Sopra Group (Paris:SOP):
-- Revenue: +22.9% (organic growth +7.6%)
-- Operating profit: +52%
-- Net profit: +55%
-0-
*T
30/06 30/06 Change
2006 2005 (%)
---------------------
Key income statement items
----------------------------------------------------------------------
Revenue(1) M EUR 443.0 360.5 +22.9%
EBITDA M EUR 29.8 19.6 +52.0%
as % of revenue % 6.7% 5.4%
Operating profit M EUR 29.8 19.6 +52.0%
as % of revenue % 6.7% 5.4%
Net profit - Group share M EUR 17.2 11.1 +55.0%
as % of revenue % 3.9% 3.1%
------------------------------------------ ----- ------ ------ -------
Earning per share
----------------------------------------------------------------------
Net profit per share(2) EUR 1.50 1.03 +45.6%
------------------------------------------ ----- ------ ------ -------
Key balance sheet and cash flow items
----------------------------------------------------------------------
Free cash flow(3) M EUR 33.3 9.7
Net debt M EUR 135.1 66.5
Equity (Group share) M EUR 190.5 133.0
Net debt / Equity % 71% 50%
*T
The operating margin of 6.7% for the first half of 2006 was in
line with the improvement forecast for the full year. Operating profit
and the net profit attributable to the Group increased by 52% and 55%,
respectively, compared with the first half of 2005.
These results confirm the relevance of Sopra Group's strategy - at
the European level in systems and solutions integration, and worldwide
with regard to Axway - as well as the successful integration of recent
acquisitions.
Information by division for the first half of 2006
-- Consulting (4.9% of revenue): The operating margin remained
strong at 11.7% despite a slight fall-off in revenue. The
improved growth expected for the second half of the year
should allow this division to improve its operating margin for
the year as a whole.
-0-
*T
30/06 30/06 31/12
2006 2005 2005
----------- ----------- -----------
EUR EUR EUR
M % M % M %
---------------------------------------- ----- ----- ----- ----- -----
Revenue 21.4 100% 22.5 100% 41.3 100%
---------------------------------------- ----- ----- ----- ----- -----
Operating profit 2.5 11.7% 2.7 12.3% 5.0 12.1%
*T
-- SSI(4) France (60.2% of revenue): The operating margin
improvement in France in the first half of the year (+0.9
percentage points to 7.6%) is in line with expectations. The
quality of the group's offerings and its strong positioning
with major clients have allowed it to resist pricing pressure,
which continues to weigh on this division's performance. The
group expects a strong uptrend in growth as well as an
improvement in the operating margin for this division in the
second half of the year.
-0-
*T
30/06 30/06 31/12
2006 2005 2005
----------- ----------- -----------
EUR M % EUR M % EUR M %
----------------------------------------- ---- ------ ---- ------ ----
Revenue 266.9 100% 255.3 100% 504.7 100%
----------------------------------------- ---- ------ ---- ------ ----
Operating profit 20.3 7.6% 17.0 6.7% 37.5 7.4%
*T
-- SSI Europe (22.9% of revenue): Strong organic growth (+15.7%)
in Europe and a pronounced improvement in the operating margin
confirm the effectiveness of the acquisition-led growth
strategy pursued by the group in 2005. This division's
operating profit of EUR 5.8 million (with an operating margin
of 5.7%) was achieved primarily thanks to the group's
operations in the United Kingdom and Spain. The operating
results of entities in other countries met expectations.
-0-
*T
30/06 30/06 31/12
2006 2005 2005
----------- ----------- -----------
EUR M % EUR M % EUR M %
----------------------------------------- ---- ----- ----- ------ ----
Revenue 101.5 100% 43.8 100% 125.5 100%
----------------------------------------- ---- ----- ----- ------ ----
Operating profit 5.8 5.7% -0.3 -0.7% 4.8 3.8%
*T
-- Axway (12.0% of revenue): Despite the traditionally high
seasonality of its business and the acquisition of Cyclone
Commerce, this subsidiary has just recorded one of its best
ever operating margins for a first half period, up almost 2
percentage points. This achievement, which was due notably to
the strong positioning of its offering in the B2B market and
Collaborative Business Solutions, means that Axway can look
forward to an excellent performance for the year as a whole.
