Sopra Steria: H1 2024 Results Continued Margin Growth
- Revenue came to €2,949.4 million1, equating to total growth of 3.8% and organic growth2 of 0.3%. Q2 revenue equated to organic growth of 0.5%.
- Operating profit on business activity up 13.6% to €285.3 million; operating margin of 9.7%, up 0.9 points from H1 2023.
- Net profit attributable to the Group from continuing operations was up 50.5% at €169.3 million, generating a margin of 5.7%. Net profit attributable to the Group, including net profit from discontinued operations, was up 9.5% at €123.2 million.
- Free cash flow totalled €44.0 million, in keeping with historical seasonal effects excluding a delay in the collection of tax credit receivables.
-
Finalisation of the sale of
Sopra Banking Software activities in early September confirmed. - Full-year targets: revenue relatively stable on an organic basis; operating margin on business activity of at least 9.7%; free cash flow of around €350 million.
At its meeting on
Cyril Malargé, Chief Executive Officer of
“Despite the market having adopted a wait-and-see stance, prompting us last week to adjust our full-year organic revenue growth guidance for the current financial year, our first-half results are robust. They provide tangible evidence of the business’s shift towards higher-added-value. This shift is intended to position
Our priorities fall into three key areas: upscaling in consulting; moving our tech offerings higher up the value chain; and upgrading our operating model.
Integration of companies acquired in 2023 has proceeded in line with the roadmap and is generating tangible commercial and operational synergies. Profitability at
Furthermore, most of the steps in the sale of banking software activities to
Lastly, we have improved operating profitability across each of our reporting units and confirm our guidance of achieving a Group operating margin of close to 10% in full-year 2024.”
Presentation of the 2024 interim financial statements
The planned sale of most of the activities of
Moreover, as part of the review of assets acquired and liabilities assumed, the Group harmonised the method used to recognise revenue at
After taking these two factors into account, restated Q1 2024 revenue came to €1,484.6 million, equating to organic growth of 0.2% (vs €1,587.4m reported, equating to organic growth of 0.3%).
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H1 2024 |
S1 2023
|
S1 2023
|
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Amount |
Margin |
Change vs 2023 (rep'd) |
Amount |
Margin |
Amount |
Margin |
||
Key income statement items |
|
|
|
|
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Revenue | €m |
2,949.4 |
|
3.8% |
2,676.7 |
|
2,840.1 |
|
Organic growth | % | +0.3% |
|
|
- |
|
|
|
|
|
|
|
|||||
Operating profit on business activity | €m |
285.3 |
9.7% |
13.6% |
249.9 |
9.3% |
251.1 |
8.8% |
Profit from recurring operations | €m |
251.2 |
8.5% |
20.9% |
216.7 |
8.1% |
207.8 |
7.3% |
Operating profit | €m |
229.7 |
7.8% |
29.7% |
188.5 |
7.0% |
177.1 |
6.2% |
Net profit from continuing activities attributable to the Group | €m |
169.3 |
5.7% |
50.5% |
128.8 |
4.8% |
112.5 |
4.0% |
Net profit attributable to the Group | €m |
123.2 |
4.2% |
9.5% |
112.5 |
4.2% |
112.5 |
4.0% |
|
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|
|
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Weighted average number of shares in issue excl. treasury shares | m |
20.16 |
|
|
20.2 |
|
20.20 |
|
Basic earnings per share | € |
6.11 |
|
9.8% |
5.57 |
|
5.57 |
|
Recurring earnings per share | € |
8.45 |
|
24.4% |
7.60 |
|
6.80 |
|
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Key balance sheet items |
|
|
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Net financial debt | €m |
1,057.0 |
|
11.7% |
946.0 |
|
946.0 |
|
Equity attributable to the Group | €m |
1,949.9 |
|
3.9% |
1,876.7 |
|
1,876.7 |
|
* On a 2024 accounting standards basis (IFRS 5) |
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Detailed breakdown of operating performance in H1 2024
The Group’s operating profit on business activity rose 13.6% to €285.3 million, equating to a margin of 9.7%, up 0.9 points from H1 2023 reported. The classification of certain activities of
In
Revenue for the
The
The Solutions reporting unit (5% of total Group revenue) generated revenue of €160.3 million, up 12.6% in total following the reallocation of €17.9 million in revenue4 from activities previously falling within the scope of
Comments on the components of net profit for H1 2024
Profit from recurring operations came to €251.2 million, up 20.9% relative to the first half of 2023. It included a €13.2 million share-based payment expense (versus €28.4 million in the first half of 2023) and a €20.9 million amortisation expense on allocated intangible assets (versus €14.9 million in the first half of 2023).
