Sodexo: A Solid Performance in Fiscal 2013
(Thomson Reuters ONE) -
* Revenues up +0.9%, thanks to:
* Increased demand for facilities management services, which accounted for
27% of revenues.
* A robust 8.3% increase in revenues from Benefits and Rewards Services.
* Operating profit before exceptional items(1) up +1.7% excluding the currency
effect
* Group net income excluding exceptional items and net of tax up +5% and
+7.3% at constant exchange rates
* A reduction in net debt, bringing the debt ratio down to 16%
* A dividend of 1.62 euro per share, an increase of 2% from the prior year
* Objectives:
* For Fiscal 2014:
* Organic revenue growth of between +2.5% and +3%.
* An improvement of around + 11% in operating profit(2), leading to an
operating margin of 5.6% (compared to 5.2% for fiscal 2013).
* For Fiscal 2015, an operating margin of 6%.
Issy-les-Moulineaux, November 14, 2013 - Sodexo (NYSE Euronext Paris FR
0000121220-OTC: SDXAY): at the November 12, 2013 Board of Directors meeting
chaired by Pierre Bellon, Michel Landel, Chief Executive Officer, presented the
performance for Fiscal 2013.
Fiscal 2013 financial performance
Year ended August Change| | |
31 (excluding| | |
In million of +------------------- currency| Currency| Reported|
euro | 2013 2012 effect)| effect| change|
+----------------+------------------+---------------+-------------+------------+
|Revenues 18,397 18,236| +1.5%| -0.6%| +0.9%|
+----------------+------+-----------+---------------+-------------+------------+
|Organic growth | 1.1%| 6.5%| | | |
+----------------+------+-----------+---------------+-------------+------------+
|Operating profit | | | | |
|before 953| 958| +1.7%| -2.2%| - 0,5%|
|exceptional | | | | |
|items | | | | |
+-----------------------+-----------+ | | |
|Exceptional (139)| 26| | | |
|items(1) | | | | |
+-----------------------+-----------+ | | |
|Operating margin | | | | |
|before 5.2%| 5.3%| | | |
|exceptional | | | | |
|items | | | | |
+-----------------------+-----------+---------------+-------------+------------+
|Reported 814 984| -15.2%| -2.1%| -17.3%|
|operating profit | | | |
+-----------------------------------+---------------+-------------+------------+
|Effective tax 34.3% 34.9%| | | |
|rate | | | |
+-----------------------------------+---------------+-------------+------------+
|Group net income 439 525| -14.3%| -2.1%| -16.4%|
|(3) | | | |
+-----------------------------------+---------------+-------------+------------+
|Group net income 530 505| +7.3%| -2.3%| +5%|
+-----------------------------------+---------------+-------------+------------+
|Net debt ratio 16% 21%| | | |
|at August 31(4) | | | |
+----------------+------+-----------+---------------+-------------+------------+
|Dividend per | | | | | |
|share (in | 1.62| 1.59| | | |
|euro)(5) | | | | | |
(1) Expenses related to the program to improve operational efficiency in Fiscal
2013 and the favorable accounting adjustment to pension plan costs in the United
Kingdom in Fiscal 2012.
(2) At constant exchange rates and before the impact of exceptional expenses
related to the operational efficiency improvement and cost reduction program.
(3) After the exceptional items mentioned above.
(4 )( ) Net debt divided by shareholders' equity and non-controlling interests.
(5 ) Subject to approval at the Annual Shareholders' meeting on January
21, 2014.
Commenting on these figures, Sodexo CEO Michel Landel said:
"Sodexo delivered a solid performance for Fiscal 2013. Our strategy is proving
effective, as seen in the increased client demand for our facilities management
services and the growth observed in our Benefits and Rewards Services. Every
day, we demonstrate our resilience as well as our ability to adapt and respond
to new client needs and a constantly changing environment.
Lastly, we are proud that our commitment to economic, social and environmental
responsibility has been recognized by the Dow Jones Sustainability Index as the
global industry leader in our sector for the ninth year in a row".
Revenue Growth
Sodexo's consolidated revenues for Fiscal 2013 increased by 0.9% to 18.4 billion
euro.
Organic growth was 1.1% or 2.9% excluding the impacts of the Rugby World Cup,
the Olympic Games and the inclusion of a 53(rd) week of revenue in North
America.
On-site Services
Excluding these special events, organic growth for the On-site Services activity
was 2.6%, due to increased demand for integrated Quality of Life Services offers
in most regions and by Sodexo's leadership in emerging countries where it
continued to enjoy growth of more than 5%. These solid performances offset the
decline in foodservices volumes, particularly in Europe, and slower growth in
site revenues in certain regions, as clients sought to decrease costs in the
current economic environment.
Fiscal 2013 organic growth by client segment was as follows:
* 4.1% in Corporate, led by solid business development in emerging countries
and the success of integrated offers in North America and Europe.
* 0.8% in Health Care and Seniors, reflecting modest business development (new
contract wins) in Fiscal 2012.
* 1.2% in Education, attributable to high client retention in North America
but with only modest growth on sites in Europe.
Benefits and Rewards Services
Organic growth in Benefits and Rewards Services revenues was 8.3%, roughly the
same rate as in Fiscal 2012, reflecting both the sustained growth dynamic in
Latin America and the continuing erosion of revenues in Hungary following the
introduction of new regulations in January 2012.
