Sopra Steria Group Sa · EURONEXT:SOP
Sopra Steria Group Sa — FY2023 Earnings Presentation
52 slides from Sopra Steria Group Sa's earnings presentation, Feb 22, 2024
Slide 1: 2023 Annual Results Presentation
2023 Annual Results Presentation Paris, 22 February 2024
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
01 Highlights of 2023 05 Priorities and targets for 2024 02 Operating position by reporting unit 06 Annexes 03 Financial results for 2023 04 Strategy 3 2023 Annual Results Presentation – 22/02/2024
Slide 4: Highlights of 2023
Highlights of 2023 Cyril Malargé Chief Executive Officer 4 2023 Annual Results Presentation – 22/02/2024
Slide 5: 2023 targets comfortably achieved
2023 targets comfortably achieved “Organic revenue “Operating margin on “Free cash growth of at least business activity flow of at least 6%” slightly over 9%” €300m” ⇣ 6.6% 9.4% €390m ✔ 5 2023 Annual Results Presentation – 22/02/2024
Slide 6: Structural improvement in performance
Structural improvement in performance 5,805 9.4% 8.9% 390 8.1% +0.5 5,101 +0.8 7.0% 287 +1.1 264 4,683 6.6% 204 4,263 7.6% 6.4% 4.8% 5.6% 5.6% 6.7% 2020 2021 2022 2023 2020 2021 2022 2023 2020 2021 2022 2023 6 2023 Annual Results Presentation – 22/02/2024
Slide 7: Strong commercial positions in strategic markets
Strong commercial positions in strategic markets 7 2023 Annual Results Presentation – 22/02/2024
Slide 8: New ambition for Consulting
New ambition for Consulting • Launch of a new strategic aim for Consulting ⏩ Target of doubling revenue over 5 years 2023 revenue • New organisation €458m • New leadership Up 11.7% 7.5% organic growth • Staff increases Around 30 new partners and managers Around 4,000 consultants 2023 average daily •
Slide 9: Tech tailored to the needs of our business lines and our clients
Tech tailored to the needs of our business lines and our clients Verticals driving customer relationships and solutions Cloud Increasing number of certifications Service lines and horizontal skill centres Data / AI Expanding technological training Cybersecurity Targeted recruitment SAP S/4HANA 9 202
Slide 10: AI a top priority for all our business lines
AI a top • 4,000 AI/data experts • Around 4,000 consultants priority for • Major scale-up programme • Global AI training programme • Target of doubling the • Development of use cases and all our workforce over 3 years an IT Advisory range business lines • AI modules natively embedded • Hyperscalers
Slide 11: Strengthened positions in Europe
Strengthened positions in Europe 2023 pro forma revenue • CS Group including acquisitions on a • Tobania full-year basis: €6,205m Defence Aeronautics & Space • Ordina • SSCL 2023 pro forma revenue Public Sector Financial Services from acquisitions: €847m Contribution to 2023 Position established
Slide 12: Making digital work for people
Making digital work for people CDP • Score of “A” for the 7th year running 63.6% reduction for Scopes 1 & 2 (baseline: 2019) 9.8% reduction for Scope 3 (baseline: 2019) Great Place To Work certification • Response rate: 82% • Overall perception: (2) 77% Total workforce: 33.5% (up 0.4 points) Proport
Slide 13: Operating position by reporting unit
Operating position by reporting unit Cyril Malargé Chief Executive Officer 13 2023 Annual Results Presentation – 22/02/2024
Slide 14: 2023 operating performance
2023 operating performance Operating profit on business Revenue activity 2022 Organic 2023 2023 2022 Restated* growth (€m) (% of Rev.) (% of Rev.) (€m) (%) France 2,384.3 2,271.7 +5.0% 9.6% 10.0% United Kingdom 940.9 873.3 +7.7% 11.0% 10.5% Other Europe 1,746.9 1,606.1 +8.8% 8.7% 6.2% Sopra Banking
