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Sodexo SA — FY2014 Earnings Presentation

64 slides from Sodexo SA's earnings presentation, Nov 13, 2014

  1. Slide 1: Fiscal 2014 Annual Results

    FISCAL 2014 ANNUAL RESULTS November 13, 2014

  2. Slide 2: Forward-Looking Information

    FORWARD-LOOKING INFORMATION This presentation contains statements that may be considered forward- looking statements and as such may not relate strictly to historical or current facts. These statements represent management's views as of the date they are made and we assume no obligation to update th

  3. Slide 3: Agenda

    AGENDA 1. FISCAL 2014 HIGHLIGHTS 2. SPOTLIGHT ON TWO GROWTH DRIVERS 3. FINANCIAL PERFORMANCE 4. REVIEW OF OPERATIONS 4a ON-SITE SERVICES 4b BENEFITS AND REWARDS SERVICES 5. OUTLOOK 6. APPENDICES 3 – Fiscal 2014 Annual Results - November 13, 2014

  4. Slide 4: Fiscal 2014 Highlights

    1 FISCAL 2014 HIGHLIGHTS 4 – Fiscal 2014 Annual Results - November 13, 2014

  5. Slide 5: Solid Results

    FISCAL 2014 HIGHLIGHTS SOLID RESULTS  Unique positioning as an integrator of services Quality of Life Services • Facilities management (particularly Hard FM) expertise well adapted to respond spurring growth in On-site Services • Extensive expertise in foodservices to evolving market needs  New co

  6. Slide 6: Fiscal 2014: Solid Results

    FISCAL 2014 HIGHLIGHTS FISCAL 2014: SOLID RESULTS Revenues €18 billion Organic revenue growth +2.3% Operating profit* €966 million +10.7% Excluding currency effects Operating margin* 5.7% +50 bps Excluding Excluding currency effects currency effects * Operating profit and margin are presented before

  7. Slide 7: Solid Results

    FISCAL 2014 HIGHLIGHTS SOLID RESULTS Net income €490 million +20.3% +11.6% Excluding After currency effects currency effects Continued significant cash €602 million +14.7% generation - Cash flow conversion* 123% Proposed dividend €1.80 +11.1% Net debt €371 million As of Aug. 31, 2014 - Gearing ratio

  8. Slide 8: Further Success for Our Quality of Life Services Offer

    FISCAL 2014 HIGHLIGHTS FURTHER SUCCESS FOR OUR QUALITY OF LIFE SERVICES OFFER CORPORATE Airbus in France Space management services Huawei Technologies in India Technical services Citigroup in the United States Technical maintenance on 1,600 sites EDUCATION Chicago Public Schools in the United States

  9. Slide 9: Further Success in Our Quality of Life Services Offer

    FISCAL 2014 HIGHLIGHTS FURTHER SUCCESS IN OUR QUALITY OF LIFE SERVICES OFFER HEALTH CARE AND SENIORS Mayo Clinic Health System in the United States Praram 9 Hospital in Thailand REMOTE SITES Woodside in Australia Facilities management services BENEFITS AND REWARDS SERVICES Banco Santander in Brazil

  10. Slide 10: Recognition of Our Commitments

    FISCAL 2014 HIGHLIGHTS RECOGNITION OF OUR COMMITMENTS For the 10th year in a row, Sodexo was named Global Sustainability Industry Leader in its sector  43% of Executive Committee Ranked No. 1 among the 120 companies in the SBF index for the proportion of women members are women  38% of Directors a

  11. Slide 11: Being One of the Global Companies Most Appreciated by Its Employees

    FISCAL 2014 HIGHLIGHTS BEING ONE OF THE GLOBAL COMPANIES MOST APPRECIATED BY ITS EMPLOYEES Improved employee engagement rate  Up 11 points since Fiscal 2008  86% of our employees rank Sodexo a better employer than its competitors  Sodexo recognized as a “Best Employer” by Aon Hewitt's global prog

  12. Slide 12: Expand Our Knowledge of Quality of Life as a Performance Driver

    FISCAL 2014 HIGHLIGHTS EXPAND OUR KNOWLEDGE OF QUALITY OF LIFE AS A PERFORMANCE DRIVER A Sodexo institute that seeks to identify quality of life drivers within organizations A unique partnership offering a macroeconomic vision of quality of life First website to provide a global perspective on quali

