Sopra Steria Group Sa · EURONEXT:SOP
Sopra Steria Group Sa — H1 2020 Earnings Presentation
50 slides from Sopra Steria Group Sa's earnings presentation, Jul 29, 2020
Slide 1: Presentation of H1 2020 results
Presentation of H1 2020 results PARIS, 29 JULY 2020
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 A resilient first half amid the Covid-19 crisis 02 Balanced crisis management 03 Operating position by reporting unit at 30 June 2020 04 Financial results for the first half of 2020 05 2020 priorities and objectives 06 Question & answer session 07 Annexes 3 Presentation of H1 2020 results
Slide 4: A resilient first half amid the Covid-19 crisis
01 A resilient first half amid the Covid-19 crisis Vincent Paris Chief Executive Officer 4 Presentation of H1 2020 results – 29/07/2020
Slide 5: A resilient profile
A resilient profile Thanks to the nature of the Group’s client portfolio and business lines Client focus on key 10% strategic accounts 100 3% 26% 6% clients 4% 6% 5% Recurring revenue BPO 11%, IT Infrastructure Management 11%, 40% Application Maintenance 12%, Software Maintenance 6% 17% 23% Banking
Slide 6: Sales performance
Sales performance Major deals A major German banking group 6 Presentation of H1 2020 results – 29/07/2020
Slide 7: Market
Market Improvement in our positioning Sopra Banking Software Sopra Steria France Top Universal Banking Solutions 3 2019 IT Services ranking 2 1 Lending solutions “2019 Revenue in France” 3 Universal Banking Solutions Sopra Steria Next Strong reputation – “Strategy, Organisation & Management – Transa
Slide 8: Revenue
Revenue Decrease limited to 2.6% Organic change in Group revenue Change in revenue in the aeronautics sector +7.4% Q12020 Q1 2020 +11% +5.4% +5.3% -20% Q2 2020 +2.6% -26% H2 2020e H1 2020 -15% FY 2020e H1 2016 H1 2017 H1 2018 H1 2019 The aeronautics sector represented around Q2 -8.4% 10% of the Grou
Slide 9: Operating margin and net cash flow
Operating margin and net cash flow Resilient performance Operating margin on business activity Free cash flow (%) (€m) H1 2019 H1 2020 +37.1(1) 6.8% 6.1% H1 2019 H1 2020 -21.8 (1) Including the favourable impact of €57m from non-recurring items 9 Presentation of H1 2020 results – 29/07/2020
Slide 10: Key figures
Key figures First-half 2020 Revenue Operating profit on business Net profit attributable to the activity Group €2,166.7m €132.8m €43.7m -2.6% organic grow th* 6.1% of revenue 2.0% of revenue Free cash flow Net financial debt UK pension fund deficit net of tax €37.1m €495.9m €94.1m vs. -€21.8m in H1
Slide 11: Balanced crisis management
02 Balanced crisis management Vincent Paris Chief Executive Officer 11 Presentation of H1 2020 results – 29/07/2020
Slide 12: Balance between short- and long-term decisions
Balance between short- and long-term decisions Focus on Adapting to sales and the crisis profitability Continued investments: Acquisition of brand, software, Sodifrance products 12 Presentation of H1 2020 results – 29/07/2020
Slide 13: Continuity of service
Continuity of service Crisis managed by focusing on quick decisions and agility in execution Top priority placed on employee health More than 90% of staff working remotely during the acute phase of the crisis Agile Group management Development of services to meet needs arising from Covid-19 Increase
Slide 14: Human resources
Human resources At the core of decision-making Top priority placed on keeping Responsible use of furlough employees informed and schemes; payments made by ensuring open labour dialogue certain governments topped up by the Group in order to maintain compensation levels Training programmes adapted; Re
