Sopra Steria Group Stock

[indiscernible] to conclude with our print for the second half of the year and get -- we'll finish with a Q&A.

Start with the highlights of the first half. at I'd like to own business that we have recorded in Q2 with underlying organic growth of 5.3%, while in the first quarter, the group was already at 4.4%. And the same time [indiscernible] business activity was at [indiscernible] and stood at 9.6%. This good operational [indiscernible] that's what makes us confident delivered I also wanted to highlight the disperformance on our consulting business. In the second quarter, we exceed the third quarter of consecutive growth at 20% higher, which was a difficult year growth every quarter is driven by Germany, earn annually momentum and with business success -- the European [indiscernible] won a 3-month agreement covering project management activities as base engineering -- and data for all European advertise the agency.

This highlights the complementarity between secretaries same expertise and the remote footprint contribution to Sarian, and this enables us to support the full European ecosystem for the -- in [ epay ], we want to contract with the FDA [indiscernible] service information systems, both on [indiscernible] data. In France, we were selected by the Ministry of the Armed Forces [indiscernible] program. So that's rolling out the future in service support and the IT system. So the public disposition is well when it comes to the definition and critical [indiscernible]. We also won a major contract with [indiscernible] national maritime surveillance platform and is covered development operation and make critical -- so following our -- pricing and legal citing purposing our recast on repo operations on the original cost and the is in critical systems ongoing available on resilience and of higher security standards.

We have made artificial intelligence development -- I think while convince potential cost impact benefit drive ending for growth and position. We refer to as we've concentrated our assets on 3 different areas that is developing a tentative consent for customer reinventing business process services with the launch of [ Lumina ] and then renovation of our production methods from the [indiscernible] an internal AI backbone.

So now if we look at each of these models best [indiscernible] the idea is to roll out solutions that can be applied to a specific business on an adjusted specific, but also to video in critical and regulated sectors where it's bile exposed to the [indiscernible] and financial serves. And this comes from a high level of initialization like the rate with use cases at large scale. So to do [indiscernible] our internal excellent, our IP and the tools that were already developed such as the [indiscernible] AI platform as well as of technological partners like [indiscernible].

Second area focuses on new generation businesses asserted with the launch of [indiscernible] and Lumina. And this new offer in both [indiscernible] unique platform fully integrated combining asset pools and constitute solutions with operational expertise that we have now seen a long time in an how can the model and roll out in highly regulated sectors like financial centers, public sector are different or a -- now the third area concerns reaction of industrial sales. So this is the AI backbone.

This is the foundation of the way we'll produce services in the future, and it can be progressively production gains, combined open architecture is agnostic. It's for a production platform, which is being designed natively. And this enables us to roll out AI quickly across all of our cities. And our teams will be retained and we're aiming to have half of our teams trained on it by the end of the year. So together, all of these initiatives show how AI is being taken in to account across our business kind of into a [indiscernible] and adding to our customers. So from design a sovereign installation sector, the transforming business operations right through the industrial rollout and keeping this under control at large scale.

One of the [indiscernible] unique specific positioning that it has in critical sectors that are regulated as a part of European priorities. So [indiscernible] businesses focusing on 4 strategic verticals, have [indiscernible] defense-associated financial series and air space.And they're promising in the midterm that part of European arena challenges and there's a benefit significant investment in the coming years. So this area is a leading player in Europe in these critical factors, and it's particularly [indiscernible] when it comes to European severances, [indiscernible] in critical systems regulated environment, and it's taken on our results-based commitment, which is the case of the [indiscernible] its business.

So during the first half, we hired on investing in order to reinforce the positioning. We acquired Starion and Nexova to establish a European -- a leading European [indiscernible] in an interest-based sector at a critical size of like EUR 200 million with [indiscernible]. We also accretive negotiations with 2 companies to reinfuse our footprint in aerospace. So the company's digital product simulation to remain both our PLM business and the manufacturing engineering from at industrial services that will reinforce our expertise in state engineering.

Finally, we have acquired in [indiscernible] Asia -- with vaccines of species and invasion [indiscernible] and coordination of rent, so resident industrial [indiscernible] management infrastructure and then obviously public security. So before we conclude the highlights, I wanted to talk about the environment, response [indiscernible] an impact on it. So we have acquired the Level 2 [indiscernible] and awarded by [indiscernible]. And this recognition of come -- it recognizes the commitment that we've had for several years now. Over 10,000 employees have been made aware or we do plan on eco design with also [indiscernible] our commitment to test digital technology with open, so protecting young people and will be [indiscernible] them awareness of good practice then our ESG commitments are still recognized by the key rating agencies, the key financial [indiscernible] EcoVadis with platinum in company assessed, and our grow is 98 out of 100.

And we have the ongoing ISO14001 rollout for the group's major sites in France, and this obviously highlights our willingness to keep improving our performance in the environment in the long term.

And with that, I'll hand the floor to Etienne du Vignaux who will talk about the situation by reporting as well as the consolidated accounts for the first half.

Good morning, ladies and gentlemen. So before we go over the situation in private reporting, [indiscernible] some information for you on the segment information. So in light of changes to our operating model. We've reviewed how we allocate cost satisfying on verticals in real term group investment, group level investment in service lines like consulting, DPS and fiber. And then in the verticals, aeronautics, defense, financial services, that was previously assigned to the France reporting unit and allocated across all reporting units.

This adjustment has no impact on the group's operating profit on business activity and the various reporting units have been restated with the 2026 methodology to ensure comparability. So let's come back to the results by reporting units, starting with France. Revenue stood at EUR 1,315.6 million. Q2 got up to a good start with organic growth of 7.1%, supported by the public sector transport, aerospace, defense, security and space as well as financial services. Operating margin on business activity was 9.5%. And contraction when compared with 2025, and this reflects use of higher of contractors -- [indiscernible] contractors to ramp up major programs throughout the first half.

In the U.K. revenue stood at EUR 464.1 million. Organic growth in revenue of 2.5%. This was driven by development of next-generation BPS, financial services, the patents and then services related to new technologies. Operating margin on business activity stood at 9.5%. So up 0.8 points when compared with H1 2025 Europe. Revenue stood at EUR 1.8 billion, excluding SST, the division had organic revenue growth of 3%. So Switzerland, Italy and Spain had good momentum, just like Scandinavia, which experienced an acceleration in Germany and Belgium improved in the second part of the semester, and then the Netherlands experienced a moderate contraction with an outlook for improvement. Return to growth in these 3 countries in the second half, that's expected. So SFT revenue stood at EUR 37 million, aligned with the program -- with the fund stop at the program [Technical Difficulty].

[indiscernible] 98.9 million net revenue, organic growth of 3% in the first half of 2021. And then we had an increase of 8.5% of the operating profit on business activity. This shows a 9.2 or 9.6% margin rate versus 9.2% during the first [indiscernible]. I'll tell more about the details of this in a minute. All in all, the operating profit reached EUR 223.5 million, therefore, up 3.8% versus the first half of 2025. Then the cost of the net management debt that improvement at EUR 8.2 million versus EUR 10.4 million in the year before. And we benefited from a decrease of the average in the first half and a slight decrease in the average cost of debt.

Then there's a EUR 3.9 million increase for the other commercial income expenses and the main reason is an increase in interest rates leases at IFRS 16 and also on the pension liabilities in noncash. And then the tax expense that I will talk you through later on, reached EUR 55.5 million, which means a net profit of associates that includes the net profit of the [indiscernible] versus a loss the previous year. The net profit attributable to the group after factoring in the noncontrolling interest reached EUR 2 million and we reached EUR 146.3 million, therefore, up 3% versus specific as we had last year.

Now then other operating income and expenses, as you can see during the first represented a net expense of EUR 40.4 million to be compared with 18.6% first half of '25. This change is explained, thanks to an increase in restructuring costs and reorganize costs, which reached a bit more than EUR 20 million to be compared with almost EUR 19 million last year. This year, as we said, we include the costs connected to the end of the SFT program, which reached almost EUR 20 million to the first half. Then the tax expense is EUR 55.5 million, as I said before, which shows an effective rate of -- tax rate to be compared with 23.7% during the first half of '25.

The normative rate, excluding the nonrecurring higher tax rates in France to be tested at more or less -- for the purpose we count on an effective rate, which will be similar to the 1 that we saw during the first half. Now then we'll talk about free cash flow and cash generation as usual, during the first half, we saw strong seasonality in terms of cash generation at the [ SPS ] for the first half was negative. That is a negative EUR 143.6 million a bit better than what we had which was a negative EUR 145.9 million. This performance is satisfactory as much as the first half of this year included several nonrecurring divestments for a total of EUR 29 million, restructuring cost connect -- at the end of the SFT program, as we said, the end of the higher tax rate in France and modification of the scheduled for payment to contributions in Norway. EBIT acted a little the difference with the increase of EUR 23 million for the operating profit on this is acting to be an with 2 elements, a decrease in project risk.

This is because we have normalized provisions now versus the provision levels we had during first half of 25 and also more investments of provisions during the first half of '26. These reversals have been used mainly that is offset by the booking of operating expenses during the half year. improved, and this is a positive contribution, reaching EUR 41 million for the cash for the half year. And then the receivables and related accounts represent 49.4% of the revenue on the 30th of June, a level that's 2.5 points lower than the average ratio that we've seen over the past 10 years, which is exactly at 51.9%.

Let me recall that the group had a 0 transfer of deconsolidating receivables neither in '25 or in '26. And then the change in disbursements connected to [indiscernible] restructuration and reorganization represented EUR 36.2 million and more than EUR 13 million connected to the [indiscernible] program. To conclude the cash generation for the first half is totally in line with the annual objective, which was set at the end of February 2026. And with the same seasonality, the net financial debt reached EUR 618.7 million on the June '26 6 versus EUR 246.7 million at the end of December '25 [indiscernible] include, as usual, the payment of dividends during the first half for a total of EUR 102.7 million, share buybacks for EUR 42.7 million [indiscernible] connected to the change in scope and the financial investments reaching EUR 87.2 million.

