Sopra Steria Group Sa · EURONEXT:SOP
Sopra Steria Group Sa — FY2014 Earnings Presentation
53 slides from Sopra Steria Group Sa's earnings presentation, Mar 19, 2015
Slide 1: 2014 Annual Results Presentation
2014 ANNUAL RESULTS PRESENTATION Paris, 19 March 2015 Delivering Transformation. Together.
Slide 2: Introduction
INTRODUCTION Pierre Pasquier - Chairman 2 2014 Annual Results Presentation - 19/03/2015
Slide 3: Agenda
AGENDA 1|Introduction 2|Performance in 2014 • Steria scope • Sopra scope • Sopra Steria 2014 financial statements 3|Vision for 2015 4|Conclusion 3 2014 Annual Results Presentation - 19/03/2015
Slide 4: 2014 Performance – Steria Scope
2014 PERFORMANCE – STERIA SCOPE Laurent Lemaire – CFO 4 2014 Annual Results Presentation - 19/03/2015
Slide 5: 2014 Performance by Geographic Area
2014 PERFORMANCE BY GEOGRAPHIC AREA STERIA STAND-ALONE The figures presented for operating profit on business activity by region are after head office costs(*) and exclude certain specific unallocated central items Revenue Operating profit on business activity 2013 Organic 2014 2014 2013 2014/2013 R
Slide 6: Breakdown of Performance: Other Europe
BREAKDOWN OF PERFORMANCE: OTHER EUROPE STERIA STAND-ALONE The figures presented for operating profit on business activity by region are after head office costs(*) and exclude certain specific unallocated central items Revenue Operating profit on business activity 2013 Organic 2014 2014 2013 2014/201
Slide 7: 2014 Performance: Breakdown by Country
2014 PERFORMANCE: BREAKDOWN BY COUNTRY STERIA STAND-ALONE The figures presented for operating profit on business activity by region are after head office costs(*) and exclude certain specific unallocated central items 2014 United Kingdom France Germany Scandinavia Belux Switzerland (€m) (% of Rev.)
Slide 8: 2014 Income Statement
2014 INCOME STATEMENT STERIA STAND-ALONE 2013 2014 2014 2013 Reported (€m) (%) (%) (€m) Revenue 1,887.0 1,754.9 Operating profit on business activity 99.4 5.3% 110.4 6.3% Expenses related to stock options and related items - 0.6 - 2.8 Amortisation of allocated intangible assets - 6.6 - 6.3 Profit fr
Slide 9: 2014 Change in Net Debt
2014 CHANGE IN NET DEBT STERIA STAND-ALONE 2014 Excluding 2014 securitisation (€m) programme (€m) Net debt at beginning of period (A) 224.0 273.6 Gross cash flow from operations before cost of net financial debt and tax 87.2 Tax paid - 21.2 Change in working capital requirement (*) - 110.0 Net cash
Slide 10: 2014 UK Pension Funds Deficit, Net of Tax
2014 UK PENSION FUNDS DEFICIT, NET OF TAX STERIA STAND-ALONE Change in the United Kingdom 220 pension funds deficit (€m) 200.0 Increase in assets practically 200 offsetting the increase in 180.0 commitments 180 Increase in the deficit mainly 160 due to foreign exchange effects (+€13m) 140 Additional
Slide 11: Summary
