Sopra Steria Group Sa · EURONEXT:SOP
Sopra Steria Group Sa — FY2021 Earnings Presentation
51 slides from Sopra Steria Group Sa's earnings presentation, Feb 24, 2022
Slide 1: 2021 Annual Results Presentation
2021 Annual Results Presentation PARIS, 24 FEBRUARY 2022
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
Agenda 01 Targets comfortably achieved in 2021 02 Operating position by reporting unit 03 2021 financial results 04 Strategy and outlook 05 Annexes 3 2021 Annual Results Presentation – 24 February 2022
Slide 4: Targets comfortably achieved in 2021
01 Targets comfortably achieved in 2021 Vincent Paris Chief Executive Officer 4 2021 Annual Results Presentation – 24 February 2022
Slide 5: Key figures for 2021 (1/2)
Key figures for 2021 (1/2) Solid performance across all financial indicators Revenue Operating profit on business Net profit attributable to the activity Group €4,682.8m €379.2m €187.7m Total grow th of 9.8% i.e. 8.1% of revenue i.e. 4.0% of revenue Organic grow th* of 6.4% Free cash flow Net financ
Slide 6: Key figures for 2021 (2/2)
Key figures for 2021 (2/2) Ongoing commitment to ESG performance Net change in workforce Proportion of women on the CDP Climate Executive Committee +3.2% 17.6% A List up 2.4% excluding acquisitions vs 12% in 2020 for the fifth year in a row Workforce attrition rate Great P lace to W ork Cumulative r
Slide 7: Significant increase in value creation
Significant increase in value creation Structural free cash flow in excess of €200 million per year 2020 2021 2020 2021 2015 2016 2017 2018 2019 2020 2021 4,800 8.2% 8.1% 300 4,683 264 4,700 8.0% +6.4% +1.1 250 FCF > €200m 229 4,600 growth 7.8% points per year 204 7.6% 200 4,500 7.4% 151 148 4,400 1
Slide 8: Major new contract wins in strategic markets
Major new contract wins in strategic markets 8 2021 Annual Results Presentation – 24 February 2022
Slide 9: Strong performance driven by digitalisation
Strong performance driven by digitalisation AI – Big data – Cloud – Cybersecurity Very buoyant market Consulting Powerful growth drivers Financial Tailored services response Digital services in Europe: Cloud migration and End-to-End approach estimated growth >5% per modernisation of Vertical special
Slide 10: Priority placed on human resources
Priority placed on human resources Attracting and retaining talented employees Net workforce 48,000 47,437 Net headcount addition in 2021 47,500 46,799 47,000 1,477 employees 46,500 46,129 45,960 45,959 46,000 2021 Recruitment 45,500 +170 +670 +638 45,000 10,636 employees (same level as in 2019) FY
Slide 11: Value enhancement strategy
Value enhancement strategy For a European leader in digital transformation Strengthening of consulting Consulting Renewal of offerings Financial services New market footprint Business recovery in 2021 IS/IT modernisation Digital transformation Revenue up 14% to ~€400m journey consulting:“Key player”
Slide 12: Targeted external growth
Targeted external growth Investments in consulting and cybersecurity French cybersecurity firm Consultancy 2021 revenue: €33m Business design Consulting, audit, IS, training 2021 revenue: €15m 240 consultants and experts ~150 consultants 80 clients (CAC 40 and SBF 120 Norway + Denmark companies, pub
Slide 13: Effective engagement with CSR actions
Effective engagement with CSR actions Improvement in ESG scores with non-financial rating agencies MSCI ESG RATINGS SUSTAINALYTICS RATINGS [CCC – AAA] AA Leader 75/100 AA Leader (7.9/10) Leader AA Leader (7.4/10) 73/100 2021 2021 A Average (7.3/10) 68/100 Outperformer 2020 (7.1/10) Outperformer 2019
Slide 14: Operating performance by reporting unit
02 Operating performance by reporting unit Cyril Malargé Chief Operating Officer 14 2021 Annual Results Presentation – 24 February 2022
