Sopra Steria Group Sa · EURONEXT:SOP
Sopra Steria Group Sa — FY2015 Earnings Presentation
41 slides from Sopra Steria Group Sa's earnings presentation, Feb 29, 2016
Slide 1: 2015 Annual Results Presentation
2015 ANNUAL RESULTS PRESENTATION Paris, 29 February 2016 Delivering Transformation. Together.
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: Introduction
INTRODUCTION Pierre PASQUIER – Chairman 3 2015 Annual Results Presentation - 29/02/2016 - Paris
Slide 4: Agenda
AGENDA 1|Key events of financial year 2015 2|Financial results for financial year 2015 3|Market, strategy & targets 4|Question & answer session 5|Annexes 4 2015 Annual Results Presentation - 29/02/2016 - Paris
Slide 5: Key events of financial year 2015
KEY EVENTS OF FINANCIAL YEAR 2015 Vincent PARIS – Chief Executive Officer 5 2015 Annual Results Presentation - 29/02/2016 - Paris
Slide 6: Key figures for 2015 (1/2)
KEY FIGURES FOR 2015 (1/2) TARGETS FOR 2015 EXCEEDED Revenue Operating profit on business activity €3,584.4m i.e. organic growth* of 2.0% €245.5m i.e. 6.8% of revenue Initial annual target: “Growth of around 2%” Annual target revised up: “Operating margin of around 6.5%” 2015 cost synergies related
Slide 7: Key figures for 2015 (2/2)
KEY FIGURES FOR 2015 (2/2) TARGETS FOR 2015 EXCEEDED Change in WCR Free cash flow -€81.9m €49.3m Estimate in H1 2015 publication: “-€150m over the year” Initial annual target: “Free cash flow = 0” Net financial debt UK pension fund deficit net of tax €530.8m €124.5m i.e. 1.76x EBITDA i.e. 43% of equ
Slide 8: 2015 overview of the Sopra Steria merger
2015 OVERVIEW OF THE SOPRA STERIA MERGER SUCCESSFUL INTEGRATION Clients Employees Shareholders Wider eligibility Headcount relatively stable Dividend policy maintained Revenue generated with major Low staff turnover* throughout the integration strategic clients up 7% Group: 16% period France:
Slide 9: A few examples of the major deals signed in 2015
A FEW EXAMPLES OF THE MAJOR DEALS SIGNED IN 2015 for a major French bank 9 2015 Annual Results Presentation - 29/02/2016 - Paris
Slide 10: Change in Group revenue in 2015
CHANGE IN GROUP REVENUE IN 2015 ORGANIC GROWTH OF 2.0% 3650 3600 3,584.4 69.2 3550 40.1 3500 Revenue (€m) 105.0 HCM = +€17.5m 3450 IM Sweden = -€5.0m CIMPA = +€27.6m 3400 3,370.1 3350 Averages vs 2014: GBP / € = +11.1% NOK / € = -6.6% 3300 3250 2014 revenue* Currency effect Scope effect Organic grow
Slide 11: Operating performance by division
OPERATING PERFORMANCE BY DIVISION KEY FIGURES FOR 2015 Revenue Operating profit on business activity 2014 Organic 2014 2015 2015 Restated** growth Pro Forma* (€m) (% of Rev.) (€m) (%) (% of Rev.) France 1,364.3 1,342.0 + 1.7% 7.5% 6.1% United Kingdom 1,042.0 1,049.1 - 0.7% 7.3% 9.5% Other Europe 697
Slide 12: France: Consulting & Systems Integration
FRANCE: CONSULTING & SYSTEMS INTEGRATION GOOD PERFORMANCE IN 2015 2015 2014 Pro forma* France: Consulting & Systems Integration (C&SI) (€m) (% of Rev.) (€m) (% of Rev.) (Including CIMPA in 2015) Revenue 1,161.1 1,093.3 Organic growth (%)** + 3.5% Operating profit on business activity 101.3 8.7% 82.0
Slide 13: France: I2S
FRANCE: I2S RECOVERY PLAN INITIATED France : 2015 2014 Pro forma* Infrastructure and Security Services (I2S) (€m) (% of Rev.) (€m) (% of Rev.) Revenue 203.2 220.4 Organic growth (%)** - 7.8% Operating profit on business activity 0.7 0.3% - 2.5 -1.1% Profit from recurring operations 0.7 0.3% - 2.5 -1
Slide 14: United Kingdom
UNITED KINGDOM SOLID POSITIONING IN THE PUBLIC SECTOR 2015 2014 Pro forma* United Kingdom (€m) (% of Rev.) (€m) (% of Rev.) Revenue 1,042.0 944.0 Organic growth (%)** - 0.7% Operating profit on business activity 76.2 7.3% 89.3 9.5% Profit from recurring operations 63.3 6.1% 77.8 8.2% Operating profi
Slide 15: Other Europe
OTHER EUROPE GROWTH AND IMPROVING SITUATION IN GERMANY 2015 2014 Pro forma* Other Europe (€m) (% of Rev.) (€m) (% of Rev.) Revenue 697.4 667.0 Organic growth (%)** + 6.3% Operating profit on business activity 18.5 2.7% 6.8 1.0% Profit from recurring operations 17.4 2.5% 5.2 0.8% Operating profit 5.3
