Monday, July 30, 2012:
In a deteriorating first half environment, the Group's activity remained robust with like-for-like revenue growth of +3.3%, highlighting a profile and positioning adapted to a market undergoing transformation.
-- The good commercial momentum was reflected in the pipeline which remains at the level equivalent to that of December 2011 (1.9x projected sales) and 9.3% growth in new orders, leading to an increased book to bill ratio of 1.11 at June 30, 2012.
-- Under the effect of significant pricing pressure and an increase in the inter-contract rate, the operating margin contracted by ?5.9 million on a comparable basis, resulting in a margin rate of 5.1% versus 6.1% during the first half of 20112 .
-- For the full year 2012, the Group expects an operating margin rate of above 6.0%.
-- The Group is working on a project with an objective to generate, on an annual basis, between ?15 million and ?18 million of additional cost savings.
On July 26, 2012, the Supervisory Board of Groupe Steria SCA examined the consolidated financial statements submitted by the General Management.
Second quarter 2012 activity
Second quarter revenues showed organic growth of 0.7% (on a calendar base averaging one day less than in 2011), leading to a 3.3% increase over the first half (calendar base identical to 2011).
This performance was achieved within a weaker trading environment, characterised by pressure on volumes and prices. Within this context, the Group's activity thus demonstrated strong resilience highlighting a profile and positioning adapted to client expectations in a market undergoing a rapid transformation. For example, the recent launches of Workplace On Command, RightApps Management and RightSecurity Services offerings were well received by the market.
Over the quarter, the Group benefited from growth in the Public Sector (+1%), Insurance (+6%), Utilities (+9%) and Transport (+27%) sectors. Banking (-2%) and Telecommunications (-10%) were, however, negatively orientated.
New orders saw strong growth over the quarter in France, Germany and the United Kingdom, driving a 9.3% increase in orders for the whole of the first half relative to the previous year.
At June 30, 2012, the Group's book to bill ratio stood at a satisfactory 1.11 (1.03 at June 30, 2011) and at 1.09 for the only cyclical activities, consulting and systems integration (0.94 at June 30, 2011). As of the same date, the pipeline, measured as a multiple of revenue, amounted to 1.9x (comparable to its level of December 31, 2011).
-- In the United Kingdom, on a like-for-like basis, second quarter revenue growth amounted to 3.4% thanks to the positive trend in the Public sector (+8%), driven by increased activity with the Ministry of Defence, the Ministry of Justice and the NHS through the NHS SBS entity. New orders saw a strong progression during the second quarter bringing the increase for the first half to 5.1%. At June 30, 2012, the book to bill ratio stood at 1.0 (0.94 at June 30, 2011).
-- In France, like-for-like growth was 4.8% (+9.3% for the first half), driven by strong momentum in the Banking, Insurance and Transport sectors, the latter having been underpinned in particular by the EcoTax contract. There were a number of large contract wins in IT infrastructure transformation (Canal+, JC Decaux, large Ministries, etc.) and information systems transformation including application maintenance activities (a major European bank, public sector, energy sector, etc.). New orders were sharply higher in the second quarter propelling first half order growth to 37.7%. At June 30, 2012, the book to bill ratio stood at 1.32 (1.05 at June 30, 2011).
-- In Germany, organic growth was -6.0% over the quarter (-4.2% for the first half), having been impacted by the difficult situation in the banking sector which represents a large proportion of the Group's revenue in this country. Activity was affected by project delays and significant price pressure. Inversely, new orders, including the Business Intelligence and Application Maintenance areas, experienced an acceleration during the second quarter amounting, at June 30, 2012, to a total identical to that of the previous year. At end June 2012, the book to bill ratio was 1.21 (1.16 at June 30, 2011).
-- The Other Europe region posted a like-for-like decline of 7.2% (-2.1% for the first half), marked by an unfavourable base effect in Scandinavia and Belgium with the ending of the large European projects (Schengen and Visa impact) and by a lengthening in the decision-making cycle, particularly in Scandinavia.
Results for the first half 2012
The first half was marked by stronger pricing pressure than the Group's initial expectations, with the negative impact on the operating margin amounting to some 100 basis points. Most of this effect was offset by productivity gains generated by the transformation programmes deployed across the Group.
At the same time, the climate of extreme caution prevailing amongst clients, marked by project cancellations and delays, was reflected, across the quasi-totality of the Group's geographies, by an increase in the average inter-contract rate relative to the first half 2011 (estimated impact ?6 million).
As a result, despite higher volumes, the Group's operating margin contracted to ?47 million versus ?52.9 million2 in the first half of 2011, resulting in an operating margin rate of 5.1%.
Other operating income and expenses for the half year represented a net expense of ?6.2 million versus a net expense of ?20.7 million in the previous year and notably included ?9 million of net restructuring charges, a non-cash charge of ?7.8 million corresponding to the amortisation of actuarial losses linked to the pension schemes and a ?12.1 million gain linked to the application of the accounting treatment following the NHS SBS full consolidation of from January 1, 2012.
Taking into account a financial result of -?4.2 million and income tax expense of ?8.4 milllion, underlying attributable net income amounted to ?27.5 million versus ?38.3 million in the previous year.
The Group is working on a project with an objective to generate, on an annual basis, between ?15 million and ?18 million of additional cost savings.
In an uncertain environment, for the full year 2012, the Group expects like-for-like revenue growth of between +2% and +3.0% and an operating margin rate of above 6.0%.
An information meeting on the first half 2012 results will take place on July 30, 2012 at 9h00 CET by webcast at www.steria.com (investors section).
Next publication: third quarter 2012 revenue on Tuesday October 30, 2012 after the market close.
Appendices: Consolidated income statement, consolidated balance sheet, summary cash flow statement and operating margin rate by geographical region at June 30, 2012.