SII

SII
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SII : Annual results analyst's meeting 2019/2020

06/11/2020 | 05:18am

SIIGroup

RéunionSFAF Meetingd'agence

2019-2020 Annual Financial Statements

June 10, 2020

Toulouse

Eric Matteucci - Chairman of the Management Board

10DidieroctobreBonnet - International2019 Regional Director

Charles Mauclair - France Regional Director

A major player in engineering consulting

Extensive technological skills at the service of consulting and engineering activities

SII covers a wide range of technological skills

Embedded IT

Cybersecurity

Information Systems / NICT

Infrastructure

via 3 approaches:

Research

Engineering

Systems

and consulting

integration

with an Build and/or Run intervention capacity

for customers in IT and R&D projects.

SII Group - June 10, 2020

2

A varied portfolio

of loyal customers

Customers present on a multitude of markets…

… the surveys for which show a high level of satisfaction*…

Services (6.5%)

Industries (9.3%)

Automotive (5.9%)

Transportation (4.5%)

Retail (3.8%)

Healthcare (4.5%)

Energy (6.6%)

Aerospace

Space Defense

(23.2%)

Banking

Insurance

(19.5%)

Telecoms & Media (13.4%)

2017-2019:93.1 %

2018-2019:90.4 %

2019-2020:92.1 %

Allmost all of our business is with large accounts

SII Group - June 10, 2020

*Regular monitoring of customers via surveys.

3

A decentralized structure

in France and worldwide

Within the SII group, the decentralised organisation enables opportunities to be seized at a local level for coordination at a group level.

Since 2019, a new organisation has been rolled out at a group level and allows:

  • agencies/subsidiaries to continue to be the central unit,
  • managers to continue to be decision-makers,
  • each agency to benefit from the group's strength for certain functions and thus provide them with additional tools and resources.

Thus, the SII group benefits from a strong local network at the service of customers:

In France, the group has 9 agencies and 22 local sites with 63% of the workforce based in the regions.

Overseas, the group has a presence in 17 countries with 88 local sites.

SII Group - June 10, 2020

4

Our employees…

… Our main asset

Great attention to the HR policy

A recognised employer brand: #Fungénieurs Targeted actions for improving quality of life at work

Group employees*

For France*

8,601

(+4,7% vs 2018-2019)

including

7,087

consultants

* As of 31/3/2020

SII Group - June 10, 2020

4,207

1,352

Hiring

+21.9%

employees

(1,266 the previous year)

A trend in line with our targets

(+6,0% vs

2018-2019)

93

91

89

87

85

83

81

79

77

75

Mar-20

Feb-20

Jan-20

Dec-19

Nov-19

Oct-19

Sep-19

Aug-19

Jul-19

Jun-19

May-19

Apr-19

Mar-19

Feb-19

Jan-19

Dec-18

Nov-18

Oct-18

Sep-18

Aug-18

Jul-18

Jun-18

May-18

Apr-18

Mar-18

Feb-18

Jan-18

Dec-17

Nov-17

Oct-17

Sep-17

Aug-17

Jul-17

Jun-17

May-17

Apr-17

Monthly change in ratio of billable hours (excl. Paid leaves (France)

Billed / Billable (excl. Paid leaves)

Staff turnover

(+21.9% the previous year)

For the 3rd year running in France, SII was recognised as a Great Place to Work. SII holds 3rd place in the ranking and is the only Digital Services Company listed in the category of more than 2,500 employees.

5

I

Highlights

  1. 2019-2020financial results
    III Outlook

A 2019/2020 financial year on the increase

… despite the end of the financial year being impacted by the Covid-19 crisis

Revenue

Change

Organic

growth

€676.3m

+7.1%

+7.3%

vs 2018-2019

vs 2018-2019

+ 8.9%

for the first 9 months

Growth in turnover in line with the targets announced at the start of the financial year on 11 June 2019 but below the targets revised on 11 February 2020 owing to the health crisis.

Operating income

-7.6%

vs 2018-2019

SII Group - June 10, 2020

7

New referrals for the year

… result of an effective commercial conquest strategy

The SII group enjoys a unique position and an innovation capacity at the service of its customers that allow it to

win new references in a multitude of sectors.

