Sopra Steria Group Un/Adr

Following the presentation, you can ask your questions in writing using the questions tab on the webcast platform. This presentation is translated into English simultaneously and is being recorded. Now I hand the floor to Vincent Paris. Good morning, everybody. Welcome to this 2021 annual results presentation. For this presentation, I will be with Cyrille Mallardet and Etienne Duvigneault. So as you know, we'll have a change in general management. Cyrille will be taking over this role as of the 1st of March. So this means with the presentation we'll be giving the results, 2021 results presentation together. Obviously this year we've managed it together. And then I'll let Cyrille talk about the outlook and guidance for the future. So how is this going to work this morning? I will start with the highlights of 2021. Then Cyril will give the detail of the operating position by reporting unit. Then Etienne will give the financial results. And then Cyril will finish with strategy and outlook. And then at the end, we will be answering all of your questions. So if we summarize our highlights of 2021, I think what we can say is that it was a good year. We've exceeded all of our objectives, all the objectives that we set ourselves a year ago, and this is reflected in a turnover of 4.6828 billion with 9.8% growth and organic growth of 6.4. Operating profit on business activity is 379.2 million, so growth of 8.1% of our revenue. Net profit attributable to the group is 187.7 million, so 4% of revenue. Free cash flow, 264.4 million, compared with 203.5 in 2020. Net financial debt, 327.1 million, so a reduction of 23.1 when compared with the end of 2020. And the UK pension fund deficit of tax, It's $48.8 million compared with $119.9 million as of the 31st of December 2020. Just a couple of words now on other figures that we're actively steering. So this is extra financial criteria. Change in workforce is plus 3.2%. So excluding acquisitions at 2.4%. Attrition rate, which we're monitoring very closely, is 16%. So it's slightly more than in 2020, we're at 13.6, but this is quite exceptional, but it's clearly better than 2019 at 17.7. Feminization of the workforce, 17.6% compared with 12% a year ago. The survey which we conduct every year, Great Place to Work, shows satisfaction as we're up 10 points compared with last year, so 72%. And then with regards to the environment, we are proud, for the fifth year in a row, we're proud to be ranked as A-list by CDB Climate. And then the cumulative reduction in greenhouse gas emissions per employee is 50%, so fully aligned with our targets. So we wanted to make up 85% by 2040, and we're aligned with this objective. So as I was saying, we've generated good performance with regards to all of our key indicators. Growth was 6.4% organic growth, a turnover of 4.68, 2.8 billion, so clearly better than 2019. Clearly, we're on the road to achieve 5 billion euros with the growth that we're generating. Operating margin on business activity, 1.1% up, so 8.1 compared with 7% last year, and then free cash flow, obviously we're satisfied with this, even if we have a favorable contact, Etienne will come back to that, but we've got about 70 million euros that was paid up front, so structurally speaking, we've set the group up with a good level of free cash flow, exceeding 20 million structurally. So against this backdrop, we've had a lot of growth, one market share, some nice victories. I won't go over them all, but I'll just give you three because they seem quite significant given the context and obviously good for the future. So Airbus, number one customer. We suffered a great deal due to the COVID crisis. We were selected for a structural deal, so engineering for all Airbus' entities on a global scale. We are referenced as a preferred partner for engineering with Airbus. And it's important to note that Airbus has obviously suffered a lot in 2022. We have planned to achieve the same turnover as what we achieved in 2019. So good work from the team here and a good, close working relationship with the customer. A second important victory, very important, in the UK, so in the financial domain. We've got Crown Commercial Service, where we were selected as one of the key operators, one of the key stakeholders in charge of managing government debt recovery. So this obviously required certification from the FCA. And this is important because this is going to, we'll see this reflected in our private sector accounts in the quarter four of 2022. But it gives us the possibility of pushing this strategy and the vision that we've had in the UK, so this platform approach in the financial sector. So this first win is important and it gives us the opportunity to win others. A third contract is iPolice, so the police in the Benelux, or in Belgium more specifically, with full overhaul of their IT system, a great deal of innovation, It's a state-of-the-art system, and it's reinforcing our sovereignty, which is obviously a key factor in all European countries. And we're very proud of this victory. So 2021 was very promising with a lot of success, as you've seen. Just a couple of words now on the market. No surprises here. Very active market, very buoyant in all sectors, in all geographies, across all business lines. And this growth is fantastic. driven by powerful drivers, the same, go to cloud, digitalization, optimization of processes with more and more artificial intelligence and data at the heart of everything, both to improve our customers' internal process, their resilience. Obviously, we're at the heart of their transformation. And then the third essential driver is cybersecurity, increasingly so. Good news is, with regards to these three drivers, we're very well positioned. We're talking about areas of expertise, which we've been able to accelerate, which we've been able to reinforce. We're part of the innovation ecosystems, and obviously we are a sovereignty and digital trust stakeholder. A couple of words on HR now. Obviously, this is key. This is an absolute priority. Obviously, the companies that are going to win are the ones who attract and retain the best talent who onboard them onto their project. So our human resources policy is at the heart of companies like us. It's at the heart of our success. So obviously we've been rolling out big efforts and we will continue to do so. We've got structural policies. So obviously we've got HR policy and this includes recruitment policies, training policies, which are obviously at the heart of companies' competitiveness, and we'll carry on heading in this direction, but it is obviously at the heart of our priorities. In terms of figures, you can see a change in headcount of approximately 1,500 employees. 