First half 2012 results
First half 2012 results
Organic revenue growth of 3.3%
Operating margin[1] of 5.1%
In a deteriorating first half environment, the Group’s activity remained robust with like-for-like revenue growth of +3.3%, highlighting a profile and positioning adapted to a market undergoing transformation.
The good commercial momentum was reflected in the pipeline which remains at the level equivalent to that of December 2011 (1.9x projected sales) and 9.3% growth in new orders, leading to an increased book to bill ratio of 1.11 at June 30, 2012.
Under the effect of significant pricing pressure and an increase in the inter-contract rate, the operating margin contracted by €5.9 million on a comparable basis, resulting in a margin rate of 5.1% versus 6.1% during the first half of 2011[2].
For the full year 2012, the Group expects an operating margin rate of above 6.0%.
The Group is working on a project with an objective to generate, on an annual basis, between €15 million and €18 million of additional cost savings.
On July 26, 2012, the Supervisory Board of Groupe Steria SCA examined the consolidated
financial statements submitted by the General Management.
First half 2012[3] consolidated results
First half
2011
Reported
2012
Revenue (€m)
865.1
926.6
Operating margin1 (€m)
% of revenue
57.6
6.7%
47.0
5.1%
Operating income[4] (€m)
34.5
37.6
Attributable net income (€m)
22.0
23.8
Underlying attributable net income[5] (€m)
38.3
27.5
Underlying diluted earnings per share4 (€)
1.17
0.81
Shareholder Equity (€m)
696.3
802.7
Net financial debt (€m)
200.0
212.7
{0>Chiffre d’affaires<}100{>Revenue<0}
First half 2012 consolidated revenue
{0>En millions d’euros<}100{>In € million<0}
H1
2011
H1
2012
{0>Croissance <}100{>Growth<0}
{0>Chiffre d’affaires<}100{>Revenue<0}
865.1
926.6
7.1%
{0>Variation de périmètre<}100{>Change in consolidation scope<0}
11.3
Change due to currency effect
20.4
{0>Chiffre d’affaires pro forma<}100{>Pro-forma revenue<0}
896.8
926.6
3.3%
First half 2012 revenue by geographic region
{0>En millions d’euros<}100{>In € million<0}
H1
2011*
H1
2012
Organic
{0>Croissance<}100{>Growth<0}
{0>Royaume-Uni<}100{>United Kingdom<0}
356.3
369.2
3.6%
{0>France<}100{>France<0}
270.2
295.3
9.3%
{0>Allemagne<}100{>Germany<0}
119.9
114.8
-4.2%
{0>Autre Europe<}100{>Other Europe<0}
150.4
147.2
-2.1%
{0>Total<}100{>Total<0}
896.8
926.6
3.3%
{0>* Chiffre d’affaires à périmètre et taux de change constants (base 2012)<}100{>*Like-for-like revenue (base 2012)<0}
First half 2012 revenue by business line
{0>En millions d’euros<}100{>In € million<0}
H1
2011**
H1
2012
{0>Croissance organique<}100{>Organic growth<0}
Infrastructure management and Business Process Outsourcing
347.1
382.1
10.1%
{0>Conseil & Intégration de Systèmes<}100{>Consulting and Systems Integration<0}
549.8
544.5
-1.0%
** Revenue on a like-for-like perimeter, currency and organisational structure (base 2012)
Second quarter 2012 revenue by geographic region
{0>En millions d’euros<}100{>In € million<0}
Q2
2011*
Q2
2012
{0>Croissance organique<}100{>Organic growth<0}
{0>Royaume-Uni<}100{>United Kingdom<0}
183.8
190.1
3.4%
{0>France<}100{>France<0}
132.6
138.9
4.8%
{0>Allemagne<}100{>Germany<0}
60.0
56.4
-6.0%
{0>Autre Europe<}100{>Other Europe<0}
81.2
75.4
-7.2%
{0>Total<}100{>Total<0}
457.5
460.8
0.7%
{0>* Chiffre d’affaires à périmètre et taux de change constants (base 2012)<}100{>*Like-for-like revenue (base 2012)<0}
Second quarter 2012 activity
Second quarter revenues showed organic growth of 0.7% (on a calendar base averaging one day less than in 2011), leading to a 3.3% increase over the first half (calendar base identical to 2011).
