Sopra Steria Group Sa · EURONEXT:SOP
Sopra Steria Group Sa — H1 2023 Earnings Presentation
48 slides from Sopra Steria Group Sa's earnings presentation, Jul 27, 2023
Slide 1: 2023 Half-Year Results Presentation
2023 Half-Year Results Presentation Paris, 27 July 2023
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking information subject to certain risks and uncertainties that may affect the Group’s future growth and financial results. Readers are reminded that licence agreements, which often represent investments for clients, are signed in greater numbers in
Slide 3: Key events for the first half of 2023 Operating position
Key events Annexes for the first half of 2023 Operating position by reporting unit Financial results for the first half of 2023 2023 outlook and targets 3 Presentation of H1 2023 results – 27 July 2023
Slide 4: Key events for the first half of 2023
Key events for the first half of 2023 Cyril Malargé Chief Executive Officer 4 Presentation of H1 2023 results – 27 July 2023
Slide 5: A solid performance from the Group
A solid performance from the Group First half 2023 (changes over one year) Total Operating margin on Free revenue business cash flow growth activity Net Organic profit revenue attributable growth to the Group 5 Presentation of H1 2023 results – 27 July 2023
Slide 6: Growth driven by very buoyant vertical markets
Growth driven by very buoyant vertical markets First half 2023 (changes over one year) Rising > +10% Q1: +1 day > +20% Q2: -2 days +11% +8% 6 Presentation of H1 2023 results – 27 July 2023
Slide 7: Operating performance in line with medium-term targets
Operating performance in line with medium- term targets 8.8% H1 2018 H1 2019 H1 2020 H1 2021 H1 2022 H1 2023 122.9 8.0% 61.9 66.3 37.1 7.2% 6.8% 6.6% -21.8 6.1% Incl. prepayments -114.3 of c. €50m H1 2018 H1 2019 H1 2020 H1 2021 H1 2022 H1 2023 7 Presentation of H1 2023 results – 27 July 2023
Slide 8: Momentum buoyed by digital transformation at major clients
Momentum buoyed by digital transformation at major clients… 8 Presentation of H1 2023 results – 27 July 2023
Slide 9: …and a growing presence in the tech ecosystem
…and a growing presence in the tech ecosystem Leader in Cyber Resiliency Services Industrial metaverse (NelsonHall) Partnerships with Nvidia and SkyReal Public Cloud Leader across Europe (ISG) Leader in Cloud Native Application & Expertise in simulation, optimisation and Application Transformation S
Slide 10: Strengthened positioning in AI
Strengthened positioning in AI Data/AI rAIse programme covering all Group programmes Public/private collective 4,000 experts and businesses: 13 industrial and academic partners Centre of excellence • AI for software engineering Platform managed by Sopra Steria c. 200 specialists • AI for consult
Slide 11: Balanced European development
Balanced European development Acquisition of CS Group and Tobania − Proposed acquisition of Ordina Defence Aerospace Public sector Financial services Energy Cybersecurity (1) Pro forma revenue including CS Group, Tobania and Ordina over 12 months 11 Presentation of H1 2023 results – 27 July 2023
Slide 12: Operating position by reporting unit
Operating position by reporting unit Cyril Malargé Chief Executive Officer 12 Presentation of H1 2023 results – 27 July 2023
Slide 13: Operating performance by reporting unit
