Sopra Steria Group Sa · EURONEXT:SOP
Sopra Steria Group Sa — FY2022 Earnings Presentation
51 slides from Sopra Steria Group Sa's earnings presentation, Feb 23, 2023
Slide 1: 2022 Annual Results Presentation
2022 Annual Results Presentation Paris, 23 February 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: Agenda
Targets achieved Targets in 2022 Operating position Annexes by reporting unit Financial results for 2022 Strategy 3 2022 Annual Results Presentation – 23 February 2023
Slide 4: Targets achieved in 2022
Targets achieved in 2022 Cyril Malargé Chief Executive Officer 4 2022 Annual Results Presentation – 23 February 2023
Slide 5: Good performance in 2022
Good performance in 2022 Sopra Steria is on track to reach its medium-term target of 10% for operating margin on business activity Organic Free cash revenue flow growth Operating margin Net on business profit margin activity 5 2022 Annual Results Presentation – 23 February 2023
Slide 6: Structural improvement in return on capital employed and performance
Structural improvement in return on capital employed and performance 8.9% 14.1% 287 8.1% 264 7.0% 11.4% 204 9.3% 5.6% 5.6% 4.8% 2020 2021 2022 2020 2021 2022 2020 2021 2022 1) Return on capital employed: (Profit from recurring operations after tax + Profit from equity-accounted companies) / (Equity
Slide 7: Major new contract wins in strategic markets
Major new contract wins in strategic markets 7 2022 Annual Results Presentation – 23 February 2023
Slide 8: Accelerated pace of strategy delivery
Accelerated pace of strategy delivery Making digital Consulting work for people 2022 Operational Offerings efficiency Digital Market share sovereignty in Europe and trust 8 2022 Annual Results Presentation – 23 February 2023
Slide 9: New momentum for consulting
New momentum for consulting • Syntec Conseil Grand Prix • in the “Innovation & Insights ” category for France’s digital ID programme • in the “Transformation of Organisations” category, shared with our client Leroy Merlin • Décideurs Magazine rankings • in “Digital Transformation Consulting” • in “I
Slide 10: Strengthened positions in strategic European markets
Strengthened positions in strategic European markets Sopra Steria’s presence Belgium 2022(e): €100m revenue, 10% growth France 2022(e)(2): €265m revenue, 11% growth 1) Source: Gartner, “Market Share: IT Services 2021” 2) Source: FactSet Estimates consensus at 31 January 2023 10 2022 Annual Results P
Slide 11: Investments in digital sovereignty and trust
Investments in digital 2022: €180m sovereignty CS Group: +€45m and trust 2022: Over €460m CS Group: +€100m Geopolitical tensions and energy crises Climate transition CS Group: +€90m End-2021: Acquisition of Eva Group 2022: Proposed acquisition of CS Group 2022: Over €300m CS Group: +€20m Technical a
Slide 12: Shift in offerings toward higher added value
Shift in offerings toward higher added value Rollout of a dynamic framework Cloud / AI / Data / Blockchain Development of business solutions powered by AI Application services transformation Large-scale skills development and cloud technologies Methods / Assets / Industrialisation / Service centres
Slide 13: Operational efficiency
Operational efficiency • Increase in average daily • Reduced real estate rate billed footprint • Rise in offshore staff, • SFT: Reduction in accounting for 19% of the medium-term operating workforce (up 0.6 pts) risks 14% growth in India 13 2022 Annual Results Presentation – 23 February 2023
Slide 14: Making digital work for people
