Sodexo Sa · EURONEXT:SW
Sodexo Sa — Sodexho — FY1999/2000 Earnings Presentation
38 slides from Sodexo Sa's earnings presentation, Dec 11, 2000
Slide 1: Annual Results 1999/2000
December 11, 2000 Annual Results 1999/2000 SODEXHO The Worldwide Leader in Food and Management Services
Slide 2: Summary
SUMMARY 1999/2000 FINANCIAL PERFORMANCE IMPLEMENTING OUR STRATEGIC PRIORITIES IN FRANCE IN MULTI-SERVICES OUTLOOK
Slide 3: 1999/2000 Financial Performance: Highlights
1999/2000 FINANCIAL PERFORMANCE HIGHLIGHTS Sales up 16% € 10.5 billion versus € 9.0 billion in 1998/1999 EBITA up 19% Operating margin up to 5.2% from 5.1% Group share of recurring net income and recurring EPS up 27% Strong free cash flow, up 44%
Slide 4: Exceptional provision for shareholding in CCA
1999/2000 FINANCIAL PERFORMANCE Exceptional provision of € 72 million for shareholding in CCA Group Share of Net Income: € 85 million (- 36% on 1998/1999) This provision has no incidence on continuing operations nor on Group cash flow
Slide 5: Changes in accounting methods
1999/2000 FINANCIAL PERFORMANCE CHANGES IN ACCOUNTING METHODS Used as of fiscal year 1999/2000 Average monthly Income statement and exchange rates statement of cash flow Average monthly EPS shares outstanding
Slide 6: Sales up 16%
1999/2000 FINANCIAL PERFORMANCE SALES UP 16% * (IN € MILLIONS) 10,505 Currency effect + 5% + 4% Acquisitions 9,032 + 7% + 1% Organic growth + 38% + 5% 1998/1999 1999/2000 * Average exchange rates for 1999/2000
Slide 7: Sales by business
1999/2000 FINANCIAL PERFORMANCE SALES BY BUSINESS Strong organic growth + 19% + 19% + 12% + 7% + 7% + 5% + 2% 98/99 99/00 (5%) 99/00 98/99 99/00 98/99 99/00 98/99 Food and Remote Service River and Management Sites Vouchers Harbor Cruises Services and Cards
Slide 8: Food and Management Services: organic growth by region
1999/2000 FINANCIAL PERFORMANCE FOOD AND MANAGEMENT SERVICES Renewed organic growth by region Sodexho Marriott 99/00 + 5% + 7% Services 98/99* + 5% + 2.8% * 53 weeks * 52 weeks 99/00 + 6% GB 98/99 + 3% France 99/00 + 10% 98/99 + 8% Other 99/00 + 10% continental 98/99 Europe + 7% Other 99/00 + 9% cou
Slide 9: EBITA
1999/2000 FINANCIAL PERFORMANCE 545 * + 19% Currency EBITA 458 effect (in € millions) + 13% 1998/1999 1999/2000 Operating margin (%) 5.1 5.2 * Average exchange rates for 1999/2000
Slide 10: Growth in EBITA by business
1999/2000 FINANCIAL PERFORMANCE 17% 6% 2% Growth 6% in EBITA 46% by business (1) 4% 9% 3% 98/99 99/00 98/99 99/00 98/99 99/00 98/99 99/00 Operating 5.0 5.1 5.4 4.9 28.9 24.6 13.1 12.8 margin (%) Food and Remote Service River and Management Sites Vouchers Harbor Cruises Services and Cards (1) Before
Slide 11: Food and Management Services EBITA
1999/2000 FINANCIAL PERFORMANCE FOOD AND MANAGEMENT SERVICES Operating EBITA (in € millions) Margin (%) Sodexho 99/00 258 5.3 Marriott Services 98/99 230 5.4 Excl. 99/00 236 4.8 Sodexho Marriott Services 98/99 194 4.6
Slide 12: Net financial expense
1999/2000 FINANCIAL PERFORMANCE NET FINANCIAL EXPENSE (IN € MILLIONS) improving despite a strong dollar and a general rise in interest rates 37 43 Interest +1 income Interest (168) (153) expense (8) 1998/1999 1999/2000 Net financial expense (131) (118)
Slide 13: Exceptional result
1999/2000 FINANCIAL PERFORMANCE EXCEPTIONAL RESULT (IN € MILLIONS) This amounts to € - 78 million and principally comprises Provision CCA € - 72 million Sale of Partena Care shareholding € - 8 million
Slide 14: Evolution of effective tax rate
