Annual Results 2008 Paris, 11th march 2009
2008 annual results Contents 1. The Engineering and Technology Consulting (ETC) market 2. 2008 annual results 3. 2009-2011 development strategy 2
2008 annual results ALTEN ALTEN remains strongly positioned on Engineering and Technology Consulting (ETC), which represents 80% of sales. ALTEN carries out conception and study projects for technical and IS Departments for key industrial, telecom and tertiary sector accounts. ALTEN now has more than 12,600 employees, 88% are top level engineering consultants. ALTEN is European leader in Engineering and Technology Consulting (ETC) 3
2008 Annual results Over 12,600 employees in 12 countries
2008 annual results The Engineering and Technology Consulting market 5
2008 annual results The ETC market The market encompasses all Engineering and Technology Consulting (ETC) services, Scientific and Technical Studies, Network and Systems Architecture. The R&D projects are the cornerstone of technological innovation and are part of our clients strategy. A market with real barriers to entry 6
2008 annual results The ETC market This market, estimated at 6.8 billion euros (PAC), has grown by between 5% and 7% per year since 2005, and will continue to grow over the medium to long-term. In France, it is estimated to have more than 80,000 engineers. The outsourcing rate is 27-30% in France, and more than 15% in Europe. A divided market comprised of around ten principal players, and many local players. The reduction in short lists and the economic crisis will probably cause a concentration of players 7
2008 annual results The ETC market in 2008 Development in the market follows on from previous years (up until November ) growth in activity, a tight recruitment market, increased turnover (>25%) demanding "purchasing" policies: pressure on prices, reduction in the number of approved suppliers, necessity of having a comprehensive offer (consulting project mode fixed price work package offshore/nearshore) 8
2008 annual results 2008 highlights Alten has confirmed almost all its reference listings and partnerships in Europe, and is one of the short listed E2S service providers in the world, for EADS. Sustained organic growth (16.2%). Activity rate of steady at approximately 94% over the year. Recruitment of more than 3,000 engineers, i.e. net growth of 870 engineers. Significant growth achieved in the Energy, Railway, Automotive and Bank sectors. Acceleration in external growth: 8 companies purchased in 2008, in France and abroad (1,100 consultants, annual sales of 86.2m). 9
2008 Annual results The development of the range December 2007 June 2008 December 2008 Consulting support for completion of studies and project on a time-spent basis, in consulting mode 6 900 7 200 7 420 Project management 600 720 780 Workpackage (project team & dedicated structure) 920 1 130 1 340 Fixed priced project, based on detailed specs 700 780 800 3080 P in structured Projects Near-Shore : Poland, Czech Rep, Romania Off-Shore : Vietnam, India with Infotech 100 170 160 Total consultants 9 220 10 000 10 500 10
2008 Annual results ALTEN s skills Dec. 2008 Dec. 2007 Onboard systems/ real time, MMI Analogue and digital electronics Onboard systems/ real time, MMI 34% 16% Analogue and digital electronics 34% 15% Communication systems 12% 13% 25% Information system architecture Mechanics, scientific calculation Communication systems 11% 14% 26% Information system architecture Mechanics, scientific calculation A top-level group of engineers with multi-disciplinary skills 11
2008 annual results 2008 acquisitions Alten has continued its policy of targeted acquisitions, in France and abroad. 2 companies specialised in project management (PMO) in France, in the first quarter (70 consultants, annual sales: 5.2m), 1 company specialised in embedded / real-time software in the Netherlands, in the first quarter (90 consultants, annual sales: 7.8m), 1 company specialised in documentation engineering, in Romania, in the second quarter (80 consultants, annual turnover: 1.7m). 12
