Sopra Steria Group Sa · EURONEXT:SOP
Sopra Steria Group Sa — H1 2024 Earnings Presentation
50 slides from Sopra Steria Group Sa's earnings presentation, Jul 24, 2024
Slide 1: 2024 Half-Year Results Presentation
2024 Half-Year Results Presentation Paris, 24 July 2024
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: Contents
Contents 01 02 03 04 05 Highlights of Operating position Financial results 2024 outlook and Annexes H1 2024 by reporting unit for H1 2024 targets 3 Presentation of H1 2024 results – 24/07/2024
Slide 4: Highlights of H1 2024
01. Highlights of H1 2024
Slide 5: Presentation of the 2024 half year financial statements
Presentation of the 2024 half year financial statements IFRS 5 IFRS 15 • Performance in the first half-year period • As part of the review of assets acquired and reflects the classification as “assets held for liabilities assumed, Sopra Steria harmonised sale” of certain activities of Sopra Banking
Slide 6: Solid performance in H1 2024
Solid performance in H1 2024 Year-on-year change 9.7% €44.0m +3.8% +0.9 pt In line with historical seasonal effects Operating Net profit Organic margin on from continuing Total growth operations Free cash flow growth business Attributable to activity the Group +0.3% €169.3m +50.5% 5.7% of revenue 6
Slide 7: Market in wait-and-see mode
Market in wait-and-see mode • Active market for large-scale digital transformation projects • Strong project pipeline but drawn-out decision-making cycles • Low discretionary spending • Far more uncertain environment in France in June • Short-term difficulties in the aeronautics sector • Temporary d
Slide 8: Major deals
Major deals United Arab Emirates Air Force 8 Presentation of H1 2024 results – 24/07/2024
Slide 9: Shift towards greater-added-value delivering results
Shift towards greater-added-value delivering results Operating margin on business activity (%) 9.7% 8.8% 8.0% 7.2% 6.8% 6.6% 6.1% H1 2018 H1 2019 H1 2020 H1 2021 H1 2022 H1 2023 H1 2024 9 Presentation of H1 2024 results – 24/07/2024
Slide 10: Accelerating internal transformation
Accelerating internal transformation CONSULTING TECH BUSINESS MODEL • Selling prices up around 5% • Skill centres • Clarification of the strategy • Continued roll-out of the Sopra • Large-scale expertise pooling • Operating model Steria Next brand • Go to market • Disposal of banking software • Part
Slide 11: Finalisation of the sale of SBS activities by early September 2024
Finalisation of the sale of SBS(1) activities by early September 2024 Steps Final completed outstanding steps Announce- Competition Signing of sale AMF filing Competition Foreign Foreign AMF Capital Closing ment authorisation agreements for exception authorisation investment investment approval of i
Slide 12: AI a top priority for all our business lines
AI a top priority for all our business lines Continued roll-out in our business lines and Preparation to support functions scale up • Developers – Experts – Consultants • Investments in decisive issues for scaling up → rAIse programme → Small Language Model vs Large Language → 4,000 consultants trai
Slide 13: Integrating acquisitions in line with plan
Integrating acquisitions in line with plan CS Group Benelux Defence Security Space Infra Cyber Offshore Cross-synergies: Critical size in Benelux Sopra Steria Group <-> CS Group Commercial synergies thanks to the Group’s end-to-end abilities Operational synergies: FY24 €10m → FY25 €23m Expected marg
Slide 14: Operating position by reporting unit
02. Operating position by reporting unit
Slide 15: Operating performance by reporting unit
Operating performance by reporting unit Operating profit on business Revenue activity H1 2023 Organic H1 2023 H1 2024 H1 2024 restated* growth restated** (€m) (% of Rev.) (€m) (%) (% of Rev.) France 1,251.3 1,272.0 - 1.6% 9.5% 9.3% United Kingdom 487.3 472.5 + 3.1% 11.6% 11.4% Europe 1,050.5 1,034.8
Slide 16: France
France H1 2023 H1 2023 H1 2024 restated* reported France (€m) (% of Rev.) (€m) (% of Rev.) (M€) (% du CA) Revenue 1,251.3 1,220.5 1,198.9 Organic growth (%) - 1.6% Op. profit on business activity 119.2 9.5% 113.3 9.3% 108.8 9.1% Profit from recurring operations 106.6 8.5% 97.4 8.0% 90.1 7.5% Operati
Slide 17: United Kingdom
United Kingdom H1 2023 H1 2023 H1 2024 restated* reported United Kingdom (€m) (% of Rev.) (€m) (% of Rev.) (M€) (% du CA) Revenue 487.3 461.0 461.0 Organic growth (%) + 3.1% Op. profit on business activity 56.7 11.6% 52.4 11.4% 52.4 11.4% Profit from recurring operations 49.8 10.2% 45.5 9.9% 45.5 9.