Telecom

Banking

Defense

Services

Automotive

Electronic

Insurance

OVH

Groupe BPCE

Naval Group

IBM

Porsche

Siemens

Orange DREAM

Orange DIF

Banque du Canada

Ultra Electronics

Volkswagen

La Banque Postale

Société Générale

Transactis

AG2R

Citibank Chili

SII Group - June 10, 2020

8

The responsiveness of the new managerial organisation

in the context of the Covid-19 crisis

The managerial organisation recently set up:

an asset in the management of the crisis and for the development of synergies

In this context, this organisation has enabled coordinated management:

at a sectoral level with collaboration between local teams and group teams

by teams with the deployment of training or the re-sectoring of profiles and their geographic movements

concerning the response to customers' needs thanks to a development of cross-cutting offers between local teams and the development department

SII Group - June 10, 2020

9

The resources implemented for business continuity

in a lockdown context

Setting up of a business continuity system that ensures the health and safety of staff and partners

Application of government measures

Implementation of teleworking and setting up of support measures (paid leave, short-time working)

Reduction of costs and cashflow management

SII Group - June 10, 2020

10

SII group, a supportive and committed player during the crisis

around the world

From the start of the crisis, the SII group's teams offered an innovative, responsive and supportive response by developing many emergency projects.

Cargo Seat Bags, a SII Netherlands and Trip & Co collaboration

Optimisation of emergency medical units at Vall d'Herbon by SII Concatel

Study of the compatibility of components in the A400M luggage hold with substances used in the fight against Covid-19 by SII Deutschland

Development of innovative technologies to improve Covid-19 diagnoses by SII

Poland

Cargo Seat Bags, a cargo bag

system placed between seats on

commercial flights

SII Group - June 10, 2020

11

II

I highlights

2019-2020 financial results

III Outlook

Financial highlights

A dynamic of growth and profitability

Revenue

(in €m)

Gross margin

(in % of revenue)

316.7

631.4

560.9

438.9

360.1

676.3

5.46%

7.62%

7.35%

6.77%

6.34%

5.99%

14-15

15-16

16-17

17-18

18-19

19-20

14-1515-1616-1717-1818-1919-20

Cash-flow*

Net income**

(in €m)

65.82

(in €m)

30.6

54.16

44.36

39.69

23.34

27.71

14-1515-1616-1717-1818-1919-20

*Potential cash flow before cost of debt and taxes

25.8226.41

22.35

11.30 13.13

14-1515-1616-1717-1818-1919-20

**before minority interests

SII Group - June 10, 2020

13

Revenue: evenly distributed among sectors

…between the main markets and diversification markets

Aerospace

Services

€157m 23.2%

Space

Defense

Industry

Automotive

vs 22.1%

Transportation

€252m

in 2018-2019

Health

37.3%

Retail

vs 37.2%

in 2018-2019

€132m

6.6%

19.5%

Banking

Energy

€44m

€91m

Insurance

vs 20.0%

vs 6.5%

in 2018-2019

in 2018-2019

Telecoms 13.4%

Media

vs 14.2%

in 2018-2019

SII Group - June 10, 2020

14

Revenue up…

…in almost all sectors

Aerospace /

Banking /

Telecoms

Energy

Others

Defense

Insurance

+9.8 %

+7.8 %

+6.1 %

+2.5%

stable

vs 2018-2019

vs 2018-2019

vs 2018-2019

vs 2018-2019

vs 2018-2019

Healthy order book before

Problems of cybersecurity

Adaptation to new standards

Demand for smart services

Transport: management of

lockdown

Sectoral issues linked to new

and continued deployment

Continued development in

flows and Involvement in

Response to cybersecurity

of very high speed

line with renewable energies,

digital sales channels in the

players in the sector

infrastructures

environmental challenges

rail sector

needs in the industrial sector

(neobanks, etc.)