This performance was achieved within a weaker trading environment, characterised by pressure on volumes and prices. Within this context, the Group’s activity thus demonstrated strong resilience highlighting a profile and positioning adapted to client expectations in a market undergoing a rapid transformation. For example, the recent launches of Workplace On Command, RightApps Management and RightSecurity Services offerings were well received by the market.
Over the quarter, the Group benefited from growth in the Public Sector (+1%), Insurance (+6%), Utilities (+9%) and Transport (+27%) sectors. Banking (-2%) and Telecommunications (-10%) were, however, negatively orientated.
New orders saw strong growth over the quarter in France, Germany and the United Kingdom, driving a 9.3% increase in orders for the whole of the first half relative to the previous year.
At June 30, 2012, the Group’s book to bill ratio stood at a satisfactory 1.11 (1.03 at June 30, 2011) and at 1.09 for the only cyclical activities, consulting and systems integration[6] (0.94 at June 30, 2011). As of the same date, the pipeline, measured as a multiple of revenue, amounted to 1.9x (comparable to its level of December 31, 2011).
In the United Kingdom, on a like-for-like basis, second quarter revenue growth amounted to 3.4% thanks to the positive trend in the Public sector (+8%), driven by increased activity with the Ministry of Defence, the Ministry of Justice and the NHS through the NHS SBS entity. New orders saw a strong progression during the second quarter bringing the increase for the first half to 5.1%. At June 30, 2012, the book to bill ratio stood at 1.0 (0.94 at June 30, 2011).
In France, like-for-like growth was 4.8% (+9.3% for the first half), driven by strong momentum in the Banking, Insurance and Transport sectors, the latter having been underpinned in particular by the EcoTax contract. There were a number of large contract wins in IT infrastructure transformation (Canal+, JC Decaux, large Ministries, etc.) and information systems transformation including application maintenance activities (a major European bank, public sector, energy sector, etc.). New orders were sharply higher in the second quarter propelling first half order growth to 37.7%. At June 30, 2012, the book to bill ratio stood at 1.32 (1.05 at June 30, 2011).
In Germany, organic growth was -6.0% over the quarter (-4.2% for the first half), having been impacted by the difficult situation in the banking sector which represents a large proportion of the Group’s revenue in this country. Activity was affected by project delays and significant price pressure. Inversely, new orders, including the Business Intelligence and Application Maintenance areas, experienced an acceleration during the second quarter amounting, at June 30, 2012, to a total identical to that of the previous year. At end June 2012, the book to bill ratio was 1.21 (1.16 at June 30, 2011).
The Other Europe region posted a like-for-like decline of 7.2% (-2.1% for the first half), marked by an unfavourable base effect in Scandinavia and Belgium with the ending of the large European projects (Schengen and Visa impact) and by a lengthening in the decision-making cycle, particularly in Scandinavia.
Results for the first half 2012
The first half was marked by stronger pricing pressure than the Group’s initial expectations, with the negative impact on the operating margin amounting to some 100 basis points. Most of this effect was offset by productivity gains generated by the transformation programmes deployed across the Group.
At the same time, the climate of extreme caution prevailing amongst clients, marked by project cancellations and delays, was reflected, across the quasi-totality of the Group’s geographies, by an increase in the average inter-contract rate relative to the first half 2011 (estimated impact €6 million).
As a result, despite higher volumes, the Group’s operating margin contracted to €47 million versus €52.9 million2 in the first half of 2011, resulting in an operating margin rate of 5.1%.
Other operating income and expenses for the half year represented a net expense of €6.2 million versus a net expense of €20.7 million in the previous year and notably included €9 million of net restructuring charges, a non-cash charge of €7.8 million corresponding to the amortisation of actuarial losses linked to the pension schemes and a €12.1 million gain linked to the application of the accounting treatment following the NHS SBS full consolidation of from January 1, 2012.
Taking into account a financial result of -€4.2 million and income tax expense of €8.4 milllion, underlying attributable net income amounted to €27.5 million versus €38.3 million in the previous year.