Operating performance by reporting unit Operating profit on business Revenue activity H1 2022 Organic H1 2023 H1 2023 H1 2022 Restated* growth (€m) (% of Rev.) (% of Rev.) (€m) (%) France 1,198.9 1,121.3 +6.9% 9.1% 9.7% United Kingdom 461.0 425.8 +8.3% 11.4% 10.5% Other Europe 819.8 736.2 0 +11.4%0
Slide 14: France
France Organic growth of 6.9% H1 2023 H1 2022 Most buoyant verticals (% of (% of (€m) (€m) Defence France Rev.) Rev.) Public sector Revenue 1,198.9 1,023.7 Aerospace Organic growth (%) +6.9% Transport Op. profit on business activity 108.8 9.1% 99.6 9.7% CS Group contribution over 4 months Profit fro
Slide 15: United Kingdom
United Kingdom Organic growth of 8.3% H1 2023 H1 2022 Double-digit growth (% of (% of Aerospace, defence and security (€m) (€m) NHS SBS and SSCL joint ventures United Kingdom Rev.) Rev.) Revenue 461.0 442.6 New and renewed major contracts: Organic growth (%) +8.3% SSCL (DEFRA, HO, DWP, MOJ, CO), NHS
Slide 16: Other Europe
Other Europe Organic growth of 11.4% H1 2023 H1 2022 Most buoyant entities Scandinavia (% of (% of Spain (€m) (€m) Other Europe Rev.) Rev.) Italy Revenue 819.8 731.3 BeNeLux Free cash flow* Organic growth (%) +11.4% Germany: 8.2% growth and operating performance back at historical levels Op. profit
Slide 17: Sopra Banking Software
Sopra Banking Software A focus on sales that is yielding positive results More sustained investment than expected to revive sales of digital offerings H1 2023 H1 2022 Organic growth of 4.0% (€m) (% of (€m) (% of Subscriptions up 9.7% Sopra Banking Software Rev.) Rev.) Revenue 218.0 210.9 Acceleratin
Slide 18: Other Solutions
Other Solutions H1 2023 H1 2022 (% of (% of (€m) (€m) Human resources solutions grew by 4.2% Other Solutions Rev.) Rev.) Revenue 142.4 135.2 Property management solutions grew by 7.6% Organic growth (%) +5.3% Operating margin on business activity: 10.0% Op. profit on business activity 14.3 10.0% 11.
Slide 19: Financial results for the first half of 2023
Financial results for the first half of 2023 Étienne du Vignaux Chief Financial Officer 19 Presentation of H1 2023 results – 27 July 2023
Slide 20: Income statement
Income statement H1 2023 H1 2023 H1 2022 H1 2022 (€m) (% of Rev.) (€m) (% of Rev.) Revenue 2,840.1 2,543.8 Organic growth 8.1% Operating Bond (*) profit on business activity 251.1 8.8% 203.1 8.0% Share-based payment expenses -28.4 -14.5 Amortisation of allocated intangible assets -14.9 -16.6 Profit
Slide 21: Other operating income and expenses
Other operating income and expenses H1 2023 H1 2022 (€m) (€m) Costs related to business combination -3.6 -0.3 Restructuring and reorganisation costs -17.3 -10.4 Other - 9.8 0.8 Other operating income and expenses -30.7 -10.0 Of which half related to non-recurring costs linked to acquisitions and dis
Slide 22: Tax
Tax H1 2023 H1 2022 (€m) (€m) Profit before tax and share from equity-accounted companies 164.6 158.2 Effective tax charge -42.5 -43.2 Effective tax rate (%) 25.8% 27.3% Estimated 2023 tax rate: 26% 22 Presentation of H1 2023 results – 27 July 2023
Slide 23: Breakdown of change in free cash flow
Breakdown of change in free cash flow 140 +37.4 122.9 +52.8 120 -2.3 -2.3 -2.3 100 +3.3 €m 80 -29.9 66.3 60 Incl. c. €50m in net 40 prepayments 20 0 Free Cash Flow EBITDA CAPEX Reorganisation Additional WCR Tax Other items Free Cash Flow H1 H1 2022 and restructuring contribution to 2023 pension fund