Slide 15: 2021 operating performance
2021 operating performance Breakdown by reporting unit Operating profit on business Revenue activity 2020 Organic 2021 2021 2020 Restated* growth (€m) (% of Rev.) (% of Rev.) (€m) (%) France 1,824.9 1,723.8 + 5.9% 8.6% 6.8% United Kingdom 823.1 722.7 + 13.9% 9.1% 8.0% Other Europe 1,343.2 1,266.7 0
Slide 16: France
France Strong rebound in performance compared with 2020 Accelerating pace of recovery over the 2021 2020 year, with double-digit growth in Q3 and Q4 France (€m) (% Rev.) (€m) (% Rev.) Rebound driven in particular by product life cycle management activities (up Revenue 1,824.9 1,655.6 17.2%) Organic
Slide 17: United Kingdom
United Kingdom Solid performance in 2021 Slowing of growth in Q4, as 2021 2020 anticipated Very strong revenue growth for the United Kingdom (€m) (% Rev.) (€m) (% Rev.) year Revenue 823.1 699.8 Public-sector joint ventures up 24.3% Defence & Security and Government p Organic growth (%) + 13.9% secto
Slide 18: Other Europe
Other Europe Improvement and consolidation of operating performance Double-digit growth 2021 2020 In Benelux (€m) (% Rev.) (€m) (% Rev.) In Scandinavia Other Europe In Germany Revenue ee cas o 1,343.2 1,249.0 Strengthening of consulting business Organic growth (%) + 6.0% in Scandinavia (EGGS Design
Slide 19: Sopra Banking Software
Sopra Banking Software Gradual improvement in operating position Continuation of product developments 2021 2020 Highly unfavourable base effect in H2 2020 for licences Sopra Banking Software (€m) (% Rev.) (€m) (% Rev.) Increase in Services revenue in H2 Revenue 434.1 421.6 2021 Robust growth for new
Slide 20: Other Solutions
Other Solutions Return to >10% operating margin on business activity Human resources solutions up 10.0% 2021 2020 Good momentum in outsourced management of payslips Other Solutions (€m) (% Rev.) (€m) (% Rev.) More than a million payslips managed each month Revenue 257.5 236.9 First major successes f
Slide 21: 2021 financial results
03 2021 financial results Étienne du Vignaux Chief Financial Officer 21 2021 Annual Results Presentation – 24 February 2022
Slide 22: Income statement
Income statement Financial year 2021 2021 2021 2020 2020 (€m) (% of Rev.) (€m) (% of Rev.) Revenue 4,682.8 4,262.9 Organic growth 6.4% Operating profit on business activity 379.2 8.1% 300.2 7.0% Share-based payment expenses - 6.7 - 4.2 Amortisation of allocated intangible assets - 33.2 - 34.8 Profit
Slide 23: Other operating income and expenses
Other operating income and expenses Financial year 2021 2021 2020 (€m) (€m) Costs related to business combination - 0.6 - 3.1 Restructuring and reorganisation costs - 35.5 - 44.6 Other 0.2 - 11.1 Other operating income and expenses - 35.8 - 58.9 Including €15.6m Covid-related costs 23 2021 Annual Re
Slide 24: Tax
Tax Financial year 2021 2021 2020 (€m) (€m) Profit before tax and share from equity-accounted companies 285.2 177.1 Effective tax charge -93.5 -60.4 Effective tax rate (%) 32.8% 34.1% Includes the impact on deferred tax of the increased tax rate in the UK (19% -> 25%) Normative tax rate estimated at
Slide 25: Detail of movement in free cash flow (FCF)
Detail of movement in free cash flow (FCF) Strong rise in EBITDA 340 320 +45.5 300 -4.6 280 +64.8 264.4 260 -1.1 €m 240 -49.3 +5.6 220 203.5 200 180 160 140 Free cash flow EBITDA CAPEX Reorganisation and Other items WCR Tax Free cash flow 2020 restructuring 2021 25 2021 Annual Results Presentation –
Slide 26: 23% reduction in net financial debt
23% reduction in net financial debt 450 42.6 400 350 -1.9 32.7 -4.4 300 -10.4 €m 250 200 150 +26.4 100 50 0 Net financial debt Free cash flow Change in scope and financial Dividends Change in exchange rates Net financial debt at 31/12/2020 investments and other at 31/12/2021 26 2021 Annual Results P