10,636 people were recruited, so we accelerated recruits as of Q2, and the figures demonstrate this. Obviously, the second half was a lot more active as planned, So 6,400 employees that joined the group. And then attrition is under control at 16%. So we've also relaunched growth of subcontracting, so with an additional 650 subcontractors when compared with the end of last year. Now our value ramp-up trajectory. We've been focusing on this topic for quite some time. Now, obviously, consulting, you know that we suffered due to the COVID crisis. Obviously, we've seen a recovery, so 14% growth in activity. Sales price up at 4%. Obviously, we have to carry on reinforcing this, accelerating consulting, which is a major part of our strategy. But 2021 was a good year for us. Offer renewal, obviously, this is ongoing. All the drivers that I've mentioned previously impact this. We have to be proactive to guide our customers and to support them through their transformation. And all of this is reflected in something that we're quite proud of. We're increasingly recognized as a leader on this market. You can see on the right hand side of the slide, you've got all the external recognition. So obviously this is good and we have to carry on heading in this direction. In terms of external growth, obviously it's targeted. Three acquisitions, very targeted. The first, EvaBSSI, so this is a part of cybersecurity in France where we're increasing our firepower. It was important to do so. And then the two others are reinforcing our consultancy activity in Norway. So we've got eggs and labs with business design and then user experience. And then just to finish, just a another important factor. This is not something that started yesterday, but our policy in terms of corporate social responsibility is one of our priorities. We're working in different areas, so social, societal, and environmental. Obviously, social, this includes diversity, equality, and then environment. We've got lots of different targets, and then societal as well. We've got, in each of our countries, we've got initiatives that we're rolling out from us, from our employees, which are becoming increasingly important. And this is reflected, we've got an improvement in our ESG scores with the non-financial rating agencies, as you can see on this slide. So that's what I can say about the highlights. Now I'd like to suggest we hand the floor to Sirin. to talk about the situation in our reporting units. Thank you, Vincent. Good morning, everybody. So operating performance in 2021 improved with turnover, which was at 4.68 billion, with organic growth of 6.4%. Operating profit on business activity at 8.1%. with an improvement of 110 base points. So now let's look at the detail of this, of each operating unit. We'll start with France. France recorded a clear recovery when compared with 2020. This is reflected in organic growth of 5.9%. We saw a recovery in turnover in the second quarter, which accelerated in the second half with double-digit organic growth. The most dynamic verticals were defense. aerospace, telecommunications, and energy. Against this backdrop, recruitment was kick-started again, and the same applies to subcontracting. We've recruited 2,800 people, and we've increased subcontractors by 300. We're in a situation where we can accelerate recruitment in order to respond to address our 2022 targets. In terms We've made a progress of 1.8% in terms of operating margin, which leaves us in a good position for 2022. In the UK, 2021 was a solid year. The turnover was up with organic growth of 13.9%. Our two joint ventures, so NHS, SBS, and SSCL, grew by over 24 percent. Defense and security and government was up 9.4 percent, despite the Q4, which was less favorable as planned, so less volume here with regards to the visa renewal activity. The private sector generated negative growth of approximately 10 percent, but the operational situation clearly improved and we plan a return to growth in the second half of 2022. And this is obviously thanks to the new platform that Vincent has mentioned, so the service platform. So this is clearly an example of the platform business, which we want to develop. So especially for financial services, we want to develop a sustainable positioning here with added value. In terms of the operating unit turnover, And this came with a clear improvement in profitability, which was at 9.1 percent, so up 110 basis points. For other Europe, organic growth was 6 percent. Growth was obviously significant, especially in the Benelux in Scandinavia and in Germany. In these three regions, the growth rate was above 10 percent. with a quarter four which was especially buoyant. Operational performance was 6.8 percent. The countries in this region improved their performance with a margin of 9.1 percent, and SST is still dilutive, but this was planned. Then there's also reinforcement of our consulting activity in Scandinavia, as Vincent has said. thanks to acquisition of eggs and labs. So for a total of 200 consultants specialized in business design and user experience. Now for software banking software, we are clearly aligned with the objectives that we've established. Two priorities, a return to profitability and at the same time, significant investment in digital offers, which will obviously generate future growth. Progressive recovery of results, so operating profit on business activity, this was confirmed. It's at 17.5% compared with 10.5 in 20 and 5 million euros in 2019. So the transformation plan is underway for R&D. This is a plan where in its first year we saw a reduction in costs of 4 million euros And the target of this five-year plan is to reduce our costs by $30 million in 2025 when compared with 2020. 2021 turnover was down 3.3%, and this is due to a highly unfavorable basis for comparison due to the licenses in the second semester. The growth, just as a reminder, was at 43%. Services revenue was up in the second half of 2021. Now the digital launch of the digital office and SaaS, so open banking and customer engaging, is very promising. This generated €6 million of recurring revenue in 2021, and this should double in 2022. Now other solutions saw organic growth of 8.7%. Human resources solutions were up 10%. They saw good momentum in the domain of outsourced payslips. So today we manage over a million payslips every month. Now, property management solutions were up 6.2%, and over the year we've won 12 new customers. we continue our investment in renovating and digitalizing our offers. Operational performance is now above 10%, so this is a first step with regards to the trajectory coming back to traditional margin levels. And now I will hand the floor to Etienne, who will talk about the financial results.