Outlook
The Group is working on a project with an objective to generate, on an annual basis, between €15 million and €18 million of additional cost savings.
In an uncertain environment, for the full year 2012, the Group expects like-for-like revenue growth of between +2% and +3.0% and an operating margin rate of above 6.0%.
An information meeting on the first half 2012 results will take place on July 30, 2012 at
9h00 CET by webcast at www.steria.com (investors section).
Next publication: third quarter 2012 revenue on Tuesday October 30, 2012 after the
market close .
Appendices: Consolidated income statement, consolidated balance sheet, summary cash flow
statement and operating margin rate by geographical region at June 30, 2012.
{0>Steria est cotée sur Euronext Paris, Eurolist (Compartiment B)<}100{>Steria is listed on Euronext Paris, Eurolist (Section B)<0}
{0>Code ISIN :<}100{>ISIN Code:<0} {0>FR0000072910, Code Bloomberg :<}100{>FR0000072910, Bloomberg Code:<0} {0>RIA FP, Code Reuters :<}100{>RIA FP, Reuters Code:<0} {0>TERI.PA<}100{>TERI.PA<0}
{0>CAC MID&SMALL 190, CAC MID 100, CAC Soft&CS, CAC Technology<}100{>CAC MID&SMALL 190, CAC MID 100, CAC Soft&CS, CAC Technology<0}
{0>Indice Général SBF 120, SBF 250, SBF 80, IT CAC, NEXT 150<}100{>General Indices: SBF 120, SBF 250, SBF 80, IT CAC, NEXT 150<0}
{0>Pour plus d’informations, consulter le site Internet :<}100{>For further information, see the website:<0} http://www.steria.com
{0>Relations Presse :<}100{>Press relations:<0}
Jennifer Lansman
{0>Tél :<}100{>Tel:<0} +33 1 34 88 61 27 / +33 6 30 61 62 82
jennifer.lansman@steria.com
{0>Relations Investisseurs :<}100{>Investor relations:<0}
{0>Olivier PSAUME<}100{>Olivier Psaume<0}
{0>Tél :<}100{>Tel:<0} +33 1 34 88 55 60 / +33 6 17 64 29 39
olivier.psaume@steria.com
Consolidated income statement at June 30, 2012
In thousands of euros
30/06/2012
30/06/2011
Revenue
926,601
865,124
Cost of sales and sub-contracting costs
(186,005)
(151,931)
Personnel costs
(538,753)
(520,237)
Bought-in costs
(133,888)
(120,249)
Taxes (excluding income taxes)
(10,967)
(10,121)
Change in inventories
(18)
30
Other current operating income and expenses
4,618
4,630
Net charges for depreciation and amortisation
(20,338)
(14,210)
Net charges for provisions
2,638
3,678
Net charges for current asset impairment
(87)
(1,480)
Operating margin (*)
43,801
55,234
Operating profitability
4.7%
6.4%
Other operating income and expenses
(6,188)
(20,704)
Operating income
37,613
34,530
Cost of net borrowings
(1,631)
715
Other financial income and expenses
(2,585)
(2,427)
Net financial expense
(4,217)
(1,713)
Income tax expense
(8,445)
(10,940)
Share of profit/(loss) of associates
85
364
Net income from continuing operations
25,036
22,241
Net income/(loss) from operations held for sale
-
-
Net income for the year
25,036
22,241
Attributable net income
23,837
21,966
Attributable to minority interests
1,199
275
Underlying4 diluted earnings per share (euros)
0.81
1.17
(*) After amortisation of the customer relationships arisen from business combinations and amounting to €3.237 million at June 30, 2012 and €2.335 million at June 30, 2011
Consolidated balance sheet at June 30, 2012
In thousands of euros
30/06/2012
31/12/2011
30/06/2011
Goodwill
785,965
744,456
701,082
Other intangible assets
102,427
71,072
63,953
Property, plant and equipment
59,214
58,642
49,912
Investments in associates
1,578
10,938
7,962
Available-for-sale financial assets
2,552
2,273
1,808
Other financial assets
3,905
3,484
3,323
Retirement benefit assets
61,052
58,212
48,132
Deferred tax assets
32,543
27,332
21,010
Other non-current assets
2,185
3,418
3,655
Non-current assets
1,051,421
979,826
900,838
Inventories
7,506
9,218
7,409