The integration of Cyclone Commerce's products with those of
Axway is making good progress.
-0-
*T
30/06 30/06 31/12
2006 2005 2005
---------- ---------- -----------
EUR M % EUR M % EUR M %
------------------------------------------ ---- ----- ---- ----- -----
Revenue 53.2 100% 38.9 100% 85.5 100%
------------------------------------------ ---- ----- ---- ----- -----
Operating profit 1.2 2.3% 0.2 0.5% 8.8 10.3%
*T
Financial position
The Group generated net free cash flow of EUR 33.3 million, in
particular due to better management of working capital requirements
and the use of an exceptional tax credit of EUR 11.1 million related
to the acquisition of Valoris.
After the disbursements relating notably to the acquisition of
Cyclone
Commerce and the dividend payment, net debt came to EUR 135
million. At 30 June 2006, the group's financial position remains
healthy: the net debt to EBITDA ratio(5) and the net debt to equity
ratio are 1.73 and 71%, respectively.
Workforce
At 30 June 2006, Sopra Group had a total workforce of 9,610
employees, including 2,860 outside France. Excluding the impact of the
Cyclone Commerce acquisition (100 employees) in January 2006, the
number of employees grew by 410 in the first half of the year. Half of
this growth related to foreign subsidiaries.
Outlook
Sopra Group has confirmed its revenue and operating margin growth
forecasts for the full-year 2006. Growth is expected to be in line
with or better than that of the market average, with revenue in the
region of EUR 900 million euros and an operating margin of 8%.
Changes in the scope of consolidation
-- Newell & Budge (UK) has been consolidated since 1 July 2005,
-- PROFit Informatica (Spain) has been consolidated since 1
November 2005,
-- Cyclone Commerce (USA) has been consolidated since 1 January
2006.
Upcoming events
Sopra Group will publish its revenue for the third quarter of 2006
on Monday, 6 November 2006 after the market close.
About Sopra Group (www.sopragroup.com)
A leader in the European consulting and IT services market, with a
total workforce of 9,600, Sopra Group provides the full spectrum of
services enabling companies to transform their organisations and their
information systems. Sopra Group is a total solution provider, from
prior strategic reflection from an executive management perspective,
through to the supervision and implementation of major systems
integration and application outsourcing projects. Through its
subsidiary Axway, the Group pursues the worldwide deployment of its
activities in both application integration and Collaborative Business
Solutions, with a complete range of solutions and services.
Appendices
Operating profit by division
-0-
*T
30/06 30/06 31/12
2006 2005 2005
------------- ------------- -------------
M EUR Revenue EBIT Revenue EBIT Revenue EBIT
------------------------------------ ----- ------- ----- ------- -----
Group 443.0 29.8 360.5 19.6 757.0 56.1
% margin 6.7% 5.4% 7.4%
------------------------------------ ----- ------- ----- ------- -----
Consulting 21.4 2.5 22.5 2.7 41.3 5.0
% margin 11.7% 12.3% 12.1%
------------------------------------ ----- ------- ----- ------- -----
SSI France 266.9 20.3 255.3 17.0 504.7 37.5
% margin 7.6% 6.7% 7.4%
------------------------------------ ----- ------- ----- ------- -----
SSI Europe 101.5 5.8 43.8 -0.3 125.5 4.8
% margin 5.7% -0.7% 3.8%
------------------------------------ ----- ------- ----- ------- -----
Axway 53.2 1.2 38.9 0.2 85.5 8.8
% margin 2.3% 0.5% 10.3%
*T
Consolidated balance sheet
-0-
*T
M EUR 30/06 30/06 31/12
2006 2005 2005
================================================= ====== ====== ======
Goodwill 272.8 115.6 242.2
Other assets 35.5 33.4 35.3
Other assets and liabilities 33.2 63.9 50.7
------------------------------------------------- ------ ------ ------
ASSETS 341.5 212.9 328.2