1999/2000 FINANCIAL PERFORMANCE EVOLUTION OF EFFECTIVE TAX RATE (IN € MILLIONS) 1998/1999 1999/2000 Income before tax 330 342 Adjusted for non-taxable 325 (5) 342 82 * items Income taxes 125 163 Effective tax rate 38.5% 38.4% * Includes exceptional provision for CCA shareholding € 72 million sale of
Slide 15: Group share of net income and EPS
1999/2000 FINANCIAL PERFORMANCE Group share EPS ** of net income * (in € millions) (in €) 99/00 116 3.44 Before goodwill (27%) (28%) 98/99 159 4.76 99/00 85 2.52 After goodwill (36%) (36%) 98/99 132 3.93 * Average exchange rates ** Average shares for 1999/2000 outstanding
Slide 16: Group share of recurring net income and recurring EPS
1999/2000 FINANCIAL PERFORMANCE Group share of recurring Recurring net income * EPS ** (in € millions) (in €) 99/00 183 5.45 Before goodwill + 24% + 24% 98/99 147 4.40 99/00 152 4.53 After goodwill + 27% + 27% 98/99 120 3.57 * Average exchange rates ** Average shares for 1999/2000 outstanding
Slide 17: Net dividend
1999/2000 FINANCIAL PERFORMANCE NET DIVIDEND to be proposed at the Annual Shareholder Meeting on February 26, 2001 (in €) 99/00 2.24 + 26% 98/99 1.78
Slide 18: Balance sheet ratios largely unaffected by exchange rates
1999/2000 FINANCIAL PERFORMANCE BALANCE SHEET RATIOS LARGELY UNAFFECTED BY EXCHANGE RATES (IN € MILLIONS) Fixed assets * Shareholders’ equity 1,936 4,065 Financial 2,009 debt Provisions 115 Working capital ** 1,898 Working capital 2,905 Deferred taxes 106 Cash 896 * Fixed assets: total fixed assets
Slide 19: Working capital and net debt
1999/2000 FINANCIAL PERFORMANCE (IN € MILLIONS) 1998/1999 1999/2000 Working Working Working Working capital capital capital capital (assets) (liabilities) (assets) (liabilities) Improvement 1,498 2,246 1,898 2,905 in negative working capital (748) (1,007) Cash Debt Cash Debt Reduction 758 2,048 896
Slide 20: Strong increase in free cash flow
1999/2000 FINANCIAL PERFORMANCE STRONG INCREASE IN FREE CASH FLOW (IN € MILLIONS) + 154 (142) + 375 = 387 1999/2000 Operating Improvement Net Free cash in working Capex cash flow + 44% flow capital + 95 (129) + 302 = 268 1998/1999
Slide 21: Significant reduction in net debt
1999/2000 FINANCIAL PERFORMANCE SIGNIFICANT REDUCTION IN NET DEBT (IN € MILLIONS) + 10 + 32 (75) less + 387 currency effect 1999/2000 = 354 177 Free cash Shareholders’ Reduction flow Acquisitions equity Changes in scope in net debt less currency + 268 (158) (42) + 63 effect 1998/1999 54 = 131
Slide 22: Principal financial ratios
1999/2000 FINANCIAL PERFORMANCE PRINCIPAL FINANCIAL RATIOS EBITA Financial expense Objective >5 4.6 3.3 3.4 97/98 98/99 99/00 Net debt Financial debt Adjusted equity Operating cash flow 100 8.4 Objective <75 % 82 6.8 Objective <4 59 5.4 97/98 98/99 99/00 97/98 98/99 99/00
Slide 23: Summary
SUMMARY 1999/2000 FINANCIAL PERFORMANCE IMPLEMENTING OUR STRATEGIC PRIORITIES IN FRANCE IN MULTI-SERVICES OUTLOOK
Slide 24: France: Speed up organic growth
IMPLEMENTING OUR STRATEGIC PRIORITIES IN FRANCE SPEED UP ORGANIC GROWTH Impact of segmentation on Sales (in € millions) 1,050 900 750 600 450 Sodexho 300 Avenance 150 Compass 0 1985 1995 2000
Slide 25: France: Impact of sub-segmentation
IMPLEMENTING OUR STRATEGIC PRIORITIES IN FRANCE SPEED UP ORGANIC GROWTH Impact of sub-segmentation since 1999 Business and Industry è 6 sub-segments Healthcare è3 " Education è3 " Example: Homes for the handicapped sub-segment 1999/2000 sales: € 38 million Change in market share since 1996 Ÿ Sodexho
Slide 26: France: Offer development