Thank you very much, Cyrille. Good morning, everybody. And to start with, we will look at the consolidated income statement to the group. First, consolidated revenue reaching €4,682.8 million, therefore up 6.4% organically. Then the operating profit on business activity per sector reached €379 million. That is a margin rate of 8.1%, therefore an improvement versus 2020, but also an improvement versus 2019, more than 10 basis points. 2019 was the benchmark year for us before COVID started. Then between this and profit from recurring operations, we have shared base payment expenses. At the end of H1 2021, we had a new incentive plan. The impact on the P&L is only half a year in 2021. The expenses on this line will increase in 2022 due to the full year effect of this plan. And then the new share ownership plan called We Share 2022 that will announce today. I'll come back to this in a minute. Then we have mortgages slightly down 33 million euros and profit from recurring operations is 339 million euros, therefore 7.2% of our total revenues. Other operating income and expenses are going down at 35.9 million euros for the year 2020 had important exceptional expenses connected to the COVID crisis and therefore operating profit was 303 million euros therefore 6.5 percent of our revenues that is up 50 percent versus the previous financial year. Between this operating profit and net profit there are financial expenses that are under control with a bit more than €1 million. That's a total drop in the total cost of net debt. I'll come back to the debt structure of the group in a minute, and our financing conditions. And then €6 million is the decrease for other income and expenses. These are financial expenses that include the interest rates, the pensions in the UK, and also foreign exchange gains, non-cash items. In a minute, we'll look at the tax level, which is going up 33 million euros for the year, in line with the profit that's increased after taking into account the share of net profits from equity-accounted companies. And after deducting minority equities and interest, we have a net profit of which attributable to the group, 187 million, that is up 4%. Then other operating income and expenses in 2020, we have 15.6 million euros of one-off costs coming from the COVID crisis. This is something we can't find in 2021, of course. This being said, restructuring costs reached 35.5 million euros, therefore more or less 0.7, 0.8% on our revenues, therefore an absolute value. The figure has been decreasing and is a proportion of revenues compared to 2020. Then tax. I'd like to say something about the tax level. The effective tax rate is at 38.8% for the year. That is 2021. It includes a one-off effect that we had recorded during H1 2021 due to the fact that we've reassessed deferred tax assets in the UK in spring 2021. The UK government said that the tax rate would go from 19% to 25%. by 2024. If we set aside these one-off effects, we will have a normative rate in 2022, which will reach more or less 27%. On the following page, you have the details of movement in free cash flow between 2020 and 2021. FCF at €264.4 million. We're very happy about this performance, with EBITDA up almost €65 million. The change in working capital was not as good as in 2020, but that's a variance of a variance or change in a change, but it's favorable. And as Vincent said, and as we saw at the end of 2020, the group benefited from very good conditions at the end of the year. The number of net expected payments is estimated at 70 million euros. We had 50 million at the end of 2020, and therefore a slight improvement as far as that is concerned. I know it's always difficult to anticipate in this case, but it shows that there's enough liquidity on the markets, and the cash situation is comfortable for the main clients of ours. Now, this good cash generation is such that we can end fiscal year with a debt that's going to be a lot smaller by 100 million euros, at 327 million euros at the end of the financial year, with, as you can see, a bit more than 100 million euros invested in M&A. and, of course, the recovery of the ordinary dividend after being suspended in 2020. The balance sheet is also very solid, and it's even more solid than before with two ratios, the net financial debt to equity at 19% at the end of the year, and the net financial debt to EBITDA, which is the main ratio that we use if we look at the banking and bond covenants, which is at 0.7 times at the end of 2021. Now, the financing structure of the group is as follows. I'm not going to go through all the lines, but it's quite diversified with no major maturities in the short run, with a lot of ungrown amounts, more than €1 billion, and cash available at more than €200 million at the end of the financial year. That's for the snapshot for 2021. Now, I'd like to say something about three topics in 2022, and I will start with the financing of the group. The group signed two days ago with its banking partners, and we'd like to thank them, by the way, a new mid-term financing contract, which is a revolving credit facility at €1.1 billion. with an initial maturity of five years, that we can extend twice one year, that is a maximum of seven years, just one covenant, which is the leveraged covenant. And there's a novelty for Sopresteria, which is this credit facility has also a system, thanks to which we can either increase or decrease the price of credit on the basis of the GHG reduction objectives. That, of course, will be geared to projects that have impacts on the environment. It will not go to the bankers nor to the group. The second item is that the group is launching a new We Share 2022 employee share ownership program, which is based on a simple principle, which is that it's one free share for each share that's purchased by the employees. for a maximum volume of shares with company contribution, which is 100,000 shares. Therefore, a total of 200,000 shares for this plan, which will be visible on the financial statements in the first half. And then finally, capitalization of some development costs for limited amount. The group is very conservative as far as this is concerned on very well-identified product lines for which we expect strong growth. Cyril mentioned the digital offering for Sopra banking software. The group intends to capitalize this for a modest amount in the light of R&D expenditure. That is, we'll have short investment cycles with a strong commercial dynamic. We've identified our ROI and begin to accelerate our investments in 2022. Thank you very much for your attention. Now I'll hand over to Cyrille again, who's going to be talking about our strategy and our outlook.