Making digital work for people CDP • Score of “A” for the 6th year running 2022: -68% vs 2015 (excl. impact of Covid-19) 2040 target: -85% vs 2015 Great Place To Work certification • Response rate: 84% • Overall perception(2): 78% (up 6 pts) +0.7 pts in 2022 (33.1% of total workforce) Executive Comm
Slide 15: Operating position by reporting unit
Operating position by reporting unit Cyril Malargé Chief Executive Officer 15 2022 Annual Results Presentation – 23 February 2023
Slide 16: 2022 operating performance
2022 operating performance Breakdown by reporting unit Operating profit on business Revenue Chiffre d'affaires activity d'activité Résultat opérationnel 2021 Organic 2022 2021 Croissance 2022 2021 2022 Restated* growth 2022 2021 (€m) Retraité* organique (% of Rev.) (% of Rev.) (M€) (€m) (%) (% du CA
Slide 17: France
France Operating margin on business activity at 10% Strong 4th quarter: Up 9.5% 2022 2021 Growth driven by: (€m) (% Rev.) (€m) (% Rev.) France • Product lifecycle management Revenue 2,039.0 1,824.9 Organic growth (%) +9.7% • Cybersecurity Op. profit on business activity 204.4 10.0% 156.3 8.6% • Cons
Slide 18: United Kingdom
United Kingdom Operating margin on business activity higher than 10% Organic growth of 7.3%, delivered despite 2022 2021 already high growth of 13.9% in 2021 (€m) (% Rev.) (€m) (% Rev.) • NHS SBS and SSCL up 3.8% United Kingdom Revenue 890.6 823.1 • Defence and Security up 20.6% Organic growth (%) +
Slide 19: Other Europe
Other Europe H2 profitability close to 10% for countries in the reporting unit Growth driven by Scandinavia and to a lesser extent by Spain, Benelux and Italy 2022 2021 Operating situation back to normal in Other Europe (€m) (% Rev.) (€m) (% Rev.) Germany since H2 Revenue ee cas o 1,473.0 1,343.2 Th
Slide 20: Sopra Banking Software
Sopra Banking Software Operating margin up 2.5% Contraction organic revenue growth mainly due to a downturn in services revenue 2022 2021 Software revenue up 1% (€m) (% Rev.) (€m) (% Rev.) • Subscriptions up 6% Sopra Banking Software Revenue 426.5 434.1 • Resilient licence sales relative to 2021 Org
Slide 21: Other Solutions
Other Solutions Operating margin on business activity at 13% 2022 2021 Human resources solutions grew by 7.2% Other Solutions (€m) (% Rev.) (€m) (% Rev.) Property management solutions grew by 2.2% Revenue 272.1 257.5 Solid Q4 for both businesses, with organic Organic growth (%) +5.6% growth of aroun
Slide 22: Financial results for 2022
Financial results for 2022 Étienne du Vignaux Chief Financial Officer 22 2022 Annual Results Presentation – 23 February 2023
Slide 23: Income statement
Income statement Financial year 2022 2022 2022 2021 2021 (€m) (% of Rev.) (€m) (% of Rev.) Revenue 5,101.2 4,682.8 Organic growth 7.6% Operating profit on business activity 453.1 8.9% 379.2 8.1% Share-based payment expenses -23.2 -6.7 Amortisation of allocated intangible assets -32.3 -33.2 Profit fr
Slide 24: Other operating income and expenses
Other operating income and expenses Financial year 2022 2022 2021 (€m) (€m) Costs related to business combination -3.7 -0.6 Restructuring and reorganisation costs -22.4 -35.5 Other -10.2 0.2 Other operating income and expenses -36.3 -35.8 24 2022 Annual Results Presentation – 23 February 2023
Slide 25: Tax
Tax Financial year 2022 2022 2021 (€m) (€m) Profit before tax and share from equity-accounted companies 347.0 285.2 Effective tax charge -83.2 -93.5 Effective tax rate (%) 24.0% 32.8% Deferred tax impact in the UK of €11.8m Annual tax rate estimated at 26% in 2023, then 24% in 2024 25 2022 Annual Re
Slide 26: Breakdown of change in free cash flow
