Company Representatives: Thierry Breton - Chairman, Chief Executive Officer Elie Girard - Deputy Chief Executive Officer, Group Chief Financial Officer Uwe Stelter - Deputy Chief Financial Officer Eric Grall - Head of Global Operations Robert Vassoyan - Chief Commercial Officer Philippe Mareine - Global Head of Human Resources
Thierry Breton : Good morning ladies and gentlemen, Thierry Breton speaking. Thank you for attending Atos conference call today on our first semester of 2019. So I’m going to share this presentation together with Elie Girard, our Deputy CEO and Group CFO. I will cover with the highlights and key figures of H1, 2019, then Elie will develop the performance of the business in H1 and I will come back to conclude on our priorities this year, and then of course we will then start the Q-&-A session also with Eric Grall, our Head of Global Operations; and Robert Vassoyan, Chief Commercial Officer. So, starting with the highlights of H1, as expected, revenue evolution in Data Management and Infrastructure in North America was improved from Q1 to Q2.

This is very encouraging, towards our objective to have this business positive in H2 in North America and also at group level. The second most important item of H1, is that we continued to integrate Syntel as planned. We have retention rate of 100% for the key employees. The top 80 people at Syntel benefit from an incentive program, and we are satisfied with the way that the teams worked very well together. The first order entry synergies were already generated in H1, and cost synergies are materializing.

This integration is crucial, and obviously the management team of Atos is 100% focused on its success. So to highlight the division, Big Data & Cybersecurity recorded a 12% growth over the last six months, fully in line with our objective to generate double-digit growth. We continued to attract high skilled staff in Cybersecurity & Big Data as well as profiles specialized in artificial intelligence. Regarding the commercial activity, the group reached 100% book-to-bill in H1. As we already said in January, at our Investor Day, 2019 is a year with a few number of contracts coming for renewal and the performance somewhat reflect that; however, we had a high level of signature, which will materialize in growth in the coming quarters.

Fourth highlight, last June, we held a fantastic tech days where over three days we had the opportunity to present to our large customers, the last innovation in our portfolio offerings and how we envision the journey with them over the next few years. I will come back on that in a few minutes. Last but not least, we completed the distribution incline of Worldline. It was a clear value-enhancement production for our shareholders, creating two leading players in their respective fields. Let’s move to the next slide, on the key figures of H1.

Revenue was EUR 5,744 million, up 0.8% at constant scope and constant exchange rates, of which plus-1.1% in Q2. This is a good step towards the acceleration we expect in H2, fully in line with our 1% to 2% full year objective. Operating margin reached EUR 529 million, representing 9.2%, 20 basis points above last year. The most important increase was performed by Business & Platform Solutions with an additional 80 basis points coming as already mentioned, from synergies with Syntel and the decision to stop several low-margin contracts at the occasion of the transfer to Syntel. Free cash flow reached EUR 23 million with timing effects in H1 that we plan to fully catch up in H2.

Elie will come back on that. Total number of staff, was 109,000 at the end of June compared to 111,000 excluding Worldline at the beginning of the year, a decrease by 1.5% mainly on profiles where we anticipate automation, robotization and artificial intelligence coming to impact the labor force. For continuing operations, net income Group share amounted to EUR 180 million, and normalized earnings per share increased by 12% year-on-year. And finally, I do not come back on order entry and the commercial dynamics that I already commented. On the next slide, our objectives for 2019.

So after the first semester on track towards full year objectives, we confirm today the revenue organic growth between 1% to 2% and operating margin rate at circa 10.5% of revenue and a free cash flow between EUR 0.6 billion and EUR 0.7 billion. Before handing over to Elie, to go deeper into the performance, let me quickly give a status update on the key innovations of Atos over the last semester in terms of technology, human resources and environment. Starting with the technologies, we focused on three new challenges that our customers are increasingly facing. For these three challenges, we presented our own solutions. First of all, we need the right computing power everywhere.

In this field, Atos brings its expertise and experience to enterprise customers to ensure that they have the computing power and support needed. The Atos Sequana Edge server that we revealed during our last Tech Days securely manage and process IoT data and runs artificial intelligence application in real-time close to the source where it is generated so that actions and decisions can be made swiftly to optimize operations. It is ideal to be used when fast response times are critical. The second challenge is the need to get value from the use of AI and specific algorithms notably to ensure Cybersecurity. Outside of Cybersecurity, Atos is leveraging AI in all its business and for all its customers notably through a major worldwide partnership with Google Cloud.

Last but not least, the major challenge is related to the need of Cybersecurity everywhere. The explosion of data volumes, and the move from closed environment to open, interconnected and multiple ecosystems significantly enlarge [inaudible] of risk. Cybersecurity is now an integral part of our physical security. During the Tech Days, Atos launched its Hardware Security Module called HSM for IoT, a high-performance security device designed to protect IoT ecosystem through Cryptographic features. On the next slide, you can see some examples of our partnerships that have been signed and enhanced in H1 and the words from our partners.

I already spoke about the one with Google Cloud and the recognition of Atos as a Global Breakthrough Partner of the Year. We became also a Microsoft Azure expert in the area of Managed Services Provider. Other example is that Atos was honored by ServiceNow at the EMEA Partner Summit and also the recognition by Dell EMC for outstanding performance. On to the next slide, in H1 we have started to implement our 2021 people strategy supporting growth and productivity gains. First, as a major player in the field of Cybersecurity, we continuously expand our expertise.

