Press release from Business Wire India
Monday, July 29, 2013 04:40 PM IST (11:10 AM GMT)
Editors: General: Economy, People; Business: Banking & financial services, Business services, Financial Analyst, Information technology, Stock exchanges; Technology
Steria Announces First Half 2013 Results
Operating margin rate of 5.2%; Significant reduction in pro-forma net financial debt
Noida, Uttar Pradesh, Pune, Maharashtra, Chennai,, Tamil Nadu, India, Monday, July 29, 2013 — (Business Wire India) — — In a challenging first half 2013 economic environment, like-for-like sales were down by 2.3% (-1.1% excluding non-recurring effects)
— The operating margin rate stood at 5.2% versus 5.1% reported at June 30, 2012
— The strong free cash flow generation over the first half enabled a ?84.4 million reduction in net financial debt relative to its level at June 30, 2012 pro-forma
— The increase in long-term bond yields over the first six months of the year enabled a 26% reduction (i.e. -?78 million) in the pension funds deficit, net of tax, relative to the estimate at December 31, 2012.
On July 26, 2013 the Supervisory Board of Groupe Steria SCA examined the consolidated financial statements submitted by the General Management.
Operating performance during the first half 2013
Within a challenging European economic environment during the first half, the Group posted a revenue decline limited to 2.3% like-for-like. This reduction needs to be seen within the context of a particularly high first half 2012 comparison base in France notably due to the non-recurring revenue arising from the launch of the Ecotaxe project (the first half of 2012 had increased by 9.3% in this region). Adjusted for this effect, the like-for-like change in the Group’s sales was -1.1% in the first half with 1.5 fewer days of production than in the first half of 2012.
In terms of business lines, the Infrastructure Management and Business Process Outsourcing activities grew by 4.5% while Applications Services (Consulting, Systems Integration, Applications Maintenance and Testing) declined by 7.4% (-5.5% excluding the Ecotaxe impact).
At the end of June 2013, the pipeline amounted to twice the level of the annual projected revenue (+6.7% versus end June 2012) due, in particular, to an improvement of around ?500 million during the second quarter relative to 31/12/2012.
Within a context characterised by longer decision-making cycles, the book to bill ratio stood at 0.85 at June 30, 2013 compared with 1.11 at June 30, 2012 (which included the “run” portion for Ecotaxe for a significant amount). In the cyclical part of the business (consulting/systems integration/testing), the book to bill ratio was, however, identical to its level of the previous year (1.08).
In the United Kingdom, revenue decreased by 3.6% on a constant currency basis in the first half of 2013. The banking and public sectors were negatively oriented whereas the positive first quarter momentum in the Energy-Utilities/Telco-Media/Transport sector was confirmed. At end June 2013, the book to bill ratio stood at 0.75 (1.0 at June 30, 2012). For its part, the pipeline has seen a marked increase since December 2012 benefiting, in particular, from new opportunities in the Public Sector.
In France, the revenue evolution improved during the second quarter relative to the first quarter but the trend remained negative with a decline of 3.0%. After restatement for Ecotaxe hardware sales in the 2012 financial year (?3 million in the second quarter), the decline was 1.2% in the second quarter of 2013. The book to bill ratio stood at 0.89 at June 30, 2013 compared to 1.32 at June 30 2012 (which had included the Ecotaxe run portion).
In Germany, organic growth was 6.9% in the second quarter of 2013 due to a positive momentum in all sectors with the exception of Telecommunications. At June 30, 2013, the book to bill ratio stood at 1.07 (1.21 at June 30, 2012).
In the Other Europe region, the organic revenue progression was +7.7% during the second quarter, benefiting from strong growth in Scandinavia and despite the activity slowdown in Belgium after the successful deployment of the second-generation Schengen Information System. At June 30, 2013 the book to bill ratio stood at the same level as at the same date of the previous year.
First half net income 2013
Despite a 2.3% decline in revenue, the first half 2013 operating margin proved resilient due to the “3P” plan which was rolled out in the different countries as of the second half of 2012. It stood at ?45.7 million versus ?47.0 million reported in 2012, representing a margin rate of 5.2% (5.1% reported at June 30, 2012).
Other operating income and expenses (mostly comprising restructuring charges) stood at -?16 million during the first half. The -?6.2 million reported for the previous year had included an exceptional capital gain of ?12.2 million linked to the application of the accounting treatment on the NHS SBS acquisition.
The financial result stood at -?12.1 million (-?4.2 million reported in 2012) mainly due to the application of the Revised IAS19 which led to a ?5.7 million increase in financial expense (no cash impact) linked to the pension fund deficit taking it to ?7.0 million. The tax charge stood at ?5.3 million (?8.4 million reported in 2012).
Despite the virtually stable operating margin, attributable net profit stood at ?7.4 million (?23.8 million reported in 2012) mainly due to the impact of the non-operational items.
Financial situation at the end of the first half 2013
Within the framework of the objectives set by the Group for 2013 and in the current economic environment, priority has been given to cash management and debt reduction. The measures implemented enabled a positive performance in terms of cash generation during the first half of 2013:
— despite the revenue decline, EBITDA saw a slight increase to ?61.6 million (?60.6 million in 2012),
— control over capex offset the increase in restructuring costs,
— strict working capital requirement management enabled positive cash flow of ?29.5 million.
In total, the Group reduced its pro-forma net debt3 by ?14.7 million relative to December 31, 2012 whereas the first half is traditionally negative in terms of cash flow.
Net financial debt thus stood at ?280.7 million at June 30, 2013, representing a comfortable financial situation for the Group in terms of both its financial ratios (gearing of 74%, EBITDA leverage ratio at 1.9x relative to a maximum of 2.5x and an interest cost cover ratio of 37.4 compared with a minimum of 5.0x) and liquidity (around ?300 million of available undrawn credit facilities with a three-year maturity).
Finally, the increase in long-term bond yields during the first half of 2013, particularly in the United Kingdom enabled a reduction in the pension fund deficit which is now accounted under liabilities in the balance sheet in application of the Revised IAS19: the deficit, net of taxes, fell from an estimated ?303.0 million at end December 2012 to an estimated ?225.5 million at June 30, 2013, i.e. a reduction of 26% or some ?78 million.
Based on the good cash flow performance during the first half, the Group confirms its priority objective of generating a positive net free cash flow in 2013 to reduce net financial debt with respect to December 31, 2012 pro-forma.
Based on the commercial data for the first half (order intake and revenue), the Group expects stable revenue for the second half of 2013 in comparison to the second half of the previous year, but maintains an objective of an improvement in its operating margin rate in the 2013 financial year.
An information meeting on the first half 2013 results will take place on Monday July 29, 2013 at 9h00 CET and will be retransmitted by webcast at www.steria.com (investors section.
Next news: Q3 2013 revenue Wednesday October 30 before the market opening
Steria is listed on 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 Africa and SE Asia and a 2012 revenue of ?1.83 billion. Over 20%(*) of Steria’s capital is owned by its employees. Headquartered in Paris, Steria is listed on the Euronext Paris market.
(*): including “SET Trust” and “XEBT Trust” (4.15% of capital)
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Olivier Psaume, Investor relations, Steria, +33 1 34 88 55 60 / +33 6 17 64 29 39, email@example.com
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