Primary performance indicators
During Fiscal 2013, Sodexo continued to invest in executing its strategy to
develop Quality of Life Services. These investments primarily concerned three
key drivers of sustainable growth for the Group:
* human resources development, through team training, opportunities for
managers to obtain international experience and an assertive diversity
policy;
* continuous improvements in technical expertise: facilities management
services now account for 27% of consolidated revenue compared to 18% in
Fiscal 2005;
* expansion in high potential markets, particularly in emerging countries
which currently represent 21% of the Group's On-site Services revenue
(compared to just 10% in Fiscal 2005) and 8.1 billion euro in issue volume
for the Benefits and Rewards Services activity (versus 2.1 billion euro in
Fiscal 2005).
The On-site Services activity's key growth indicators were as follows:
* a 92.5% client retention rate. This was down from Fiscal 2012, due to
Sodexo's decision to terminate certain underperforming contracts and to a
higher number of Remote Site projects reaching completion. Excluding these
two factors, the retention rate was close to that for the prior year.
* 2.1% growth at existing sites, compared to 3.4% for the prior year. The
decrease reflects the following:
* lower foodservices volumes, notably in Europe
* strong pricing pressure from clients seeking reductions in their own
cost base, making it more difficult for Sodexo to have clients accept
inflation clauses (covering food price inflation and, in particular,
wage and related payroll tax increases),
* a slower rate of economic growth in certain emerging countries and the
completion of major projects in the Remote Sites segment (particularly
mining projects).
* a 7.8% business development rate (new contract wins), up globally compared
to 7.6% for the prior year thanks to the Group's many contract wins. The
amount of new contracts won during the fiscal year was 1.4 billion euro in
annual revenues.
Increase in operating profit before exceptional items
Group operating profit was 953 million euro, an increase of 1.7% compared to
Fiscal 2012 excluding the currency effect and a slight 0.5% decrease at current
currency exchange rates.
Operating profit generated by the Benefits and Rewards Services activity rose by
close to 13% and that of the On-site Services activity in North America was up
by nearly 7%. The contribution of On-site Services in continental Europe and the
Rest of the World region declined compared to Fiscal 2012 due to lower
foodservices volumes, increased pricing pressure from clients seeking to cut
costs, and inflationary pressure in emerging countries.
Sodexo's teams responded to these challenges by mobilizing around specific
actions to strengthen competitiveness and reduce operating costs. This is
illustrated by the year-on-year reduction in underlying administrative expenses,
excluding currency effects and excluding the costs incurred for the program to
improve operational efficiency and reduce costs. As a result, consolidated
operating margin was unchanged from Fiscal 2012 (excluding currency effects).
Including currency effects, consolidated operating margin narrowed by 0.1
percent point to 5.2% at current currency exchange rates.
Exceptional items
Reported operating profit amounted to 814 million euro, a decline of 17.3% at
current currency exchange rates and 15.2% excluding the currency effect.
At the beginning of Fiscal 2013, Group senior management launched a program to
improve operational efficiency and reduce costs. The objective of the program is
to reduce on-site operating costs and achieve overhead cost savings, with annual
savings increasingly affecting operating profit in Fiscal 2014 and Fiscal 2015.
As announced in April 2013, senior management expects the program to generate
exceptional costs of 180 to 200 million euro over a period of 18 months starting
in September 2012. During Fiscal 2013 costs of 139 million euro were recognized
in connection with this program.
In addition, Fiscal 2012 was impacted by a favorable accounting adjustment
related to the pension plan in the United Kingdom. As a result of new
regulations in that country, the Group elected in October 2011 to replace the
retail price index (RPI) with the consumer price index (CPI) in the calculation
of future indexation adjustments to the pension obligations to certain
beneficiaries of its pension plan.
Net income and Earnings per share
Group net income was 439 million euro compared to 525 million euro in the prior
year, a decrease of 16.4% or 14.3% excluding currency effects.
Earnings per share was 2.91 euro compared to 3.48 euro for the prior year, a
decrease of 16.4% or 14.4% excluding currency effects.
The change in Group net income and earnings per share masks the underlying
progress and performance of Sodexo's teams, as a result of the following
exceptional items:
* the 91 million euro after-tax negative impact of costs incurred in
connection with the program to improve operational efficiency and reduce
costs, the benefits of which will not be seen until two to three years from
now.
* a higher prior year basis of comparison due to the favorable accounting
adjustment in Fiscal 2012 related to pension plan costs in the United
Kingdom.
Excluding these two items, Fiscal 2013 Group net income and earnings per share
increased by around 5%.
Dividend
At the Annual Shareholders' Meeting to be held on January 21, 2014, the Board of
Directors will recommend paying a dividend of 1.62 euro per share for Fiscal
2013, an increase of 2% from the prior year. This proposal reflects the Board's
great confidence in the Group's future and also takes into consideration
Sodexo's solid cash-generating financial model.
For the first time this year, shares held in registered form for more than four
years, and still held when the Fiscal 2013 dividend becomes payable, will be
entitled to a 10% dividend premium of the dividend paid on the other shares,
provided that they do not represent over 0.5% of the capital per shareholder.
A major strength:
a solid, cash-generating financial model
Net debt was reduced by 161 million euro in Fiscal 2013, further demonstrating
the quality of the Group's solid cash-generating financial model, a major
strength in the current economic environment.
Net debt at August 31, 2013 was 478 million euro, representing 16% of
consolidated equity compared to 21% at August 31, 2012.
Subsequent Events
There have been no material changes in the financial position or business
situation of the Company and its subsidiaries since August 31, 2013.
