Slide 1: 2016 Annual Results Presentation
2016 ANNUAL RESULTS PRESENTATION Paris, 27 February 2017 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: White Paper: Making a Success of Your Digital Transformation
WHITE PAPER MAKING A SUCCESS OF YOUR DIGITAL TRANSFORMATION How can you effectively navigate your digital transformation? Available at www.soprasteria.com 3 2016 Results Presentation - 27/02/2017 - Paris
Slide 4: Agenda
AGENDA 1 2016 operational performance 2 2016 financial results 3 Rollout of our strategy in 2016 4 2017 outlook and targets 5 Question & answer session 6 Annexes 4 2016 Results Presentation - 27/02/2017 - Paris
Slide 5: 2016 Operational Performance
2016 OPERATIONAL PERFORMANCE Vincent Paris – Chief Executive Officer 5 2016 Results Presentation - 27/02/2017 - Paris
Slide 6: Key Events of Financial Year 2016
KEY EVENTS OF FINANCIAL YEAR 2016 Strong 2016 performance Targets exceeded Consolidation of a leading position in France Recovery in low-margin businesses Higher-value offerings and digital initiatives Strengthening of Sopra Banking Software A new Enterprise Project 6 2016 Results Presentation - 27/
Slide 7: Key Figures
KEY FIGURES STRONG PERFORMANCE IN 2016 Revenue Operating profit on business activity €3,741.3m i.e. organic growth* of 5.2% €301.1m growth at constant exchange rates of 8.3% i.e. 8.0% of revenue and total growth of 4.4% up 22.6% relative to 31/12/2015 Net profit attributable to the Group Net financi
Slide 8: Targets Exceeded in 2016
TARGETS EXCEEDED IN 2016 “Organic revenue growth of between 3% and 5%” Organic growth of 5.2% “Operating margin on business activity of more than 7.5%” Operating margin on business activity of 8.0% “Strong increase in free cash flow” Free cash flow of €150.6m compared with €49.3m in
Slide 9: Major Contracts Won in 2016
MAJOR CONTRACTS WON IN 2016 9 2016 Results Presentation - 27/02/2017 - Paris
Slide 10: Operating Performance by Division
OPERATING PERFORMANCE BY DIVISION STRONG PERFORMANCE ACROSS ALL REPORTING UNITS IN 2016 Revenue Operating profit on business activity 2015 Organic 2016 2016 2015 Restated* growth (€m) (% of Rev.) (% of Rev.) (€m) (%) France 1 528.1 1 432.4 + 6.7% 8.1% 7.5% United Kingdom 927.9 924.4 + 0.4% 8.0% 7.3%
Slide 11: France: Consulting & Systems Integration
FRANCE: CONSULTING & SYSTEMS INTEGRATION CONSOLIDATION OF A LEADING POSITION 2016 2015 France: Consulting & Systems Integration (C&SI) (€m) (% of Rev.) (€m) (% of Rev.) (Including CIMPA) Revenue 1 327.4 1 161.1 Organic growth (%) + 8.0% Operating profit on business activity 119.0 9.0% 101.3 8.7% Pro
Slide 12: France: Infrastructure and Security Services (I2S)
FRANCE: INFRASTRUCTURE AND SECURITY SERVICES (I2S) RECOVERY IN LINE WITH TARGETS France: 2016 2015 Infrastructure and Security Services (I2S) (€m) (% of Rev.) (€m) (% of Rev.) Revenue 200.6 203.2 Organic growth (%) - 1.3% Operating profit on business activity 4.4 2.2% 0.7 0.3% Profit from recurring
Slide 13: United Kingdom
UNITED KINGDOM BUSINESS STABLE OVERALL AT CONSTANT EXCHANGE RATES 2016 2015 United Kingdom (€m) (% of Rev.) (€m) (% of Rev.) Revenue 927.9 1 042.0 Organic growth (%) + 0.4% Operating profit on business activity 74.7 8.0% 76.2 7.3% Profit from recurring operations 63.1 6.8% 63.3 6.1% Operating profit
Slide 14: Update on SSCL
