GROUPE STERIA : Interim results 2010: Revenue growth of +3.3%. Underlying attributable net income up by +15.2%

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In the first half 2010, like-for-like revenue was up by +1.4% compared to the first half 2009. The operating margin2 increased by 2.4% versus the first half 2009, leading to an operating margin rate of 6.9%. Attributable net income increased by +58.4% to ¤25.2m and represented 3.0% of revenue versus 2.0% at 30 June 2009. Net financial debt stood at ¤209.9m, a reduction of ¤30.0m versus 30 June 2009. New orders increased by 3.2% in the first half 2010 and the ratio of new orders to consolidated revenue stood at 1.13 at 30 June 2010.

On 29 July 2010, the Supervisory Board of Group Steria SCA examined the consolidated accounts submitted by the General Management.

First half 2010 consolidated results

First half   2009 2010 Total growth Organic growth
At constant perimeter and currency
 Revenue ¤m 805.4 832.1 +3.3% +1.4%
Operating margin2
 % of revenue
¤m
%
55.8
6.9%
57.1
6.9%
+2.4%
-
 
Operating income3 ¤m 43.4 46.1 +6.2%
Attributable net income
% of revenue
¤m
%
15.9
2.0%
25.2
3.0%
+58.4%
+1.0 ppt
Underlying4 attributable net income ¤m 28.8 33.2 +15.2%
Underlying4 diluted earnings per share ¤ 0.91 1.02 +11.9%
Shareholders' equity ¤m 608.1 729.8  
Net financial debt ¤m 239.9 209.9

Revenue

First half 2010 consolidated revenue

¤ million H1
2009
H1
2010
Growth
Revenue 805.4 832.1 3.3%
Change in consolidation scope -    
Change due to currency effect 15.3    
Pro forma revenue 820.7 832.1 1.4%

First half 2010 revenue by geographic zone

¤ million H1 2009* H1 2010 Organic
growth
United Kingdom 329.3 325.3 -1.2%
France 250.5 259.9 3.7%
Germany 111.8 115.2 3.0%
Other Europe 129.1 131.6 1.9%
Total 820.7 832.1 1.4%

First half 2010 revenue by business line

¤ million H1
 2009*
H1
2010
Organic
growth
Outsourcing and Business Process Outsourcing 308.3 324.8 5.4%
Consulting and Systems Integration 512.4 507.2 -1.0%

Second quarter 2010 revenue by geographic zone

¤ million H1
 2009*
H1
2010
Organic
growth
United Kingdom 169.9 163.3 -3.9%
France 122.6 128.6 4.9%
German 56.8 57.6 1.3%
Other Europe 68.6 68.0 -0.8%
Total 417.9 417.5 -0.1%

* Like-for-like revenue (basis 2010)

Second quarter 2010 activity

Group revenue increased by 1.4% on a like-for-like basis in the first half 2010. During the second quarter 2010, activity was stable, with consolidated revenue amounting to ¤417.5m (-0.1% like-for-like versus the second quarter 2009).

At constant currency, new orders recorded a strong rise of 17.6% in the second quarter 2010, leading to a total increase of 3.2% in the first half 2010 versus the first half 2009.

At 30 June 2010, the ratio of new orders to consolidated revenue stood at 1.13 (similar to the 1.12 at 30 June 2009). In the Consulting and Systems Integration activities the ratio was 1.0 at 30 June 2010.

