GROUPE STERIA : Organic revenue growth of 5.6% in the second quarter of 2011. 15.5% increase in underlying attributable net income in the first half of 2011

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Like-for-like revenue increased by 3.4% in the first half of 2011 relative to the first half of 2010. Revenue growth saw a marked acceleration during the second quarter to +5.6% compared with +1.3% during the first quarter thanks to a continued positive dynamic in Continental Europe and a return to growth in the United Kingdom. The operating margin1 was stable versus the first half of 2010, leading to an operating margin rate of 6.7%. First half 2011 attributable net income increased by 15.5% to ¤38.3 million. The pipeline, measured as a multiple of revenues, saw growth across all regions and stood at 2.5 times versus 2.2 times at the end of June 2010.

On July 28, 2011, the Supervisory Board of Groupe Steria SCA examined the consolidated financial statements submitted by the General Management.

First half 2011 consolidated results2

First half     2010   2011   Total growth Organic growth
At constant perimeter and currency
Revenue ¤m 832.1 865.1 +4.0% +3.4%
Operating margin1
% of revenue
¤m
%
57.1
6.9%
57.6
6.7%
+0.8%
-
 
Operating income3 ¤m 46.1 34.5 -25.1%  
Attributable net income ¤m 25.2 22.0 -12.7%  
   
Underlying attributable net income4 ¤m 33.2 38.3 +15.5%  
Underlying diluted earnings per share4 ¤ 1.02 1.17 +13.8%  
   
Shareholders' equity ¤m 729.8 696.3    
Net financial debt ¤m 209.9 200.0    

Revenue

First half 2011 consolidated revenue

In ¤ million H1
2010
H1
2011
Growth
Revenue 832.1 865.1 4.0%
Change in consolidation scope -    
Change due to currency effect 4.4    
Pro-forma revenue 836.5 865.1 3.4%

First half 2011 revenue by geographic region

In ¤ million H1 2010* H1
2011
Organic growth
United Kingdom 327.7 327.5 -0.1%
France 258.2 270.2 4.7%
Germany 115.2 119.9 4.0%
Other Europe 135.4 147.5 9.0%
Total 836.5 865.1 3.4%

*Like-for-like revenue (2011 base)

First half 2011 revenue by business line

In ¤ million H1
2010**
H1
2011
Organic growth
Infrastructure Management and Business Process Outsourcing 319.3 332.2 4.0%
Consulting and Systems Integration 517.1 532.9 3.1%

** Revenue on a like-for-like perimeter, currency and organisational structure basis (2011 base)

Second quarter 2011 revenue by geographical region

In ¤ million Q2 2010* Q2
2011
Organic growth
United Kingdom 158.4 163.8 3.4%
France 127.7 132.6 3.8%
Germany 57.6 60.0 4.3%
Other Europe 69.5 79.6 14.7%
Total 413.1 436.1 5.6%

*Like-for-like revenue (2011 base)

Second quarter 2011 activity

During the second quarter 2011, the Group enjoyed a good commercial dynamic which continued in the month of June despite an unsettled European environment.

On a like-for-like basis, revenue growth in second quarter 2011 revenues saw a marked acceleration to +5.6% compared with +1.3% during the first quarter of 2011. This increase was mainly explained by a return to revenue growth in the United Kingdom and an acceleration in the revenue growth of the Other Europe zone.

At the end of the first half 2011, the book to bill ratio stood at 1.03 (compared with 1.13 at June 30, 2010, a figure that had been significantly inflated during June 2010 by the Cleveland Police contract amounting to ¤200 million).

At June 30, 2011, the pipeline, measured as a multiple of revenue, was up across all the Group's geographic areas and stood at 2.5 times versus 2.2 times in the previous year.

