- Revenue of €1,903.2 million,
equating to organic growth of 2.6%
- Growth of 3.8% at constant exchange
rates and total growth of 1.3%
- Operating margin on business
activity up 0.4 points to 7.5%
- Increase of 22.3% in net profit
attributable to the Group, at €66.0 million
Regulatory News:
At its meeting on 27 July 2017 chaired by Pierre Pasquier,
Sopra Steria’s (Paris:SOP) Board of Directors approved the
financial statements for the first half of 2017. The Statutory
Auditors have conducted a limited review of the financial
statements.
Sopra Steria: 2017 Half-year results
H1 2017
H1 2016
Reported
Key income statement items Revenue €m
1,903.2 1,878.8
Total growth
+ 1.3% Organic growth + 2.6% Operating profit on business
activity €m / % 142.1 7.5% 134.2 7.1% Profit from recurring
operations €m / % 114.2 6.0% 114.0 6.1% Operating profit €m / %
102.7 5.4% 103.2 5.5% Net profit attributable to the Group €m / %
66.0 3.5% 54.0 2.9%
Weighted average number of sharesin issue
excl. treasury shares
m 20.20 20.01 Basic earnings per share € 3.27 2.70 Recurring
earnings per share € 3.65 3.07
Key balance sheet items
30/06/17
30/06/16 Net financial debt €m
643.3 719.6 Equity attributable to the Group €m
1,085.4 1,006.7
* Alternative performance measures are defined
in the glossary at the end of this document
Comments on business activity and operating performance for
the first half of 2017
In the first half of 2017, the European digital services market
showed sustained growth, bolstered by investments in digital and
cloud offerings. Sales were strong for Sopra Steria during the
period and operating performance is on track to meet full-year
targets. Among the highlights was a very clear upturn in business
lines that had been generating weak margins and which are now in a
position to reach, at a minimum, the profitability objectives set
for 2017.
A number of initiatives were launched in the first half and are
illustrated by major commercial successes, the expansion of
offerings (in both services and solutions), the continued pursuit
of an active targeted acquisition policy and the deepening of
exchanges with a broad ecosystem of partners. These initiatives are
strengthening Sopra Steria’s digital and cloud growth strategy.
Sopra Steria generated revenue of €1,903.2 million in the first
half of 2017, representing total growth of 1.3%. Changes in scope
had a positive impact of €20.5 million, while currency fluctuations
had an adverse impact of €44.5 million, essentially due to the 9.5%
drop in the pound-to-euro exchange rate relative to the same period
a year earlier. Growth at constant exchange rates and scope was
2.6%. The Group’s operating profit on business activity grew by
5.9% relative to the first half of 2016, to €142.1 million, a
margin of 7.5%, up 0.4 percentage points from the previous
year.
In France, first-half revenue came to €801.4 million,
representing organic growth of 2.1%.
- Business levels at Consulting &
Systems Integration (revenue of €701.4 million), held back by
particularly negative calendar effects in the second quarter (three
fewer working days), generated organic growth of 2.6%. This
performance was buoyed by an increase of 7.6% in Consulting. The
public sector and aerospace were the best-performing vertical
markets. The outlook for the second half is favourable and should
prompt an acceleration in growth compared to the first half. With
regard to profitability, operating profit on business activity
reached €69.1 million, or 9.8% of revenue, thus remaining stable
relative to the first half of 2016.
- I2S (Infrastructure & Security
Services) generated revenue of €100.0 million, representing
negative organic growth of 1.3%. The IT infrastructure management
business has successfully refocused on high added-value services
(consulting, architecture, cloud computing, etc.), with a clear
improvement in profitability and a 3.5% decrease in revenue.
Cybersecurity (11% of the entity’s revenue) achieved strong organic
growth of 24.6%. Profitability at I2S improved markedly, with an
operating margin on business activity of 3.1%, 2.6 percentage
points higher than that achieved in the year-earlier period and in
line with the roadmap set to achieve the full-year target of
5%.
