BWI: Steria’s 2013 Annual Results

Source : Steria Tuesday, March 4, 2014 4:37PM IST (11:07AM GMT)   Steria's 2013 Annual Results Strong year-end momentum spells bright prospects for 2014   Paris, France Order intake in the fourth quarter set off the Group’s growth dynamic with an expectation of more than 6% growth in 2014 Revenue for the fourth quarter of 2013 was up 2.0%, excluding the impact of the suspension of Ecotax’s application at the end of the year Consolidated revenue for the full year stood at 1,754.9 million euros (-1.8% on a like-for-like basis) with the operating margin at 6.3% (6.4% in 2012) Attributable net income, impacted by non-recurring items, came to €8.9 million Free cash flow for the year grew to €89.4 million (against €10.6 million in 2012) while net financial debt at 31 December 2013 was cut to €224 million with net debt to EBITDA at 1.6x (as opposed to 2.0x at 31 December 2012[1])   On 27/02/2014, the Steria SCA Group Supervisory Board reviewed the consolidated financial statements submitted by Management.    2013 consolidated results       2012 Published 2012[2] 2013   Organic growth At constant perimeter and currency Revenue €m 1,827.2 1,827.2 1,754.9   -1.8% Operating margin2 % of revenue €m % 117.4 6.4% 117.5 6.4% 110.4 6.3%     Operating income[3] €m 72.6 88.3 53.8     Attributable net income €m 35.6 41.0 8.9     % of revenue % 1.9% 2.2% 0.5%                   Underlying attributable net income[4] €m 79.7 73.2 47.4     Underlying diluted earnings per share6 € 2.36 2.17 1.54                   Shareholders’ equity €m 815.0 510.5 392.7     Net financial debt €m 143.0 143.0 224.0         Revenue   2013 consolidated revenue   In € million 31/12/2012 31/12/2013 Growth Revenue 1,827.2 1,754.9 -4.0% Change in consolidation scope 0.1     Change due to currency effect -40.1     Pro-forma revenue 1,787.3 1,754.9 -1.8%   2013 revenue by geographic region   In € million 31/12/2012* 31/12/2013 Organic growth United Kingdom 701.1 691.5 -1.4% France 588.5 555.4 -5.6% Germany 243.1 239.1 -1.6% Other Europe 254.5 268.9 5.7% Total 1,787.3 1,754.9 -1.8%   *Like-for-like (consolidation scope, exchange rates and organisational structure) revenue (base 2013) Fourth quarter 2013 revenue by geographic region   In € million 4Q  2012* 4Q  2013 Organic growth United Kingdom 177.3 187.0 5.5% France 154.4 141.7 -8.2% Germany 67.6 59.9 -11.4% Other Europe 70.8 80.2 13.2% Total 470.1 468.8 -0.3% *Like-for-like revenue (base 2013)   2013 operating performance The Group reported a decrease of 1.8% in organic growth for the financial year. This change was impacted by the Ecotax project, due to a base effect in 2012 arising from non-recurrent sales (€12.5 million) as well as the fact that a portion of the 2013 revenue was not recognised, given the uncertainty in the project. After adjustment for both of these impacts, organic growth in 2013 revenue would be -0.6%. In the fourth quarter of 2013, the Group saw an improved momentum as compared to the rest of the year with a practically stable organic growth (-0.3% compared to the fourth quarter of 2012 and +2% after adjustment for unrecognised revenue relative to Ecotax). The last quarter also saw the signing of the SSCL contract with the UK government, a contract related to the modernisation and outsourcing of its back office functions. With an estimated amount of over one billion pounds over ten years, this contract is the biggest ever in Steria’s history. Sustained by the vigorous order intake in the fourth quarter of the year 2013, the book-to-bill ratio at 31 December 2013 stood at 1.05 (1.03 at 31 December 2012). As regards the cyclical part of the business (consulting/systems integration/testing), the book-to-bill ratio was 0.97 (1.10 at 31 December 2012).   