This gives us a solid balance on the 30th of June '26 as you can see the equity represented 61% of the assets and [WCR], whereas the gearing ratio improved at 29% to be compared with 34% of the year before. Now as the leverage ratio is compared at the end of June, it is 1.1x EBITDA. That's pro forma numbers on rolling 12 months before IFRS 16, though the ratio we had last at 1.2% and well below the banking covenant and onco, which is a maximum 3x. And then the group has a comfortable financing with almost EUR 2 billion lines spend has not been drawn at the end of June '26, and the maturities go from July '26 to '29. We recently reinforced our liquidity profile [indiscernible] we assigned a [indiscernible] financing for a total line of EUR 300 million. This includes 2 maturities, EUR 270 million in 5 years with [indiscernible] rate and 83 million in 7 years with variable rates.

This refinancing will cover the 2 countries of Euro PP, the outs on the table to EUR 150 million total. And the first 1 maturity in July this year and the second trance will have its maturity in July '27. Apart from the utility extension, the -- will give the group more divest balancing sources for an average weighted cost below 4% when we sign the contract and to optimize financing also in terms of cost the flexibility the group has an EU NTM program totaling EUR 300 million plus the EU CP program totaling EUR 700 million on the 30th of June '26 an for the NTM program, we have EUR 55 million and for any UCP, EUR 160 million.

We can use these and that's covered with a multicurrency credit facility, reaching EUR 1.1 billion, which would be used as a source of financing versus any UCP and MTM if we meet them at the end of the financial statement. Now Rajesh it was yours for the outlook for 2026.

Thank you, Etienne, So before we come back to the priorities for the second half, just want to take a few moments to speak about a few ideas that I've had after my side first month as CEO of Sopra Steria. So the first 5 months have been focused on meeting teams -- and understanding our offering and what makes us specific or unique. So there are 3 areas of strengths that have absolutely convinced me that the group is unique.

Firstly, we've got teams with great business and technology expertise. Next, we've got long-term test-based relationships with our customers to base on long-term commitment. And then our positioning is unique. We exposed the significant exposure to promising like defense, aerospace, public sees. And this puts us in a good position when it comes to quick evolution that we're seeing on the market and then the emergence of serenity challenges. We're also clear cited when it comes to our environment. The macroeconomic and geopolitical backdrop remains uncertain. Furthermore, the basis for comparison in the second half of 2026 won't be as favorable as in the first half.

And then finally, as I previously stated, we have taken into account the dilutive impact on growth of the wind down of the SFT program and this impact will be more significant in the second half compared to the first half. Further, we are going into the second half with confidence we are benefiting from favorable trends in our strategic markets, so in particular in aerospace, defense, security and space and in the public sector. What more we're expecting ongoing improvement in the situation in Germany, Belgium and the Netherlands. And this means that we can expect a return to growth in these 3 countries during the second half.

Based on this, we are capable of raising our organic growth target for 2026. We are now targeting organic growth between plus 2% and plus 2.5% for the full year compared with plus 1% and plus 2% announced previously. The target still includes a negative nonrecurring impact of it linked to the SFT program. So excluding this impact, the organic growth target which has been revised would be between plus 4% and plus 4.5%. So for the rest, we're confirming our margin targets and our free cash flow target as communicated at the beginning of the year. So operating margin on business activity of at least 9.5% and free cash flow of around 5% of revenues.

So I'd like to suggest that we move on to the Q&A session now.

[Operator Instructions]

The first question comes from Nicolas David from ODDO BHF.

Congratulations on the good results. My first question regards Q2. And what were the positive surprises when compared with what was initially planned in terms of geographies and sectors. And then my second question regards Q2, we've seen the acquisitions and then -- but we've got a negative net recruitment, so on an organic basis is negative. Can you just help us understand the trend here 1,000 people Q2. Can you just give us a bit more detail on these figures and explain why the momentum is what it is?

Thank you, Nicolas, for your question. So for the first one, we've not been particularly surprised by Q2, even if we've confirmed the positive momentum, especially in France, so with growth rates of basically equivalent between Q1 and Q2, 7.1 million compared with 7.2 million. All geographies just to keep it simple. There wasn't 1 geography that set out, old geographies [indiscernible] has made a positive commission. So we're just slightly above what we're expecting. So this is what enables us to raise the guidance for the year with the comments that Rajesh made. Obviously, we'll have a less favorable basis for comparison moving into the second half when compared with the first half. And obviously, this will be even more -- it will be less favorable with regards to SFT, but this has already been flat.

Now per headcount, excluding acquisitions, we are up excluding acquisition, we're up 200, 300 full-time equivalents Q2 compared with Q1. So there is an organic growth in head count in Q2 versus Q1.

So the contribution of Starion and Nexova in terms of headcount?

It's about 600. [indiscernible] that we've got internal head count, but then there's also subcontracting, especially to space, that's more significant than in other sectors.

And just a follow-up question in terms of margin EBITDA. So that's stable year-on-year. Can we have an explanation of what the momentum is here -- is that why you're not raising the margin guidance for the full year?

So obviously, I explained this previously when I talked about cash. EBITDA is flat in HI [indiscernible] fewer provisions. So obviously, that's good news. It means the level of risk the group has had is going down. And conversely, we've eliminated certain risk that was previously provisioned. So [indiscernible] EUR 20 million, if you look at the details, net -- so that's a favorable impact on H1 and we didn't see this in H2 or at least not at this level. So that's the [indiscernible] of the non-production in H1. But now we give guidance on operating profit on business activity. Obviously, these impacts that are mentioned are now behind us, these reversals of provisions that's behind us, and we won't see this going forward.

Next question from Thomas Poutrieux at BNP Paribas.

One question linked to Defense and [indiscernible]. Could we have a little bit more strategy or more information on the matter for the second half? And then could we have perhaps some examples of new initiatives or new skills that are being developed, things that you're pushing to be able to new opportunities in the coming years. And then next point on the U.K., could you just limo the momentum that you have in the pipeline for the business. So various contracts. There's obviously been a change in CEO, I think that the [indiscernible] July. And then in the public sector could you give us some more information with regards to your expectations for growth in the coming quarters.

So for defense, as you've seen, we've had good commercial success, which I described during the presentation, that we are reinforcing the group in various sectors, we're expecting strong growth. So in particular, space. And this is why we've made the investment in Starion, obviously enabled us to win interesting contract with the European Space Agency. So all digital transformation solutions based on AI, open AI and then based on solutions like [indiscernible] against drone, anti-drone solutions. All of this is very promising, and we're expecting growth in the upcoming -- in the future.

So in the U.K., obviously, a change in CEO that was [indiscernible] because currently [indiscernible] Nielsen is retiring -- happen. So a new CEO has been appointed not that long ago. And obviously he's already been with the group for over 10 years. So this is aligned with what we've been doing previously, and it's not external recruitment. Now for business momentum in the U.K., last year, you remember that the business wasn't linear. It was [indiscernible]. There were some quarters where there was growth, and there was others where there was a contraction. So it's transactional volume that can obviously have an impact from 1 quarter to another and take a step back and not necessarily look at the biggest quarter-on-quarter.

First quarter organic growth 12.2%, that was the first quarter. Q2, we had slight growth, so 2.5% over the first half and Q3 we're expecting more growth. Obviously, the third quarter was slightly weaker last year, in particular for NHS -- the 2 joint ventures that we have [indiscernible]. And then conversely, Q4, which experienced strong growth last year should have less growth this year. So you have to bear that in mind when we talk about growth in the U.K. But broadly speaking, we're expecting slight growth in the U.K. over the year.

So public sector business as [indiscernible], but not just that, that's now 100% owned by Sopra Steria [indiscernible] SSCL and then of the business outside of the JVs. We had growth in Q1, growth in Q2, and we're expecting growth in Q3.

And just a question on aerospace, which wasn't that strong in the second half, but 12% at group level. I think Q1 was 15%. What are you expecting in Q2.

So the basis of comparison is going to be less favorable because we -- we started to take off, excuse the pun last year. That was obviously driven by Airbus, as you know. So that materialized in July, August of last year. So the basis, the comparison not as favorable, but it is a buoyant sector.

Next question Laurent Daure, Kepler Cheuvreux.

I have the first question to ask to pick on what [indiscernible] has been the joint venture in the U.K. I think that 2026 was the year when we were supposed to have many call the tenders for new possible contracts. I wanted to know more about. The commercial momentum to secure growth 2022 to 2030 2joint ventures. That's my first point.

Number two, you've mentioned the public factor, you said that's 1 of the factors for you to grow like aero and defense. Now for the public the base effect -- this complex during the first half in maybe there's some [indiscernible] or recovery depending on the country.

And then the third question, at the beginning of the conference call, did you tell us more about reversal of growth provisions for [indiscernible]? If not, could you give us the number, please?

But the fact the U.K. is concerned, we have a pipeline in the U.K., which is still good with opportunities in the defense sector, financial services and public sector with decisions that will be made in the year to come, not necessarily only in 2026. That's the time [indiscernible] you have to remember. This includes opportunities in IT services and BPS, new-generation BPS. And to this, we have the new lumina offer that Rajesh has described before, that's at least [indiscernible] 1.5 billion that's quite -- we're not going to be the winners of all these deals, but they're not in the pipeline, we have good commercial activity in the U.K.

You said 1.5 billion. Is that annual?

No, that's what we have in the pipeline. And then this would spread covering 5, 6 or 7 years. It all depends on the deals on the contract. But what I mean is that we have enough to support our future growth in the U.K. Of course, you have to reinvest bids and find these contracts and not lose any. As far as the public sector is concerned, I mean, you're asking a question which covers much more than the U.K. And of course, there's growth. If you look at France, in Q1, yes, okay, we have the base effect in Q2 which is at a lower level, but favorable. Everything included in France, we had a similar growth in Q2 versus Q1, more or less 7%.

So quite dynamic, quite good. But we know that in France, there will be election soon, but that's going to be an issue in 2027. But to the end of the year, we're quite confident. We know that there are ongoing projects that will bear fruit for the end of the year. And we are working and focusing on the best topics world because there will be a budgetary debate and the decisions will be made. The government has mentioned that. But for the time being, the no impact in the short run.

And the first question, [indiscernible] provisions more or less EUR 10 million reversal of provisions for [indiscernible].

Next question, Derric Marcon, Bernstein.

A couple of questions. To [indiscernible] more global test. Now could you tell us more about the public sector and this market, not as in France, but in other countries as well. I'd like to better understand this positive trend that you're seeing at present. Is that something that's happening in other countries? Is it sustainable? That's my first question.

Second question is a more technical. What about the minority interest? Why are they lower than last year? And third question. There's a strong generation in -- during the second quarter versus Q1. Is there a large contract signing an explanation -- and we can to this decent change between Q1 and Q2. You know there's a lot of servicing in this activity. Would you say there's a new trend, given the very good numbers we had for Q2.

