Sopra Steria Group Sa · EURONEXT:SOP
Sopra Steria Group Sa — FY2020 Earnings Presentation
55 slides from Sopra Steria Group Sa's earnings presentation, Feb 26, 2021
Slide 1: 2020 Annual Results Presentation
2020 Annual Results Presentation PARIS, 26 FEBRUARY 2021
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 2020 highlights: agility, resilience, responsibility 02 Operating position by reporting unit 03 2020 financial results 04 Medium-term strategy and ambitions 05 Targets for 2021 06 Annexes 3 2020 Annual Results Presentation – 26/02/2021
Slide 4: Key events of 2020: agility, resilience, responsibility
01 Key events of 2020: agility, resilience, responsibility Vincent Paris Chief Executive Officer 4 2020 Annual Results Presentation – 26/02/2021
Slide 5: Constantly adjusting how we worked throughout 2020
Constantly adjusting how we worked throughout 2020 Sopra Steria demonstrated its agility Governance Working methods – Remote working Staffing – Resource management Winning new business Offerings adapted to the environment Responsiveness and fighting spirit 5 2020 Annual Results Presentation – 26/02/
Slide 6: Key figures for 2020
Key figures for 2020 Very resilient performance Revenue Operating profit on business Net profit attributable to the activity Group €4,262.9m €300.2m €106.8m total negative grow th of 3.9% i.e. 7.0% of revenue i.e. 2.5% of revenue and negative organic grow th* of 4.8% Free cash flow Net financial deb
Slide 7: 2020 negative organic growth limited to 4.8%
2020 negative organic growth limited to 4.8% Specific impact linked to the weighting of aerospace and the cyberattack: c. 2.5 pts of growth +6.5% c. 1.5 pts Aeronautics impact +3% to +5% +5.2% +4.9% Q1 Q12020 2020 +11% +3.5% -20% Q2 2020 Change in revenue from aeronautics +2.0% -29% Q3 2020 2020 act
Slide 8: Quarterly breakdown of 2020 organic growth
Quarterly breakdown of 2020 organic growth Gradually improved after bottoming out in Q2 3.3% 0% -4.2 % (1) -5.9% -8.4% -7.7% (2) Q1 Q2 Q3 Q4 2020 2021e (1) Q4 restated to exclude the effects of the cyberattack. (2) Q4 reported. 8 2020 Annual Results Presentation – 26/02/2021
Slide 9: Resilient operating margin
Resilient operating margin Declined only 1 pt, including 0.2 pts as a result of the cyberattack Operating margin on business Prices stable overall activity (%) Continued to rise slightly in consulting Sharp fall in consultant downtime between April and December Situation normalised in Q4 2020 8.0% 7
Slide 10: Robust cash flow performance
Robust cash flow performance Rate of conversion of operating profit into cash flow held steady Cash conversion ratio Days Sales Outstanding (DSO) (3) excluding non-recurring items FCF(1) / OPBA(2) 70 days 68 days 50% 51% 51% 43% 41% 61 days 55 days 20% 54 days(4) 2015 2016 2017 2018 2019 2020 2016 2
Slide 11: Market positioning
Market positioning Consolidation and fresh recognition despite the crisis Sopra Steria France Sopra Banking Software Sopra HR Software & Top 3 Universal Banking Solutions Major Multi-country payroll contenders 2 Digital services company “2019 Revenue in France” 1 Lending solutions Representative ven
Slide 12: Corporate social responsibility policy
Corporate social responsibility policy A stakeholder-friendly approach Top priority placed on employee Priority on protecting the health dialogue and human resource of employees, clients and management from the onset of partners the Covid-19 crisis: monitoring, information, compensation, skills pres
Slide 13: Greater recognition from non-financial rating agencies
Greater recognition from non-financial rating agencies Confirmation of a continued rise in Sopra Steria’s ESG scores MSCI ESG RATINGS SUSTAINALYTICS RATINGS [CCC – AAA] AA Leader Pending AA Leader (7.4/10) 73/100 A Average (7.3/10) 68/100 Outperformer 2020 2020 A Average (7.1/10) 64/100 Outperformer
Slide 14: Operating position by reporting unit
02 Operating position by reporting unit Vincent Paris Chief Executive Officer 14 2020 Annual Results Presentation – 26/02/2021
Slide 15: 2020 operating performance