Awards
In Fiscal 2013, Sodexo won several major awards recognizing its commitment to
social, environmental and economic responsibility:
* Included in the DJSI World and DJSI STOXX indexes since 2005, for the ninth
year in a row Sodexo was named "Global Sustainability Industry leader" by
the Dow Jones Sustainability Indexes (DJSI).
* Sodexo was once again included in Fortune magazine's "Most Admired
Companies" list, ranking first in the "Diversified Outsourcing Services"
category and number one for Innovation, Social Responsibility, Financial
Soundness, Long-term Investment and Global Competitiveness.
Outlook
At the November 12, 2013 Board of Directors meeting, Chief Executive Officer
Michel Landel underlined the effectiveness of the Group's long-term strategy,
based on a unique range of Quality of Life Services, an unparalleled global
network in its activities, and undisputed leadership in emerging countries.
He pointed out that since 2005, Sodexo has delivered average annual revenue
growth of 6.1% a year (at constant exchange rates) and average annual growth in
operating profit and Group net income (excluding currency effects and
exceptional items) of 8.4% and 10%, respectively. In addition, over this same
eight-year period, Sodexo has achieved an average cash conversion ratio (of net
income into free cash flow) of around 140%.
This consistent and robust performance, which enables the Group to finance its
development, is even more significant given the steadily worsening conditions in
the global economy over the same period.
Michel Landel explained that senior management is now focusing more than ever on
enhancing the Group's competitiveness and continuing to adapt it to its
environment and clients. All of the teams are committed to pursuing two key
objectives:
* Accelerating organic growth, to achieve an average annual increase in
revenues of 7% over the medium term.
Sodexo is starting Fiscal 2014 with a number of strengths, including:
* Double-digit growth in Benefits and Rewards Services in Latin America
and Asia.
* Steadily rising demand for integrated services.
* An unrivalled international network and client segmentation that will be
optimized in coming years.
* Reducing operating costs, thereby improving productivity at all levels.
* The constant pursuit of savings and cost reduction has become a major
concern for all of our stakeholders worldwide.
* The costs of deploying this program to improve operational efficiency
reduced Group net income by 139 million euro in Fiscal 2013 and will
continue to weigh on the first half of Fiscal 2014. Nevertheless, these
efforts began to deliver their initial benefits at the end of the last
fiscal year.
Encouraged by these factors, Sodexo has now set the following new objectives for
Fiscal 2014:
* Organic growth in revenue of between 2.5% and 3%.
* An 11% increase in operating profit (at constant exchange rates and
excluding the impact of the exceptional costs related to the program to
improve operational efficiency).
As a result, the Group is now targeting an operating margin of 5.6% for Fiscal
2014, up 0.4% compared with Fiscal 2013.
In addition, Sodexo has a two-year target of reaching a consolidated operating
margin of 6% by Fiscal 2015.
This target reflects the following:
* Significant annual savings of around 160 million euro from the program to
improve operational efficiency and reduce costs.
* Slower-than-expected growth in certain emerging countries and in the mining
sector, currently experiencing a short-term slowdown. Nevertheless, the
Group remains confident that these markets, where Sodexo holds leadership
positions, retain strong growth potential over the medium term.
* The earnings impact of exchange rate fluctuations due to the effect of the
geographic mix on margins.
Lastly, Michel Landel reiterated Sodexo's core strengths:
* Significant market potential, estimated at over 50 times current revenues.
* A Quality of Life services positioning particularly well adapted to changing
client needs.
* An unparalleled global network spanning 80 countries.
* Undisputed leadership in emerging markets.
* A strong culture and engaged teams.
* An excellent financial model.
* Its independence.
These strengths enable Sodexo to look to the future with confidence and to
maintain its investments, particularly in the development of its people and the
enhancement of its expertise.
In conclusion, Michel Landel added: "I would like to thank our clients for their
loyalty, our shareholders for their confidence and Sodexo's 428,000 employees
for their efforts in Fiscal 2013 and for their daily commitment to improving the
Quality of Life of our clients and consumers."
After the Board of Directors' meeting, Pierre Bellon added: "Our performance is
good. It could be improved in the future. Congratulations and thank you to the
men and woman on the ground who work each day to improve client and consumer
satisfaction; to Michel Landel and his teams; to our best entrepreneurs; to our
Board members whom I make work very hard; and to our shareholders for their
loyalty. A big thank you to all of you for all that you have already done and
what you will do in the future for Sodexo's growth."
Analyst briefing
Sodexo will hold a briefing today at 9:00 a.m. at the Capital 8 Conference
Center (32, rue Monceau, 75008 Paris) to discuss the Fiscal 2013 results. The
briefing may also be viewed via webcast on www.sodexo.com.
Financial communications schedule
First-quarter Fiscal 2014 revenues January 8, 2014
---------------------------------------------------------
Annual Meeting January 21, 2014
---------------------------------------------------------
Payment of the Fiscal 2013 dividend February 4, 2014
---------------------------------------------------------
About Sodexo
Founded in 1966 by Pierre Bellon, Sodexo is the global leader in services that
improve Quality of Life, an essential factor in individual and organizational
performance. Operating in 80 countries, Sodexo serves 75 million consumers each
day through its unique combination of On-site Services, Benefits and Rewards
Services and Personal and Home Services. Through its more than 100 services,
Sodexo provides clients an integrated offering developed over more than 45 years
of experience: from reception, safety, maintenance and cleaning, to foodservices
and facilities and equipment management; from Meal Pass, Gift Pass and Mobility
Pass benefits for employees to in-home assistance and concierge services.
Sodexo's success and performance are founded on its independence, its
sustainable business model and its ability to continuously develop and engage
its 428,000 employees throughout the world.