Operating profit was €229.7 million, up 29.7%, after a net expense of €21.5 million for other operating income and expenses (compared with a net expense of €30.7 million in the first half of 2023).
Net interest expense was €18.2 million (versus €12.5 million in the first half of 2023).
The tax expense was €33.3 million in the half‑year period, versus €42.5 million in the first half of 2023, translating to a Group‑wide tax rate of 15.7% following the recording of non‑recurring tax income in the
Net profit/(loss) from associates came in at a €1.4 million loss (compared with a €0.1 million loss in the first half of 2023).
Net profit from continuing operations came in at €176.9 million, up 45.0%, giving a margin of 6.0%.
Net profit/(loss) from discontinued operations came in at a loss of €46.1 million.
Consolidated net profit came to €130.7 million, up 7.2% relative to the first half of 2023.
After deducting €7.6 million in non‑controlling interests, net profit attributable to the Group came to €123.2 million, up 9.5% (compared with €112.5 million in the first half of 2023), representing a net profit margin of 4.2%.
Basic earnings per share came to €6.11 (up 9.7%), compared with €5.57 per share in the first half of 2023.
Financial position at
Free cash flow in the first half of 2024 came in at €44.0 million, in keeping with historical seasonal effects excluding the delay until July of the collection of tax credit receivables. This compares with €122.9 million in the first half of 2023, which included net receipts in advance of around €50 million.
Net financial debt totalled €1,057.0 million at
Workforce
The Group’s net headcount stood at 56,001 employees at
The workforce attrition rate was 15.2% (vs 15.7% in the first half of 2023).
Targets for 2024
- Revenue relatively stable on an organic basis
- Operating margin on business activity of at least 9.7%
- Free cash flow of around €350 million (previously in excess of €350 million)
Presentation meeting
The results for the first half of 2024 will be presented to financial analysts and investors in a French/English webcast on Wednesday,
- Register for the French-language webcast here
- Register for the English-language webcast here
Or by phone:
- French-language phone number: +33 (0)1 70 37 71 66
- English-language phone number: +44 (0)33 0551 0200
Practical information about the presentation and webcast can be found in the ‘Investors’ section of the Group’s website: https://www.soprasteria.com/investors
Upcoming financial releases
Thursday,
Glossary
- Basic recurring earnings per share : This measure is equal to basic earnings per share before other operating income and expenses net of tax.
- Downtime :Number of days between two contracts (excluding training, sick leave, other leave and pre-sales) divided by the total number of business days.
- EBITDA : This measure, as defined in the Universal Registration Document, is equal to consolidated operating profit on business activity after adding back depreciation, amortisation and provisions included in operating profit on business activity.
- Free cash flow :Free cash flow is defined as the net cash from operations; less investments (net of disposals) in property, plant and equipment, and intangible assets; less lease payments; less net interest paid; and less additional contributions to address any deficits in defined-benefit pension plans.
- Operating profit on business activity : This measure, as defined in the Universal Registration Document, is equal to profit from recurring operations adjusted to exclude the share-based payment expense for stock options and free shares and charges to amortisation of allocated intangible assets.
- Organic revenue growth : Increase in revenue between the period under review and restated revenue for the same period in the prior financial year.
- 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 foreseeable, presented separately in order to give a clearer picture of performance based on ordinary activities.
- Restated revenue : Revenue for the prior year, expressed on the basis of the scope and exchange rates for the current year.