Slide 15: France
France Total growth: 16.9%, with CS Group consolidated for 10 months • CS’s contribution to revenue: €257.4m • CS’s organic growth: 10.2% 2023 2022 • Operational synergies from 2024 Growth at constant scope: 5.0% (€m) (% Rev.) (€m) (% Rev.) France • Q4 growth: 2.3% Revenue 2,384.3 2,039.0 Organic gr
Slide 16: United Kingdom
United Kingdom 2023 2022 Organic growth: 7.7% (€m) (% Rev.) (€m) (% Rev.) • Aeronautics, Defence and Security: United Kingdom 23.1% Revenue 940.9 890.6 • NHS SBS: 9.7% Organic growth (%) +7.7% • SSCL: 15.3% Op. profit on business activity 103.2 11.0% 93.8 10.5% • Private sector: 2.4% Profit from rec
Slide 17: Other Europe
Other Europe 8.8% growth at constant scope and exchange rates 2023 2022 Growth driven by Scandinavia and Spain, with double-digit growth Other Europe (€m) (% Rev.) (€m) (% Rev.) Revenue 1,746.9 1,473.0 New position in Benelux ee cas o Organic growth (%) +8.8% • Consolidation of Ordina in Q4 2023 Op.
Slide 18: Sopra Banking Software
Sopra Banking Software Return to growth for SBS, with 4.8% 2023 2022 organic growth (€m) (% Rev.) (€m) (% Rev.) Growth achieved in all four quarters, Sopra Banking Software with 6.7% organic growth in Q4 Revenue 445.1 426.5 Organic growth (%) +4.8% Software revenue up 4.2%, driven by 9.8% growth in
Slide 19: Other Solutions
Other Solutions 2023 2022 Human Resources Solutions organic (€m) (% Rev.) (€m) (% Rev.) Other Solutions growth: +6.7% Revenue 288.2 272.1 Property Management Solutions Organic growth (%) +5.9% organic growth: +4.1% Op. profit on business activity 39.4 13.7% 35.4 13.0% Continued recovery of operating
Slide 20: Financial results for 2023
Financial results for 2023 Étienne du Vignaux Chief Financial Officer 20 2023 Annual Results Presentation – 22/02/2024
Slide 21: Income statement
Income statement 2023 2023 2022 2022 (€m) (% of Rev.) (€m) (% of Rev.) Revenue 5,805.3 5,101.2 Organic growth 6.6% Operating profit on business activity 548.2 9.4% 453.1 8.9% Share-based payment expenses -43.0 -23.2 Amortisation of allocated intangible assets -38.0 -32.3 Profit from recurring operat
Slide 22: Share-based payments
Share-based payments • Peak in 2023 • 2024 expected to be close to historical average (0.4% of revenue) €43m ~€25m €23m €7m €4m 2020 2021 2022 2023 2024e 22 2023 Annual Results Presentation – 22/02/2024
Slide 23: Other operating income and expenses
Other operating income and expenses 2023 2022 (€m) (€m) Costs related to business combination -6.8 -3.7 Restructuring and reorganisation costs -32.3 -22.4 Other -98.3 -10.2 Other operating income and expenses -137.4 -36.3 o/w €86.3m asset impairment charge on SBS and €13.7m in acquisition-related ex
Slide 24: Tax
Tax 2023 2022 (€m) (€m) Profit before tax and share from equity-accounted companies 294.0 347.0 Effective tax charge -111.7 -83.2 Effective tax rate (%) 38.0% 24.0% Normative rate excluding non-recurring items: ~25% Tax rate expected to be about 26% in 2024 24 2023 Annual Results Presentation – 22/0
Slide 25: Breakdown of change in free cash flow
Breakdown of change in free cash flow 500 450 +126.8 +0.4 +38.9 +5.2 390.2 400 -23.3 350 -45.0 €m 300 287.2 Net advanced payments 250 200 150 100 Free cash flow EBITDA Capex Reorganisation and WCR Tax Interest expenses, Free cash flow 2022 restructuring lease payments, 2023 other 25 2023 Annual Resu
Slide 26: Increase in net financial debt related to acquisitions