In the United Kingdom, revenue for the year declined by 1.4% on a like-for-like basis. The second half of the year however showed an upturn, auguring well for a strong growth momentum in the months to come. Steria has strengthened its leading position in providing IT services to public bodies for their transformation, notably in the police, justice, and health sectors as well as in the Cabinet Office itself. The Energy-Utilities/Telco-Media/Transport sector also gained momentum, recording a strong growth. At end-December 2013, the book-to-bill ratio was 1.19 (as opposed to 0.82 at 31 December 2012). The ratio for cyclical business was 0.92 at 31 December 2013. In France, revenue was down 5.6% (-2.1% after restatement for the impact of Ecotax). The fourth quarter showed slight improvement with negative growth limited to 1.3% as opposed to -2.3% over the first nine months (excluding the non-recurring impact of Ecotax). The book-to-bill ratio stood at 1.01 at 31 December 2013 compared to 1.18 at 31 December 2012. The ratio was 0.99 at 31 December 2013 for cyclical business. Operating margin in IT infrastructure management business, in this region, declined sharply due to an exceptional situation related to the Ecotax infrastructure build-up, a delay in the evolution of our delivery model for new transforming contracts and extra costs related to a datacenter consolidation programme.   A turnaround programme known as “ERE 2016” has been launched. It has two components – growth and value, and productivity. The measures planned under this programme are aimed at reviving the growth dynamic right from 2014 and generate 16 to 20 million euros of savings by 2015, aiming at a profitability of 7% in 2016. In Germany, revenue declined by 1.6%. Growth for the fourth quarter was notably affected by a particularly unfavourable comparison effect owing to the brisk pace of business in the fourth quarter of 2012. The public sector maintained a strong momentum thoughout the year, whereas the banking sector tapered off slightly and the Energy-Utilities/Telco-Media/Transport sector was negatively oriented. At 31 December 2013, the book-to-bill ratio was 0.95 (1.13 at 31 December 2012). In the Other Europe region, organic growth was strong (+5.7%), particularly in the public sector and the Energy-Utilities/Teleco-Media/Transport sector. Scandinavia gained considerable momentum with an organic growth of 13.3%. Following several consecutive years of strong growth, the Scandinavian region posted revenue of almost €200 million.   2013 net income   Despite the decline in revenue (-1.8%), operating margin for 2013 held up well, sustained by various actions such as the 3P plan implemented in the different countries as of the second half of 2012. It stood at 6.3% (€110.4 million) compared to 6.4% in 2012, despite the negative impact due to the introduction of Ecotax whose application bas being suspended at the end of the year. For operations outside of France, accounting for 70% of the Group’s revenue, operating margin moved up by 60 basis points (8.2% compared to 7.6% in 2012). Other operating income and expenses, mostly comprising restructuring expenses of €35.2 million and a non-current provision of €8.0 million in connection with the Ecotax contract, stood at -€50.3 million. The amount of -€38.3 million reported in the previous year included a non-taxable non-recurrent capital gain of €12.3 million from the accounting impact of the takeover of NHS SBS. The financial result stood at -€25.8 million (-€7.9 million reported in 2012) mainly due to the application of the Revised IAS 19 that led to a €14.1 million increase in financial expense (with no cash impact) relating to the pension fund deficit for the financial year 2013. The tax expense of €15.5 million (€12.1 million reported in 2012) factors in the decision to not activate deferred taxes on a portion of the results in France; the impact of this decision being €10 million on the income tax expense for 2013. Impacted by non-recurrent items, attributable net income came to €8.9 million (€35.6 million reported in 2012).   Financial position at end-2013 The Group’s financial debt stood at €224.0 million at 31 December 2013, down €71.5 million compared to the debt2 at 31 December 2012, despite the unfavourable impact of currency fluctuations amounting to €17.0 million. The reduction in net financial debt stems from the tight control over capital investments (Capex) that decreased by 25% compared to the year 2012, combined with strict management of working capital that was improved by €81.5 million for the financial year. The latter change included a recurrent and deconsolidating programme of non-recourse securitisation of receivables, initiated in the second half of 2013, for a net amount of €49.6 million. This highly favourable change in the Group’s financial debt must be seen from the perspective of the strong priority given in the beginning of 2013 to cash management and debt reduction.   