Thank you, Etienne. So before we come back to our outlook and the targets that we're setting ourselves, I'd like to reaffirm our business strategy and just inform you what we're implementing to make this project happen. So it's an independent project supported by a reference shareholder And via employee shareholding, as Etienne reminded, it's a project that onboards all of our employees in the company's performance. So this sets out various requirements, one of which is ongoing improvement in our performance. Our strategy is very simple. It means drawing on our differentiation levers, our culture, our digital sovereignty, our close relationship with our customers, and it means producing high-performance offers with high added value, so end-to-end consulting, software, technological expertise, and then obviously our vertical approach as well. We are driving an ambitious project seeking sustained growth with a targeted acquisition So it's an ambitious project, which is European and global for software. So obviously we're staying in the course, and we're activating the different levers that we've established. So we are concentrated on our positioning with our 100 key European accounts. We have a willingness to have an impact. End-to-end approach with our customers accelerating on technology. So I'm talking about cloud artificial intelligence cyber security and we are also Reinforcing our consulting activities. So with higher this value here consultancy to support our major customers transformation project also draws on a production an extra production model, which is highly robust and then as for software I This is a key lever obviously to assume this high added value sustainable positioning with our major customers. Our mid-term ambitions haven't changed. With regards to the group's performance, we're targeting organic growth and turnover between 4 and 6 percent annually, free cash flow between 5 and 7 percent of revenue every year. With regards to profitability, we're targeting operating margin on business activity of approximately 10% in 2024. Finally, we want to play an active and sustained role in sector consolidation so as to reinforce our skills and grow our market share. Furthermore, we want to be ambitious with regards to corporate responsibility. This is at the heart of our business strategy, and we've got three priorities. The environment, boosting female representation with regards to our management and management bodies, and then digital sustainability with regards to our value proposition. With regards to the environment, we've set ourselves the target of net zero emissions in 2028. At the end of 2021, with a cumulative reduction of minus 50%, excluding COVID impacts, we're aligned with this objective. Now, with regards to female representation, we want to hit 30% of the XCOM in 2025. But in addition to this target, we've launched a program to identify, promote high potential women at all levels of management so that we can actually kickstart this approach in the long term. We're also looking at offers sustainability and especially with our consulting offers as well so that we can support our customers with ethical trust challenges and then also responsibility with regards to how we use digital. In 2022, we are fully committed to our transformation and to increasing our performance. We have set ourselves three priorities for the year. So firstly, human resources. Big challenge here is attractiveness, so attracting and retaining talent. In 2022, we want to accelerate recruitment, and we are targeting over 11,000 new hires. We are also working on retaining our employees, so using the tool Great Place to Work, and obviously all the initiatives that result from this. All of management at all levels of the company are clearly committed to this absolute priority, which is human resources. Furthermore, Etienne has mentioned it this year. We are launching the employee shareholding program, obviously to closely involve our employees in the company's growth and performance. The second priority is development of business synergies, so developing differentiating offers. with a special focus this year on the financial services and defense verticals. And then the last priority for this year is developing, strengthening consulting and software. Obviously, these are two key pillars for the group's strategy. Finally, our financial targets for 2022, we are aiming for organic growth in revenue between 5% and 6%. operating margin on business activity between 8.5 and 9% and then free cash flow of approximately 250 million euros. So that is all for the 2021 presentation. I'd like to thank you for listening and now we can move on to any questions.