Slide 15: Cost management
Cost management Adjustment programmes launched rapidly -49% -13% -13% vs H1 2019 vs H1 2019 vs H1 2019 Travel and Administrative Project business fees and subcontracting expenses advertising 15 Presentation of H1 2020 results – 29/07/2020
Slide 16: A purposeful, human and sustainable development policy
A purposeful, human and sustainable development policy Growing recognition ESG positioning updated in June 2020 74/100 Platinum On 19 May 2020, Sopra Steria signed the United Nations Global Compact and the Science Based 62/100 Targets initiative.” Advanced Euronext ® Eurozone Added to the ESG Large
Slide 17: Operating position by reporting unit at 30 June 2020
03 Operating position by reporting unit at 30 June 2020 Vincent Paris Chief Executive Officer 17 Presentation of H1 2020 results – 29/07/2020
Slide 18: Operating performance by reporting unit
Operating performance by reporting unit Operating profit on business Revenue activity H1 2019 Organic H1 2020 H1 2020 H1 2019 Restated* growth (€m) (% of Rev.) (% of Rev.) (€m) (%) France 864.6 914.7 - 5.5% 8.2% 9.3% United Kingdom 338.5 355.1 - 4.7% 4.6% 6.1% Other Europe 638.8 599.4 0 + 6.6%0 7.4%
Slide 19: France
France Significant impact of the drop in production observed in the aeronautics sector H1 2020 H1 2019 France (€m) (% of Rev.) (€m) (% of Rev.) Revenue 864.6 914.9 Organic growth (%) - 5.5% Operating profit on business activity 70.8 8.2% 85.2 9.3% Profit from recurring operations 65.3 7.6% 81.7 8.9%
Slide 20: United Kingdom
United Kingdom Good resilience in the public sector, especially the two joint ventures H1 2020 H1 2019 United Kingdom (€m) (% of Rev.) (€m) (% of Rev.) Revenue 338.5 429.6 pact o S3 o d Organic growth (%) - 4.7% Operating profit on business activity 15.5 4.6% 26.4 6.1% Profit from recurring operatio
Slide 21: Other Europe
Other Europe Business resilient across geographies H1 2020 H1 2019 Other Europe (€m) (% of Rev.) (€m) (% of Rev.) Revenue ee cas o 638.8 534.9 Organic growth (%) + 6.6% Operating profit on business activity 47.4 7.4% 34.5 6.5% Profit from recurring operations 45.2 7.1% 32.7 6.1% Operating profit 40.
Slide 22: Sopra Banking Software
Sopra Banking Software Progress made on the product roadmap H1 2020 H1 2019 Sopra Banking Software (€m) (% of Rev.) (€m) (% of Rev.) Revenue 205.4 204.0 Organic growth (%) - 10.9% Operating profit on business activity -6.7 -3.3% -9.5 -4.7% Profit from recurring operations -13.9 -6.8% -15.6 -7.6% Ope
Slide 23: Other Solutions
Other Solutions Half-year period marked by postponed project launches H1 2020 H1 2019 Other Solutions (€m) (% of Rev.) (€m) (% of Rev.) Revenue 119.4 123.6 Organic growth (%) - 5.0% Operating profit on business activity 5.9 5.0% 14.5 11.7% Profit from recurring operations 5.5 4.6% 13.9 11.2% Operati
Slide 24: Financial results for the first half of 2020
04 Financial results for the first half of 2020 Étienne du Vignaux Chief Financial Officer 24 Presentation of H1 2020 results – 29/07/2020
Slide 25: Income statement
Income statement First-half 2020 H1 2020 H1 2020 H1 2019 H1 2019 (€m) (% of Rev.) (€m) (% of Rev.) Revenue 2,166.7 2,207.1 Organic growth -2.6% Operating o d profit on business activity 132.8 6.1% 151.0 6.8% Share-based payment expenses - 2.2 - 4.3 Amortisation of allocated intangible assets - 19.1
Slide 26: Other operating income and expenses