Breakdown of change in free cash flow 340 320 +45.2 +10.9 300 +18.9 +15.3 287.2 280 264.4 -17.1 260 -39.7 -10.5 €m 240 220 200 180 160 140 Free cash flow EBITDA Capex Reorganisation Additional WCR Tax Other Free cash flow in 2021 and restructuring contributions to in 2022 pension plans 26 2022 Annua
Slide 27: 54% reduction in net financial debt
54% reduction in net financial debt 400 350 327.1 300 250 200 -20.9 152.0 150 -68.8 100 -22.4 50 +287.2 0 Net financial debt Free cash flow Changes in scope and Dividends Exchange rate fluctuations Net financial debt at 31/12/2021 financial investments and other at 31/12/2022 27 2022 Annual Results
Slide 28: Strengthened balance sheet structure
Strengthened balance sheet structure Assets + WCR (€m) 2,672.1 2,772.0 31/12/22 31/12/21 6% Net financial debt 12% Gearing Gearing 15% Net financial debt / 8% 19% 13% Equity 4% Lease liabilities 5% 4% 10% Leverage Leverage Net financial debt / EBITDA(1) 0.31x 0.73x Provisions for contingencies and l
Slide 29: Diversified and accessible financing
Diversified and accessible financing 31/12/2022 31/12/2022 Amount Amount used authorised (€m) (€m) Available undrawn amount of €1.3bn Bond 250.0 250.0 i.e. 81% of authorised am ount (1) Multi-currency revolving credit facility - 1,100.0 Overdrafts and bilateral credit lines 60.0 271.5 Total 310.0 1,
Slide 30: Changes in scope
Changes in scope Foreign investment screening/approval by Approval by competition authorities competition authorities In progress Achieved Acquisition of controlling interest – Launch of Closing Early March 2023 public offer Before 31 March 2023 Consolidation: March 2023 Consolidation: March 2023 20
Slide 31: Strategy
Strategy Cyril Malargé Chief Executive Officer 31 2022 Annual Results Presentation – 23 February 2023
Slide 32: Ambitious corporate plan
Ambitious corporate plan Reference shareholder Organic growth Employee shareholding …in services and External growth Performance worldwide in software End-to-end approach Software Expansion of Consulting Entrepreneurial culture and Targeting specific verticals close customer relationships Tech Digit
Slide 33: Strategy built on clearly defined elements
Strategy built on clearly defined elements 100 European key accounts End-to-end approach Industrial approach 8 preferred verticals, 3 of which Strengthening of consulting DevOps and asset-based are strategic Tech & Digital platforms • Financial Services • Cloud, Cyber, AI, Data, Blockchain X-Shore •
Slide 34: Targets
Targets 34 2022 Annual Results Presentation – 23 February 2023
Slide 35: 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 35 2022 Annual Results Presentation – 23 February 2023
Slide 36: 2022 Annual Results Presentation – 23 February 2023
36 2022 Annual Results Presentation – 23 February 2023
Slide 37: Annexes
Annexes 37 2022 Annual Results Presentation – 23 February 2023
Slide 38: 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 Low carbon mobility (baseline: 2015) by 2040 (baseline: 2015) Sites, business travel, data policy centres Digitisation Offsetting e
Slide 39: Key features of announced tie-up with CS Group
Key features of announced tie-up with CS Group Proposed acquisition of a controlling interest followed by a simplified public tender offer Purchase price for Value of shares (100%): Induced premiums(3): controlling interest: €282.5m(1) Ownership structure KEY TERMS €11.5 per share 1M VWAP up 74.7% (
Slide 40: Sopra Steria, a European leader in digital transformation
