Sopra Steria Group Un/Adr

Good afternoon ladies and gentlemen and welcome to this conference call for this upper stereo 2024 H1 results announcement. This call is recorded. And. Your questions, you'll be connected online on listening mode only. If you wish to ask any questions, please star 1 on your telephone keypad. So star 1 on your telephone keypad to be connected to the operator. Now I'll hand the floor to Cyril Malagé, CEO of Supersteria, to start. Over to you. Thank you. Hello. Good afternoon, ladies and gentlemen. Welcome to this webcast for the Soprasteria 2024 H1 results announcement. I'll be giving this presentation with Etienne Divigno, the group CFO. I'll start by going over the highlights of H1, then the operating position by reporting unit. Then Etienne Duvigneau will present the details of the financial results. Then we'll conclude with our priorities for the second half and our financial targets for 2024. We'll finish with a Q&A session. Firstly, just to make sure that this presentation is clear as possible, I'd like to specify that in accordance with IFRS 5, the financial statements for the first half reflect the classification as assets held for sale of certain activities of Sopra banking software as of the 1st of January, 2024. Furthermore, as part of the view of assets acquired, Sopra's area has harmonized the methods used to recognize revenue for certain ordinar contracts in accordance with AFRS 15. Etienne Duvigneau will give you more details on the impacts of these two standards during his presentation. So, despite a wait-and-see climate, which led us last week to adjust our organic growth target for the full year, our H1 results are solid. Revenue was up 3.8% when compared with 2023. Variation on an organic basis, it was plus 3% above our expectations given the month of June, which was impacted by several external factors. Despite this context, margins have improved. The operating margin on business activity stood at 9.7% with a 0.9 point improvement compared with the 8.8% published for the first half of 2023. net profit from continuing operations attributable to the group, so before taking into account discontinued operations and after deduction of minority interests, the net profit from continuing operations attributable to the group was up 50.5% to hit €169.3 million, so with a net margin rate of 5.7% of revenue compared with 4% in the first half of 2023. Free cash flow... stood at 44 million euros. And this is in line with historical seasonal effects, excluding the postponement of a collection of research tax credits in July. So the market wasn't particularly buoyant in the first half. We can even say there's been a wait-and-see climate since June, and there is no outlook for a recovery in the second half. Major transformation projects do exist. Our pipeline is full up and there are plenty of opportunities, but decisions are being pushed back and this means there is lower discretionary spending. The increasing uncertainty in France has only been increasing since June and this meant investment decisions that our customers are taking are being pushed back. Aerospace, despite encouraging a mid-term outlook, is suffering short-term difficulties which are expected impacting our order book. And then in the UK, we've had a temporary delay in the ramp up of a significant contract. But this will provide a positive contribution in 2025. So despite this unfavorable context, we have won some good deals in the first half. I'd like to quote a couple of them. In France, we've got a good contract in. So update of the... applications, maintenance and upgrade of applications for SNCF Voyager with over 4 million euros. Our systems are at the heart of SNCF's systems. So this is for managing trains and managing traveler information. And we've had the opportunity to implement our expertise in terms of AI. And then for SSCL in the UK, we've extended a contract with the Metropolitan Police for two extra years. And then there's a new hospital as well, the Nottingham University Hospital, which joined the NHS SBS platform. I'd also like to highlight two other projects in cybersecurity. Firstly, the Directorate General of Public Finances in France. We won a cyber contract, 25 million over four years. That's for prevention, protection and remediation services. And then we've also finished a cloud migration for a major French bank, one of the largest European foundations in terms of data manage, and that was based on AWS. We've also had a great deal of success in terms of AI, I just want to highlight a major player in the aerospace and defense domain where we won and we've started the scoping phase for an industrial AI project supporting our customer. And then finally, just to highlight CS's good integration within the group, we've also won another good deal, won by CS. So the Air Force in the United Arab Emirates, so an operational system for command and control, C2, which aims to reinforce interoperability across different systems in the UAE, between all their different systems. So that's what we can say about business. Now I'd like to come back to our performance. In the first half, our operational performance has continued to improve, and this ongoing improvement in our margin is a result of transformations which were initiated over three years ago to generate greater added value for our customers. We've had three priorities, so upscaling consulting, ramp-up in value of tech, and then the upgrade in our operational model. At the same time as these transformations, we've also reinforced our operational steering for our projects and our cost control. And so the combination of the transformations underway and the reinforced steering of operations has enabled us to increase our operating