2020 operating performance Breakdown by reporting unit Operating profit on business Revenue activity 2019 Organic 2020 2020 2019 Restated* growth (€m) (% of Rev.) (% of Rev.) (€m) (%) France 1,655.6 1,844.6 - 10.2% 6.8% 9.7% United Kingdom 699.8 686.5 + 1.9% 8.0% 7.3% Other Europe 1,249.0 1,221.4 0
Slide 16: France
France Financial year 2020 impacted by the effects of the pandemic and the cyberattack 2020 2019 France (€m) (% of Rev.) (€m) (% of Rev.) Revenue 1,655.6 1,813.1 Organic growth (%) - 10.2% Operating profit on business activity 111.9 6.8% 175.5 9.7% Profit from recurring operations 104.8 6.3% 167.2 9
Slide 17: United Kingdom
United Kingdom Performance improved thanks to our two public sector joint ventures 2020 2019 United Kingdom (€m) (% of Rev.) (€m) (% of Rev.) Revenue 699.8 771.5 p Organic growth (%) + 1.9% Operating profit on business activity 56.0 8.0% 56.1 7.3% Profit from recurring operations 44.1 6.3% 43.8 5.7%
Slide 18: Other Europe
Other Europe Performance improved across virtually all geographies 2020 2019 Other Europe (€m) (% of Rev.) (€m) (% of Rev.) Revenue ee cas o 1,249.0 1,152.9 Organic growth (%) + 2.3% Operating profit on business activity 101.0 8.1% 77.4 6.7% Profit from recurring operations 96.5 7.7% 73.0 6.3% Opera
Slide 19: Sopra Banking Software
Sopra Banking Software Gradual improvement in operating position 2020 2019 Sopra Banking Software (€m) (% of Rev.) (€m) (% of Rev.) Revenue 421.6 438.9 Organic growth (%) - 9.1% Operating profit on business activity 10.5 2.5% 4.9 1.1% Profit from recurring operations -4.1 -1.0% -8.9 -2.0% Operating
Slide 20: Other Solutions
Other Solutions A year impacted by project postponements 2020 2019 Other Solutions (€m) (% of Rev.) (€m) (% of Rev.) Revenue 236.9 257.5 Organic growth (%) - 8.9% Operating profit on business activity 20.8 8.8% 40.3 15.7% Profit from recurring operations 19.9 8.4% 39.1 15.2% Operating profit 17.9 7.
Slide 21: 2020 financial results
03 2020 financial results Étienne du Vignaux Chief Financial Officer 21 2020 Annual Results Presentation – 26/02/2021
Slide 22: Income statement
Income statement Financial year 2020 2020 2020 2019 2019 (€m) (% of Rev.) (€m) (% of Rev.) Revenue 4,262.9 4,434.0 Organic growth -4.8% Operating o d profit on business activity 300.2 7.0% 354.3 8.0% Share-based payment expenses - 4.2 - 11.1 Amortisation of allocated intangible assets - 34.8 - 28.9
Slide 23: Other operating income and expenses
Other operating income and expenses Financial year 2020 2020 2019 (€m) (€m) Costs related to business combination - 3.1 - 3.3 Restructuring and reorganisation costs - 44.6 - 31.6 Other - 11.1 3.9 Other operating income and expenses - 58.9 - 31.0 o/w Covid: -€15.6m o/w Cyberattack: -€5.3m net 23 2020
Slide 24: Tax
Tax Financial year 2020 2020 2019 (€m) (€m) Profit before tax and share from equity-accounted companies 177.1 258.7 Effective tax charge - 60.4 - 87.3 Effective tax rate (%) 34.1% 33.8% Expected 2021 effective tax rate: c. 28% 24 2020 Annual Results Presentation – 26/02/2021
Slide 25: 17% reduction in net financial debt
17% reduction in net financial debt Robust free cash flow (FCF): €203.5m 550 513.9 500 450 -11.4 425.6 -99.5 -4.3 €m 400 350 300 +203.5 250 Net financial debt Free cash flow Changes in scope and Dividends Currency changes Net financial debt at 31/12/2019 financial investments and other at 31/12/2020
Slide 26: Detail of movement in free cash flow (FCF)
Detail of movement in free cash flow (FCF) Strong performance on working capital c. €50m of non- 240 recurring favourable 229.3 effects 220 +47.3 203.5 €m 200 -26.0 -3.5 -1.9 180 €50m of non- recurring favourable 160 effects +7.9 -49.5 140 Free cash flow EBITDA CAPEX Reorganisation and Other items W
Slide 27: Diversified and accessible financing
Diversified and accessible financing €1.1bn in available undrawn facilities 31/12/2020 31/12/2020 Maturities Amount Amount • Bond: 2026 and 2027 used authorised • Bank borrowing facilities: 2023 and (€m) (€m) 2024 Bond 250.0 250.0 Syndicated loan – Tranche A € 96.0 96.0 Amount authorised Syndicated
