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Atos has given an update on the Tech Foundations deal and its financial aspects with no real progress at this stage. Confusion and uncertainty abound, in particular on the capital increase. The renegotiations with EPEI should lead to the cancellation of EPEI’s stake in Eviden, a higher amount of cash paid for Tech Foundations (in return for which) and the reinforcement of the Onepoint position. Atos is still in discussions on its debt refinancing and is considering further divestments. What will
Companies: Atos (ATO:EPA)Atos SE (ATO:PAR)
AlphaValue
Organic revenue was down 3%, more than expectations. Conversely, the book to bill ratio improved thanks to Tech Foundations. Atos was impacted by lower volume in software and cloud licences and longer decision-making by customers in the US and an adverse comparative in South America. The stabilisation of revenue is anticipated in the Americas in Q4 23 (vs -13% in Q3 23). 2023 guidance is confirmed, thereby removing fears of a slippage regarding tough trading conditions in the US market.
The new governance does not change the scenario for Tech Foundations and massive capital increase announced in August 2023. The extended completion time will be even more negative in terms of business development and financing. The new target price takes into account a capital increase reset at the par value of the share (€1.0/share).
The appointment of Jean-Pierre Mustier as the new Chairman of the Board is positive given the disastrous results of Bertrand Meunier. The appointment of Laurent Collet-Billon as Vice-Chairman of the Board is the political aspect of the case considering the involvement of Atos in defence and cybersecurity. Inversely, the scenario for Tech Foundations does not change and shareholder approval of the operation (including the capital increase) has been delayed until early Q2 24. No hope of a lasting
Tech Foundation has revised upwards its mid-term targets vs the previous objectives given last year. Revenue growth is expected to be back in 2026 after a bottom of €5.0bn in 2024, one year ahead of the previous target. The operating margin is expected to be 6-8% of revenue in 2026 (vs above +5% in 2025 previously). The presentation of the measures show the scale of the task over the next few years.
Q1 23 organic revenue growth beat expectations (+2.8%) due to the strong growth at Eviden (+9.5%), boosted by the ramp up of the HPC activity on the back of strong orders in H2 22 and growth in application development and digital security. The Tech Foundations’ core businesses were flat, which was reassuring. The book to bill ratio improved in Tech Foundations and showed high volatility in Eviden. 2023 guidance is maintained. There is still no guidance for free cash flow.
Atos achieved the 2022 guidance after a long period of negative news flow. The H2 22 showed an improvement in the book to bill ratio (112% in Q4 22 vs 71% in Q3 22), and an improved organic revenue growth (+2.3% o/w +4.6% in Q4 22) and operating margin (5.1% vs 1.1% of revenue in H1 22). At the end of February 23, 80% of the €700m of divestments had been completed/or secured. The 2023 guidance is not exceptional but includes further improvements.
The decrease in organic revenue is slowing sequentially (-0.1% vs -1.9% in Q2 22) thanks to the earlier-than-expected stabilisation of the Tech Foundations activities. The recovery of HPC revenue in Q4 22 based on strong order intake in Q2 22 should support group revenue growth close to +1.5% at constant currency in 2022. The operating margin should be at the low end of 3%-5% of revenue. Atos confirmed the completion of the separation of its activities in H2 23.
Onepoint has made a €4.2bn offer for Evidian which does not integrate Evidian’s potential recovery by 2026 presented at the Capital Market Day in June 2022. Onepoint justifies this valuation by the deterioration in the performance of Evidian. Regarding this offer, all of Atos’ debt would be removed from its scope. The offer has been rejected by Atos which is expecting a higher valuation with the distribution and listing of Evidian shares as from mid-2023.
Atos reported a mixed set of figures for H1 22. Nevertheless, there were some positive achievements sequentially. In Q2 22, the decrease in organic revenue decelerated and the order intake jumped vs Q1 22. The operating margin was low in H1 22 (1.1% of revenue) and should improve in H2 22 thanks to restructuring, higher HPC volume, price increases and further work on underperforming contracts. Atos secured new debt to fund the transformation plan before the split into two listed companies.