Slide 18: Europe
Europe H1 2023 H1 2023 H1 2024 restated* reported Europe (€m) (% of Rev.) (€m) (% of Rev.) (M€) (% du CA) Revenue 1,050.5 834.8 819.8 Organic growth (%) + 1.5% Op. profit on business activity 97.3 9.3% 73.1 8.8% 72.8 8.9% Profit from recurring operations 84.2 8.0% 66.0 7.9% 66.0 8.1% Operating profi
Slide 19: Solutions
Solutions H1 2023 H1 2023 H1 2024 restated* reported Solutions (€m) (% of Rev.) (€m) (% of Rev.) (M€) (% du CA) Revenue 160.3 160.3 142.4 Organic growth (%) - 0.0% Op. profit on business activity 12.2 7.6% 11.1 6.9% 14.3 10.0% Profit from recurring operations 10.6 6.6% 7.8 4.9% 12.4 8.7% Operating p
Slide 20: Financial results for H1 2024
03. Financial results for H1 2024
Slide 21: SBS activities recognised as discontinued operations (IFRS 5)
SBS activities recognised as discontinued operations (IFRS 5) H1 2023 Impact H1 2023 H1 2024 restated* IFRS 5 reported (€m) (% of Rev.) (€m) (% of Rev.) (€m) (€m) (% of Rev.) France Revenue 1,251.3 1,220.5 21.6 1,198.9 Op. profit on business activity 119.2 9.5% 113.2 9.3% 4.4 108.8 9.1% Royaume-Uni
Slide 22: Harmonisation of the method used to recognise revenue relating to Ordina (IFRS 15)
Harmonisation of the method used to recognise revenue relating to Ordina (IFRS 15) • Negative impact on Ordina’s H1 revenue of €41.1m • Equivalent amount in Q1 and Q2 • 2023 revenue restated for the purposes of calculating organic growth • No impact on operating profit on business activity 22 Presen
Slide 23: Income statement
Income statement 23 Presentation of H1 2024 results – 24/07/2024
Slide 24: Other operating income and expenses
Other operating income and expenses H1 2023 H1 2023 H1 2024 restated* reported (€m) (€m) (€m) Costs related to business combination 0.0 -3.6 -3.6 Restructuring and reorganisation costs -17.7 -14.7 -17.3 Other -3.7 -9.8 -9.8 Other operating income and expenses - 21.5 - 28.2 - 30.7 * On a 2024 account
Slide 25: Tax
Tax H1 2023 H1 2023 H1 2024 restated* reported (€m) (€m) (€m) Profit before tax and share from equity-accounted companies 211.5 186.0 164.6 Effective tax charge -33.3 -47.6 -42.5 Effective tax rate (%) 15.7% 25.6% 25.8% * On a 2024 accounting standards basis (IFRS 5) Normative rate excluding non-rec
Slide 26: Net profit from continuing and discontinued operations
Net profit from continuing and discontinued operations H1 2023 S1 2023 H1 2024 restated* reported (€m) (% of rev.) (€m) (% of rev.) (€m) (% of rev.) Net profit from continuing operations 176.9 6.0% 138.3 5.2% 122.0 4.3% Non-controlling interests 7.6 9.5 9.5 Net profit attributable to the Group from
Slide 27: Change in free cash flow
Change in free cash flow +50.2 102.2 €m -90.4 44.0 -18.0 Free cash flow EBITDA WCR Other Free cash flow H1 2023 (restated*) H1 2024 * On a 2024 accounting standards basis (IFRS 5) 27 Presentation of H1 2024 results – 24/07/2024
Slide 28: Net financial debt stable excluding impact of dividend payments in H1
