Sopra Steria Group Sa · EURONEXT:SOP
Sopra Steria Group Sa — H1 2022 Earnings Presentation
47 slides from Sopra Steria Group Sa's earnings presentation, Jul 28, 2022
Slide 1: Presentation of H1 2022 results
Presentation of H1 2022 results PARIS, 28 JULY 2022
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 Highlights of H1 2022 02 Operating position by reporting unit at 30 June 2022 03 Financial results for H1 2022 04 Priorities and objectives for 2022 05 Proposed acquisition of CS GROUP 06 Q&A session 07 Annexes 3 Presentation of H1 2022 results – 28/07/2022
Slide 4: Highlights of H1 2022
01 Highlights of H1 2022 Cyril Malargé Chief Executive Officer 4 Presentation of H1 2022 results – 28/07/2022
Slide 5: Solid performance in H1 2022
Solid performance in H1 2022 In line with full-year targets Revenue Operating profit on business Net profit attributable to the activity Group €2,543.8m €203.1m €112.3m 7.3% organic grow th* i.e. 8.0% of revenue +32% relative to 30 June 2021 Free cash flow Net financial debt UK pension funds net of
Slide 6: Highly eventful H1
Highly eventful H1 Demonstration of the Group’s transformation Major deals Listings Launches Financial services Market Financial services Digital services AI, Cybersec., Agile & DevOps, IoT, Cloud Infr. Mgt. Services ABI(1) Award for blockchain-based collateral management solution Partnership with O
Slide 7: Strong, steady market dynamics in Q2
Strong, steady market dynamics in Q2 Solid growth fundamentals Organic revenue growth Average Value (Group) enhancement organic growth +8.1% 2004 – 2021 +6% +6.4% +6.5% Structural growth market Cloud Digitisation of processes FY 2021 Q1 2022 Q2 2022 Cybersecurity 7 Presentation of H1 2022 results –
Slide 8: Priority placed on human resources
Priority placed on human resources Attracting and retaining talent Net workforce 48,707 48,114 47,437 Net change in workforce 46,799 45,960 45,959 46,129 +5.6% vs 30/06/2021 +170 +670 +638 +677 +593 New hires in H1 2022 FY 2020 Q1 2021 Q2 2021 Q3 2021 FY 2021 Q1 2022 Q2 2022 6,843 people, 60% of ful
Slide 9: Improved operating performance
Improved operating performance Operating margin up 0.8 pts and free cash flow of €66m Operating margin on business activity (%) Free cash flow (€m) 8.0% H1 2018 H1 2019 H1 2020 H1 2021 H1 2022 61.9 66.3 7.2% 37.1 6.8% 6.6% -21.8 6.1% H1 2018 H1 2019 H1 2020 H1 2021 H1 2022 -114.3 9 Presentation of H
Slide 10: Resilient profile
Resilient profile Thanks to the nature of the Group’s client portfolio and business lines Client focus on key strategic accounts 100 3% 11% 22% clients 5% Recurring revenue 4% 5% BPO, IT Infrastructure Management, Application Maintenance, Software Maintenance 40% 6% 19% 25% Revenue from the public/s
Slide 11: Operating position by reporting unit at 30 June 2022
02 Operating position by reporting unit at 30 June 2022 Cyril Malargé Chief Executive Officer 11 Presentation of H1 2022 results – 28/07/2022
Slide 12: Operating performance by reporting unit
Operating performance by reporting unit Operating profit on business Revenue activity H1 2021 Organic H1 2022 H1 2022 H1 2021 Restated* growth (€m) (% of Rev.) (% of Rev.) (€m) (%) France 1,023.7 932.0 + 9.8% 9.7% 8.3% United Kingdom 442.6 421.4 + 5.0% 10.5% 8.7% Other Europe 731.3 676.2 0 + 8.2%0 5
Slide 13: France