Slide 28: Solid financial position
Solid financial position A significantly strengthened balance sheet structure Equity in 2020: €1,445.4m Net financial debt in 2020: €425.6m Net financial debt/equity Net financial debt/EBITDA(1) Financial covenants 3x 47% 1,7x 29% 1,1x 2018 2020 2018 2020 (1) Pro forma EBITDA before impact of IFRS 1
Slide 29: Medium-term strategy and ambition
04 Medium-term strategy and ambition Vincent Paris Chief Executive Officer 29 2020 Annual Results Presentation – 26/02/2021
Slide 30: Our market
Our market Growth buoyed by digital transformation Growth in the digital services market could One of the key lessons for businesses from the average around 5% a year for the next four years materialisation of pandemic risk in 2020 is the (Gartner, Western Europe, 2020-2024, current US dollars, upda
Slide 31: Our ambition
Our ambition Establishing ourselves as a European leader in digital transformation Benchmark partner for large public authorities, financial and industrial operators, and strategic companies in the main countries where the Group operates. Helping our clients make “Together, building a the best use o
Slide 32: Our corporate project
Our corporate project Independent and creating value for stakeholders Expanding European - Organic growth …in services and worldwide in software - External growth Independent - Reference shareholder - Employee shareholding Added value Unique - Performance - End-to-end approach - Software development
Slide 33: Our strategic levers
Our strategic levers In digital services and software Focus strategy Offering strategy Production model 100 European key accounts End-to-end approach Industrial approach (methods IT SERVICES Eight preferred verticals and a Strengthen consulting (volume and tools) priority focus on the financial and
Slide 34: Our financial targets
Our financial targets For the medium term Target business mix Organic performance External growth Consulting 15% Revenue growth 4% – 6% Proactively pursuing Software 20% OPBA (1) c. 10% of revenue consolidation IT Services 65% FCF (2) 5% –7% of revenue (1) Operating profit on business activity (2) F
Slide 35: Our key non-financial targets
Our key non-financial targets Climate change, women in the workforce, digital responsibility Women to make up 30% of Digital sustainability in Zero net emissions by 2028 Executive Committee by 2025 our value proposition Cut GHG emissions(1) from direct A proactive policy of bringing Building ethics,
Slide 36: Financial targets for 2021
05 Financial targets for 2021 Vincent Paris Chief Executive Officer 36 2020 Annual Results Presentation – 26/02/2021
Slide 37: Environment for 2021
Environment for 2021 A challenging first quarter followed by a gradual return to revenue growth Environment improving but still uncertain Strong sales but little visibility Situation in vertical markets a mixed bag Aerospace and transport still affected, albeit now stabilised, and offer little visib
Slide 38: Financial targets for 2021
Financial targets for 2021 Organic revenue growth of between 3% and 5% Including negative growth in Q1 Operating margin on business activity of between 7.5% and 8.0% Free cash flow of around €150m 38 2020 Annual Results Presentation – 26/02/2021
Slide 39: Annexes
06 Annexes 39 2020 Annual Results Presentation – 26/02/2021
Slide 40: Key figures for 2020
Key figures for 2020 Non-financial performance Net change in workforce(2) Percentage of women in Reduction in GHG emissions(1) workforce(2) per employee -3.2% 32.5% -58.9% vs +2.4% in 2019 vs 32% in financial year 2019 2020 com pared w ith 2019 Workforce attrition rate Percentage of women Cumulative
Slide 41: Plan aimed at achieving zero net emissions
Plan aimed at achieving zero net emissions Target set for 2028 Zero net emissions 2021 2022 2025 2027 2028 Business travel Waste Supply chain Offices Commuting Data centres 50% 100% Direct activities Indirect activities 41 2020 Annual Results Presentation – 26/02/2021