  13. Slide 13: Spotlight on Two Growth Drivers

    2 SPOTLIGHT ON TWO GROWTH DRIVERS 13 – Fiscal 2014 Annual Results - November 13, 2014

  14. Slide 14: Growth Led by Facilities Management Services

    SPOTLIGHT ON TWO GROWTH DRIVERS GROWTH LED BY FACILITIES MANAGEMENT SERVICES Growth in Facilities Management Services revenues in Fiscal 2014: +17% in Corporate in North America +12% in the United Kingdom €5 billion +10% in Asia in Fiscal 2014 +6% in Continental Europe or 28% of revenues Facilities

  15. Slide 15: Bangkok Medical Centre, Thailand

    SPOTLIGHT ON TWO GROWTH DRIVERS - CLIENT CASE STUDY BANGKOK MEDICAL CENTRE, THAILAND OUR CLIENT  One of Thailand's biggest private hospitals  1,550 employees, doctors and nurses  3,900 patients  Challenges: reduce operating costs and attract an international clientele SODEXO'S SOLUTION: AN EXPAN

  16. Slide 16: Benefits and Rewards Services Double-Digit Growth

    SPOTLIGHT ON TWO GROWTH DRIVERS BENEFITS AND REWARDS SERVICES DOUBLE-DIGIT GROWTH An extensive range of Benefits and Rewards Services combining economic performance and improvement in quality of life Issue volume €15.5 billion Organic issue volume growth +10.7% Organic revenue growth +13.0% Operatin

  17. Slide 17: Money Boost - Junaeb

    SPOTLIGHT ON TWO GROWTH DRIVERS - CLIENT CASE STUDIES MONEY BOOST - JUNAEB SODEXO INNOVATION BOOST SAVINGS AND REDUCE EMPLOYEE STRESS MONEY BOOST (UK) Online money management tool that helps employees save by setting spending priorities and targets. Benefits for our client: Improvement in Quality of

  18. Slide 18: Solid Financial Performance

    3 SOLID FINANCIAL PERFORMANCE 18 – Fiscal 2014 Annual Results - November 13, 2014

  19. Slide 19: Organic Growth

    SOLID FINANCIAL PERFORMANCE ORGANIC GROWTH Organic growth: +2.3% of which: On-site Services Benefits and Rewards Services +1.8% +13% 19 – Fiscal 2014 Annual Results - November 13, 2014

  20. Slide 20: Operating Profit

    SOLID FINANCIAL PERFORMANCE OPERATING PROFIT* Operating profit up almost 11%, driving a 50 bps rise in operating margin at constant exchange rates € millions 1,067 966 964 +10.7% Unfavorable currency effect EXCLUDING CURRENCY EFFECTS Fiscal 2013 Fiscal 2014 Operating margin* 5.2% 5.7% 5.4% * Operati

  21. Slide 21: Program to Improve Operational Efficiency and Reduce Costs

    SOLID FINANCIAL PERFORMANCE PROGRAM TO IMPROVE OPERATIONAL EFFICIENCY AND REDUCE COSTS € millions Incurred in 139 Fiscal 2013 EXCEPTIONAL IMPLEMENTATION Incurred in 27 Fiscal 2014 COSTS Total to date over 18 months 166 (Sept. 2012-Feb. 2014) Achieved in 28 Fiscal 2013 SUSTAINABLE ANNUAL Achieved in

  22. Slide 22: Improvement in Consolidated Results

    SOLID FINANCIAL PERFORMANCE IMPROVEMENT IN CONSOLIDATED RESULTS Fiscal 2014 Fiscal 2013 CHANGE At current At constant € millions € millions exchange rates exchange rates Revenues 18,016 18,397 -2.1% +2.6% Operating profit* before exceptional items 966 964 +0.2% +10.7% Exceptional items (27) (139) Op

