Presentation is loading. Please wait.

Presentation is loading. Please wait.

1 2006/07 Interim numbers & Outlook SFAF Meeting - 15 November 2006 - Bernard HUVÉ CEO.

Similar presentations


Presentation on theme: "1 2006/07 Interim numbers & Outlook SFAF Meeting - 15 November 2006 - Bernard HUVÉ CEO."— Presentation transcript:

1 1 2006/07 Interim numbers & Outlook SFAF Meeting - 15 November 2006 - Bernard HUVÉ CEO

2 2 SII at a glance  SII is present on the market of technology consulting - Outsourced R&D, engineering and systems integration & telecoms - Presence in France + subsidiary in Poland  A long-lasting company: 27 years of profitable growth (founded on 1 April 1979)  2005/06 sales: €105.7m (+21.6% of organic growth)  2005/06 operating margin: 10.1%  Financially sound (IFRS) 31/03/06: Net cash €14.4m; Shareholders’ capital €34.2m  1 800 employees at 31 October 2006 (+23%) -Of which 80% engineers BAC + 5 -A strong technical culture and client service  Value creation: 2005 ROCE (after tax) = 35.6% -A flexible organisation, decentralised, reactive -Stringent management on a day-to-day basis ID card

3 3 SII ’ s services Outsourced R&D R&D Consulting Studies and implementation Processing, industrialisation 66% Systems Integration, Networks & Telecoms Third party maintenance 33% Development consulting 87% Project management assistance 5% Other and non IT 8% SII at a glance

4 4 Strasbourg Sophia Vélizy Sannois Lille 9 agences 10 offices Toulouse Bordeaux Nantes Tours Le Mans Brest Rennes Caen Lyon Montpellier La Ciotat Aix 0-100Lille, Strasbourg, Warsaw > 100Aix, Rennes, Nantes Sannois, Sophia, Toulouse, Vélizy Geographical breakdown of sales Lannion Niort National geographical footprint – subsidiary in Poland SII at a glance 1 subsidiary

5 5 A loyal clientele with major accounts  Major accounts 95%, SME 2%, Other 3%  20 top clients = 67% of sales -SII’s strategy: quality of service -SII’s positioning: mixed teams – long and recurrent projects dual expertise: IT and functioning -C lient strategy: listings and discounts on sales, pricing pressure, requests for projects with earnings commitment SII at a glance AmadeusEADSGemaltoSagemThales DCNFrance TelecomIBMSiemensThomson TOP 10 CLIENTS

6 6 Banking, Insurance 5.9% Sales breakdown / client sector Industry 58.9% Telecom and Media 15.5% Transport, Tourism, Services 6.8% A few new clients 2006 AIR liquide CSEE TransportPROSODIE NEUF TelecomVALÉO SII at a glance Utilities 2.9% Other services 6.3 % Public services 3.3% Sales by sector of activityIndustry breakdown Electronics 30.3% Automobile 20.0% Aerospace 14.7% Defence 13.2% Digitial TV 9.5% Payment systems 6.7% Other 4.6% Commerce, Retail 0.4% Railways 1.0%

7 7  Gaining strength of fixed-rate services  Commitment to achieving earnings rather than supplying means  Outsourcing  Global contracts vs specific skills Sales by contract Changes in contracts SII at a glance Technical assistance 73.3% Other 7.9% Fixed rate 18.8%

8 8 Summary H1-2006/07 Sustained profitable growth – SII on the stock market 2006/07 Outlook and targets

9 9  Durable growth drivers - Product innovation, a factor of company competitiveness - Sustained growth in outsourcing (Flexibility / Technological complimentarity) - The taking off of built-in IT Technology consulting, a buoyant market Technology consulting €5bn Outsourced IT R&D, software & IT and technical services H1-2006/07 Source : Syntec Informatique 17 octobre 2006 Technology consulting outperforms the L&S sector H1-2006 growth: 8% vs 6.5% L&S sector (Syntec Informatique structure) €21bn

10 10 * Source : Syntec Informatique 17 octobre 2006 Return to buoyancy -5 0 5 10 15 20 88899091929394959697989900010203040506 GDPL&SInvestment  Growth founded on a recovery in IT investment - Projects reappear - Growth mainly driven by volumes and rarely by prices - Durable growth triggers (globalisation, competition, retirement boom)  But a tightening labour market - 65% of companies say they have difficulties in recruiting* - A greater turnover in the IT sector - Salary pressure H1-2006/07 Growth in %