Key figures (as of August 31, 2013)
18.4 billion euro in consolidated revenues
428,000 employees
18th largest employer worldwide
80 countries
33,300 sites
75 million consumers served daily
11.4 billion euro in market capitalization (as of November 13, 2013)
Forward-looking statements
This press release contains statements that may be considered as forward-looking
statements and as such may not relate strictly to historical or current facts.
These statements represent management's views as of the date they are made and
Sodexo assumes no obligation to update them. The reader is cautioned not to
place undue reliance on these forward-looking statements.
Contacts
+---------------------------------------------------------------------+
| Analysts and Investors Press |
| |
| Pierre BENAICH Laura SCHALK |
| Tel. & Fax : +33 1 57 75 80 56 Tel. & Fax : +33 1 57 75 85 69 |
| E-mail: pierre.benaich(at)sodexo.com E-mail: laura.schalk(at)sodexo.com |
+---------------------------------------------------------------------+
APPENDIX 1
Comments by activity and geography
All operating profit figures in this document exclude the exceptional items
described in the press release.
1. On-Site Services
1.1 North America
Revenues
+---------+---------+----------+------------+-----------+---------+
in million| Fiscal| Fiscal| Organic|Acquisitions| Currency| Total|
of euros | 2013| 2012| growth| | effect| growth|
+------------+---------+---------+----------+------------+-----------+---------+
|Corporate | 1,647| 1,537| +5.2%| | | |
+------------+ +---------+ +------------+-----------+---------+
|Health Care | 2,521| 2,559| -1.9%| | | |
|and Seniors | | | | | | |
+------------+ +---------+ +------------+-----------+---------+
|Education | 2,653| 2,634| +0.2%| | | |
+------------+ +---------+ +------------+-----------+---------+
TOTAL 6,821 6,730 +0.6% +0.4% +0.4% +1.4%
On-Site Services revenues in North America were 6.8 billion euro, with organic
growth of 0.6%. The Fiscal 2012 figure included an additional week's activity
compared to Fiscal 2013 as Sodexo operates on a 52/53-week calendar basis as is
industry practice in North America. The impact of the 53rd week on Fiscal 2012
revenues is estimated at 120 million euro. On a comparable 52-week basis,
organic revenue growth was 2.4%, as follows:
* Organic growth in the Corporate segment was 7.2%, reflecting the success of
integrated service offers for clients such as the International Monetary
Fund and Nokia, as well as strong growth in the Remote Site segment in
Canada. The Group signed many contracts with clients in the United States
such as Boeing Company, Harley Davidson and more recently Walt Disney World
Parks & Resorts in Florida, and Siemens in Canada.
* In Health Care and Seniors, revenues contracted by 0.1%, due to modest
business development in Fiscal 2012 and the loss of the contract with
Ascension Health System. However, business development has picked up rapidly
since the beginning of Fiscal 2013 and should lead to an improved rate of
organic growth starting in Fiscal 2014. The numerous large and prestigious
contracts won during the year included ManorCare, HCA East Florida, LA
County, Ochsner, University of Arizona Medical Center, Wesley Medical Center
and CHI.
* Organic growth in Education was 2.1%. Client retention remained high at
around 98%, while growth in site revenues was more restrained due to:
* a decline in the number of meals served in primary schools following
implementation of the Healthy and Hunger-Free Kids Act which has changed
schoolchildren's eating habits;
* modest growth in the number of new university students, reflecting
demographic trends.
New contracts won in Fiscal 2013 included Brandeis University, University of
Michigan Dearborn, Emerson College and Bayonne School District.
The acquisition in the U.S. of Roth Bros., a technical maintenance and energy
management company, contributed 0.4 percentage points of growth.
Operating profit
On-Site Services operating profit in North America totaled 371 million, an
increase of nearly 7% over the prior year excluding currency effects. Operating
margin was 0.3 points higher at 5.4%.
This solid performance reflected tight control over all operating costs and
productivity gains, particularly in the Corporate segment, and resulted from the
deployment of new generation operational management tools.
1.2 Continental Europe
Revenues
+---------+---------+----------+------------+-----------+---------+
in million| Fiscal| Fiscal| Organic|Acquisitions| Currency| Total|
of euros | 2013| 2012| growth| | effect| growth|
+------------+---------+---------+----------+------------+-----------+---------+
|Corporate | 3,407| 3,346| +1.2%| | | |
+------------+ +---------+ +------------+-----------+---------+
|Health Care | 1,404| 1,396| +0.4%| | | |
|and Seniors | | | | | | |
+------------+ +---------+ +------------+-----------+---------+
|Education | 905| 904| -0.1% | |
+------------+ +---------+ ------------+---------+
TOTAL 5,716 5,646 +0.8% +0,2% +0,2% +1.2%
In Continental Europe, revenues totaled 5.7 billion euro, with organic growth of
0.8%. On-Site Services performance in Continental Europe remained mixed, with
several countries such as France, the Netherlands, Italy and Germany seeing a
marked slowdown in activity. This contrasted with a continued strong dynamic in
Russia and Sweden.
In Corporate, organic growth was 1.2%, led by the ramp-up of major contracts
with groups such as Unilever, Eli Lilly and AstraZeneca as well as Gazprom in
the Remote Sites segment in Russia. These contracts more than offset the decline
in foodservices volumes that resulted from both client staff cutbacks and
reduced spending by consumers, which weighed on revenue growth in several
countries. Highlights of the year on the business development front included
renewal of the KLM contract in the Netherlands and the signature of new
contracts with Air France, the Paris-Saint Germain (PSG) football stadium,
Safran and Amundi in France, DNB in Norway, the Belgian Parliament and OMK Vyksa
in Russia.