And the fourth question is about restructuring. And what can we expect during the second half.

Okay, 4 questions. First, the public sector. Well, thank you for asking. Public sector, it's not just France, as you know. We have a good footprint covering all of our geographies to the public sector. And it's not just once that hangs out. The other countries don't need France to grow in the public sector. So the momentum is good everywhere in the -- of the sector, well, we don't have the breakdown of the numbers reach compared, but that's a good momentum in France.

Now the second question, NHS SBS look at the annual numbers, not the half year numbers, that means March. So you should compare this with last year, NHS has a net profit which is at low level of contribution, contribution [indiscernible]. This is a seasonal effect, correct. There's no massive acceleration. We're very happy with the growth we have for this business during the first half, and we expect growth for the full year, we find an important license during the second quarter. the public sector in France.

And that's good in terms of growth rate during Q2. There's no need pick tablets sales being to happen for the rest of the year. And fourthly, restructuring, there's going to be less restructuring during the second half versus H1 which is -- P&L will take most of the restructuring costs for assets, as you saw when you looked at the numbers.

The next question comes from Frederic Boulan from BofA.

So my question was around the pricing environment, if you can comment on what you're seeing in competitive bids? And in particular, any more color you can give us on how kind of pricing expectations from your customers to a degree, Gene is a factor in those price negotiations? And any specific kind of opportunity you can flag on the positive side to offset some of the AI deflation we're seeing.

Well, what we're seeing today is no major impact connected to -- or due to AI as all the clients the trout the number [indiscernible] and there are some use cases that a good scale, scale of. But today, we've not seen a price decrease. We've not seen anything in terms of productivity connected to if you look at all the bids and the large bids they're very competitive and they're more competitive because most of the big players to customer managed to use AI to bolster productivity. So prices will adjust as a consequence. So this is something that's going to speed up, a trend that will speed up.

The trend will focus more on restructuring type of contracts outcome-based contracts so that the digital selling company like us can take a big share of the cake, you can take more risk. And then that means that we'll be able to use our own solutions and the deployment of AI more massively.

When we design and deploy our solution.

Next question, Laurent Daure, Kepler Cheuvreux.

A follow-up question. Could you tell us more Ordina, a progress report, if you will, because the revenues are recovering, I think. What you're doing with this division.

It has gone up and down after being acquired. And could you give us a time line when will we have good revenue again?

Ordina. That's to the Netherlands, if you don't know [indiscernible] Sopra Steria had not any presence in the past, and they included the group once we acquired Ordina. The revenue, Rajesh said, it's the same trend in Q2 versus Q1 with a [indiscernible] decrease which means a decrease, which is not as marked as last year's decrease. We had a 2-digit decrease in the Netherlands last year. It's not the same tender [indiscernible]. And our forecast is that we'll be back to growth during the second half, that's very important, you see because there's a tipping point, if I would say, in the Netherlands.

And as Rajesh said, we've done that in Germany and [indiscernible] already. Now if we look at our margins, they've improved. We're not going to give you the country breakdown, though, but we've improved our margin, and that was the case during the first half, and it even more marked during the second half. Now we have appointed a [indiscernible] you probably know that joined us end of August, beginning of September. And this really good for the teams. There's good momentum. The mindset. The mood is certainly different in the Netherlands.

What about Belgium. I think you worked a lot [indiscernible] companies to be amalgamated. And what about this [indiscernible] ? Is it over?

[indiscernible] The answer is yes. Yes. integration's over. It's done. We integrated 2 companies. We had a [indiscernible] EUR 118 million more or less we increased revenue freehold over there. We expect EUR 300 million in revenue this year with the acquisitions of Ordina, [indiscernible] Luxembourg and Turbana not long ago. Now as far as Belgium is concerned for Q2, we changed the trend. We have net recruitments, it's positive. It has not happened for a number of quarters. And if you look at our margin, it's recovering. Let's say what we saw last year. And we saw that during the first half, and we'll see that when we look at the financial statements for H2. Thank you very much.

There are no more questions. I'll hand the floor back to our speakers for the conclusion.

Thank you very much. Thank you for your questions. So we've now the finish call. And with Rajesh, we'll be seeing you soon. Thank you very much.

Good morning, ladies and gentlemen, and welcome to this Quarter 1 2026 Revenue Announcement for Sopra Steria. [Operator Instructions] I'll now hand the floor to Rajesh Krishnamurthy, CEO. Over to you.

Good morning, ladies and gentlemen. Welcome to this conference call to comment Sopra Steria's revenue in Q1 2026. I'm here with Etienne du Vignaux, Group CFO, with whom I will lead this session.

I'll start with a few general comments on the quarterly performance. Next, I'll go over the figures for our 4 reporting units. Finally, we'll finish with a Q&A session.

Revenue in Q1 2026 stood at EUR 1,463.2 million, growth of 3.4% when compared with Q1 last year. At constant exchange and scope, growth in revenue was 3.2%. As previously announced, the revenue in Q1 2026 includes the first significant impact of the conclusion, which has been planned for several years and announced in 2023 of the SFT program with the Sparda-Banks. The negative impact, which is not recurrent -- not recurring of the conclusion of this program was 1.2 points over the quarter. Thus, excluding the impact of the SFT program, underlying organic growth for Q1 was 4.4%.

Q1 2026, this confirms the rebound in business activity, which we observed as of Q4 2025. Business momentum improved across most of our geographies. All the group's reporting units, France, the U.K., Europe, excluding SFT and Solutions saw growth in the first quarter.

Even if the basis for comparison was favorable, Q1 2024 saw a contraction of 4.9%, but we've seen an acceleration in the Aeronautics sector, which showed growth of 15% over 12 months and in Defense, Security and Space, which posted growth of 7% over 12 months.

The Consulting business confirmed its rebound with organic growth of 5%. Business in Q1 2026 highlights that there is significant demand from our customers to implement transformation through technology. We've seen growing interest in terms of matters linked to AI, cybersecurity and digital dependency. These are many topics where Sopra Steria is well positioned.

Now I'd like to suggest that we move on to the detailed analysis of the performance by reporting unit. Let's start with France. In France, revenue stood at EUR 650.1 million. Organic growth in revenue experienced a clear acceleration, so plus 7.2% over 12 months compared with the fourth quarter of 2025, which stood at 1.6%.

With the exception of Energy and Telcos, which were still contracting, all the reporting units verticals demonstrated positive growth. The most buoyant verticals were Transport, Aeronautics, Public Sector with growth rates above 10%. Defense, Security, Space and Financial Services also experienced sustained growth between 5% and 10%.

Now for the U.K. In the U.K., revenue stood at EUR 220 million. Organic growth was 4.2%. The basis of comparison was particularly favorable because in Q1 2025, there was a contraction of 10.1%. This being said, the NHS SBS platform business was solid. So with the next-gen business process services, especially for recruitment, private sector and then financial services.

For Europe, excluding SFT, the division returned to growth in this quarter after having experienced an average quarterly contraction of around 2.6% in 2025. Organic growth was thus 1.6%. Italy, Switzerland, Scandinavia, and Spain demonstrated dynamic growth.

Germany, Belgium and the Netherlands posted a moderate contraction, but a lot less pronounced than in the fourth quarter of 2025. We're expecting ongoing improvement and a return to growth in these 3 countries over the coming quarters.

SFT posted revenue of EUR 31.9 million compared with EUR 47.7 million in Q1 2025. So this is aligned with expectations. In total, including SFT, Europe generated revenue of EUR 507.8 million or an organic contraction of 1.6%.

Now for Solutions. Solutions generated revenue of EUR 85.3 million, organic growth of 0.9%. The business focusing on human resources, which represents 2/3 of the unit's activity was stable, whereas the property management business was very buoyant.

To conclude, Q1 2026 confirms the return to growth in our business that started in the first -- fourth quarter of 2025. Our customers are still investing in a technology-driven transformation, and they're displaying a growing interest in matters linked to AI, cybersecurity and digital dependencies.

We've got a significant exposition to strategic sectors like Aeronautics, Defense, Space, Public Sector and Financial Services, which represents 70% of revenue, and this is where there's significant investment momentum.

We're drawing on an entrepreneurial model, which makes us agile and where most of our work is carried out under a fixed price or an outcome-based agreement, so 60% of revenue at the end of 2025. And this enables us to share -- it enables us to ensure that we share the value created by our solutions with our customers.

The environment is quite uncertain, even more so since the end of February, but our profile gives us a high level of resistance with an exclusively European presence, lack of exposure to sectors like industry or goods exporting companies with the exception of Aeronautics, strong foothold in public and para-public sectors and a commercial strategy focused on close customer relationships and our top 100 customers.

So based on this, we're confirming our goals for 2026 in terms of organic growth in revenue, operating margin and cash generation, while recalling that quarterly seasonal impacts will be as pronounced as in 2025.

I'd now like to suggest that we open the Q&A session.

[Operator Instructions] The next question is from Nicolas David at ODDO.

Rajesh, Etienne, good start to the year. I've got 2 questions, which are linked. The first is last February, you were expecting Q1 to be aligned with the annual guidance. But finally, here, your Q1 is above your guidance. Where were the positive surprises when compared with the initial expectations?

And then in February, you're expecting -- excluding SFT, obviously, that's going to increase over the next quarters. This implies an increasing growth, excluding SFT over the coming quarters at group level. So are you confirming that we can see an acceleration in growth, excluding SFT at group level over the next quarters?

Thank you, Nicolas. So we don't give quarterly guidance. We gave an indication at the start of last year. That was an exception. We're starting the year aligned with our forecast. You've obviously understood the annual guidance. In some geographies, Germany, Netherlands, Belgium, we're expecting an acceleration in growth compared with what we've seen at the start of the year, so an improvement on last year as well.

So the business is volume related in France, U.K. We're not necessarily expecting acceleration here, but we've got a favorable basis for comparison in the first quarter, but that will be less so in the coming quarters. And then with SFT, obviously, you've got in mind, we've got the deflation impact, which is going to slow down. Obviously, Rajesh gave you the revenue, a few -- EUR 10 million in the first quarter. Obviously, that's going to be eliminated. It will be roughly EUR 5 million by quarter.

And then obviously, Rajesh has also reminded us that the environment is highly volatile. So today, we're focused on our annual guidance target of growth between 1% and 2%, excluding SFT, 3% to 4%.