11 11  1 company, 9 profit centres - Low indirect rates (10.1%), despite decentralisation - Entrepreneur managers - Reporting in (virtually) real time  A quality approach at the heart of the strategy - One of the first IT services companies to obtain the ISO9001 certificate in 1992 - One of very few IT services companies to be certified for 100% of its activity - A very advanced CMMi approach  Attributes of an average-sized player - Decentralisation / Responsibility - Commercial buoyancy - Local services with clients - Huge reactivity SII outperforms technology consulting SII +21% in H1-2006/07 vs Technology consulting +8%* * Source : Syntec Informatique 17 octobre 2006 H1-2006/07

12 12 41.2 48.4 58.7 H1 2004H1 2005H1 2006 SII: Sustained growth A buoyant first half Q1 sales €29.61m, +21.3 % Q2 sales €29.13m, +21.3 % +17.6% Sales in €m +21.3% H1-2006/07

13 13 Average headcount Recruitment trends  HR efforts in line with the strategy -Recent recruitments: 347 engineers (target: +700 engineers in 2006/07) -Huge capacity to recruit: school presence, dedicated in-house teams, enterprise culture, cooptation -Turnover: 23% -Salary pressure H1-2006/07

14 14 Inter-contract ratio (SII terminology) = (Billable-Billed) / Billable Controlled inter-contract rates In % H1-2006/07 H1 2005/06 average 4.3% H1 2006/07 average 5.2%

15 15 Billable daysQ2Q3Q4Q1Total 2004/0562656463254 2005/0663646365255 2006/076063 64250 An unfavourable first half  A penalising 2006/07 timetable regarding sales - Fewer billable days (250!) - A first half (civil year Q2) with only 60 billable days - A base of comparison focused on SII’s first half  A huge temporary impact on profitability - Employees with 35 days of fixed holiday per year (25+10 fixed flexi days) - A direct impact on profitability (3 / 63 = 4.8% on Q2) - An impact spread over 2006/07 (5 / 255 = 2.2% over the year) H1-2006/07

16 16 + Commercial buoyancy (organic growth = +21%) – Slight increase in the inter-contract rate – Higher average salary > Increase in selling prices – Impact from n° of trading days on sales and above all on profitability 2006/07Q2Q3 Sales (€m)29.6129.13  2005/06 (in %) +21.3 Op. margin (in % of sales)6.2%10.2% Att. net profit (in % of sales) 4.3%6.6% Average headcount in quarter16781733 In summary H1-2006/07

17 17 Sustained profitable growth H1-2006/07 numbers Financial structure SII shares

18 18 0.68 47.2 Sales €58.74m +21.3% In €m Consumed purchases Payroll Taxes 4.9 1.7 Provisions Sustained profitable growth Other income and expenses 0.61 €4.83m -10.7% Op. profit Huge payroll = 80.4% of sales (vs 76.6%) - 4-day delay in billing - Average salary +2.5%

19 19 C L Ô T U R E A U 31 M A R S Profit and loss account Sustained profitable growth In €m H1-06/07 IFRS H1-05/06 IFRS  Sales58.7448.43+21.3 Operating profit4.835.41-10.7 in % of sales8.211. 2 Financial products0.110.21- Tax1.731.94- Att. net profit3.213.68-12.8 in % of sales5.57.7 Average headcount17041346+26.6 Headcount at end of period17551422-

20 20 Cash flow capacity Change in WCR Investment Financing (incl. dividends) Cash flow  Available cash H1-2005/06 Cash flow table Share transfers In €m  Net cash 3.50 -0.60 -0.30 -1.50 -2.40 -4.10 -1.80 -4.20 H1-2006/07 Sustained profitable growth 4.20 2.00 -0.90 -0.80 0.30 -2.20 -0.70

21 21 Financial structure In €m Sustained profitable growth IFRS 30/09/2005 Fixed assets 3.4 WCR 12.0 Cash 16.3 Shareholders’ capital 31.1 Fixed assets 0.6 IFRS 30/09/2006 Fixed assets 5.9 WCR 18.9 Cash 10.2 Shareholders’ capital 34.5 Fixed assets 0.5

22 22 Shareholders ’ structure Personnel and fund 4.54% Free float 30.61% Management 56.42% Treasury shares 8.43% 3 000 000 shares SII shares Source : SII

23 23 Technology consulting (Akka, Assystem, Alten, Altran, Ausy) Eurolist (C) Code ISIN : FR0000074122 EuroNext segment NextEconomy / SBF 250 – Small 90 Stock-market performance SII shares Source JCF Quant SII 20 25 30 35 40 45 50 55 T4 2003 T1 2004 T2 2004 T3 2004 T4 2004 T1 2005 T2 2005 T3 2005 T4 2005 T1 2006 T2 2006 T3 2006 T4 2006