SUMMARY STERIA STAND-ALONE Strong growth and solid performance in the United Kingdom Challenging conditions in France and Germany Cash consumption highly correlated with the development phase of the SSCL shared service platform in the United Kingdom and the discontinuation of the deconsolidation pro
Slide 12: 2014 Performance – Sopra Scope
2014 PERFORMANCE – SOPRA SCOPE François Lefebvre – Deputy CFO 12 2014 Annual Results Presentation - 19/03/2015
Slide 13: 2014 Performance by Division
2014 PERFORMANCE BY DIVISION SOPRA STAND-ALONE Revenue Operating profit on business activity 2013 Organic 2014 2014 2013 2014/2013 Restated(*) growth (€m) (% of Rev.) (% of Rev.) (Change) (€m) (%) France 786.60 765.5 0 + 2.8% 0 8.5% 0 7.9% 0 + 0.6 point Europe (excl. France) 262.50 252.2 0 + 4.1% 0
Slide 14: Breakdown of Performance: Europe (excl. France)
BREAKDOWN OF PERFORMANCE: EUROPE (EXCL. FRANCE) SOPRA STAND-ALONE Revenue Operating profit on business activity 2013 Organic 2014 2014 2013 2014/2013 Restated(*) growth (€m) (% of Rev.) (% of Rev.) (Change) (€m) (%) United Kingdom 84.7 0 88.4 0 - 4.2% 0 4.8% 0 7.4% 0 - 2.6 points Spain 90.9 0 75.9 0
Slide 15: Breakdown of Performance: Other Solutions
BREAKDOWN OF PERFORMANCE: OTHER SOLUTIONS SOPRA STAND-ALONE Revenue Operating profit on business activity 2013 Organic 2014 2014 2013 2014/2013 Restated(*) growth (€m) (% of Rev.) (% of Rev.) (Change) (€m) (%) Sopra HR Software 132.0 117.7 + 12.1% 11.8% 8.3% + 3.5 points Property management solution
Slide 16: 2014 Revenue Breakdown: Solutions
2014 REVENUE BREAKDOWN: SOLUTIONS SOPRA STAND-ALONE SOLUTIONS REVENUE €433m IN 2014 (29% OF REVENUE) SOLUTIONS REVENUE BREAKDOWN BY BUSINESS LINE Property Licences management 15% solutions Integration services 49% BUSINESS LINE 24% Maintenance 10% Sopra HR 30% Software 12% Managed Services SOLUTIONS
Slide 17: 2014 Performance: Breakdown by Country
2014 PERFORMANCE: BREAKDOWN BY COUNTRY (*) SOPRA STAND-ALONE 2014 France United Kingdom Spain Italy Switzerland Belgium Germany (€m) (% of Rev.) (€m) (% of Rev.) (€m) (% of Rev.) (€m) (% of Rev.) (€m) (% of Rev.) (€m) (% of Rev.) (€m) (% of Rev.) Revenue 786.6 84.7 90.9 43.6 11.9 17.7 13.7 Operating
Slide 18: 2014 Income Statement
2014 INCOME STATEMENT SOPRA STAND-ALONE 2013 2014 2014 2013 Reported (€m) (%) (%) (€m) Revenue 1,482.0 1,349.0 Operating profit on business activity 127.8 8.6% 108.9 8.1% Expenses related to stock options and related items - 1.7 - 3.0 Amortisation of allocated intangible assets - 5.4 - 4.8 Profit fr
Slide 19: 2014 Change in Net Debt
2014 CHANGE IN NET DEBT SOPRA STAND-ALONE 2014 2013 (€m) (€m) Net debt at beginning of period (A) 154.6 204.1 Gross cash flow from operations before cost of net financial debt and tax 109.9 93.6 Tax paid - 31.6 - 36.8 Change in working capital requirement 1.0 - 1.7 Net cash flow from operations 79.3
