Sopra Steria Group Sa · EURONEXT:SOP
Sopra Steria Group Sa — Non-Deal Roadshow (November 2019)
43 slides from Sopra Steria Group Sa's roadshow presentation, November 2019
Slide 1: Post Q3 Roadshows
Post Q3 Roadshows NOVEMBER 2019
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: Summary
Summary 01 Company overview 02 Strategy 03 FY2018 Highlights 04 2019 YTD performance & FY objectives 05 Annexes 3 Post Q3 Roadshows – November 2019
Slide 4: Company overview
01 Company overview 4 Post Q3 Roadshows – November 2019
Slide 5: Western Europe IT Services market structure
Western Europe IT Services market structure A market of $ 305bn Sopra Steria 2018 Market Share ($) Main competitors in Western Europe Market Sopra Steria Market Share Capgemini $bn / % 2018 2018 2018 Accenture CGI France 40.3 2.0 5.0% AtoS UK 90.8 0.9 1.0% IBM Germany 52.7 0.4 0.8% DXC
Slide 6: Sopra Steria at 31/12/2018
Sopra Steria at 31/12/2018 A European leader in digital transformation Top 5 European digital services companies Top 10 operating in Europe 2018 revenue of €4.1bn 44,000+ employees Operations in 25 countries End-to-end approach Revenue to 31/12/2018 2% 9% 12% 3% 22% 27% 15% 6% 5% 50% 6% 64% 12% 7% 2
Slide 7: Revenue by country for the period
Revenue by country for the period Ended 31/12/2018 SERVICES REVENUE TO 31/12/2018 SOLUTIONS REVENUE TO 31/12/2018 2018 revenue Other Europe = €997m o/w Germany = 36% 15% o/w Scandinavia = 30% 29% o/w Spain = 14% o/w Belux = 8% o/w Italy = 8% o/w Switzerland = 4% €3,480M €616M SERVICES 49% SOLUTIONS
Slide 8: Solutions revenue for the period
Solutions revenue for the period Ended 31/12/2018 SOLUTIONS REVENUE BY PRODUCT SOLUTIONS REVENUE BY BUSINESS LINE Sopra Banking Software 12% 2018 revenue = €374m o/w France = €149m 14% o/w Outside France = €225m 10% €616M €616M SOLUTIONS SOLUTIONS 27% 52% 61% 24% Sopra Banking Software Integration S
Slide 9: Ownership at 31/12/2018
Ownership at 31/12/2018 A key shareholder backing the corporate plan Pasquier Odin Managers Family Family 3.1% 68.4% 28.4% Founders & Sopra GMT Shares managed on Treasury Management Soderi Free float 19.6% behalf of employees shares 2.8% Shareholders’ agreement 22.4% 7.0% 0.2% 70.3% (33.0%) (8.3%) (
Slide 10: 50 years of continuous growth and transformation
50 years of continuous growth and transformation IT SERVICES TO SUPPORT THE MODERNIZATION OF ECONOMIC PERFORMANCE SOCIETY AS THE STRATEGIC FOCUS 1968-69 1985 1990 1999 2000 Sopra created: 1968 Sopra listed Sopra listed Steria created: 1969 on NYSE Euronext Paris on NYSE Euronext Paris DIGITAL TRANSF
Slide 11: Sopra Steria historical performance
Sopra Steria historical performance 4095 3845 3741 3584 3370 Revenue (€m) Operating profit on business activity (€m) 1349 1216 1050 964 958 912 856 781 672 556 37 47 63 76 82 65 86 93 110 109 231 246 301 329 308 2014 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Proforma 2015 2016 2017 2018 ** T
Slide 12: Sopra Steria historical performance
Sopra Steria historical performance 3 150 Net profit attributable to Axway (€m) 2,4 2,5 130 2,2 Net profit attributable to the Group (€m) 110 1,9 1,9 1,9 1,9 2 1,7 1,7 Dividend (€) 1,65 1,65 90 1,35 1,5 Axway spin off 70 8 8 June 2011, Sopra 1,1 Group AGM approved the distribution by Sopra 50 2 11 G
Slide 13: Strategy
02 Strategy 13 Post Q3 Roadshows – November 2019
Slide 14: An independent, value-creating corporate plan
An independent, value-creating corporate plan Expanding European Ethics and Values - Organic growth …in services and worldwide - Targeted external growth in software Independent - Key shareholder - Employee shareholding Added Value Unique - Consulting - Software - End-to-end - Entrepreneurial cultur
Slide 15: Mission and values
Mission and values “Leveraging digital to build a positive future for all” Priority on Respect Proactive, client service for others positive initiatives Professional A sense of shared Open-mindedness excellence commitment and curiosity 15 Post Q3 Roadshows – November 2019
Slide 16: Strategic ambitions