Other operating income and expenses First-half 2020 H1 2020 H1 2019 (€m) (€m) Costs related to business combination - 0.5 - 2.3 Restructuring and reorganisation costs - 15.8 - 14.3 Other - 7.5 - 1.2 Other operating income and expenses - 23.8 - 17.8 Including €7.7m in costs directly related to Covid-
Slide 27: Tax
Tax First-half 2020 H1 2020 H1 2019 (€m) (€m) Profit before tax and share from equity-accounted companies 75.9 103.2 Effective tax charge - 23.7 - 34.4 Effective tax rate (%) 31.2% 33.4% 27 Presentation of H1 2020 results – 29/07/2020
Slide 28: Net financial debt down slightly
Net financial debt down slightly Thanks to positive free cash flow despite a traditionally unfavourable seasonal effect 550 513.9 €m 500 -2.9 495.9 -6.9 -9.2 +37.1 450 Net financial debt Free cash flow Changes in scope and Change in treasury shares Other Net financial debt at 31/12/2019 financial in
Slide 29: Detail of movement in free cash flow (FCF)
Detail of movement in free cash flow (FCF) Strict management of the working capital requirement in the first half of 2020 37.1 Strict management of DSO +86.5 €m Free cash flow Change in Change in CAPEX Tax Reorganisation and Other items Change in WCR Free cash flow H1 2019 EBITDA restructuring H1 20
Slide 30: Solid financial position at 30/06/2020 (1/2)
Solid financial position at 30/06/2020 (1/2) Diversified funding sources and comfortable liquidity 30/06/2020 30/06/2020 Amount Amount Equity €1,442.1m used authorised (€m) (€m) Bond 250.0 250.0 Net financial debt Syndicated loan – Tranche A € 112.0 112.0 €495.9m Syndicated loan – Tranche B £ 49.1 4
Slide 31: Solid financial position at 30/06/2020 (2/2)
Solid financial position at 30/06/2020 (2/2) Financial leverage substantially below 2x EBITDA Net financial debt/EBITDA(1) 3x Financial covenant 2.1x 2x 1.8x 1.8x 1.8x 1.6x 1.3x 1x June janv-15 June janv-16 June janv-17 June janv-18 June janv-19 June janv-20 2015 2016 2017 2018 2019 2020 (1) Pro for
Slide 32: 2020 priorities and objectives
05 2020 priorities and objectives Vincent Paris Chief Executive Officer 32 Presentation of H1 2020 results – 29/07/2020
Slide 33: Key priorities in an environment that remains highly incertain
Key priorities in an environment that remains highly incertain In the second half of 2020 Uncertainties surrounding the future development of the pandemic in the regions where Sopra Steria operates Uncertainties surrounding digital investment decisions to be made by major clients in Q4 2020 Recognit
Slide 34: Financial targets for 2020
Financial targets for 2020 Organic revenue growth of between -2 % and -4 % Operating margin on business activity of between 6 % and 7 % Free cash flow of between €80m and €120m 34 Presentation of H1 2020 results – 29/07/2020
Slide 35: Question & answer session
06 Question & answer session 35 Presentation of H1 2020 results – 29/07/2020
Slide 36: Annexes
07 Annexes 36 Presentation of H1 2020 results – 29/07/2020
Slide 37: Our mission
Our mission Together, building a positive future by making digital work for people Our objectives Our commitments Make a sustainable, human, purposeful contribution to society Be a benchmark employer Be the partner of choice for our clients Establish ongoing constructive and transparent dialog
Slide 38: Recognised corporate social responsibility policy
Recognised corporate social responsibility policy Commitment to the Global Compact (Advanced level) ESG ratings Workforce updated in June 2020 2019–2020 7th in HappyIndex®Trainees(1) | World(2) 2020 AA 6th in HappyIndex®AtWork | France 2019 – Leader “More than 5,000 employees” category 74/100 9th in