In the United Kingdom , excluding currency, the trend in second quarter revenue exceeded initial expectations at -3.9% versus the second quarter 2009. The quarter was notably characterised by the signature, in June 2010 with the Cleveland Police Authority, of one of the largest contracts ever won by the Group for an inital amount of ¤211m over 10 years. This contract to provide an extensive range of services (IT, back office BPO, business line BPO) consolidates, in the short term, the prospects for the Group's activity in the UK public sector. It also illustrates the potential opportunities in the United Kingdom and counterbalances the risks linked to the UK government's budgetary constraints. Driven by the Cleveland Police Authority contract, new orders increased year on year by 26.9% in the second quarter 2010. At 30 June 2010, the ratio of new orders to revenue amounted to 1.31. In France, the improving trend seen in the past few quarters was confirmed and even saw a marked acceleration in growth. After organic growth of 2.6% in the first quarter, the second quarter showed organic growth of 4.9%. This good performance was accompanied by some major commercial successes together with growth in new orders and the pipeline which increased by 5.7% and 10.2% respectively during the first half 2010 versus the first half 2009. In Germany, in an environment marked by signs of an improvement, the Group confirmed the positive orientation of its activities. Organic growth was 3.0% during the first half with an organic growth rate of 1.3% in the second quarter, thanks to a positive dynamic in the energy and banking sectors where the Group continues to win market share. Other Europe saw like-for-like revenue growth of 1.9% in the first half 2010.  It should be noted that the second quarter 2010 was characterised, in Spain, by a significant reduction in the rate of revenue decline. Scandinavia maintained a positive organic growth rate over the quarter (+0.8%) despite a very unfavourable comparison basis (organic growth of +20.6% in the second quarter 2009).

First half 2010 results

The first half continued to be characterised by a difficult price environment, together with a return to a tight recruitment market.

In this difficult environment, the Group pursued its efforts to increase productivity and internal efficiency, enabling it to post a first half 2010 operating margin2 (taking into account the abolition of the business tax in France) of 6.9%.

Net restructuring costs, amounting to ¤3.8m during the first half 2010, were limited to 0.5% of the Group's revenue.

The financial result of ¤-9.7m (versus ¤-12.9m in the first half 2009) included a reduction in net cost of financial debt.

During the first half 2010, the tax charge declined by ¤3.4m to ¤11.0m. This should be compared with a high first half 2009 comparison basis and includes ¤3.5m of the new Contribution on Added Value of Enterprises tax (CVAE) in France.

In total, attributable net income saw a significant increase from ¤15.9m in the first half 2009 to ¤25.2m in the first half 2010 (+58.4%), enabling a 1.0 percentage point increase in the net income to 3.0% of consolidated revenue.

Lastly, thanks to continued efficient cash flow management during the first half 2010, net financial debt was reduced by ¤30.0m versus 30 June 2009 to ¤209.9m. Net financial debt thus represented 28.8% of consolidated shareholders' equity at the end of the first half compared with a ratio of 39.5% at 30 June 2009.

Outlook

Within a contrasting environment, the Group expects for the full year 2010 like-for-like revenue growth and confirms its objective5 in terms of operating margin2 rate.

2010 interim results information meeting on 30/07/2010 at 11:30am.
This meeting will be relayed by webcast on
 www.steria.com (investors section)

 

Next publication: Third quarter 2010 revenue
Monday 15 November 2010 after the market close.

Appendices: consolidated income statement, consolidated balance sheet, simplified cash flow statement and operating margin2 by geographic zone at 30 June 2010.

Video interview with François Enaud, Chairman and CEO of Groupe Steria SCA: available at 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 more information, please visit our 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

Consolidated income statement at 30 June 2010

In thousands of euros 30/06/2010 30/06/2009
Restated
Revenue 832,062 805,417
Cost of goods sold and sub-contracting costs (149,891) (150,135)
Personnel costs (492,253) (475,821)
Bought-in costs (125,200) (108,695)
Taxes (excluding income taxes) (8,991) (12,176)
Change in inventories 36 37
Other current operating income/expenses 10,870 12,382
Net charges for depreciation and amortisation (15,848) (18,861)
Net charges for provisions 4,543 1,779
Net charges for current asset impairment (525) (424)
Operating margin (*) 54,803 53,504
% of revenue 6.6% 6.6%
Other operating income and expenses (8,677) (10,051)
Operating income 46,126 43 453
Cost of net borrowings (5,801) (7,255)
Other financial income and expenses (3,908) (5,597)
Net financial expense (9 709) (12 852)
Income tax expense (11,036) (14,445)
Share of income/(loss) of associates (150) (196)
Net income from continuing activities 25,231 15,960
Net income/(loss) from operations held for sale    
Net income 25,231 15,960
   