margin on business activity by 3.6% when compared with H1 2023. Based on this, we're confident in our capacity to hit the 10% target at the end of the year. Now I'd like to suggest we spend a couple of moments talking about the transformations underway. We have three priorities, consulting, our tech offering, and upgrading our business model. With regards to consulting, we want to build a European consultancy firm, double revenue by 2028. increased the value of our services, and this year we've accelerated rollout of the Soprasteria Next brand in Europe, so in particular in the UK and in Italy. Our sales prices are up 5%, which demonstrates that... the value of our services is going up despite the difficult market. In terms of technological offers, we've ramped up our efforts on rolling out AI. We've also built a strategic partnership with Microsoft to accelerate rollout of co-pilot Office 365. And then we've done this for ourselves. And then we've also put together an offering for our customers. So an offer which is highly successful at the moment. Now in terms of our skills, our tech skills, we have also ramped up our efforts, increased the number of certified employees. We've increased the number of experts in architecture and then on recent technology as well. And we have also enhanced our offering catalog, whether it be focusing on cloud, data, platforms, or BPS. Finally, with regards to our business model, at the start of the year, we confirmed our positioning that we want to be a European stakeholder in consulting with digital services for major operations operators and organizations in Europe to be able to address European sovereignty challenges. So to clarify our positioning we took the decision to dispose our banking software activities and the steps of this operation have been successfully completed and the disposal will be completed by the end of September. So on this last point I'd just like to give you a couple more details So the planned disposal was announced on the 21st of February 2024. Since then, it's come to life. We've had the legal carve-out of SBS's activities to be sold, and then also by the contribution of activities to be retained within the group. Most of the steps... have been successfully completed. So we've got signing of the sale of agreements. Then we've had authorizations obtained from the different authorities, competition authority, but then also the foreign investment regulation approval as well. AMF approval of the Axway prospectus, which has been submitted as part of the capital increase that was done on the 22nd of July. So the capital increase will take place between the 26th of July and the 20th of August. So the operation will be closed in early September in accordance with the initial plan. Now let's take a couple of moments to talk about artificial intelligence, which is at the heart of our transformation. GenAI has the potential to significantly impact productivity, performance across multiple businesses, our business, but also our customers' business. So given this paradigm shift and then boosted by our history in AI technology, we've decided to accelerate investment in this area. So in two areas, rolling out this technology in our business lines and our support functions, but then we're also investing in decisive issues, so preparation to scale up... and then trusted AI as well. We launched a program called RAISE a year ago with the idea of boosting adoption of AI within the company and then supporting our customers, helping them to adopt trusted solutions. We've got 4,000 experts specialized in data and AI, and our goal is to double this number in just a couple of years. So our business consultants are the first people who go to talk to our customers with their AI knowledge. So these 4,000 consultants have all been trained on AI over the past couple of months and will be extending this training to all of our employees. Now, the next steps are scaling up and then addressing ethical AI challenges We've decided to invest more, and I'll highlight this with a few examples. Firstly, rollout of the AI factory offering, so for customers to industrialize use of AI. That's the first factor on tangible projects. Then we've got smaller AI models. the small language models, and then we're going to extend AI use cases where we can address energy consumption matters, for example. And then the last example, using AI to manage information manipulation issues, and disinformation with an analysis system looking at changes in information if there is a conflict, combined with the C2 systems provided by CS, or we've got development of a detection and reaction system for IT attacks, powered by AI. And then we've also launched a think tank, Pegasus, helping to rally the relevant stakeholders in this domain. Now, let's come back to the integration of acquisitions. So, which is in line with the plan, and we're happy to observe a change in positioning, especially on the defense market, thanks to the acquisition of CS, but also in the Benelux, thanks to Tabania and Ordina. In defense, we are leveraging business expertise and the offers that CS Group has that we didn't have previously. And CS Group can capitalize on the power and the robustness of a solid group like Sopra at Seria to reassure their clients and access these major programs. From now on, we have opportunities which were previously not accessible. So this applies to defence, but security as well, and then space. We now have access to European programmes. CS growth is at about 4% in the first half, and the pipeline is reassuring with regards to the outlook in the future. In the Benelux... We're anticipating growth in 2024, but we're getting in good opportunities internally, especially in financial