Ladies and gentlemen, If you have questions, please dial 01 on your telephone. You can also ask your questions in writing. Please use the Q&A tab on the webcast platform. We've received a first question, an oral question from Mr. Nicolas David, Odo Securities. Hello, Vincent. Hello, Cyrille. Hello, Etienne. Well, congratulations, Cyrille, for this appointment. I'd like to congratulate Vincent as well for what you've done since 2015. I have three questions to ask you. First one, can you tell us more about the margin improvement drivers in 2022? You expect a good margin improvement in the context when we have wage increases. Can we expect a sharp increase in the banking software performance as early as 2022, or perhaps in services you're not yet back to the levels you had before the crisis, or both? If you have any detail, please. And then what are the moving parts between the upper part and the lower part of the guidance bracket? Now, second question. I think it's the first time that you're giving us a specific date for the midterm margin, that is 2024. So my question is, what has changed then? Do you think you have better visibility? Do you have more comfort to mention a date now? And my third question is staff or headcount. Can you tell us more about Q4 organic net recoupments and your objectives in 2022 as far as hiring policy is concerned? And I have another question as well about subcontracting. 150, I thought you had plus 800 in nine months. So was there a decrease in Q4? If yes, why please? Well, we'll answer these three questions in the right order. the drivers to improve our margin? Well, the good news is that all of our entities can improve for different reasons, but we can improve everywhere. It's not just one single unit that's going to be really doing something good and the other ones would be stable. But for different reasons, we consider that in the two or three years to come, and more particularly in 2022, we think we can really improve our performance. That's my first answer. And then I think you asked another question as well about wage increases and the possibility of sticking to our margins. Well, by the way, I'd like to recall that, of course, there are wage increases. And as we speak, we have bigger wage increases than two years ago, yet we're careful. And what we look at is the average salary. So we increase the wages of people who have a strong potential or those with potential and we hire many fresh outs so that we have a pyramid which will remain more or less the same we want to have an average wage or salary that's going to be stable over time now what's going to happen in 2022 then well given the context maybe the average wage is going to be increased a little But our objective, and that's very credible, is that the selling prices will increase more than the average wage increases. And therefore, we think there's no particular risk on that. On the contrary, we'd say that this is an opportunity. Given a market that's thriving, we think we can improve our margins. And therefore, that's something we can do, I think. It was the case in 2021. I think we can improve in all of the units of the group. Second question, why the 2024 date? Well, that's more or less connected to what I've just said. That is, we have a better visibility on the different units. Well, of course, the backdrop, the context is different in each case. But for a couple of years, we've decided to stick to the target. It's still the target that we have. But we want to have more ambitious objectives, yet they're realistic given the context in which we operate today. Then the third question, the hiring policy. Cyril, we'll give you all the particulars. Thank you very much, Vincent. Well, as far as the hiring policy is concerned, throughout the year, we've started recruiting again. And we recruited throughout the year. We accelerated during the second half. If you look at the number of people we recruited, the number increased 50% compared to H1. And therefore, that means that the beginning of 2022 is going to be quite positive in terms of the recruitment dynamics. Okay, thank you very much. And what about subcontracting? Is there a number you can give us, the trends, the dynamics, and what you're going to do in 2022? Will you work more with subcontractors or not? Will you hire more people and therefore work less with subcontractors? Well, my answer is that if you look at the market, well, we use both levers. That is internal recruitment but also subcontractors. These are the two levers. And we can perhaps increase the number of subcontractors we work with in 2022. But we have a third lever, offshoring. This is accelerating as well. We're recruiting more. So we adapt to meet the market needs. Okay. So there's been no decrease in subcontractors during Q4? Am I correct? How should we interpret the number? Well, I didn't even notice this. I think we are going to have more subcontractors. What we can say as well is that in 2022, we're increasing, as Cyril said. We have more subcontractors. We hire more people. Headcount is going up. We're very careful, though. We're very conservative. But we want to grow as well, and therefore we're going to grow in these three areas. So you think that 2022 is going to be more like H2 2021 in terms of total number of recruitments? Yes, you can say that. Well, All things being equal, of course, and I was thinking about what we heard on the news this morning. Okay, thank you very much for these answers. Thank you very much. For your information, you can ask your questions orally if you use the conference call number. by dialing 01. Otherwise, you can use the webcast platform and send your questions in writing with the Q&A tab. We have a second question from Mr. Emmanuel Parot, Gilbert Dupont. The floor is yours. I hope you can hear us. No, we can't hear you. We have a technical problem, Mr. Perrault. We can't hear you. Mr. Perrault, please answer the question again. Can you hear me all right? Yes. Good. Hello. Hello. Sorry about this. To start with, You mentioned that there's an improvement in your operating, your gross margin in 2021. That is selling prices increased more than the average wage and you expect the same in 2022. Is that correct? Second question. Well, first a question about subprime banking. Can you tell us more about revenues in 2021, the split between SaaS, licenses, maintenance, et cetera, and what you expect in 2022? What's the market going to be like? What about the licenses? And what about your operational drivers? And I have another question yet about capitalization of development costs. What is the amount that you anticipate And usually for us, these are all considered as expenses. So why have you capitalized some of these development costs? Thank you very much. Well, question number one then, the margins. Well, yeah, absolutely. I can confirm what you've said. This is our rationale. Of