At 31 December 2013, the Group had a sound financial position in terms of both its financial ratios (gearing of 60%, EBITDA leverage ratio at 1.6x against a maximum of 2.5x and interest cost cover ratio of 17.3 compared with a minimum of 5.0x) and liquidity (approximately €378 million in available undrawn credit facilities).   The pension fund deficit, net of tax remained stable at 31 December 2013 compared to 30 June 2013 (despite the rise in sterling in the second half-year) and was reduced by €78 million compared to 31 December 2012 pro-forma.   Dividends The Steria SCA General Management, the Supervisory Board and the Soderi Board of Directors proposed a dividend[5] payment of €0.10 per share for the financial year 2013 (€0.20 in 2012).   Outlook In light of the order intake in the fourth quarter of 2013, and the expected strong growth in the United-Kingdom, the Group has set its targets for organic growth in revenue between +6% and +8% for the financial year 2014 and an increase of at least 10% in the absolute value of its operating margin.   Steria is listed on NYSE Euronext Paris, Eurolist (Section B) ISIN code: FR0000072910, Bloomberg code: RIA FP, Reuters code: TERI.PA SBF 120 General Index, NEXT 150, CAC MID&SMALL, CAC MID 60, CAC Soft&CS, CAC Technology, Euronext FAS IAS   For further information, see the website: http://www.steria.com   About Steria: www.steria.com Steria delivers IT enabled business services and is the Trusted Transformation Partner for private and public sector organisations across the globe. By combining in depth understanding of our clients' businesses with expertise in IT and business process outsourcing, we take on our clients' challenges and develop innovative solutions to address them efficiently and profitably. Through our highly collaborative consulting style, we work with our clients to transform their business, enabling them to focus on what they do best. Our 20,000 people, working across 16 countries, support the systems, services and processes that make today's world turn, touching the lives of millions around the globe each day. Founded in 1969, Steria has offices in Europe, India, North African and South-East Asia. The Group generated revenue of €1.75 billion in 2013. Over 20 %(*) of its capital is held by its employees. Headquartered in Paris, Steria is listed on the Euronext Paris market. (*): including “SET Trust” and “XEBT Trust” (4.15% of the capital)   2013 consolidated income statement   In € million 31/12/2013 31/12/20123 31/12/2012 reported Revenue 1,754,925 1,827,197 1,827,197 Cost of sales and sub-contracting costs (332,939) (359,240) (359,240) Personnel costs (1,012,896) (1,042,289) (1,042,319) Bought-in costs (259,822) (259,306) (259,306) Taxes (excluding income tax) (21,680) (22,870) (22,870) Change in inventories 339 (22) (22) Other current operating income and expenses 10,158 5,759 5,759 Net charges for depreciation and amortisation (35,802) (38,137) (38,137) Net additions to provisions 1,609 107 107 Impairment of current assets 263 (304) (304) Operating margin after amortisation of intangible assets recognised in connection with business combinations(*) 104,156 110,894 110,864 Other operating income and expenses (50,339) (22,581) (38,288) Operating income 53,817 88,313 72,576 Net cost of borrowings (6,373) (2,527) (2,527) Other financial income and expenses (19,414) (14,087) (5,338) Financial result (25,787) (16,614) (7,866) Income tax expense (15,493) (13,723) (12,073) Share of income(loss) from equity-consolidated companies 206 116 116 Net income from continuing operations 12,743 58,092 52,753         Total net income 12,743 43,173 37,834         Attributable net income 8,857 41,005 35,596 Non-controlling interests 3,886 2,168 2,237         Underlying5 diluted earnings per share (in euros) 1.54 2.17 2.36   (*) Amortisation of customer relationships recognised in connection with the acquisition of Xansa and NHS SBS accounting for (6,269) thousand euros at 31 December 2013 and (6,566) thousand euros at 31 December 2012 2013 consolidated balance sheet   In € million 31/12/2013 31/12/20123 31/12/2012 reported Goodwill 762,579 779,171 779,171 Intangible assets 99,505 102,758 102,758 Property, plant and equipment 52,871 60,212 60,212 Investments in associates 1,681 1,541 1,541 Available-for-sale assets 878 2,531 2,531 Other financial