services or with the European Commission. We've got a customer at Rabobank, so Soprasteria is a strategic partner to roll out their transformation. And then thanks to these two entities, CS and then Benelux and the synergies that I've just mentioned, the operational synergies program is tangible and is starting to pay off. We're expecting operational margin in 2024. to be up when compared with previous years and that applies in the first semester already. Now let's look at the operating position by reporting unit but before we go into each reporting unit I want to just highlight something, each reporting unit has improved its operating performance in the first half when compared with the first half of 2023. So this means that all of our four units are contributing to improvement in operating results in the first half. So now if we move to France, revenues in France stood at €1,251.3 million, or organic growth of minus 1.6%. The second quarter was quite flat compared with the first quarter. We've seen significant growth in defence and transport, stability in the public sector withheld well, and in financial services as well, and then a contraction in the other verticals. Operating margin on business activity was 9.5%, up 0.4%. points compared with H1 2023. And this increase comes from an intrinsic increase of 0.2 points and then a accretive effect from the reallocation of business previously within SBS. So that's 0.2 points. And then we've also had an increase in CS's profitability of around two points. Now let's move to the United Kingdom. Revenue was €487.3 million. Organic growth of 3.1%. Organic growth driven by the first quarter and by SSCL. Second quarter, there was a slight contraction given the slowdown for SSCL living to the impact of the elections. in the UK. And then the most buoyant sectors were financial services, government and transport. The operating margin on business activity was 11.6%, so an up 0.2 points when compared with H1 2023. Now let's move on to Europe. Revenue stood at 1,050.5 million euros, organic growth a plus 1.5%. So growth, which was sustained, supported by good momentum in Scandinavia, Spain, and Italy, There was a contraction in Germany, which was smaller in Q2 versus Q1. And then the integration of the three entities in the Benelux generated comparable revenues with H1 2023. Operating margin on business activity was 9.3%. 0.4 points compared with H1 2023. And this is due to an intrinsic increase of 0.5 points. Then we had the dilutive impact of 0.1 points linked to reallocation of business from SBS. Profitability in the Benelux was up approximately two points. Now let's move on to the solutions reporting unit. Revenue stood at €160.3 million. Organic growth was flat. So this growth highlights different realities. So human resources business grew 5.2%, whereas real estate activity... contracted 5.3% in a difficult real estate market. Operating margin on business activity was 7.6% compared with 10% in H1. So we had an intrinsic increase of 0.7 points and then the dilutive impact of 3.1 points linked to reallocation of business from SBS. So that's the details of the operating units. And now I'll hand the floor to Etienne, who will talk about the financial results. Over to you.

Thank you, Cyrille. Good evening, everybody. Before we have a look at the consolidated P&L, let us have a look at the impacts of IFRS 5. That is, we have to look at SPS activities that will be sold to Axway in activities that are held to be sold. On the slide on the left, what we have is the revenue and the operating profit on business activity by sector. And on the right-hand side, the difference between the reported numbers on the first half of 2023 and the restated H1 2023 as FBS was an activity that was held to be sold in January 2023. Therefore, as you can see globally and for each sector, you can see the impact of restatement on the revenue and the margin. To recap, the revenue for the first half that's been restated is €163 million below the reported revenue. And there's an accretive level for 50 basis points in 2023 on the operating profit on business activity. And the accretion effect will be 20 basis points for the full year. In addition, if we look at the balance sheet, the SBS activities to be sold will be grouped together in the lines called assets to be sold or liabilities that will be transferred or sold. Then if we look at Ordina, since we review the assets and liabilities, the group has harmonized, of course, the recognition of revenue on some contracts for Ordinaire. We assess that Ordinaire is an agent in the Netherlands and Belgium for some contracts, that is, when we resell external scales, which means that in order to be compliant with IFRS 15, the revenue, therefore, is recognized with a net amount, which is the generated margin, rather than having a gross number on the basis of an operating expense. The effect of harmonization is minus 41.1 million euros, to be precise, on the revenue for the first half of Ordina's revenue. The amount is well distributed between the first half and the second half. Organic growth, of course, has been restated and recalculated, taking to account the restatement. There's no effect on the operating profit on existing activities, continuing activities. Now, let's have a look at the income statement. Consolidated revenue, €2.949.4 million, therefore up 3.8%. Organic growth is 0.3% up. The operating profit on business activities is €285.3 million, therefore 9.7%. percent margin rate, therefore 90 basis points higher than what we reported versus restated H1, 40 basis points up. Now, between this and the current result, the expense is 13 million euros, therefore a sharp drop versus 2023, including the employee WeShare plan, which was