Net financial debt stable excluding impact of dividend payments in H1 -20.1 -9.5 -93.6 -14.1 -18.3 Valued in the sale price to be +44.0 received by €m Sopra Steria Group in H2 946.0 2024 1,047.5 1,057.0 Net financial debt Free Cash Flow Changes in scope Dividends Changes in Flows pertaining Net fina
Slide 29: H2 balance sheet impacts related to strategic refocusing
H2 balance sheet impacts related to strategic refocusing Disposal of 3.619 million Axway shares at €26.50 per share €95.9m (carried out 19/07/2024) + Disposal by Sopra Steria Group of the pre-emptive subscription rights for Axway to Sopra GMT €10.2m as part of the Axway capital increase + Value rece
Slide 30: Solid balance sheet structure
Solid balance sheet structure Simplified balance sheet Assets + WCR (€m) 30/06/24 Gearing Leverage 53% 4% 12% €138.8m 53% 1.6x 30/06/2024 3,762.9 3% 28% 53% 5% 14% Gearing Leverage 31/12/2023 3,655.2 31/12/23 €167.8m 49% 1.5x 3% 26% Equity Pensions – Post-employment benefits Net Net Pensions – Post-
Slide 31: Diversified, accessible financing
Diversified, accessible financing 30/06/2024 30/06/2024 Amount Amount used authorised Available undrawn amount of €1.4bn (€m) i.e. 65% of authorised amount(1) (€m) Bond 250.0 250.0 Bank loans & borrowing facilities 467.0 542.0 Refinancing on 19/12/2023 Multi-currency revolving credit facility - 1,10
Slide 32: Priorities and targets for 2024
04. Priorities and targets for 2024
Slide 33: Priorities for H2 2024
Priorities for H2 2024 PERFORMANCE VALUE BUSINESS FOCUS • Profitability steering • Consulting • Expansion • Cost control • Tech & AI solutions • Strengthened support for • Integration management • Operating model sales • Selling price 33 Presentation of H1 2024 results – 24/07/2024
Slide 34: Full-year targets for 2024
Full-year targets for 2024 Organic revenue growth Operating margin on business Free cash flow activity Relatively At least Around stable 9.7% €350m 34 Presentation of H1 2024 results – 24/07/2024
Slide 35: Q&A
Q&A
Slide 36: Annexes
05. Annexes
Slide 37: Helping combat climate change
Helping combat climate change New SBTi1 targets covering our entire value chain by 2030 SCOPES 1 & 2 • Energy management • Digitalisation Offices + • Better locations and -63.6% On-site data centres infrastructure (vs 43.7% in 2022) -54% Ways to Target Type of reduce 2023 results for 2030 emissions
Slide 38: Sopra Steria: a European leader in digital transformation
Sopra Steria: a European leader in digital transformation Breakdown of revenue as at 30 June 2024 Top 10 operating in Europe(1) €5.8bn 2023 revenue 9% 10% 16% 15% 4% 36% 6% 6% 4% >52,000 4% employees 47% 11% 6% 59% 26% Operations in 17% 24% 30 countries Consulting Financial Services France Insurance
Slide 39: Breakdown of revenue by country
Breakdown of revenue by country At 30 June 2024 Services Solutions Revenue to 30/06/2024 Revenue to 30/06/2024 38% 5% Revenue: Europe = €1,051m o/w Benelux = 28% 9% o/w Scandinavia = 27% o/w Germany = 20% o/w Spain = 10% o/w SFT = 9% €2,789m 45% 86% o/w Italy = 5% €160m o/w Switzerland = 1% 17% Fran