So just to understand, when you -- you say Q1 is in line with the guidance, this Q1 at 3%, does this contain any positive surprises?

So we're not expecting to have to review our yearly guidance.

The next question comes from Michael Briest from UBS.

Two from me. Can you confirm the 2028 outlook is also intact and unchanged today? And then I noticed in terms of headcount, there was 800 people added in the international delivery centers. Can you talk about the strategy around offshoring? And I think previously, you said you wanted to get to about 20% by 2028 from those markets. Is that still the case?

Thank you for your question. So we haven't changed our 2028 outlook, as mentioned in the press release. So that was the first question. Now with regards to offshoring, I'll let Rajesh reply.

So obviously, we're carrying on developing offshore, but we have to take into account the fact there's a strong acceleration in AI and the efficiency that we can bring to our projects. We're investing in our AI backbone project, which enables us to accelerate and gain in efficiency, and we'll be working with our customers on the acceleration of migration from the legacy to our new project.

So we're looking at this very closely. We're looking at how we carry on using our offshore programs wisely.

The next question comes from Laurent Daure at Kepler Cheuvreux.

Three questions from me. Firstly, a clarification, Etienne. I had SFT, which went down to EUR 5 million as of Q2. Now you're saying Q3. So has that been pushed back with regards to your initial expectations? So what are you expecting from SFT in Q2? Will that be at the same level as Q1? Or -- so I just want to clarify that.

Next, a question on the figures for France. I missed the start of the call, so perhaps you went over these details. But this 7.2%, if you could detail this, so the basis for comparison and then the ramp-up of certain contracts that you won last year and then the boost from Aeronautics, what does this look like? Or what would be the normative run rate for France for the coming quarters?

And then last question, if you could just come back to the U.K. and Belgium, where there's been discussions with governments with regards to contracts. I just wanted a bit of reassurance with regards to what's going on that this is not going to impact the Public Sector business in Belgium and in the U.K.

Thank you, Laurent, for these 3 questions. So for the first question, the impact of SFT, I had the second half in mind, but we're talking about EUR 5 million in Q2 going forward. So the growth rate in France, yes, obviously, we're very happy with the performance in France. Rajesh gave the details for the group and for France, the vertical markets are not growing at the same speed. We're driven by airline.

This obviously applies to the group and France growth here, a comparison basis, which was quite favorable. We started the year with a contraction last year and then growth came back throughout the year for Airbus. So we've got this favorable basis for the comparison. Obviously, that's going to progressively be eliminated.

And then for Defense as well, that's holding up well. Defense, Security and Space, driven by our activities that came from CS Group. Consulting is rebounding as well, struggling last year in France. With the public sector, obviously, we know the reason for this. The budget was voted late. This year, once again, the budget was voted late but our customers in the public sector have anticipated the matter.

So we've got a clear rebound in the public sector, which we observed as of Q4 last year, and it's been confirmed in Q1. It's difficult to give you the split or give you the rebound or the basis for comparison. But perhaps in financial sector, we can say that the contracts that we signed last year, we've got like a commercial momentum going here with positive momentum linked to the good business that we started last year.

The only sector that is slightly contracting, but mid-single digit that is Energy and Telcos, which is slightly below the other sectors. So for -- so for the 9 months remaining, we should expect 4%, 5% organic. No -- mechanically, the basis of comparison will be less favorable, but we should expect a single-digit growth.

And then the last question on the contract in the U.K. and Belgium. So today, we haven't really observed an issue linked to these projects. Belgium, the i-Police program that was unilaterally stopped by the Federal Police in Belgium. But we've known about this for 2 years now. So there's very little revenue that's been recorded.

I was in Belgium myself. I met some customers. It's more a political matter. Today, we don't see an impact on Belgium or in the U.K. with regards to these matters. So just to be clear, there's no other issues with other public sector tenders. No, no, not at all. In the 2 regions, no.

Next question comes from Derric Marcon at Bernstein.

I've got several questions. The first is on the U.K. Could you give us a little bit more detail on performance? You've given some qualitative comments on NHS SBS and NS&I, but could we have a little bit of a breakdown that we usually get between the platforms, SSCL, NHS, private, public sector, a little bit more granularity with regards to the 4% growth in Q1.

And then for airline in France, is there a one-off impact here, which won't last, which won't be ongoing into the coming quarters? Or is there a recovery in the -- or investment restarting at Airbus and it's going to be sustainable? Obviously, some things were discontinued or stopped in 2025. Are they going again in 2026?

And then third question on headcount. When we look at the sequential, we don't see growth, we see a contraction. So how can we link the good performance in terms of organic growth displayed in Q1 and the fact that in terms of sequential net hiring, we're not seeing the same trend.

And then could you give us some details on the strong increase in ex-shore that we've seen in previous quarters. What's linked to NS&I? What's linked to other customers? How is it working with your global delivery centers?

So I'll take the first question for the U.K. So the growth rate in the U.K., 4.2% isn't that different. NHS was a little bit above that, about 5%. But for former SSCL and the rest of the business, this is about the level, about 4% for the U.K.

Now for airline in France, driven by Airbus, but not just Airbus. We already said at the start of the full year publication. We've seen the recovery of Airbus starting from the summer of 2025. We've got mid-term outlook. Perhaps you heard the Airbus call yesterday. So we've got mid-term outlook, which is positive. They've got some production issues to deal with in the short-term. This is nothing new. That's well known.

And I think all of the value chain will benefit from this recovery, which isn't short-term. Obviously, quarter-by-quarter, we'll have a comparison basis, which is more favorable in Q1 and that will progressively be eliminated, but we should see growth in the coming quarters. That's what we think today.

Then the third question on headcount. So if we look at internal headcounts, which are disclosed, they're up in the figures that you've had. We've also got sub-contracting and our sub-contracting rate is up. We've had to ramp up quite quickly on various contracts. We are recruiting significantly. But for obvious reasons, we have to be able to manage risks.

We have to increase the sub-contracting rate, which is up versus the end of last year and the end of this quarter. And then the last quarter on offshore, so a significant part linked to NS&I, including the transfer of staff. And then apart from that, we're not expecting a strong increase in offshore activity. It will continue at a normal pace. I don't have all the history, but we've got good momentum, nothing exceptional going on here.

Clear. And then for the U.K., if we take all the business lines at about 4% and then NHS slightly above that. We've seen contract ramp-ups which could explain a Q1 performance, which explains why the performance is where it is, and it might continue in the coming quarters. Can we just have an explanation of the booster or a bit of information on the contracts that started last year? Where is the growth coming from? And is this something that's going to last throughout the year?

I'm going to give you the same comment that Rajesh gave for the full year. We've got like a bumpy year in the U.K. So you don't need to look at a snapshot for the quarter. Take a step back. We're not expecting standardized growth, a standard level of growth quarter-by-quarter. We've got a highly favorable basis for comparison in Q1.

It will be different in Q2. There's different factors that impact the U.K. NHS double-digit growth in Q2 2025 compared with 2024. So we're expecting a flat year in the U.K.

[Operator Instructions] The next question comes from Wolfgang Specht from Berenberg.

Two additional ones from my end. First one on local market; Germany, Belgium, Netherlands. You expected improving trends in the coming quarters. Can you elaborate a little bit what are your expectations based on? Are there new contract starts or ramp-ups we should expect?

And then on daily rates, do you see any potential for, let's say, selected improvements in some regional markets or in selected industries? Or are customers currently rather reluctant to accept step-ups?

So for the first question on growth rates expected in Germany, Netherlands and Belgium. In these 3 entities, we saw a contraction throughout every quarter in 2025, even if the pace of this contraction did improve in Belgium at the end of the year. We're starting 2026 with a modest contraction, a lot lower than the levels we saw last year, low-single digits in terms of negative growth.

And we're expecting -- for these 3 entities, we're expecting a progressive improvement for Germany, Belgium and the Netherlands, which could lead us to growth in the second half of the year in these 3 geographies, so Germany, Belgium and the Netherlands. So that's my comment on those regions.

And then your second question on daily rates. We've got very low inflation at the moment in Europe. Obviously, there are differences between the different countries, but about 1.5% France, low inflation in terms of salaries. We're going to have to be very disciplined here. So the increase in daily rates is going to be moderate this year, same applies to the increase in our costs.

The next question comes from Laurent Daure from Kepler Cheuvreux.

Just a follow-up question. If you could just give us an update on Ordina and the 2 geographical regions. There were some integration issues in Belgium between the 3 different subsidiaries. In Belgium, is everything under control in terms of organization?

And then for the Netherlands, fewer integration issues, but the turnover had slipped. What means that today, you've got a recovery? Is it the market? Or have you changed? I think there was a change in CEO. Has this enabled you to have more confidence?

Yes. So in Belgium, we had a difficult integration. There were 3 entities, Sopra Steria, Tobania, and Ordina of roughly the same size for the integration here. So we had a difficult context. But now the new organization is in place. We have the new CEO who's taken over since September and the new organization, I myself traveled to Belgium last week, and we confirm that the situation is under control and the contraction that we've experienced will be reversed. And as Etienne said, we will return to growth.

For the Netherlands, as you've said, we haven't had any integration issues, but there was a problem linked to the organization. There was a Benelux CEO. We've reorganized the activity. We've got a CEO in Belux and then we have a CEO for the Netherlands. We've recruited a new CEO who arrived in September as well, got off to a great start within the company.

And today, we -- in the Netherlands, we've got lots of activities linked to resources. So with strong acquisition, obviously, mechanically, this is linked to turnover if we haven't replaced people. So we've seen a significant reduction, the attrition. This is under control. And this is more linked to the changes we've made rather than market activity.

Okay. Thank you. There are no more questions for the time being. So I'll hand the floor back to Mr. Krishnamurthy for the conclusions.

So thank you very much for your questions, and we'll be seeing you in 3 months. Thank you very much, and goodbye.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Good morning, ladies and gentlemen, and welcome to this 2025 Annual Results Presentation for Sopra Steria. [Operator Instructions]

I'll now hand the floor to Rajesh Krishnamurthy, CEO. Over to you.