course, the situation will vary depending on the country. The increases will be different in India, in Germany, and in France. and the price increases very much based on the business mix. But we've seen this trend at the end of 2021, at the beginning of 2022 as well. We'll continue, and as far as banking software is concerned, for licenses, well, the breakdown is more or less the same compared to what we said before. It's 12%, subscriptions 14%, maintenance 31%, and services 42%. That's the breakdown for our revenues. So there's no major mismatch compared to what we said at the end of last year or during H1. Now, what's going to happen this year? Well, we think we're going to have the same breakdown for licenses, more or less. The percentage will be the same as the one we had last year. This is 50 million. And then, of course... We will do our best so that we have more subscriptions, that we have an increased number in subscriptions. And as Cyril said as well, we will continue and develop our products and will be investing in the most fruitful products tomorrow and will optimize R&D. This is still our rationale. We're not going to change it. And by the way, in 2022 and 2023, we'll be consolidating these action plans. rather than looking just for growth. It's a good thing, of course, if there's some type of growth. We'll do our best so that we have more licenses, more subscriptions. But the number one priority for us is to focus on the two topics I mentioned before. This will guarantee tomorrow's success. And then as far as capitalization of development costs is concerned, Etienne will tell you more about this. Yeah, if we look at the amounts, I'm not going to give you the exact numbers, but in any case, it's going to be less than 10% of groups' R&D investments, so a very small amount. We're looking at products that we've clearly identified, and then we want to have more investments to these products. For instance, the digital offering for Sopra banking software, and with immediate investments, that will be accelerating. And generally speaking... These products are based on the subscription mode, and therefore we have revenues over time, spreading over time compared to the license and maintenance traditional business model that we had until now. And I have another question about the operational leverage for Sopra Banking in 2022. I think you've worked on rationalization of R&D. Can you tell us more about this, please? Certainly, our objective is to progressively improve our profitability. We don't want to put too much pressure on the short term, though. So it's a tricky exercise, but that's what we've been doing. in the past three years. We want to optimize our modus operandi. We want to decrease costs if we think we can decrease costs, but we want to keep our levels of investments if this is a guarantee of our success for tomorrow. So that's true. We're progressively improving. We don't want a sudden change in our profit profile for the reasons I've just explained. Okay, thank you very much. Next question. Thank you. I have several questions to ask as well. Question number one. On the margins in France, they're not yet back to the normative level. Today, there's a difference between 2021 and 2022. And this change is that at the beginning of 2021, you didn't have an optimum use level or other reasons that explain why you're not back to the previous level. Question number two about headcount again. I know that you have plus 500 people for offshore, and yet the percentage is still at more or less 18%. What are you going to do in India for Q4? They were quite stable. Do you have an objective in terms of assuring? And the third question about other solutions. Now, we are back to 10. That's operating margin. We are at the peak of 15 or 16. How can we have this change? Because now revenues are up again. So... Does that mean that you have a good margin on this service business? Well, that is, you usually have six points in the margin. Where can you find these six points, these margin six points? Well, the first question is about the margins in France. Yes, you're correct. As we said a year ago, there's the fact that progressively we hide during the first half and then we accelerated. We've kept the same structure even though revenues are going down. because we wanted to be ready should there be a strong growth. So we said that before. We said that in 2021, we would never find the margins we had in 2019. Yet it's still our objective, as Cyril said. So what we're doing is very much in line with what we said in 2021. And that's true for 2022. Then the headcount. Headcount in India. We have no problems with our growth in India. It's not because we're not visible enough, or it has nothing to do with the local headcount or the local teams that would slow down our growth in India. Not at all. It's the business we can't send there, that is, in terms of offshoring. This is how we're positioned. That is, as I said before, it's based on sovereignty. Then we want to be strong in some verticals. I was thinking about the public sector, defense, and security. And in other sectors, we're a bit careful to offshore things to India. We're not saying we're not doing anything, but we have technological developments there, and we consider that we can still grow in India, given the customer portfolio that we have. But this cannot be compared with the global plays on the industry market, for instance, where their offshoring percentage is different compared to ours. So we have a clear focus. We want to have a center of expertise, a benchmark for the group, which is what we're promoting, what we're doing. But this will be done progressively because we need to convince many clients. But as we go, little by little, we think we can do more in India compared to what we could have done three or five years ago. And in some cases, we need to do more offshoring in some sectors. So we intend to grow, and yet we know that there are some constraints, the constraints I've just mentioned. As far as other solutions are concerned, I've been saying this for several half years. We invest more in the modernization of our offerings in digital. It would be a major error if we didn't invest, and we've been investing for two or three Otherwise, we wouldn't be in a position to grow enough. So we're revamping our offering. We're investing more than ever in digital solutions or digital technologies. We're on the right tracks back to the 15% or 16% you mentioned before. That's true. But we need to invest for the time being, which is what we did in the past two years. Part of what happened is due to COVID in 2020. But in 2021, we had extra investments that we wanted to do so that we have solid positions over the longer run. And yet, there's nothing that says that in the midterm, we wouldn't be back to our margin levels. If you look at the trends, there's a progressive improvement.

