GROUPE STERIA : 2009 annual results: Results show good resilience. Strong cash generation

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2009 annual results1:
Results show good resilience
Strong cash generation

Revenue decline limited to -3.1% on a like-for-like basis. Good resilience of the operating margin2 at 7.3%, a contraction of only 0.4 of a percentage point relative to the 2008 operating margin. Solid attributable net profit of ¤48.2 million, increasing to 3.0% of revenue versus 2.9% in 2008. Strong cash generation enabling a ¤48.3 million reduction in net financial debt.

On March 12, 2010, the Supervisory Board of Groupe Steria SCA examined the consolidated financial statements submitted by the General Management.

Annual consolidated results 2009

    2008 2009   Organic growth
At constant
perimeter and
currency
Revenue ¤m 1 765.7 1 630.0   -3.1%
Operating margin2
as % of revenue
¤m
%
135.5
7.7%
118.9
7.3%
   
Operating profit3 ¤m 110.0 92.0    
Attributable net profit ¤m 51.6 48.2    
as % of revenue % 2.9% 3.0%    
         
Underlying attributable net profit4 ¤m 75.9 70.4    
Underlying earnings per share4 ¤ 2.42 2.23    
         
Shareholders' equity ¤m 545.5 634.5    
Net financial debt ¤m 235.3 187.0    

Annual results 2009

In 2009, within a challenging economic environment, Steria's revenue and earnings showed a good level of resilience, reflecting the solidity of the Group's positioning.

This resilience needs to be seen alongside the major investments made by Groupe Steria in 2009 in the industrialisation of its business lines, the harmonisation of its tools and on the offer strategy in order to increase its competitiveness and reinforce its organic growth potential.

The operating margin1 for the 2009 financial year amounted to 7.3%, significantly above the guidance given during the 2009 second half thanks to a good fourth quarter performance. The modest decline in the operating margin (0.4 of a percentage point versus 2008) was the result of numerous programmes to optimise costs and improve productivity.

In the United Kingdom, the operating margin1 was maintained at a high level of 11.3% (11.4% in 2008), reflecting the successful integration of Xansa, the cost synergies generated and the efficiency of the offshore model.

In France, the operating margin1 remained virtually stable over the year at 6.4%, due to a significant improvement during the 2009 second half relative to the 2008 second half (+0.6 of a percentage point to 6.3%). This trend, together with the improved commercial performance at the end of 2009, are tangible and encouraging signs of a new dynamic in France.

In Germany, the recovery in activity during the second half, when revenue grew by +2.5% relative to the 2008 second half, enabled the decline in the operating margin1 to be limited to 2.2 percentage points for the year (7.1% versus 9.3% in 2008). This needs to be seen within the context of a marked decline in the consultancy market during 2009 and thus constitutes a strong performance.

In the Other Europe zone, despite a difficult situation in Spain, revenue increased by +2.5% on a like-for-like basis and the operating margin1 improved by 0.4 of a percentage point thanks to Scandinavia and Benelux/Switzerland whose operating margins1 are now similar to that of the Group.

Net integration and restructuring expenses for the 2009 financial year, which amounted to ¤20.2 million, remained limited to 1.2% of annual revenue.

The financial result of ¤-20.5 million includes a marked reduction in the net cost of financial debt (¤-14 million versus ¤-20.1 million).

Lastly, attributable net profit for the 2009 financial year showed good resilience. At ¤48.2 million it was only slightly down on the net profit for the previous financial year (¤51.6 million) and reached 3.0% of the Group's revenue compared with 2.9% in 2008.

It should be noted that the net profit includes a number of non-recurring items: the write-off of the remaining goodwill in Spain amounting to ¤7.6 million, a ¤5.7 million provision for a contract dispute which is non-recurring in nature, a gain of ¤14.6 million corresponding to the reduction in the Group's obligations within the framework of the change in pension regimes.

Financial situation at the end of the 2009 financial year

Cash flow generation for the 2009 financial year was ahead of expectations with free cash flow of ¤48.3 million. This performance was achieved despite ¤17.9 million of disbursements linked to restructuring and ¤37.8 million of additional contributions to the pension funds. It was notably the result of a structural improvement in working capital requirement which represented 0.7% of revenue at the end of 2009 and the optimisation of industrial investments which were limited to 1.4% of revenue.

The Group's overall financial situation is healthy: net financial debt, which amounted to ¤187.0 million at December 31, 2009, was reduced by 20.5% over the financial year and now represents only 29.5% of shareholders' equity.

Dividends

Within a context of good earnings resilience relative to 2008, the Group Management, the Supervisory Board and the Soderi Board of Directors propose to maintain a dividend5 of ¤0.12 per share in respect of the 2009 financial year.

Outlook

The environment remains fragile and uncertain. The end of 2009 and the beginning of 2010 have, however, shown some signs which could point to an improvement in the situation over the course of the year.

Within this context, Steria will remain on the offensive in 2010. While rigorously managing its costs, the Group will pursue the significant investments which started to bear fruit in 2009 in terms of industrialisation and changes in the offer portfolio, of which one of the main aims is to sustainably accelerate the level of organic growth.

Despite a first half which is likely to prove challenging, for the 2010 financial year as a whole the Group should show good resilience in terms of organic growth and operating margin1.