Situation since March 2020:

Situation since March 2020:

New services

Situation since March 2020:

Services: projects in line

(e.g. payment, media)

Switch to teleworking with

with regulations

Defence: difficulty

Switch to teleworking with

some project stoppages

experienced by the sector in

some project stoppages

Situation since March 2020:

Situation since March 2020:

managing teleworking

Switch to teleworking

Switch to teleworking

Aviation: sharp decline in

Good business continuity

Severe difficulties in

activity

transport, tourism, and

sales/distribution

SII Group - June 10, 2020

15

Balanced operations

…in France and elsewhere

51%

of revenue generated in France

in fiscal year 2019-2020

49%

of revenue generated by international operations

in fiscal year 2019-2020

40%

59.4 % du CA

140 2019-2020

(€m) 206 60 %

13.0 % du CA

43

2019-2020

39

11.8 % du CA

195

(€m)

52

15.8 % du CA

SII Group - June 10, 2020

16

Monitoring of business by geographic zone

Details for France and Poland

FRANCE

POLAND

2019-2020

+1.7%

vs 2018/2019

Top 3 sectors: ASD / BAM /

TELCO

Recent situation:

01/2020: 87.6%

Rate of activity: 03/2020: 77.7% 04/2020: 63.7%

End of 03/2020 : 95%

Rate of teleworking: End of 05/2020 : 81%

2019-Q4:-0.7%Rate of growth: 2020-Q1:-5.2%

(YoY)2020-April: -21.5%

2019-2020

+23.5%

vs 2018-2019

Top 3 sectors: BAM / Health / Electronics

Double-figure

growth in activities

for more than 10

years

Recent situation:

01/2020 : 84.7%

Rate of activity: 03/2020 : 84.3% 04/2020 : 85.7%

End of 03/2020: 98%

Rate of teleworking: End of 05/2020: 98%

Rate of growth:

2019-Q4: +24.6%

2020-Q1: +22.9%

(YoY)

2020-April: +22.0%

SII Group - June 10, 2020

17

Monitoring of business by geographic zone

Details for Germany and Spain

GERMANY

SPAIN

2019-2020

-5.1 %

vs 2018-2019

Top 3 sectors:

ASD / Automotive /

Equipment

SII Deutschland:

activities less impacted

Recent situation * :

01/2020 : 89%

Rate of activity: 03/2020 : 85% 04/2020 : 75%

End of 03/2020: 80%

Rate of teleworking: End of 05/2020: 75%

2019-Q4: +0.9% Rate of growth: 2020-Q1: +2.7%

(YoY)2020-April: -18.4%

2019-2020

-3.5%

vs 2018-2019

Top 3 sectors:

Services / BAM /

TELCO

Stable business

Recent situation:

01/2020: > 90%

Rate of activity: 03/2020: 80% 04/2020: 76%

End of 03/2020: 98%

Rate of teleworking: End of 05/2020: 90%

2019-Q4:-4.8%

Rate of growth: 2020-Q1: -11.8%

(YoY)2020-April: -19.5%

* : engineering activity only

SII Group - June 10, 2020

18

Monitoring of business by geographic zone

Details for others countries

OTHERS COUNTRIES

2019/2020

+ 17,2 %

vs 2018/2019

New positive

situation in Chile

New perspectives in

Romania

Sweden :

deployment of the

Polish offshore

offer

Recent sityuation:

01/2020 : 95%

Rate of activity: 03/2020 : 92% 04/2020 : 90%

Fin 03/2020 : 96%

Rate of teleworking: Fin 05/2020 : 97%

4T/2019 : + 13,9% Rate of growht: 1T/2020 : + 8,6%

(YoY)04/2020 : - 1,5%

SII Group - June 10, 2020

19

Gross income from operating activities: €44.2m

Margin resilience in a difficult context

in €m (pending audit completion)

2018-2019

2019-2020

Revenue

631.38

676.33

+7.1%

Payroll

-390.42

-417.75

Purchases and outisde expenses

-177.81

-183.09

Taxes

-6.37

-6.26

Depreciation, amortization and provisions

-9.04

-25.80

Others expenses and revenues

0.37

0.73

Gross income from operating activities

48.10

44.16

-8.2%

Gross margin, as a % of revenue

7.62%

6.53%

-1.09 pt.

