Sopra Steria Group Sa · EURONEXT:SOP
Sopra Steria Group Sa — H1 2018 Earnings Presentation
47 slides from Sopra Steria Group Sa's earnings presentation, Jul 27, 2018
Slide 1: 2018 Half-Year Results Presentation
2018 HALF-YEAR RESULTS PRESENTATION Paris, 27 July 2018 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: Agenda
AGENDA 1 A half-year focused on priority areas 2 Operating position at 30 June 2018 3 2018 half-year financial results 4 Outlook and targets 5 Question and answer session 6 Annexes 3 2018 Half-Year Results Presentation – 27/07/2018
Slide 4: A half year focused on priority areas
A HALF YEAR FOCUSED ON PRIORITY AREAS Vincent Paris – Chief Executive Officer 4 2018 Half-Year Results Presentation – 27/07/2018
Slide 5: Recap of priorities for 2018
RECAP OF PRIORITIES FOR 2018 Sopra Banking Banking Completion of the T1 Platform programmes and strengthening of the Software Software software house model United United Kingdom Kingdom Success with the repositioning (Consulting/ Private Sector) Invest- ments Offerings / Digital / Human Resources /
Slide 6: Sopra Banking Software: important go lives
PROGRESS MADE IN THE FIRST HALF OF 2018 SOPRA BANKING SOFTWARE: IMPORTANT GO LIVES Sopra Successful completion of the main Platform programmes Banking according to plan Software Go live of the Sopra Banking Platform for Payments software solution for Transactis Go live of the Sopra Banking Platf
Slide 7: United Kingdom: ongoing transformation
PROGRESS MADE IN THE FIRST HALF OF 2018 UNITED KINGDOM: ON GOING TRANSFORMATION Launch of two plans in 2018 An investment plan to drive transformation Recruitment of consultants and sales representatives Training United Digital Kingdom A plan to provide €20m in full-year operating cost sav
Slide 8: A first half marked by investments
PROGRESS MADE IN THE FIRST HALF OF 2018 A FIRST HALF MARKED BY INVESTMENTS Sopra Banking Software High level of R&D investments maintained Digital eXperience Platform Moves to acquire a greater market position in lending United Kingdom Invest- ments Two transformation plans launched in 2018
Slide 9: Clear improvement of cash performance
PROGRESS MADE IN THE FIRST HALF OF 2018 CLEAR IMPROVEMENT OF CASH PERFORMANCE €32m improvement in free cash flow compared with H1 2017 thanks to DSO reduction H1 2018 cash performance on track to meet full-year target (2018 target: +€60m of free cash flow compared with 2017) Cash flow 9 2018 Half-Ye
Slide 10: Active and targeted M&A strategy
PROGRESS MADE IN THE FIRST HALF OF 2018 ACTIVE AND TARGETED M&A STRATEGY Acquisitions announced in the first half of 2018 BLUECARAT (Germany) – 2017 revenue: €33m O.R. System (Sopra Banking Software) – 2017 revenue: €2m it-economics (Germany) – 2017 revenue: €20m Acquisition of a 10% stake in
Slide 11: Operating position at 30 June 2018
OPERATING POSITION AT 30 JUNE 2018 Vincent Paris – Chief Executive Officer 11 2018 Half-Year Results Presentation – 27/07/2018
Slide 12: Greater seasonal impact than in 2017
GREATER SEASONAL IMPACT THAN IN 2017 Calendar effect Licences Investments H2 Share-based payments H1 Taxes 12 2018 Half-Year Results Presentation – 27/07/2018
Slide 13: H1 2018 key figures
H1 2018 KEY FIGURES FIRST HALF IN LINE WITH FORECASTS Revenue Operating profit on business Net profit attributable to the Group activity €2,014.0m €132.8m €38.4m i.e. organic growth* of 5.3% i.e. 6.6% of revenue i.e. 1.9% of revenue Free cash flow Net financial debt UK pension fund deficit net of ta