The transformation plan includes two independent entities, SpinCo and TFCo, significant investment and the disposal of non-core assets. The joint announcement of the resignation of the CEO highlights a governance problem. In 2022-23, the funding needs are under control if there is no slippage in the execution of the plan. By the end of 2023, 70% of SpinCo shares should be distributed to Atos shareholders and the remaining stake should be monetized to fund TFCo’s transformation costs.
Q1 22 was hardly fantastic but there was some small improvement. Organic revenue decreased (-2.4%) showing a sequential improvement (-6.9% in Q4 21) partly explained by the catch-up in activity from Q4 21 to Q1-Q3 22. Revenue decreased at a lower pace than expected in infrastructure and increased in the digital business and cybersecurity services. High Performance Computing was affected by difficulties in the component supply chain. The low book-to-bill ratio was the bad surprise. The 2022 guida
Atos released its final 2021 figures that were in line with the preliminary numbers. The news flow does not improve significantly. 2022 guidance is disappointing with revenue between -0.5% and +1.5% at constant currency due to the continuing decline in the classic IT infrastructure and a low operating margin of 3-5% of revenue reflecting uncertainties on how much the decrease of IT infrastructure will slow and on the timing to pass on price increases to customers to offset wage inflation.
Bad news continues with significant impairments and provisions (€2.4bn in total) and lower 2021 revenue and operating margin than previously announced. There remains an undisclosed impairment (under assessment) to reflect a lower recognition of the group’s deferred tax assets. Nevertheless, it seems now that all is cleared up given the thorough analysis of all the contracts. The new organisation is simplified around three business lines (legacy infrastructure, digital & cloud services, big data
Atos missed all 2021 guidance. Revenue decreased by -2.4% on constant currency (vs stable revenue expected), the operating margin was c.4% of revenue (vs c.6% of revenue expected). The huge deterioration in free cash flow to c.€-420m is effectively very bad news. The new CEO’s priorities are the portfolio of services, the commercial activity, the cost base and a simplified organization. There should be a better visibility on the direction of Atos at the end of February 22.
Research Tree provides access to ongoing research coverage, media content and regulatory news on Atos. We currently have 129 research reports from 4 professional analysts.
Eleco’s FY23 results show robust organic recurring revenue growth of +17% with recurring revenue +22% to £20.7m, adj EBITDA +2% ahead of the January update, and a confident outlook with Q1 ARR already at £24.5m vs £22.6m at FY23. At this point, the excellent start to FY24 leads us to reiterate our FY24-26E revenue, adj EBITDA, EFCF, and DPS, and we include the April 2024 acquisition of Vertical Digital in our FY24-26E net cash, as we explain below. As Eleco builds upon the successful acquisition
Companies: Eleco Plc
Cavendish
Made Tech has won a material expansion (worth up to £19.5m/2yrs) with a long-standing customer, The Department for Levelling Up, Housing and Communities (“DLUHC”). Coming off the back of a soft H1 bookings performance, we expect this win to materially boost investor sentiment and reassure how notwithstanding a tough backdrop (given an impending general election) MTEC continues to outcompete legacy providers and in-so-doing, grow its share of wallet with large/strategic customers. Landing near FY
Companies: Made Tech Group PLC
Singer Capital Markets
Companies: Cerillion Plc
Liberum
Cerillion has announced a very solid update, as H1 sales and EBITDA are both up 10% y/y to £22.5m and £10.9m respectively, notwithstanding the exceptionally strong base period (sales and EBITDA +27% and +38% resp.). Results therefore point to continued strong customer demand, reflecting how Cerillion’s out-of-the-box product continues to resonate and gain adoption, particularly in a ‘budget conscious’ environment, by offering faster time to market, greater configurability and at a lower cost. Me