In the United Kingdom, excluding currency impact, revenue growth was in line with expectations, returning to positive territory during the second quarter with growth of 3.4% versus the second quarter of 2010. A significant highlight of the quarter was the first contract extension with the Cleveland Police Authority increasing the scope of activities. This extension to the original contract illustrates both the Group's effectiveness in terms of service execution and the potential scope for generating cost savings in the UK public sector via Business Process Outsourcing services. It should also be noted that NHS SBS, Steria's joint venture with the NHS, recorded 20.5% revenue growth for the first half5. At June 30 2011, the book to bill ratio stood at 0.94 with the pipeline increasing to 2.6 times revenue versus 2.3 times at June 30, 2010. In France, organic revenue growth amounted to 3.8%. Second quarter activity remained dynamic and was notably characterised by a strong trend in the public and financial sectors. At June 30, 2011, the book to bill ratio was similar to that of the previous year at 1.05. In Germany, organic revenue growth was 4.3% driven by a strong dynamic in the public sector. New orders saw a significant increase enabling the book to bill ratio to reach 1.16 at June 30, 2011 versus 0.98 in the previous year. The Other Europe region made strong progress during the first half 2011 with like-for-like revenue growth of 14.7%. Scandinavia, Belgium/Luxembourg and Switzerland all posted double-digit growth rates whilst revenue in Spain decreased during the quarter. At June 30, 2011, the book to bill ratio for the region stood at 1.09 versus 0.99 at June 30, 2010.

Results for the first half 2011

For the first half of 2011, the Group's operating margin1 amounted to ¤57.6 million versus ¤57.1 million in 2010, leading to an operating margin rate of 6.7%.

The other income and operating expenses for the half year notably included ¤7.8 million of non-recurring costs linked to the rationalisation and optimisation of premises during 2011 in France and India within the framework of the transformation programmes implemented by the Group.

Net financial expense saw a significant improvement to -¤1.7 million (versus -¤9.7 million in the first half 2010) mainly due to a marked reduction in the net cost of financing.

Attributable net income amounted to ¤22.0 million during the first half 2011 compared with ¤25.2 million in 2010. Excluding non-recurring items including those linked to the rationalisation of buildings, attributable net income rose by 15.5% to ¤38.3 million.

Outlook

The Group confirms its full year 2011 guidance for organic revenue growth of between 3% and 4% and an operating margin rate1 at least equal to that of 2010.

An information meeting on the first half 2011 results will take place on July 29, 2011 at 9:00am CET by webcast at www.steria.com (investors section).

Next publication: third quarter 2011 revenue on Wednesday November 2, 2011 after market close

Appendices: Consolidated income statement, consolidated balance sheet, summary cash flow statement and operating margin rate1 by geographical region at June 30, 2011.

A video interview with François Enaud, General Manager of Steria SCA can be viewed at www.steria.com

GROUPE STERIA SCA
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 120, 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 (0)1 34 88 64 44/+33 (0)6 15 15 27 92
Isabelle.grange@steria.com
Investor Relations:
Olivier PSAUME
Tel: +33 (0)1 34 88 55 60/+33 (0)6 17 64 29 39
olivier.psaume@steria.com

 

 

Consolidated income statement at June 30, 2011

In thousands of euros 30/06/2011 30/06/2010
Revenue 865,124 832,062
Cost of sales and sub-contracting costs (151,931) (149,891)
Personnel costs (520,237) (492,253)
Bought-in costs (120,249) (125,200)
Taxes (excluding income taxes) (10,121) (8,991)
Change in inventories 30 36
Other current operating income and expenses 4,630 10,870
Net charges for depreciation and amortisation (14,210) (15,848)
Net charges for provisions 3,678 4,543
Net charges for current asset impairment (1,480) (525)
Operating margin (*) 55,234 54,803
% of revenue 6.4% 6.6%
Other operating income and expenses (20,704) (8,677)
Operating income 34,530 46,126
Cost of net borrowings 715 (5,801)
Other financial income and expenses (2,427) (3,908)
Net financial expense (1,713) (9,709)
Income tax expense (10,940) (11,036)
Share of profit/(loss) of associates 364 (150)
Net income from continuing operations 22,241 25,231
Net income/(loss) from operations held for sale
Net income for the year 22,241 25,231
Attributable net income 21,966 25,161
Attributable to minority interests 275 70
Underlying4 diluted earnings per share
(in euros)
1.17 1.02

(*) After amortisation of the customer relationships recognised on the acquisition of Xansa and amounting to ¤2.335 million at June 30, 2011 and ¤2.330 million at June 30, 2010.