Slide 24: Managed growth in net financial debt
Managed growth in net financial debt 600 -84.8 -6.6 Tobania CS Group 500 and other financial investments -438.3 400 558.9 300 200 100 152.0 0 +122.9 Net financial debt at Free Cash Flow Changes in scope and Dividends Foreign exchange Net financial debt at 31/12/2022 financial investments fluctuation
Slide 25: Strong balance sheet structure
Strong balance sheet structure Assets + WCR (€m) 3,092 2672 30/06/23 31/12/22 6% Net financial debt Gearing Gearing 18% Net financial debt / 30% 8% 15% Equity 4% Lease liabilities 14% 5% 3% Leverage Leverage 5% Net financial debt / EBITDA(1) 1.03x 0.31x Provisions for contingencies and losses Pensio
Slide 26: Diversified and accessible financing
Diversified and accessible financing 30/06/2023 30/06/2023 Amount Amount used authorised (€m) (€m) Bond 250.0 250.0 Available undrawn amount Multi-currency revolving credit facility - 1,100.0 €1.3bn i.e. 79% of authorised amount(1) Overdrafts and bilateral credit lines 98.6 310.7 Total 348.6 1,660.7
Slide 27: Reminder of the timeline for changes in scope
Reminder of the timeline for changes in scope 2022 revenue: €273m 2022 revenue: €92m 2022 revenue: €429m Consolidated 1 March 2023 Consolidated 1 March 2023 Public offering: 19/07 to 26/09 Integration process underway Integration process underway AGM: 6 September 2023 Expected synergies of €13m Chan
Slide 28: Discussions over the Cabinet Office's put option
Discussions over the Cabinet Q&A: why this Office’s put option wouldn’t happen in the NHS • Tenth anniversary of • SSG 75%/CO 25% creation of SSCL • 2022 performance • Success from the inception: operation, • Revenue: €337m execution, savings • Net profit: €36m • Option to sell included in • Contrac
Slide 29: 2023 outlook and targets
2023 outlook and targets Cyril Malargé Chief Executive Officer 29 Presentation of H1 2023 results – 27 July 2023
Slide 30: A resilient profile
A resilient profile Thanks to the nature of the Group’s client portfolio and business lines 100 clients Software and application maintenance, IT infrastructure management, BPO 37% Financial services 36% Insurance Public Sector Defence & homeland security, public sector Aeronautis & Space, Defence, S
Slide 31: Priorities for 2023
Priorities for 2023 1 2 3 Value focus Consulting Recruitment Profitability steering Financial Services Training Production cost control AI & tech Career development Acquisition integration Software 31 Presentation of H1 2023 results – 27 July 2023
Slide 32: Financial targets for 2023 & 2024
Financial targets for 2023 & 2024 Organic revenue Operating Free cash flow growth margin on business activity For , Sopra Steria confirms its target of reaching an operating margin on business activity of around 32 Presentation of H1 2023 results – 27 July 2023
Slide 33: Presentation of H1 2023 results – 27 July 2023
33 Presentation of H1 2023 results – 27 July 2023
Slide 34: Annexes
Annexes 34 Presentation of H1 2023 results – 27 July 2023
Slide 35: Helping combat climate change
Helping combat climate change Plan to reduce our greenhouse gas (GHG) emissions – 2022 results Direct activities Energy management -68%1 per employee -85%2 per employee Sites, business travel, data Low-carbon transport (baseline: 2015) by 2040 (baseline: 2015) policy centres Digitisation Offsetting
Slide 36: Key elements of planned tie-up with Ordina N.V.