Slide 20: Summary
SUMMARY SOPRA STAND-ALONE Solid positioning and performance in France Very good year for all Solutions Mixed performance between countries in Europe Good level of free cash flow 20 2014 Annual Results Presentation - 19/03/2015
Slide 21: Presentation of Sopra Steria 2014 Financial Statements
PRESENTATION OF SOPRA STERIA 2014 FINANCIAL STATEMENTS Laurent Lemaire – CFO 21 2014 Annual Results Presentation - 19/03/2015
Slide 22: Accounting Policies
ACCOUNTING POLICIES SOPRA STERIA The 2014 financial statements presented in the following slides have been prepared to reflect: accounting policies harmonised based on Sopra practices the application of acquisition accounting (IFRS 3) to Steria, which resulted in the fair value recognition of as
Slide 23: Adjustments to Net Opening Position (31/07/2014)
ADJUSTMENTS TO NET OPENING POSITION (31/07/2014) SOPRA STERIA Application of Sopra accounting policies -€49.9m Impact of IFRS 3 on financial liabilities -€33.6m Adjustments to liabilities for risks -€28.3m Impairment of assets -€24.9m Adjustments to equity -€136.6m Tax impact +€4.8m Net adjustments
Slide 24: Goodwill & Impact of PPA
GOODWILL & IMPACT OF PPA (*) SOPRA STERIA Purchase price €641.4m Opening equity (31/07/2014) – net of adjustments €260.4m Difference to allocate €381.0m Allocated intangible assets to be Goodwill amortised (client relationships) €286.8m €94.2m Ex. Sopra Ex. Sopra + + €51.0m €343.1m Ex. Steria Annual
Slide 25: 2014 Pro Forma Income Statement
2014 PRO FORMA INCOME STATEMENT SOPRA STERIA 2014 2014 2014 2014 Stand-alone Stand-alone Adjustments (*) Pro forma Pro forma Sopra Steria (€m) Sopra Steria Sopra Steria (€m) (€m) (€m) (% of Rev.) Revenue 1,482.0 1,887.0 1.1 3,370.1 Operating profit on business activity 127.8 99.4 4.0 231.2 6.9% Expe
Slide 26: 2014 Pro Forma Change in Net Debt
2014 PRO FORMA CHANGE IN NET DEBT SOPRA STERIA 2014 2014 Pro forma Excluding securitisation programme Sopra Steria and IFRS 3 Euro PP impact (€m) (€m) Net debt at beginning of period (A) 348.7 398.3 (*) Gross cash flow from operations before cost of net financial debt and tax 197.2 Tax paid - 52.8 (
Slide 27: Simplified Balance Sheet (IFRS)
SIMPLIFIED BALANCE SHEET (IFRS) SOPRA STERIA 2013 2014 Reported Sopra Steria Sopra (€m) (€m) Goodwill 1,449.3 317.5 Allocated intangible assets 174.6 51.4 Other fixed assets 230.0 56.7 Equity-accounted investments 146.8 118.8 Fixed assets 2,000.7 544.4 Net deferred tax 146.6 23.5 Trade accounts rece
Slide 28: Sound Financial Position (1/2)
SOUND FINANCIAL POSITION (1/2) SOPRA STERIA Gearing(*): 40.6% EBITDA leverage: 1.6x (max. 3.0x) Net financial debt at 31/12/2014 31/12/2014 Sopra Steria Gross financial debt 664.8 Available undrawn amount: €877.5m, Cash and cash equivalents 222.4 i.e. 57% of authorised amount Net financial debt 442.
