Organic growth of 4.0% Confirmation
of full-year targets
- Revenue for Q3 2023: €1,345.4 million
- Total growth of 10.6% and organic growth of 4.0%
- Completion of Ordina acquisition following successful public
offer; launch of integration
- Agreement for Sopra Steria to buy the UK Cabinet Office’s
stake in the SSCL JV for £82.3 million
Regulatory News:
Sopra Steria Group (Paris:SOP) generated consolidated revenue
of €1,345.4 million in the third quarter of 2023, equating to total
growth of 10.6%. At constant scope and exchange rates, revenue grew
4.0%.
Sopra Steria: Consolidated revenue – Q3 2023 €m / %
Q3 2023
Q3 2022
Organic growth
Total growth
Revenue
1,345.4
1,216.9
4.0%
10.6%
Cyril Malargé, Chief Executive Officer of Sopra Steria Group,
commented:
“In an environment marked by a succession of geopolitical crises
and a slowing European economy, Sopra Steria is showing good
resilience. Despite an unfavourable calendar effect (with one fewer
business day), the third quarter of 2023 saw organic growth of
4.0%, driven in particular by robust business in the defence,
aerospace, public sector, and transport verticals. As in the
previous two quarters, all five of the Group’s reporting units made
a positive contribution to growth.
Over the period, our teams remained highly focused on boosting
operational performance and transforming the Group (in areas such
as our strategy of moving up the value chain, consulting, services
and solutions, skills centres, and technologies).
I’m also delighted with the promising partnership we’ve just
formed with Thales and Google Cloud to build one of the first
sovereign cloud-based artificial intelligence platforms. Aimed at
financial services firms and the public sector, this platform will
help organisations improve their operational efficiency and the
user experience for their customers.
We began the integration of Ordina, following our successful
public offer. Sopra Steria has become a benchmark player in digital
services in the Benelux region, generating around €700 million in
pro forma revenue and employing over 4,000 professionals.
Against this backdrop, and assuming at this stage that there is
no major deterioration in the global economy, I am confident in the
Group’s ability to achieve its targets.”
Comments on Q3 2023 business activity
Revenue totalled €1,345.4 million, equating to total growth
of 10.6% relative to Q3 2022. Changes in scope had a positive
impact of €91.7 million, and currency fluctuations had a negative
impact of €14.5 million. At constant scope and exchange rates,
revenue grew 4.0%.
The France reporting unit (42% of the Group total)
generated revenue of €567.9 million, equating to organic growth of
3.9%. Revenue for the consulting business remained buoyant, boosted
by rising selling prices. The Product Lifecycle Management business
grew by over 9%. The best-performing vertical markets were
transport, defence, aerospace and the public sector. Energy and
telecommunications grew slightly. The banking, insurance and retail
verticals contracted.
The United Kingdom reporting unit (17% of the Group
total) generated revenue of €230.8 million, equating to organic
growth of 1.5%, affected by a high basis of comparison for the visa
and passport renewal platforms. The two joint ventures specialising
in business process services for the public sector (SSCL and NHS
SBS), on the other hand, posted solid growth, as did the aerospace,
defence and security sector. Fourth-quarter growth is expected to
be on a par with the second quarter.
The Other Europe reporting unit (28% of the Group total)
posted €378.2 million in revenue, representing organic growth of
5.4%. This performance was driven by Scandinavia and Spain, which
posted organic growth near or above 10%. Excluding SFT, the
reporting unit’s countries posted average organic growth of 6.9%.
Revenue for SFT was in line with its level in Q1 and Q2.
Revenue for Sopra Banking Software (8% of Group revenue)
came to €102.3 million, representing organic growth of 4.3%,
notably driven by the Sopra Banking Platform and the Sopra
Financing Platform’s digital offers. This resulted in a 7.9%
increase in subscription revenue. Software revenue (60% of the
total) was up by about 1% while services revenue grew 10.0%.
The Other Solutions reporting unit (5% of the Group
total) posted revenue of €66.2 million, representing organic growth
of 5.0%. The Human Resources Solutions business (which generates
70% of the reporting unit’s revenue) grew by 4.4%. The Property
Management Solutions business grew 6.4%.