France Robust growth in business activity and operating margin back to pre-Covid level Growth in Q2 (10.1%) slightly higher H1 2022 H1 2021 than in Q1 (9.6%) Performance driven by: France (€m) (% of Rev.) (€m) (% of Rev.) Product Lifecycle Management (+40%), Revenue 1,023.7 914.8 Cybersecurity (+16%
Slide 14: United Kingdom
United Kingdom Operating margin on business activity above 10% Growth accelerated in Q2 (10.1% vs H1 2022 H1 2021 0.3% in Q1) Stronger-than-expected momentum for United Kingdom (€m) (% of Rev.) (€m) (% of Rev.) the service platform business and the Revenue 442.6 408.9 two joint ventures, SSCL and NH
Slide 15: Other Europe
Other Europe Growth driven by Scandinavia and Benelux Double-digit revenue growth in H1 2022 H1 2021 Scandinavia and Benelux Operating margin for the half-year Other Europe (€m) (% of Rev.) (€m) (% of Rev.) period temporarily affected by a Revenue 731.3 665.2 contract in Germany ee cas o Negotiation
Slide 16: Sopra Banking Software
Sopra Banking Software H1 in line with targets Slightly negative growth in revenue H1 2022 H1 2021 Licences contracted by 14.1% (more pronounced seasonal effect than in Sopra Banking Software (€m) (% of Rev.) (€m) (% of Rev.) 2021) Revenue 210.9 210.5 Performance in subscriptions, maintenance and se
Slide 17: Other Solutions
Other Solutions Growth driven by Human Resources Solutions business Human Resources Solutions up 7.5% H1 2022 H1 2021 Property Management Solutions relatively stable Other Solutions (€m) (% of Rev.) (€m) (% of Rev.) Continued improvement in operating Revenue 135.2 128.9 margin on business activity,
Slide 18: Financial results for H1 2022
03 Financial results for H1 2022 Étienne du Vignaux Chief Financial Officer 18 Presentation of H1 2022 results – 28/07/2022
Slide 19: Income statement
Income statement H1 2022 H1 2022 H1 2022 H1 2021 H1 2021 (€m) (% of Rev.) (€m) (% of Rev.) Revenue 2,543.8 2,328.3 Organic growth 7.3% Operating profit on business activity 203.1 8.0% 168.6 7.2% Share-based payment expenses -14.5 -2.2 Amortisation of allocated intangible assets -16.6 -16.2 Profit fr
Slide 20: Other operating income and expenses
Other operating income and expenses H1 2022 H1 2022 H1 2021 (€m) (€m) Costs related to business combination -0.3 -0.2 Restructuring and reorganisation costs -10.4 -14.7 Other 0.8 5.7 Other operating income and expenses -10.0 -9.2 20 Presentation of H1 2022 results – 28/07/2022
Slide 21: Tax
Tax H1 2022 H1 2022 H1 2021 (€m) (€m) Profit before tax and share from equity-accounted companies 158.2 133.3 Effective tax charge -43.2 -44.6 Effective tax rate (%) 27.3% 33.5% Impact on deferred tax of Includes the lower tax the increased tax rate in the rate in France United Kingdom (27.5% -> 25%
Slide 22: Change in net financial debt with respect to 31 December 2021
Change in net financial debt with respect to 31 December 2021 Structural improvement in free cash flow in H1 -68.9 -1.4 344.9 327.1 €m -5.4 -8.4 +66.3 Net financial debt Free cash flow Changes in scope and Purchase and sale of Dividends Other Net financial debt at 31/12/2021 financial investments tr
Slide 23: Breakdown of changes in free cash flow (FCF)
Breakdown of changes in free cash flow (FCF) +18.4 +7.3 66.3 61.9 +3.5 +8.1 -11.7 -3.2 -17.5 -0.4 €m Free cash flow EBITDA CAPEX Non-recurring items Lease Additional contributions Other WCR Tax Free cash flow H1 2021 incl. reorganisation payments related to retirement items H1 2022 & restructuring b