Could you just give us some details in terms of products So I understand with regards to, obviously there's various development that's possible, but with regards to HR products, what investment is there? Because this is an industry that's changing hugely. No, but yeah, all of our products need to open up to digital in more and more countries, so more and more openness. Customers want a modern HR IT system And so our products need to be aligned with this. We need to have partnerships. We need to have the possibility to open them up. And we're investing on this. But obviously, it's a relevant comment. We're going to come back to the target with regards to HR quicker than with regards to real estate, where the investment is heavier. So with regards to HR, we should get to the target quicker than what we will do with real estate. Okay, thank you very much. We have another question from Laura Metaille. Yes, so I have a question. Organic growth for 2022 is slightly less than 2021. Can you explain some of the drivers for this level of growth? And what do you expect for growth in the UK in 2022? Okay, well, you've got the answer here, basically. Cyril has already presented growth in the UK was very conjunctural. It was boosted in 2021, so we're expecting it to be flat in 2022. So that's the first explanation. Then obviously we've got the comparison, the impact of the comparison basis. 2021. We obviously were comparing with everything that happened the previous year, so it's very difficult to isolate figures. I would say that structurally we've got a growth trend with an active market, recruitment, and then obviously the priorities that we've set ourselves. So I think it's the whole context, but we should hit the growth rates announced for this region. Thank you. Next question. Derek Marcon from SOCGEN. Over to you. Good morning, gentlemen. Can you hear me? Yes, good morning. So I had three questions. The first is on the UK. You said that there was an improvement, a structural improvement in profitability for the UK. If Should we understand with this message that, one, margin can improve in 2022? And basically, with the U.K., if we look to 2024 with regards to 10% group margin, will the U.K. be above that despite the investments that you'll be making in the private sector? So that's my first question. My second question is, could we have some – The ARR for software banking software, obviously for the digital side of the business. And then the third question is with SFS in Germany. Do you expect 2022? Do you expect the dilutive effect to be comparative with what you've experienced in previous years, especially 2021? And then I've got some other questions which I've sent in writing. Obviously, I know you like to read my questions. So with regards to the UK, The volume, the exceptional volume that we had, so mainly for SSCL, where we had a lot more recruitment than usual, and the volume in Visa, which obviously made up for delays given the COVID crisis, all of this boosted performance, but also margins, because obviously with this type of operations, we've got exceptional volumes. This pulls up the margin. So this is the basis for comparison. So it dropped. that we're expecting in terms of these operations, in terms of turnover and profitability, compared with the structural improvement that we're working on for the rest of the business. So as said, for UK, we've got investments to be made in platforms, especially in the financial sector, but we're not going to give up on this. So this being said, we expect to be at roughly the same rate or slightly improved. It's too soon to say in terms of profitability. We're not expecting a huge jump up for 2022, but for 2024, there's no reason not to see this if we're successful in the private sector, so especially with our platforms in the financial sector, so with the synergies from Sopra Banking Software. Obviously, we think this is accessible for the UK, broadly speaking. It should achieve its 10% in the future, but obviously it's very too soon to give any more detailed information. With regards to Sopra Banking Software, I said about 60 million of subscription, so 14% of turnover. And we're expecting an increase in 2022. And then the last question was on the dilutive effect of SST in Germany. So in 2022, we'll still have this dilutive effect comparable with 2021. So... Will you give us regularly the ARR for digital or software banking software? Can we expect to have an announcement on this regularly? Because obviously with this transition towards subscription or to SaaS, this metric is obviously more important than what it was in the past. Yes, this is something that we've got in mind, but we won't be doing so in the short term. This will come later. Claire, thank you very much. Ladies and gentlemen, just as a reminder, if you'd like to ask a question, press 01 on your telephone. You can also send your questions in writing on the web platform. The next question is from Gregory Ramirez, Brian Garnier. Good morning. Thank you for taking my question. I just wanted to come back to headcount. So Q4, just a clarification because when I calculate the attrition which is integrated into Q4, so net increase was 511 for Q4. So obviously we've got the acquisitions as well, so EVA and eggs. This brings me to 150 recruitments, net recruitments in Q4, whereas in Q3, I had calculated 620 if we take the LABS acquisition on the 30th of September. Is this, have I made the right calculation, or how can we explain the fact that we've only got an increase, quite a low increase in headcount? And obviously taking into account the attrition in Q4. I also have a question with regards to the attrition trends that we're seeing in ITE services. And obviously we're seeing that this is increasing across the board elsewhere. But with Soprasteria, we haven't yet hit the level, the highest levels of the market in 2018, 2019. Some stakeholders obviously exceeded these attrition rates. So how can you explain the fact that the attrition rate is held at rates that are lower than what we saw before the crisis? Is this area is more exposed in France or in the Parisian region, or have we got less exposition more generally speaking with regards to our customers? How do you explain this? So with regards to growth in headcount, I don't have the same figures as you, but perhaps we need to look at that in more detail. I've got 670 employees. and then 638 in Q4. So there's no breakaway here. Obviously, you have to look at the detail month on month. We've got more recruitment in various parts of the year, various moments of the year. When you look at the start of the year, obviously, this is the big question. We've got an active cycle here with a pace. But everything's in continuity, and it's not slowing down. Obviously, this remains a challenge. We're not the only people who are trying to recruit at this time. With regards to attrition now, obviously it's very difficult to speak for others, but there is one