Consolidated balance sheet at June 30, 2011

In thousands of euros 30/06/2011 31/12/2010 30/06/2010
Goodwill 701,082 727,977 757,440
Other intangible assets 63,953 67,041 69,154
Property, plant and equipment 49,912 70,365 75,906
Investments in associates 7,962 7,941 6,485
Available-for-sale financial assets 1,808 1,808 1,809
Other financial assets 3,323 3,234 2,238
Retirement benefit assets 48,132 44,592 46,342
Deferred tax assets 21,010 14,149 10,971
Other non-current assets 3,655 3,524 2,987
Non-current assets 900,837 940,632 973,332
Inventories 7,409 8,165 9,704
Net trade receivables and similar accounts 290,786 271,031 287,716
Amounts due from customers 224,123 167,164 212,081
Other current assets 32,918 31,731 48,588
Current portion of non-current assets 3,538 3,743 3,174
Current tax assets 31,558 28,160 24,905
Prepaid expenses 31,041 24,043 31,602
Cash and cash equivalents 122,675 177,246 148,628
Current assets 744,049 711,283 766,398
Non-current assets classified as held for sale 23,507 0
Total assets 1,668,393 1,651,915 1,739,730
Shareholders' equity 694,285 721,357 728,236
Minority interests 2,052 1,897 1,542
Total equity 696,337 723,254 729,778
Long-term borrowings 277,667 204,110 276,094
Retirement benefit obligations 35,838 35,052 34,245
Provision for non-current liabilities and charges 16,709 17,936 18,282
Deferred tax liabilities 18,228 17,780 20,964
Other non-current liabilities 6,201 5,313 5,763
Non-current liabilities 354,643 280,190 355,348
Short-term borrowings 44,972 74,332 82,459
Provisions for current liabilities and charges 31,789 34,763 27,147
Net trade payables and similar accounts 159,399 145,719 145,441
Gross amounts due to customers and advances and payments on account received 74,639 80,587 92,797
Current tax liabilities 48,425 43,197 35,041
Other current liabilities 253,757 269,874 271,719
Current liabilities 612,981 648,471 654,604
Liabilities directly associated with non-current assets classified as held for sale 4,432 0 0
Total equity and liabilities 1,668,393 1,651,915 1,739,730

 

Summary cash flow statement at June 30, 2011

In ¤ million 30/06/11 30/06/10
EBITDA 67.0 64.3
Non-cash adjustments 3.0 -0.2
Net financial costs -0.4 -4.0
Cash flow before tax 69.6 60.1
Income tax -9.3 -7.6
Change in WCR (cash elements) -107.7 -48.2
Operating cash flow -47.5 4.2
Net industrial investment -14.9 -14.1
Restructuring -12.6 -6.0
Operating free cash flow -75.0 -15.9
Dividends6 -8.7 -8.7
Net financial investment -0.5 -0.1
Capital increase 0.0 0.7
Change in consolidation scope 0.0 0.0
Additional contribution to pension fund -9.6 -8.5
Other -5.0 9.6
Free cash flow -98.8 -22.9

 

Operating margin7 in the first half
by geographical region

In ¤ million H1
2011
H1
2010
Reported
United Kingdom 9.1% 10.0%
France 6.8% 6.7%
Germany 6.5% 5.7%
Other Europe 4.2% 5.0%
Group costs -0.5% -0.7%
Group 6.7% 6.9%

1 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.

2 Limited auditors' report published.

3 Operating income includes restructuring costs, capital gains on disposals, expenses linked to share-based schemes granted to employees and other operating income and expenses.

4 Attributable net income restated, after tax, for other operating income and expenses, amortisation of intangible assets and unrecognised deferred tax assets.

5 NHS SBS is a joint venture 50% owned by Steria which generated revenue of ¤62 million in 2010. 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.

6 Of which coupon on the hybrid convertible bond: ¤8.7 million at June 30, 2011 and at June 30, 2010

7 Before amortisation of intangible assets linked to business combinations

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