UPDATE ON SSCL TRANSFORMATION PHASE SUCCESSFULLY COMPLETED Characteristics of 2016 operating End of Created at end-2013 the joint venture position transformation phase Founding clients 75/25 joint venture 98% of KPIs 200 Revenue (£m) Department for Work and with Cabinet Office continually achieved
Slide 15: Other Europe
OTHER EUROPE SUCCESS OF THE RECOVERY PLAN INITIATED IN 2015 2016 2015 Other Europe (€m) (% of Rev.) (€m) (% of Rev.) Revenue 728.1 697.4 Organic growth (%) + 5.8% Operating profit on business activity 41.8 5.7% 18.5 2.7% Profit from recurring operations 39.1 5.4% 17.4 2.5% Operating profit 31.1 4.3%
Slide 16: Sopra Banking Software
SOPRA BANKING SOFTWARE A YEAR OF DEVELOPMENT AND CONSOLIDATION 2016 2015 Sopra Banking Software (€m) (% of Rev.) (€m) (% of Rev.) Revenue 350.9 282.4 Organic growth (%) + 11.7% Operating profit on business activity 31.9 9.1% 25.7 9.1% Profit from recurring operations 22.9 6.5% 20.3 7.2% Operating pr
Slide 17: Other Solutions
OTHER SOLUTIONS IMPROVED OPERATING PERFORMANCE 2016 2015 Other Solutions (€m) (% of Rev.) (€m) (% of Rev.) Revenue 206.4 198.3 Organic growth (%) + 3.7% Operating profit on business activity 29.4 14.2% 23.1 11.6% Profit from recurring operations 28.3 13.7% 23.1 11.6% Operating profit 26.7 12.9% 17.7
Slide 18: 2016 Financial Results
2016 FINANCIAL RESULTS Etienne du Vignaux – Chief Financial Officer 18 2016 Results Presentation - 27/02/2017 - Paris
Slide 19: Income Statement
INCOME STATEMENT FINANCIAL YEAR 2016 2016 2016 2015 2015 (€m) (% of Rev.) (€m) (% of Rev.) Revenue 3 741.3 3 584.4 Organic growth 5.2% Operating profit on business activity 301.1 8.0% 245.5 6.8% Expenses related to stock options and related items - 12.1 - 1.2 Amortisation of allocated intangible ass
Slide 20: Other Operating Income and Expenses
OTHER OPERATING INCOME AND EXPENSES FINANCIAL YEAR 2016 2016 2015 (€m) (€m) Costs related to business combination - 1.3 - 2.0 Restructuring and reorganisation costs - 22.9 - 67.2 Other - 3.5 - 3.3 Other operating income and expenses - 27.7 - 72.4 20 2016 Results Presentation - 27/02/2017 - Paris
Slide 21: Tax Expense
TAX EXPENSE FINANCIAL YEAR 2016 2016 2015 (€m) (€m) Profit before tax and share from equity-accounted companies 225.9 129.6 Effective tax charge 80.9 47.2 Effective tax rate (%) 35.8% 36.4% 2016 2015 (€m) (€m) Net deferred tax assets 128.9 126.9 21 2016 Results Presentation - 27/02/2017 - Paris
Slide 22: Change in Net Financial Debt in 2016
CHANGE IN NET FINANCIAL DEBT IN 2016 VERY STRONG IMPROVEMENT IN FREE CASH FLOW o/w €38.6m 600 acquisition of Axway shares 530.8 -31.3 -119.2 506.0 500 +12.6 +12.1 400 o/w €20m from -21.0 -0.9 one-off favourable -46.7 -6.2 items -29.6 300 -17.0 -72.0 200 +344.0 100 Free cash flow of €150.6m vs. €49.3
Slide 23: A Free Cash Flow Representing 4% of Revenue
A FREE CASH FLOW REPRESENTING 4% OF REVENUE 150,6 49,3 2014 2015 2016 -44,2 23 Présentation des Résultats 2016 - 27/02/2017 - Paris
Slide 24: A Healthy Financial Position at 31/12/2016
A HEALTHY FINANCIAL POSITION AT 31/12/2016 DEBT COVENANTS AND LIQUIDITY Net financial debt 31/12/2016 31/12/2016 at 31/12/2016: Amount used Amount authorised €506.0m (€m) (€m) Bond 180.0 180.0 Syndicated loan - Tranche A € 160.0 160.0 Syndicated loan - Tranche B £ 74.8 74.8 EBITDA leverage: Multi-cu
Slide 25: UK Pension Fund Deficit Net of Tax at 31/12/2016
UK PENSION FUND DEFICIT NET OF TAX AT 31/12/2016 AN AVERAGE NET DEFICIT OF AROUND €200m SINCE END-2014 250 245 222 Deficit net of tax up 10% 221 vs. 30/06/2016 200 200 Deficit net of tax (€m) Increase in pension obligations vs. 30/06/2016 due to a lower 150 discount rate over the period 125 (in spit
