Sopra Steria Group Sa · EURONEXT:SOP
Sopra Steria Group Sa — H1 2017 Earnings Presentation
44 slides from Sopra Steria Group Sa's earnings presentation, Jul 28, 2017
Slide 1: Presentation of First-Half 2017 Results
PRESENTATION OF FIRST-HALF 2017 RESULTS Paris, 28 July 2017 Delivering Transformation. Together.
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: So Digital
SO DIGITAL FOLLOW SOPRA STERIA’S EXPERTS ON TV! TNT: 30 – Bbox: 30 – Freebox: 915 – Numéricable/SFR: 96 – Orange: 360 3 Presentation of H1 2017 results – 28/07/2017
Slide 4: Agenda
AGENDA 1 Stepping up our Digital and Cloud growth strategy 2 Operating position at 30 June 2017 3 Financial results for the 1st half of 2017 4 2017 targets 5 Question & answer session 6 Appendices 4 Presentation of H1 2017 results – 28/07/2017
Slide 5: Stepping up our Digital and Cloud growth strategy
STEPPING UP OUR DIGITAL AND CLOUD GROWTH STRATEGY Vincent Paris – Chief Executive Officer 5 Presentation of H1 2017 results – 28/07/2017
Slide 6: Highlights of the First Half of 2017
HIGHLIGHTS OF THE FIRST HALF OF 2017 Performance in line with full-year targets Strong recovery in lower-margin businesses Photo Dynamic sales momentum Investing in our offerings Proactive, targeted external growth policy Amplification of interactions with the ecosystem
Slide 7: Dynamic Sales Momentum
DYNAMIC SALES MOMENTUM DRIVEN BY DIGITAL TRANSFORMATION British Bank 7 Presentation of H1 2017 results – 28/07/2017
Slide 8: Investing in Our Offerings
INVESTING IN OUR OFFERINGS TO DRIVE OUR CLIENTS’ DIGITAL TRANSFORMATION Digital services platform dedicated to data Internal social management in property management RPA and Artificial Intelligence coding platform Digital eXperience Platform Application Management New version of the Digital platform
Slide 9: Proactive, Targeted External Growth Policy
PROACTIVE, TARGETED EXTERNAL GROWTH POLICY SOFTWARE – CONSULTING – FINANCE – DIGITAL Sopra Banking Software raises its stake in Planned acquisition of Cassiopae, a finance 2MoRO Solutions, a management solutions Maintenance, Repair & Operations (MRO) developer, to 100%. solutions developer Fully con
Slide 10: Amplification of Interactions with the Ecosystem
AMPLIFICATION OF INTERACTIONS WITH THE ECOSYSTEM ACROSS THE VARIOUS ASPECTS OF DIGITAL Top Schools & Incubators Start-Ups & Schools & Specialists Accelerators Universities Student Award & Incubators Strategic Corporate responsibility Strengthening key relationships Clients partners Award Digital Awa
Slide 11: Our Digital Vision Requires a Digital Continuum
OUR DIGITAL VISION REQUIRES A DIGITAL CONTINUUM Data science & artificial intelligence form the core of transformation AI Legacy & digital are intertwined and work hand in hand Simplifying transformation by pooling best practices Speed up time to market by capitalising on our IP platforms User- & da
Slide 12: H1 2017 Operating Performance
H1 2017 OPERATING PERFORMANCE Vincent Paris – Chief Executive Officer 12 Presentation of H1 2017 results – 28/07/2017
Slide 13: Key Figures