Slide 14: Track record of organic growth
TRACK RECORD OF ORGANIC GROWTH ORGANIC GROWTH OF 5.3% IN THE FIRST HALF OF 2018 + 5.3% + 5.2% + 3.5% + 2.0 % 2015 2016 2017 H1 2018 14 2018 Half-Year Results Presentation – 27/07/2018
Slide 15: Operating performance by division
OPERATING PERFORMANCE BY DIVISION GREATER SEASONAL IMPACT THAN IN 2017 Revenue Operating profit on business activity H1 2018 H1 2017 Organic H1 2018 H1 2017 IFRS 15 Restated* growth IFRS 15 IFRS 15 (€m) (€m) (%) (% of Rev.) (% of Rev.) France 849.1 817.4 + 3.9% 9.0% 9.0% United Kingdom 382.8 396.4 -
Slide 16: France
FRANCE SOLID PERFORMANCE H1 2018 H1 2017 IFRS 15 IFRS 15 France (€m) (% of Rev.) (€m) (% of Rev.) Revenue 849.1 801.8 Organic growth (%) + 3.9% Operating profit on business activity 76.0 9.0% 72.2 9.0% Profit from recurring operations 60.5 7.1% 60.8 7.6% Operating profit 56.1 6.6% 56.6 7.1% Solid gr
Slide 17: United Kingdom
UNITED KINGDOM FIRST-HALF PERFORMANCE ACCORDING TO PLAN H1 2018 H1 2017 IFRS 15 IFRS 15 United Kingdom (€m) (% of Rev.) (€m) (% of Rev.) Revenue 382.8 405.3 Organic growth (%) - 3.4% Operating profit on business activity 17.1 4.5% 25.5 6.3% Profit from recurring operations 10.5 2.7% 19.1 4.7% Operat
Slide 18: Other Europe
OTHER EUROPE STRONG GROWTH H1 2018 H1 2017 IFRS 15 IFRS 15 Other Europe (€m) (% of Rev.) (€m) (% of Rev.) Revenue 475.5 396.6 Organic growth (%) + 15.2% Operating profit on business activity 32.9 6.9% 26.9 6.8% Profit from recurring operations 28.9 6.1% 24.2 6.1% Operating profit 25.1 5.3% 19.8 5.0%
Slide 19: Sopra Banking Software
SOPRA BANKING SOFTWARE CONTINUING INVESTMENTS H1 2018 H1 2017 IFRS 15 IFRS 15 Sopra Banking Software (€m) (% of Rev.) (€m) (% of Rev.) Revenue 187.4 173.2 Organic growth (%) + 8.7% Operating profit on business activity - 8.4 -4.5% 4.0 2.3% Profit from recurring operations - 14.6 -7.8% - 1.8 -1.0% Op
Slide 20: Other Solutions
OTHER SOLUTIONS STRONG PERFORMANCE H1 2018 H1 2017 IFRS 15 IFRS 15 Other Solutions (€m) (% of Rev.) (€m) (% of Rev.) Revenue 119.2 114.6 Organic growth (%) + 4.0% Operating profit on business activity 15.1 12.7% 13.1 11.4% Profit from recurring operations 13.9 11.7% 11.4 9.9% Operating profit 12.8 1
Slide 21: 2018 half-year financial results
2018 HALF-YEAR FINANCIAL RESULTS Etienne du Vignaux – Chief Financial Officer 21 2018 Half-Year Results Presentation – 27/07/2018
Slide 22: Income statement
INCOME STATEMENT FIRST HALF 2018 H1 2018 H1 2018 H1 2017 H1 2017 IFRS 15 IFRS 15 IFRS 15 IFRS 15 (€m) (% of Rev.) (€m) (% of Rev.) Revenue 2,014.0 1,891.5 Organic growth 5.3% Operating profit on business activity 132.8 6.6% 141.6 7.5% Expenses related to stock options and related items - 22.1 - 17.0
Slide 23: Expenses related to share-based payments
EXPENSES RELATED TO SHARE-BASED PAYMENTS IFRS 2 EXPENSE REACHES A PEAK IN 2018 ~€30m €22m ~€15m ~€8m H1 2018 H2 2018e 2018e 2019e 23 2018 Half-Year Results Presentation – 27/07/2018
Slide 24: Other operating income and expenses
OTHER OPERATING INCOME AND EXPENSES FIRST HALF 2018 H1 2018 H1 2017 IFRS 15 IFRS 15 (€m) (€m) Costs related to business combination - 0.4 - 0.4 Restructuring and reorganisation costs - 18.0 - 10.7 Other - 0.7 - 0.3 Other operating income and expenses - 19.1 - 11.4 Restructuring and reorganisation co