Acquisition and external growth transactions
Following the successful public offer launched on 26 July 2023,
Sopra Steria now holds more than 98% of the share capital of Dutch
company Ordina. It will be fully consolidated from October 2023 and
delisted from Euronext Amsterdam on 15 November 2023. Governance is
in place and the integration process was launched on 26
September.
On 24 October 2023, the UK Cabinet Office announced its decision
to exercise the put option to sell its 25% stake in SSCL’s share
capital to Sopra Steria. This joint venture had already been fully
consolidated in Sopra Steria’s accounts since 2013. The Group will
acquire the remaining 25% of its shares from the Cabinet Office on
6 November 2023 for a total of £82.3 million. This transaction,
which is immediately accretive to Sopra Steria’s net profit and
earnings per share, will not affect SSCL’s customers, employees or
services.
Workforce
The net headcount came to 53,430 people at 30
September 2023, compared with 49,411 people at 30 September 2022. A
total of 9,328 staff were employed at international service centres
(India, Poland, Spain, etc.), around the same level as at 30 June
2023.
Downtime was stable with respect to 30 June 2023.
At 30 September 2023, the subcontracting rate was 1.4
percentage points higher than the low point reached in 2020, at the
end of a period deeply affected by the Covid‑19 pandemic.
The workforce attrition rate was 15.1% (vs 18.3% at 30
September 2022).
Targets confirmed
Assuming at this stage that there will be no major deterioration
in the economy in a more uncertain geopolitical context, the
full-year 2023 and medium-term financial targets are confirmed.
For 2023:
- Organic revenue growth of at least 6.0%
- Operating margin on business activity slightly over 9%
- Free cash flow of at least €300 million
For the medium term:
The Group has set a target to achieve an operating margin on
business activity of around 10% in 2024. In the medium term, it is
targeting annual organic revenue growth of between 4% and 6%, and
free cash flow of between 5% and 7% of revenue.
Presentation meeting
Revenue for the third quarter of 2023 will be presented to
financial analysts and investors via a bilingual (French and
English) conference call to be held on Friday, 27 October 2023 at
8:30 a.m. CET (Paris time).
- French-language phone number: +33 (0)1 70 37 71 66
- English-language phone number: +44 (0)33 0551 0200
Practical information about this presentation can be found in
the ‘Investors’ section of the Group’s website:
https://www.soprasteria.com/investors
Upcoming financial releases
Thursday, 22 February 2024 (8:30 a.m.): Meeting to report 2023
annual results
Friday, 26 April 2024 (8:30 a.m.): Meeting to report Q1 2024
revenue
Tuesday, 21 May 2024 (2:30 p.m.): General Meeting of
Shareholders
Wednesday, 24 July 2024 (6:30 p.m.): Meeting to report 2024
half-year results
Thursday, 31 October 2024 (8:30 a.m.): Meeting to report Q3 2024
revenue
Glossary
- Restated revenue: Revenue
for the prior year, expressed on the basis of the scope and
exchange rates for the current year.
- Organic revenue growth:
Increase in revenue between the period under review and restated
revenue for the same period in the prior financial year.
- EBITDA: This measure, as
defined in the Universal Registration Document, is equal to
consolidated operating profit on business activity after adding
back depreciation, amortisation and provisions included in
operating profit on business activity.
- Operating profit on business
activity: This measure, as defined in the Universal
Registration Document, is equal to profit from recurring operations
adjusted to exclude the share-based payment expense for stock
options and free shares and charges to amortisation of allocated
intangible assets.
- Profit from recurring
operations: This measure is equal to operating profit
before other operating income and expenses, which includes any
particularly significant items of operating income and expense that
are unusual, abnormal, infrequent or not foreseeable, presented
separately in order to give a clearer picture of performance based
on ordinary activities.
- Basic recurring earnings per
share: This measure is equal to basic earnings per share
before other operating income and expenses net of tax.
- Free cash flow: Free cash
flow is defined as the net cash from operating activities; less
investments (net of disposals) in property, plant and equipment,
and intangible assets; less lease payments; less net interest paid;
and less additional contributions to address any deficits in
defined-benefit pension plans.
- Downtime: Number of days
between two contracts (excluding training, sick leave, other leave
and pre-sales) divided by the total number of business days.