KEY FIGURES PERFORMANCE IN LINE WITH FULL-YEAR TARGETS Revenue Operating profit on business activity €1,903.2m €142.1m 7.5% of revenue, organic growth* of 2.6% up 5.9% from 30/06/2016 Net profit attributable to the Group Net financial debt €66.0m €643.3m 3.5% of revenue 1.9x EBITDA up 22.3% from 30/
Slide 14: Operating Performance by Reporting Unit
OPERATING PERFORMANCE BY REPORTING UNIT STRONG RECOVERY IN LOWER-MARGIN BUSINESSES Revenue Operating profit on business activity H1 2016 Organic H1 2017 H1 2017 H1 2016 Restated* growth (€m) (% of Rev.) (% of Rev.) (€m) (%) France 801.4 784.9 + 2.1% 9.0% 8.6% United Kingdom 413.0 438.2 - 5.7% 6.0% 7
Slide 15: France: Consulting & Systems Integration
FRANCE: CONSULTING & SYSTEMS INTEGRATION SOLID OPERATING PERFORMANCE France: H1 2017 H1 2016 Consulting & Systems Integration (C&SI) (€m) (% of Rev.) (€m) (% of Rev.) Revenue 701.4 677.6 Organic growth (%) + 2.6% Operating profit on business activity 69.1 9.8% 66.3 9.8% Profit from recurring operati
Slide 16: France: Infrastructure and Security Services (I2S)
FRANCE: INFRASTRUCTURE AND SECURITY SERVICES (I2S) SUCCESSFUL REPOSITIONING France: H1 2017 H1 2016 Infrastructure and Security Services (I2S) (€m) (% of Rev.) (€m) (% of Rev.) Revenue 100.0 101.2 Organic growth (%) - 1.3% Operating profit on business activity 3.1 3.1% 0.5 0.5% Profit from recurring
Slide 17: United Kingdom
UNITED KINGDOM TRANSFORMATION INITIATED H1 2017 H1 2016 United Kingdom (€m) (% of Rev.) (€m) (% of Rev.) Revenue 413.0 483.4 Organic growth (%) - 5.7% Operating profit on business activity 24.6 6.0% 35.4 7.3% Profit from recurring operations 18.3 4.4% 29.3 6.1% Operating profit 18.4 4.5% 29.2 6.0% I
Slide 18: Other Europe
OTHER EUROPE RECOVERY IN LINE WITH TARGETS H1 2017 H1 2016 Other Europe (€m) (% of Rev.) (€m) (% of Rev.) Revenue 397.8 355.6 Organic growth (%) + 11.1% Operating profit on business activity 27.2 6.8% 15.8 4.4% Profit from recurring operations 24.5 6.1% 13.9 3.9% Operating profit 20.1 5.1% 11.1 3.1%
Slide 19: Sopra Banking Software
SOPRA BANKING SOFTWARE CONTINUED GROWTH AND INVESTMENT IN OFFERINGS H1 2017 H1 2016 Sopra Banking Software (€m) (% of Rev.) (€m) (% of Rev.) Revenue 185.8 160.2 Organic growth (%) + 8.0% Operating profit on business activity 6.3 3.4% 6.9 4.3% Profit from recurring operations 0.3 0.1% 2.6 1.6% Operat
Slide 20: Other Solutions
OTHER SOLUTIONS GOOD SALES AND OPERATING PERFORMANCE H1 2017 H1 2016 Other Solutions (€m) (% of Rev.) (€m) (% of Rev.) Revenue 105.1 100.7 Organic growth (%) + 3.5% Operating profit on business activity 11.7 11.2% 9.3 9.2% Profit from recurring operations 10.4 9.9% 8.7 8.6% Operating profit 9.0 8.6%
Slide 21: Financial Results for the 1st Half of 2017
FINANCIAL RESULTS FOR THE 1ST HALF OF 2017 Etienne du Vignaux – Chief Financial Officer 21 Presentation of H1 2017 results – 28/07/2017
Slide 22: Income Statement
INCOME STATEMENT FIRST-HALF 2017 H1 2017 H1 2017 H1 2016 H1 2016 (€m) (% of Rev.) (€m) (% of Rev.) Revenue 1,903.2 1,878.8 Organic growth 2.6% Operating profit on business activity 142.1 7.5% 134.2 7.1% Expenses related to stock options and related items - 17.0 - 10.2 Amortisation of allocated intan
Slide 23: Other Operating Income and Expenses