Strategic ambitions Services Strategic partner for large public authorities, financial and industrial players, and strategic companies in Europe, providing end-to-end support for the transformation of their business and operating models, making the best possible use of digital and the Group’s soluti
Slide 17: The Sopra Banking Software project
The Sopra Banking Software project Core banking: target market and adopted approach Core banking Market Transformation projects for core banking systems of Europe/Middle East/Africa (EMEA)-based retail banks regardless of size (T1 to T4) Approach End-to-end model: solution–implementation–operation D
Slide 18: The Sopra Banking Software project
The Sopra Banking Software project Specialised loans: target market and adopted approached Specialised loans Market Specialised financial institutions (equipment manufacturers and lenders) around the world: - Automotive loans - Consumer loans - Corporate loans - Equipment loans Approach A unique wor
Slide 19: A sustainable, human and guiding contribution
A sustainable, human and guiding contribution Our commitment as a responsible company We believe that we cannot make the Innovation and digital technology serving the challenges world more sustainable and responsible of the Group and of our customers without the commitment and positive contribution
Slide 20: Strategic objectives
Strategic objectives Organic growth of between 4% and 6% per year, under equivalent market conditions Revenue Acquisition strategy Operating margin Operating margin on business activity ~10% FCF 5% to 7% of revenue 20 Post Q3 Roadshows – November 2019
Slide 21: FY2018 Highlights
03 FY2018 Highlights 21 Post Q3 Roadshows – November 2019
Slide 22: Key figures
Key figures 2018 Revenue Operating profit on business activity Net profit attributable to the Group €4,095.3m €307.9m €125.1m Organic grow th* of 4.9% Taking into account a tax rate of 39.6 % due to i.e. 7.5% of revenue Growth at constant exchange rate of 7.4% non-recurring item s for around €15m (8
Slide 23: 2018, a transitional year…
2018, a transitional year… Bolstering the Group in response to a challenging workload Heavy workload resulting in delivery issues Internal growth Acquisitions Transformations underway at all entities Licence revenue lower than expected Investments to improve the model - Reinforced organisational str
Slide 24: …and a year of big leaps forward
…and a year of big leaps forward Robust growth in business activity Structural improvement in cash generation Continued progress in raising the value of offerings First encouraging signs in the United Kingdom Significant headway for Sopra Banking Software’s products External recognition for our sust
Slide 25: Operating performance by reporting unit
Operating performance by reporting unit Revenue Operating profit on business activity 2018 2017 Organic 2018 2017 IFRS 15 Restated* growth IFRS 15 IFRS 15 (€m) (€m) (%) (% of Rev.) (% of Rev.) France 1,699.5 1,623.5 + 4.7% 9.1% 8.6% United Kingdom 783.1 784.1 - 0.1% 5.7% 6.9% Other Europe 997.1 871.
Slide 26: 2019 YTD performance & FY objectives
04 2019 YTD performance & FY objectives 26 Post Q3 Roadshows – November 2019
Slide 27: H1 - Strong growth in a market driven by digital
H1 - Strong growth in a market driven by digital Organic revenue growth* of 7.4% in the first half +7.4% +5.2% +4.9% +3.5% +2.0% 2015 2016 2017 2018 H1 2019 * Alternative performance measures are defined at the end of this presentation 27 Post Q3 Roadshows – November 2019
Slide 28: H1 - Performance in line with full-year targets
H1 - Performance in line with full-year targets Operating margin and free cash flow Slight rise in the operating margin on business Improvement in free cash flow activity in the first half of 2019 in the first half of 2019 6.8% H1 2018 €m H1 2019 6.6% -21.8 H1 2018 Operating margin H1 2019 -77.3 on
Slide 29: H1 - Progress in specialised loans in 2019 (1/2)
H1 - Progress in specialised loans in 2019 (1/2) A better level of control at 30 June 2019 CLIENT PORTFOLIO RESILIENCE DEVELOPMENT OF V4.7 Around 10 challenging projects Standardised version Specific client support during the current period Industrialisation of production Unique source code API cata