Slide 16: Sopra Banking Software
SOPRA BANKING SOFTWARE SUCCESSFUL PRODUCT LINES, HIGHER INVESTMENTS 2015 2014 Pro forma* Sopra Banking Software (€m) (% of Rev.) (€m) (% of Rev.) Revenue 282.4 270.7 Organic growth (%)** + 2.5% Operating profit on business activity 25.7 9.1% 33.7 12.4% Profit from recurring operations 20.3 7.2% 28.2
Slide 17: Other Solutions
OTHER SOLUTIONS POSITIVE TRENDS FOR REVENUE AND MARGINS 2015 2014 Pro forma* Other Solutions (€m) (% of Rev.) (€m) (% of Rev.) Revenue 198.3 174.7 Organic growth (%)** + 3.2% Operating profit on business activity 23.1 11.6% 22.0 12.6% Profit from recurring operations 23.1 11.6% 22.0 12.6% Operating
Slide 18: Financial results for financial year 2015
FINANCIAL RESULTS FOR FINANCIAL YEAR 2015 François LEFEBVRE – Chief Financial Officer (acting) 18 2015 Annual Results Presentation - 29/02/2016 - Paris
Slide 19: Income statement
INCOME STATEMENT FINANCIAL YEAR 2015 2014 2014 2015 2015 Pro forma* Pro forma* (€m) (% of Rev.) (€m) (% of Rev.) Revenue 3,584.4 3,370.1 Organic growth** +2.0% Operating profit on business activity 245.5 6.8% 231.2 6.9% Expenses related to stock options and related items - 1.2 - 2.3 Amortisation of
Slide 20: Other operating income and expenses
OTHER OPERATING INCOME AND EXPENSES FINANCIAL YEAR 2015 2014 2015 Pro forma (€m) (€m) Costs related to business combination - 2.0 - 18.7 Restructuring and reorganisation costs - 67.2 - 44.1 Other - 3.3 8.8 Other operating income and expenses - 72.4 - 54.1 20 2015 Annual Results Presentation - 29/02/
Slide 21: Tax expense
TAX EXPENSE FINANCIAL YEAR 2015 2014 2015 Pro forma (€m) (€m) Profit before tax and share from equity-accounted companies 129.6 126.9 Effective tax charge 47.2 31.3 Effective tax rate (%) 36.4% 24.7% 2014 2015 Adjusted* (M€) (M€) Deferred tax net asset 127.1 146.6 Uncapitalised tax asset 42.0 54.5 *
Slide 22: Change in net financial debt
CHANGE IN NET FINANCIAL DEBT FINANCIAL YEAR 2015 2014 2015 Pro forma (€m) (€m) Net debt at beginning of period (A) - 442.4 - 348.7 Cash flow from operations before cost of net financial debt and tax* 240.7 197.2 Tax paid - 35.2 - 52.8 Change in operating working capital requirement - 81.9 - 109.0 Ne
Slide 23: Change in net financial debt in 2015
CHANGE IN NET FINANCIAL DEBT IN 2015 FREE CASH FLOW IMPACTED BY COST-OPTIMISATION INITIATIVES 550 -22.5 -530.8 -35.3 500 - 89.2 - 442.4 Net debt (€m) 450 - 55.8 400 + 2.4 + 6.9 350 + 105.1 300 250 200 Net financial Free cash flow Restructuring Capital increase Changes in Change in scope Dividends Sh
Slide 24: Sound financial position at 31/12/2015
SOUND FINANCIAL POSITION AT 31/12/2015 COVENANTS AND LIQUIDITY 31/12/2015 31/12/2015 Amount used Amount authorised Net financial debt (€m) (€m) at 31/12/2015: €530.8m Bond* 180.0 180.0 Syndicated loan - Tranche A € 180.0 180.0 Syndicated loan - Tranche B £ 98.1 98.1 Multi-currency revolving credit f
Slide 25: UK pension fund deficit net of tax in 2015
UK PENSION FUND DEFICIT NET OF TAX IN 2015 FAVOURABLE IMPACT OF INTEREST RATES AND INFLATION 210 200.0 190 Commitments down €87.7m at Deficit net of tax (€m) 170 constant exchange rates 150 Positive currency effect of 130 124.5 €12.3m 110 Annual additional cash contribution of £17m unchanged 90 thro
Slide 26: Simplified balance sheet
SIMPLIFIED BALANCE SHEET 31/12/2015 31/12/2014 31/12/2015 Adjusted* (€m) (€m) Goodwill 1,586.9 1,475.2 Allocated intangible assets 179.0 174.6 Other fixed assets 231.2 230.0 Equity-accounted investments 154.4 146.8 Fixed assets 2,151.5 2,026.6 Net deferred tax 127.0 146.8 Trade accounts receivable (
Slide 27: Market, strategy & targets
MARKET, STRATEGY & TARGETS Vincent PARIS – Chief Executive Officer 27 2015 Annual Results Presentation - 29/02/2016 - Paris
Slide 28: Project orientation