Good morning, ladies and gentlemen. I'm very happy to talk to you today for my first presentation of results as CEO of Sopra Steria. I took up office on the 2nd of February. The first weeks have been very intense. They've enabled me to start talking in depth with management teams to meet employees in several different entities and to talk to various different customers and strategic partners. What I can observe confirms the conviction or the strong belief that led me to join the group. Sopra Steria has got solid fundamentals, recognized technological foundations and a unique European positioning in a sector which is undergoing reconfiguration. I spent over 30 years in technology, consulting and large-scale transformation in Europe, in Asia and in the Americas. I have experience in rapid growth environments, in demanding competitive landscapes and within organizations which are experiencing in-depth transformation.

This experience taught me that lasting growth is based on strategic coherence, strict execution and the capacity to rally talents in the long term. It's exactly this potential that I see at Sopra Steria. The group has got a strong European presence and exposition to strategic sectors like defense, aeronautics, space, public sector and financial services. Against the backdrop, which has been marked by technological sovereignty matters, security of critical systems and industrialization and artificial intelligence, I'd say this positioning is a genuine competitive advantage. Sopra Steria has also got differentiating factors in consulting, platform, engineering for complex systems. And the combination of this expertise is essential to support our customers' in-depth transformations.

The coming weeks will be spent deepening my understanding of the group, broadly listening and refining our strategic priorities. My goals are clear: boost the group's development trajectory, boost its operational performance and consolidate its role as a European stakeholder in technology and digital services.

Now I'll hand the floor to Etienne du Vignaux for the detailed presentation of the 2025 results, and I'll be back for the conclusion.

Thank you, Rajesh. Good morning, ladies and gentlemen. Let's start with the highlights of 2025. Firstly, we're satisfied that we achieved all the targets at the start of the year. First of all, organic growth in revenue at minus 2.2% within the guidance that we set between minus 2.5% and plus 5%. Operating margin on business activity was at 9.5% in the mid of the range between 9.3% and 9.8% and free cash flow was at 6% of revenue, also in the middle of the range announced at the start of the year of between 5% and 7% of revenue. And above the indication that we gave at the bottom of the range in the first half, but I'll come back to that point. So against this backdrop of performance aligned with our objectives, the net profit attributable to the group was up significantly, up 18.3% when compared with 2024 to hit EUR 296.8 million, so net margin of 5.3%, an increase of 1 point.

Basic earnings per share were up 22.2% to hit EUR 15.23. Another highlight at the end of the year was the return to growth. So since the fourth quarter 2024, revenue was contracting, but the last quarter in 2025 saw a return to growth. Revenue was up organically by 1.8% in Q4 2025. Now if we look at the geographies, we've seen positive momentum in the South of Europe, in Italy, in Spain and in Switzerland. France and the U.K. returned to growth with plus 1.6% in France in Q4 compared with minus 2.5% over 9 months and then plus 8.8% in the U.K. versus minus 8.3% over the first 9 months.

In terms of the sectors now, Financial Services grew throughout the fourth quarter, and we saw a return to growth in Aeronautics, 10% in Defense, Space and Security and then public sector, especially in France and the U.K. I want to highlight a rebound in consulting, plus 5.1%, driven by acceleration in Aeronautics. We saw growth in Spain, Italy, Belgium and Germany and a stabilization in France. We've also won new references, synergies with Aurexia have got off to a good start as well. In total, the group's operating performance was solid, notwithstanding an adverse environment. This operating profit on business activity contracted slightly, but remained close to 10%. Free cash flow was at the group's normative level. And then return on capital employed before tax was above 20%, which is our midterm goal.

Thanks to good cash performance in the second half of the year, conversion rate of operating profit on business activity was 63.8% with EUR 340.9 million of free cash flow. So that gives us a free cash flow yield above 10% to 10.7%. The dividend proposed for 2025 is EUR 5.30 per share. As a reminder, it was EUR 4.65 in 2024. This increase shows an improvement in net result and then it also comes following a buyback program for EUR 150 million to increase the number of treasury shares, and that was concluded in January 2025. We've also had some good commercial momentum accelerating since the first half of 2025. I'll give you a few key commercial wins, which illustrate the group's positioning.

First of all, the contract with NATO, which shows our capacity to expand into new high-growth potential customers in the defense domain. We've also won a first pilot, so building a secure interoperable and sovereign ecosystem for data sharing between European countries. We've also rolled out our sovereign data security solution, Datasphere. We've rolled that out. So doing joint analysis training and education that's been set up. We've also won a significant reference in AI for the Trusted Digital. There will be an ad hoc press release on the matter this morning. So that's probably one of the biggest contracts of this type in France, value estimated at tens of millions of euros. So this is a major AI contract.

In the U.K., another domain now, we've won another contract of over GBP 10 million. So for financing accounting on the platform that we launched in October for NHS SBS. And then we've also won another contract with the CNES, the National Space Studies Center. So that's critical space surveillance and this is operation of a new traffic monitoring system based on a catalog of over 40,000 space objects and anticollision technology. So our customers are calling on us more and more for new gen technologies in order to operate their transformations. For 2 years now, we've considerably ramped up our efforts in this domain in order to increase the share of this business out of our total business. The number of certifications that we have in data, AI, cloud, ServiceNow, SAP, this has increased by 50% over 2 years and 18% just in 2025.

At the end of 2025, we think the weight of new gen -- next-gen tech is about 60% of our business and AI, obviously, we've made this a priority, and we're convinced of its potential and positive impact that it can have for digital services. So 2025 saw a clear acceleration, AI, so as a production tool, we've timed by 2, the number of active licenses that we have with GitHub, Copilot, Claude, Gemini. We've also established the architecture so that we can make available to all of our employees, analysts, all the AI, all the agents that we use within software engineering, we made that available, and we've increased by 50% the number of consultants that we have in the AI for business practice. We've also seen an increase in the number of projects for our customers throughout 2025. Most of the group's priority accounts launched AI projects.

In France, the number of customers who launched AI projects was up 44%. And one of the most significant supplier listings that we have in this country was won by Sopra Steria. So we don't believe in the theory that AI is going to kill off digital services companies. We see it as an accelerator for Sopra Steria because AI will enable a progressive overhaul of our customers' business processes, we think we're in a good position to support them in the long term.

Now for some more highlights for 2025. We've also had geopolitical events of sovereignty, defense and security stakes. Against this backdrop, Sopra Steria has got a favorable positioning. Our business is focused on Europe. Our strategic sectors are the public sector, defense, space, security and aeronautics and then financial services. And these verticals represent 70% of the group's revenue. Sopra Steria is positioned as a legitimate partner to address sovereignty matters for European customers, for European countries. We're talking about defense. The group's revenue in 2025, so armies, defense industries was about EUR 1 billion, so 20% of the group's revenue.

I'd also like to spend a couple of minutes talking about sovereignty and defense. So we've mentioned the geopolitical situation. We've also seen extra territoriality issues the states have raised, but we are not limiting ourselves to data security. We're focused on resilience, technological mastery and ethics. We're ensuring continuity in businesses and models. Obviously, you have to take into account cybersecurity risks and data protection. But then you have to think about technological dependency and the choice of algorithms that we're making. For our customers, understanding their technological dependency issues and helping them orientate themselves to alternatives is becoming quite critical. So this is a priority as part of their strategic plan. Sopra Steria is extremely legitimate when it comes to these matters. We are a European group. We're independent. Our strategy is exclusively built in Europe for Europe, and we're one of the 2 exclusive partners for SAP in Europe.

The group has also given its exposition to sensitive sectors like defense and public sector. We've developed specific solutions, which address sovereignty matters. So hosting sensitive data, for example, SecNumCloud, sovereign solutions developed by the group, maintenance MCO solutions, data security, I've mentioned Datasphere and then also secure platforms like Blue Jay. More specifically, you've understand that the group has got big ambitions in defense, space and security. We're a key stakeholder for over 40 years in the domain. We're one of the top 10 leaders in the industrial and technological defense space in France, and we're also a member of the ITDB in Europe.

Our positioning as an industrial player in France, specialized in critical systems. Our customers are the armed forces, government agencies, I mentioned NATO, industrial players in defense, TELUS, Airbus, Defense and Space, we can aim for roughly 10% growth over the coming years. And we also intend to invest in this domain with targeted acquisitions. Just as a reminder, in December, we announced that we started exclusive negotiations to welcome Starion and Nexova, so 2 specialists in space and security, and their revenue is around EUR 100 million.

Now let's look at the operating performance by reporting unit. You've got the summary here, and I'll go straight to France. Revenue stood at EUR 2.409 billion, so down organically of 1.5%. Fourth quarter posted growth of 1.6%, following 9 months with a contraction of 2.5%. This return to growth is explained by a clear improvement in Aeronautics, good momentum in the public sector, rebound in growth in Defense, Space and Security and Transport and also a clear improvement in Consulting when compared with the start of the year, Q4 was stable. Operating profit on business activity was at 9% at the same level as 2024 despite an increase in social charges, which impacted the results in 2025.

In the U.K. revenue stood at EUR 909.9 million, so down organically by 4.3%. After negative growth of 8.3% over the first 9 months, we saw growth in Q4 at 8.8% when compared with 2024, thanks to solid growth in the SSCL and NHS SBS platforms and then a less challenging base for comparison. Operating margin on business activity stood at 9.6% compared with 12.1% of 2024. For an external observer, the changes in business in the U.K. is not easy to understand given the variations from one quarter to another. So let's take a step back and look at the different components that make up the U.K. business. So we're investing for several years now in BPS, so next-gen BPS activity and various growth drivers, which will compensate the transformation of the previous generation BPO activities. So this is mainly driven by SSCL so which we've got visibility up to 2028, but we see a progressive erosion obviously generated by Agentic AI.

So at the same time as this, we've developed other platforms. We expect significant growth that applies to NHS, SBS. That one went live in October 2025. A new platform is being commissioned, which will enable us to win market share. For financial services, debt management, we've seen initial success with NS&I in defense, a domain where we've launched a new secure platform as part of the [ DCAP ] program and then our digital services as well, where we've got new generation services based on AI, Cloud, ServiceNow, et cetera. So in total, we're targeting over EUR 1 billion in revenue in the U.K. Based on a lot more in the past, this platform logic with a vertical approach for health, financial services and defense.

Now let's move on to Europe. Revenue was down 2.8% on an organic basis. So minus 3.2% over 9 months of the year to hit EUR 1,990.6 million. Spain, Italy and Switzerland continued to grow, whereas Germany, Scandinavia and Benelux saw different momentum over the first 9 months of the year. The SFT program generated EUR 162.9 million in 2025 compared with EUR 170.8 million in 2024. So the impact of its planned conclusion was 0.2 points on the reporting unit in 2025. For 2026, we're anticipating EUR 45 million in revenue, around EUR 30 million in Q1 and then EUR 5 million per quarter over the remaining 3 quarters.