2008 annual results 2008 acquisitions 1 Microsoft technology experts company in France, in July 2008 (80 consultants, annual sales: 7.5m), 2 companies specialised in information technologies in Spain at the end of September (300 consultants, annual sales: 24m), 1 company specialised in the field of mechanics, electronics and scientific computation, in Sweden in December 2008 (400 consultants, annual sales: 40m). The current market context should enable Alten to strengthen its external growth under advantageous conditions, particularly internationally. 13
2008 annual results Acquisitions in the first quarter 2009 In France, a company specialised in the design of "vehicle" systems: engine control and motorisation systems, embedded and real-time software (180 consultants, annual sales: 14m), In Italy, a company specialised in Telecom and embedded software (150 consultants, annual sales: 10m), 14
2008 Annual results Shareholding on 31 December 2008 Voting rights Founder + Holding 57,66% FCP Alten 0,86% Public 41,49% Public 58.58% 40.24% Founder and controlling holding 1.18% FCP ALTEN 15
2008 Annual results Annual results 2008 16
2008 Annual results Revenue growth +20.7 % 846.3 +22.3 % 701.2 26.3% International 576.3 25% In M 436.2 27.7% 25.8% 72.3% 74.2% 75% 73.7% France Dec. 2005 Dec. 2006 Dec. 2007 Dec. 2008 17
2008 Annual results Revenue breakdown by business sector (in%) December 2007 Automotive 20% 10% Energy Automotive December 2008 20% 12% Energy Aeronautics Space Rail/ Naval 13% 3% Telecoms 19% 14% 7% 6% 4% 4% Banking/tertiary Industry Multimedia/ Services Electronics G.P. Defence Aeronautics Space Rail/ Naval 13% 3% 17% 15% 7% Industry 5% 4% 4% Multimedia/ Services Electronics G.P. Defence Telecoms Banking/tertiary 18
2008 Annual results Consolidated turnover by country (in m) Countries Turnover % Turnover % Var 2007 2008 en % Benelux 58.4 8.3% 73.0 8.6% +25.0% Spain 46.9 6.7% 62.4 7.4% +33.1% Germany 46.5 6.6% 52.1 6.2% +12.3% United Kindgom 10.7 1.5% 15.4 1.8% +44.0% Italy 8.4 1.2% 11.9 1.4% +41.7% Switzerland 5.5 0.8% 5.2 0.6% -5.5% Eastern Europe 1.5 0.1% 2.3 0.3% +53.3% Europe (excl. France) 177.8 24.9% 222.3 26.3% +25.0% France 523.4 75.1% 624.0 73.7% +19.2% TOTAL 701.2 100% 846.3 100% +20.7% 19
2008 Annual results Condensend income statement (in m) In M 2007 2008 Var % Turnover 701.2 846.3 +20.7 % Operating Profit on Activity 84.5 97.2 +15.0% In % of revenue 12.1% 11.5 % Cost of stock options -4.2-4.4 Operating Profit before exceptionals 80.3 92.8 +15.6% Non recurrent profit -1.6 - Gain (loss) on assets disposals 0-0,3 Goodwill impairment -5.6-5.5 Operating Profit 73.1 87.0 +19.0% In % of revenue 10.4% 10.3% Net debt income (expense) -0.4-0.6 Financial cost on liabilities present value -0.3-0.1 Depreciation on financial assets - -0,6 Financial income -0.7-1.3 Corporate income tax -29.2-30.9 Minority interests -0.3-0.3 Profit attributable to the group 42.9 54.5 +27% In % of revenue 6.1% 6.4% Audit in progress 20
2008 Annual results Condensed Income Statement by Regions (en m) 2007 2008 In M 2007 2007 Elim 2007 2008 2008 Elim 2008 France Internat. Groupe France Internat. Groupe Sales 529.5 184.6-12.9 701.2 630.8 232.4-16.9 846.3 Operating Profit on activity In % of revenue 64.5 20.0 84.5 72.2 25.0 97.2 12.2% 10.8% 12.1% 11.4% 10.8% 11.5% Cost of Stock options -4.2 - -4.2-4.4 - -4.4 Operating profit before exceptionals 60.3 20.0 80.3 67.8 25.0 92.8 Non recurrent profit Gain (loss) on assets disposals Goodwill impairement -1.6 - -1.6 - - - - - - - -0.3-0.3-1.7-3.9-5.6-5.5 - -5.5 Operating profit In % of revenue 57.0 16.1 73.1 62.3 24.7 87 10.8% 8.7% 10.4% 9.9% 10.6% 10.3% Net debt income (expense) Financial cost on liabilities present value Depreciation on financial assets -0.4 - -0.4-0.4-0.2-0.6-0.2-0.1-0.3-0.1 - -0.1 - - - -0.6 - -0.6 Financial income -0.6-0.1-0.7-1.1-0.2-1.3 Corporate income tax Minority interest -22.8-6.4-29.2-22.7-8.2-30.9 - -0.3-0.3-0.1-0.2-0.3 Net profit In % of revenue 33.6 9.3 42.9 38.4 16.1 54.5 6.3% 5.0% 6.1% 6.1% 6.9% 6.4% Audit in progress 21
