GROUPE STERIA : 2011 annual results

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2011 annual results[1]

Organic revenue growth: +3.3%

Operating margin rate[2]: 7.4%

Attributable net income up by 26.4% to ¤55m

Like-for-like revenue increased by 3.3% in the 2011 financial year relative to 2010 The operating margin[2] rose by 7.8% to ¤129.9m, or an operating margin rate of 7.4% (+30 basis points relative to 2010) Despite an increase in non-recurring restructuring charges, attributable net income reached an all-time record, rising by 26.4% to ¤55m Underlying diluted earnings per share improved by 23.4% to ¤2.73

On March 2, 2012, the Supervisory Board of Groupe Steria SCA examined the consolidated financial statements submitted by the General Management.

Annual consolidated results 2011

 
2010
Corrected[3]
 
2011
Organic growth
At constant perimeter and currency
Revenue ¤m 1,692.7 1,747.7 3.3%
Operating margin[2]
% of revenue
¤m
%
120.4
7.1%
129.9
7.4%
Operating income[4] ¤m 81.6 81.9
Attributable net income ¤m 43.5 55.0
% of revenue % 2.6% 3.1%
Underlying attributable net income[5] ¤m 71.7 90.5
Underlying diluted earnings per share5 ¤ 2.21 2.73
Shareholders' equity ¤m 721.2 766.4
Net financial debt ¤m 101.2 125.9

Revenue

2011 consolidated revenue

In ¤ million 2010 2011 Growth
Revenue 1,692.7 1,747.7 3.2%
Change in consolidation scope -
Change due to currency effect -0.6
Pro-forma revenue 1,692.1 1,747.7 3.3%

2011 revenue by geographic region

In ¤ million 2010* 2011 Organic growth
 
United Kingdom 651.0 656.5 0.8%
France 528.5 551.7 4.4%
Germany 237.5 239.8 1.0%
Other Europe 275.1 299.8 9.0%
Total 1,692.1 1,747.7 3.3%

* Like-for-like revenue (2011 base)

2011 revenue by business line

In ¤ million 2010** 2011 Organic growth
Infrastructure Management and
Business Process Outsourcing
645.0 675.4 4.7%
Consulting and Systems Integration 1,047.0 1072.3 2.4%

** Like-for-like revenue (base 2011 base)

Fourth quarter 2011 revenue by geographic region

In ¤ million Q4 2010* Q4
 2011
Organic growth
United Kingdom 173.5 169.7 -2.2%
France 145.1 150.6 3.8%
Germany 63.1 61.2 -3.0%
Other Europe 77.9 88.9 14.0%
Total 459.6 470.4 2.3%

* Like-for-like revenue (2011 base)

Operational performance 2011

In 2011, the Group saw a growth resurgence in organic growth at 3.3% (+1.5% in 2010) with a positive dynamic across all geographic regions, including the United Kingdom. Growth was notably driven by the public sector (+2.7%), and the Utilities/Energy/Transport (+7.3%) sector while Finance (stable) and Telecommunications (-4,7%) were less favourable.

This performance was achieved despite instability in the European markets from the beginning of the second half of 2011. In this regard, the fourth quarter of 2011 proved very resilient with organic growth of 2.3% and new orders entry similar to the fourth quarter of 2010.

Over the 2011 financial year as a whole, new orders entry were stable (+0.5% relative to 2010). At December 31, 2011, the book to bill ratio stood at 1.04 (versus 1.07 at end 2010).

Over the financial year, the Group's operating margin2 improved by 7.8% to ¤129.9m, leading to an operating margin rate of 7.4% (+30 basis points relative to 2010).

This performance takes into account, in 2011, the ongoing investment in reinforcing the product portfolio and deploying high-performance common tools. This investment, of which first effects are starting to emerge, is aimed at strengthening the Group's profitable growth model.

In the United Kingdom, in line with expectations, like-for-like revenues saw a modest 0.8% progression, underpinned by a good performance from the public sector where revenues grew by 3.6% and from BPO which posted organic growth of 15.7%. Note also that NHS SBS[6], the joint-venture between Steria and the National Health Service, recorded organic revenue growth of 17.2% over the year.

Orders entry increased by 8.2% in the fourth quarter 2011, enabling the book to bill ratio to reach 1.0 at December 31, 2011.

In a very competitive market, the robustness of the Group's model was illustrated by the continued high level of the operating margin rate which stood at 10.6%, a 20 basis points increase compared to 2010.