Disclaimer
This document 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 can be found in the 2023 Universal Registration Document filed with the Autorité des Marchés Financiers (AMF) on
About
The world is how we shape it.
For more information, visit us at www.soprasteria.com
Annexes
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€m | H1 2024 | H1 2023 | Growth |
Revenue |
2,949.4 |
2,840.1 |
+3.8% |
Changes in exchange rates |
8.3 |
||
Revenue at constant exchange rates |
2,949.4 |
2,848.4 |
+3.5% |
Changes in scope |
295.8 |
||
Change in scope - Application of IFRS 15 |
-41.1 |
||
Classification as assets held for sale - IFRS 15 |
-163.5 |
||
Revenue at constant exchange rates, scope and accounting standards |
2,949.4 |
2,939.7 |
+0.3% |
|
|||
For €1 / % |
Average rate H1 2024 |
Average rate H1 2023 |
Change |
Pound sterling |
0.8546 |
0.8764 |
+ 2.5% |
Norwegian krone |
11.4926 |
11.3195 |
- 1.5% |
Swedish krona |
11.3914 |
11.3329 |
- 0.5% |
Danish krone |
7.4580 |
7.4462 |
- 0.2% |
Swiss franc |
0.9615 |
0.9856 |
+ 2.5% |
|
||||||
Q1 2024 restated (A) |
Q1 2024 reported |
Q1 2023 restated* (B) |
Q1 2023 reported |
Organic growth (A/B) |
Total growth |
|
|
633.6 |
624.6 |
653.5 |
589.9 |
-3.0% |
+7.4% |
|
240.0 |
240.0 |
223.5 |
216.7 |
+7.4% | +10.7% |
|
531.9 |
547.7 |
525.1 |
410.4 |
+1.3% | +29.6% |
Solutions |
79.0 |
71.2 |
79.5 |
70.6 |
-0.6% |
+11.9% |
|
- |
103.8 |
- |
107.7 |
- |
- |
|
1,484.6 |
1,587.4 |
1,481.6 |
1,395.4 |
+0.2% | +6.4% |
* Revenue at 2024 scope, exchange rates and accounting policies (IFRS 5 & 15) |
|
||||||
Q2 2024 |
Q2 2023 restated* |
Q2 2023 reported |
Organic growth |
Total growth |
||
|
617.7 |
618.5 |
609.0 |
-0.1% |
+1.4% | |
|
247.3 |
249.0 |
244.3 |
-0.7% |
+1.2% | |
|
518.6 |
509.7 |
409.4 |
+1.7% | +26.7% | |
Solutions |
81.3 |
80.9 |
71.8 |
+0.6% | +13.3% | |
|
- |
- |
110.3 |
- |
- |
|
|
1,464.8 |
1,458.1 |
1,444.7 |
+0.5% | +1.4% | |
* Revenue at 2024 scope, exchange rates and accounting policies (IFRS 5 & 15) |
|
||||||
H1 2024 |
H1 2023 restated* |
H1 2023 reported |
Organic growth |
Total growth |
||
|
1,251.3 |
1,272.0 |
1,198.9 |
-1.6% |
+4.4% | |
|
487.3 |
472.5 |
461.0 |
+3.1% | +5.7% | |
|
1,050.5 |
1,034.8 |
819.8 |
+1.5% | +28.1% | |
Solutions |
160.3 |
160.3 |
142.4 |
-0.0% |
+12.6% | |
|
- |
- |
218.0 |
- |
- |
|
|
2,949.4 |
2,939.7 |
2,840.1 |
+0.3% | +3.8% | |
* Revenue at 2024 scope, exchange rates and accounting policies (IFRS 5 & 15) |
|
||||||
H1 2024 |
S1 2023 restated* |
H1 2023 reported |
||||
€m | % | €m | % | €m | % | |
|
||||||
Revenue |
1,251.3 |
1,220.5 |
1,198.9 |
|||
Operating profit on business activity |
119.2 |
9.5% |
113.3 |
9.3% |
108.8 |
9.1% |
Profit from recurring operations |
106.6 |
8.5% |
97.4 |
8.0% |
90.1 |
7.5% |
Operating profit |
99.4 |
7.9% |
89.7 |