As reported in March, underlying EBITDA profitability improved to record levels despite FX headwinds. Further platform and proposition developments were completed, key steps on its digital roadmap, and it has already won 7 contracts YTD. Alongside planned growth in private membership, this will at least offset the loss of one contract. Forecasts are left unchanged today and, as member engagement throttles back up, FX headwinds ease, and proof points of digital efficiency emerge, markets should b
Companies: Ten Lifestyle Group PLC
itim is a disruptive SaaS-based platform that enables store-based retailers to implement a proven Omni-channel solution. This morning, the group has announced an additional professional services contract with its long-standing client, The Entertainer. Following a year-long trial, The Entertainer is opening in over 800 Tesco stores across the UK & Ireland, alongside a supplier agreement for Tesco stores across Central Europe. Under the contract, The Entertainer will extend its use of itim's Unify
Companies: Itim Group PLC
WHIreland
GE Healthcare has announced the launch of the Voluson Signature 20 and 18 ultrasound systems, with the related press release noting these systems ‘comprehensively integrate artificial intelligence’ to improve the ultrasound procedure for clinicians and the women being scanned. These ultrasound systems include SonoLyst, the AI which incorporates Intelligent Ultrasound’s ScanNav Assist and ScanNav AutoCapture AI software. The launch of additional Voluson systems including the SonoLyst suite of AI
Companies: Intelligent Ultrasound Group Plc
22nd April 2024 * A corporate client of Hybridan LLP ** Arranged by type of listing and date of announcement *** Alphabetically arranged **** Potential means Intention to Float (ITF) has been announced Dish of the day Admissions: Delistings: What’s baking in the oven? ** Potential**** Initial Public Offerings: Reverse Takeovers: 16 April 2024: Electric Guitar (ELEG.L) Concurrent with its Admission to trading on AIM, Electric Guitar is proposing to acquire the entire issued share capital of 3radi
Companies: ARV CTL AFRN FEN HUW TENG BBSN EAAS VAL
Hybridan
Alphawave Semi has reduced guidance for FY23 and prospectively citing lower revenues from China, changes in expected revenue recognition from long-term contracts, and continuing investment in R&D. The share price has reacted negatively, giving up most of the gains since the trading statement at the end of January. Current consensus, which is a good match for pre-existing guidance, should be reduced, most likely following release of the FY23 results and full 1Q24 trading update due on 23 April. H
Companies: Alphawave IP Group PLC
Capital Access Group
Companies: FOG PEB KBT EMR TIME GETB JNEO
Devolver Digital encouragingly delivered 2023 results slightly ahead of expectations and provided a steady medium-term outlook that leads us to reiterate our 2024 Adjusted EBITDA estimates. Longer term, the company is now planning to further develop its two major planned titles, Human Fall Flat 2 and System Era's next major new release. We now expect those major titles to be released in 2026 rather than 2025, meaning we lower our 2025 Adjusted EBITDA forecast to $10.6m from $17.6m but introduce
Companies: Devolver Digital, Inc.
Zeus Capital
This report is intended to help UK small- and mid-cap investors gain a better understanding of software companies’ routes to market, and to highlight how one of the most important facets of the way in which they grow and deliver value is routinely ignored. We examine sales processes for six UK-listed companies and one that has recently been taken over, and consider why they have followed their respective paths.
Companies: Idox plc
Progressive Equity Research
Banquet Buffet*** Abingdon Health 9.25p £11.3m (ABDX.L) The lateral flow contract development and manufacturing organisation announces its unaudited interim results for the six months ended 31 December 2023. Revenue increased 117% to £2.4m (H1 2023: £1.1m). The Adjusted EBITDA loss decreased 47% to £1.2m (H1 2023: £2.2m). Furthermore, reduction in operating loss of 50% to £1.2m (H1 2023: £2.4m). The Board therefore expects that H2 2024 revenue will be significantly improved compared with H1 2024
Companies: CPX SLP FA/ FIPP ECR ETP ORCA
Companies: IGP RUA BOOM
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