Slide 24: Strengthened balance sheet structure
Strengthened balance sheet structure 30/06/22 30/06/21 Net financial debt 12% 15% Gearing Gearing 15% 11% Net financial debt / 18% 26% Lease liabilities Equity 3% 4% 3% 11% Leverage Leverage Provisions for Net financial debt / EBITDA(1) 0.75x 1.01x contingencies and losses Pensions – Post- 66% Pensi
Slide 25: Diversified, readily available financing
Diversified, readily available financing 30/06/2022 30/06/2022 Amount Amount used authorised (€m) (€m) Available undrawn amount: €1.3bn Bond 250.0 250.0 i.e. 81% of authorised am ount (1) Multi-currency revolving credit facility - 1,100.0 Overdrafts and bilateral credit lines 61.6 271.5 Maturities T
Slide 26: Priorities and objectives for 2022
04 Priorities and objectives for 2022 Cyril Malargé Chief Executive Officer 26 Presentation of H1 2022 results – 28/07/2022
Slide 27: Priorities for H2 2022
Priorities for H2 2022 Accelerating our transformation priorities Human resources Attracting talent Training Management New tech-driven dynamic Accelerating Cloud, AI, cybersecurity our Centres of expertise transformation Tech leaders priorities Accelerating in consulting Organisationa
Slide 28: Confirmation of 2022 targets
Confirmation of 2022 targets Organic revenue growth of between 5% and 6% Operating margin on business activity of between 8.5% and 9.0% Free cash flow of around €250m 28 Presentation of H1 2022 results – 28/07/2022
Slide 29: Proposed acquisition of CS GROUP
05 Proposed acquisition of CS GROUP 29 Presentation of H1 2022 results – 28/07/2022
Slide 30: Proposed acquisition of CS GROUP
Proposed acquisition of CS GROUP A leader in mission-critical systems – Accelerated commercial momentum 2021 revenue: €237.4m Main clients Order intake: €487.2m in 2021 13% organic growth 2022 revenue (est.): Two major programmes spanning more €258.7m(1) than 10 years with France’s defence procureme
Slide 31: A strategic, value-creating transaction
A strategic, value-creating transaction A benchmark player in the critical defence & security, space and energy markets Benchmark player in critical sectors: Defence & Security/Space/Energy o ~€600m in revenue from defence & security on a 2021 basis o Strategic relations with major defence industr
Slide 32: Key components of the terms of the tie-up with CS GROUP
Key components of the terms of the tie-up with CS GROUP Proposed acquisition of controlling interests followed by a simplified public offer Block purchase price: Equity value (100%): Resulting premiums(3): €11.5 per share €282.5m(1) Share ownership structure VWAP 1 month: +74.7% (at 27 July 2022) KE
Slide 33: Q&A session
06 Q&A session 33 Presentation of H1 2022 results – 28/07/2022
Slide 34: Annexes
07 Annexes 34 Presentation of H1 2022 results – 28/07/2022
Slide 35: Sopra Steria at 30/06/2022
Sopra Steria at 30/06/2022 A European leader in digital transformation Among the top 5 European digital services companies Among the top 10 operating in Europe 2021 revenue 48,000+ Operations in End-to-end of €4.7bn employees nearly 30 countries approach Revenue – 30/06/2022 2% 11% 15% 3% 22% 5% 31%
Slide 36: Breakdown of Group revenue by country
Breakdown of Group revenue by country To 30/06/2022 SERVICES REVENUE – 30/06/2022 SOLUTIONS REVENUE – 30/06/2022 H1 2022 revenue: Other Europe = €731m 13% o/w Scandinavia = 34% o/w Germany = 28% o/w SFT = 11% 33% o/w Spain = 11% o/w Belux = 7% o/w Italy = 6% o/w Switzerland = 3% €2,198m €346m SERVIC