In France, revenue growth was strong including during the fourth quarter. Organic growth amounted to 4.4% over the year benefiting from a good performance in Banking and Insurance (+11.5%) and the Public sector (+4.5%). Orders entry increased by 11.2% over the year and the book to bill ratio stood at 1.1 at December 31, 2011.

In 2011, the operating margin2 rose by 5.5% to ¤37.3m, leading to an operating margin rate of 6.8%, up by 10 basis points relative to the previous year.

In Germany, the trend was positive in the Public Sector, Telecommunications and Transportation but negative in the Finance sector which limited growth to 1.0% over the year. The Group's position with major German banking institutions was, however, significantly strengthened in 2011 thanks to a successful breakthrough in recurring business through the winning of large applications maintenance contracts, an area from which the Group had hitherto been absent. The outlook is positive with orders entry up by 25.7% relative to the previous year. At December 31, 2011, the book to bill ratio stood at 1.2.

The operating margin rate saw a marked improvement, rising by 110 basis points to 7.7%.

In Other Europe, like-for-like revenues progressed by 9.0% with strong growth in Scandinavia (+10%), Switzerland (+9.8%) and Belgium/Luxembourg (+19.3%) whilst the decrease in Spain was reduced to -5.4%.

At December 31, 2011, the book to bill ratio was 1.0.

The materialisation, in particular, of a number of project risks in the first half, particularly in Denmark - risks which are now under control - led to a 30 basis point deterioration in the operating margin rate2 to 5.6%.

Financial year 2011

Other income and operating expenses amounted to ¤43.3m, up by ¤9.2m relative to 2010 principally due to an increase in restructuring and integration costs (¤22.9m over the year) and a ¤3.6m charge, with no cash impact, linked to a goodwill write-down in Sweden.

Net financial expense saw a significant improvement over the financial year to ¤7.2m versus ¤20.9m in 2010 mainly due to the fall in the average cost of financing and an increased return on the Group's cash deposit.

Despite an increase in non-recurring expenses over the year, 2011 attributable net income reached an all-time high of ¤55m, a 26.4% increase on 2010.

Financial situation at the end of the 2011 financial year

At December 31, 2011, the Group's net financial debt, whose slight increase over the year can be explained notably by negative currency effects (¤15m) and one-off costs linked to buildings optimisation (¤11m), amounted to ¤125.9m.

At the closing date, net financial debt represented 0.8 times the Group's EBITDA.

The renewal of all the Group's bank credit facilities amounting to ¤600m in June 2011 has secured the Group's financing until June 2016.

Dividends

The solidity of the Group's financial situation and the operational outlook leads the General Management, the Groupe Steria SCA Supervisory Board and the Soderi Board of Directors to propose a dividend[7] of ¤0.35 per share (¤0.24 in respect of 2010), in respect of the 2011 financial year.

Outlook

For the 2012 financial year, in the current uncertain economic environment, the Group is targeting a slight organic revenue growth with an operating margin rate2 comparable to the three last years. Free cash flow generation should return to its normative level.

 

An information meeting on the 2011 annual results will take place on Tuesday March 6, 2012 at 10h00 CET and will be retransmitted by webcast at www.steria.com (investors section)
Next publication: first quarter 2012 revenue on Friday May 4, 2012 before the market opening


Appendices: Consolidated income statement, consolidated balance sheet and summary cash flow
statement at December 31, 2011.

A video interview with François Enaud, General Manager of Groupe Steria SCA can 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
CAC MID&SMALL 190, CAC MID 100, CAC Soft&CS, CAC Technology
General Indices: SBF 120, SBF 250, SBF 80, IT CAC, NEXT 150
For further information, see the website: http://www.steria.com

 

Press relations - Hotwire:
Charles Catherinot / Marion Delmas
Tel: +33 1 43 12 55 61 / 62
steriagroup@hotwirepr.com
Investor relations:
Olivier Psaume
Tel: +33 1 34 88 55 60 / +33 6 17 64 29 39
olivier.psaume@steria.com