OTHER OPERATING INCOME AND EXPENSES FIRST-HALF 2017 H1 2017 H1 2016 (€m) (€m) Costs related to business combination - 0.4 - 1.0 Restructuring and reorganisation costs - 10.1 - 7.9 Other - 0.9 - 1.8 Other operating income and expenses - 11.4 - 10.7 23 Presentation of H1 2017 results – 28/07/2017
Slide 24: Tax
TAX FIRST-HALF 2017 H1 2017 H1 2016 (€m) (€m) Profit before tax and share from 96.7 94.8 equity-accounted companies Effective tax charge 30.8 44.4 Effective tax rate (%) 31.8% 46.8% H1 2017 H1 2016 (€m) (€m) Net deferred tax assets 121.0 152.3 24 Presentation of H1 2017 results – 28/07/2017
Slide 25: Change in Net Financial Debt
CHANGE IN NET FINANCIAL DEBT FREE CASH FLOW USUALLY NEGATIVE IN THE FIRST HALF OF THE YEAR 700 643.3 650 -28.5 -0.8 -1.8 -109.0 +2.8 600 550 506.0 500 First half of the year €m usually sees net cash 450 outflows 400 350 300 250 200 Net financial debt Free cash flow Changes in scope and Dividends rec
Slide 26: Sound Financial Position at 30/06/2017
SOUND FINANCIAL POSITION AT 30/06/2017 DEBT COVENANTS AND LIQUIDITY Net financial debt 30/06/2017 30/06/2017 at 30/06/2017: Amount used Amount authorised €643.3m (€m) (€m) Bond 180.0 180.0 Syndicated loan – Tranche A € 160.0 160.0 Syndicated loan – Tranche B £ 72.8 72.8 EBITDA leverage: 1.92x (max.
Slide 27: 2017 Outlook and Targets
2017 OUTLOOK AND TARGETS Vincent Paris – Chief Executive Officer 27 Presentation of H1 2017 results – 28/07/2017
Slide 28: Recap of Priorities for 2017
RECAP OF PRIORITIES FOR 2017 PERFORMANCE Continue to improve performance ACQUISITIONS Proactive policy of targeted acquisitions Shift business mix with goal of Consulting and ADDED VALUE Solutions accounting for 15% and 20% respectively by 2020 TRANSFORMATION Continue to adapt our model to respond t
Slide 29: Recap of Budgetary Assumptions for 2017
RECAP OF BUDGETARY ASSUMPTIONS FOR 2017 Adverse calendar effect of 2 to 3 days in a number of European countries Adverse GBP/EUR currency translation effect, essentially in the first half of the year (based on the current exchange rate) Transitional year for SSCL Organic revenue growth highe
Slide 30: Confirmation of 2017 Targets
CONFIRMATION OF 2017 TARGETS Organic revenue growth between 2% and 3% Operating margin on business activity of around 8.5% Free cash flow > €150m 30 Presentation of H1 2017 results – 28/07/2017
Slide 31: Questions & Answers
QUESTIONS & ANSWERS 31 Presentation of H1 2017 results – 28/07/2017
Slide 32: Appendices
APPENDICES 32 Presentation of H1 2017 results – 28/07/2017
Slide 33: Sopra Steria at 30/06/2017
SOPRA STERIA AT 30/06/2017 A EUROPEAN LEADER IN DIGITAL TRANSFORMATION Top 5 European digital services companies Top 10 operating in Europe 40,000+ A presence in End-to-end 2016 revenue of €3.7bn employees over 20 countries offering Revenue to 30/06/2017 Rest of the World Business Process Other Serv
Slide 34: Revenue by Country
REVENUE BY COUNTRY FOR THE PERIOD ENDED 30/06/2017 SERVICES REVENUE TO 30/06/2017 SOLUTIONS REVENUE TO 30/06/2017 H1 2017 revenue Other Europe = €398m o/w Germany = 33% o/w Spain = 15% Other Europe Rest of the o/w Italy = 8% o/w Switzerland = 6% World o/w BeLux = 9% o/w Scandinavia = 29% 13% 25% Fra