In H1, we recruited 425 new highly qualified profiled and successfully we deployed 200 engineers across divisions driven by our internal screening programs. In April, as I already said, Atos was recognized by Google. We further expanded our partnership by adding more than 450 Google Cloud certified employees in H1, making then Atos Number 1 in that field. Third, with our ambition to equip all our engineers, with digital skills by 2021, we are already ahead of schedule with our digital certification plan in our core areas such as automation, Google, IoT, Digital Workplace, and of course Hybrid Cloud. As we are at Atos, technology passionate, we are specifically engaged our scientific and expert communities to expand our ecosystem with the world class universities and top customers on artificial intelligence applied to industry.

In term of attractiveness, towards graduates, more than 3,000 campus graduates were selected this semester by Atos Syntel in our Group Campus Management program materialized into a record high traffic on our external career site. Finally, our People Strategy is underlined and supported by our ‘We are Atos’ program to further drive employee experience with a specific focus on wellbeing, social value, diversity and inclusion. Finally, on the next slide, I would like to emphasize the role of Atos as Green Digital Partner. Like CSR in general, green has become a key trend across the investor community. It is now also a major trend across customers, and this is why we decided to accelerate from an already leading position, as you know, Atos is already recognized as a Worldwide CSR leader for years in the Dow Jones Sustainability Index, for example but we set up also specific programs to go further.

First, we took the decision in H1 to offset 100% of our carbon emission; second, we integrated in December last year the new green generation of data center minus 30% more energy efficient; and finally, we have launched a new initiative to federate a comprehensive green ecosystem in our industry. With all these initiatives, we want Atos to be recognized by our customers as their preferred Green Digital Partner. Thank you for your attention, and Elie, the floor is now yours.

Elie Girard: Thank you, Thierry. Hello, everyone and let me start with the main wins of the last quarter.

In Q2, the group signed several deals which fully reflect our strategy in the three business segments. We signed an important contract with the European Union, which aims through the implementation of application and infrastructure services, at facilitating the fast and secure processing of visa applications by third country nationals requiring visas to enter the Schengen area. With Philips, we won an extension of our contract in the cloud covering both on-prem and public cloud businesses, as well as the new application contract managing all health care applications. With the French customer Damart, we signed a contract to migrate its infrastructure to the cloud with Google Cloud. For the whole year, and this is a very important one, we handled the encryption of its data before switching to Google Cloud-based office software.

In the unified communication field we signed an OpenScape voice contract for the German savings bank, Helaba. Finally, we signed a full year contract to deliver the most powerful supercomputer in Norway to national e-infrastructure provider, Uninett Sigma2. On top of the deals on this slide and many others that we signed in Q2, let me please add a major multiyear contract signed in July in North America in the health care industry. Accordingly, and for the sake of clarity, it is not part of Q2 figures. On the next slide, regarding the sales during the first semester, the group order entry reached EUR 5.7 billion, representing a book-to-bill ratio of 100%, of which 113% in the second quarter.

Book-to-bill ratio was particularly high for Big Data & Cybersecurity with 137%. Business & Platform Solutions recorded a healthy 104%, while Infrastructure & Data Management reported 91%. Indeed, the number of contracts which came for renewal during the first half of the year was significantly lower compared to last year. As an example, 11 deals above EUR 50 million last year, only three deals above EUR 50 million this year. Therefore, the orders booked in H1 included a much higher portion of new contracts or new customers, mainly Infrastructure & Data Management.

The full backlog at the end of June 2019 amounted to EUR 21.3 billion, stable compared to end of December 2018, representing EUR 1.9 billion a year of revenue. The full qualified pipeline was EUR 7.1 billion, up compared to EUR 6.8 billion at the end of December 2018. Now we move to the financial performance of the semester and the reconciliation between statutory and organic figures for H1 revenue. First of all, as a reminder Worldline is accounted for as a discontinued operation since 1 January 2019, therefore not part of our revenue, operating margin and free cash flow. Now on the new perimeter of the group, exchange rates positively contributed to revenue for plus EUR 91 million and to operating margin for plus EUR 9 million, mainly coming from the appreciation of the American dollar versus the euro.

Scope effects amounted to minus EUR 395 million for revenue and minus EUR 41 million for operating margin. This was mostly related to the deconsolidation of Worldline, the acquisition of Syntel, the disposal of some specific Unified Communication & Collaboration activities, and the disposal and decommissioning of nonstrategic activities within CVC. The next slide presents the performance by division. I am going to comment in the next three slides each of them, but in a nutshell the performance of the total group was as expected with Infrastructure & Data Management starting its recovery. Thanks in particular to North America, which is a good signal as we target to return to positive organic growth in H2.

Business & Platform Solutions leveraged our new project in digital and automation, thanks in particular to Syntel and performed an overall organic growth at plus 2.3%, in spite of the cleaning of low-margin contracts. Finally, Big Data & Cybersecurity continued to record a double-digit growth at plus 12.4%. In terms of profitability, operating margin improved by 20 basis points at 9.2% compared to last year pro forma. The main increase came from Business & Platform Solutions with 80 basis points improvement as the effect of synergies with Syntel started to materialize and as we cleaned up low-margin contracts. In Big Data & Cybersecurity, the decrease only reflected specific R&D and new innovative offering investments in Cybersecurity, in Artificial Intelligence and in Big Data.

