition to the customary DSO disclosure.
As confirmed during the H1 2018 release of results, the Group maintains its objective of c.60 per cent Free Cash Flow conversion in 2018 and to further increase it to c.65 per cent in 2019.
Appendix
DSO evolution over the last periods
| In days of revenue | H1 2018 | FY 2017* | FY 2017 | FY 2016 | FY 2015 | FY 2014 |
| Underlying DSO | 69 | 62 | 56 | 48 | 45 | 50 |
| Customer Financial Arrangements | 23 | 23 | 21 | 15 | 13 | 12 |
| Effective DSO | 46 | 39 | 35 | 33 | 32 | 38 |
| * Restated for IFRS 15 |
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Contacts
Media:
Sylvie Raybaud - +33 6 95 91 96 71 - sylvie.raybaud@atos.net
Investor Relations:
Gilles Arditti - +33 1 73 26 00 66 - gilles.arditti@atos.net
About Atos
Atos is a global leader in digital transformation with approximately 100,000 employees in 73 countries and annual revenue of around € 12 billion. European number one in Big Data, Cybersecurity, High Performance Computing and Digital Workplace, the Group provides Cloud services, Infrastructure & Data Management, Business & Platform solutions, as well as transactional services through Worldline, the European leader in the payment industry. With its cutting-edge technologies, digital expertise and industry knowledge, Atos supports the digital transformation of its clients across various business sectors: Defense, Financial Services, Health, Manufacturing, Media, Energy & Utilities, Public sector, Retail, Telecommunications and Transportation. The Group is the Worldwide Information Technology Partner for the Olympic & Paralympic Games and operates under the brands Atos, Atos Consulting, Atos Worldgrid, Bull, Canopy, Unify and Worldline. Atos SE (Societas Europaea) is listed on the CAC40 Paris stock index. www.atos.net - Follow us on @Atos