Slide 29: Sound Financial Position (2/2)
SOUND FINANCIAL POSITION (2/2) SOPRA STERIA 31/12/2014 31/12/2014 Amount Amount used authorised (€m) (€m) Bond (*) 180.0 180.0 Syndicated loan - Tranche A € 200.0 200.0 Syndicated loan - Tranche B £ 102.7 102.7 Multi-currency revolving credit facility 126.7 900.0 Finance leases 10.4 10.4 Overdrafts
Slide 30: IFRS Consolidated Income Statement
IFRS CONSOLIDATED INCOME STATEMENT SOPRA STERIA: 12 MONTHS + 5 MONTHS 2013 2014 Reported Sopra Steria Sopra (€m) (€m) Revenue 2,280.4 1,349.0 Operating profit on business activity 193.0 108.9 Expenses related to stock options and related items - 2.0 - 3.0 Amortisation of allocated intangible assets
Slide 31: Vision for 2015
VISION FOR 2015 Vincent Paris – CEO John Torrie – Deputy CEO 31 2014 Annual Results Presentation - 19/03/2015
Slide 32: Project Presented When the Tie-up Was Announced
PROJECT PRESENTED WHEN THE TIE-UP WAS ANNOUNCED FROM THE PRESENTATION GIVEN 8 APRIL 2014 32 2014 Annual Results Presentation - 19/03/2015
Slide 33: Sopra Steria 2014: A European Leader in Digital Transformation
SOPRA STERIA 2014 A EUROPEAN LEADER IN DIGITAL TRANSFORMATION Rest of the World 25% €3.4bn in revenue France COUNTRY 46% In the TOP 5 29% 36,000+ employees European United Kingdom IT services companies In the TOP 10 BPS 20+ countries IT services companies 14% Solutions operating in Europe 13% BUSINE
Slide 34: Our Clients' Transformation Needs
OUR CLIENTS’ TRANSFORMATION NEEDS PUTTING TECHNOLOGY TO WORK FOR BUSINESS AND IT BPS BUSINESS VALUE Mobile SSC platforms Analytics SaaS Operational efficiency Client experience Connected Business focus objects Solutions B2B relationships Standardisation, globalisation, regulation, HR 3.0 TRANSFORMAT
Slide 35: Strategic Plan: A New Corporate Project
STRATEGIC PLAN Our clients Sopra Steria Undergoing a transformation A new enterprise A new corporate project Builds on our strengths Confirmed choices Solutions/BPS More Solutions, Managed Extensive business offering Services and Consulting Wide presence in Europe Vertical integration of o
Slide 36: Positioned at the Core of Our Clients' Transformation
POSITIONED AT THE CORE OF OUR CLIENTS’ TRANSFORMATION… Transformation partner Business Provider of Solutions and Managed Value Services for Business Segments Architect-Integrator of the Digital World IT Value Driver of IT Asset Enhancement 36 2014 Annual Results Presentation - 19/03/2015
Slide 37: … and in Different Verticals
… AND IN DIFFERENT VERTICALS Aerospace, Financial Public Defence, ... Services Sector Security Retail TRANSFORMATION Manufacturing PARTNER Energy Utilities Financial 7% services Solutions & Telecoms 8% 27% Media business services 8% €3,370m Transport 12% Digital Services 15% 23% Public Architect
Slide 38: CIMPA SAS Acquisition Project
CIMPA SAS ACQUISITION PROJECT ADDITIONAL INDUSTRY KNOW-HOW IN THE AEROSPACE SEGMENT CIMPA SAS acquisition project - Industry know-how in the management of equipment lifecycles - Ability to ensure digital continuity between industrial processes and IT systems Founded in 1995 - Potential for developme
Slide 39: Changes in the Group's Governance
CHANGES IN THE GROUP’S GOVERNANCE SEAMLESS, EXECUTION-FOCUSED GOVERNANCE Pierre Pasquier Vincent Paris John Torrie Chairman of the Board of Directors CEO Deputy CEO • Drives Group strategy • Directs the Group’s operations • Assists the CEO in directing the • Oversees the Integration • Chairs the Exe
Slide 40: Integration Progress
INTEGRATION PROGRESS IN LINE WITH INITIAL PLANNING 8 April 2014 • Sopra-Steria merger project announced Summer 2014 • Success of Sopra’s public exchange offer for Steria • Group refinancing October 2014 • Employee representative bodies give opinions allowing the merger project to move forward