Slide 25: Tax
TAX FIRST HALF 2018 H1 2018 H1 2017 IFRS 15 IFRS 15 (€m) (€m) Profit before tax and share from 73.2 96.9 equity-accounted companies Effective tax charge - 34.9 - 30.7 Effective tax rate (%) 47.8% 31.7% 2018 effective annual tax rate estimated at around 30.5% 25 2018 Half-Year Results Presentation –
Slide 26: Change in net financial debt in H1 2018
CHANGE IN NET FINANCIAL DEBT IN H1 2018 FREE CASH FLOW HAS LONG BEEN NEGATIVE IN THE FIRST HALF 700 - 18.3 - 1.6 662.4 650 - 15.7 - 2.3 - 114.3 -37.0 600 Sale of trade receivables leading to their -77.3 deconsolidation at end-2017 550 510.1 500 €m Seasonal impact: 450 first half of the year usually
Slide 27: Detail of changes in free cash flow
DETAIL OF CHANGES IN FREE CASH FLOW €32M IMPROVEMENT COMPARED WITH FIRST HALF 2017 140 -4.5 -11.2 120 - 8.1 17.5 -114.3 -109.0 €54.5m - 4.8 reduction in WCR, 100 + 7.4 equating to a 4-day 37 decrease in DSO €m 80 + 54.5 Sale of trade receivables 60 leading to their deconsolidation at end-2017 40 -77
Slide 28: Sound financial position at 30/06/2018
SOUND FINANCIAL POSITION AT 30/06/2018 DEBT COVENANTS AND LIQUIDITY 30/06/2018 30/06/2018 Net financial debt Amount used Amount authorised at 30/06/2018: (€m) (€m) €662.4m Bond 180.0 180.0 Syndicated loan – Tranche A € 144.0 144.0 Syndicated loan – Tranche B £ 65.0 65.0 Multi-currency revolving cred
Slide 29: Outlook and targets
OUTLOOK AND TARGETS Vincent Paris – Chief Executive Officer 29 2018 Half-Year Results Presentation – 27/07/2018
Slide 30: 2018 targets
2018 TARGETS Organic revenue growth between 3% and 5% Slight improvement in operating margin on business activity with strong seasonal impact (H1 < H2) Free cash flow > €170m (> €133m including 2017 sale of trade receivables) 30 2018 Half-Year Results Presentation – 27/07/2018
Slide 31: Reaffirmed 2020 ambitions
REAFFIRMED 2020 AMBITIONS Operating margin on business activity around 10% Annual organic growth Free cash flow between between 3% and 5% over 5% and 7% of revenue the period 2020 31 2018 Half-Year Results Presentation – 27/07/2018
Slide 32: Questions and answers
QUESTIONS AND ANSWERS 32 2018 Half-Year Results Presentation – 27/07/2018
Slide 33: Annexes
ANNEXES 33 2018 Half-Year Results Presentation – 27/07/2018
Slide 34: Sopra Steria at 30/06/2018
SOPRA STERIA AT 30/06/2018 EUROPEAN LEADER IN DIGITAL TRANSFORMATION Among the Top 5 European digital Within the Top 10 operating in services companies Europe Operations in 2017 revenue of 43,000 End-to-end more than 20 €3.8bn employees approach countries Revenue for H1 2018 Rest of the World Busine
Slide 35: Revenue by geographic zone
REVENUE BY GEOGRAPHIC ZONE FOR THE PERIOD ENDED 30/06/2018 SERVICES REVENUE FOR H1 2018 SOLUTIONS REVENUE FOR H1 2018 First-half 2018 revenue Other Europe = €476m o/w Germany = 35% Other Europe o/w Spain = 14% o/w Italy = 8% Rest of the World o/w Switzerland = 4% o/w Belux = 9% o/w Scandinavia = 30%
Slide 36: Solutions revenue
SOLUTIONS REVENUE FOR THE PERIOD ENDED 30/06/2018 SOLUTIONS REVENUE BY PRODUCT SOLUTIONS REVENUE BY BUSINESS LINE FOR H1 2018 FOR H1 2018 Property Management Managed Services Solutions 12% 14% Licences Sopra HR 9% €307M Sopra €307M Software 27% SOLUTIONS SOLUTIONS Banking 61% 55% Software 22% Integr
Slide 37: Changes in exchange rates