In the United Kingdom, first-half revenue (€413.0
million) recorded a downturn in organic growth of 5.7%. Exchange
rate fluctuations had a negative impact of €45.1 million. Overall,
the region posted total revenue growth of -14.6%. Given the
transition phase experienced this year by the SSCL joint venture of
Sopra Steria with the Cabinet Office, revenue for the region is
expected to be lower in 2017 (see the 27 February 2017 press
release). In terms of profitability, the United Kingdom achieved an
operating margin on business activity of 6.0% in the first half of
2017 (1.3 percentage points lower than in the year-earlier period).
This performance reflects additional costs relating to the latest
client migration onto SSCL, while the private sector has arrived at
the implementation phase of its transformation project.
Revenue for the Other Europe reporting unit rose sharply
(11.1% organic growth), reaching €397.8 million. All of the
region’s countries saw robust growth, with a special mention for
Germany, which confirmed the success of its recovery (12.7% organic
growth and an operating margin on business activity greater than
8%). For the reporting unit as a whole, the operating margin on
business activity improved strongly by 2.4 percentage points to
6.8%.
Sopra Banking Software generated revenue of €185.8
million, an increase of 16.0%. Revenue growth for this business was
also strong at constant scope and exchange rates, rising by 8.0%.
This performance was driven primarily by services as well as
Cassiopae’s specialist loan products. Over the period, Sopra
Banking Software continued to invest in its offerings. Amplitude
Up, a new, digital-ready version of its Amplitude product, was
released. An innovative digital platform to support the creation of
novel ways to enhance the client experience and assist financial
players in ensuring compliance with the Payment Services Directive
(PSD2) has been announced. Lastly, the development of the Platform
product continued, in line with its roadmap. In terms of
profitability, given the recognition of research and development
expenses in the income statement and the fact that licence sales
are concentrated in the second half of the year, the operating
margin on business activity came to 3.4% (4.3% at 30 June
2016).
Other Solutions (Human Resource Solutions and Property
Management Solutions) posted revenue of €105.1 million in the
first half of 2017, equating to organic growth of 3.5%, and an
operating margin on business activity of 11.2%, up 2.0 percentage
points relative to the first half of 2016. This performance was
accompanied by an enrichment of the added value of the offers.
Thus, for example, in the field of human resources,
interoperability with talent management solutions has been
established, and in the field property management, Sopra Steria
took an equity stake in La FoncièreNumérique®, a digital platform
to better manage and leverage all data relating to digitised
property assets.
Comments on net profit for the first half of 2017
Profit from recurring operations came to €114.2 million. This
includes a €17.0 million expense related to share-based payments
(versus €10.2 million in the first half of 2016), as a result of
the renewal, in 2017, of the “We Share” employee share ownership
plan and of a long-term incentive plan set up for the Group’s main
managers.
Operating profit was €102.7 million after a net expense of €11.4
million for other operating income and expenses (compared to a net
expense of €10.7 million in first-half 2016), which included
€10.1 million in reorganisation and restructuring
expenses.
The tax expense was €30.8 million in the half-year period,
versus €44.4 million in the first half of 2016, translating to a
Group-wide tax rate of 31.8%.
The share of profit of equity-accounted companies (mainly Axway)
was €1.0 million in the half-year period (€3.8 million in
first-half 2016).
The net profit attributable to the Group was €66.0 million after
deducting €0.9 million in respect of minority interests, 22.3%
higher than the figure of €54.0 million for the first half of
2016.
Basic earnings per share came to €3.27 (compared with €2.70 in
the year-earlier period), representing an increase of 21.1%.
Financial position at 30 June 2017
Sopra Steria’s financial position at 30 June 2017 was robust in
terms of both financial ratios and liquidity.
Free cash flow for the first half of the year, which is
traditionally a period of net cash outflows due to seasonal
effects, amounted to an outflow of €109.0 million.
In the first half, outflows for external growth (changes in
scope) amounted to €26.6 million.
Net financial debt was €643.3 million at the end of June 2017,
equating to 1.9x EBITDA compared to 2.2x as of end of June 2016
(with the bank covenant stipulating a maximum of 3x).
At 30 June 2017, the Group had €1.5 billion in financing, of
which €1.1 billion was available.1 In addition, the maturity of the
Group’s syndicated loan was extended by one year, to 6 July
2022.