In Health Care and Seniors, organic revenue growth was 0.4%. This was partly the
result of applying a more selective approach to new business in Southern Europe
and it also reflected soft growth in site revenues, due to clients' strict
controls over spending. Business wins included Pôle Santé Sud (Le Mans) in
France.
Education revenues remained flat compared to the prior year. Growth in
comparable site revenue was fairly limited, particularly in Spain and Italy due
to pressure on school budgets leading to a reduction in the number of services.
Sodexo also pursued a selective approach to new business in this segment,
particularly in Southern Europe.
During Fiscal 2013, new contracts were signed with the Toulon schools in France,
Satakunta University of Applied Sciences in Finland, and the Täby schools in
Sweden.
Operating profit
Operating profit from On-site Services in Continental Europe was 196 million
euro, representing a decline of 9.3% compared to the prior year excluding
currency effects, which was mainly due to lower foodservices volumes and also to
pricing pressure from clients seeking cost reductions, which meant that Sodexo
was only able to pass on part of the increase in wages, payroll taxes and food
prices. In addition, Sports and Leisure activities in France, which have high
fixed costs, were affected by the decline in the number of tourists and
unfavorable weather conditions. Tight control of overheads throughout the
region nevertheless paid off, particularly in the second half of the fiscal
year.
Operating margin narrowed to 3.4%, from 3.8% in Fiscal 2012.
1.3 Rest of the World (Latin America, Middle East, Asia, Africa, Australia and
Remote Sites)
Revenues
+---------+---------+----------+------------+-----------+---------+
in million| Fiscal| Fiscal| Organic|Acquisitions| Currency| Total|
of euros | 2013| 2012| growth| | effect| growth|
+------------+---------+---------+----------+------------+-----------+---------+
|Corporate | 3,402| 3,302| +5.7%| | | |
+------------+ +---------+ +------------+-----------+---------+
|Health Care | 171| 162| +8%| | | |
|and Seniors | | | | | | |
+------------+ +---------+ +------------+-----------+---------+
|Education | 110| 113| -1.9% | |
+------------+ +---------+ ------------+---------+
TOTAL 3,683 3,577 +5.5% +0.5% -3% +3%
With revenues of 3.7 billion euro, the Rest of the World region (combining Latin
America, Middle East, Asia, Africa, Australia and Remote Sites) accounted for
21% of the Group's revenues in Fiscal 2013 compared to less than 10% in Fiscal
2005.
Organic growth in the region was 5.5%. This was a slower growth rate than in
recent years, due to a certain loss of economic momentum in certain emerging
markets and in the mining sector.
In December 2012, Sodexo acquired MacLellan, the leading facilities management
services provider in India.
Organic growth in the Corporate segment was 5.7%, reflecting the fast pace of
business development in Fiscal 2012, particularly in Colombia and Chile, and
good growth in site revenues in India. However, the slowdown in industrial
activity and the halting of new mining projects started to have an impact in the
latter part of the fiscal year, while the completion of several Remote Sites
projects had a modest negative effect.
During the fiscal year:
* major contracts were won with Botica Farmaceutica, Electrolux and Martins in
Brazil.
* in China and India, where Sodexo is the undisputed leader, the client
portfolio was expanded with the addition of companies such as Sinosteel in
China, and Samsung Electronics India, Honeywell Technology Solutions India,
Cipla, Nestlé and Honda in India.
* in Remote Sites, companies such as Pacific Rubiales, one of Colombia's
leading oil and gas companies, chose Sodexo.
Sodexo's global expertise in the Health Care and Seniors segment continued to
pay off, notably in Latin America, China and Southeast Asia, as illustrated by
the 8% organic revenue growth and contract wins with establishments such as
Wuhan University Renmin Hospital in China, Clinica Universidad de los Andes in
Chile, and São Rafael de Salvador Hospital in Brazil.
Operating profit
Operating profit in the Rest of the World region contracted slightly compared to
the previous year, to 119 million euro. In many countries operating profit was
up sharply but in others, such as Brazil, Sodexo was only able to partially pass
on to clients the impact of inflation on operating expenses (food prices,
employee costs and indirect taxes).
Operating margin was 3.2% in Fiscal 2013 compared to 3.5% the previous year.
1.4 United Kingdom and Ireland
Revenues
+---------+---------+----------+------------+-----------+---------+
in million| Fiscal| Fiscal| Organic|Acquisitions| Currency| Total|
of euros | 2013| 2012| growth| | effect| growth|
+------------+---------+---------+----------+------------+-----------+---------+
|Corporate | 993| 1 155| -14%| | | |
+------------+ +---------+ +------------+-----------+---------+
|Health Care | 274| 254| +7.1%| | | |
|and Seniors | | | | | | |
+------------+ +---------+ +------------+-----------+---------+
|Education | 130| 134| -3.6%| | | |
+------------+ +---------+ +------------+-----------+---------+
TOTAL 1,397 1,543 -9.6% +0.7% -0.5% -9.4%
On-Site Services revenues in the United Kingdom and Ireland totaled 1.4 billion
euro, down by nearly 10% compared to the previous year when Sodexo, in
partnership with the Mike Burton Group, was a major service provider for the
Rugby World Cup and the London Olympics. Revenues from these two events totaled
over 207 million euro. Excluding these revenues from the basis of comparison,
underlying organic revenue growth in the United Kingdom and Ireland was + 3.4%.