  23. Slide 23: Net Income and Earnings per Share

    SOLID FINANCIAL PERFORMANCE NET INCOME AND EARNINGS PER SHARE Net income Earnings per share +11.6% +11.0% €3.23 €490 million €439 million €2.91 Fiscal 2013 Fiscal 2014 Fiscal 2013 Fiscal 2014 23 – Fiscal 2014 Annual Results - November 13, 2014

  24. Slide 24: Consolidated Cash Flow

    SOLID FINANCIAL PERFORMANCE CONSOLIDATED CASH FLOW CASH CONVERSION MODEL CONFIRMED € millions Fiscal 2014 Fiscal 2013 Operating cash flow 708 747 Net capital expenditure (294) (249) Change in working capital 188 27 Free cash flow 602 525 Net acquisitions (50) (98) Change in shareholders' equity (282

  25. Slide 25: Consolidated Balance Sheet

    SOLID FINANCIAL PERFORMANCE CONSOLIDATED BALANCE SHEET SOLID RATIOS AND FINANCIAL POSITION € millions Aug. 31, Aug. 31, Aug. 31, Aug. 31, 2013 2014 2013 2014 Non-current assets 6,626 6,852 Shareholders’ equity 2,950 3,189 Current assets 3,902 4,120 Non-controlling interests 37 32 excluding cash Fina

  26. Slide 26: Proposed Dividend per Share

    SOLID FINANCIAL PERFORMANCE PROPOSED DIVIDEND PER SHARE Dividend increase in line with net income growth €1.62 €1.80* +11.1% Payout ratio: 56% of net income and 54% of net income before exceptional items Fiscal 2013 Fiscal 2014  Dividend to be approved at the January 19, 2015 Shareholders' Meeting

  27. Slide 27: Review of Operations

    4 REVIEW OF OPERATIONS 27 – Fiscal 2014 Annual Results - November 13, 2014

  28. Slide 28: 4a On-Site Services

    4a ON-SITE SERVICES 28 – Fiscal 2014 Annual Results - November 13, 2014

  29. Slide 29: Organic Growth: +1.8%

    ON-SITE SERVICES ORGANIC GROWTH: +1.8% North America +3.7% United Kingdom and Ireland +4.7% Continental Europe -0.2% Rest of World +0.2% ( +6.9% excluding Remote Sites ) 29 – Fiscal 2014 Annual Results - November 13, 2014

  30. Slide 30: Growth Indicators

    ON-SITE SERVICES GROWTH INDICATORS Comparable Business Client retention unit growth development 7.8% 7.1% 92.5% 93.4% 2.1% 2.5% Fiscal 2013 Fiscal 2014 Fiscal 2013 Fiscal 2014 Fiscal 2013 Fiscal 2014 Includes voluntary contract exits 30 – Fiscal 2014 Annual Results - November 13, 2014

  31. Slide 31: Organic Growth by Client Segment

    ON-SITE SERVICES ORGANIC GROWTH BY CLIENT SEGMENT Corporate +2.2%  Accelerated growth in North America and in facilities management services  Mining sector slowdown and Remote Site closures -4.5% Health Care and Seniors  Moderate comparable unit growth +1.1%  Weak business development and volunt

  32. Slide 32: North America

    ON-SITE SERVICES NORTH AMERICA € millions Revenues Corporate +8.9% Organic 6,821 growth 6,759  Strong Corporate demand spurred Unfavorable by integrated Quality of Life currency effect Services offers  Good gains for Remote Sites in Canada +3.7% ORGANIC GROWTH Health Care and Seniors +1.1%  Volun

  33. Slide 33: North America

    ON-SITE SERVICES NORTH AMERICA € millions Operating profit* Operating margin* 372 358 5.5% 5.3% Change at constant rates Unfavorable currency effect +0.5% CHANGE EXCLUDING CURRENCY EFFECTS Fiscal 2013 Fiscal 2014 Fiscal 2013 Fiscal 2014  Costs associated with a Health Care contract  One-off impact

  34. Slide 34: Continental Europe

    ON-SITE SERVICES CONTINENTAL EUROPE € millions Revenues Corporate +1.1%  Decline in foodservices Organic Acquisitions volumes 5,716 growth 5,702 Unfavorable currency  Sharp slowdown in growth effect in Russia in the second half  Continued success of facilities management services -0.2% CHANGE Hea