External growth
The Group announced a number of transactions in first-half
2017:
- Cassiopae: stake raised from 75% to
100% (the company had already been fully consolidated since the
second quarter of 2016);
- Kentor: planned acquisition of a 100%
stake in this Swedish company specialised in consulting and systems
integration having generated revenue of €34 million in 2016 (to be
consolidated in the second half of 2017);
- 2MoRo: planned acquisition of a 100%
stake in this French software developer for the aerospace and
defence market (solutions for fleet tracking, navigability
management, preventive and curative maintenance management, etc.)
having generated revenue of €1 million in 2016 (to be consolidated
in the second half of 2017);
- Acquisition of a minority stake in the
creation of La FoncièreNumérique®.
Workforce
At 30 June 2017, the Group’s workforce totalled 40,431 people
(39,813 at 31 December 2016), with 18.0% working in X-Shore
zones.
Targets for 2017
The Group’s targets for the 2017 financial year are
confirmed:
- organic revenue growth of between 2%
and 3%;
- an operating margin on business
activity of around 8.5%;
- free cash flow in excess of €150
million.
Presentation of first-half 2017 results
The results for the first half of 2017 will be presented to
financial analysts and investors in French on 28 July 2017 at 9:00
a.m. CET, at the Shangri-La Hotel in Paris.
The presentation may be attended remotely via a bilingual
webcast in French and English:
Register for the French language webcast:
http://edge.media-server.com/m/p/vy9pw27
Register for the English language webcast:
http://edge.media-server.com/m/p/vy9pw27b/lan/en
Or by phone:
French-language phone number: +33 (0)1 70 77 09 20
English-language phone number: +44 (0)203 367 9454
Practical information about the presentation and webcast can be
found in the ‘Investors’ section of the Group’s website:
https://www.soprasteria.com
Next financial release
Thursday, 26 October 2017 (before market): publication of Q3
2017 revenue
Glossary
- 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 year.
- EBITDA: This measure, as defined in the
Registration Document, is equal to the consolidated operating
profit on business activity adding back depreciation and
amortisation included in the operating profit on business
activity.
- Operating
profit on business activity: This measure, as defined in
the Registration Document, is equal to profit from recurring
operations adjusted to exclude the expense relating to the cost of
services rendered by the grantees of stock options and free shares
and additions to the amortisation of allocated intangible
assets.
- Profit from
recurring operations: This measure is equal to operating
profit before other operating income and expenses, which includes
any particularly significant items of operating income and expense
that are unusual, abnormal, infrequent or not predictive, presented
separately in order to give a clearer picture of performance based
on ordinary activities.
- Recurring
earnings per share: This measure is equal to basic
earnings per share before taking into account other operating
income and expenses net of tax.
- Free cash
flow: Free cash flow is defined as the net cash from
operating activities (as described in the consolidated cash flow
statement in the Registration Document), less investments (net of
disposals) in tangible and intangible fixed assets, less net
interest and less additional contributions to address any deficits
in defined-benefit pension plans.
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 the second half of the year, with
varying impacts on end-of-year performance. Actual outcomes and
results may differ from those described in this document due to
operational risks and uncertainties. More detailed information on
the potential risks that may affect the Group’s financial results
are available in the 2016 Registration Document filed with the
Autorité des Marchés Financiers (AMF) on 13 April 2017 (see pages
37 and following in particular). Sopra Steria does not undertake
any obligation to update the forward-looking information contained
in this document beyond what is required by current laws and
regulations. The distribution of this document in certain countries
may be subject to certain laws and regulations. Persons physically
present in countries where this document is released, published or
distributed should inquire as to any applicable restrictions and
should comply with those restrictions.
About Sopra Steria
Sopra Steria, a European leader in digital transformation,
provides one of the most comprehensive portfolios of offerings on
the market, spanning consulting, systems integration,
industry-specific solutions, infrastructure management and business
process services. It provides end-to-end solutions to address the
core business needs of large companies and organisations, helping
them remain competitive and grow. Combining added value with
innovative high-performance services, Sopra Steria excels in
guiding its clients through their transformation projects to help
them make the most of digital technology. With over 40,400
employees in more than 20 countries, Sopra Steria generated revenue
of €3.7 billion in 2016.