Slide 35: Solutions Revenue
SOLUTIONS REVENUE FOR THE PERIOD ENDED 30/06/2017 SOLUTIONS REVENUE BY PRODUCT SOLUTIONS REVENUE BY BUSINESS LINE Property Management Solutions Managed Services 10% 13% Licences 11% Sopra HR 27% €291m Sopra €291m Software SOLUTIONS SOLUTIONS 54% Banking 64% Software 22% Integration Maintenance Servi
Slide 36: Changes in Exchange Rates
CHANGES IN EXCHANGE RATES FIRST-HALF 2017 Changes in exchange rates Average rate Average rate Change For €1 / % H1 2017 H1 2016 (%) Pound sterling 0.8606 0.7788 - 9.5% Norwegian krone 9.1785 9.4197 + 2.6% Swedish krona 9.5968 9.3019 - - 3.1% 0 Danish krone 7.4368 7.4497 + 0.2% Swiss franc 1.0766 1.0
Slide 37: Change in Revenue in the 1st Half of 2017
CHANGE IN REVENUE IN THE 1ST HALF OF 2017 GROWTH AT CONSTANT EXCHANGE RATES: 3.8% 1920 48.4 1,903.2 1900 1880 1,878.8 -44.5 Cassiopae = +€13.9m LASCE = +€5.8m Active3D = +€0.8m 1860 20.5 €m 1840 Average change vs H1 2016: 1820 GBP/EUR = -9.5% 1800 1780 H1 2016 revenue Currency effect Scope effect Or
Slide 38: Earnings per Share
EARNINGS PER SHARE FIRST-HALF 2017 H1 2017 H1 2016 (€m) (€m) Net profit attributable to the Group (€m) 66.0 54.0 Weighted average number of shares in issue excluding treasury shares 20.20 20.01 Basic earnings per share (€) 3.27 2.70 Basic recurring earnings per share (€) 3.65 3.07 Theoretical weight
Slide 39: Breakdown of Change in Net Financial Debt
BREAKDOWN OF CHANGE IN NET FINANCIAL DEBT FIRST-HALF 2017 H1 2017 H1 2016 (€m) (€m) Operating profit on business activity 142.1 134.2 Depreciation, amortisation and provisions (excluding allocated intangible assets) 4.0 20.2 EBITDA 146.1 154.4 Non-cash items - 1.4 - 0.2 Tax paid - 23.7 - 33.0 Change
Slide 40: Simplified Balance Sheet
SIMPLIFIED BALANCE SHEET 30/06/2017 30/06/2017 31/12/2016 (€m) (€m) Goodwill 1,536.7 1,557.0 Allocated intangible assets 166.1 179.7 Other fixed assets 167.2 160.8 Equity-accounted investments 194.2 202.3 Fixed assets 2,064.3 2,099.8 Net deferred tax 121.0 128.9 Trade accounts receivable (net) 1,191
Slide 41: UK Pension Fund Deficit Net of Tax at 30/06/2017
UK PENSION FUND DEFICIT NET OF TAX AT 30/06/2017 AVERAGE NET DEFICIT AROUND €200M SINCE END-2014 250 245 221 222 223 200 Deficit net of tax down 9% 200 Deficit net of tax (€m) vs 31/12/2016 150 Commitments stable since 125 31/12/16; increase in local 100 currency-denominated assets Annual additional
Slide 42: Global Workforce
GLOBAL WORKFORCE FIRST-HALF 2017 30/06/2017 31/12/2016 France 18,629 18,227 United Kingdom 6,320 6,508 Other Europe 7,961 7,844 Rest of the World 253 231 X-Shore 7,268 7,003 Total 40,431 39,813 42 Presentation of H1 2017 results – 28/07/2017
Slide 43: Ownership at 30/06/2017
OWNERSHIP AT 30/06/2017 KEY SHAREHOLDERS BACKING THE CORPORATE PROJECT Pasquier Odin Managers family family 2.4% 69.0% 28.6% Founders & Sopra GMT Interests managed on Treasury management Soderi Free float 19.6% behalf of employees shares 3.0% Shareholders’ agreement 22.6% 8.1% 0.1% 69.2% (33.3%) (8.
Slide 44: 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 the restated revenue for the same period in the prior financial