Slide 26: Rollout of Our Strategy in 2016
ROLLOUT OF OUR STRATEGY IN 2016 Vincent Paris – Chief Executive Officer 26 2016 Results Presentation - 27/02/2017 - Paris
Slide 27: Sopra Steria 2016: Stronger Fundamentals
SOPRA STERIA 2016 STRONGER FUNDAMENTALS A recognised brand Performance once again close to Organic growth of 5.2% historical standards Clients Major contracts won France’s top recruiter of young graduates in the 2014 Pro forma 2015 2016 digital sector (source: Usine Nouvelle) Happy Trainees
Slide 28: Continued Rollout of Our Strategy in 2016
CONTINUED ROLLOUT OF OUR STRATEGY IN 2016 FOCUSING ON PREVIOUSLY DEFINED KEY THEMES European leader in digital transformation 28 2016 Results Presentation - 27/02/2017 - Paris
Slide 29: Reaffirmed Independence and Proactive External Growth
CONTINUED ROLLOUT OF OUR STRATEGY IN 2016 REAFFIRMED INDEPENDENCE AND PROACTIVE EXTERNAL GROWTH We Share 2016: 200,000 Sopra Steria shares acquired by employees Sopra Steria’s founders, managers and employees together hold 30.3% of the company’s shares and 41.7% of voting rights The Group completed
Slide 30: Higher-Value Offerings
CONTINUED ROLLOUT OF OUR STRATEGY IN 2016 HIGHER-VALUE OFFERINGS FRANCE CONSULTING SOLUTIONS As % of total France revenue As % of total Group revenue 2016 growth 2016 growth 28% (o/w 17% organic growth) 16% (o/w 9% organic growth) 12% 15% of revenue of revenue 11% 14% of revenue of revenue 2015 2016
Slide 31: Close Client Relationships and Improved Solutions
CONTINUED ROLLOUT OF OUR STRATEGY IN 2016 CLOSE CLIENT RELATIONSHIPS AND IMPROVED SOLUTIONS Stronger vertical governance and beginnings of synergies • Across national boundaries • Across service offerings (end-to-end approach) Priority on the banking vertical International rollout of key accou
Slide 32: Digital at the Heart of Performance
CONTINUED ROLLOUT OF OUR STRATEGY IN 2016 DIGITAL AT THE HEART OF PERFORMANCE ENTREPRENEUR Agility Short cycle Integrated model Market recognition Advisory Board • No. 1 IoT recruiter in France (source: JobaJobi Institute survey) • Development of IBM Watson alliance DTO • Financial services competen
Slide 33: 2017 Outlook and Targets
2017 OUTLOOK AND TARGETS Vincent Paris – Chief Executive Officer 33 2016 Results Presentation - 27/02/2017 - Paris
Slide 34: Priorities for 2017
PRIORITIES FOR 2017 PERFORMANCE Continue to improve performance ACQUISITIONS Proactive policy of targeted acquisitions Shift business mix with goal of Consulting and ADDED VALUE Solutions accounting for 15% and 20% respectively by 2020 TRANSFORMATION Continue to adapt our model to respond to all the
Slide 35: 2017 Budgetary Assumptions
2017 BUDGETARY ASSUMPTIONS Adverse calendar effect of 2-3 days in a number of European countries Adverse GBP/EUR currency translation effect End of transformation phase for SSCL Reduction in revenue linked to transformation (down c. £45m vs. 2016) 35 2016 Results Presentation - 27/02/2017 -
Slide 36: 2017 Targets
2017 TARGETS Organic revenue growth of between 2% and 3% Operating margin on business activity of around 8.5% Free cash flow > €150m 36 2016 Results Presentation - 27/02/2017 - Paris
Slide 37: Questions & Answers
QUESTIONS & ANSWERS 37 2016 Results Presentation - 27/02/2017 - Paris
Slide 38: Annexes