Sopra Steria (SOP) is listed on Euronext Paris (Compartment A) –
ISIN: FR0000050809
For more information, please visit our website:
www.soprasteria.com
Annexes
Sopra Steria: Impact on revenue of
exchange rates and changes in scope – H1 2017 €m
H1 2017 H1 2016 Growth Revenue
1,903.2 1,878.8 + 1.3% Changes in exchange rates
-44.5
Revenue at
constant exchange rates 1,903.2
1,834.3 + 3.8% Changes in scope
20.5
Revenue at constant scope and exchange rates
1,903.2 1,854.8 +
2.6% Sopra Steria: Changes in exchange rates –
H1 2017 For €1 / % Average rate
H1 2017
Average rate
H1 2016
Change
Pound sterling 0.8606 0.7788 -
9.5% Norwegian krone 9.1785 9.4197 + 2.6% Swedish krona 9.5968
9.3019 - 3.1% Danish krone 7.4368 7.4497 + 0.2% Swiss franc
1.0766 1.0960 + 1.8%
Sopra Steria: Revenue
by reporting unit (€m / %) – H1 2017 H1
2017 H1 2016
Restated*
H1 2016
Reported
Organicgrowth
Total
growth
France 801.4 784.9 778.8 + 2.1% + 2.9% United Kingdom 413.0
438.2 483.4 - 5.7% - 14.6% Other Europe 397.8 358.1 355.6 + 11.1% +
11.9% Sopra Banking Software 185.8 172.0 160.2 + 8.0% + 16.0% Other
Solutions 105.1 101.5
100.7 + 3.5% + 4.4%
Sopra Steria
Group 1,903.2 1,854.8
1,878.8 + 2.6%
+ 1.3% * Revenue at 2017 scope and exchange rates
Sopra Steria: Revenue by reporting unit (€m / %) –
Q2 2017 Q2 2017 Q2 2016
Restated*
Q2 2016
Reported
Organicgrowth
Total
growth
France 391.0 394.1
391.1 - 0.8% - 0.0% United Kingdom 207.8 225.3 246.2 - 7.8% - 15.6%
Other Europe 196.9 184.9 185.0 + 6.5% + 6.4% Sopra Banking Software
99.9 90.6 91.5 + 10.3% + 9.2% Other Solutions 53.8
52.2 51.8 + 3.0%
+ 3.8%
Sopra Steria Group 949.5
947.0 965.6
+ 0.3% - 1.7% * Revenue at 2017 scope
and exchange rates
Sopra Steria: Performance by reporting unit – H1 2017
H1 2017
H1 2016 €m % €m %
France
Revenue 801.4 778.8 Operating
profit on business activity 72.2 9.0% 66.8 8.6% Profit from
recurring operations 60.8 7.6% 59.5 7.6% Operating profit 56.5 7.1%
54.6 7.0%
of which C&SI Organic growth + 2.6%
Revenue 701.4 677.6 Operating profit on business activity 69.1 9.8%
66.3 9.8% Profit from recurring operations 58.4 8.3% 59.5 8.8%
Operating profit 56.7 8.1% 57.0 8.4%
of which I2S
Organic growth - 1.3% Revenue 100.0 101.2 Operating profit on
business activity 3.1 3.1% 0.5 0.5% Profit from recurring
operations 2.3 2.3% 0.0 0.0% Operating profit -0.2 -0.2% -2.4 -2.4%
United Kingdom
Revenue 413.0
483.4 Operating profit on business activity 24.6 6.0% 35.4 7.3%
Profit from recurring operations 18.3 4.4% 29.3 6.1% Operating
profit 18.4 4.5% 29.2 6.0%
Other Europe
Revenue 397.8 355.6 Operating profit on business activity
27.2 6.8% 15.8 4.4% Profit from recurring operations 24.5 6.1% 13.9
3.9% Operating profit 20.1 5.1% 11.1 3.1%
Sopra Banking
Software
Revenue 185.8 160.2 Operating
profit on business activity 6.3 3.4% 6.9 4.3% Profit from recurring
operations 0.3 0.1% 2.6 1.6% Operating profit -1.3 -0.7% 1.1 0.7%
Other Solutions
Revenue 105.1
100.7 Operating profit on business activity 11.7 11.2% 9.3 9.2%
Profit from recurring operations 10.4 9.9% 8.7 8.6% Operating
profit 9.0 8.6% 8.1 8.0%
Sopra Steria: Consolidated income statement
– H1 2017 H1 2017
H1 2016
Reported