Slide 40: Breakdown of Solutions revenue
Breakdown of Solutions revenue At 30 June 2024 Solutions by type Solutions by service line Revenue to 30/06/2024 Revenue to 30/06/2024 7% 9% 27% 26% 39% €160m €160m 64% 7% 21% Sopra Solutions Integration Services Maintenance Sopra HR Software Licences Managed Services Property Management Solutions C
Slide 41: Breakdown of change in consolidated revenue
Breakdown of change in consolidated revenue Growth at constant scope and exchange rates of 3.8% +295.8 -41.1 +9.8 2 949,4 2 840,1 -163.5 +8.3 €m o/w GBP +€12m o/w NOK -€4m Revenue Currency Scope Application Application Organic Revenue H1 2023 effect effect of IFRS 15 of IFRS 5 growth H1 2024 41 Pres
Slide 42: Changes in exchange rates
Changes in exchange rates Changes in exchange rates Average rate Average rate Change H1 2024 H1 2023 (%) For €1 / % Pound sterling 0.8546 0.8764 +2.5% Norwegian krone 11.4926 11.3195 -1.5% Swedish krona 11.3914 11.3329 -0.5% Danish krone 7.4580 7.4462 -0.2% Swiss franc 0.9615 0.9856 +2.5% 42 Present
Slide 43: Earnings per share
Earnings per share H1 2023 H1 2024 reported (€m) (€m) Net profit attributable to the Group (€m) 123.2 112.5 Net profit attributable to the Group from continuing operations 169.3 128.8 Weighted average number of shares in issue excluding treasury shares 20.16 20.20 Basic earnings per share (€) 6.11 5
Slide 44: Breakdown of change in net financial debt
Breakdown of change in net financial debt 44 Presentation of H1 2024 results – 24/07/2024
Slide 45: Simplified balance sheet
Simplified balance sheet 31/12/2023 31/12/2023 30/06/2024 restated* reported (€m) (€m) (€m) Goodwill 2,334.2 2,586.2 2,668.9 Allocated intangible assets 185.8 232.1 124.8 Other fixed assets 250.8 307.9 304.3 Right-of-use assets 417.6 457.1 457.1 Equity-accounted investments 97.0 185.9 185.9 Total fi
Slide 46: UK pension fund deficit net of tax at 30/06/2024
UK pension fund deficit net of tax at 30/06/2024 119 Deficit net of tax (€m) 57 49 -1 -19 -16 -25 -50 31/12/2020 30/06/2021 31/12/2021 30/06/2022 31/12/2022 30/06/2023 31/12/2023 30/06/2024 46 Presentation of H1 2024 results – 24/07/2024
Slide 47: Global workforce
Global workforce 30/06/2024 30/06/2023 France 20,917 22,363 United Kingdom 7,218 7,693 Other Europe 15,999 13,943 Rest of the World 235 555 X-Shore 8,044 9,400 Total continuing operations 52,413 53,954 Activities recognised within assets held for sale 3,600 4,000 47 Presentation of H1 2024 results –
Slide 48: Restatements related to application of IFRS 5
Restatements related to application of IFRS 5 48 Presentation of H1 2024 results – 24/07/2024
Slide 49: A core shareholder backing the corporate plan
A core shareholder backing the corporate plan Ownership structure at 30 June 2024 Pasquier family Odin family Managers Treasury shares 68.5% 28.4% 2.7% 0.4% Founders & Sopra Shares managed on Treasury shares Free float Management GMT behalf of employees 2.6% 19.6% Shareholders’ 6.3% 1.1% 70.4% 20.8%
Slide 50: 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