ANNEXES 38 2016 Results Presentation - 27/02/2017 - Paris
Slide 39: Sopra Steria at 31/12/2016
SOPRA STERIA AT 31/12/2016 EUROPEAN LEADER IN DIGITAL TRANSFORMATION 2016 revenue of A presence in over An end-to-end 40,000 employees €3.7 billion 20 countries offering Top 5 European digital services Top 10 operating in Europe companies Revenue to 31/12/2016 Rest of World Other BPS 2% Retail Banki
Slide 40: Revenue by Country
REVENUE BY COUNTRY FOR THE PERIOD ENDED 31/12/2016 SERVICES REVENUE TO 31/12/2016 SOLUTIONS REVENUE TO 31/12/2016 2016 revenue Other Europe = €728m o/w Germany = 33% o/w Spain = 16% Other Europe o/w Italy = 8% o/w Switzerland = 6% Rest of World o/w Belux = 9% o/w Scandinavia = 28% 12% 23% France €3,
Slide 41: Solutions Revenue
SOLUTIONS REVENUE FOR THE PERIOD ENDED 31/12/2016 SOLUTIONS REVENUE BY PRODUCT SOLUTIONS REVENUE BY BUSINESS LINE Property Management Solutions Managed Services 9% 14% Licences Sopra HR 14% 28% €557m Sopra €557m 50% Software SOLUTIONS SOLUTIONS Banking 63% Software Integration 22% Maintenance Servic
Slide 42: Changes in Exchange Rates
CHANGES IN EXCHANGE RATES FINANCIAL YEAR 2016 Changes in exchange rates Average rate Average rate Change For €1 / % 2016 2015 (%) (€m) (€m) Pound sterling 0.8195 0.7258 - 11.4% Norwegian krone 9.2906 8.9496 - 3.7% Swedish krona 9.4689 9.3535 - - 1.2% 0 Danish krone 7.4452 7.4587 - + 0.2%0 Swiss fran
Slide 43: Change in Revenue in Financial Year 2016
CHANGE IN REVENUE IN FINANCIAL YEAR 2016 GROWTH AT CONSTANT EXCHANGE RATES OF 8.3% 3800 3750 183.3 3,741.3 3700 IM Sweden = -€2.3m Cassiopae = +€37.1m 3650 CIMPA = +€64.6m LASCE = +€3.7m Active 3D = +€0.7m 3600 3,584.4 -130.3 103.9 3550 3500 3450 Averages vs. 2015: 3400 GBP/EUR = -11.4% NOK/EUR = -3
Slide 44: Earnings per Share
EARNINGS PER SHARE FINANCIAL YEAR 2016 2016 2015 (€m) (€m) Net profit - attributable to Group (€m) 150.4 84.4 Weighted average number of shares in issue excluding treasury shares 20.04 19.76 Basic earnings per share (€) 7.50 4.27 Basic recurring net earnings per share (€) 8.45 6.75 Theoretical weigh
Slide 45: Breakdown of Change in Net Financial Debt
BREAKDOWN OF CHANGE IN NET FINANCIAL DEBT FINANCIAL YEAR 2016 2016 2015 (€m) (€m) Operating profit on business activity 301.1 245.5 Depreciation, amortisation and provisions (excluding allocated intangible assets) 42.9 58.0 EBITDA 344.0 303.5 Non-cash items - 0.9 - 7.5 Tax paid - 72.0 - 35.2 Change
Slide 46: Simplified Balance Sheet
SIMPLIFIED BALANCE SHEET 31/12/2016 31/12/2016 31/12/2015 (€m) (€m) Goodwill 1 557.0 1 586.9 Allocated intangible assets 179.7 186.5 Other fixed assets 160.8 162.8 Equity-accounted investments 202.3 154.4 Fixed assets 2 099.8 2 090.7 Net deferred tax 128.9 126.9 Trade accounts receivable (net) 1 132
Slide 47: Headcount
HEADCOUNT FINANCIAL YEAR 2016 31/12/2016 31/12/2015 France 18 227 17 606 United Kingdom 6 508 6 722 Other Europe 7 844 7 495 Rest of the World 231 134 X-Shore 7 003 6 493 Total 39 813 38 450 47 2016 Results Presentation - 27/02/2017 - Paris
Slide 48: Ownership at 31/01/2017
OWNERSHIP AT 31/01/2017 KEY SHAREHOLDERS BACKING THE CORPORATE PROJECT Pasquier Odin Managers family family 2.4% 69.0% 28.6% Founders & Sopra GMT Interests managed on Treasury management Soderi Free float 19.7% behalf of employees shares 3.0% Shareholders’ agreement 22.7% 7.6% 0.6% 69.2% (33.1%) (8.
Slide 49: 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