€m %
€m % Revenue
1,903.2 1,878.8
Staff costs -1,176.4 -1,150.8 Operating
expenses -582.5 -572.9 Depreciation, amortisation and provisions
-2.2 -20.9
Operating profit on business activity
142.1 7.5%
134.2 7.1% Expenses related to stock
options and related items -17.0 -10.2 Amortisation of allocated
intangible assets -10.9
-10.1
Profit from recurring
operations 114.2 6.0%
114.0 6.1% Other
operating income and expenses -11.4
-10.7
Operating
profit 102.7 5.4%
103.2 5.5% Cost of net
financial debt -3.5 -3.8 Other financial income and expenses -2.5
-4.6 Tax expense -30.8 -44.4 Share of net profit from
equity-accounted companies 1.0
3.8
Net profit
66.9 3.5%
54.2 2.9% Attributable to the Group
66.0 3.5%
54.0 2.9% Minority interests
0.9 0.2
Weighted average number of shares in issue excl.
treasury shares (m) 20.20 20.01 Basic earnings per share (€) 3.27
2.70
Sopra Steria: Simplified balance sheet (€m) –
30/06/2017 30/06/17
31/12/16
Goodwill 1,536.7 1,557.0 Allocated intangible assets 166.1 179.7
Other fixed assets 167.2 160.8 Equity-accounted investments 194.2
202.3
Fixed assets 2,064.3 2,099.8 Net
deferred tax 121.0 128.9 Trade accounts receivable (net)
1,191.1 1,132.7 Other assets and liabilities -1,090.5 -1,171.5
Working capital requirement (WCR) 100.6
-38.7 Assets + WCR
2,285.8 2,190.0
Equity 1,117.0 1,103.1 Provisions for
post-employment benefits 433.2 464.5 Provisions for contingencies
and losses 92.3 116.4 Net financial debt 643.3
506.0
Capital invested 2,285.8 2,190.0
Sopra Steria: Change in net
financial debt (€m) – H1 2017 H1 2017 H1 2016
Operating
profit on business activity 142.1
134.2 Depreciation, amortisation and provisions
(excl. allocated intangible assets) 4.0
20.2
EBITDA 146.1
154.4 Non-cash items -1.4 -0.2 Tax paid -23.7 -33.0 Change
in operating working capital requirement -184.0 -172.9
Reorganisation and restructuring costs -12.6
-14.1
Net cash flow from operating activities
-75.7 -65.7 Change relating to
investing activities -20.8 -20.1 Net financial interest -3.7 -4.0
Additional contributions related to defined-benefit pension plans
-8.8 -10.8
Free cash flow
-109.0 -100.6 Impact of changes
in scope -26.6 -104.7 Financial investments -1.9 -0.1 Dividends
paid - - Dividends received from equity-accounted companies 2.8 0.2
Capital increases in cash 0.2 2.0 Purchase and sale of treasury
shares -1.0 9.3 Impact of changes in foreign exchange rates -1.8
5.2 Other changes - -
Change in net
financial debt -137.3
-188.8
Net financial debt at beginning of period
506.0 530.8 Net financial debt at
end of period 643.3
719.6 Sopra Steria: Workforce
breakdown – 30/06/2017 30/06/17
31/12/16 France 18,629 18,227
United Kingdom 6,320 6,508 Other Europe 7,961 7,844 Rest of the
World 253 231 X-Shore 7,268 7,003
Total 40,431 39,813
1 Assuming a constant amount of commercial paper (€399.2m at
30/06/2017) and overdrafts
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170727006639/en/
Sopra SteriaInvestor RelationsOlivier Psaume, +33
(0)1 40 67 68 16olivier.psaume@soprasteria.comorPress
RelationsSimon Zaks (Image 7), +33 (0)1 53 70 74
63szaks@image7.fr
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