Slide 27: Very solid balance sheet
Very solid balance sheet Position at 31 December 2021 Net financial debt / Equity Net financial debt / EBITDA (1) Leverage 448 1,696 0.7x 327 Gearing Financial 19% covenants: 3x maximum 327 Equity Net financial debt Dette financièredebt Net financial nette EBITDA(1) (1) Pro forma EBITDA before impac
Slide 28: Available and diversified financing
Available and diversified financing Position at 31 December 2021 Maturities 31/12/2021 31/12/2021 • Bond: 2026 and 2027 Amount Amount • Bank borrowing facilities: 2023 and used authorised 2024 (€m) (€m) Bond 250.0 250.0 Syndicated loan – Tranche A € 88.0 88.0 Amount authorised €1.5bn Syndicated loan
Slide 29: Additional information concerning financial year 2022
Additional information concerning financial year 2022 Renewal of syndicated credit facilities on 22 February 2022 Five-year €1.1 billion multi-currency revolving credit facility Improved credit spread Only one covenant (leverage ratio of 3x, which can be raised to 3.5x over 18 months in the event of
Slide 30: Strategy and outlook
04 Strategy and outlook Cyril Malargé Chief Operating Officer 30 2021 Annual Results Presentation – 24 February 2022
Slide 31: Reaffirming our ambitious corporate plan
Reaffirming our ambitious corporate plan In a rapidly changing post-pandemic market environment Expanding European Organic growth …in services and worldwide in software External growth Independent Core shareholder Employee shareholding Performance Added value Unique End-to-end approach
Slide 32: Strategy underpinned by clearly defined levers
Strategy underpinned by clearly defined levers Focus strategy Offering strategy Production model 100 European key accounts End-to-end approach Industrial approach 8 key vertical markets, Strengthening of consulting DevOps and asset-based including 2 priorities Digitisation platforms Financial Servic
Slide 33: Medium-term ambitions
Medium-term ambitions Financial targets Conseil Operating performance - 2022 / 2024 Services External financiers growth Revenue organic growth +4% to +6% pa Operating margin rate on business activity ~ 10% in 2024 Proactively pursuing consolidation Free cash flow 5% to 7% of rev. 33 2021 Annual Resu
Slide 34: Medium-term ambitions
Medium-term ambitions ESG objectives Net-zero emissions Women to make up 30% of Digital sustainability in our by 2028 Executive Committee by 2025 value proposition Cut GHG (1) emissions from A proactive policy of bringing Digital sobriety direct activities, approved by more women into the Measuring
Slide 35: Priorities for 2022
Priorities for 2022 Attracting and retaining talented employees 11,000+ new hires Expansion of Great Place to Work® certification Employee share ownership programme Continuation of Development of business synergies transformation Strengthening of Financial Services and Defence & and Security
Slide 36: Financial targets for 2022
Financial targets for 2022 Organic revenue growth of between 5% and 6% Operating margin on business activity of between 8.5% and 9.0% Free cash flow of around €250m 36 2021 Annual Results Presentation – 24 February 2022
Slide 37: Annexes
06 Annexes 37 2021 Annual Results Presentation – 24 February 2022
Slide 38: Sopra Steria, a European leader in digital transformation
Sopra Steria, a European leader in digital transformation Breakdown of revenue – year ended 31 December 2021 Top 5 European digital services companies Top 12 operating in Europe 2021 revenue >47,000 Operations in End-to-end approach of €4.7bn employees 30 countries End-to-end 2% 15% 10% 3% 24% 5% 31
Slide 39: Detailed breakdown of revenue by country
Detailed breakdown of revenue by country Year ended 31/12/2021 SERVICES REVENUE TO 31/12/2021 BUSINESS SOLUTIONS REVENUE TO 31/12/2021 Revenue Other Europe = €1,343m o/w Germany = 31% 34% 13% o/w Scandinavia = 29% o/w SFT = 13% o/w Spain = 11% 45% o/w Benelux = 7% o/w Italy = 6% o/w Switzerland = 3%
