EuroBusinessMedia (EBM): Steria, a leading European IT services companies, reports results for the first half of 2011. François Enaud, welcome. You are the Chairman and CEO of Steria. What are your comments on the Group’s performance in the first half of 2011?
François Enaud: Our H1 results are in line with our expectations and guidance given at the beginning of the year. First, on organic growth, we have accelerated the growth in the second quarter by 5.6% versus 1.3% in Q1, with good growth, as expected, in the UK by 3.4% versus minus 3% in the first quarter, and solid acceleration as well in Scandinavia. Regarding the commercial performance, it is quite good as well and solid, with a new increase of the pipe which is now at the level of 2.5 times full year revenue and a book-to-bill which is still above 1, and especially interesting and promising new deals, such as big deals signed in Norway for the road administration or for the municipality of Trondheim. As for the extension of Cleveland which is as well promising regarding our capacity to deliver the savings expected by this police force. And last but not least, we are very pleased to have now the definitive signature of the Eco-tax Project which is now relaunched.
EBM: And what about operating margin and net profit in the first half of the year?
François Enaud: They are as well in line with our expectations and even slightly better than the guidance given at the beginning of the year. The operating margin stood at 6.7%, and with significant improvement in Germany, by 80 basis points, and stability in France. Regarding the net result, the underlying attributable net result has increased by 15.5% when the fully diluted EPS has grown by 13.8%. This performance for H1 confirms and gives us the confidence to deliver the increase of the net result we have guided at the beginning of the year from the €43 million published last year to €50 million for this year.
EBM: What were the main trends by geographic zone in the second quarter?
François Enaud: Starting with the UK, despite the quite challenging environment, as expected, as I said, we have returned to growth in this geography, with a satisfactory 3.4% growth and notably thanks to a return to growth in the Public Sector. And interestingly, our business in the BPO has grown by 31% with a solid growth as well for our famous Joint Venture with the NHS, with 21% growth in revenue. And for the other geographies, in France, we’re still with solid growth, with a trend of 5% growth, with especially a very solid activity in Finance and Public Sectors. In Germany, the growth, around 4.3%, is mainly driven by the Public Sector and in the other geographies, such as Scandinavia, Belux and Switzerland, as I said, it is a double digit growth, which is definitely very satisfactory and confirming the right strategy in these countries.
EBM: What is your update on recruitments, notably offshore, and your update regarding the staff attrition rate?
François Enaud: Regarding recruitment we are in line with our plan. We have recruited 2,500 people in the first half, of whom 600 in France, 1200 in India. The attrition is quite stable at 16%. Our headcount has grown by 2.2% at the end of June versus end of March. And globally, for the full year, we are in the plan to have a net increase of our headcount of 1200 people.
EBM: You have signed new credit lines in June 2011 replacing by anticipation the existing ones. What are your comments on that?
François Enaud: Yes, indeed, we have signed, end of June, a 600 million € multi-currency syndicated loan which has been, by the way, heavily oversubscribed. These new facilities enable us to have a very good visibility for the next five years, and especially to envisage, with full serenity, the reimbursement of our hybrid convertible bond in 2013.
It is interesting as well to indicate that we have again, as well, some flexibility with these new facilities and it has been negotiated with good conditions and, everything being equal, the cost of the gross debt will only represent 3% versus 4% with the previous facilities.
EBM: And lastly, what is your outlook for the second half and what is your guidance update for the full year?
François Enaud: Our H1 results confirm the initial vision of the full year we had in the beginning of the year and that’s why, consequently, we do confirm our guidance, which is an organic growth by 3% to 4%, an operating margin at least at the level of last year, which was 7.1%, and a net attributable result growing to €50 million versus €43m last year.
EBM: Francois Enaud, Chairman and CEO of Steria, thank you very much.
François Enaud: You’re welcome.