7.3% |
84.2 |
7.0% |
|
||||||
Revenue |
487.3 |
461.0 |
461.0 |
|||
Operating profit on business activity |
56.7 |
11.6% |
52.4 |
11.4% |
52.4 |
11.4% |
Profit from recurring operations |
49.8 |
10.2% |
45.5 |
9.9% |
45.5 |
9.9% |
Operating profit |
48.2 |
9.9% |
38.2 |
8.3% |
38.2 |
8.3% |
Other |
||||||
Revenue |
1,050.5 |
834.8 |
819.8 |
|||
Operating profit on business activity |
97.3 |
9.3% |
73.1 |
8.8% |
72.8 |
8.9% |
Profit from recurring operations |
84.2 |
8.0% |
66.0 |
7.9% |
66.0 |
8.1% |
Operating profit |
72.6 |
6.9% |
53.3 |
6.4% |
56.2 |
6.9% |
Solutions | ||||||
Revenue |
160.3 |
160.3 |
142.4 |
|||
Operating profit on business activity |
12.2 |
7.6% |
11.1 |
6.9% |
14.3 |
10.0% |
Profit from recurring operations |
10.6 |
6.6% |
7.8 |
4.9% |
12.4 |
8.7% |
Operating profit |
9.5 |
5.9% |
7.4 |
4.6% |
12.0 |
8.5% |
|
||||||
H1 2024 |
H1 2023 restated* |
H1 2023 reported |
||||
€m | % | €m | % | €m | % | |
Revenue |
2,949.4 |
2,676.7 |
2,840.1 |
|||
Staff costs |
-1,862.9 |
-1,637.3 |
-1,755.0 |
|||
Operating expenses |
-727.1 |
-731.1 |
-768.8 |
|||
Depreciation, amortisation and provisions |
-74.2 |
-58.4 |
-65.2 |
|||
Operating profit on business activity |
285.3 |
9.7% |
249.9 |
9.3% |
251.1 |
8.8% |
Share-based payment expenses |
-13.2 |
-22.9 |
-28.4 |
|||
Amortisation of allocated intangible assets |
-20.9 |
-10.3 |
-14.9 |
|||
Profit from recurring operations |
251.2 |
8.5% |
216.7 |
8.1% |
207.8 |
7.3% |
Other operating income and expenses |
-21.5 |
-28.2 |
-30.7 |
|||
Operating profit |
229.7 |
7.8% |
188.5 |
7.0% |
177.1 |
6.2% |
Cost of net financial debt |
-8.8 |
2.4 |
-6.4 |
|||
Other financial income and expenses |
-9.4 |
-4.9 |
-6.1 |
|||
Tax expense |
-33.3 |
-47.6 |
-42.5 |
|||
Net profit from associates |
-1.4 |
-0.1 |
-0.1 |
|||
Net profit of continuing activities |
176.9 |
6.0% |
138.3 |
5.2% |
122.0 |
4.3% |
Net profit of discontinued activities |
-46.1 |
-16.3 |
- |
|||
Consolidated net profit |
130.7 |
4.4% |
122.0 |
4.6% |
122.0 |
4.3% |
Attributable to the Group |
123.2 |
4.2% |
112.5 |
4.2% |
112.5 |
4.0% |
Non-controlling interests |
7.6 |
9.5 |
9.5 |
|||
Weighted avg nb of shares in issue excl. treasury shares (m) |
20.16 |
20.20 |
20.20 |
|||
Basic earnings per share (€) |
6.11 |
5.57 |
5.57 |
|||
* On a 2024 accounting standards basis (IFRS 5) |
|
|||
H1 2024 |
H1 2023 restated* |
H1 2023 reported |
|
Operating profit on business activity |
285.3 |
249.9 |
251.1 |
Depreciation, amortisation and provisions (excl. allocated intangible assets) |
74.1 |
59.4 |
67.0 |
EBITDA |
359.4 |
309.2 |
318.1 |
Non-cash items |
-4.1 |
5.3 |
1.6 |
Tax paid |
-35.2 |
-41.8 |
-46.8 |
Change in operating working capital requirement |
-152.3 |
-61.9 |
-14.0 |
Reorganisation and restructuring costs |
-18.1 |
-27.2 |
-29.9 |