An information meeting on the 2009 annual results will take place on March 16, 2010 at 11h30 and will be relayed by webcast at www.steria.com (investors section)

Next publication: first quarter 2010 revenue
Thursday May 11, 2010 after the market close

Appendices: consolidated income statement, consolidated balance sheet and summary cash flow statement at December 31, 2009

Video interview with François Enaud, General Manager of Steria SCA: may be viewed at www.steria.com and www. steria.fr

Steria is listed on Euronext Paris, Eurolist (Section B)
ISIN Code: FR0000072910, Bloomberg Code: RIA FP, Reuters Code: TERI.PA

Indices: 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 see the website: http://www.steria.com

Press relations:
Isabelle Grange
Tel : +33 1 34 88 64 44/+33 6 15 15 27 92
Isabelle.grange@steria.com
Investor relations:
Olivier Psaume
Tel : +33 1 34 88 55 60/+33 6 17 64 29 39
olivier.psaume@steria.com

1 Audit procedures completed, audit report relating to the certification underway.
2 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 costs, 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.
3 Operating profit includes restructuring costs, capital gains on disposals, expenses linked to share-based schemes granted to employees and other non-recurring income and charges.
4 Attributable net profit restated, after tax, for other operating income and expenses, amortisation of intangible assets and unrecognised deferred tax assets.
5 Subject to shareholder approval at the Shareholders' General Meeting on Friday May 28, 2010. The dividend will be detached on Tuesday June 9, 2010. The dividend will be paid as of Tuesday July 7, 2010. Between June 9 and June 25, 2010, shareholders will be able to opt for payment in cash or shares.

Consolidated income statement at December 31, 2009

In thousands of euros 31/12/09 31/12/08
Revenue 1,629,977 1,765,678
Cost of sales and sub-contracting costs (283,740) (308,276)
Personnel costs (945,949) (978,768)
Bought-in costs (235 327) (274 454)
Taxes (excluding income taxes) (23,938) (37,383)
Change in inventories (19) 335
Other current operating income and expenses 20,750 8,752
Net charges for depreciation and amortisation (35,608) (43,117)
Net charges for provisions (10,938) (1,736)
Net charges for current asset impairment (817) (627)
Operating margin (*) 114,391 130,404
% of revenue 7.0% 7.4%
Other operating income and expenses (22,362) (20,398)
Operating profit 92,029 110,006
Cost of net borrowings (14,016) (20,092)
Other financial income and expenses (6,516) (4,365)
Net financial expense (20,532) (24,457)
Income tax expense (23,565) (33,140)
Share of profit/(loss) of associates 775 (2,057)
Net profit from continuing operations 48,707 50,352
Net profit/(loss) from operations held for sale - 771
Net profit for the year 48,707 51,123
   
Attributable net profit 48,189 51,601
Attributable to minority interests 518 (478)
   
Underlying4 diluted earnings per share (in euros) 2.23 2.42

(*) After amortisation of the customer relationships recognised on the acquisition of Xansa and amounting to ¤(4,550) thousand for the 2009 financial year and ¤(5,090) thousand for the 2008 financial year.

Consolidated balance sheet at December 31, 2009

31/12/2009 31/12/2008
Goodwill 706,417 672,015
Other intangible assets 66,301 62,050
Property, plant and equipment 74,004 85,453
Investments in associates 6,181 5,222
Available-for-sale financial assets 1,809 2,203
Other financial assets 3,977 12,466
Retirement benefit assets 42,230 3,440
Deferred tax assets 10,506 15,310
Other non-current assets 2,900 2,189
Non-current assets 914,379 860,348
Inventories 9,194 6,201
Net trade receivables and similar accounts 281,445 281,284
Amounts due from customers 192,025 190,434
Other current assets 36,017 26,186
Current portion of non-current assets 2,963 2,838
Current tax assets 27,340 15,837
Prepaid expenses 24,491 27,885
Cash and cash equivalents 149,859 141,138
Current assets 723,334 691,803
Non-current assets classified as held for sale    
Total assets 1,637,713 1,552,151

Shareholders' equity6 633,179 544,960
Minority interests 1,283 555
Total equity 634,462 545,515
Long-term borrowings 270,001 325,837
Retirement benefit obligations 33,698 39,898
Provision for non-current liabilities and charges 17,529 13,688
Deferred tax liabilities 16 750 14 293
Other non-current liabilities 5 466 18 146
Non-current liabilities 343,444 411,862
Short-term borrowings 66,866 50,583
Provisions for current liabilities and charges 35,590 19,216
Net trade payables and similar accounts 148,386 134,493
Gross amounts due to customers and advances and payments on account received 108,857 113,702
Current tax liabilities 34,900 31,366
Other current liabilities 265,208 245,414
Current liabilities 659,807 594,774
Liabilities directly associated with non-current assets classified as held for sale 0 0
Total equity and liabilities 1,637,713 1,552,151

6 of which ¤152 million relating to the subordinated hybrid convertible bonds issued in November 2007

Summary cash flow statement at December 31, 2009

31/12/09 31/12/08
Cash flow before tax 149.1 145.2
Income tax -18.5 -10.9
Change in WCR (cash elements) -2.3 14.4
Operating cash flow 128.3 148.7
Net industrial investment -22.4 -29.8
Restructuring -17.9 -19.1
Operating free cash flow 87.9 99.8
Dividends7 -13.6 -13.2
Net financial investment 5.0 -1.3
Capital increase 11.5 3.5
Change in perimeter 0.0 1.4
Additional contribution to pension funds -37.8 -28.5
Other - 4.8 10.0
Free cash flow 48.3 71.6

7 Including the coupon on the subordinated hybrid convertible bonds: ¤8.7 million in 2009 and 2008.

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