Slide 42: 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) Goals for 2040 Baseline: 2015 (baseline: 2015) -85%(1) -13.6% in 2016 2028 milestone (baseline: 2015) -20.0% in 2017 -58%(1) - 6.4 points in 2017 -29.1% in 2018 -9.1 poi
Slide 43: Other Sopra Steria ESG rankings
Other Sopra Steria ESG rankings 2020 standings Climate Change A-List Platinum medal for our Engagement Leader for our environmental sustainability in 2020, in the for engaging our suppliers in performance for the top 1% for the second relation to climate action fourth year running year running Two n
Slide 44: Sopra Steria at 31/12/2020
Sopra Steria at 31/12/2020 A European leader in digital transformation Among the top 5 European digital services companies Among the top 10 operating in Europe 2020 revenue 46,000 Operations in End-to-end €4.3bn employees 25 countries approach Revenue to 31/12/2020 2% 10% 15% 3% 26% 5% 32% 15% 4% 48
Slide 45: Breakdown of Group revenue by country
Breakdown of Group revenue by country At 31/12/2020 SERVICES REVENUE – 31/12/2020 BUSINESS SOLUTIONS REVENUE TO 31/12/2020 Other Europe 2020 revenue = €1,249m 15% o/w Germany = 30% o/w Scandinavia = 26% o/w SFT = 16% 34% o/w Spain = 12% o/w Benelux = 7% o/w Italy = 6% o/w Switzerland = 3% €3,604m €6
Slide 46: Breakdown of Business Solutions revenue
Breakdown of Business Solutions revenue At 31/12/2020 BUSINESS SOLUTIONS REVENUE BY PRODUCT BUSINESS SOLUTIONS REVENUE BY BUSINESS LINE Sopra Banking Software 12% 2020 revenue = €422m o/w France = €184m 16% o/w Outside France = €238m 11% €659m €659m BUSINESS BUSINESS 45% 24% SOLUTIONS SOLUTIONS 64%
Slide 47: Global workforce
Global workforce Financial year 2020 31/12/2020 31/12/2019 France 19,799 19,502 United Kingdom 6,646 6,305 Other Europe 10,885 10,868 Rest of the World 523 510 X-Shore 8,107 9,060 Total 45,960 46,245 47 2020 Annual Results Presentation – 26/02/2021
Slide 48: Changes in exchange rates
Changes in exchange rates Financial year 2020 Changes in exchange rates Average rate Average rate Change For €1 / % 2020 2019 (%) Pound sterling 0.8897 0.8778 - 1.3% Norwegian krone 10.7228 9.8511 - 8.1% Swedish krona 10.4848 10.5891 + 1.0% Danish krone 7.4542 7.4661 + 0.2% Swiss franc 1.0705 1.1124
Slide 49: Change in revenue in financial year 2020
Change in revenue in financial year 2020 Decline at constant exchange rates: 3.1% 4,600 4,500 o/ w NOK -22.7m +76.1 o/ w GBP -13.1m 4,434.0 4,400 -33.5 SFT = +€89.0m 4,300 Sodifrance = +€32.0m SAB = +€26.6m 4,262.9 €m NeoSpheres = +€2.5m Recruitm ent = -€74.0m -213.7 4,200 4,100 4,000 2019 revenue C
Slide 50: Earnings per share
Earnings per share Financial year 2020 2020 2019 (€m) (€m) Net profit attributable to the Group (€m) 106.8 160.3 Weighted average number of shares in issue excluding treasury shares 20.25 20.23 Basic earnings per share (€) 5.27 7.92 Basic recurring earnings per share (€) 7.42 8.97 Theoretical weight
Slide 51: Breakdown of change in net financial debt
Breakdown of change in net financial debt 2020 2019 (€m) (€m) Operating profit on business activity 300.2 354.3 Depreciation, amortisation and provisions (excluding allocated intangible assets) 187.4 159.3 EBITDA 487.6 513.6 Non-cash items 6.7 - 3.0 Tax paid -82.9 -81.0 Change in current operating w
Slide 52: Simplified balance sheet
Simplified balance sheet 31/12/2020 31/12/2019 (€m) (€m) Goodwill 1,843.2 1,813.9 Allocated intangible assets 161.5 181.5 Other fixed assets 241.1 267.9 Right-of-use assets 290.3 320.4 Equity-accounted investments 193.4 195.0 Fixed assets 2,729.6 2,778.8 Net deferred tax 113.4 98.1 0 0 Trade account
Slide 53: UK pension fund deficit net of tax
Uk pension fund deficit net of tax Deficit net of tax (€m) 245 200 167 125 123 119 113 53 2020 Annual Results Presentation – 26/02/2021
Slide 54: Ownership at 31/12/2020
Ownership at 31/12/2020 A reference shareholder backing the corporate plan Pasquier Odin Managers family family 3.4% 68.3% 28.3% Founders & Management Sopra GMT Shares managed on behalf Treasury shares Free float 2.6% 19.6% of employees Shareholders’ 6.3% 0.2% 71.2% agreement (8.4%) (57.8%) 22.2% (3
Slide 55: 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