Net cash flow from operating activities |
149.7 |
183.6 |
229.0 |
Lease payments |
-62.7 |
-41.8 |
-46.2 |
Change relating to investing activities |
-28.0 |
-35.8 |
-47.2 |
Net interest |
-9.4 |
3.1 |
-5.8 |
Additional contributions related to defined-benefit pension plans |
-5.7 |
-6.9 |
-6.9 |
Free cash flow |
44.0 |
102.2 |
122.9 |
Capital increase |
-180.0 |
-0.5 |
- |
Impact of changes in scope |
-91.8 |
-435.9 |
-428.6 |
Financial investments |
12.8 |
-6.7 |
-6.7 |
Dividends paid |
-93.9 |
-87.5 |
-87.5 |
Dividends received |
0.3 |
2.7 |
2.7 |
Purchase and sale of treasury shares |
-13.4 |
-3.1 |
-3.1 |
Impact of changes in foreign exchange rates |
-0.7 |
-4.5 |
-6.6 |
Impact of SBS net financial debt classified under discontinued operations |
211.7 |
26.4 |
- |
Change in net financial debt |
-111.0 |
-406.9 |
-406.9 |
* On a 2024 accounting standards basis (IFRS 5) | |||
Net financial debt at beginning of period |
946.0 |
152.0 |
152.0 |
Net financial debt at end of period |
1,057.0 |
558.9 |
558.9 |
|
|||
|
restated* |
reported |
|
|
2,334.2 |
2,586.2 |
2,668.9 |
Allocated intangible assets |
185.8 |
232.1 |
124.8 |
Other fixed assets |
250.8 |
307.9 |
304.3 |
Right-of-use assets |
417.6 |
457.1 |
457.1 |
Equity-accounted investments |
97.0 |
185.9 |
185.9 |
Fixed assets |
3,285.4 |
3,769.2 |
3,740.9 |
Net deferred tax |
79.5 |
70.0 |
98.3 |
Trade accounts receivable (net) |
1,359.0 |
1,372.4 |
1,372.4 |
Other assets and liabilities |
-961.0 |
-1,556.4 |
-1,556.4 |
Working capital requirement (WCR) |
398.0 |
-184.0 |
-184.0 |
Assets + WCR |
3,762.9 |
3,655.2 |
3,655.2 |
Equity |
2,007.6 |
1,925.1 |
1,925.1 |
Pensions – Post-employment benefits |
138.8 |
167.8 |
167.8 |
Provisions for contingencies and losses |
97.5 |
113.3 |
113.3 |
Lease liabilities |
462.0 |
503.0 |
503.0 |
Net financial debt |
1,057.0 |
946.0 |
946.0 |
Capital invested |
3,762.9 |
3,655.2 |
3,655.2 |
* On a 2024 accounting standards basis (IFRS 5) |
|
||
|
|
|
|
20,917 |
22,363 |
|
7,218 |
7,693 |
Other |
15,999 |
13,943 |
Rest of the World |
235 |
555 |
X-Shore |
8,044 |
9,400 |
Total (continuing operations) |
52,413 |
53,954 |
Activities classified as assets held for sale | ∼ 3,600 | ∼ 4,000 |
__________________________________________________
1
The activities of
2 Alternative performance measures are defined in the glossary at the end of this document.
3 The increase in Axway’s share capital to help finance the purchase will take place between 26 July and
4 Baseline : 2023
5 Leverage calculated on the basis of net financial debt before IFRS 5 of €1,048 million.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240724608880/en/
Investor Relations
Olivier Psaume
olivier.psaume@soprasteria.com
+33 (0)1 40 67 68 16
Press Relations
caroline.simon@image7.fr
+33 (0)1 53 70 74 65
Source: