GROUPE STERIA : 2008 Annual revenue
Operating margin rate1 rises to 7.7%
Steep fall in net financial debt: -23,3% Full year 2008 revenue increased by 24.7% to EUR 1 765.7m. Like for like revenue increased by 0.9% The 2008 operating margin rate1 was 7.7%, +0.4 of a point compared to the 2007 published figure and +0.9 of a point compared to the 2007 pro forma margin rate which included Xansa for 12 months. Net attributable profit increased to EUR 51.6m Very good operational cash flow generation with free operating cash flow2 rising to EUR 99.8m vs. EUR 85.8m in 2007. Steep fall in net financial debt to EUR 235.3m, a reduction of 23.3% on the situation at end 2007. Successful integration of Xansa: cost synergies in 2008 were 28% higher than the initial target of EUR 23.5m3 and staff numbers in India rose by 11% to 5,671 at end December 2008.
On March 12th 2009, the supervisory board of Group Steria SCA examined the consolidated accounts submitted by General Management.
First half consolidated results 2008
|Revenue||€ m||1416.2||1765.7||+24.7%||At constant rate
as % of revenue
|vs. pro forma
|Operating profit6||€ m||95.7||110.0||+14.9%|
|Attributable net profit||€ m||50.0||51.6||+3.2%|
|Underlying Attributable Net Profit7||€ m||61.1||70.1||+14.7%|
2008 Key events
The operating margin1 rose by 30.8% to EUR 135.5m. For the sixth year running, Steria improved its operating profitability during 2008: the operating margin1 was 7.7%, a rise of 0.4 points compared to the previous financial year and + 0.9 point compared to the pro forma margin rate in 2007 which included Xansa over 12 months.
This improvement highlights the successful integration of Xansa.Cost synergy targets for 2008 were exceeded and amounted to EUR 30m8 compared to the initial target fixed in July 2007 of EUR 23.5m8. In addition, cash out linked to restructuring charges as of end 2008 were EUR 10m8 lower than the initial estimate of EUR 32.6m8. All of the Xansa contracts which have expired since the acquisition in October 2007 have been renewed and commercial synergies are starting to take effect. Development of the industrial production model has accelerated with an 11% increase in staffing levels in India: 5,671 people as of end December 2008 or 29.5% of total Group employees.
The operating margin rate in the UK increased significantly to 11.4%, +1.9 points. In Germany, the operating margin rate improved to 9.3% +1 point. In the Other Europe zone, the operating margin rate rose by 0.8 point to 5.1%.
In France, the operating margin was 6.5%, less than in 2007. The new organisation announced at the end of 2008 that refocuses on the strategic sectors and is in line with the Group's industrialised service offer has been fully up and running since January 1st 2009 and should improve the entity's efficiency in 2009.
The Group achieved very good cash flow generation over the financial year. Free operating cash flow2 rose in 2008 to EUR 99.8m vs. 85.8m in 2007 thanks to an efficient management of capex and working capital requirements and despite of EUR 19.9m in restructuring charges.
Net financial debt was significantly lower at EUR 235.3m at December 31 2008 compared to EUR 306.9m at December 31 2007 and EUR 340m at June 30 2008.
At the end of December 2008, the Group's financial situation is healthy and robust.Limited financial debt (0.4 x shareholders' equity and 1.5x Ebitda). After-tax pension commitments recognised in the balance sheet were down to EUR 31.2m compared to EUR 54m at end December 2007. Banking covenants were comfortably respected: Ebitda9 leverage was 1.54 (compared to a ceiling set at 2.25) and interest coverage10 was 6.74 (compared to a floor set at 3.75). Annual repayments falling due over the next three years will on average be lower than EUR 60m.
Cash position is EUR 141.1m and there were additional facilities (confirmed and not yet used) of EUR 236m at end December 2008.
NB: 2008 net profits take into account a non-recurring tax charge of EUR 5.8m which corresponds to the de-activation of deferred tax assets in Spain which should be viewed in the context of developments in the Spanish economy.
In the current economic climate where the Group's priority is to reduce debt, the General Management, the Supervisory Board and Soderi's Board of directors are proposing a dividend11 for 2008 of EUR 0.12 euro per share (EUR 0.42 was paid out in 2007).
The business environment in the first weeks of 2009 is difficult and offers only a limited visibility.
The large proportion of revenue deriving from recurring services (roughly 60% of total revenue) combined with the company's positioning on clients in the public, energy and transport sectors (50% of total revenue) means the Group has a strong resilience.
The Group also benefits from two major advantages in helping clients with their strategic transformation needs and cost savings: a leading position in Europe on the promising Business Process Outsourcing market and an advanced industrial organisation that harnesses an integrated production model which fully integrates onshore and offshore resources. At end 2008, offshore staff represented 30% of total Group employees.
The Group has also taken steps to manage costs by optimising structures, purchasing, internal IT etc. This, together with the further synergies expected from the integration of Xansa, should support the Group's performance over the short to medium term.
Based on these factors the Group should prove resilience to the economic downturn and is confident in its ability to comply with its banking covenants.Information meeting on the 2008 annual results on March 17th 2009 at 11:30am.
This meeting will be relayed by webcast on steria.com
Next publication: first-quarter 2009 revenue:
Wednesday May 14 2009 after the market close.
Enclosures:Consolidated income statement for the 2008 financial year Consolidated balance sheet for the 2008 financial year Simplified cash flow statement for the 2008 financial year Interview with François Enaud, Chairman of Groupe Steria SCA, on www.steria.com and www.steria.fr Steria is listed on Euronext Paris, Eurolist (Compartment B)
ISIN: 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:01 34 88 64 44 / 06 15 15 27 92
Tel:01 34 88 55 60 / 06 17 64 29 39
|Revenue||1 765 678||1 416 164|
|Purchases consumed and sub-contracting||(308 276)||(259 427)|
|Personnel charges||(978 768)||(788 831)|
|External expenses||(274 454)||(210 324)|
|Tax and duties||(37 383)||(27 763)|
|Other operating income/expenditure||8 752||6 919|
|Net depreciation and amortisation||(43 117)||(31 259)|
|Net allocations to provisions||(1 736)||(3 303)|
|Depreciation of current assets||(627)||(689)|
|Operating margin (%)||130 404||102 451|
|Operating profitability||7.4 %||7.2 %|
|Other operating income and expenses||(20 398)||(6 745)|
|Operating profit||110 006||95 706|
|Net cost of financial debt||(20 092)||(13 217)|
|Other financial income and expenses||(4 365)||(3 061)|
|Financial result||(24 457)||(16 278)|
|Tax||(33 140)||(28 025)|
|Group share of profits from equity consolidated companies||(2 057)||(280)|
|Results from continuing activities||50 352||51 123|
|Results from discontinued activities or those being divested.||771||(877)|
|Total net profit||51 123||50 246|
|Attributable net profit||51 601||50 018|
|Fully diluted underlying earnings per share7
(*) After amortisation of client relationships recognised from the acquisition of Xansa representing EUR 5.090m at December 31 2008 and EUR 1.188m at December 31 2007Consolidated balance sheet as at 31.12.08
|Goodwill||672 015||834 857|
|Intangible fixed assets||62 050||81 626|
|Tangible fixed assets||85 453||103 559|
|Investments in associates||5 222||8 941|
|Assets available for sale||2 203||2 367|
|Other financial assets||12 466||11 790|
|Pension commitments - Asset||3 440||0|
|Deferred tax assets||15 310||26 467|
|Other non-current assets||2 189||1 308|
|Non-current assets||860 348||1 070 915|
|Stocks||6 201||15 489|
|Trade debtors and similar||281 284||334 582|
|Client receivables||190 434||166 584|
|Other current assets||26 186||28 724|
|Non-current assets less than one year||2 838||2 291|
|Current tax assets||15 837||9 313|
|Advance payments||27 885||28 754|
|Cash and cash equivalents||141 138||147 173|
|Current assets||691 803||732 910|
|Non-current assets held for sale||1 250|
|Total assets||1 552 151||1 805 075|
|Group shareholders' equity||544 960||675 479|
|Minority interests||555||2 021|
|Total shareholders' equity||545 515||677 500|
|Loans and financial debt (> 1 year)||325 837||387 830|
|Pension commitments - Liability||39 898||68 509|
|Provisions for liabilities and charges (> 1 year)||13 688||19 077|
|Deferred tax liabilities||14 293||11 957|
|Other non-current liabilities||18 146||968|
|Non-current liabilities||411 862||488 341|
|Loans and financial debt (< 1 year)||50 583||66 239|
|Provisions for liabilities and charges (< 1 year)||19 216||19 692|
|Trade receivables and related accounts payable||134 493||172 278|
|Amounts owed to clients and advances received||113 702||113 485|
|Current tax liabilities||31 366||20 242|
|Other current liabilities||245 414||246 106|
|Current liabilities||594 774||638 042|
|Non-current liabilities held for sale||1 192|
|Total liabilities||1 552 151||1 805 075|
|Change in Working Capital Requirement||14.4||49.1|
|Operating cash flow||148.7||127.3|
|Operating free cash flow||99.8||85.8|
|Net financial investment||-1.3||-693.1|
|Change in perimeter||1.4||-60.7|
|Others (incl. pension commitments)||10.0||6.3|
|Free cash flow||71.6||-307.7|
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 amounting to the total cost of services provided (expenses needed to carry out projects), marketing costs and general and administrative costs.
2 Operating cash flow less changes in Working Capital Requirements, Capex net of disposals and restructuring.
3 Exchange rate as of July 26 2007 (EUR/GBP 0.67) corresponding to the date the acquisition of Xansa was announced. Non audited figure.
4 Includes Xansa for 2.5 months in 2007.
5 Xansa has been fully consolidated since October 17 2007, i.e. over 12 months in 2008.
6 Operating profit includes restructuring costs, capital gains from disposals, expenses linked to share schemes granted to employees and other non-recurring items.
7 Attributable net profit restated for operating income and expenses, amortisation of intangible assets and interest costs from business combinations and exceptional items that impacted Xansa's results during the period when it was equity consolidated in the Group's accounts in 2007.
8 Exchange rate as of July 26 2007 (EUR/GBP 0.67) the date when the acquisition of Xansa was announced. Non audited figures.
9 Net financial debt + after-tax pension fund deficit on Ebitda (Earnings before interest, tax, amortisation and depreciation)
10 Net cost of financial debt on operating margin2
11 Subject to shareholder approval at the AGM on Friday May 29. The dividend will be detached on Tuesday June 9. The dividend will be paid out from Tuesday July 7. Between June 9 and June 25, shareholders will be able to choose for payment in cash or payment in shares.
12 Adjustment of asset and liability values under IFRS 3 business combinations due mainly to accounting for contract costs of EUR 3.69m that were not identified at the time of the acquisition.
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