Slide 40: Detailed breakdown of Solutions revenue
Detailed breakdown of Solutions revenue Year ended 31/12/2021 BUSINESS SOLUTIONS REVENUE BY PRODUCT BUSINESS SOLUTIONS REVENUE BY SERVICE LINE Sopra Banking Software 12% 2021 revenue = €434m o/w France = €187m 16% o/w Outside France = €247m 9% €692m €692m 25% BUSINESS BUSINESS 48% SOLUTIONS SOLUTION
Slide 41: Global workforce
Global workforce Financial year 2021 31/12/2021 31/12/2020 France 19,842 19,799 United Kingdom 6,926 6,646 Other Europe 11,494 10,885 Rest of the World 498 523 X-Shore 8,677 8,107 Total 47,437 45,960 41 2021 Annual Results Presentation – 24 February 2022
Slide 42: Changes in exchange rates
Changes in exchange rates Financial year 2021 Changes in exchange rates Average rate Average rate Change For €1 / % 2021 2020 (%) Pound sterling 0.8596 0.8897 + 3.5% Norwegian krone 10.1633 10.7228 + 5.5% Swedish krona 10.1465 10.4848 + 3.3% Danish krone 7.4370 7.4542 + 0.2% Swiss franc 1.0811 1.070
Slide 43: Detailed change in revenue
Detailed change in revenue Growth at constant scope and exchange rates of 6.4% in 2021 4,800 +283.8 4,682.8 4,700 4,600 4,500 +94.5 4,400 +41.6 €m 4,300 4,262.9 4,200 o/ w NOK +€15m EGGS Design +€1.0m Sodifrance +€68.5m o/ w GBP +€25m Fidor +€25.0m 4,100 4,000 2020 revenue Currency effect Scope effe
Slide 44: Earnings per share
Earnings per share Financial year 2021 2021 2020 (€m) (€m) Net profit attributable to the Group (€m) 187.7 106.8 Weighted average number of shares in issue excluding treasury shares 20.24 20.25 Basic earnings per share (€) 9.27 5.27 Basic recurring earnings per share (€) 10.45 7.42 Theoretical weigh
Slide 45: Breakdown of change in net financial debt
Breakdown of change in net financial debt Financial year 2021 2021 2020 (€m) (€m) Operating profit on business activity 379.2 300.2 Depreciation, amortisation and provisions (excluding allocated intangible assets) 173.2 187.4 EBITDA 552.3 487.6 Non-cash items - 0.9 6.7 Tax paid -77.3 -82.9 Change in
Slide 46: Simplified balance sheet
Simplified balance sheet Financial year 2021 31/12/2021 31/12/2020 (€m) (€m) Goodwill 1,984.3 1,843.2 Allocated intangible assets 131.8 161.5 Other fixed assets 216.4 241.1 Right-of-use assets 343.1 290.3 Equity-accounted investments 198.1 193.4 Fixed assets 2,873.8 2,729.6 Net deferred tax 99.7 0 1
Slide 47: UK pension fund deficit net of tax
UK pension fund deficit net of tax In €m 300 245 250 200 200 167 150 125 123 113 119 100 49 50 0 47 2021 Annual Results Presentation – 24 February 2022
Slide 48: A core shareholder backing the corporate plan
A core shareholder backing the corporate plan Ownership structure at 31 December 2021 Pasquier Odin Treasury Managers family family shares 2.7% 68.3% 28.3% 0.7% Founders & Management Sopra GMT Shares managed on behalf Treasury shares Free float 2.6% 19.6% of employees Shareholders’ 5.8% 0.4% 71.5% a
Slide 49: Commitment to net-zero emissions by 2028
Commitment to net-zero emissions by 2028 Our trajectory toward achieving net-zero emissions by 2028 Net-zero emissions of the supply of the supply chain + Waste, chain commuting and remote working + Business travel Offices, data centres Direct activities Indirect activities 49 2021 Annual Results Pr
Slide 50: Plan to reduce CO2 emissions from direct activities
Plan to reduce CO2 emissions from direct activities (1) Aligning with the 1.5°C trajectory approved by SBTi (measured per employee) Baseline: 2015 -13.6% in 2016 Target for 2040 (baseline: 2015) -20.0% Intermediate target for 2028 -85%(1) in 2017 (baseline: 2015) -6.4 points -58%(1) in 2017 -29.1% i
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