Operating free cash flow3+153%
Gearing4 below 50%
2007 annual revenue: ¤1416.2m, + 12.7%
2007 operating margin2: ¤103.6m, + 15.7% compared with 2006, representing a margin rate of 7.3% (vs. 7.1% in 2006)
Operating free cash flowincreased by 153.1% to ¤85.8m vs. ¤33.9m in 2006. This good performance has enabled the group to reduce net financial debt to ¤306.9m as of 31 December 2007, with a gearing of 45.3%, below initial expectations.
Taking into account the confidence of the Group in its prospects, it is proposed to pay a dividend5of ¤0.42 per share for FY 2007.
On March 21st 2008 the supervisory board of Steria Group SCA examined the consolidated accounts submitted by the General Management.
Annual Consolidated Results 2007
as % of revenue
|Attributable net profit||¤m||54.3||50.0||-7.9%|
|Attributable underlying net profit||¤m||61.1||61.1||+0.0%|
|Diluted underlying earnings per share||¤||2.96||2.80||-5.4%|
|Average weighted diluted number of shares||Mn||20.61||21.85||+6.1%|
|Net financial debt||¤m||-0.8||306.9||-|
In 2007, the Steria Group improved its operating profitability for the fifth year running. The operating margin2 rose by 15.7% to ¤103.6m. This resulted in an operating margin rate of 7.3%, an increase of 20bp compared with the previous financial year. This improvement is due as much to Steria's historic perimeter (where the operating margin rose by 10bp to 7.2%) as to Xansa's contribution in the period from October 17 to December 31 2007 when it was fully consolidated (operating margin2 of 8.3%).
All geographical zones improved their operating profitability, before group costs during the period under review. In France, the operating margin improved by 40bp compared to 2006 and reached 9.7%. In the United Kingdom, before Xansa was integrated, the operating margin2 rose by 20bp to 9.8%. In Germany, the operating margin2 rose to 8.3% vs. 7.9% in 2006. In the Other Europe zone, the operating margin2 added 10bp to 4.3%.
Key events in 2007
- During FY 2007, the group undertook extensive measures to reinforce its competitive positioning.
- Increased value added in services (portfolio of horizontal and vertical solutions, consulting capability in business transformation).
- Reduced exposure to low value-added services.
- Industrialisation of service production (harmonising procedures, standardisation of tools, opening of a Global Services Centre in Poland, the creation of a joint venture in Morocco in applications development).
- The Group made a highly strategic acquisition which has significantly reinforced its position among the ten leading IT service providers in Europe9, which propelled it to 9th place in the British IT services market and made it the European IT Services company with the highest proportion of Indian resources compared to total headcount.
- Besides making the Group more visible to both its local and European clients, this acquisition considerably enhances its service offering with comprehensive coverage of the IT services chain (consulting, applications development and maintenance, infrastructure management and Business Process Outsourcing (BPO).
- An acceleration of the Group's industrialisation, enabling it to improve on the excellence of the services provided to clients by implementing a Global Delivery model between Europe and India which builds on 10 years experience and 5.100 highly qualified Indian employees who represent more than 25% of the Group's overall workforce.
- Lastly, this acquisition gives the Group a leading position in the BPO market which offers significant growth perspectives for the coming years.
- Operating free cash flow rose significantly during FY 2007 (+153.1%) to ¤85.8m. leaving net financial debt at year end less than expected (¤306.9m) This means the Group's financial situation at end December 2007 is sound and robust.
- Mainly medium term debt,
- Gearing limited to 45.3% of shareholders equity of ¤677.5m,
- Banking covenants well respected,
- Additional financing facility of ¤277.6m at end December 2007,
- Consolidated pension fund liabilities in the balance sheet after tax limited, to ¤54m (including Xansa) compared to ¤60.3m at end 2006.
The 2007 accounts integrate a non recurring increase of the tax charge to ¤28m compared to ¤23,4m in 2006. The decrease in the UK and German corporate income tax rates reduced, in 2007, the accounting value of deferred tax assets and consequently generated an exceptional tax charge which increased the effective tax rate of the exercice to 35.8%. Restated for this effect, the Net attributable profit rose by +0.4% and the Current net attributable profit increased by +7.6%.
Strategically well placed in terms of geographical presence, businesses, offers and production capacity, the Group is confident about the outlook for its future development. The Group's new profile is already considered by clients as a competitive advantage and will generate new opportunities for growth. Moreover, the historical resilient characteristic of the Group through its recurring activities is significantly reinforced thanks to its new offshore capability.
As far as the current financial year is concerned, Xansa's integration is going according to plan, allowing us to confirm an objective of cost savings from the acquisition of approximately ¤23m for 2008 and a targeted operating margin2 for 2008 above 8%.
Next publication: first-quarter 2008 revenue
Wednesday 15 May 2008 before the market opens.