Increase in net financial debt related to acquisitions -91.9 -31.4 946.0 900 -1,061.0 700 500 300 152.0 100 Net financial debt Free cash flow Changes in scope and Dividends Changes in foreign exchange Net financial debt -100 at 31/12/2022 financial investments rates and other at 31/12/2023 -300 +390
Slide 27: Solid financial structure
Solid financial structure Simplified balance sheet Assets + WCR (€m) 3,655.2 2,672.1 31/12/23 31/12/22 6% Net financial debt Gearing Gearing Net financial debt / 49% 8% 26% 15% Equity 4% Lease liabilities 5% 14% Leverage Leverage Net financial debt / EBITDA(1) 1.50x 0.31x 3% Provisions for 5% contin
Slide 28: Diversified, accessible financing
Diversified, accessible financing 31/12/2023 31/12/2023 Amount Amount Available undrawn amount used authorised €1.3bn (€m) (€m) i.e. 64% of authorised am ount (1) Bonds 250.0 250.0 Bank loans & borrowing facilities 467.0 542.0 Multi-currency revolving credit facility - 1,100.0 Refinancing on 19/12/2
Slide 29: Strategy
Strategy Cyril Malargé Chief Executive Officer 29 2023 Annual Results Presentation – 22/02/2024
Slide 30: Ambitious corporate plan
Ambitious corporate plan Core shareholder Organic growth Employee share ownership External growth Performance End-to-end approach Entrepreneurial culture Developing the Consulting business Close customer relationships Targeting specific verticals Digital sovereignty Tech 30 2023 Annual Results Prese
Slide 31: Clarification of the strategy
Clarification of the strategy • Become a compelling European alternative to global players for major European clients • Make a difference in terms of digital sovereignty challenges, especially in the public sector, financial services, defense & security and aerospace • Strengthen European presence w
Slide 32: Separation of SBS activities and disposal of banking software to Axway Software
Separation of SBS activities and disposal of banking software to Axway Software Transferred scope to Scope remaining within Axway Software: Sopra Steria: Banking software activities Service activities Transferred scope: Remaining scope: o Software activities o Service activities or projects for majo
Slide 33: Other elements of the project
Other elements of the project Disposal of 3.619m Axway shares currently owned by Sopra Steria to Sopra GMT, at a price of €26.5 per share for an amount of €95.9m Axway has announced its intention to finance part of the contemplated transaction through a Reduction of capital increase with prefere
Slide 34: Accounting impact and project timetable
Accounting impact and project timetable Estimated Slight improvement of operating margin rate on an annual basis accounting impacts on Decrease of the Group's net financial debt and stronger investment capacity Sopra Steria No significant additional impact on assets valuation group XX XX Trans
Slide 35: Priorities and targets for 2024
Priorities and targets for 2024 Cyril Malargé Chief Executive Officer 35 2023 Annual Results Presentation – 22/02/2024
Slide 36: Priorities for 2024
Priorities for 2024 • 2024 operational complementarities: €10m • Target run rate: €23m • Developing the Consulting business • Offering higher-value tech services and solutions • Adjusting the operating model • Continuing to improve performance • Development in Europe and M&A policy • Financial targe
Slide 37: Targets for 2024
Targets for 2024 Organic revenue Operating Free cash flow growth margin on business activity 37 2023 Annual Results Presentation – 22/02/2024
Slide 38: 2023 Annual Results Presentation – 22/02/2024
38 2023 Annual Results Presentation – 22/02/2024
Slide 39: Annexes
Annexes 39 2023 Annual Results Presentation – 22/02/2024
Slide 40: Helping combat climate change