  35. Slide 35: Continental Europe

    ON-SITE SERVICES CONTINENTAL EUROPE € millions Operating profit* Operating margin* Change at constant rates 231 4.1% Unfavorable 198 currency effect 3.5% +17.7% CHANGE EXCLUDING CURRENCY EFFECTS Fiscal 2013 Fiscal 2014 Fiscal 2013 Fiscal 2014  Tight management of overheads  Cost savings generated

  36. Slide 36: Rest of World

    ON-SITE SERVICES REST OF WORLD € millions Revenues 3,683 Organic growth Corporate -1.3% Acquisitions 3,327  Further growth in Corporate +5.6% Unfavorable revenues (services and industrial currency effect clients) +6.9%  Sharp slowdown in mining sector -7.3% +0.2% excl. Remote Sites ORGANIC GROWTH

  37. Slide 37: Rest of World

    ON-SITE SERVICES REST OF WORLD € millions Operating profit* Operating margin* Change at 4.2% constant rates 140 127 Unfavorable currency effect 3.4% +20.5% CHANGE EXCLUDING CURRENCY EFFECTS Fiscal 2013 Fiscal 2014 Fiscal 2013 Fiscal 2014  Productivity gains in all geographies  Increasing synergies

  38. Slide 38: United Kingdom and Ireland

    ON-SITE SERVICES UNITED KINGDOM AND IRELAND € millions Revenues Organic growth Favorable currency effect 1,483 Corporate +6.3% 1,397  Start-up of the comprehensive Northumberland justice services contract +4.7% ORGANIC GROWTH Health Care and Seniors +3.8%  Ramp-up and extension of services at seve

  39. Slide 39: United Kingdom and Ireland

    ON-SITE SERVICES UNITED KINGDOM AND IRELAND € millions Operating profit* Operating margin* 4.8% 67 Favorable 66 currency effect 4.5% Change at constant rates - 3.0% CHANGE EXCLUDING CURRENCY EFFECTS Fiscal 2013 Fiscal 2014 Fiscal 2013 Fiscal 2014  Productivity gains offset by: • Start-up costs for

  40. Slide 40: 4b Benefits and Rewards Services

    4b BENEFITS AND REWARDS SERVICES 40 – Fiscal 2014 Annual Results - November 13, 2014

  41. Slide 41: Issue Volume and Revenues

    BENEFITS AND REWARDS SERVICES ISSUE VOLUME AND REVENUES Issue volume Revenues € billions € millions Organic growth Acquisitions Organic 16 growth Acquisitions 15.5 790 751 Unfavorable currency effect Unfavorable currency effect +10.7% +13% ORGANIC ORGANIC GROWTH GROWTH Fiscal 2013 Fiscal 2014 Fiscal

  42. Slide 42: Issue Volume and Revenues: Latin America

    BENEFITS AND REWARDS SERVICES ISSUE VOLUME AND REVENUES Latin America Issue volume Revenues € billions € millions Organic Organic growth Acquisitions growth Acquisitions 8.1 452 7.3 410 Unfavorable Unfavorable currency currency effect effect +17.2% +20.8% ORGANIC ORGANIC GROWTH GROWTH Fiscal 2013 Fi

  43. Slide 43: Issue Volume and Revenues: Europe and Asia

    BENEFITS AND REWARDS SERVICES ISSUE VOLUME AND REVENUES Europe and Asia Issue volume Revenues € billions € millions Organic growth Acquisitions 8.2 338 Organic 341 7.9 growth Acquisitions Unfavorable Unfavorable currency effect currency effect +4.1% +2.5% ORGANIC ORGANIC GROWTH GROWTH Fiscal 2013 Fi

  44. Slide 44: Operating Profit

    BENEFITS AND REWARDS SERVICES OPERATING PROFIT € millions Operating profit Operating margin 38.5% 37.9% 35.7% Change at constant rates 304 268 Unfavorable currency effect +11.8% GROWTH EXCLUDING CURRENCY EFFECTS Fiscal 2013 Fiscal 2014 Fiscal 2013 Fiscal 2014 Fiscal 2014 at constant rates at current