not the case in 2024. Annually, the expense will be less than 20 million euros for this line. Then we have the inclusion of acquisitions in 2024. That is Ordina and Tobania. Ordina was acquired in October 2023. The expense includes the amortization for the first half of 2024 plus three months of amortization that had not been accounted for in 2023 because the PPA, that is the price allocation, was not done when we were closing the annual accounts. If we look at the annual amounts for 2024, the expense for the line should be nearing €35 million. The profit from recurring operations is at €251 million, therefore, 0.5 percent on revenues and up 200 basis points. The other operating income and expenses at 0.7 percent of total revenue versus 1 percent last year. And the operating profit was at €229.7 million, therefore €7.8 million from revenues, therefore up 160 basis points versus what we reported in 2023. Between the operating profit and the net profit, there's the cost of the financial debt at €8.8 million only. And in this IFRS 5 format, the other financial income and expenses are, in fact, interest paid on the pension and IFRS 16 expenses. The net profit from continuing activities is at 176 million euros, therefore 6% of our revenue, and for discontinued operations, minus 46 million euros. I'll give you more information on this in a minute. And if we deduct the minority interests, the group share is €123.2 million, therefore 4.2% of our revenue. If we add the disposal activities, then If we deduct the minority interest, we have 5.7% of revenues versus 4% published on the first half of 2023. If we look at other operating income expenses, we have a ratio of 0.7% of our revenue for the first half. to be compared with 1% for the first half of 2023. These expenses correspond to restructuring costs mainly and reorganization of our activities that are continuing activities in Germany, France and the Benelux. And therefore, there's a drop in values and there's a percentage of our revenue and the one-off costs connected to the SPS sale are not accounted in the line, but you will find them in another line called net result of discontinued activities at the end of the income statement. Then, a few words about the tax. The charge shows a 15.7% level, which is not normative, restated from favourable non-recurring items in the UK. The tax level is at 26% for this first half, and for the year, the level will be more or less 23% for the tax rate expected. Then, the net profit from continuing operations to start with, and then discontinued operations as well. The net profit from continuing activities, as I said, is at 5.7% of our revenue if we deduct the minority interest compared to 4% for H1 2023. Then for discontinued activities, we're at minus 46%. What we have in this number, we have the revenue of SBS disposed 171.9 million euros for the first half of 2024. versus 163 for the first half of 2023. We have 5.8 million euros for operating profit on business activities, and minus 46 million euros includes non-recurring effects, that is more than 40 million euros, which are the following ones. The fees connected to the transaction, more or less 7 million euros. The re-evaluation of net assets of SBS, that is 27.6 million euros, taking into account the bridge between the company value at €330 million, and the estimated price at closing, that is at the beginning of September. And finally, we have restructuring costs and reorganisation costs as well for this activity, totalling a bit more than €12 million. And finally, and in addition, SBS has financial expenses, given its debt level, which represent more or less €12 million, which of course have an impact on the net result, €-46 million. Now, let's have a look at the cash generation for continuing activities. Free cash flow for the first half that we expected with a decrease versus H1 2023, still positive, 44 million euros, more or less, for continuing activities. The main elements are, of course, the increase in EBITDA, as you can see, 15 million more than H1 2023, that's restated, and a negative change, that is 90 million euros, for working capital requirement. then the general environment is such that we have to be quite conservative for the second half. We've seen that DSOs have deteriorated at mid-year. That you can see if we look at deterioration of WCR for the first half. And beginning of July, we cashed in more than 40 million of tax credits in France that we expected normally in June. In other words, if we restate it from this account, the free cash flow for continuing activities would have reached 84 million euros, which would mean a correct level given the seasonal effect that we usually see on this indicator. Then the financial debt, apart from the impact of the dividend payment, it's more or less stable, practically stable. We started at an amount which was 940 million euros at the end of the last year, free cash flow plus 44 million euros. on continuing activities, the cash-out for changes in scope and financial investments, 18 million euros, quite low, and most of this is the minority stakes of Ordina, the net flow of dividends, 96.6 million euros, and the flows connected to sold activities, 20 million euros. The financial debt, the economic view, is at 1 billion 47 million euros. And if we restate the number, because we have to do this, it's the IFRS 5 standard, from the cash that we still have at SPS, 9.5 million euros, the net debt IFRS 5 is 1 billion 57 million euros. then this debt doesn't take into account, neither does it take into account the selling of the Axway shares to GMT, 95.9 million euros, nor the selling of pre-emptive subscription rights disposal to GMT again, which will take place in the days to come for a total of 10 