------------------------------------------------- ------ ------ ------
Shareholders' Equity (Group share) 190.5 133.0 185.3
Provisions 15.9 13.4 14.2
Net debt 135.1 66.5 128.7
------------------------------------------------- ------ ------ ------
CAPITAL INVESTED 341.5 212.9 328.2
*T
Change in equity
-0-
*T
M EUR
-------
Position at 31 December 2005 185.3
----------------------------------------------------------------------
Dividends - 12.6
Net profit - Group share 17.2
Capital increase through exercise of share options 0.3
Purchase or sale of own shares - 0.1
Share-based payments 0.3
Translation adjustments 0.1
----------------------------------------------------------------------
Position at 30 June 2006 190.5
*T
Consolidated income statement
-0-
*T
30/06 30/06 Variation
2006 2005 (%)
=============================== ============ ============ ============
M EUR % M EUR %
------------------------------- ------- ---- ------- ---- ------------
Revenue 443.0 100% 360.5 100% + 22.9%
------------------------------- ------- ---- ------- ---- ------------
Staff costs - Employees -295.4 -249.2 + 18.5%
Staff costs - Contractors -35.0 -24.2 + 44.6%
Staff costs - Total + 20.8%
------------------------------- ------- ---- ------- ---- ------------
Operating expenses -76.6 -62.1 + 23.3%
Depreciation and provisions -6.2 -5.4 + 14.8%
------------------------------- ------- ---- ------- ---- ------------
Operating profit on ordinary
activities 29.8 6.7% 19.6 5.4% + 52.0%
------------------------------- ------- ---- ------- ---- ------------
Other operating income and
expenses - -
------------------------------- ------- ---- ------- ---- ------------
Operating profit 29.8 6.7% 19.6 5.4% + 52.0%
------------------------------- ------- ---- ------- ---- ------------
Financial result -5.1 -1.4
Corporation tax -7.5 -7.1
------------------------------- ------- ---- ------- ---- ------------
Net profit 17.2 3.9% 11.1 3.1% + 55.0%
Group share 17.2 0.0% 11.1
Minority interests - -
=============================== ======= ==== ======= ==== ============
Gross operating profit 35.4 8.0% 23.8 6.6% + 48.7%
=============================== ======= ==== ======= ==== ============
*T
Change in net debt (6)
-0-
*T
EUR m 30/06 30/06 31/12
2006 2005 2005
=======================
Net debt at opening (A) 128.7 58.9 58.9
---------------------------------------------- ------- ------ --------
Gross cash flow from operations before net
financial debt and tax 36.1 25.0 66.6
Tax paid 3.6 - 5.4 - 14.2
Changes in working capital requirements 1.5 - 4.5 - 1.3
---------------------------------------------- ------- ------ --------
Net cash flow from operations 41.2 15.1 51.1
Net financial interest paid - 4.8 - 3.9 - 8.5
Capital expenditures - 3.1 - 1.5 - 3.9
---------------------------------------------- ------- ------ --------
Free cash flow 33.3 9.7 38.7
Changes in scope - 24.7 - 7.8 - 103.2
Dividends paid - 12.6 - 8.6 - 8.6
Capital increases in cash 0.3 0.2 4.1
Employee participation - 2.0 - 0.2 0.7
Application IAS 32 & 39 - - 1.0 - 1.0
Other changes - 0.3 0.0 - 0.7
---------------------------------------------- ------- ------ --------
Net cash flow (B) - 6.0 - 7.7 - 70.0
Changes in interest rates - 0.4 0.1 0.2
---------------------------------------------- ------- ------ --------
Net debt at closing(6) (A-B) 135.1 66.5 128.7
---------------------------------------------- ------- ------ --------
*T
References:
(1) Cf. press release dated 7 August 2006.
(2) Calculated based on the weighted average of ordinary shares in
circulation.
(3) Net cash from operations before net interest expense and
corporate income tax paid, change in working capital
requirements and operating investments net of disposals.
(4) SSI: Systems and Solutions Integration.
(5) On a rolling 12-month basis.
(6) Net cash from operations less operating investments net of
disposals.