Acquisitions relate to WS Atkins' facilities management business in the United
Kingdom, acquired in December 2011.
The ramp-up of facilities management offers for large corporations helped to
drive 3.4% organic revenue growth in the Corporate segment (excluding the impact
of the Fiscal 2012 sporting events). Contract wins included AstraZeneca, GSK,
Augusta Westland and Unilever. The solid performance in facilities management
services more than offset lower foodservices volumes.
In the Justice segment, Sodexo was awarded a major contract by Northumberland
prison at the end of the fiscal year.
In Health Care and Seniors, growth accelerated to 7.1%, reflecting an excellent
client retention rate and additions to the services provided to several
university hospitals, including North Staffordshire University Hospital and
Brighton and Sussex University Hospital.
In the Education segment, which accounts for less than 10% of Sodexo's revenues
in the United Kingdom and Ireland, revenue contracted slightly compared to
Fiscal 2012. Comparable on-site growth in university revenues was modest and the
teams continued to apply a selective approach to new business in the State
school sector.
Operating profit
On-Site Services operating profit in the United Kingdom and Ireland contracted
to 67 million euro compared with 80 million euro in the previous year, which
included the contribution from major sporting events. As a result, operating
margin narrowed to 4.8%, from 5.2% in Fiscal 2012.
2. Benefits and Rewards Services
Issue volume
+----------+---------+----------+------------+-----------+---------+
in million| Fiscal| Fiscal| Organic|Acquisitions| Currency| Total|
of euros | 2013| 2012| growth| | effect| growth|
+-----------+----------+---------+----------+------------+-----------+---------+
|Latin | 8,128| 7,016| +22%| | | |
|America | | | | | | |
+-----------+ +---------+ +------------+-----------+---------+
|Europe and | 7,908| 7,730| +1.0%| | |
|Asia | | | | | |
+-----------+ +---------+ +------------- +---------+
TOTAL 16,036 14,746 +11% +2.5% -4.7% +8.8%
Benefits and Rewards Services issue volume (face value multiplied by the number
of vouchers and cards issued) totaled 16 billion euro in Fiscal 2013. Organic
issue volume growth remained in the double digits, at 11%.
In Latin America growth accelerated to 22%, driving up issue volume to more than
8 billion euro. This strong gain was attributable to the steady increase in the
number of beneficiaries in underpenetrated markets such as Brazil, and to higher
voucher face values and to the effects of hyperinflation in Venezuela.
In Europe and Asia, organic issue volume growth was driven by the increase in
issue volume under the ONEM contract in Belgium and strong business development
in Turkey. These advances offset the impact on growth rates in the early part of
the fiscal year of the fall in activity in Hungary, where a higher tax advantage
is provided to beneficiaries of service vouchers issued by Hungarian companies
since January 1, 2012.
Revenues
+----------+---------+----------+------------+-----------+---------+
in million| Fiscal| Fiscal| Organic|Acquisitions| Currency| Total|
of euros | 2013| 2012| growth| | effect| growth|
+-----------+----------+---------+----------+------------+-----------+---------+
|Latin | 452| 418| +15.6%| | | |
|America | | | | | | |
+-----------+ +---------+ +------------+-----------+---------+
|Europe and | 338| 338| -0.6%| | |
|Asia | | | | | |
+-----------+ +---------+ +------------- +---------+
TOTAL 790 756 +8.3% +1.6% -5.4% +4.5%
Benefits and Rewards Services organic revenue growth was 8.3%, comparable to
Fiscal 2012. The November 2012 acquisition of Servi-Bonos, a leading meal
voucher and card issuer in Mexico, added 1.6% to reported revenue.
Organic growth remained strong in Latin America, at 15.6%. This excellent
performance was all the more remarkable in that it was achieved in an
environment shaped by declining interest rates and pressure on client
commissions in Brazil.
New clients that chose Sodexo in Fiscal 2013 included FEMSA, in several
countries in the region, Ciferal Industria de Onibus in Brazil, Instituto
Nacional de Vias (INVIAS) in Colombia and Reckitt Benckiser and Deacero SA in
Mexico.
In Europe and Asia, revenue contracted by 0.6%. Excluding the impact of
regulatory changes in Hungary, organic growth would have been 2.1%, reflecting
strong business development in France and Turkey.
Recent contract wins included the Lyon Chamber of Commerce and Industry in
France and the Diyarbakir city authorities in Turkey.
Operating profit
Benefits and Rewards Services operating profit totaled 304 million euro, an
increase of 4.8% compared to the previous year. However, unfavorable changes in
currency exchange rates against the euro, particularly for the Brazilian real,
overshadowed the activity's strong underlying performance.
Excluding the currency effect, operating profit rose by 12.8%, reflecting the
leverage provided by volume growth and the cost efficiencies generated by tight
management of expense items; which allowed for continued investment in new
technologies and marketing.
Benefits and Rewards Services operating margin was 38.5% compared to 38.4% the
previous year.