million euros. And it doesn't take into account the value received from SBS, That will have, in September, a bit more than €300 million. Therefore, all in all, a bit more than €400 million in cash that will reduce the debt level during H2. The balance is still solid, the balance sheet, with a gearing ratio net debt on equity, which is at 53% on the 30th of June. Net debt to EBITDA ratio, as you can see, is 1.6 times, well below the maximum which is authorized in the credit contracts submitted to Covenants. and the ratio will be well below one at the end of the year. On the following page, we have the usual snapshot. That is, that's the debt structure of the group. We don't have much to say for this first half. The group negotiated at the end of 2023 with the banking pool a new bond, 400 million euros that we can amortize, maturity end of 2028. The group has more than 1.1 billion in lines that are not drawn on the 30th of June, apart from what has been authorized in terms of overdrafts. And we have Treasury bills, and this is covered with the RCF, which is undrawn at the end of June. And the date is January 2029. Thank you very much for your attention. And Cyril now is going to tell you more about the priorities and objectives for 2024.

Thank you, Etienne. So now let's come back to the priorities for H2. Our priorities obviously aim to uphold ongoing improvements in our performance, but also support our business activity with the market context, which is less favorable. In terms of performance, we're going to reinforce project and cost control or steering. There are synergies expected as part of the integration of companies acquired, and they're going to be steered very closely And then we also want to accelerate our internal transformation to support the group's ramp-up with three different priorities, developing consulting, organizing our tech offering, obviously with AI, generative AI, rolled out within these offers, and then the upgrade in our operating model as well. I'll conclude with our financial targets For 2024, in keeping with the first half, we expect the second half to be more or less stable on an organic basis. We confirm our target for operating margin on business activity, so confirming our initial target, and we're confident that we should hit at least 9.7% operating margin on business activity, taking into account the disposal of SBS activity, where we'll see a 0.2% point impact and then free cash flow around 350 million euros so this we've come to the end of our h1 presentation thank you for listening and now let's move on to the q a session Ladies and gentlemen, as a reminder, if you wish to ask a question, dial star 1 on your telephone keypad and then dial star 2 to cancel your question. So we're waiting for your questions. We have one first question from Laura Metaillé from Morgan Stanley. Over to you. The floor is yours. Hello. Two questions, please. So the first, could you comment your expectations by region, even if it's just high level for the second half of the year? Are there regions which should perform better than others in the second half? And then the second is changes in prices. You mentioned a 5% increase. Are your prices still below your competitor? Are you going to try and increase the prices in the short term? Okay, so for your first question, growth in the second half. What can I say? Well, by major region, I think in France we're going to be flat. Okay. In the UK, flat or slight negative growth if we take into account the figures from the programme that I mentioned in 2025. In Europe, that's 36% of our revenue, so growth is expected in the second half, driven by three countries, so Scandinavia, Spain and Italy. And then for solutions, the solutions reporting slight growth in the second half of the year. So that should lead us to flat in the second half. Then for increase in sales price, yeah, obviously we're moving closer to our competitors. I think there's still wiggle room. Let's take consulting, for example. For three years now, we've initiated an increase in sales price. I think there's still room for maneuver. Systems integration, I think we're... increasingly close to our major competitors especially in our major regions so france and then we've still got wiggle room when it comes to technological expertise and cyber security so i think we've still got the capacity to increase our improve our sales prices obviously we steer our sales price with regards to increasing salaries. Obviously, we look in France. I'll give you the example of France. I give you this example quite often, but you can see the changes. So sales price in France increased by 5%, whereas the average salary increased by 4%. Thank you. Next question from Nicolas David at AutoBHF. Over to you. The floor is yours. Good evening, everybody. I have three questions. First, on business momentum. Obviously, we've had more detail by region. With regards to the month of June, which you said was quietly weaker, and then in the UK, we've obviously had the election context as well. And then we had... Q2, what are the differences compared with Q1? And then for France, we're expecting flat growth despite an increase – an improvement in Q2 versus Q1. Is it Airbus that is sort of cancelling out this improvement momentum in France or – or anything else, public sector, banking sector. And then second question. on revenue for Ordina. Is this something that you had in mind when you established your initial guidance? Or is this on top of... Is this why you're updating your guidance, 20 basis points? So this reclassification of margin. Just want to understand in terms of three cash flow, third question now, with... We've seen the slight change here. Are we taking into account less ebb and dirt in your