  45. Slide 45: Outlook

    5 OUTLOOK 45 – Fiscal 2014 Annual Results - November 13, 2014

  46. Slide 46: Revenues: Trends for Fiscal 2015

    OUTLOOK REVENUES: TRENDS FOR FISCAL 2015  A global economy defined  Continued growth in demand, by low inflation and weak growth confirming the relevance of our integrated services offer  A more uncertain short-term macroeconomic and political  Sustained double-digit growth for environment in so

  47. Slide 47: Operating Profit: Improvement Drivers in Fiscal 2015

    OUTLOOK OPERATING PROFIT: IMPROVEMENT DRIVERS IN FISCAL 2015 Further gains in operational efficiency thanks to:  Structured and monitored action plans at all levels to achieve our Fiscal 2015 objective  An operational efficiency improvement program that is delivering savings  Engaged teams firmly

  48. Slide 48: Fiscal 2015 Objectives

    OUTLOOK FISCAL 2015 OBJECTIVES We are currently targeting: Organic revenue growth of around 3% and around 10% growth in operating profit i.e. a further increase in operating margin in Fiscal 2015 to reach 5.7%* Representing an 80 bps rise in operating margin over two years (excluding currency effect

  49. Slide 49: Fiscal 2015 Operating Margin Objective

    OUTLOOK FISCAL 2015 OPERATING MARGIN OBJECTIVE * At Fiscal 2013 exchange rates ** At Fiscal 2014 exchange rates +80 bps 6.0%* 5.7%* 5.7%** 5.4%** 5.2% Fiscal 2013 Fiscal 2014 Fiscal 2015 Fiscal 2014 Fiscal 2015 actual objective actual objective 49 – Fiscal 2014 Annual Results - November 13, 2014

  50. Slide 50: Preparing for the Future

    OUTLOOK PREPARING FOR THE FUTURE  Ongoing efforts to improve competitiveness  Extensive knowledge of Quality of Life levers in our markets, and for our clients and consumers  Sustained investment in expertise, human resources and innovation across the globe 50 – Fiscal 2014 Annual Results - Novem

  51. Slide 51: Medium Term (3-5 Years)

    OUTLOOK MEDIUM TERM (3-5 YEARS)  an annual average revenue growth rate (excluding exchange rate impacts) between 4% and 7%  an annual average growth (excluding exchange rate impacts) in operating profit between 8% and 10%  an average annual cash conversion ratio* of around 100% * Ratio of free ca

  52. Slide 52: Our Major Strengths

    OUTLOOK OUR MAJOR STRENGTHS  The Group’s independence  Significant market potential estimated at nearly 50 times Group revenues  Unique offer of Quality of Life Services, particularly well suited to evolving client needs  Unmatched global network covering 80 countries  Uncontested leadership in

  53. Slide 53: Appendices

    APPENDICES 1. Fiscal 2014 revenue distribution 2. Revenue growth 3. Free cash flow 4. Debt refinancing 5. Financial debt analysis 6. Financial ratios 7. Principal exchange rates used 8. Impact of principal exchange rates on the balance sheet 9. Currency effect: Venezuelan bolivar fuerte 53 – Fiscal

  54. Slide 54: Fiscal 2014 Revenue Distribution

    APPENDIX 1 FISCAL 2014 REVENUE DISTRIBUTION Distribution by activity and client segment Distribution by geographic zone On-site Services 96% 32% Corporate North Continental America Europe 9% Remote Sites 4% Defense 38% 34% 4% Sports and Leisure 2% Justice 17% Health Care 7% Seniors 21% Education UK

  55. Slide 55: Revenue Trends

    APPENDIX 2 REVENUE TRENDS € millions +2.3% Organic growth +0.3% 18,397 Acquisitions 18,016 -4.7% Unfavorable currency effect -2.1% TOTAL CHANGE Fiscal 2013 Fiscal 2014 55 – Fiscal 2014 Annual Results - November 13, 2014

  56. Slide 56: Free Cash Flow

    APPENDIX 3 FREE CASH FLOW 117 825 Change in 708 working capital Capex 71** Net cash Change in from financial assets (Benefits and Operating operating Rewards cash flow activities Services) 602 (consolidated cash flow statement) (294)* FCF 92 * (294) = + (245) Tangible and intangible fixed asset inve

