Atos's UK auditor raises 'material uncertainty' about future
- Reference: 1719484033
- News link: https://www.theregister.co.uk/2024/06/27/atos_uk_going_concern/
- Source link:
In the latest annual report for the [1]year ended December 31, 2022 [PDF] – filed on June 24 – Atos highlights the ongoing discussions to reach a "refinancing plan" for its financial debt and to restructure the business, as well as talks to sell certain elements including the big data and security unit to the French state and Worldgrid.
"However, the group cannot rule out that the outcome of those discussions may be unsuccessful or that the solutions arising from those discussions prove insufficient to cover the group's financing maturities and cash requirements on a long-term basis," auditor Grant Thornton says in the report."
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"As a result of the circumstances described above regarding the ability of the group to support the company's access to liquidity, there is a material uncertainty related to events or conditions that may cast significant doubt on the company's ability to continue as a going concern."
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Until a longer-term agreement is reached, Atos's [5]interim financing program includes a €100 million ($106 million) revolving credit facility, a €300 million ($320 million) factoring facility, and a €50 million ($53 million) loan from the French state.
The company has €2 billion ($2.14 billion) of debt that will mature in 2024 alone, so restructuring talks need to go well. Yet it was back to the drawing board [6]yesterday after the consortium led by OnePoint, the biggest shareholder in Atos with an 11.4 percent stake, pulled out for an unspecified reason. This leaves just two alternatives on the table.
[7]Atos in chaos as bailout talks unravel faster than you can say 'restructuring'
[8]French state bidding for piece of Atos, offers €700M
[9]Atos gets a reprieve with restructure plan from Onepoint consortium
[10]France willing to buy key Atos assets to keep them French
With such uncertainty surrounding the future of the France-headquartered operation, the UK government is already [11]reported to be lining up alternative suppliers should Atos fail to get over its financial struggles.
According to public sector researchers at Tussell, Atos has won a total of £2.4 billion ($3 billion) in contracts since December 2019, and contracts worth a total £942 million ($1.18 billion) are currently active, including at the Student Loans Company, the Department for Work and Pensions, the Home Office, and HMRC.
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A spokesperson for the Cabinet Office told us: "We undertake regular reviews of suppliers and on occasion will undertake further due diligence to ensure public services can be maintained in a variety of scenarios."
We asked Atos to comment on the annual report for its UK ops but the company has yet to reply.
Atos's share price peaked in March 2010 at €147 and the last high was €99.45 in June 2017. It has slid ever since and at the time of writing it stands at €1.12. Atos was slow to react to the threat to its tech infrastructure and services businesses caused by the advent of the cloud, much like IBM GTS (now Kyndryl), as well as HPE and CSC (now DXC).
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Lopping off the big data and security division, for which the [14]French state has bid €700 million ($748 million), might give the business some breathing room and an injection of cash. However, finding a buyer for the legacy operations (datacenter, outsourcing, etc.) may well prove more difficult, hence the going concern warning. ®
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[1] https://reg.cx/4dpj
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2Zn2MsIglpxlobQGzgPSBDAAAANA&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
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[5] https://atos.net/en/2024/press-release_2024_06_21/market-update-june-20-2024
[6] https://www.theregister.com/2024/06/26/atos_restructure_deal_fails/
[7] https://www.theregister.com/2024/06/26/atos_restructure_deal_fails/
[8] https://www.theregister.com/2024/06/14/french_state_still_wants_atos_stake/
[9] https://www.theregister.com/2024/06/11/atos_restructure/
[10] https://www.theregister.com/2024/04/29/france_buy_atos_assets/
[11] https://inews.co.uk/news/uk-fears-financial-turmoil-it-giant-severe-effect-pip-nhs-3110917
[12] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Zn2MsIglpxlobQGzgPSBDAAAANA&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[13] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33Zn2MsIglpxlobQGzgPSBDAAAANA&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[14] https://www.theregister.com/2024/06/14/french_state_still_wants_atos_stake/
[15] https://whitepapers.theregister.com/
Re: Flop
This probably isn't affected by the effects on IR35 on small businesses.
Most of what Atos is on the hook for are either datacentre operations, or big budget IT projects, both of which, by definition, wouldn't have been provided by small businesses.
In fact, there is probably very little that businesses that are affected by IR35 do that is directly contracted by the government. True, many government departments engage small businesses/contractors to provide specific services, mainly for (supposedly) short-term skills requirements, but I don't know any SME that will be interested, or even could, step up to run a datacentre. A company that is large enough to do this work is pretty much by definition too big to be a SME, and thus won't be affected by IR35.
What IR35 has done is made the businesses that are large enough to handle these things consider whether they can engage these smaller companies/contractors to help provide these services to the government. That certainly has been affected.
I am a contractor currently working through an umbrella myself, so I do understand the IR35 issues, and what you said isn't one of them.
It'll never happen but it would be a Really Good Idea (which is why it'll never happen) for the next HMG of whatever colour to rescue it. That way it could effectively buy in what it needs to start to take control of its own IT destiny, something it should have done years ago.
In Brazil, we are already used to seeing this. A large corporation wins large public tenders, making these government agencies somewhat dependent on it. Then that same organization breaks up, knowing that governments will have to bail it out
Complete nonsense
It makes absolutely no sense whatsoever to me that Atos, that bought Bull in 2014, and is the current parent of Eviden, that is behind top supercomputers in the current Top500, with installs in France, Germany, Italy, Spain, Sweden, Finland, Slovenia, Luxembourg, Brazil, and the UK, could be in such a dire financial state, trading on Euronext at €1.12, particularly with current enthusiasm for datacenter AI. There must have been terrible internal management there, especially seeing how they are the one company in the EU that has (had?) the wherewithal to produce large computational systems, competing successfully with the US and China (HPE-Cray, Dell, Lenovo). This Atos crash is a goddam shame.
Re: Complete nonsense
Supercomputers are a tiny part of the business -- and probably not very profitable!
They made most of their money managing out sourced data centers. But with the current obsession with moving to the clouds that has become a dying business.
Re: Complete nonsense
"There must have been terrible internal management there."
My sentiments entirely. Now try Thales ...
Re: Complete nonsense
ATOS & Thales, French management at its finest...
Flop
Even after UK government giving big consultancies a life line in form of changes to IR35 that wipe the competition from small business, they still can't make it work...