Disclaimer
This document contains forward-looking information subject to
certain risks and uncertainties that may affect the Group’s future
growth and financial results. Readers are reminded that licence
agreements, which often represent investments for clients, are
signed in greater numbers in the second half of the year, with
varying impacts on end-of-year performance. Actual outcomes and
results may differ from those described in this document due to
operational risks and uncertainties. More detailed information on
the potential risks that may affect the Group’s financial results
can be found in the 2022 Universal Registration Document filed with
the Autorité des Marchés Financiers (AMF) on 17 March 2023 (see
pages 40 to 45 in particular). Sopra Steria does not undertake any
obligation to update the forward-looking information contained in
this document beyond what is required by current laws and
regulations. The distribution of this document in certain countries
may be subject to the laws and regulations in force. Persons
physically present in countries where this document is released,
published or distributed should enquire as to any applicable
restrictions and should comply with those restrictions.
About Sopra Steria Steria Sopra Steria, a major Tech
player in Europe with around 55,000 employees in nearly 30
countries, is recognised for its consulting, digital services and
software development. It helps its clients drive their digital
transformation and obtain tangible and sustainable benefits. The
Group provides end-to-end solutions to make large companies and
organisations more competitive by combining in-depth knowledge of a
wide range of business sectors and innovative technologies with a
fully collaborative approach. Sopra Steria places people at the
heart of everything it does and is committed to putting digital to
work for its clients in order to build a positive future for all.
In 2022, the Group generated revenues of €5.1 billion. The world
is how we shape it. Sopra Steria (SOP) is listed on Euronext
Paris (Compartment A) – ISIN: FR0000050809 For more information,
visit us at www.soprasteria.com
Annexes
Sopra Steria: Impact on revenue of changes in scope and exchange
rates – 9M 2023 €m / %
9M 2023
9M 2022
Growth
Revenue
4,185.5
3,760.7
+11.3%
Changes in exchange rates
-59.7
Revenue at constant exchange rates
4,185.5
3,701.0
+13.1%
Changes in scope
221.4
Revenue at constant scope and exchange rates
4,185.5
3,922.3
+6.7%
Sopra Steria: Changes in exchange rates – 9M 2023 For €1
/ %
Avg. rate
Avg. rate
Change
9M 2023
9M 2022
Pound sterling
0.8707
0.8472
-2.7%
Norwegian krone
11.3483
10.0070
-11.8%
Swedish krona
11.4789
10.5274
-8.3%
Danish krone
7.4486
7.4399
-0.1%
Swiss franc
0.9774
1.0118
+3.5%
Sopra Steria: Revenue by reporting unit – 9M 2023 €m /
%
9M 2023
9M 2022
9M 2022
Organic
Total
Restated*
growth
growth
France
1,766.8
1,668.1
1,501.6
+5.9%
+17.7%
United Kingdom
691.8
653.2
671.5
+5.9%
+3.0%
Other Europe
1,198.0
1,095.0
1,080.0
+9.4%
+10.9%
Sopra Banking Software
320.3
307.7
309.4
+4.1%
+3.5%
Other Solutions
208.6
198.3
198.3
+5.2%
+5.2%
Total
4,185.5
3,922.3
3,760.7
+6.7%
+11.3%
* Revenue at 2023 scope and exchange rates
Sopra Steria: Revenue
by reporting unit – Q3 2023 €m / %
Q3 2023
Q3 2022
Q3 2022
Organic
Total
Restated*
growth
growth
France
567.9
546.8
477.9
+3.9%
+18.8%
United Kingdom
230.8
227.4
228.9
+1.5%
+0.9%
Other Europe
378.2
358.9
348.7
+5.4%
+8.5%
Sopra Banking Software
102.3
98.1
98.5
+4.3%
+3.9%
Other Solutions
66.2
63.0
63.0
+5.0%
+5.0%
Total
1,345.4
1,294.2
1,216.9
+4.0%
+10.6%
* Revenue at 2023 scope and exchange rates
Sopra Steria:
Workforce breakdown – 30/09/2023
30/09/2023
30/09/2022
France
21,681
19,775
United Kingdom
7,767
7,278
Other Europe
14,102
12,142
Rest of the World
552
455
X-Shore
9,328
9,761
Total
53,430
49,411
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231026040274/en/
Investor Relations Olivier Psaume
olivier.psaume@soprasteria.com +33 (0)1 40 67 68 16
Press Relations Caroline Simon (Image 7)
caroline.simon@image7.fr +33 (0)1 53 70 74 65
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