assets 4,427 9,495 9,495 Retirement benefits assets - - 62,552 Deferred tax assets 95,480 117,439 43,202 Other non-current assets 4,233 1,830 1,830 Non-current assets 1,021,654 1,074,978 1,063,293 Inventories 21,039 9,013 9,013 Net trade receivables and similar accounts 207,045 266,744 266,744 Amounts due from customers 164,313 202,607 202,607 Other current assets 58,672 42,285 42,285 Current portion of non-current assets 3,461 3,948 3,948 Current tax assets 39,723 33,333 33,333 Prepaid expenses 35,065 22,865 22,865 Cash and cash equivalents 209,441 145,579 145,579 Current assets 738,757 726,373 726,373 Non-current assets classified as held for sale 6,354 7,475 7,475 Total assets 1,766,765 1,808,826 1,797,141       Shareholders’ equity 382,813 504,722 807,490 Non-controlling interests 9,855 5,763 7,543 Total equity 392,668 510,484 815,033 Long-term borrowings 363,393 245,810 245,810 Retirement benefits liabilities 291,369 382,966 48,613 Provision for non-current contingencies and charges 7,041 12,396 12,396 Deferred tax liabilities 1,572 1,036 20,701 Other non-current liabilities 52,984 23,989 23,989 Non-current liabilities 716,358 666,197 351,510 Short-term borrowings 70,015 42,786 42,786 Provisions for current contingencies and charges 29,740 24,652 24,652 Net trade payables and similar accounts 171,205 148,751 148,751 Gross amounts due to customers and advance payments received 71,369 81,822 81,822 Current tax liabilities 41,348 41,126 41,126 Other current liabilities 273,420 292,283 290,738 Current liabilities 657,097 631,420 629,874 Non-current liabilities classified as held for sale 642 724 724 Total liabilities 1,766,765 1,808,826 1,797,141   2013 cash flow statement   In €m 31/12/2013 31/12/2012 EBITDA 136.5 147.4 Non-cash adjustments 2.1 0.6 Change in WCR (cash components) 81.5 -14.6 Operating cash flow 220.1 133.4 Net industrial investment -30.4 -40.7 Income tax -27.2 -25.1 Net financial interest paid -12.1 -4.6 Restructuring -43.1 -33.4 Retirement benefits -17.9 -19.0 Free cash flow[6] 89.4 10.6             Dividends[7] -11.5 -19.1 Net financial investment 1.4 -1.3 Capital increase 9.2 8.6 Change in consolidation scope 0.0 -7.4 Currencies and other paper -17.0 -8.5 Change in net cash (before hybrid bond) 71.5 -17.1 Redemption of hybrid convertible bond -152.4 0.0 Change in net cash (after hybrid bond) -80.9 -17.1   2013 operating margin2 by geographic region   % of revenue 31/12/2013 31/12/2012 United Kingdom 10.0% 9.4% France 4.2% 5.7% Germany 5.3% 4.4% Other Europe 6.1% 5.7% Corporate expenses -0.6% -0.6% Group 6.3% 6.4%     [1]Net financial debt would have amounted to €295.4 million (€143.0 million + €152.4 million) at 31 December 2012 considering the hybrid convertible bonds that were issued in 2007 (€152 million classified as equity) and redeemed on 2 January 2013. [2]2012 financial statements presented with the application of IAS19R as of January 1, 2013 – retrospective application. [3]Operating income includes restructuring and reorganisation costs, capital gains or losses on disposals, the estimated fair value of share-based compensation, the impact of goodwill impairment tests and, for the financial statements published in 2012, actuarial gains and losses recognized within the framework of accounting for post-employment benefits (so-called corridor method).  [4]Attributable net income restated, after tax, for other operating income and expenses and amortisation of intangible assets. [5]Subject to the shareholders’ approval at the Shareholders’ General Meeting of Thursday 22 May 2014. Ex-date is fixed on Friday 30 June 2014. The dividend will be payable as from Thursday 3 July 2014. [6] Before investment, financing and currency translation effects [7] Including subordinated hybrid convertible bond coupon: €8.7 million in 2013 and 2012   Media Contact Details Sachdev Ramakrishna, Director Marketing Steria India Limited, ,+91-9871715438 , sachdev.ramakrishna@steria.co.in   KEYWORDS: Business/ Finance:Banking & Financial services, Business Services, Financial Analyst & Investors, Information Technology, Technology;General:People   If you wish to change your Business Wire India selection please visit on Business Wire India and use your personal username and password to login.   Submit your press release at http://www.businesswireindia.com

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