To finish, operating margin -- operating profit on business activity was 8.7% compared with 9.1% in 2024. Now let's finish with Solutions, which posted revenue of EUR 337.6 million, organic growth of 2.6%. Human Resources Solutions was up over 3.2%. Property Management contracted slightly with a contraction of 1.7%. Specialized Lending Solutions were up over 10%. Operating margin was at 16.7%, so that's up 4.2 points when compared with 2024. All business units, so Human Resources, Property Management and Specialized Lending contributed to an improvement in profit.

We will start immediately. We'll have a look at the income statement. Revenues at EUR 5.648 billion, therefore, down 2.2% in terms of total change and organic change. Thus, the operating profit on business activity fared well at EUR 534 million with a margin rate of 9.5%. Let me tell you that this includes a dilutive aspect of 3 basis points due to social charges that increased in France and in the U.K. beginning of 2025. Share-based payment expenses reached EUR 20.5 million, therefore, up EUR 3.2 million due mainly to social charges again that went up. The amortization of allocated intangible assets decreased significantly to reach EUR 22.8 million due to the fact that we came to the end of the amortization of customer relations after the amalgamation with Sopra Steria.

I will go through the other operating income and expenses in a minute. They represent a bit less than 0.9% of the revenue for the year. Operating profit totaled EUR 441.2 million, therefore, a margin rate of 7.8% to be compared with 8% in '24. Financial result is made up of the cost of financial debt and other financial income and expenses was similar to the one we had in '24. The tax expense is something I'll be discussing in a minute, reached EUR 96.7 million. Therefore, the consolidated net profit was up 17% to reach EUR 304.2 million, which included in 2024. The net loss of discontinued activities for a total of minus EUR 58.3 million. After including the interest that didn't confer any control, EUR 7.4 million, the net attributable profit reached EUR 296 million, therefore, a margin rate net, which is 5.3% to be compared with 4.3% in 2024.

Now back to the other operating income and expenses. They include mainly a number of acquisition expenses, restructuring costs and reorganization costs totaling EUR 51.8 million, similar order of magnitude versus 2024 and proceeds of EUR 4.5 million, which include proceeds due to a modification of the pension schemes in the U.K. I wanted to say this not because of the amount, which is rather low, but because it illustrates the fact that the group is actively managing its pension funds in the U.K. The other operating income and expenses represent less than 0.9% of consolidated revenue in 2025. The tax charge totaled EUR 96.7 million, therefore, an effective tax rate of 24%. The normative rate, excluding exceptional contributions of France is assessed at 25% more or less in France for 2025. And for 2026, we expect a 27% rate that includes the exceptional level in France that will be continued occasionally.

Now back to the cash generation. The free cash flow was solid and higher than the brackets and numbers given at the end of the first half of '25, thanks to good cash performance during the second half of the year. It reached EUR 340.9 million, therefore, 6% of our revenue. EBITDA contracted by more or less EUR 70 million. The difference with the decrease of EUR 30 million of operating profit on business activity is due to a change in the net reversals of provisions. Almost all of those are offset by the recognition of operating expenses during the year. As we expected at the beginning of the year, the WCR change led to a cash consumption in 2025 with the progressive stop of the SFT program that we announced. This being said, the end of the year was rather good, better than we thought at the end of summer. Excluding SFT, the DSO at the end of December is to be compared to the one we had in 2024, that is 45 days, which is a very good performance.

What we expect is a comparable level for 2026. As to nonrecurring items, we have to factor them in, in 2026. There are disbursements due to taxes and occasional taxes that were up in France and Norway and restructuring costs that were higher -- that will be higher in 2026 because we're going to stop the SFT program. These one-off impacts will be impacting the free cash flow for the first half, and therefore, it will be more seasonally marked. Therefore, that's why we expect for 2026 free cash flow that will be 5% of our revenue. The net financial debt was at EUR 246.7 million, therefore, down more than 35% compared to the end of December 2024. The sharp reduction in the debt is to be explained, thanks to the robustness of free cash flow, which more than offset the amount allocated to the change in scope dividends and share buyback. I must say that the share buyback totaled, as you can see, EUR 63.7 million, and they include EUR 43.5 million of disbursements, which was due to the fact that at the end of January 2025, we bought EUR 150 million of shares announced in October 2024.

The balance sheet is even more solid in 2025. The net financial debt at the end of the year represented 11.5% of equity and 0.4x EBITDA pro forma numbers for 2025 before IFRS 16 impact. And then we had questions on the balance sheet once we reported for the first half. I must say 2 things right now. First, the group has not had in 2025 or the previous years to consider non-deconsolidating receivables assignments. And as you can see in the simplified balance sheet, which is an annex to this presentation is that the line called receivables and linked lines, including the bills to be made, reached EUR 1.290 billion, therefore, an amount which has not changed more or less since 2024, which represents 22.8% of our total revenue, which means the average level that we had seen over the past 7 years.

Now as far as financing is concerned, the group still has comfortable financing with lines that we can use for a total amount of EUR 2 billion, more or less 2/3 were available as of the 31st of December '25. Maturity will go from July '26 to '29. That's for the numbers for 2025.

Now I'll hand over again to Rajesh, who's going to be talking us through the annual objectives.

Thank you, Etienne. So the 2025 results and particular return to the growth in Q4 constitute solid foundations to attack 2026 with confidence. The group has been managed between October 2025 and February 2026 with an approach based on continuity and a high-quality transition team. The budget process was conducted seriously, thoroughly with a bottom-up approach involving all countries and all business lines. The goals or the objectives of the results of this are coherent, they're realistic, and they've been approved by the Board of Directors. For 2026, we are targeting organic growth in revenue between 1% and 2%. This objective includes a nonrecurring negative impact of around 2% arising from the planned conclusion of the SFT program. So this is a one-off limited to 2026. Without SFT, the growth organic -- the organic growth target would be between plus 3% and plus 4%.

This momentum is based on a return to growth in nearly all of our geographies, and we've got a solid outlook in financial services, defense, space, aeronautics and public sector, in particular, in France. Operating margin on business activity at least 9.5%, a slight improvement when compared with 2025. Free cash flow of around 5% of revenue. These objectives reflect a progressive recovery trajectory with discipline and under control. They reflect both the current market context and our willingness to progressively improve our operational performance. I would like to highlight that 2026 will also be a year of strategic works, more in-depth strategic works. We will carry on reinforcing our positioning in positive domains like next-gen technology, AI, sovereignty and defense, while continuing our efforts to improve operational excellence.

Now let's open the Q&A session, and Etienne will be your main speaker for any financial items. But for me, I'll be delighted to start meeting you in the coming weeks and share our vision and the group's ambitions.

[Operator Instructions]

The first question comes from Nicolas David from ODDO.

Rajesh and Etienne, congratulations from me. I've got 3 questions. The first, could you give us a little bit more color on Q1 compare the growth that you had with Q4? What's changing? What are the variables here? We're seeing strong momentum in public sector in Q4 in France versus exceptional? Or has this been built into the budget? Or will we see this in Q1? And then with SFT in Q1, there shouldn't decline, but how does that stand compared with Q4, which generated growth. So could we have a little bit more information so that we can understand organic growth?

Second question on the guidance for margin. So at the bottom of the range, 9.5%. What would drive you towards the bottom of the range? Obviously, you've had a return to growth, reduction of the bench and then we've got the SFT that wasn't necessarily very profitable. So these are positive things when it comes to margin. And then the U.K. had a lower margin in 2025. So can we see -- will we see an improvement in margin in the U.K.? And then the last question on the U.K. as well. Thank you very much for the details on strategy. Should we understand that there's a risk of phasing or erosion of BPS. Is that going to come before the growth drivers kick in? Or will that be at the same time? Are we going to have a bit of a dip in growth in the U.K. at the start of the phase for 2026 to 2029?

Thank you for your questions, Nicolas. I'll start with the first one on Q1 2026. How is this reflected when we compare with how we end the year and how we're starting the year. We've closed the month of January. I'm not going to give you the figures, but we've got them. So we obviously refined our forecast, and this confirms the budget approach. So the start of the year is aligned with our forecast. And then in terms of the guidance in Q1, we've got similar figures to the annual guidance. So the pace in Q1 is comparable with what we've indicated for the full year guidance.

Now for the public sector in France, yes, it got off to a difficult start or a slow start, budget delays in France -- it finished the year better than what it started. So the end of 2025 was more dynamic. I think that even if this year, the budget came a little bit late, administrations are kind of used to this way of working, if I may say. So this year in 2026, the budget was voted late, but that was kind of expected, and it's going to be managed. So we're less concerned than what we were at the start of last year when it comes to the start, given the fact that the budget wasn't voted on the 31st of December.

Now for the next question on margin. So the guidance isn't 9.5%. It's at least 9.5%. So it's not quite the same thing. Rajesh said it, we're expecting a slight improvement in margin. We're at the start of the year now. The environment around us is quite unstable, public sector. There's a lot going on around us. And we're comfortable with this guidance for the time being. For the U.K. The question is on the outlook, the 3- to 4-year outlook. I said it earlier. With regards to traditional BPO activity, we've got visibility up until 2028. These are long-term contracts. If they were to transition, then that transition would take several years. We're not going to have a sudden stop or a sudden loss in revenue. We've got quite a good level of visibility through to 2028.

Just on margin, so 9.5%, that's to be taken into account. But -- so if there's any bad surprises or anything that impacts the top line, how is that taken into account? Is there any pressure on margins, which could compensate for the positive factors like the bench that's going down or a favorable calendar effect?

Yes, there's a slight impact from social charges, 30 basis points. It's not nothing on the operating margin on business profit. So the impact was over -- it's a marginal impact, but it is known. That has been integrated into the guidance.

And then for BPS, good visibility. But what -- does this integrate deflation?