Slide 39: Sopra Steria at 30/06/2020
Sopra Steria at 30/06/2020 A European leader in digital transformation Among the top 5 European digital services companies Among the top 10 operating in Europe 2019 revenue 46,000 Operations in End-to-end of €4.4bn employees 25 countries approach Revenue – 30/06/2020 2% 14% 10% 3% 26% 6% 32% 15% 4%
Slide 40: Breakdown of Group revenue by country
Breakdown of Group revenue by country At 30/06/2020 SERVICES REVENUE – 30/06/2020 SOLUTIONS REVENUE – 30/06/2020 H1 2020 revenue: Other Europe = €639m o/w Germany = 29% 15% o/w Scandinavia = 26% o/w SFT = 17% 35% o/w Spain = 12% o/w Belux = 6% o/w Italy = 6% o/w Switzerland = 3% €1,842M €324M SERVIC
Slide 41: Breakdown of Solutions revenue
Breakdown of Solutions revenue At 30/06/2020 SOLUTIONS REVENUE BY PRODUCT SOLUTIONS REVENUE BY BUSINESS LINE Sopra Banking Software 12% H1 2020 revenue = €205m o/w France = €89m 18% o/w outside France = €116m 6% €324M €324M 25% SOLUTIONS SOLUTIONS 48% 63% 28% Sopra Banking Software Integration Servi
Slide 42: Changes in exchange rates
Changes in exchange rates First-half 2020 Changes in exchange rates Average rate Average rate Change For €1 / % H1 2020 H1 2019 (%) Pound sterling 0.8746 0.8736 + 0.1% Norwegian krone 10.7324 9.7304 + 10.3% Swedish krona 10.6599 10.5181 + 1.3% Danish krone 7.4648 7.4651 - 0.0% Swiss franc 1.0642 1.1
Slide 43: Change in revenue in the first half of 2020
Change in revenue in the first half of 2020 2 300 2,300 +30.8 2,207.1 2 200 2,200 -12.5 Sparda = +€76.3m 2,166.7 SAB = +€26.6m NeoSpheres = +€2.0m -58.7 Recruitm ent = -€74.0m €m 2 100 2,100 2 000 2,000 Revenue Currency effect Scope effect Organic growth Revenue H1 2019 H1 2020 43 Presentation of H1
Slide 44: Earnings per share
Earnings per share First-half 2020 H1 2020 H1 2019 (€m) (€m) Net profit attributable to the Group (€m) 43.7 60.9 Weighted average number of shares in issue excluding treasury shares 20.23 20.22 Basic earnings per share (€) 2.16 3.01 Basic recurring earnings per share (€) 3.06 3.61 Theoretical weight
Slide 45: Breakdown of change in net financial debt
Breakdown of change in net financial debt First-half 2020 45 Presentation of H1 2020 results – 29/07/2020
Slide 46: Simplified balance sheet
Simplified balance sheet 30/06/2020 30/06/2020 31/12/2019 (€m) (€m) Goodwill 1,771.3 1,813.9 Allocated intangible assets 158.0 181.5 Other fixed assets 257.0 267.9 Right-of-use assets 315.3 320.4 Equity-accounted investments 195.4 195.0 Fixed assets 2,697.0 2,778.8 Net deferred tax 90.7 0 98.1 0 0 0
Slide 47: UK pension fund deficit net of tax at 30/06/2020
UK pension fund deficit net of tax at 30/06/2020 Decrease due to the increase in value of plan assets and the weaker GBP vs EUR 149 Deficit net of tax (€m) 123 113 94 31/12/2018 30/06/2019 31/12/2019 30/06/2020 47 Presentation of H1 2020 results – 29/07/2020
Slide 48: Global workforce
Global workforce First-half 2020 30/06/2020 30/06/2019 France 19,677 19,343 United Kingdom 6,741 6,352 Other Europe 10,807 10,268 Rest of the World 499 360 X-Shore 8,879 8,636 Total 46,603 44,959 48 Presentation of H1 2020 results – 29/07/2020
Slide 49: Ownership at 30/06/2020
Ownership at 30/06/2020 A reference shareholder backing the corporate plan Pasquier Odin Managers family family 3.4% 68.3% 28.3% Founders and management Sopra GMT Shares managed on behalf Treasury shares Free float 2.8 % 19.6% of employees Shareholders’ 6.4% 0.1% 71.1% agreement (8.5%) (57.8%) 22.4%
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 year