IMPLEMENTING OUR STRATEGIC PRIORITIES IN FRANCE SPEED UP ORGANIC GROWTH Offer Development Peugeot sites in Mulhouse Development of on-site refreshment services since 1999 with Relais Gourmand and vending: Ÿ 1999/2000 Sales rising from € 3 million An increase of more than 50% in one year Parc Saint-C
Slide 27: France: Developing synergies
IMPLEMENTING OUR STRATEGIC PRIORITIES IN FRANCE DEVELOPING SYNERGIES Sales synergies INSEAD Fontainebleau INSEAD Singapore Sales: € 3 million Sales: € 1 million Peugeot Citroën Peugeot Citroën in France in Brazil Sales: € 15 million Sales: € 1.2 million
Slide 28: Sales synergies: Federation of International Schools
IMPLEMENTING OUR STRATEGIC PRIORITIES IN FRANCE DEVELOPING SYNERGIES Sales synergies Federation of International Schools 500 schools in 106 countries, of which 15 in France Potential market in France: € 4.6 million September 1999: A partnership contract signed as “preferred supplier” for food and ma
Slide 29: France: Focusing on cash flow
IMPLEMENTING OUR STRATEGIC PRIORITIES IN FRANCE FOCUSING ON CASH FLOW A goal for all employees: 15% to 50% of the annual bonus linked to improvement A stringent sales policy Ÿ Analysis of client and prospects’ financial situations Ÿ Negotiation of payment dates and terms Day-to-day management Ÿ Fast
Slide 30: Summary
SUMMARY 1999/2000 FINANCIAL PERFORMANCE IMPLEMENTING OUR STRATEGIC PRIORITIES IN FRANCE IN MULTI-SERVICES OUTLOOK
Slide 31: Multi-services: Sodexho in Central and Eastern Europe
IMPLEMENTING OUR STRATEGIC PRIORITIES IN MULTI-SERVICES Sodexho in Central and Eastern Europe Annual Sales: € 105 million 25% in multi-services (excluding food services) Ericsson in Moscow Annual Sales: € 2 million 75% in multi-services (excluding food services)
Slide 32: Range of services provided to Ericsson
IMPLEMENTING OUR STRATEGIC PRIORITIES IN MULTI-SERVICES Range of services provided to Ericsson Consultancy – Estate Purchasing – Administration We provide 3 main kinds Catering of activities Building People services Mainte- Light House nance Maintenance Keeping Vending Business services Safety/ Rece
Slide 33: How we faced the situation in May 1997
IMPLEMENTING OUR STRATEGIC PRIORITIES IN MULTI-SERVICES How we faced the situation in May 1997 Ericsson needs Focus on core business Partnership High level of quality standards Reactive and tailor-made solutions Sodexho approach Set-up of a full proactive team Ÿ Innovation: commissioning Ÿ Professio
Slide 34: Key learning points
IMPLEMENTING OUR STRATEGIC PRIORITIES IN MULTI-SERVICES Key learning points Adapted Human Resources Specialization + coordination Permanent innovation process ICT & High Tech Management Solution Provider Perceived added value Optimize the value of client’s assets Improve the corporate image of the c
Slide 35: Competitive advantages for Sodexho
IMPLEMENTING OUR STRATEGIC PRIORITIES IN MULTI-SERVICES Competitive advantages for Sodexho Reference and differentiation from competition Long term partnership Development opportunities Cross fertilization and synergies with other segments/markets/countries Competency Centres created
Slide 36: Summary
SUMMARY 1999/2000 FINANCIAL PERFORMANCE IMPLEMENTING OUR STRATEGIC PRIORITIES IN FRANCE IN MULTI-SERVICES OUTLOOK
Slide 37: Outlook
OUTLOOK Our objective Average annual growth 15-20% in recurring EPS for the at constant current fiscal year and exchange rates the two following years How? By continuing to implement our strategic objectives By creating a new vision, a new ambition, a new dream for Sodexho “To improve the quality of
Slide 38: Sodexho
Sodexho ALLIANCE