Helping combat climate change New SBTi1 targets covering our entire value chain by 2030 SCOPES 1 & 2 - 63.6% - 54% • Energy management • Digitalisation Offices + • Better locations and (vs 43.7% reduction in 2022) on-site data centres infrastructure Ways to reduce Target for 2030 <10% offsetting Typ
Slide 41: Sopra Steria: A European leader in digital transformation
Sopra Steria: A European leader in digital transformation Breakdown of revenue – Financial year ended 31 December 2023 Top 13 operating in Europe(1) 2023 revenue: 56,000 Operations in End-to-end €5.8bn employees 30 countries approach France Consulting Financial Services Systems Integration Insurance
Slide 42: Breakdown of revenue by country
Breakdown of revenue by country To 31/12/2023 Services SBS and Other Solutions Revenue to 31/12/2023 Revenue to 31/12/2023 Revenue: Other Europe = €1,747m o/w Germany = 25% o/w Scandinavia = 30% o/w Belux = 18% o/w Spain = 10% o/w SFT = 9% o/w Italy = 6% o/w Switzerland = 2% €5,075m €733m France Fra
Slide 43: Breakdown of Solutions revenue
Breakdown of Solutions revenue To 31/12/2023 SBS and Other Solutions SBS and Other Solutions Revenue by product Revenue by service line Sopra Banking Software 2023 revenue = €445m o/w France = €178m o/w Outside France = €267m €733m €733m Sopra Banking Software Integration Services Maintenance Sopra
Slide 44: Global workforce
Global workforce 31/12/2023 31/12/2022 France 21,758 19,822 United Kingdom 7,779 7,440 Other Europe 16,534 12,583 Rest of the World 560 435 X-Shore 9,202 9,410 Total 55,833 49,690 44 2023 Annual Results Presentation – 22/02/2024
Slide 45: Changes in exchange rates
Changes in exchange rates Changes in exchange rates Average rate Average rate Change For €1 / % 2023 2022 (%) Pound sterling 0.8698 0.8528 -2.0% Norwegian krone 11.4248 10.1026 -11.6% Swedish krona 11.4788 10.6296 -7.4% Danish krone 7.4509 7.4396 -0.2% Swiss franc 0.9718 1.0047 +3.4% 45 2023 Annual
Slide 46: Breakdown of change in revenue
Breakdown of change in revenue +283.5 5,805.3 +420.6 5,101.2 €m -74.0 Revenue 2022 Currency effect Scope effect Organic growth Revenue 2023 46 2023 Annual Results Presentation – 22/02/2024
Slide 47: Earnings per share
Earnings per share Financial year 2023 2023 2022 (€m) (€m) Net profit attributable to the Group (€m) 183.7 247.8 Weighted average number of shares in issue excluding treasury shares 20.22 20.26 Basic earnings per share (€) 9.08 12.23 Basic recurring earnings per share (€) 15.51 13.66 Theoretical wei
Slide 48: Breakdown of change in net financial debt
Breakdown of change in net financial debt 2023 2022 (€m) (€m) Operating profit on business activity 548.2 453.1 Depreciation, amortisation and provisions (excluding allocated intangible assets) 176.1 144.4 EBITDA 724.3 597.5 Non-cash items 0.4 5.4 Tax paid -82.6 -87.8 Change in current operating wor
Slide 49: Simplified balance sheet
Simplified balance sheet 31/12/2023 31/12/2022 (€m) (€m) Goodwill 2,668.9 1,943.9 Allocated intangible assets 124.8 108.3 Other fixed assets 304.3 261.3 Right-of-use assets 457.1 359.9 Equity-accounted investments 185.9 183.5 Fixed assets 3,740.9 2,857.0 Net deferred tax 98.3 0 58.5 0 0 0 Trade acco
Slide 50: 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 -16 -50 -25 50 2023 Annual Results Presentation – 22/02/2024
Slide 51: A core shareholder backing the corporate plan
A core shareholder backing the corporate plan Ownership structure at 31 December 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’ 6.45% 0.8% 70.5%
Slide 52: 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