  57. Slide 57: Debt Refinancing

    APPENDIX 4 DEBT REFINANCING Refinancing:  €500 million due March 28, 2014  €880 million in bonds due January 2015 Debt issues:  March 2014 US private placement ("USPP") for USD 1.1 billion, with maturities of 5, 7, 10, 12, and 15 years and average interest of 3.8%  June 2014 two-tranche bond iss

  58. Slide 58: Analysis of Financial Debt

    APPENDIX 5a ANALYSIS OF FINANCIAL DEBT* AS OF AUGUST 31, 2014 € millions BY CURRENCY BY MATURITY 58% € < 1 year 957 1-2 years 1% 225 Other 41% $ 2-3 years 10 BY INTEREST RATE 3-4 years 409 100% Fixed 4-5 years average rate of 169 4.3% as of Aug. 31, 2014 > 5 years 2,082 * Financial debt of €3,852 mi

  59. Slide 59: Analysis of Financial Debt (Restated)

    APPENDIX 5b ANALYSIS OF FINANCIAL DEBT* RESTATED TO REFLECT THE BONDS TO BE REDEEMED IN JANUARY 2015 € millions BY CURRENCY BY MATURITY 45% € < 1 year 44 1-2 years 1% 225 Other 54% $ 2-3 years 10 3-4 years BY INTEREST RATE 409 4-5 years 100% Fixed 169 average rate of 3.8% > 5 years 2,082 * Financial

  60. Slide 60: Financial Ratios

    APPENDIX 6a FINANCIAL RATIOS Gearing ratio Reimbursement capacity Net debt/Shareholders' equity Gross financial debt/ Operating cash flow objective < 75% objective < 4 years 4.1** 21% 3.4 16% 3.2 15% 2.8 12% Fiscal 2011 Fiscal 2012 Fiscal 2013 Fiscal 2014 Fiscal 2011 Fiscal 2012 Fiscal 2013 Fiscal 2

  61. Slide 61: Financial Ratios

    APPENDIX 6b FINANCIAL RATIOS Interest cover Net debt ratio Operating profit/ Net debt/EBITDA Net financial expense objective < 2 years 6.5 6.6* 6.0 0.5 5.4 0.4 0.3 0.3 objective > 5 Fiscal 2011 Fiscal 2012 Fiscal 2013 Fiscal 2014 Fiscal 2011 Fiscal 2012 Fiscal 2013 Fiscal 2014 * Restated to reflect

  62. Slide 62: Principal Exchange Rates

    APPENDIX 7 PRINCIPAL EXCHANGE RATES Average rate Average rate Closing rate Closing rate 1 euro = Change Change Fiscal 2014 Fiscal 2013 Aug. 31, 2014 Aug. 31, 2014 US Dollar 1.3612 1.3075 -3.9% 1.3188 1.3235 +0.4% Pound Sterling 0.8233 0.8367 +1.6% 0.7953 0.8539 +7.4% Brazilian Real 3.1038 2.7178 -12

  63. Slide 63: Principal Currency Effects on the Balance Sheet as of August 31, 2014

    APPENDIX 8 PRINCIPAL CURRENCY EFFECTS ON THE BALANCE SHEET AS OF AUGUST 31, 2014 € millions USD £ BRL VEF USD £ BRL VEF Non-current Shareholders' 12 54 41 (2) (12) 45 33 (37) assets equity Deferred tax Provisions 0 1 2 (1) 1 1 2 (1) assets Deferred tax 0 0 5 0 Change in liabilities working capital 2

  64. Slide 64: Impacts of the Devaluation of the Venezuelan Bolivar Fuerte

    APPENDIX 9 IMPACTS OF THE DEVALUATION OF THE VENEZUELAN BOLIVAR FUERTE  For Fiscal 2014, Sodexo applied a rate of USD 1 = VEF 51.06 (1 euro = VEF 67.34) compared to an average rate of USD 1 = VEF 10.20 (1 euro = VEF 13.5 used in Fiscal 2013).  Main impacts of the devaluation on the Fiscal 2014 inc

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