Let's move to the next slide. Infrastructure & Data Management revenue was EUR 3.137 billion in H1 2019, down minus 1.8% at constant scope and exchange rates. The division pursued its business model transformation by increasing the share of revenue in Hybrid Cloud Orchestration and in projects in Technology Transformation Services. The division continued the digital transformation with main clients through migrations to Hybrid Cloud, automation and robotization. It also managed to close several new deals in these strategic areas.

Growth was performed in Financial Services with the ramp-up of the significant contract in North America with CNA, over compensating the S&P contract not renewed last year and in the United Kingdom with Aviva. Activities also increased with NS&I and with Aegon. Additional sales were achieved in Telco, Media & Utilities with BBC, as well as the ramp-up of the contracts with Scottish Water in the United Kingdom and with the telco operator MÁSMÓVIL in Spain. The situation in Public sector, as well as Manufacturing, Retail & Transportation remained challenging, notably in the United Kingdom due to the base effect of transitions completed with Ministry of Justice in H1 2018 and in the U.S. from the Marriott International contract lost last year.

This was partly offset by increased business in the Other Business Units. After our first quarter at minus 3.0%, the division achieved minus 0.6% organically during the second quarter of 2019; thanks notably to the contribution from North America. Operating margin in Infrastructure & Data Management was EUR 274 million, representing 8.7% of revenue achieving stability compared to last year. Indeed, all geographies pursued strong cost saving and industrialization actions, including the RACE program to reduce their cost base, to adapt it when necessary to their revenue evolution, and finally, to anticipate coming automation and robotization. On the next slide, Business & Platform Solutions revenue during the first half of 2019 reached EUR 2.135 billion, plus 2.3% at constant scope and exchange rates.

Growth was strong in Manufacturing, Retail & Transportation that benefited from a good performance in almost all geographies and more particularly in Germany, thanks to the new Application Management Services with Siemens, as well as new SAP engagement in Central & Eastern Europe, the contribution from Syntel activities in North America, and finally, new business recently won in the Benelux & The Nordics, which also contributed positively. Telco, Media & Utilities sector showed a growth largely fueled by Other Business Units through higher volumes with Italian and Spanish utilities, coupled with higher activities for WorldGrid contract in France. This was partly offset by lower volumes in some Application Management contracts in Germany and in Benelux & The Nordics. The division posted growth in Financial Services. Syntel activities strongly supported the performance in this market in North America and materialized revenue synergies on existing accounts in the United Kingdom.

The situation was more challenging in the banking sector in France, [inaudible] and Central Europe. In Public & Health higher volumes were achieved in Germany and in France, even if it did not compensate volume reductions in legacy contracts in North America, contract reduction last year in Benelux & The Nordics and project completions in the U.K. During the second quarter, organic growth was 1.1% due to a further cleaning of low-margin contracts. Operating margin was EUR 247 million, representing 11.6% of revenue. This strong improvement of 80 basis points versus last year H1, was mainly led by North America, Germany and the U.K.

This was attributable to cost synergies from Syntel integration, but also to increasing revenue share of Codex, SAP HANA, and more generally, to digital offerings combined with continued cost-savings effect in most geographies, notably through the industrialization of global delivery and a more efficient workforce management. While talking about Business & Platform Solutions, let's turn to a status of Syntel integration on the next two slides. First, Syntel client growth in H1 was in line with our plan. While Q1 was above 8% in Q2, we came to the range of 4% to 5%, which is the growth rate we expected for Syntel at the time we made the acquisition. Syntel renewed and extended two large contracts in the North American insurance market, as well as a new scope with a major U.S.

bank. Turning now to synergies; in H1, we signed 21 deals for a total of circa EUR 40 million of order entry. At the end of June we see a total of synergy opportunities ahead of us of $1 billion. As an example, in Q2 a deal to modernize applications using Google Cloud was signed with an oil field services leader company in the U.S., thanks to Syntel. This customer is a long-standing client of Atos in IDM.

Second example, the group won a new client in North America to implement S/4HANA, thanks to the combined capabilities of both of Atos and Syntel. Finally, as an example of joint offering, we complement the Atos cloud management platform with the Syntel SyntBots platform to build the AMOS platform, to automate application migration to the cloud. On the next slide let's move to cost synergies. As you can see in H1, we transferred circa EUR 940 million of contracts from Atos under Syntel management plus, another EUR 140 million started this month. This will enable operational efficiency increase, and therefore the realization of the expected cost synergy plan.

We realized in H1, EUR 14 million annualized savings in the areas of real estate and procurement and expect overall cost synergies of EUR 30 million for the year, in line with our plan to reach EUR 120 million run rate in three years. Finally, to enable our growth in offshore demand from our global customers, we opened a new global delivery center in the south of India, which has started operations in Q2. On the next slide, revenue in Big Data & Cybersecurity was EUR 473 million, with a continued double-digit growth led by a strong performance largely driven by France and Benelux & The Nordics. In particular, growth was sustained by Big Data activity including high-performance computers. This mainly came from new business in France, combined with a strong performance posted in Benelux & The Nordics with CSC contract, as well as in Brazil with Petrobras.