Key elements of planned tie-up with Ordina N.V. “Recommended public cash offer followed by customary pre-wired back-end acquisition of 100% of Ordina N.V.'s business” IMPACTS FOR TRANSACTION TIMETABLE KEY TERMS SHAREHOLDERS SOPRA STERIA At 20 March 2023 21 March Purchase price for controlling Fulfil
Slide 37: Sopra Steria: a major tech player in Europe
Sopra Steria: a major tech player in Europe Breakdown of revenue to 30 June 2023 EMEA-leading IT services provider (top 9)(1) 2022 revenue 54,000 Operations in End-to-end €5.1bn employees 30 countries approach France Consulting & Systems Integration Financial services United Kingdom Hybrid Cloud & T
Slide 38: Detailed breakdown of revenue by country
Detailed breakdown of revenue by country At 30/06/2023 SERVICES – Revenue to 30/06/2023 BUSINESS SOLUTIONS revenue to 30/06/2023 Revenue Other Europe = €820m o/w Germany = 28% o/w Scandinavia = 33% o/w Spain = 12% o/w SFT = 10% o/w Benelux = 8% o/w Italy = 6% o/w Switzerland = 2% €2,480M €360M SERVI
Slide 39: Breakdown of Solutions revenue
Breakdown of Solutions revenue At 30/06/2023 BUSINESS SOLUTIONS revenue by product BUSINESS SOLUTIONS revenue by service line Sopra Banking Software = €218m 5% o/w France = 42% o/w outside France = 58% €360M €360M BUSINESS BUSINESS SOLUTIONS SOLUTIONS Sopra Banking Software Integration Services Main
Slide 40: Changes in workforce
Changes in workforce 30/06/2023 30/06/2022 France 22,363 20,106 United Kingdom 7,693 7,208 Other Europe 13,943 11,944 Rest of the World 555 467 X-Shore 9,400 8,982 Total 53,954 48,707 40 Presentation of H1 2023 results – 27 July 2023
Slide 41: Changes in exchange rates
Changes in exchange rates Changes in exchange rates Average rate Average rate Change For €1 / % H1 2023 H1 2022 (%) Pound sterling 0.8764 0.8424 -3.9% Norwegian krone 11.3195 9.9817 -11.8% Swedish krona 11.3329 10.4796 -7.5% Danish krone 7.4462 7.4402 -0.1% Swiss franc 0.9856 1.0319 +4.7% 41 Present
Slide 42: Breakdown of change in consolidated revenue
Breakdown of change in consolidated revenue Growth at constant scope and exchange rates of 8.1% 3,000 2,900 +211.9 2,840.1 2,800 2,700 +129.6 2,600 2,543.8 2,500 -45.2 €m 2,400 Tobania: +€32m o/w GBP -€17m CS GROUP +€98m o/w NOK: -€25m 2,300 2,200 2,100 2,000 Revenue H1 2022 Currency effect Scope ef
Slide 43: Earnings per share
Earnings per share H1 2023 H1 2022 (€m) (€m) Net profit attributable to the Group (€m) 112.5 112.3 Weighted average number of shares in issue excluding treasury shares 20.20 20.22 Basic earnings per share (€) 5.57 5.55 Basic recurring earnings per share (€) 6.80 5.92 Theoretical weighted average num
Slide 44: Breakdown of change in net financial debt
Breakdown of change in net financial debt H1 2023 H1 2022 (€m) (€m) Operating profit on business activity 251.1 203.1 Depreciation, amortisation and provisions (excluding allocated intangible assets) 67.0 62.1 EBITDA 318.1 265.3 Non-cash items 1.6 - 1.8 Tax paid -46.8 -44.5 Change in operating worki
Slide 45: Simplified balance sheet
Simplified balance sheet 30/06/2023 31/12/2022 (€m) (€m) Goodwill 2,316.0 1,943.9 Allocated intangible assets 93.9 108.3 Other fixed assets 274.1 261.3 Right-of-use assets 387.6 359.9 Equity-accounted investments 179.2 183.5 Total fixed assets 3,250.8 2,857.0 Net deferred tax 71.0 0.0 58.5 0.0 0.0 0
Slide 46: UK pension fund deficit net of tax at 30/06/2023
UK pension fund deficit net of tax at 30/06/2023 149 119 113 95 Deficit net of tax (€m) 57 49 30/06/2019 31/12/2019 30/06/2020 31/12/2020 30/06/2021 31/12/2021 30/06/2022 31/12/2022 30/06/2023 -25 -19 -50 46 Presentation of H1 2023 results – 27 July 2023
Slide 47: A core shareholder backing the corporate plan
A core shareholder backing the corporate plan Ownership structure at 30 June 2023 Pasquier Odin Treasury Managers family family shares 2.7% 68.5% 28.4% 0.4% Founders & Management Sopra GMT Shares managed on behalf Treasury shares Free float 2.6% 19.6% of employees Shareholders’ 6.9% 0.2% 70.7% agree
Slide 48: Alternative performance measures
Alternative performance measures Restated revenue: Revenue for the prior year, expressed on the basis of the scope and exchange rates for the current year. Organic revenue growth: Increase in revenue between the period under review and restated revenue for the same period in the prior financial year