2008 Annual results Condensed Balance sheet ( m) Assets Liabilities and shareholders equity In M Dec. 2007 Dec 2008 (Net) (Net) In M Dec. 2007 (Net) Dec. (Net) 2008 Goodwill 124.4 162.6 Other intangible assets 3.0 10.2 Tangible assets 11.5 11.4 Non-current financial assets 14.0 15.0 Deferred tax 5.7 6.3 NON CURRENT ASSETS 158.7 205.5 CURRENT ASSETS 321.2 404.8 CASH 32.2 44.7 TOTAL ASSET 512.1 655.0 Shareholder s equity 264.2 317.6 Minority shareholders 0.4 - Long term contingency provis. 6.0 9.0 Non current financial liabilities 1.7 4.2 Other long term liabilities 4.7 5.5 NON CURRENT LIABILITIES 12.4 18.7 CURRENT LIABILITIES 207.1 261.0 FINANCIAL LIABILITIES 28.0 57.7 TOTAL LIABILITIES 512.1 655.0 22
2008 Annual results Cash flow statement (in m) In m 2007 2008 Cash-Flow 84.5 103.1 Corporation tax paid -28.1-31.8 Change in working capital -34.0-19.8 Cash flow from operating activities 22.4 51.5 Acquisitions/disposal on fixed assets -15.5-12.2 Impact of change in scope of consolidation -14.6-37.1 and earn out paid Net cash flow on investment -30.1-49.3 Cash flow from financing activities 11.1 10.3 NET CHANGE IN CASH POSITION 3.4 12.5 Audit in progress 23
2008 Annual results 2009/2011 development strategy 24
2008 annual results Situation of the ETC market at the start of 2009 Telecom Operators Telecom Component Manufacturers Energy Aeronautics / Space Other Industries Multimedia Consumer Electronics Defence Railway Automotive Banking Finance 25
2008 annual results Specific case of the Automotive sector Main clients: Renault (6.5%) - PSA (6.5%) Component manufacturers (4%) Other manufacturers (3%). i.e. approximately 1.800 consultants at the start of 2009 Risk areas: Renault: sudden stoppage without notice of services, announced on 20 December, with immediate effect. Component manufacturers: Return of tens of consultants during January and February. Situation to date: - Only strategic services are being continued at Renault. - Approximately 370 consultants on the bench in the Automotive sector. 26
2008 annual results Situation of the ETC market at the start of 2009 Tensions in price negociations Expected reduction in the average salary Reduced visibility of our clients investment and development programmes in acyclical sectors (Aeronautics/Energy/Railway) and in the Banking vector Irrational behaviour of some competitors, detrimental to the whole of the profession The major players, which are capable of managing the current situation and adapting their offer, will be the post-crisis winners. 27
2008 annual results Crisis management: support measures Managing costs (review of salary scales staffing control working time reduction/paid holiday, etc.), Daily monitoring of bench time, Detailed mapping of skills to improve the fluidity of consultants, between the different business sectors. Optimising production costs and the rate of activity 28
2008 annual results Crisis management: management measures Adjustment of operational wage costs (Sales representatives HR and recruitment staff Finance and administration), Review of general expenses and renegotiation of main contracts, Reduction in HR and recruitment publicity costs. Controlling overheads 29
2008 annual results Crisis management: urgent measures Assessment of "structural overstaffing" if the Automotive sector (in particular Renault) does not relaunch the suspended projects, and if the other sectors do not offer sufficient prospects, All possibilities and solutions must be contemplated, without taboo, in order to adjust the skills offer and bring the activity rate up to 94% 30
2008 annual results Development strategy: preparing for the future Continue to set up a managerial and administrative organisation suited to the Group s future size and development of the offer. Capitalise on sectoring the offshore on one hand, and developing the Information System and Networks activity on the other hand, in order to speed up regional and international development. Target acquisitions, in particular internationally (Northern Europe Germany Spain), in a more favourable context (easing prices, less competition from private equity funds) 31