Cybersecurity activities also performed a double-digit growth led by new business opportunities with CNA in North America, coupled with good performance in Benelux & The Nordics, and in Germany, which largely offset revenue from licenses not repeated this year in the U.K. Mission Critical Systems sales posted a solid growth, largely coming from the ramp-up of a national police contract in Central & Eastern Europe. In Q2, Big Data and Cybersecurity division recorded a revenue organic growth at plus 13.2%. Operating margin was EUR 48 million representing 10.2% of revenue and a reduction compared to last year on a like-for-like basis. Operating profitability in H1 2019 just reflected specific R&D and innovative offering investments in Cybersecurity, in Artificial Intelligence and on Big Data solutions.

It does not change the trend that we follow both this year and on the three year plan. Next slide presents the performance by business unit. During the first half of 2019, revenue grew in most business units. In North America Infrastructure & Data Management accelerated its recovery in Q2. Thanks to the ramp-up of new contracts including CNA Financial Corporation, while it was impacted for the last time by the ramp-up of two contracts terminated at the end of H1 last year.

North America is now on track towards positive organic growth in H2. In Business & Platform Solutions, the good performance recorded in Financial Services, but also in Manufacturing, Retail & Transportation, benefiting from Syntel did not offset lower volumes in Public & Health. Germany up plus 2.2%, thanks to a strong activity in Business & Platform Solutions led by both digital projects and the new Application Management contract with Siemens. Revenue was stable in Infrastructure & Data Management, and growth was generated in Big Data & Cybersecurity with new businesses in Manufacturing. France grew by plus 4.6% fueled notably by the strong performance in Big Data & Cybersecurity, and more particularly in Public & Health with business within high-performance computers and Big Data, but also in Business & Platform Solutions, which recorded growth in most of its industries.

In the U.K., a strong activity in Business & Platform Solutions, more particularly from Syntel, did not compensate lower sales of licenses in Cybersecurity and lower volume on contracts renewed last year in Infrastructure & Data Management. The geography also delivered billions to U.K. postal service company and ramped up the Cybersecurity contract with Aegon. Benelux & The Nordics recorded a growth at plus 2.6%, driven by its good performance in Big Data & Cybersecurity, while stabilizing Infrastructure & Data Management. Other Business Units performed a solid plus 6.1% organically; thanks to a strong performance in the three divisions and in all geographies, more particularly in Central & Eastern Europe and in South America.

The increase of operating margin in the first half of the year was mainly led by North America and Other Business Units. Indeed, North America benefited from the cross materialization of synergies with Syntel and the improved monitoring of costs to align with the level of its activity. Other Business Units operating margin improvement was performed in almost all geographies and linked to revenue growth. On the next slide, as you remember, as part of the three year plan ADVANCE 2021, we launched our productivity and excellence program named RACE to accelerate further our margin expansion. Over the first six months, RACE rolled out a set of new activities, setting up solid foundations embedding agile, digital and automation into our delivery platforms.

Let's start with automation, which is RACE theme #1 and a focal element in Atos journey. We deployed across all geographies the Atos automation marketplace. This is enabling us to capitalize share across-the-board and impact faster our bottom line. As of end of H1, we have over 1,800 automation cases already available. This dynamic is also translated into an increase in certified employees on automation technology, multiplied by seven times in a year.

As a consequence, H1 recorded additional 130 customers where we deployed our automation framework. In IDM we have launched several incremental actions for lighter delivery structure. Furthermore, we have turned 25% of all our IDM open vacancies into automation and software roles to prepare our new employee generation to the software world of automation. Also, we are applying a new operational KPI framework based on AI and analytics at the heart of our productivity assets throughout IDM. Our right-shoring activities are accelerating versus last year, plus 50% with HR function, we have reduced internally our time to the right resource by 30%.

This happened by reengineering, digitalizing and simplifying our processes. Finally, the last example around contract profitability improvement methodology. We addressed with it a specific pool of low-margin accounts and we started to generate visible product margin improvement on these target contracts within six months. In parallel, we built a Contract Management Digital Academy towards our client-facing teams to share best practices. So clearly, as you see, we are pushing on all cylinders to drive margin improvements.

Now let me comment the income statement of H1 2019. We start with the operating income for the first half of 2019 at EUR 288 million. I would like to comment the large items. Staff organization amounted to minus EUR 63 million with the acceleration of the adaptation of the group workforce in several countries, in particular in Germany and to a lesser extent in France. Rationalization costs was minus EUR 17 million, mainly in North America and in France.

Integration amounted to minus EUR 24 million, mainly related to the integration cost of Syntel to generate synergies. The total of restructuring, rationalization and integration costs will decrease in H2 in line with the full year objective. Amortization of purchase price allocation was minus EUR 79 million compared to minus EUR 49 million last year. Syntel customer relationships and technology amortization was minus EUR 33 million in H1 this year. Net financial expense amounted to minus EUR 79 million for the period compared to minus EUR 23 million for the first half of 2018.