Slide 37: Breakdown of Solutions revenue
Breakdown of Solutions revenue To 30/06/2022 SOLUTIONS REVENUE BY PRODUCT SOLUTIONS REVENUE BY BUSINESS LINE Sopra Banking Software H1 12% 2022 revenue = €211m o/w France = €92m 16% o/w Outside France = €119m 7% €346m €346m SOLUTIONS SOLUTIONS 49% 27% 61% 28% Sopra Banking Software Integration Servi
Slide 38: Changes in exchange rates
Changes in exchange rates H1 2022 Changes in exchange rates Average rate Average rate Change For €1 / % H1 2022 H1 2021 (%) Pound sterling 0.8424 0.8680 +3.0% Norwegian krone 9.9817 10.1759 +1.9% Swedish krona 10.4796 10.1308 -3.3% Danish krone 7.4402 7.4368 -0.0% Swiss franc 1.0319 1.0946 +6.1% 38
Slide 39: Change in revenue in H1 2022
Change in revenue in H1 2022 +173.0 2,543.8 EVA Group = +€16.9m EGGS = +€7.5m €m +24.4 +18.1 2,328.3 Revenue Currency effect Scope effect Organic growth Revenue H1 2021 H1 2022 39 Presentation of H1 2022 results – 28/07/2022
Slide 40: Earnings per share
Earnings per share H1 2022 H1 2022 H1 2021 (€m) (€m) Net profit attributable to the Group (€m) 112.3 85.1 Weighted average number of shares in issue excluding treasury shares 20.22 20.25 Basic earnings per share (€) 5.55 4.20 Basic recurring earnings per share (€) 5.92 4.45 Theoretical weighted aver
Slide 41: Breakdown of change in net financial debt
Breakdown of change in net financial debt H1 2022 H1 2022 H1 2021 (€m) (€m) Operating profit on business activity 203.1 168.6 Depreciation, amortisation and provisions (excluding allocated intangible assets) 62.1 89.3 EBITDA 265.3 257.9 Non-cash items -1.8 2.8 Tax paid -44.5 -32.8 Change in operatin
Slide 42: Simplified balance sheet
Simplified balance sheet 30/06/2022 30/06/2022 31/12/2021 (€m) (€m) Goodwill 1,961.6 1,984.3 Allocated intangible assets 124.6 131.8 Other fixed assets 234.0 216.4 Right-of-use assets 384.8 343.1 Equity-accounted investments 201.8 198.1 Total fixed assets 2,906.9 2,873.8 Net deferred tax 46.6 99.7 0
Slide 43: UK pension fund deficit net of tax at 30/06/2022
UK pension fund deficit net of tax at 30/06/2022 149 123 119 113 95 Deficit net of tax (€m) 57 49 31/12/2018 30/06/2019 31/12/2019 30/06/2020 31/12/2020 30/06/2021 31/12/2021 30/06/2022 -50 43 Presentation of H1 2022 results – 28/07/2022
Slide 44: Global workforce
Global workforce H1 2022 30/06/2022 30/06/2021 France 20,106 19,925 United Kingdom 7,208 6,675 Other Europe 11,944 11,011 Rest of the World 467 502 X-Shore 8,982 8,016 Total 48,707 46,129 44 Presentation of H1 2022 results – 28/07/2022
Slide 45: Ownership at 30/06/2022
Ownership at 30/06/2022 A core shareholder backing the corporate plan Pasquier Odin Treasury Managers family family shares 2.7% 68.3% 28.3% 0.7% Founders & Management Sopra GMT Shares managed on behalf Treasury shares Free float 2.6% 19.6% of employees Shareholders’ 6.6% 0.1% 71.0% agreement (8.2%)
Slide 46: 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 Agency Rating type Rating scale 2018 2019 2020 2021 Change since 2018 A AA AA MSCI MSCI ESG AAA > CCC AA 7.9/10 +0.8 points Ratings 7,1/10 7,3/10 7.4/10 (Leader) (Average) (Leader) (L
Slide 47: Alternative performance indicators
Alternative performance indicators 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 ye