Sopra Steria, a European leader in digital transformation Breakdown of revenue – Financial year ended 31 December 2022 Among the top 5 European digital services companies Among the top 12 operating in Europe 2022 revenue 50,000 Operations in End-to-end €5.1bn employees 30 countries approach France C
Slide 41: Detailed breakdown of revenue by country
Detailed breakdown of revenue by country Financial year ended 31/12/2022 SERVICES – Revenue to 31/12/2022 BUSINESS SOLUTIONS – Revenue to 31/12/2022 Revenue Other Europe = €1,473m o/w Germany = 28% o/w Scandinavia = 34% o/w SFT = 11% o/w Spain = 11% o/w Benelux = 7% o/w Italy = 6% o/w Switzerland =
Slide 42: Breakdown of Solutions revenue
Breakdown of Solutions revenue Financial year ended 31/12/2022 BUSINESS SOLUTIONS – Revenue by product BUSINESS SOLUTIONS – Revenue by service line Sopra Banking Software 2022 revenue = €427m o/w France = €180m o/w Outside France = €247m €699M €699M BUSINESS BUSINESS SOLUTIONS SOLUTIONS Sopra Bankin
Slide 43: Global workforce
Global workforce Financial year 2022 31/12/2022 31/12/2021 France 19,822 19,842 United Kingdom 7,440 6,926 Other Europe 12,583 11,494 Rest of the World 435 498 X-Shore 9,410 8,677 Total 49,690 47,437 43 2022 Annual Results Presentation – 23 February 2023
Slide 44: Changes in exchange rates
Changes in exchange rates Financial year 2022 Changes in exchange rates Average rate Average rate Change For €1 / % 2022 2021 (%) Pound sterling 0.8528 0.8596 +0.8% Norwegian krone 10.1026 10.1633 +0.6% Swedish krona 10.6296 10.1465 -4.5% Danish krone 7.4396 7.4370 -0.0% Swiss franc 1.0047 1.0811 +7
Slide 45: Breakdown of change in revenue
Breakdown of change in revenue Growth at constant scope and exchange rates of 7.6% in 2022 5,200 +359.3 5,101.2 5,100 5,000 4,900 +46.9 4,800 +12.2 4,682.8 4,700 €m EVA Group +€33.0m o/ w GBP +€7m EGGS +€13.9m 4,600 o/ w CHF +€3m 4,500 4,400 4,300 2021 revenue Currency effect Scope effect Organic gr
Slide 46: Earnings per share
Earnings per share Financial year 2022 2022 2021 (€m) (€m) Net profit attributable to the Group (€m) 247.8 187.7 Weighted average number of shares in issue excluding treasury shares 20.26 20.24 Basic earnings per share (€) 12.23 9.27 Basic recurring earnings per share (€) 13.66 10.45 Theoretical wei
Slide 47: Breakdown of change in net financial debt
Breakdown of change in net financial debt Financial year 2022 2022 2021 (€m) (€m) Operating profit on business activity 453.1 379.2 Depreciation, amortisation and provisions (excluding allocated intangible assets) 144.4 173.2 EBITDA 597.5 552.3 Non-cash items 5.4 - 0.9 Tax paid -87.8 -77.3 Change in
Slide 48: Simplified balance sheet
Simplified balance sheet Financial year 2022 31/12/2022 31/12/2021 (€m) (€m) Goodwill 1,943.9 1,984.3 Allocated intangible assets 108.3 131.8 Other fixed assets 261.3 216.4 Right-of-use assets 359.9 343.1 Equity-accounted investments 183.5 198.1 Fixed assets 2,857.0 2,873.8 Net deferred tax 58.5 99.
Slide 49: UK pension fund deficit net of tax
UK pension fund deficit net of tax €m 300 245 250 200 200 167 150 125 123 119 113 100 49 50 0 -50 -25 31/12/2014 31/12/2015 31/12/2016 31/12/2017 31/12/2018 31/12/2019 31/12/2020 31/12/2021 31/12/2022 49 2022 Annual Results Presentation – 23 February 2023
Slide 50: A core shareholder backing the corporate plan
A core shareholder backing the corporate plan Ownership structure at 31 December 2022 Pasquier Treasury Odin Managers family shares family 28.4% 2.7% 68.5% 0.4% Founders & Management Sopra GMT Shares managed on behalf Treasury shares Free float 2.6% 19.6% of employees Shareholders’ 6.4% 0.5% 70.8% a
Slide 51: 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