essential factor. Obviously, we're less present in India, and India has a higher attrition rate. And then elsewhere, this is obviously an essential factor. We talk about recruitment, but but it's even it's even more effective to keep employees to retain them in the long term we know them and they know our culture so this is obviously a key priority where we're going to try and differentiate ourselves but obviously we remain humble uh 2022 is probably going to be a little bit more tense than 2021. yes just to add to what you're saying um obviously The best recruitment we can make is actually retaining existing employees. So all of our management is committed to this approach. We've positioned a great place to work with everything that this means in terms of action plans resulting from this. We want to create close working relationships between managers and employees, but obviously we're very humble. The market is what it is. We're all on the same market. So this is going to be an area that we're going to pay attention to in 2022. But our basic principle is that the best recruitment you can make is retaining your existing employees. Thank you very much. So we don't have any more questions on the phone. But I will hand over the floor for the written questions. So we've had a few questions over the internet. The first is Dominique Javier from Nelson Hall, who's just coming back to offshore. We've already answered this in part. What are your offshore ambitions in India when Capgemini is recruiting 45,000 people per year? Do you think it would be relevant to have an acceleration in India for Soprasteria? Yeah, I've already answered this question. We haven't got the same volume. We haven't got the same market cap. Obviously, one of the strong sectors is industry, and that's not where we are. So we're less focused on this market. So yes, obviously, we want to push, but obviously, we've got a different project service center excellence, obviously more targeted. But yeah, we need to grow in India, and there's no reason why we won't be successful in doing so. Next question, Derek Marcon from SockGen. So the three recent acquisitions, Labs, Eggs, and Eva, have they got growth outlook in 2022 that is above that of the group? Could you give us a few details on turnover, volume, margin profile and positioning. So I'll let Etienne add to this, but obviously these three entities are not going to be pulling the group down. So yes, the answer is yes. We're seeing good momentum for these three entities. Now for the detail of the figures, I'll hand over to Etienne. Yeah, you've got a few details in the presentation. Ava, 33 million euros in 2020. 21 eggs and lab of 15 and then six respectively, so in Scandinavia. So either SSS, BSSI is cyber, so obviously significant growth expected here. And then the two eggs and labs in Norway, we're expecting significant growth in 2022. We have a new question from . Over to you. I hope you can hear me. Sorry to come back to the floor. But I just have another question. It's with regard to the UK. So for several semesters now, we've seen signs of improvement in the private sectors. But we're not necessarily seeing this reflected in the figures. What are the items or what are the factors that could lead us to think that we could have a return to growth in the second half of 2022, which is more secure than in the past? And then when we look at the major areas, we're seeing big success in the UK in the private sector, but obviously given the limited weighting of this activity when compared with The rest of the activity in the UK is not going to have a big difference, but could we just focus on growth outlook in the public sector for joint ventures and then outside of joint ventures in the UK? So a lot of questions here with regard to the private sector. Obviously, we've never hidden this. We're a small stakeholder. We haven't had solid positions. So each time there was renewal, it was difficult. Either we lost margins or we lost our footing. So for several years now, we've been trying to focus on our strengths. So I said this earlier, platforms, in part in the financial sector, this is a priority. And then for the rest, obviously, we're trying to resist. We're not going to be a strong stakeholder. We need time. So this is already a first victory. having this certification, so the possibility to manage the government debt refund platform. And we hope that in the two, three coming years, we're going to have other positions like this. Obviously, given our size, given the size of operations, we're quite confident we'll have growth starting from Q4 of this year. So that will be quite important. Just to give you some figures, about 10 million this year. 30 million in 2023. And given the context, what's important is that we haven't lost sight of our focus. Sometimes we might lose positionings. We've had negative growth. But margins, even if they're not at the level that they should be, they are nonetheless better than where we were two, three years ago. We're losing money. So we're investing and we're trying to improve our profitability with a more targeted approach. So that's the UK project in the private sector. Obviously, with two, three platform positionings, it could completely change things. Obviously, we're never going to be bigger than what we are in public, but we need to have another strong sector. We can't just be dependent on the government, on government changes. We knew this with the public sector approach. This is something we would have to work on. It's a long-term approach, but I think we're attacking it from the right angle, so using our strengths. Now, for the rest of the UK, we've got momentum, we've got the vision we have, public sector is transforming, we've got quite an interesting positioning, and we are expecting growth. I said, obviously, structurally. Last year was really exceptional with regards to volume, so we've seen a little slowdown, but there's no reason why we shouldn't be supporting the digital transformation of the public sector. So that's what I can say with regards to the targets of the UK. Thank you very much. We don't have any more questions over the phone. One last question from Nicolas David from Odo. Could you give us an estimation of the P&L costs for the incentive plan or the employee shareholding plan for the coming years? So obviously, this depends on the decision made from the board of directors. I can't give you details on that. But we share in 2022, which is implemented this year. Obviously, this depends on the share price, so about 20 million euros. And then the incentive, obviously, it depends on the share price, about 10 million euros.

Well, we have no more questions, neither in writing nor on the phone. So, please, gentlemen, you have the floor. Well, if we've gone through all the questions, we'd like to thank you. Thank you for joining us, and we will meet again soon. And that is the Q1 results. Thank you very much. Have a nice day.