guidance and then a change in the DSO? Are there any other factors impacting this? Thank you, Nicola. So, with regards to the first question... Yes, June was a turning point, but now we're looking to the second half of the year. This is what has led us to adjust our organic growth annual target. And then in France, we're hoping to have a recovery from Airbus in the second half, but that's not going to happen, so that's impacting our aerospace business, and in particular France. If we just come back to France... We've got defense and transport, which has got good momentum in the first half, and this will continue in the second half. And then we're resilient or flat, which is good news for the public sector and financial services. And then we've got negative growth in aerospace, then energy as well, and retail as well. So that's the situation. Then with regards to your two other questions, Etienne, I'll hand the floor to you. So with regards to Ordina, the calculation was 40 million per semester, so 80 million in total, not 0.1 points. It's not 20 BPs. So that's a creative impact. Obviously, we haven't forgotten about Ordinance Revenue last year. We bought it in October. And then for the cash now, obviously, DSO. We're being quite cautious in terms of DSO. We've got our environment, which is tougher. Obviously, we're anticipating this, but it's confirming it is turning out to be tougher. We've got private companies who are paying more attention to their cash, and then obviously public administration as well, which is in debt, so they're paying a lot of attention to their cash. with regards to what we anticipated at the start of the year. We're not quite there on DSO. Obviously, we've got this temporary effect over the summer in France that's having an impact on the forecast, but we are cautious when it comes to working cap. Thank you. If you would like to ask a question, please dial star 1 on your telephone keypad. Next question comes from Laurent Dor, from Kepler-Chevreux. Over to you. Thank you. Good evening. So, several questions. One... question on SSCL and the elections, just from a practical point of view. Can you give us some more details on the impact this has had? Obviously, you had good volumes last year. Has there been a standardization impact, which we should expect in H2? Then my second question was also on the UK. If we could have an idea of what's going on in the private sector, changes in the private sector, and then also your pipeline in the public sector, it would seem there were various deals for the end of the year, which you were hoping to sign, which would contribute to 2025. And then last question, could we have some more detailed information on consulting? So HR, One, obviously, we've got the conjunctural situation. It's probably going down, but then we'll rebound with growth. You spoke about it quickly, but one of the challenges is going to be ramping up outside of France. From a practical standpoint, could you just share how your offers are being received with certain customers? Let us know if there'll be improvements in certain situations or if you're going to make inroads in certain countries. Question on SSCL. Yes, we've had lower volumes, lower recruitment volumes, which have been requested by the administration, the organization, obviously anticipating the election that took place at the start of July. So we did feel that in May and June. then we think it's going to remain flat in Q3 with the summer, et cetera, time to get up and running, and then we think there'll be opportunities henceforth. Now for the pipeline. which is still significant in the private sector. We're confident because in financial services, we've signed in the second half of last year, we signed a programme which will ramp up progressively, and this is planned for next year, so over 2025. We've got quite good visibility in this domain. And then how can we qualify the current pipeline? I would say it's like elsewhere, a good pipeline, but obviously decisions which are being pushed back given the political context, but then also the economic context as well. Then for consulting, in the first half, we had negative growth of 4% at group level and and we've had negative growth of 1.5% in France, which is our key driver in consulting. So first quarter, very difficult. Start of the year, difficult. Bench, high level of bench. Second quarter was better, and if I look towards the full year, we think... we can come back to flat growth. So starting from minus four going to flat growth, that means growth in the second half. Now the qualitative in the countries. So the qualitative question on the different countries going beyond France... We feel that we've got consulting does have an impact in Scandinavia. So digital consulting, IT consulting, all the offers that we're developing, tech offers. Obviously, they're selling well in France and in Scandinavia. We're ramping up consulting in Germany. I'm very confident here. Good recruitment, recruited some good partners who are boosting the team. Obviously, people... think that there's a good story to tell at Superstaria, and that's why they're joining us. Obviously, there's work to be done in Spain and Italy. In the UK, we're reassessing what we want to do with consulting with regards to our business activity, so BPS and then classic IT services. historically speaking we've got consulting for bps and we're asking ourselves if in addition to this activity perhaps we don't need to do other consulting to develop services business as well so that's a question that we're going to address in the second half thank you very much We don't have any more questions waiting in the French line, so now we're going to switch to the English-speaking line. Over to you.