24 24 2006/07 Outlook SII strengths 2006/07 targets SII outlook Sector outlook

25 25 Sustained demand  Continued investment in companies - Catching up with underinvestment in the past - Technological innovation, distribution of in-built electronics - Renewal of IT systems - Multiplication of projects (smaller but more frequent)  Growing outsourcing - Retirement boom - Refocusing on the core business - Increasingly complex projects 2006/07 Outlook  Today’s challenge: recruitment - Conserve criteria of quality and profitability - SII: 700 engineers forecast in 2006/07 (half for turnover, half for growth)

26 26 Margins under pressure  Virtually stable reference prices - Pricing power on the demand side - Overcapacity of the offering, dumping of small players - Clients looking for savings - Indirect pressure from offshoring  Selling price – cost price scissor effect - Pressure on salaries - Shortfall of certain profiles  Problem of billable days - H2-2006/07 virtually stable in relation to 2005/06 (-1 day) - 252 days in 2007/08 2006/07 Outlook Billable daysQ2Q3Q4Q1Total 2005/0663646365255 2006/076063 64250 2007/086164 63252

27 27 Constantly looking for improvement SII proactive regarding profitability  Continued rigourous management - Reduced functioning costs - Indirect rates under pressure  Nearshore intervention capacity (Poland)  Growth / profitability arbitrage - Intention to not enter into a deflationary trend… - … which could lead to a refusal of missions  The real challenge: improvement of production processes - The possibility of work packages - The CMMi 2006/07 Outlook

28 28 The advantages of the CMMi model  Necessity to improve the management of complex projects - Clients require an increasing number of services to commit to earnings - Additional risks… (exceeding budgets, changes) - …but opportunities to gain margins in certain conditions - Necessary discipline to control projects and optimise teams and expertise  Against this backdrop, quality insurance and CMMi valued processes are solutions adapted to the integration of IT systems. 2006/07 Outlook Advantages for SII - Traceability, capitalisation and reproductibility - Better management of employed resources - Proposals for hybrid contracts - Reduction and control of unknown Advantages for clients - Better defined interfaces (quality) - Repeated follow up and deliveries - Platform development (outsourced services for the supplier)

29 29 Early implementation of the CMMi model  This valuation backs SII’s level of quality - Process mastered and standardised throughout the company - Development planned and assessed - Corrective forecasts and actions - Collective capitalisation and valuation (expertise, methods, tools and metrics) 2006/07 Outlook Certified service sites (at CMMi level)SII Aix-en-Provence (3)Silogic Toulouse (2) AXLOG engineering (3)SII Sophia Antipolis (2)SQLI Toulouse (2) Cap Gemini-Paris Accelerated Delivery center (2)SII Toulouse (2)Steria Midi Pyrénées (2)  SII the most advanced players in this approach At 4/09/2006 – official list of the SEI relative to valued French IT services companies* i.e. for SII: 1/2 sites at level 3 and 2/6 sites at level 2 (at 4/09/2006) SII’s target: December 2006: Nantes (2)February 2007: Rennes (2) End-2008: all agencies committed to generating earnings will be at level 3 * Sources: http://seir.sel.cmu.edu/pars/pars_list_iframe.asp

30 30 2006/07 Outlook 1. Limited risks Clients: large accounts, loyal Historical and technoligical background Persisting quality insurance 2. Basic functional model One company, multiple profit centres Decentralised structure and localised services Enterprise culture: Technical and Services SII’s strengths – Still the same! 3. Sound balance sheet Steady cash generation Satisfactory cash balance No financial debt

31 31 2006/07 Targets  Assumptions regarding the business climate  Sustained demand 6-8% of growth according to IT Syntec 3 times growth forecast for GDP  Margins under pressure 2006 prices = 2005 prices + ε  +0% (a little better in 2007?)  SII’s targets*  Sales growth of around 20% (€125m-130m)  Operating margin down (9-10%)  2,000 salaries at 31 March 2007 (net creation of 350/400 jobs) Confirmation of targets from May 2006 * * Réunion SFAF du 17 mai 2006

32 32 Upcoming meetings  Q3 earnings: 14 February 2007  Full-year earnings and SFAF meeting: 16 May 2007  2006/07 AGM: 20 September 2007


Download ppt "1 2006/07 Interim numbers & Outlook SFAF Meeting - 15 November 2006 - Bernard HUVÉ CEO."

Similar presentations


Ads by Google