Well, we need to look at the broad situation in the U.K. There's things impacting BPO. Obviously, this is not new to us. We've been doing this for over 10 years. We're seeking productivity gains, but we obviously want to win market share and ramp up the volumes. I indicated growth for NHS. We'll have growth here. We've got this new platform, which we've already announced in Q3 for NHS SBS. That went live in October. It was successful, and we're expecting growth, new hospitals, new trusts who will be joining the business. Then for the rest, from SSCL activity, we've got the transformation to conduct. We want to make gains. That is our goal, integrate new technologies. And then obviously, the question is how we share these gains with the customers, but we deliver outputs. We're not working on a time and material basis. We deliver services that will benefit our customer. So we want to -- and we're working to improve our productivity. Agentic AI is a way of making productivity gains, and it's up to us to be good and demonstrate this, sell more value to our customers.

Crystal clear. Now back to SFT for Q4. I had the impression that their contribution was positive for Q4 2025. Could you confirm this, please? And then I'm done.

Yes, certainly. We've given you the exact numbers for SFT. There's a table on that with the exact contribution during 2025. And I even gave you the breakdown per quarter in 2026. Now back to 2025, at the end of the year, that is Q4, a slight growth, even though there's a degrowth if you look at the whole year. And then there's going to be a marked decrease during Q1 and mainly starting as of Q2 2026, that is.

Next question from Michael Briest, UBS.

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Thank you for these questions. Now as far as restructuring is concerned, if it's for 2025, I gave you the numbers before. That is the level is EUR 50 million, more or less what we had in 2024. Now for '26, now you'll probably remember that the SFT business will have to go through major restructuring during the first half. And therefore, we think that the total expenses for restructuring will be going up in 2026, and that's due to the one-off impact of SFT that's going to weigh in terms of the charges. But there's no massive plan. I was thinking about what other players said in the same industry. Now the thing for us is to go back to growth and hiring people, recruitment, that is. So back to growth and recruitment. And by the way, in France, we talked about our recruitment objective not long ago, a number of weeks ago, that's quite ambitious for '26.

Now the second question, that's the midterm objectives. Again, we'd like to repeat the midterm objectives. There's no reason to change them. Rajesh took you through these objectives. These are the ones that we mentioned a few years ago during the CMD. And the third question had to do with capital allocation, more specifically the share buybacks. And that's true at the beginning of last year, we continued with the EUR 150 million target that we announced in October 2024. And I'm certain that the Board of Directors is always asking themselves this question. This from the technical point of view, is something that we can use. We have all the authorizations to do that. So that's all I can say about the share buyback program.

The next question, Derric Marcon from Bernstein.

I have several questions to ask. Number one, your guidance range, there's a 1 point difference between the lower part and the upper part of the bracket, quite unusual. In the past, you had more safety buffers, if I can say, a bigger margin. Does that mean that at the beginning of 2026, your visibility is better than it was the case before? I suppose, yes, if you look at 2025. But what about the years before 2025? And could you give us more color about the reasons why you would reach the upper part of the bracket. What are the main assumptions that explain the difference between the lowest part and the upper part of the bracket.

Now the second question, the U.K. back to what Nicolas said, that is your objective is EUR 1 billion for 2029. Now I'd like to know more about the underlying assumptions that you have. Have you factored in, for instance, the renewal of SSCL? If yes, what's the scope? What's the size that we're looking at? And could we know more about your mix that is the EUR 1 billion for 2029 between the new platform, the traditional BPO, the different business lines. And this to make comparisons with the private sector so that we better understand the setup of this business in the U.K. in 2029 versus this snapshot that we had for 2025?

And thirdly, the EUR 1 billion target in the U.K., could we perhaps have an idea of the profit level that you expect by that time in the U.K. Now there's a decrease in 2025 compared to 2024. Could it be possible to go back to the 12% that we had by that time? Because you're making investments, will these investments continue? Or will the margin be capped?

Thank you very much for these questions. Now the first question is the guidance for our revenue. That's true. It's between 1% and 2%. And it takes into account, as Rajesh said, that there's a negative impact, which is 2 points negative impact because we have come to the end of SFT. So if you calculate the normative guidance, it would be between 3% and 4%. As we speak, well, the year has just started, Nicolas David asked the question before. We have confidence in our guidance. It's different from the previous years when we had uncertainties about the markets and how they would evolve. The market players were looking for a tipping point, a turnaround. There we are. We have it. We're back to growth in -- during the fourth quarter. So we have better visibility on our growth. Now the SFT topic is something that we fully comprehend. We had some uncertainties in the past on that. So we trust that the guidance now could be between 1% and 2%.

Now the second question has to do with the U.K. We're not going to give you the mix breakdown for 2029. Things can happen. There's a renewal of contracts. I gave you the main trends per business line. And our ambition is to grow our revenue in the U.K. in 2029 and the U.K. margin. Now the margin is accretive for the group today. It will continue to be accretive, and it will be more than 10% in any case.

Okay, Etienne. But you said EUR 1 billion in 2029. And I suppose that the basic -- the working assumption is that SSCL will be continued. Maybe there's going to be deflation, not really totally offset by the volumes, but you're not going to lose the EUR 300 million, EUR 400 million connected to SSCL by 2029.

No, of course, we're not going to lose EUR 300 million, EUR 400 million regardless of the contracts we have in 2029 to meet the objective. Now, some contracts will end. Others will start. We're not making those detailed forecast. It's a general guidance by business domain or by business. Thank you very much.

Next question. Thomas Poutrieux, BNP Paribas.

I have a couple of questions to ask. I'll start with Aeronautics and Defense. You said that there's a 2-digit growth for Aeronautics in Q4. That's good news. And I was wondering, could we extrapolate on these numbers for Aeronautics and for the defense business in '26? And what have you -- is that something that you included in your guidance? And what you have in your guidance for the year?

Second question, Belgium. Beginning of February, you talked about this contract, the i-Police contract with press articles that were released because the contract was to come to an end at the end of 2025 with probably the government or the Belgian public sector because they're quite reluctant to pay, I'd say. And therefore, did you have to set aside provisions in 2025 for that? Have you thought about any provisions in your guidance for 2026 on that contract? And since you're saying back to growth, now we're talking about Belgium in 2026, aren't we?

And third question about the U.K. Now what you're saying is that during Q1, we enjoyed growth that was more or less in line with the annual guidance, even though the comparison basis is simple in the U.K. Does that mean that if we have 9% organic growth in Q4, we can't extrapolate this in Q1 '26. Therefore, that would mean a slowdown to be expected. And my question is, why would there be such a slowdown? And my final question is about specialized credit. You've said specialized credits were up 10% for Q4. I was wondering why? Is it a license with a client that was signed in Q4? Or is there an underlying trend that is improving for that business line?

Aeronautics and Defense, that's true. We are back to a positive year, a very positive year for Aeronautics. For 2026, we expect 5% or 10% growth in between 5% and 10%. Second question, Belgium. Our subsidiary, Sopra Steria Belgium communicated reporting on the 5th of February. There's a press release that's really crystal clear on that. And we have no danger as far as the balance sheet is concerned. No amounts were unpaid. We were paid by the Police for the projects that we've delivered on, on that project for which there was not much in terms of production in 2025. So no problem with the balance sheet and no need to set aside provisions on the balance sheet.

Now 2026 in Belgium. That's true. We're going to be back to growth at the end of the year. This is a region or a country where the market was complicated in 2025. And the main managers have changed in Belgium. There's a different momentum. And therefore, we're going to grow again in Belgium during the second half of 2026. The third question was about the U.K. And could you repeat your question?

Certainly. I was thinking Q4 was really good in the U.K.

Okay. Okay. Extrapolating from the Q4 to Q1. No, no, no. My answer is no. We're not going to have 8.8%. No, no. if that's what you were thinking about, but perhaps some type of growth. We can't extrapolate from the Q4 number. As I said before, if you look quarter-by-quarter revenues, it's difficult to understand this in the U.K. So don't take this number. You shouldn't have done that, by the way, for Q3 either. And then the specialized credits. I agree with you. That's a business that's rather small, rather minimal. It doesn't really weigh much in terms of the solutions reporting unit. We sell licenses mainly at the end of the year. That's the reason. But the business is growing. It wasn't the case over the past years. And therefore, the margins are restored, which is good news.

The next question comes from Laurent Daure from Kepler Cheuvreux.

I've got several questions. I wanted to come back to Nicolas' comment on SFT. We can see that there's quite a weak impact in Q1, and that's going to accentuate into Q2. You said Q1 was aligned with annual guidance. So does this mean as of Q2, Q3, there are going to be contracts that are going to compensate ramp-up to have -- can we have a better idea of the quarterly phasing? My next question, you mentioned a slight drop in EBITDA, not at the same level as the EBIT. Could you give us some more details on why and what's in this? And then my third question, just to -- if we take a step back, think about where you stand with regards to the 2 major acquisitions, CS Group and Ordina, think about the margin compared with the initial targets.

Thank you, Laurent. So SFT, we've given a precise phasing for 2026, EUR 30 million in the first quarter and then EUR 5 million per quarter for Q3 -- Q2, Q3, Q4. So normally, you've got all of the information you need to be able to restate the figures, excluding SFT, so you can establish normative growth. For the second question on EBITDA, yes, obviously, there's a difference of EUR 40 million between the drop in operating profit on business activity and the drop. So we've got net provisions. Obviously, we recover provisions every year, and these are consumed. So this EUR 40 million has got 2 blocks. We've got EUR 40 million in operating expenses. So these are operating provisions and then EUR 19 million for tax expenses disbursed over the year. That's what the difference is. We're talking about previous litigation or things that have been recovered last year.

And then M&A, previous -- past M&A. So Ordina -- so Sopra's CS Group. CS Group, we've got positive commercial momentum. I reminded you of our positioning, which is highly relevant today in various domains, C2, command and control, anti-drone, security in Europe. So from a commercial point of view, I think we've got an advantageous positioning today. And in terms of profitability, we are on the trajectory that we established. So we've made progress this year. It's not quite at normative levels, but not far off. Now for Ordina and then all the acquisitions we made in the Benelux, we had Ordina, which was present in the Netherlands and then in Belgium. We've also acquired Tobania in Belgium. So we tripled the size of our footprint in Belgium.

So the 2 markets because obviously, Belgium on one side and then the rest on the other -- in terms of growth, we're anticipating for these 2 markets in 2026, we're expecting to see progress. So progress in terms of growth. We've seen that the situation is progressively improving in Belgium. The Netherlands, which was a little bit tougher last year because that's a smaller entity for us. So the #1 priority is commercial momentum. We've got new management, which is now in place since Q3 in the 2 geographies, so the Benelux and the Netherlands. We plan to simplify the organization by getting rid of the Benelux layer that was inherited from Ordina and that came on top of the 2 geographies. So I think we are in marching order now. We've got motivated teams. We're ready to move forward, and we'll see growth, whether it be in terms of growth or margin as of 2026.