PROJECT ORIENTATION A PARTNER IN OUR CLIENTS’ DIGITAL TRANSFORMATION Integrated end-to-end European partner for digital transformation • European operator A • End-to-end provider differentiated • Focus on large clients and priority vertical markets positioning • Capacity for innovation • Partner in
Slide 29: Priority given to vertical approach
PRIORITY GIVEN TO VERTICAL APPROACH Vertical Large client Business line Strong Consulting focus focus focus offering Banking Business & Tech Aerospace / Defence / Homeland Security Policy in place for more Specific professional Consulting BU in each Public Sector than 10 years domains
Slide 30: Acceleration of digital initiatives
ACCELERATION OF DIGITAL INITIATIVES Vertical approach IBM Interconnect Multiple Business & Tech consulting digital references Cloud Innovation Award 2015 In-house Sopra Steria innovation awards DIGITAL ARCHITECT INTEGRATOR Co-innovation ecosystem Strategic partnerships DigiLab’ - SIA Lab’ - TUBà Sma
Slide 31: A strong ambition in the banking vertical
A STRONG AMBITION IN THE BANKING VERTICAL A strategic challenge A unique asset Major market €760m in revenue Key role of Software Long-standing client relationships Front and back office needs Industry- and tech-specific solutions Impact of digital End-to-end offering Evolving sector A comprehensive
Slide 32: Proposed acquisition of Cassiopae
PROPOSED ACQUISITION OF CASSIOPAE BOLSTERING THE BANKING VERTICAL Solutions Integrated front-to-back solution (V4.5) for Founded in 1987 managing specialised and real-estate financing Social housing management solution Shareholders Founding family: 20% Managers: 29% Investors: 51% Strategic in
Slide 33: Launch of a new enterprise project
LAUNCH OF A NEW ENTERPRISE PROJECT Reaffirming our values 50,000 training days by 2018, 20,000 in 2016 Employee shareholding project New programme in the first half of 2016 33 2015 Annual Results Presentation - 29/02/2016 - Paris © Copyright Showeet.com
Slide 34: Targets for 2016
TARGETS FOR 2016 Organic revenue growth of over 2% Operating margin on business activity of over 7.5% Strong increase in free cash flow 34 2015 Annual Results Presentation - 29/02/2016 - Paris
Slide 35: Reminder of targets for 2017
REMINDER OF TARGETS FOR 2017 Revenue of between €3.8bn and €4.0bn Operating margin on business activity of between 8% and 9% 35 2015 Annual Results Presentation - 29/02/2016 - Paris
Slide 36: Questions & Answers
QUESTIONS & ANSWERS 36 2015 Annual Results Presentation - 29/02/2016 - Paris
Slide 37: Annexes
ANNEXES 37 2015 Annual Results Presentation - 29/02/2016 - Paris
Slide 38: Sopra Steria 2015
SOPRA STERIA 2015 EUROPEAN LEADER IN DIGITAL TRANSFORMATION €3.6bn More than 38,000 Present in An end-to-end in revenue employees over 20 countries offering Top 5 European IT services companies Top 10 operating in Europe Other Europe 2015 revenue = €697m Revenue at 31/12/2015 o/w Germany = 34% o/w S
Slide 39: Breakdown of Sopra Steria's 2015 revenue
BREAKDOWN OF SOPRA STERIA’S 2015 REVENUE BY COUNTRY SERVICES REVENUE AT 31/12/2015 SOLUTIONS REVENUE AT 31/12/2015 Rest of World Other Europe 13% 22% France France 44% €3,104m Other €481m 29% 58% Europe 34% United Kingdom 39 2015 Annual Results Presentation - 29/02/2016 - Paris
Slide 40: Breakdown of Solutions revenue
BREAKDOWN OF SOLUTIONS REVENUE FINANCIAL YEAR 2015 SOLUTIONS REVENUE BY PRODUCT SOLUTIONS REVENUE BY BUSINESS LINE Property Management Solutions Managed Services 10% 12% Licences 14% Sopra HR €481m Sopra €481m Software 31% 51% Banking 59% Software 23% Integration Maintenance Services Sopra Banking S
Slide 41: Share ownership structure at 31/12/2015
SHARE OWNERSHIP STRUCTURE AT 31/12/2015 A STABLE SHAREHOLDER BASE FOR A SUCCESSFUL PROJECT Pasquier Odin Managers family family 2.4% 69.0% 28.6% Founders & Sopra GMT Holdings managed on Treasury Management Soderi Free float 19.7% behalf of employees shares 4.2% Shareholders’ agreement 23.9% 7.7% 1.5