The increase mainly came from minus EUR 32 million interest expenses to finance Syntel acquisition and further to the first application of IFRS 16, the interest on the lease liabilities. The tax charge for the first half of 2019 was minus EUR 38 million corresponding to an annualized effective tax rate of 18.3%. Share of net profit of associates accounted for under equity method, amounted to EUR 12 million in the first half of 2019 coming from the contribution of Worldline since May 1, 2019. The group reported a net income from continuing operations group share of EUR 180 million for the first half ended June 30, 2019. The net income from discontinued operation group share amounted to EUR 3.055 billion and was made of the contribution from Worldline net results from the first four months of the year and of the net gain on distribution of Worldline shares net of cost to distribute after tax.

This net gain was EUR 2.996 billion. The normalized net income was EUR 343 million and normalized diluted EPS group share from continuing operations was EUR 3.21, up plus 12% versus H1 last year. Let's move to the free cash flow on the next slide. Operating margin before depreciation and amortization was EUR 835 million. In addition to the depreciation of right-of-use assets under IFRS 16, the increase was – the increase by EUR 293 million of OMDA is due to the Syntel scope effect as well as organic improvement from operations.

CapEx totaled minus EUR 173 million, representing 3.0% of revenue, 40 basis points less than the same period last year as the group structure became less capital intensive. During the first half of the year, change in working capital was minus EUR 269 million compared to minus EUR 152 million in the first half of 2018. The increase in working capital requirement compared to the first half of last year mainly came from the combination of

three items: Number one, reduction in sales of receivables in H1 2019, although it will remain stable over the full year. This effect was circa minus EUR 40 million; an unfavorable geographical mix in Q2 of billed revenue evolution, as North America and United Kingdom where collection is faster decreased, while most of the other geographies increased. The effect can be estimated at circa minus EUR 35 million in H1 2019.

Third, higher supplier payment concentration in H1 versus H2 for circa minus EUR 35 million. All these three effects are by nature H1/H2 timing effects, and as such, will not impact the full year free cash flow generation. Total cash out for reorganization, rationalization and integration was minus EUR 95 million. A larger portion of reorganization costs was pulled forward into H1 to optimize the impact on the full year operating margin. The group objective for the full year is confirmed at 1% of revenue plus Syntel integration costs and German transformation plan.

Cash out related to taxes paid amounted to minus EUR 48 million. The increase was mainly due to Syntel scope effect. Cost of net debt increased from minus EUR 8 million in the first half of 2018 to minus EUR 36 million in the first half of 2019, of which minus EUR 32 million from interest expenses to finance Syntel acquisition. Finally, other items totaled minus EUR 26 million, stable compared to last year same period. So group free cash flow generated during the first half of 2019 totaled EUR 23 million compared to EUR 78 million in H1 2018, and I'm going to show you now how we look at H2.

On the next slide, you see a bridge starting from H1 at EUR 23 million to full year at guidance between EUR 600 million and EUR 700 million. First of all, last year we reached EUR 418 million in H2, excluding Worldline. That included two months of Syntel, so I need to add four months of Syntel in the bridge for this year; that is EUR 60 million. Then, as I told you the combined three impacts on H1 sales of receivables, geographic mix on billing and more concentration of supplier payments or timing effect and will reverse in H2 for circa EUR 110 million. Then we target an additional EUR 55 million operating margin in H2, in line with the guidance of circa 10.5% full year.

The continuous decrease of the release of provisions should allow a conversion rate improvement and generate EUR 10 million more in H2. Considering the level of restructuring and integration in H1, we plan H2 this year higher than H2 last year by minus EUR 35 million. The financial expenses related to the financing of Syntel acquisition will be EUR 15 million more in H2 this year, as the financing started beginning of October last year. This is the way we intend to achieve our full year guidance of free cash flow that we are confirming today. Next slide presents the cash evolution.

Net acquisitions and disposals in H1 2019 amounted to minus EUR 11 million, mainly relating to the cost to distribute the Worldline shares and other costs related to the distribution. Capital increase totaled EUR 15 million in the first half of 2019 compared to EUR 7 million in the first semester of 2018, mainly explained by the group shareholding program, Share 2018 for employees which occurred only in the first half of 2019. In H1 2019, minus EUR 16 million were cashed out for share buybacks, notably to deliver performance shares with no dilution for shareholders. The cash-out resulting from dividend was minus EUR 58 million compared to minus EUR 70 million in the first half last year. And to finish on this slide, group net debt was EUR 2.939 billion at the end of June 30 this year compared to EUR 2.872 billion on December 31, 2018.

On my last slide, the total head count of the group was 108,851 at the end of June 2019 compared to 122,100 at the end of December 2018. Most of the decrease came from the deconsolidation of Worldline, which represented roughly 11,500 people. Excluding the scope effect, the decrease was minus 1.5% over the semester due to the continuous deployment of automation and robotization programs. Attrition was circa 15% in the first semester and the group hired more than 9,000 staff, majority of them in offshore countries. Thank you all for your attention, and it is now back to you Thierry for the conclusion.

Thierry Breton: Thank you very much Elie. Before starting the Q&A, so let me summarize our priorities this year after a solid H, and of course this is part of our – sorry, the first year of our three year plan. Growth in H2 for both North America and therefore for IDM, that's what we expect of course in H2, integration of Syntel and accelerating the improvement of B&PS profitability, rolling out the ongoing transformation and performance program, and of course focus, and this is not a surprise for you of course, on Big Data & Cybersecurity to position this division as a leading player as we are convinced that this fragmented market will consolidate and that we want to be a key player in this consolidation. So thank you for your attention. We are now going to take your questions.