Consolidated income statement at December 31, 2011

In thousands of euros 31/12/2011 31/12/2010
corrected
Revenue 1,747, 677 1,692,668
Cost of sales and sub-contracting costs (324,203) (303,040)
Personnel costs (1,031,087) (1,001,318)
Bought-in costs (230,429) (246,712)
Taxes (excluding income taxes) (19,043) (18,109)
Change in inventories 1 412
Other current operating income and expenses 10,727 20,130
Net charges for depreciation and amortisation (28,914) (31,818)
Net charges for provisions 2,832 4,894
Net charges for current asset impairment (2,359) (1,407)
Operating margin (*) 125,202 115,700
% of revenue 7.2% 6.8%
Other operating income and expenses (43,301) (34,068)
Operating income 81,900 81,632
Net cost of borrowings (1,633) (10,633)
Other financial income and expenses (5,611) (10,293)
Net financial expense (7,244) (20,926)
Income tax expense (21,032) (18,312)
Share of income/(loss) of associates 1,512 1,617
Net profit from continuing operations 55,136 44,011
Net income/(loss) from operations held for sale - -
Net profit for the year 55,136 44,011
Attributable net profit 55,009 43,524
Non-controlling interests 128 487
Underlying4 diluted earnings per share
(in euros)
2.73 2.21

(*) After amortisation of the customer relationships recognised on the acquisition of Xansa and amounting to ¤(4 672) thousand for the 2011 financial year and ¤(4 724) thousand for the 2010 financial year.

Consolidated balance sheet at December 31, 2011

31/12/2011 31/12/2010
corrected
Goodwill 744,456 727,977
Other intangible assets 71,072 67,041
Property, plant and equipment 58,642 70,365
Investments in associates 10,938 7,941
Available-for-sale financial assets 2,273 1,808
Other financial assets 3,484 3,234
Retirement benefit assets 58,212 44,592
Deferred tax assets 27,332 14,149
Other non-current assets 3,418 3,525
Non-current assets 979,826 940,632
Inventories 9,218 8,165
Net trade receivables and similar accounts 299,468 271,031
Amounts due from customers 176,345 167,164
Other current assets 31,225 31,731
Current portion of non-current assets 3,565 3,743
Current tax assets 35,213 28,160
Prepaid expenses 23,001 24,043
Cash and cash equivalents 170,369 177,246
Current assets 748,403 711,283
Non-current assets classified as held for sale 9,095 0
Total assets 1,737,324 1,651,915
Shareholders' equity[8] 764,493 719,334
Non-controlling interests 1,897 1,897
Total equity 766,390 721,231
Long-term borrowings 263,626 204,110
Retirement benefit obligations 40,247 35,052
Provision for non-current liabilities and charges 14,122 20,688
Deferred tax liabilities 20,939 17,780
Other non-current liabilities 6,817 5,313
Non-current liabilities 345,750 282,943
Short-term borrowings 32,648 74,332
Provisions for current liabilities and charges 34,638 34,763
Net trade payables and similar accounts 152,179 145,719
Gross amounts due to customers and advances and payments on account received 70,900 80,587
Current tax liabilities 54,971 42,467
Other current liabilities 278,694 269,874
Current liabilities 624,030 647,741
Liabilities directly associated with non-current
assets classified as held for sale
1,155 0
Total equity and liabilities 1,737,324 1,651,915

Summary cash flow statement at December 31, 2011

31/12/11 31/12/2010
corrected
EBITDA 151,4 139,7
Non cash adjustments 3.8 0.5
Financial Charges -3.2 -10.4
Cash flow before tax 152.0 129.8
Income tax -18.7 -15.3
Change in WCR (cash elements) -43.6 21.9
Operating cash flow 89.7 136.4
Net industrial investment -33.1 -25.1
Restructuring -34.2 -13.7
Operating free cash flow 22.3 97.6
Dividends[9]  -14.9 -11.0
Net financial investment -4.1 -1.6
Capital increase  6.8 8.8
Change in perimeter -1.0 0.0
Additional contribution to pension funds  -18.6 -16.8
Other  -15.2 8.8
Free cash flow  -24.7 85.9

[1] Items shown have been fully audited. Specific audit verifications 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 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.

[3] Corrected for an error linked to the change in discount rate used to calcuate long-term provisions linked to vacant premises and refurbishment costs.

[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] NHS SBS is a joint venture 50% owned by Steria which generated revenue of ¤72 million in 2011. It is reported using the equity

method and its performance is therefore not fully consolidated in either Group revenue or operating margin but only 50% in net

income.

[7] Subject to shareholder approval at the General Shareholders' Meeting on Tuesday May 15, 2012. The dividend will be detached on

Monday June 4, 2012 and paid on Thursday July 5, 2012. Between June 4 and June 22, 2012, shareholders will be able to opt for payment in either cash or shares.

[8] of which ¤150 million relating to the subordinated hybrid convertible bonds issued in November 2007

[9] Including the coupon on the subordinated hybrid convertible bonds: ¤8.7m in 2011 and 2010.

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