Share-based payments

-1.42

-1.28

Non-recurring items

-0.28

Net operating income

46.40

42.88

-7.6%

Net operating margin, as a % of revenue

7.35%

6.34%

-1.01 pt.

Net operating margin in France, as a % of revenue

7.3%

4.6%

-2.7 pt.

Net operating margin at international operations,

7.4%

8.1%

+0.7 pt.

as a % of revenue

Operating profit: €44.2m

  • Group annual staff activity rate (TACE) of 88.4% compared to 90.7% in 2018-2019.
  • Impact IFRS 16

External charges: removal of rents of: €14,828 k

Depreciation: Leased property depreciation of: €14,813 k

Total impact on the Operating profit insignificant

Operating profit decline in France: -35,4 %

- Deteriorated annual average staff activity rate (TACE)

Annual average TACE France: 88.5 % in 2019-2020, vs 91.3% in 2018-2019

- 1 extra working day

- Investment in structure

Continued improvement of overseas margins

- Exceptional performance in Poland

- Improved performance in Chile et aux the Netherlands - Deterioration in Germany

- Additional €900 k provision in Spain

SII Group - June 10, 2020

20

A financial year impacted by the health crisis

In all key items of the income statement

In €m

2018-2019

2019-2020

(pending audit completion)

Revenue

631.38

676.33

+7.1%

Operating income

46.40

42.88

-7.6%

Gross margin (as a % of revenue)

7.35%

6.34%

Interests income (expense)

-1.67

-2.05

Taxes (including business value-added tax)

-14.14

-14.42

Net income

30.60

26.41

-13.7%

Net margin

4.85%

3.90%

Non-controlling interests *

-0.09

-0.21

Net income after non-controlling interets *

30.69

26.62

-13.3%

Average headcount

7,921

8,356

+435

Headcount at the end of the period

8,213

8,601

+388

IFRS 16 impact

Financial expenses: +1,360,000

Net income: -900,000

(*): impact of put option on non-controlling interests

SII Group - June 10, 2020

21

Cash-flow

Cash-generating activity

Before IFRS 16

After IFRS 16

In €m

2018-2019

2019-2020

2019-2020

(pending audit completion)

Potential cash flow *

54.16

65.82

65.82

Change in working capital

-13.63

-21,70

-2.03

and taxes paid

Cash flow from operations

40.53

44.12

63.79

Cash flow from investment

-10.16

-10.68

-10.68

Cash flow from financing

-3.90

-19.13

-38.80

Change in available cash

26.47

14.31

14.31

Purchases of securities

-0.40

0.11

0.11

Foreign-exchange gains (losses)

-0.57

-2.83

-2.83

Change in net cash

25.50

11.59

11.59

Cash at period start

54.40

79.91

79.91

Cash at period end

79.91

91.50

91.50

Long-term debt

-22.21

-12.24

-55.43

Short-term debt

-24.90

-23.95

-38.10

Net Cash

32.80

55.31

-2.03

* Self financing capacity before cost of debt and taxes

SII Group - June 10, 2020

22

Balance sheet

3/31/2019

3/31/2020

Before IFRS 16

3/31/2020

After IFRS 16

Non-current

assets

€74.5m

Current

assets

€224.8m

Cash

€79.9m

Shareholders'

equity

€162.0m

Non-controlling interests: €0.1m

Non-current

liabilities: €31.3m

Current

liabilities €185.9m

Non-current

assets

€77.7m

Current

assets

€218.1m

Cash

€91.5m

Shareholders'

equity

€174.2m

Non-controlling interests: €0.0m

Non-current

liabilities: €21.4m

Current

liabilities

€191.7m

Non-current

assets

€133.7m

Current

assets

€218.1m

Cash

Shareholders'

equity

€172.8m

Non-controlling interests: €-0.3m

Non-current

liabilities

€64.6m

Current

liabilities €205.9m

  • = €379.2m
  • = €387.3m

€91.5m

  • = €443.3m

SII Group - June 10, 2020

23

III

I Highlights

II 2019-2020 financial results

Outlook

The resilience of the digital sector...