Just for your information, in the room, again we have also Philippe Mareine, our Global Head of Human Resources; and also Uwe Stelter. Uwe held many positions of CFO. He is coming from the finance in Siemens and we welcomed Uwe many years ago with the integration of Sys [ph]. He's German of course, but lives now in Paris. He was the Global CFO of IDM under the direction of Eric Grall and the COO of B&PS in Atos.

So he knows both the finance and business and is now the Deputy CFO of the company, that's why Uwe is also attending this call. So, now the first question please?

Operator: Your first question comes from the line of Michael Briest of UBS. Your line is open. Please go ahead.

Michael Briest: Good morning, thank you; a couple from me.

Just in terms of North America, I obviously can see and hear your confidence in the second half recovery, down 5% in the period though, and I think if we exclude Syntel it's more like a high single-digit decline. Could you sort of explain how the business is going to accelerate so quickly from that sort of position? And then secondly, also following up on Syntel, you are talking about mid-single-digit growth. If we look at Business & Platform Solutions again, it looks like in the second quarter there was a small decline and I understand what you're saying around sort of cleansing some of the older low-margin contracts? When will that process end? Is that already gone or will that continue to be a feature of the second half? Thank you.

Thierry Breton: Thank you, Michael. Maybe Elie, you want to take the – I think just to correct a little bit the first question and...

Elie Girard: Hi Michael. So on North America, you got several evolutions. First of all, IDM improved in North America between Q1 and Q2, so the decrease of IDM has reduced. So we are not in the high single-digit as you said in IDM North America. So we are on the path on the way of the recovery and growth reach in North America IDM in H2 as well.

Thierry Breton: Exactly in line with our plans.

Elie Girard: Yes, absolutely! Now to get the full number of North America and the evolution from Q1 to Q2, you need to consider what we explained that the Syntel legacy, so the scope of Syntel that we acquired, has gone back to globally to the 4% to 5% band that we have always targeted for this acquisition, for the perimeter of Syntel, from a level which was more in the 8% to 10% during the few quarters, but again, we've always explained that we are seeing for this acquisition 4% to 5%. So we've got this effect from 8% to 4% to 5% globally Syntel from Q1 to Q2, and then you've got another aspect which is on the B&PS legacy Atos, especially in the healthcare sector, which is down for a few quarters and which will recover by the end of the year. So in total, I repeat, IDM North America had decreased – has reduced its decrease from Q1 to Q2 as planned and is on the way to positive in H2. The second part of your first question was what makes us confident? It is still the same levers that we explained back at the beginning of the year and the bridge that we showed, if you remember.

Number one, we've got the base effect from the lost contracts last year that are going – that are exiting the base in Q3 and that amounts to roughly 5% -- 5 points on this perimeter. That means roughly at group level 0.8 acceleration due to the base effect between Q2 and Q3 just on this. The second lever is coming from an improved fertilization that the management of North America has managed to kick in, Eric, already from Q1 to Q2 and we expect much more in Q3 and in Q4. So this is fertilization, meaning small work that is on top of existing contracts. And number three, last but not least, new logos, new customers, and we just said, it's not in H1 figures, but we just announced that we had signed one of those sizable deals in July in IDM in North America, in the health care sector that will produce, generate revenues in H2.

Sorry to be a bit long, but to go through all the dimensions of the recovery of IDM North America.

Thierry Breton: I think it was important, because we are very confident and I think it's important to share it with you. Maybe the second question also?

Elie Girard: Second question on Business & Platform Solutions and I think it was a shorter question, shorter answer. The low-margin contract cleaning should not go further in the rest of the year. So we will not clean further contracts, but of course in Q3 we still have an impact from the contracts that have been cleaned so far.

But no additional cleaning of contracts, because as we explained as well, the three ways of transfer of contracts from B&PS Atos legacy to Syntel management has been executed, Uwe, the last one being on July 1.

Thierry Breton: But Michael, I think it was important and this is really something very important to us. During the transfer of this contract, we did say that we need to have in-depth cleaning and I think it was really the time to do it; it's once in a lifetime. So this is why we need, and as Elie said, it will impact your Q2, Q3 and then it's behind us. But of course, on the contrary, we enhanced the profitability, which is also of course very important.

Next question please.

Operator: Thank you. The next question comes from the line of Stacy Pollard of JPMorgan. Your line is open. Please go ahead.

Stacy Pollard: Thank you. Just a little a follow-up on the Big Data & Cybersecurity division around margins. Obviously, it declined year-on-year. It looks like that was mostly France and U.K. and you said it wouldn't impact the full year and that some of that is I think around the timing of investments.

Can you maybe just explain again your visibility there? And then second question is kind of on the working capital impact that hurt the free cash flow. You have this table or chart, I forgot. I think its slide 26 that walks through the EUR 110 million in the first half-second half timing effects. But then what are the factors for that last little box called further improvement in working capital? What kind of needs to happen there or in what size of order of magnitude or impact could we see?