APPENDIX 2
Financial statements for Fiscal 2013
(audited)
Consolidated income statement
Change Change
in million of euro at current at constant
Fiscal 2013 Fiscal 2012 exchange rates exchange rates
-------------------------------------------------------------------------------
Revenues 18,397 18,236 +0.9% +1.5%
-------------------------------------------------------------------------------
Operating profit
before exceptional
items 953 958 -0.5% +1.7%
-------------------------------------------------------------------------------
Exceptional items(1) (139) 26
Operating profit 814 984 -17.3% -15.2%
Financial income 87 65
Financial expenses (223) (231)
Share of profit of
associates 17 18
Profit before tax 695 836 -16.9% -15%
-------------------------------------------------------------------------------
Income tax expense (233) (286)
Profit for the
period 462 550 -16% -14%
-------------------------------------------------------------------------------
Non-controlling
interests 23 25
Group profit for the
period 439 525 -16.4% -14.3%
-------------------------------------------------------------------------------
Earnings per share
(in euro) 2.91 3.48 -16.4% -14.4%
-------------------------------------------------------------------------------
Dividend per share
(in euro) 1.62(2) 1.59
-------------------------------------------------------------------------------
Exceptional items
Change
in million of euro
At current At constant
Fiscal 2013 Fiscal 2012 exchange rate exchange rate
-------------------------------------------------------------------------------
Operating profit
before exceptional 953 958 -0.5% +1.7%
items
-------------------------------------------------------------------------------
Exceptional costs
recorded in
connection with the
program to improve (139)
operational
efficiency and
reduce costs
Accounting
adjustment to - 26
retirement plan
costs
TOTAL exceptional (139) 26
items
-------------------------------------------------------------------------------
REPORTED OPERATING 814 984 -17.3% -15.2%
PROFIT
-------------------------------------------------------------------------------
(1 )In Fiscal 2013, costs recorded in connection with the program to improve
operational efficiency and reduce costs and in Fiscal 2012, a 26 million euro
favorable accounting adjustment related to pension plan costs in the United
Kingdom.
(2) Subject to approval at the Annual Shareholders' meeting on January
21, 2014.
Segment information: operating profit
Operating profit
in million of euro Change Change
Before corporate at current at constant
expenses Fiscal 2013 Fiscal 2012 exchange rate exchange rate
-------------------------------------------------------------------------------
On-site Services
-------------
North America 371 346 +7.2% +6.6%
-------------
Continental Europe 196 215 -8.8% -9.3%
-------------
Rest of the World 119 126 -5.6% -4.8%
-------------
UK and Ireland 67 80 -16.3% -16.3%
Total On-site 753 767 -1.8% -2.1%
Services
-------------------------------------------------------------------------------
Benefits and Rewards 304 290 +4.8% +12.8%
Services
-------------
Headquarters -94 -83
-------------
Eliminations -10 -16
-------------
Exceptional items (139) 26
-------------------------------------------------------------------------------
TOTAL 814 984 -17.3% -15.2%
-------------------------------------------------------------------------------
Consolidated balance sheet
ASSETS EQUITY AND LIABILITIES
(in million of August August (in million of August August
euro) 31, 2013 31, 2012 euro) 31, 2013 31, 2012
-------------------------------------------------------------------------------
SHAREHOLDERS'
EQUITY
Capital 628 628
Share premium 1,109 1,109
Consolidated
reserves 1,216 1,297
and retained
earnings
Total Group
shareholders' 2,953 3,034
equity
-----------------------------------
Non-controlling 37 35
interests
NON-CURRENT Total
ASSETS shareholders' 2,990 3,069
equity
------------------------------------------- -----------------------------------
Property, plant 540 574
and equipment
Goodwill 4,803 5,031 NON-CURRENT
LIABILITIES
-----------------------------------
Other
intangible 528 563 Borrowings 1,895 2,550
assets
Client Derivative
investments 288 296 financial 1 2
instruments
Associates 78 81 Employee 372 381
benefits
Financial 118 133 Other 214 222
assets liabilities
Derivative
financial 69 26
instruments
Other non- 14 15 Provisions 99 105
current assets
Deferred tax 187 169 Deferred tax 153 161
assets liabilities
Total non- Total non-
current assets 6,625 6,888 current 2,734 3,421
liabilities
------------------------------------------- -----------------------------------
CURRENT ASSETS CURRENT
LIABILITIES
------------------------------------------- -----------------------------------
Financial 7 4 Bank overdrafts 40 15
assets
Derivative
financial 39 1 Borrowings 712 136
instruments
Derivative
Inventories 271 296 financial 19 23
instruments
Income tax 119 96 Income tax 109 130
receivable payable
Trade and other 3,466 3,445 Provisions 116 41
receivable
Restricted cash
and financial
assets related Trade and other
to the Benefits 734 609 payables 3,347 3,422
and Rewards
Services
activity
Cash and cash 1,347 1, 451 Vouchers payable 2,541 2,533
equivalents
Total current 5,983 5,902 Total current 6,884 6,300
assets liabilities
------------------------------------------- -----------------------------------
TOTAL
TOTAL ASSETS 12,608 12,790 LIABILITIES 12,608 12,790
AND EQUITY
-------------------------------------------------------------------------------
Consolidated statement of cash flow
(in million of euro) Fiscal 2013 Fiscal 2012
-------------------------------------------------------------------------------
Operating activities
-------------------------------------------------------------------------------
Operating profit before financing costs 814 984
-------------------------------------------------------------------------------
Non cash items
-------------------------------------------------------------------------------
Depreciation 271 353
Provisions 93 (9)