Slide 41: Overview of Operations
OVERVIEW OF OPERATIONS VISION FOR 2015 • Consulting & Systems Integration • Positive dynamic in all verticals (excl. Telecoms) suggesting growth in 2015 • Beneficial impact of the merger on sales positioning • Consultant downtime improved significantly since Q4 2014 France • Some client collections
Slide 42: Overview of Operations
OVERVIEW OF OPERATIONS VISION FOR 2015 • Germany: situation stabilising • Internal reorganisation done • First positive signs coming in Other Europe • Will be a gradual recovery • Scandinavia: focusing on profitability • Other Countries: integration in line with initial plan • Excellent performance
Slide 43: Forecasts for 2015
FORECASTS FOR 2015 SYNERGIES & TARGETS Operating Synergies: Value of annual operating synergies confirmed: €62m Most synergy-generating steps will have been initiated by year-end 2015 Total full-year impact starting in 2017 Cost of implementing synergies: €65m Targets: Organic revenue grow
Slide 44: Conclusion
CONCLUSION Pierre Pasquier - Chairman 44 2014 Annual Results Presentation - 19/03/2015
Slide 45: Ownership Structure at 31/12/2014
OWNERSHIP STRUCTURE AT 31/12/2014 KEY SHAREHOLDERS COMMITTED TO PROJECT SUCCESS Pasquier Odin Managers family family 2.4 % 69.0 % 28.6 % Founders & Sopra GMT Geninfo Holdings managed on Management Soderi Free float 16.4 % 7.0 % behalf of employees 4.3 % Shareholders’ agreement 27.7% 8.7% 63.6% (42.1
Slide 46: 2017 Plan - Targets
2017 PLAN - TARGETS A BOLD, REALISTIC PLAN Revenue of between €3.8bn and €4.0bn Operating profit on business activity of between 8% and 9% 46 2014 Annual Results Presentation - 19/03/2015
Slide 47: Questions & Answers
QUESTIONS & ANSWERS 47 2014 Annual Results Presentation - 19/03/2015
Slide 48: Annexes
ANNEXES 48 2014 Annual Results Presentation - 19/03/2015
Slide 49: Sopra Steria 2014 Pro Forma Revenue
SOPRA STERIA 2014 PRO FORMA REVENUE BY QUARTER Q1 Q2 Q3 Q4 2014 (€m) (€m) (€m) (€m) (€m) France 329.5 324.1 307.2 353.0 1,313.6 United Kingdom 225.3 243.0 236.8 238.9 944.0 Other Europe 166.5 167.7 153.0 180.1 667.1 Sopra Banking Software 64.1 63.1 56.4 87.1 270.7 Other Solutions 36.1 42.3 42.2 54.1
Slide 50: 2014 Data by Division
2014 DATA BY DIVISION SOPRA STERIA 31/12/2014 PRO FORMA The figures presented for operating profit on business activity by region are after head office costs and exclude certain specific unallocated central items 2014 - Pro forma (12m+12m) Sopra Banking France United Kingdom Other Europe Other Solut
Slide 51: Breakdown of 2014 Pro Forma Revenue
BREAKDOWN OF 2014 PRO FORMA REVENUE SOPRA STERIA BY GEOGRAPHIC AREA 2014 PRO FORMA GROUP REVENUE 2014 SERVICES REVENUE (87% OF REVENUE) Rest of the Other World Europe 23% 45% France €2,937M Other 2% Europe 23% 32% United Kingdom 46% France €3,370M 2014 SOLUTIONS REVENUE (13% OF REVENUE) Rest of the
Slide 52: Breakdown of Workforce by Geographic Area
BREAKDOWN OF WORKFORCE BY GEOGRAPHIC AREA SOPRA STERIA Titre 4 Titre 1 15% 30% United Kingdom Nearshore – Strong European presence with Offshore 17% 17% especially 30% solid bases in France 10% and the Titre 4United Kingdom Titre 2 TITLE 15% Titre 3 Rest of REGIONS 20% Nearshore/offshore profiles in
Slide 53: Forward Looking Statements
FORWARD LOOKING STATEMENTS This document contains forecasts in respect of which there are risks and uncertainties concerning Sopra Group’s future growth and profitability. The Group highlights the fact that the signature of licence contracts, which often represent investments for clients, are more s