Thierry Breton: Thanks Stacy for your two questions. For the first one of course, Cybersecurity is as you know a key division.

Everything is important but Cybersecurity is like extremely important, so we invest a lot of time. We invest a lot and we invested a lot in H1. Okay, we decreased the OM and I accepted that because we invested a bit more. That difference is roughly a few million, that's probably something like EUR 5 million, but of course we will recuperate this integrally, fully in the second half. But I did say that it was helpful to invest higher than we thought to be ready, and yes, I could confirm that we are absolutely, fully confident in the target we give.

By the way, you may see an acceleration also in growth more than we expect in the coming quarter that I think you should expect a very high growth in this division, other continuous improvements in the environment. And you know, that's very important for us. The demand is there, but you know that I continue to believe that we will use this division to consolidate, and I'm personally deeply involved in it. Elie, second question?

Elie Girard: Sure, Hi Stacy. So on the working capital question, in fact on the bridge, Page 26, when you add all the bricks, and yes, the identified effects, you get to EUR 637 million, so you are largely into the range already, and the last one is of course the daily work of the entire teams of Atos, of course, chasing any overdue we have with customers, invoicing, billing, and of course procurement, optimizing billing terms and payment terms with our suppliers.

So we are working on this every day. This is also part of the RACE program. So we expect always a continuous improvement from this. It is honestly difficult to put a figure on this as there is some volatility in the working capital, but we expect and we showed that by the way, you know our three year plan. We are starting from year 2018 with a change in working capital, which was already quite significantly negative, so we could expect to have a further improvement going forward.

Stacy Pollard: Okay, useful. Thank you.

Elie Girard: Thank you Stacy and next question please?

Operator: Your next question comes from the line of Laurent Daure with Kepler. Please go ahead. Your line is open.

Laurent Daure: Yes, thank you. Morning gentlemen. I have a few questions this morning. The first is on all the first wins you mentioned with your Google agreement. Can we have a bit more color about the size of deals and how sizable these agreements can be a few years from now? The second question is on the M&A side.

I think 2019, probably the focus is to integrate Syntel rather than M&A. But in more general terms we've seen some moves from Cap towards the engineering sector. Was wondering if you see an area where in the future you could have interest or if you believe it's something that is too far away from your core business? And my final question, sorry to be back on North America, you already gave a lot of details. But on the B&PS, on the Atos side, seems it's coming down quite a lot. So I just want to be certain that this is a short-term issue.

And if we have a little bit more color on what happened in Public & Health care I think you bought a business long ago in the U.S. So is there a specific issue there or it's just one or two quarters of weakness and then the B&PS of Atos will be back to growth just for the U.S.?

Thierry Breton: Okay, thank you Laurent, three questions. Maybe since Eric is really the key member of the executive community for our partnership with Google, maybe it will be good that you take this and maybe Robert could jump on it also to add the view in terms of the deals that we can have, but I think it's important to have that. And then I will take the M&A Laurent and then we will come back to secure you that this is really a timing effect for B&PS. Eric?

Eric Grall: Okay, hello Laurent.

So first, overall if we look at H1, we signed roughly close to EUR 176 million of new contracts, thanks to the Google partnership, which now puts our total since the beginning of the partnership at about EUR 300 million of new contracts, new order entry that was generated through the partnership and that's for the H1, of course statutory numbers and full year and since the partnership last year. And it's contract of course, varying size. They contributed to significant opportunities like in Philips as we said in Q1. That was a very sizable win for us combining the Google GCP capabilities with Syntel capabilities and IDM so that was very great and large one. We have also smaller deals that start small because it's about artificial intelligence.

We do first proof of concept. We sign one contract and then we expect to replicate in many other sites or dimensions on a given customer. I have to say also Laurent that the contract that Elie mentioned in his introduction, that unfortunately was signed in July and not in June, but therefore not in our H1 numbers. And the large one, that large contract in health care is fully related to the partnership. It was a joint pursuit activity together with Google and also with the Syntel team.

So combining the strengths of all the divisions.

Thierry Breton: Robert, you want to add something maybe on...

Robert Vassoyan: Maybe a couple of points to show the momentum, Laurent. 40 deals signed in H1 compared to 10 last year H1, so you can really, really see the acceleration. And the other thing that I would say is, on every single year renewal; whether its data center renewal, Digital Workplace renewal, Application Management renewal, we are succeeding in adding a small component assessment, a small cloud migration that leads then to bigger contracts, and this is how we'll progressively grow the contracts to develop the momentum that Eric has mentioned.

Thierry Breton: So good momentum Laurent, and we are very proud and excited. And by the way, it's also extremely good for our people. The appetite to become an expert is high. It's extremely demanding by the way to become an expert, but we have – it's good also for our employees. The second question of course is M&A.

Yes, you're absolutely right. This year we focus of course on the integration of Syntel and we are fully in line, extremely happy. Personally I could tell you I'm extremely happy with this acquisition; fantastic people; extremely good customer relationships; and by the way, a lot of technology also, which is pretty unusual for this kind of our company, this is why we bought it. But yes, you could expect some moves, and by the way, you could expect that we will make some acquisitions in Cybersecurity. We will announce some and we are working on that, on it.