Thank you very much. Our question is from Aditha Budavarapu of Bank of America. Please go ahead.

Hi, good afternoon, and thanks for taking my question. This is Aditha from Bank of America. First question, just on the headcount, Unix shooting super banking down in the first half 24 versus first half 23. Could you just comment on that, as far as that's related to the demand environment you're seeing? Second, can you comment on what you're seeing in France, the political uncertainty? Do you expect – when do you expect more clarity around maybe the pipeline in France? And then could you maybe just talk a bit more about the margin drivers, you know, margins a bit more resilient in this weaker top-line growth? How would you think about that for this year, but maybe also for the midterm?

Right. Well, to answer the first question, that is for banking, Etienne. Yeah, your question has to do with headcounts, outside banking or with banking. That's true. We report on the 30th of June of 52,413 exactly. And the change that we can see the year-on-year change is minus 2%, minus 1.9% to be precise on this scope, excluding banking. And the quarter-to-quarter change is a negative 6.9%. And that's that. Then if we look at organic numbers, because Ordina was not in the group last year, the year-to-year change is 0%. And with Ordina's restating quarter-to-quarter changes, minus 0.5%. I hope that this has answered your question. To answer the second question, that is the pipeline for France, if I got your question right, I think we have a good pipeline in France. The problem is not the pipeline, it's the decisions made by the clients. How could I describe this if we look at the main sectors? The defence business, the pipeline is really good, but apart from this situation, I'd say it takes time to make a decision in this sector, but yet we have something quite interesting. to increase our growth starting in 2025. I'd say the same about the public sector and transport. For aerospace, the numbers are a lot lower, even though with Airbus it's low, but we have many other actors as well. Dassault, that's another player, or Thales, or Naval, to include them as well, or Naval, if we include them in aerospace, if we can. And then for retail and insurance, then we have less in the pipeline. But we have discretionary expenses that we try and serve. So in France, the pipeline is really interesting in a nutshell. And what's important is to see if our clients, again, can make decisions on what we have in the pipeline. And finally, your third question, the margin drivers and the growth in margins. The objective was more or less 10% in 2024. We can confirm the objective. That's what we said at the beginning of 2022. And we consider... that 10% is not a limit per se, if I can say. We consider that we can do better than this. But before that, we have to make sure that we have a solid 10%. We have to reach that level first, then confirm the level the following year, and then continue and improve this 10% margin level. We were in a position to improve them. We said we would improve our margins regardless of our growth numbers because that's a momentum that started two or three years ago with a project approach, the integration of acquired companies. It was also based on how we manage HR and the workforce and also based on cost optimization. And, of course, selling banking, of course, will contribute to this. That's what I could say about the margins.

Thank you. Maybe just one follow-up on the UK. Hi, sorry, just one follow-up on the UK. Just on the JV with the NHS, can you just comment on the trends you're seeing there, and are there any major renewals on that in 2025?

Well, as far as NHS is concerned, there's no change, really. The revenue for NHS is distributed on a large number of customers, hospital by hospital, or groups of hospitals, rather. So revenue is not really concentrated. It's distributed. And there's growth. There was growth in H1. We expect an annual growth as well. Cyril gave us the name of a new client that we've added in our portfolio. So that's for NHS.

We have no more questions.

So now back to the speakers who will be concluding this conference call. Well, thank you. Thank you for being with us. And I hope you enjoy the rest of the day. Thank you very much. Bye-bye.