CHANGES IN EXCHANGE RATES FIRST HALF 2018 Changes in exchange rates Average rate Average rate Change For €1 / % H1 2018 H1 2017 (%) Pound sterling 0.8798 0.8606 - 2.2% Norwegian krone 9.5929 9.1785 - 4.3% Swedish krona 10.1508 9.5968 - 5.5% 0 Danish krone 7.4476 7.4368 - 0.1% Swiss franc 1.1697 1.07
Slide 38: Change in revenue in the first half of 2018
CHANGE IN REVENUE IN THE FIRST HALF OF 2018 GROWTH AT CONSTANT EXCHANGE RATES: 7.4% 2050 + 100.7 2,014.0 2000 Kentor = +€17.3m 2MoRO = +€1m Galitt = +€15.5m BLUECARAT = +€5.3m 1950 €m 1,903.2 + 38.7 1900 - 11.6 - 16.9 1850 1800 H1 2017 IFRS 15 effect Currency effect Scope effect Organic growth H1 20
Slide 39: Earnings per share
EARNINGS PER SHARE FIRST HALF 2018 H1 2018 H1 2017 IFRS 15 IFRS 15 (€m) (€m) Net profit attributable to the Group (€m) 38.4 65.9 Weighted average number of shares in issue excluding treasury shares 20.16 20.20 Basic earnings per share (€) 1.90 3.26 Basic recurring earnings per share (€) 2.60 3.65 Th
Slide 40: Breakdown of change in net financial debt
BREAKDOWN OF CHANGE IN NET FINANCIAL DEBT FIRST HALF 2018 H1 2018 H1 2017 IFRS 15 IFRS 15 (€m) (€m) Operating profit on business activity 132.8 141.6 Depreciation, amortisation and provisions (excluding allocated intangible assets) 22.9 6.7 EBITDA 155.7 148.3 Non-cash items - 3.5 - 1.4 Tax paid - 34
Slide 41: Simplified balance sheet
SIMPLIFIED BALANCE SHEET 30/06/2018 30/06/2018 31/12/2017 IFRS 15 IFRS 15 (€m) (€m) Goodwill 1,598.4 1,590.6 Allocated intangible assets 161.6 161.5 Other fixed assets 189.0 179.7 Equity-accounted investments 192.2 189.1 Fixed assets 2,141.2 2,120.9 Net deferred tax 83.2 99.1 Trade accounts receivab
Slide 42: UK pension fund deficit net of tax at 30/06/2018
UK PENSION FUND DEFICIT NET OF TAX AT 30/06/2018 SHARP REDUCTION IN THE FIRST HALF OF 2018 250 245 221 222 223 Deficit net of tax down 47% vs 200 200 31/12/2017 Deficit net of tax (€m) 167 Decrease in commitments due to 150 increase in the discount rate (up 125 30 bp vs 31/12/2017) and 100 88 decrea
Slide 43: Changes in the workforce
CHANGES IN THE WORKFORCE FIRST HALF 2018 30/06/2018 31/12/2017 France 19,056 18,649 United Kingdom 5,895 6,181 Other Europe 9,513 8,777 Rest of the World 305 281 X-Shore 8,010 7,773 Total 42,779 41,661 43 2018 Half-Year Results Presentation – 27/07/2018
Slide 44: Ownership at 30/06/2018
OWNERSHIP AT 30/06/2018 A LEADING SHAREHOLDER AS THE PROJECT’S GUARANTOR Pasquier Odin Managers family family 3.1% 68.4% 28.4% Founders & Management Sopra GMT Interests managed on Treasury 19.6% Soderi Free float 2.9% behalf of employees shares (28.8%) (4.4 %) Shareholders’ agreement 22.6% 7.7% 0.1%
Slide 45: Impact of IFRS 15: income statement
IMPACT OF IFRS 15 INCOME STATEMENT H1 2017 H1 2017 before IFRS 15 after IFRS 15 (€m) (€m) Revenue 1,903.2 1,891.5 Staff costs - 1761.1 - 1749.9 Operating profit on business activity 142.1 141.6 Profit from recurring operations 114.2 113.7 Operating profit 102.7 102.3 Other financial income and expen
Slide 46: Impact of IFRS 15: balance sheet
IMPACT OF IFRS 15 BALANCE SHEET 31/12/2017 31/12/2017 before IFRS 15 after IFRS 15 (€m) (€m) Deferred tax assets 115.4 115.1 Non-current assets 2247.1 2246.8 Trade accounts receivable 1137.8 1147.1 Other current assets 256.4 246.3 Current assets 1556.6 1555.8 Total assets 3803.8 3802.6 Consolidated
Slide 47: 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 the restated revenue for the same period in the prior financial