Attributable net income 25,161 15,883
Minority interests 70 77
 
Underlying4 diluted earnings per share
( euros )
1.02 0.91

(*) After amortisation of client relationships recognised in the acquisition of Xansa representing ¤2,330K at 30 June 2010 and ¤2,268K euros at 30 June 2009

Consolidated balance sheet at 30 June 2010

In thousands of euros 30/06/2010 31/12/2009
Reported
30/06/2009
Goodwill 75,440 706,417 730,528
Other intangible assets 69,154 66,301 67,193
Property, plant and equipment 75,906 74,004 79,832
Investments in associates 6,485 6,181 5,387
Available-for-sale assets 1,809 1,809 1,825
Other financial assets 2,238 3,977 4,343
Retirement benefit assets 46,342 42,230 19,073
Deferred tax assets 10,971 10,560 9,821
Other non-current assets 2,987 2,900 2,625
Non-current assets 973,332 914,379 920,627
Inventories 9,704 9,194 8,159
Net trade receivables and similar accounts 287,716 281,445 264,997
Amounts due from customers 212,081 192,025 213,423
Other current assets 48,588 36,017 23,408
Current portion of non-current assets 3,174 2,963 2,829
Current tax assets 24,905 27,340 19,884
Prepaid expenses 31,602 24,491 40,715
Cash and cash equivalents 148,628 149,859 145,945
Current assets 766,398 723,334 719,360
Non-current assets held for sale  
Total assets 1,739,730 1,637,713 1,639,987

Shareholders' equity 728,236 633,179 607,540
Minority interests 1,542 1,283 570
Total equity 729,778 634,462 608,110
Long-term borrowings (> 1 year) 276,094 270,001 330,280
Retirement benefit obligations 34,245 33,698 32,858
Provision for non-current liabilities and charges 18,282 17,529 15,045
Deferred tax liabilities 20,964 16,750 5,697
Other non-current liabilities 5,763 5,466 20,088
Non-current liabilities 355,348 343,444 403,968
Short-term borrowings (< 1 year) 82,459 66,866 55,569
Provisions for current liabilities and charges 27,147 35,590 18,075
Net trade payables and similar accounts 145,441 148,386 151,927
Amounts due to clients and advances received 92,797 108,857 112,720
Current tax liabilities 35,041 34,900 36,935
Other current liabilities 271,719 265,209 252,683
Current liabilities 654,605 659,807 627,809
Liabilities directly associated with non-current assets classified as held for sale  
Total liabilities 1,739,730 1,637,713 1,639,987

Simplified cash flow statement at 30 June 2010

In thousands of euros 30/06/10 30/06/09
Cash flow before tax 60.6 60.5
Income tax -7.6 -9.9
Change in WCR (cash elements) -48.8 -9.0
Operating cash flow 4.2 41.6
Net industrial investment -14.1 -9.9
Restructuring -6.0 -4.6
Operating free cash flow -15.9 27.1
Dividends6 -8.7 -8.8
Net financial investment -0.1 3.9
Capital increase 0.7 0.0
Change in consolidation scope 0.0 0.0
Additional contribution to pension fund -8.5 -22.8
Other 9.6 -4.0
Free cash flow -22.9 -4.6

Operating margin7 in the first half
by geographic zone

¤ million H1
2010
H1
 2009
United Kingdom 10.0% 11.2%
France 6.7% 6.6%
Germany 5.7% 5.7%
Other Europe 5.0% 4.6%
Group costs -0.7% -1.1%
Group 6.9% 6.9%

1 Auditors' limited review report published
2 Before amortisation of intangible assets linked to business combinations. In 2010, this takes into account the abolition of the  Business Tax in France for which the related charge accounted in the first half 2009 was ¤3.3m. 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.
3 Operating income includes restructuring costs, capital gains on disposals, costs incurred on share-based payments made to employees and other non-recurring income and charges.
4 Attributable net income restated, after tax, for other operating income and expenses, amortisation of intangible assets and unrecognised deferred tax assets.
5 Adjusted to the new tax classification in France
6 Of which coupon on the hybrid convertible bond: ¤8.7m at 30 June 2010 and at 30 June 2009.
7 Before amortisation of intangible assets linked to business combinations

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