... key player in business continuity and recovery

Digital:

a resilient sector

  • decline in business contained for Q1 2020,
  • an estimated decrease in turnover of less than 25% in Q2 2020 according to

a study by Syntec numérique with the hope of a gradual recovery from September,

a sector that is necessary for business continuity in many sectors

  • with the deployment of teleworking: security of infrastructures and challenges of Cloud and cybersecurity,
  • in the banking sector: intensification of digital operations,
  • in the telecommunications sector: solidity of networks.

At the heart of the crisis, the SII group is a major player in a key sector for business continuity and recovery.

SII Group - June 10, 2020

25

The SII group's assets and levers that are

favourable for the development of activities

A history of growth

and a capacity to adapt to crises

A balanced Build and Run mix

allowing business continuity at the heart of the crisis and supporting customers in their recovery

A decentralised organisation

in order to better seize opportunities

The strength of the HR model,

an asset for business recovery

A varied and loyal customer portfolio

that bears witness to recognised expertise

An expected rise in demand for problems

concerning digital transformation and cybersecurity

Geographic locations

that are varied and of high quality

A strong financial structure and long-term shareholding

SII Group - June 10, 2020

26

Updating of prospects for Q1 2020/2021

In the context of the health crisis, impact and recovery trends vary according to the nature of the project (Run versus Build), the business sector, and the geographic area.

In view of the uncertainty, the first quarter of 2020/2021 closed on 30 June 2020 that covers the lockdown/lockdown easing period in many countries, is expected to show a decline of between -8% and -10% compared to last year:

  • Estimated impact on turnover in France: -15% to -20%(compared to -20%to -25%announced on 12 May)
  • Estimated impact on turnover overseas: 0% to -5%(compared to -5%to -10%announced on 12 May)
  • Estimated "effects of change" impact on turnover overseas: -1% to -2%

In this context, it is difficult to provide forecasts for the entire financial year. To date, the SII group only provides quarterly targets.

27

Investor information

(5/31/2020)

Number of shares: 20,000,000

ISIN Code: FR0000074122

LEI code: 96950044FWV7YEJCKR65

Exchange: Euronext Paris Compartment B

Others

30.59 %

Float

Fidelity

Management &

10.99%

41.58%

Employees

Treasury shares

54.19%

4.23%

2020-2021 Financial timetable

11 AOUT

Fiscal 2020-2021 Q1 revenue, after closing of trading

17 SEPT

2020 Shareholders' meeting

12 NOV

Fiscal 2020-2021 Q2 revenue, after closing of trading

9 DEC

Fiscal 2020-2021 1st half financial results, after close of trading

10 DEC

SFAF Meeting - 2020-2021 1st half financial statements

Proposed dividend of €0.10 per share

Groupe SII - 10 juin 2020

28

Questions

Attachments

Breakdown of international operations

in €m

2018-2019

2019-2020

Change

Organic change*

Revenue from international operations (1)

289.52

328.80

+13.6%

+14.0%

Poland

157.98

195.17

+23.5%

+23.9%

Germany

54.67

51.87

-5.1%

-5.1%

Spain

40.28

38.86

-3.5%

-3.5%

Romania

8.06

10.09

+25.2%

+27.5%

Chile

6.31

8.27

+31.0%

+42.9%

Canada

5.48

6.86

+24.9%

-21.6%

Belgium

5.57

4.85

-12.8%

-12.8%

Czech Repulic

3.49

3.18

-9.1%

-9.4%

The Netherlands

2.51

3.00

+19.8%

+19.8%

United Kingdom

1.10

2.26

+105.7%

+104.0%

Colombia

1.75

2.06

+17.7%

+27.4%

Morocco

1.51

2.02

+33.9%

+31.3%

Switzerland

0.79

0.27

-66.0%

-67.5%

Sweden

-

0.04

n.s.

n.s.

India

0.01

0.00

n.s.

n.s.

Average international headcount

4,125

4,299

+174

Operating margin of international operations

7.42%

8.15%

+0.73 pt.

*Excluding the impact of acquisitions and exchange- rate fluctuations

2018-2019 exchanges rates applied to revenue for 2019-2020.

(1): Consolidated revenue after elimination of intra-group operations

31

Disclaimer

SII SA published this content on 10 June 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 11 June 2020 09:17:07 UTC

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