Slide 30: H1 - Progress in specialised loans in 2019 (2/2)
H1 - Progress in specialised loans in 2019 (2/2) A clearly defined plan Full diagnostic Strengthening of Release of v4.7 organisation and v4.7.0 management brought to market Q4 2018 Q1 2019 Q4 2019 Q1 2020 2020 Recovery plan: 1. Product strategy Restart of sales - Development of v4.7 Launch Weekly r
Slide 31: H1 - Operating performance by reporting unit
H1 - Operating performance by reporting unit Revenue Operating profit on business activity H1 2018 Organic H1 2019 H1 2019 H1 2018 Restated* growth (€m) (% of Rev.) (% of Rev.) (€m) (%) France 914.9 849.1 + 7.7% 9.3% 9.0% United Kingdom 429.6 385.7 + 11.4% 6.1% 4.5% Other Europe 534.9 498.5 + 7.3% 6
Slide 32: Q3 - Revenue by reporting unit
Q3 - Revenue by reporting unit Revenue Q3 2018 Organic Total Q3 2019 Restated* growth growth (€m) (€m) (%) (%) France 427,8 392,4 + 9,0% + 9,0% United Kingdom 166,2 155,1 + 7,1% - 13,1% Other Europe 281,9 265,1 + 6,3% + 16,6% Sopra Banking Software 104,5 93,2 + 12,1% + 44,2% Other Solutions 58,6 53,
Slide 33: Priorities for 2019
Priorities for 2019 Focus on delivery SOPRA BANKING SOFTWARE Synergies with the services arm of the company VALUE ENHANCEMENT Investments in all entities STRUCTURE Reinforcement to prepare for future growth Benchmark employer CORPORATE RESPONSIBILITY Gender balance and equal treatment 33 Post Q3 Roa
Slide 34: Raising of annual growth target and confirmation of other 2019 targets
Raising of annual growth target and confirmation of other 2019 targets Organic revenue growth of between 6.3% and 6.5% Previously announced as “equal to or greater than 6%” Slight improvement in operating margin on business activity Free cash flow > €150m 34 Post Q3 Roadshows – November 2019
Slide 35: Annexes
05 Annexes 35 Post Q3 Roadshows – November 2019
Slide 36: Income statement
Income statement Financial year 2018 2018 2018 2017 2017 IFRS 15 IFRS 15 IFRS 15 IFRS 15 (€m) (% of Rev.) (€m) (% of Rev.) Revenue 4,095.3 3,831.1 Organic growth 4.9% Operating profit on business activity 307.9 7.5% 330.7 8.6% Expenses related to stock options and related items - 22.8 - 21.2 Amortis
Slide 37: Breakdown of change in net financial debt
Breakdown of change in net financial debt Financial year 2018 37 Post Q3 Roadshows – November 2019
Slide 38: Structural improvement in cash generation
Structural improvement in cash generation Cash conversion ratio Days Sales Outstanding (DSO) FCF(1) / Operating profit on business activity 50% 43% 41% 70 days 68 days 20% 61 days 2015 2016 2017 2018 2016 2017 2018 (1) Free cash flow excluding sales of trade receivables and after adjusting for non-r
Slide 39: Solid financial position at 31/12/2018 (1/2)
Solid financial position at 31/12/2018 (1/2) Comfortable structure and liquidity 31/12/2018 31/12/2018 Equity Amount used Amount authorised €1,329.2m (€m) (€m) Bond 180.0 180.0 Syndicated loan – Tranche A € 128.0 128.0 Net financial debt Syndicated loan – Tranche B £ 57.2 57.2 €620.9m Multi-currency
Slide 40: Simplified balance sheet
Simplified balance sheet 31/12/2018 31/12/2018 31/12/2017 IFRS 15 IFRS 15 (€m) (€m) Goodwill 1,708.5 1,590.6 Allocated intangible assets 183.0 161.5 Other fixed assets 234.9 179.7 Equity-accounted investments 195.1 189.1 Fixed assets 2,321.5 2,120.9 Net deferred tax 79.6 99.1 Trade accounts receivab
Slide 41: Earnings per share
Earnings per share Financial year 2018 2018 2017 IFRS 15 IFRS 15 (€m) (€m) Net profit attributable to the Group (€m) 125.1 172.5 Weighted average number of shares in issue excluding treasury shares 20.18 20.21 Basic earnings per share (€) 6.20 8.53 Basic recurring earnings per share (€) 7.43 9.34 Th
Slide 42: Global workforce
Global workforce Financial year 2018 31/12/2018 31/12/2017 France 19,013 18,649 United Kingdom 6,407 6,181 Other Europe 10,095 8,777 Rest of the World 344 281 X-Shore 8,255 7,773 Total 44,114 41,661 42 Post Q3 Roadshows – November 2019
Slide 43: 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