Losses (gains) on disposals and other, net of tax (4) 16
Dividends received from associates 16 16
Change in working capital from operating activities (129) 56
-------------------------------------------------------------------------------
Change in inventories 6 (7)
Change in client and other accounts receivable (197) (87)
Change in suppliers and other liabilities 67 (10)
Change in Service Vouchers and Cards to be reimbursed 151 157
Change in financial assets related to
the Benefits and Rewards Services activity (156) 3
Interest paid (171) (160)
Interest received 10 20
Income tax paid (282) (258)
Net cash provided by operating activities 618 1 018
-------------------------------------------------------------------------------
Investing activities
-------------------------------------------------------------------------------
Acquisitions of tangible and intangible fixed asset
investments (241) (308)
Fixed asset disposals 12 28
Change in client investments (7) (39)
Change in financial assets 19 20
Acquisitions of consolidated subsidiaries (99) (586)
Disposals of consolidated subsidiaries 1 3
Net cash used in investing activities (315) (882)
-------------------------------------------------------------------------------
Financing activities
-------------------------------------------------------------------------------
Dividends paid to parent company shareholders (240) (221)
Dividends paid to minority shareholders of
consolidated companies (23) (26)
Treasury shares 24 (25)
Increase/Decrease in capital 0 1
Acquisitions of non-controlling interests (12) (15)
Proceeds from borrowings 44 238
Repayment of borrowings (66) (131)
Net cash used in financing activities (273) (179)
-------------------------------------------------------------------------------
CHANGE IN NET CASH AND CASH EQUIVALENTS 30 (43)
-------------------------------------------------------------------------------
Net effect of exchange rates and other effects on cash (159) 55
Cash and cash equivalents, as of beginning of period 1,436 1,424
NET CASH AND CASH EQUIVALENTS,
AS OF END OF PERIOD 1,307 1,436
-------------------------------------------------------------------------------
APPENDIX 3
Selection of new clients - Fiscal 2013
On-Site Services
Corporate
Air France, Orly, France
Amundi, Paris, France
Australian Submarine Corporation, Australia
Banco Bradesco S.A., Osasco, Brazil
Boston Consulting Group, Shanghai, China
Boeing Company, three sites in South Carolina and Washington, United States
Botica Farmacêutica, two sites in Brazil
Cipla Palliative care and training center, Pune, India
Commercial Aircraft Test Center SH CA, China
DNB, Oslo, Norway
Electrolux, São Carlos, Brazil
Endesa, Madrid, Spain
GlaxoSmithKline, Wavre, Belgium
Harley Davidson Inc., Wisconsin, United States
Hitachi Equipment Manufacturing, Tianjin, China
Honda Motor Cycles and Scooter, Karnataka, India
John Deere, Dewas and Patiala, India
Martins, seven sites in Brazil
Kuwait Ministry of Interior, 23 sites in Kuwait
Nestlé India Ltd., Bangalore, India
Nokia, 140 sites in 55 countries
OMK Vyksa, Nizhny Novgorod, Russia
Belgian parliament, Brussels, Belgium
PWC Sydney, Australia
Safran, Issy-les-Moulineaux, France
Siemens Canada Ltd., 44 sites in Canada
Sinosteel, Wuhan, China
Stockholm County Council, Sweden
The Co-operative Group Ltd., seven sites in the North West of England
Volkswagen, Pune, India
Health Care and Seniors
Brighton & Sussex University Hospital, Brighton, United Kingdom
Clínica Universidad de los Andes, Santiago, Chile
Great Plains Regional Medical Center, three sites in Nebraska, United States
HCA East Florida, nine hospitals in Florida, United States
HCR ManorCare, 290 retirement homes in 32 states, United States
Hospital São Rafael, Salvador, Brazil
LA County, two UCLA Medical Center sites in California, United States
Loyola University Chicago-Stritch School of Medicine, Illinois, United States
Municipality of Gothenburg, Sweden
Ochsner Medical Center, Louisiana, United States
Pôle Santé Sud, Le Mans, France
ProMedica Toledo Children's Hospital, Ohio, United States
Renmin Hospital of Wuhan University, Wuhan, China
The University of Arizona Medical Center, Arizona, United States
Wesley Medical Center, Kansas, United States
Defense
US Air Force, five bases in the United States
US Forces, Zayed military city, United Arab Emirates
Base Aéronavale de Lanvéoc Poulmic, France
Defense Commissary Agency, 12 sites in the United States
Education
Al Mareefa College, Riyadh, Saudi Arabia
Bayonne School District, New Jersey, United States
Brandeis University, Massachusetts, United States
British School of Beijing, Beijing, China
Confederation College, four sites in Ontario, Canada
Emerson College, Massachusetts, United States
Ensemble Scolaire des Recollets, Longwy, France
Hong Kong International School, Hong Kong
Lynn University, Florida, United States
Toulon City Hall, Toulon, France
Täby municipality, 10 sites in Stockholm, Sweden
Shanghai High School, Shanghai, China
SSMS and Birla Institute of Technology and Science, Rajasthan, India
St. Andrews College, Dublin
Sultan Qaboos University, Muscat, Oman
Teaneck School District, New Jersey, United States
Universidad de los Andes, Bogota, Colombia
Satakunta University of Applied Sciences (SAMK), Pori, Rauma and Kankaanpää,
Finland
University of Michigan Dearborn, Michigan, United States
York County School District, Virginia, United States
Justice system
HMP Northumberland, United Kingdom
Remote Sites
Campamento Pionero, Antofagasta, Chile
Dakota Landing, North Dakota, United States
Highland Gold, Chukotka, Russia
Hyundai Engineering & Construction Co. Ltd., Khasab, Oman
Pacific Rubiales Energy, Puerto Gaitan, Colombia
Suncor Fort Hills, Fort McMurray, Canada
Total Clov, Angola
Trepang Services - Blaydin Village, Darwin, Australia
Sports and Leisure
Brighton & Hove Albion Football club, Brighton, United Kingdom
Par
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Datum: 14.11.2013 - 07:01 Uhr
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News-ID 316351
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