- Consolidated income statement for the 2007 financial year
- Consolidated balance sheet for the 2007 financial year
- Simplified cash flow statement for the 2007 financial year
- Video interview with François Enaud, Chairman and CEO of Steria SCA on www.steria.com and www.steria.fr
Steria is listed on Euronext Paris. Eurolist (Compartment B)
ISIN code: FR0000072910. Bloomberg Code: RIA FP. Reuters Code: TERI.PA
CAC MID&SMALL 190,CAC MID 100, CAC Soft&CS, CAC Technology
SBF 120 general index, SBF 250, SBF 80, IT CAC, NEXT 150
For further information, please visit our website: http://www.steria.com
Tel: +33 1 34 88 64 44 / +33 6 15 15 27 92
Tel: +33 1 34 88 55 60 / +33 6 17 64 29 39
Consolidated income statement as of 31 December 2007
|(¤ 000)||December 31 2007||December 31
|Revenue||1 416 164||1 256 582|
|Purchases consumed and sub-contracting||(259 427)||(287 424)|
|Personnel charges||(788 831)||(663 736)|
|External expenses||(210 324)||(172 923)|
|Tax and duties||(27 763)||(20 458)|
|Other operating income/expenditure||6 919||4 978|
|Net depreciation and amortisation||(31 259)||(24 006)|
|Net allocations to provisions||(3 303)||(2 976)|
|Depreciation of current assets||(689)||(809)|
|Operating margin||102 451||89 554|
|Operating profitability||7.2 %||7.1%|
|Other operating income and expenses||(6 745)||(8 486)|
|Operating profit||95 706||81 068|
|Net cost of financial debt||(13 217)||(4 249)|
|Other financial income and expenses||(3 061)||1 006|
|Financial result||(16 278)||(3 243)|
|Tax||(28 025)||(23 637)|
|Group share of profits from equity consolidated companies||(280)||998|
|Result of continuing activities||51 123||55 456|
|Result of discontinued activities||(877)||(562)|
|Total net profit||50 246||54 894|
|Attributable net profit||50 018||54 332|
|Fully diluted underlying8 earnings per share (in ¤)||2.80||2.96|
Consolidated balance sheet as of 31 December 2007
|Dec 31 2007||Dec 31 2006
|Goodwill||831 166||241 241|
|Intangible fixed assets||81 626||14 240|
|Tangible fixed assets||103 559||68 380|
|Investments in associates||10 641||4 810|
|Assets available for sale||2 367||2 360|
|Other financial assets||11 790||969|
|Deferred tax assets||26 467||39 221|
|Other non current assets||1 309||0|
|Non-current assets||1 068 925||371 221|
|Stocks||15 489||11 392|
|Trade debtors and similar||334 582||278 471|
|Amounts due from customers||168 688||120 888|
|Other current assets||25 995||10 668|
|Non-current assets less than one year||2 291||1 537|
|Current tax assets||9 313||6 163|
|Advance payments||29 230||17 914|
|Cash and cash equivalents||147 173||58 303|
|Current assets||732 761||505 336|
|Assets of disposal group classified as held for sale||1 250||0|
|Total assets||1 802 936||876 557|
|Group shareholders' equity||675 479||322 453|
|Minority interests||2 021||1 039|
|Total shareholders' equity||677 500||323 492|
|Loans and financial debt (> 1 year)||387 830||48 948|
|Pension commitments||68 509||74 827|
|Provisions for liabilities and charges (> 1 year)||18 009||5 680|
|Deferred tax liabilities||12 755||2 068|
|Other non-current liabilities||968||19|
|Non-current liabilities||488 071||131 542|
|Loans and financial debt (< 1 year)||66 239||8 535|
|Provisions for liabilities and charges (< 1 year)||14 935||15 478|
|Trade receivables and related accounts payable||175 166||134 984|
|Amounts owed to clients and advances received||113 485||58 683|
|Current tax liabilities||20 242||15 709|
|Other current liabilities||246 106||188 134|
|Current liabilities||636 173||421 523|
|Liabilities directly associated with the assets classified as held for sale||1 192||0|
|Total liabilities||1 802 936||876 557|
Simplified cash flow statement
|Dec 31 2007||Dec 31 2006
|Change in Working Capital Requirement
|Operating cash flow||127.3||73.6|
|Operating free cash flow||85.8||33.9|
|Net financial investment||-693.1||9.1|
|Change in perimeter||-60.7||0.0|
|Others (incl. pension commitments)||-8.3||-9.9|
|Free cash flow||-307.7||39.1|
1The consolidated accounts for 2007 include Xansa's results, consolidated by the equity method between August 1 2007 and October 16 2007 for the stake held by Steria during this period (25.4%) as well as Xansa's fully consolidated accounts between October 17 2007 and December 31 2007.
2Before amortization 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 amounting to the total cost of services provided (expenses needed to carry out projects), marketing costs and general and administrative costs.
3Cash flow less changes in Working Capital Requirements, Capex net of disposals and restructuring.
4Net financial debt as a proportion of shareholders' equity.
5Dividend on existing shares to be proposed by Management at the Shareholders General Meeting on 6 June 2008.
6Diamis, 40% owned by Steria, is consolidated by the equity method in the 2007 accounts (proportional consolidation in the 2006 published accounts). Sysinter is considered as being in the process of being sold as at December 31 2007. (Fully consolidated in the 2006 published accounts). Diamis and Sysinter are part of the French perimeter.
7Operating profit includes restructuring costs, capital gains on disposals, expenses linked to share benefits granted to employees.
8Attributable net profit restated for other operating income and expenses, amortization of intangible assets and loan fees arising from the business combination and other exceptional items integrated in the Xansa result during the period in which the equity consolidation method was applied.
9Source: Gartner Top 10 analysis based on Gartner database as at April 2007 (professional services revenues only). Includes end to end service providers only and excludes captive IT services companies.
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|GROUPE STERIA||Euronext Paris||15.46||0.00%||0|