Net trade receivables and similar accounts
286,744
299,468
290,786
Amounts due from customers
244,609
176,345
224,123
Other current assets
42,757
31,225
32,918
Current portion of non-current assets
3,863
3,565
3,538
Current tax assets
42,952
35,213
31,558
Prepaid expenses
28,492
23,001
31,041
Cash and cash equivalents
139,602
170,369
122,675
Current assets
796,526
748,403
744,048
Non-current assets classified as held for sale
8,912
9,095
23,507
Total assets
1,856,859
1,737,324
1,668,393
Shareholders’ equity
796,406
764,493
694,284
Minority interests
6,283
1,897
2,052
Total equity
802,689
766,390
696,337
Long-term borrowings
292,927
263,626
277,667
Retirement benefit obligations
41,436
40,247
35,838
Provision for non-current liabilities and charges
14,407
14,122
16,709
Deferred tax liabilities
20,556
20,939
18,227
Other non-current liabilities
25,421
6,817
6,203
Non-current liabilities
394,746
345,750
354,644
Short-term borrowings
59,376
32,648
44,972
Provisions for current liabilities and charges
29,261
34,638
31,789
Net trade payables and similar accounts
146,185
152,179
159,399
Gross amounts due to customers and advances and payments on account received
91,540
70,900
74,639
Current tax liabilities
56,157
54,971
48,425
Other current liabilities
275,772
278,694
253,757
Current liabilities
658,292
624,030
612,981
Liabilities directly associated with non-current assets classified as held for sale
1,131
1,155
4,432
Total equity and liabilities
1,856,859
1,737,324
1,668,393
Summary cash flow statement at June 30, 2012
{0>En millions d’euros<}100{>In € million<0}
30/06/12
30/06/11
EBITDA
60.7
67.0
Non-cash adjustments
0.4
3.0
Net financial costs
-2.6
-0.4
Cash flow before tax
58.5
69.6
Income tax
-13.9
-9.3
Change in WCR (cash elements)
-75.6
-107.7
Operating cash flow
-31.0
-47.5
Net industrial investment
-21.8
-14.9
Restructuring
-12.8
-12.6
Operating free cash flow
-65.5
-75.0
Dividends[7]
-8.7
-8.7
Net financial investment
0.2
-0.5
Capital increase
0.0
0.0
Change in consolidation scope
-0.4
0.0
Additional contribution to pension fund
-8.9
-9.6
Other
-3.5
-5.0
Free cash flow
-86.8
-98.8
Operating margin rate[8] in the first half by geographical region
{0>En millions d’euros<}100{>In € million<0}
H1
2012
H1
2011
Restated2
H1
2011
Reported
{0>Royaume-Uni<}100{>United Kingdom<0}
8.4%
9.1%
9.1%
{0>France<}100{>France<0}
4.7%
5.1%
6.8%
{0>Allemagne<}100{>Germany<0}
3.7%
6.5%
6.5%
{0>Autre Europe<}100{>Other Europe<0}
2.6%
4.2%
4.2%
Group costs
-0.7%
-0.5%
-0.5%
Group
5.1%
6.1%
6.7%
[1] Before amortisation of intangible assets arising from business combinations. The operating margin is the Group’s key indicator. It is
defined as the difference between revenue and operating expenses, the latter being equal to the total cost of services rendered
(costs necessary for the implementation of projects), sales costs and general and administrative expenses.
[2]The comparison with the first half 2011 takes into account a restatement concerning the charge for paid holidays accrued at 30/06/2011 in France (-€4.7 million) on the basis of the methodology applied in 2012. A symmetrical adjustment will be booked in the second half of 2012 leading to a neutral impact for the full year.
[4]Operating income includes restructuring costs, capital gains on disposals, expenses linked to share-based schemes granted to
employees and other operating income and expenses.
[5]Attributable net income restated, after tax, for other operating income and expenses, amortisation of intangible assets and unrecognised deferred tax assets.
[6] Consulting and systems integration in the strict sense, excluding testing and application maintenance
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