2008 annual results Conclusion The first half of 2009 will be dedicated to managing the crisis, adapting the company to the new environment, and protecting the margin. Opportunities for external growth, at attractive prices, should enable ALTEN to grow stronger on strategic markets. The expected improvement in cash generation will be dedicated to financing acquisitions, to possible payment of dividends and to clear the debts. The largest and most financially solid players should benefit from the economic context to increase their market share. Alten should emerge from the current crisis period stronger and be able to consolidate its position as the leading Engineering and Technology Consulting company 32
Annual Results 2008 Paris, 11th march 2009
APPENDICES BALANCE SHEET - ASSETS (In thousands of euros) ITEM Dec 2007 Dec. 2008 GOODWILL 124 427 162 561 INTANGIBLE FIXED ASSETS 3 038 10 211 TANGIBLE FIXED ASSETS 11 498 11 428 NON CURRENT FINANCIAL ASSETS 13 977 15 016 DEFERRED TAX ASSETS 5 737 6 323 NON CURRENT ASSETS 158 678 205 540 WORK IN PROGESS 90 146 TRADE DEBTORS 299 025 377 093 OTHERS RECEIVABLES 22 125 27 530 CASH 32 166 44 691 CURRENT ASSETS 353 405 449 460 TOTAL ASSETS 512 083 655 000 Audit in progress
APPENDICES BALANCE SHEET - LIABILITIES (In thousands of euros) ITEM Dec 2007 Dec 2008 Capital 31 976 32 246 Premiums 12 036 14 065 Consolidated reserves 177 353 216 754 Consolidated net profit 42 879 54 483 SHAREHOLDERS EQUITY 264 244 317 549 MINORITY INTERESTS 428 - Provisions 6 009 8 984 Non current financial debts 1 704 4 192 Other non current liabilities 4 731 5 491 NON CURRENT LIABILITIES 12 445 18 667 Provisions 1 511 1 446 Current financial debts 27 919 57 726 Trade and other account payable 23 707 32 596 Other current liabilities 181 831 227 016 CURRENT LIABILITIES 234 968 318 784 TOTAL LIABILITIES 512 083 655 000 Audit in progress
APPENDICES PROFIT AND LOSS ACCOUNT (In thousands of euros) ITEM Dec. 2007 Dec. 2008 NET REVENUE 337 818 846 284 PURCHASES -44 290-45 656 PERSONNEL COSTS -481 265-593 824 EXTERNAL CHARGES -76 945-93 090 TAXES OTHER THAN ON NET INCOME -11 387-12 916 AMORTISATION -5 047-5 473 OTHER CHARGES AND INCOME 2 303 1 817 OPERATING CHARGES -616 632-749 143 OPERATING PROFIT ON ACTIVITY 84 524 97 141 Stock options cost -4 195-4 366 OPERATING INCOME ON ACTIVITY BEFORE EXCEPTIONALS 80 329 92 776 Non recurrent income -1 594 - Capital gain - -260 Goodwill depreciation -5 644-5 560 OPERATING INCOME 73 091 86 956 Net financial cost on net debt -437-626 Financial cost on liabilities present value -293-75 Depreciation on financial assets - -564 FINANCIAL INCOME -730-1 265 TAX EXPENSE -29 147-30 889 CONSOLIDATED NET PROFIT 43 216 54 802 PROFIT ATTRIBUTABLE TO MINORITY INTERESTS -337-319 PROFIT ATTRIBUTABLE TO THE GROUP 42 879 54 483 Audit in progress
APPENDICES CASH FLOW STATEMENT (In thousands of euros) ITEM Dec. 2007 Dec. 2008 CASH FLOW 84 443 103 111 Consolidated Net Profit 43 216 54 802 Amortisation and Provisions 7 515 12 724 Cost of stock options 4 195 4 366 Tax expense 29 148 30 886 Other -321-357 Financial charges 730 2 554 Financial income -1 867 Income tax paid -28 076-31 794 Change in Working Capital Requirements -34 026-19 825 NET CASH FLOW GENERATED BY ACTIVITY (FREE CASH FLOW) 22 382 51 493 Acquisition / Disposal of fixed assets -15 499-12 240 Impact of change in scope of consolidation and earn-outs paid -14 622-37 080 NET CASH FLOW ON INVESTMENTS -30 121-49 320 Net financial cost -437-626 Capital increase 4 573 2 299 Buy back of shares 0-7 465 Repayment of long term debt -1 145 65 Changes in short term financial debts 8 171 16 077 NET CASH FLOW FROM FINANCING OPERATIONS 11 161 10 351 CHANGE IN CASH POSITION 3 422 12 524 Cash on hand 32 166 44 691 Overdrafts -25 650-54 533 Bank loans -3 266-5 277 NET CASH POSITION 3 250-15 120 Audit in progress