Of course, at size which are compatible with us, but we are on an ongoing process to review everything. Exactly what we did when we started the process with Worldline; we were watching everything and we were contemplating everything. So we'll continue to focus here, on one hand to enhance significantly the growth and profitability on this division and we are on the plan, and on the second hand to see the opportunities that we may have. Now you mentioned some acquisition from one of our competitors and my friend, Paul Hermelin. It's a big move and I don't want to comment this.

The only thing I could tell is that it's not a surprise to me that somebody finally decided to make a proposal on Altran, and for us, we consider it was not matching both our strategy and financial capabilities. That's the only thing I could say. Elie, for the third one.

Elie Girard: Hi Laurent. So on the B&PS Atos legacy healthcare part, so it would not last.

We will still have – we have an impact for a few quarters already and we will still have an impact in Q3, which will be canceled in Q4 that only comes from if I go one sentence into the details. This is an activity which aims at migrating hospitals to new software system and those cycles in this activity and we are at the end of the cycle, so we have a kind of base effect. And again that will exit, but this base effect will exit in Q4.

Laurent Daure: So it means we rather have to wait for the fourth quarter to be back to growth in North America because of this impact or...

Elie Girard: No, no, no.

You know I want it to be precise, so I gave you all the impacts in all the compartments, but we reiterate that we expect to be positive in North America as soon as Q3.

Thierry Breton: Yes, absolutely. Thank you, Laurent. Maybe another question?

Operator: Thank you. The next question comes from the line of Nicolas David of ODDO BHF.

Please go ahead. Your line is open.

Nicolas David: Yes, hi. Good morning gentlemen. I have two questions actually if I may.

First is regarding IDM in the U.S. As you still expect organic growth improvement in H2, should we expect the margin also to improve there in H2 and also because you are taking action to improve efficiency, and thus for the whole IDM business, can we expect the H2 margin to be up year-on-year given also that after solid H1 margin? And I have a follow-up.

Thierry Breton: Nicolas, yes. I confirm fully yes to your two questions. First, in the U.S., definitely, and secondly, of course very solid improvement in the operating margin in H2, but Eric will give you more details, but I can confirm a strong yes to your two questions.

Eric Grall: So much like to what Thierry said; it may be a bit of colors. Effectively Elie mentioned in his presentation a number of RACE initiatives. Several of them are at full speed of execution in IDM. We are accelerating the base on automation and significantly not only deploying in the U.S., which is where we have a number of large contracts, but also across of the world and combined also with a better mix of onshore and near shore / offshore resources. So the combination of the two effects, the automation is going to lead us to effectively an improvement in H2 in terms of operating margin.

That will be reflected of course in the U.S. and overall in IDM.

Nicolas David: Thank you, and my second question is more in general. It is given that the macro environment gets a bit tougher. Do you see more appetite from clients regarding maybe large outsourcing deals aiming at cutting costs.

These are on infra side or even application with more offshore or is it – you didn't see any change in the demand so far?

Thierry Breton: No, we don't see this yet, but I’ll just turn this to maybe Eric. Robert, you don't see this? No, not yet.

Nicolas David: Alright. Thank you.

Thierry Breton: Thank you.

Maybe another question?

Operator: Your next question comes from the line of Mohammed Moawalla of Goldman Sachs.

Mohammed Moawalla: Great, thank you very much. Two questions. Firstly, in B&PS have you seen any sort of macro impacts in terms of sort of customer buying behavior, and then I accept that in Syntel you are sort of continue discontinuing some of the low-margin business. But in the core, have you seen sort of any effect of that and is that the risk in H2? And then secondly Thierry, just coming back on to Cybersecurity, your sort of flagged potential sort of acquisitions here, do you feel that you can sort of undertake some of this M&A with Cybersecurity still within Atos Group or do you feel that you need to sort of create value and spin out this business and then use that as a vehicle perhaps to be more competitive in M&A? Thank you very much.

Thierry Breton: Thank you, Mo, and hello Mo. Maybe I will ask Uwe to answer the first question, both as his capacity of Group Deputy CFO and former COO at B&PS. Uwe, how do you see the impact of them? Do we still see – already see some issue on it?

Uwe Stelter: Yes, thanks Thierry. So I think from an overall market perspective we don't see any general trends which would believe us that there is any weakness in the market. What we see in the opposite is then, of course our customers are looking for opportunities to digitalize and also you know improve their application landscape, which of course with Syntel and to combination with IDM.

As Eric was mentioning on Google, we see a lot of opportunities to help clients in this space. So we see actually more upsides than any downside on the customers we are serving. Thierry Breton : That's for the first question, Mo, but I understand your question of course; and for the second one, yes of course as I said, we have to prepare us to consolidate and I told you that we do what has to be done. It's true that we have with our division a very, very solid business, fast-growing, highly profitable, but again, I will do everything that I have to do when it will be needed. But as I said, the only constraint I have is that this business is 100% part of our activity, because now it's so critical that it is definitely part of Atos strategy, and by the way a big differentiator.

I’ll just remind you that we have been ranked by Gartner as a Number One in Europe in cybersecurity services and number three worldwide.

Thierry Breton: So I think that we don't have any more questions. So I would like to take this opportunity to wish you a very good vacation to all of you. And for myself, my wife and myself, we will take 15 days, well-deserved. Thank you all.