So 2 and 3 very clear. Question one, you didn't really answer my question because EUR 25 million less over half year, that's a 1.5 point impact on organic growth. We just want to be sure that we're not going to have a deceleration of growth because of SFT.

Well, you know that we don't give growth guidance quarter-by-quarter. We give the details of SFT because there was a significant impact from one quarter to another. But I will say that Q1 is getting off to a start, which is aligned with our forecast.

We're going to take one last question now.

The next question comes from Aditya Buddhavarapu from Bank of America.

First one for Rajesh. Could you just talk about your -- since you've joined the company, some of your key observations you made and maybe what are your main priorities as you go through the next few months in terms of strategy or structure? Second question on AI. So you mentioned some good momentum in terms of clients who are using -- or signing up for AI projects. Can you just talk about what percentage of bookings or revenues linked to Gen AI right now? And on those, are you seeing -- how you're seeing pricing evolving if there's been any change related to that?

And finally, on the U.K., could you also just clarify when you talk about the legacy BPS erosion, is that driven by just regular pricing changes? Or is there anything more specific to AI on that?

So for me, the priority in the first weeks is obviously to carry on deepening my understanding of the group. It's a group with a lot of history, a strong culture, lots of practices, which are deep rooted in its history. So firstly, I want to understand how the group works operationally, meet the teams, meet the customers, meet the partners. And the work that I've started to look at above all is how can we supplement integration procedures for acquisitions that we've already announced. We've spoken about CS, but also the activity in Belgium. How can we simplify the organization to be more present and more effective to leverage the growth expected in the domains that we've mentioned, defense, security, airline, et cetera. For me, those are the 2 priorities.

And then talking about AI today, we've published the figures that we track, wins of new customers, but we haven't yet -- we can't structurally quantify all projects linked to AI. So this is something that we're going to work on. It's important for us, obviously, with the momentum that we're seeing today. But today, we can't currently communicate on the bookings linked to AI. But what we do observe is that most contracts do integrate an AI component. So AI, obviously, there's 2 dimensions here. We've got use of AI internally AI improving productivity test, documentation, support functions, et cetera. And this is something that we're industrializing at group level. And then part of the gains will come from the fact that we boost our competitiveness. And we've got AI for our customers. AI doesn't reduce complexity. It increases it.

So it creates additional demand. We have to secure everything, data governance. So we can be a systems integrator stakeholder for critical systems. And this is our playing field, and this is where we see opportunities.

And then for the third point, I'll hand that one back to Etienne perhaps.

Yes, for the U.K. linked to the question on AI, yes, BPO, BPS services must be integrated into the future for us, for our customers. We have to integrate AI possibilities, Agentic AI as well. We're working on that to bring value to our customers and BPS services, their outputs, we're not selling AI. We're not selling technology. We're selling services and results. So we want to try and increase this value. It's up to us to provide new services, and we think that's an opportunity for us providing that we can master this technology and provide the right solutions for our customers.

No more questions. hand the floor back to the speakers for the conclusion.

Thank you very much for your questions, and we'll be seeing you soon. Goodbye.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Good morning, ladies and gentlemen. Welcome to the Q3 2025 Revenue Conference for Sopra Steria. [Operator Instructions]

I hand the floor to Etienne du Vignaux, over to you.

Good morning, ladies and gentlemen, and welcome to this conference call to comment on Sopra Steria's Q3 2025 revenue. I'll start with a few general comments on the performance throughout the quarter, then I'll detail the figures in our 4 reporting units, then we'll finish with the outlook for the end of 2025. And then as usual, we'll have a Q&A session at the end.

So general comments. Revenue in Q3 2025 was EUR 1,315.8 million, down 2.9% organically when compared with Q3 2024. The impact of currency fluctuations was negative at minus EUR 6.8 million, and the change in scope had a positive impact of EUR 4.7 million following the acquisition of Aurexia on the 30th of April this year. Performance in Q3 reflects a return to growth in the Aerospace business, which, as a reminder, represents 10% of the group's revenue. Then ongoing improvement in the situation in France, where revenue stabilized at minus 0.1% when compared with last year, following minus 4.9% in Q1 and minus 2.4% in Q2. I should also note that there was a postponement of a ramp-up in the U.K. for a program in the defense sector. It has been launched, and it does offer perspectives for growth in future quarters.

The group headcount increased sequentially. In Q3, headcount was up 0.9% when compared with Q4, essentially in France, plus 1% and in India, plus 3.4%. On an annual basis, the contraction in headcount is slowing down. It was minus 1.5% in Q3 compared with minus 2.2% in Q2 and minus 2.3% in Q1. The change in headcount is explained by an increase in recruitment, so 2,900 people in Q3 compared with 2,000 in Q2 and 1,400 in Q1.

So now let's look at the performance by reporting unit. In France, revenue stabilized, down 0.1% organically to hit EUR 574.9 million. After a very slow start to the year, the trends improved in the aeronautics sector, which returned to growth and in the defense sector. In the public sector, the traction was stable with regards to H1, and that showed signs of improvement, which should continue into Q4. We're not expecting a significant impact of the political context in the rest of the financial year and a return to growth is expected in Q4.

Now in the U.K., revenue stood at EUR 211.5 million, so negative organic growth. The SSCL and NHS SBS platform slightly declined, while NS&I significantly grow and the quarter was impacted by the delay, as I said, as a ramp-up of a major program in the defense sector. This program has been launched and does offer an opportunity for growth in 2026. And the group confirms the reporting units rebound in Q4. Now for Europe, generated a revenue of EUR 452.1 million, so a negative organic growth of 3.4%, close to the levels in Q1 and Q2 which were at minus 3.3% and minus 3%, respectively.

The impact of the progressive ramp-down of the SFT program was 1.3 points of negative growth. It was at 0.6 points in Q2 and slightly positive at 0.1 in Q1. So if we look at Europe, Italy, Spain and Switzerland experienced growth. Scandinavia and Germany saw their revenue contract. And in the Benelux, the contraction was more pronounced. Now if we turn to Solutions, which generated revenue of EUR 77.4 million, so down organically slightly at 0.4%. Solutions focusing on Human Resources, which represents 2/3 of the reporting unit's business slightly increased. And then the specialized lending solutions were also up, but real estate solutions contracted slightly.

So to conclude, Q3 was quite close to what we expected with the exception of the U.K., which was impacted by the postponement of the ramp-up of the defense program. Q4 should be marked by positive growth at group level, low single digits. That will be driven by a recovery in France and the U.K. The aeronautics sector, financial services and public sector should continue to improve over the last quarter of the year. And in France, we're not anticipating a significant impact given the political situation over Q4. So against this backdrop, annual targets for 2025 are confirmed organic growth in revenue of between minus 2.5% and plus 0.5% operating margin on business activity between 9.3% and 9.8% and then a free cash flow between 5% and 7% of revenue.

I should specify that as the financial analyst consensus anticipated it, we should be in the lower range of the -- at the lower end of the range for growth in revenue and free cash flow.

So now I'd like to suggest that we open the Q&A session.

[Operator Instructions]

First question from Laura Metayer from Morgan Stanley.

I had a question on return to growth in Q4. Can we have some more details on the drivers? Obviously, I understand the defense program in the U.K. has been launched. I saw in the press release that's got the outlook for 2026. So can we have a little more detail on your confidence with return -- to the return to low single-digit growth for Q4 because that represents a big acceleration when compared with Q3.

Thank you. Yes. So Q4 growth will be driven by our 2 major geographies. So France, where we're expecting positive growth in Q4. We've stabilized revenue in Q3, as you've seen, and we've got growth momentum over Q4, which we're feeling quite comfortable about. And then I said we're not expecting a deterioration linked to the political situation. So we're not worried about that in the short term. So driven by contracts that have been signed throughout the year. So significant contracts in financial services, which didn't produce revenue in Q3, but we'll see a ramp-up over Q4 at the end of the year.

For the U.K., yes, the defense program has been postponed or the launch has been postponed. So we should also note that all the joint ventures or former joint ventures, SSCL, NHS contracted in Q3 slightly with NHS which grew in the first half, so double-digit growth in Q2. And then in the month of August and September was a lot less pushy. So we're expecting a rebound in growth for NHS. SSCL has got less of a variation, but it's -- the explanation here comes from the NHS former joint venture. So confident when it comes to return to growth for NHS, gone live in October for a significant platform, which centralized purchases for NHS. So that was successful, and we're confident with regards to the return to growth in this business.

And then obviously, bear in mind that we've got a very high basis for comparison in the U.K. We stopped the VI program in mid-October last year. So we've obviously got this comparison effect that we won't have going forward.

The next question comes from Nicolas David at ODDO.

Etienne, I just want to come back to the defense contract in the U.K. just to have an idea. So obviously, there will be costs with regards to the initial trajectory that was planned, and then we've got everything that's planned in Q4. Will there be any revenue? Would it be -- can you just give us some more details on the impact of what happened in Q3? And then I've got a question on SFT. The extent of the negative growth here, is that aligned with what you're anticipating? Or have you seen an acceleration? Are we ahead of the plan that we had for 2026? Will there perhaps be less of a slowdown in 2026? What are we expecting for Q4 compared with Q3?

And then last question on the Benelux. We've seen a deterioration in Q3 with regards to the first half. What's the outlook? Do you see potential for improvement in business in Q4? Or is this the market context, which won't allow this?

Thanks for your questions. So with regards to the U.K. and the defense program, this is public. Even if it's defense, it's public. If you go on our website for the U.K., you'll find it. It's got a code name and it's called Bluejay. But this is a program that enables collaborative work between the defense ministries and it supports the launch of the GCAP program, so the Combat Air Program, that's a shared program between the U.K., Japan and Italy. So a joint venture has been set up. So it is currently starting. It's a very long-term program, but it has started in the U.K., in Japan and Italy. So we've co-built with the digital ministry. We've co-built this platform, and it's the only platform that is certified and accredited with the security needed for the different engineers and the different industrial players. So this is a 20-year program. So there's obviously a slight postponement with regards to the launch, but we're very confident with regards to the future outlook. So about EUR 10 million of postponement, that's about the numbers we're looking at.

Next question now on SFT. We have migrated all the banks. So there were 7 Sparda banks as part of this program. The last one, the most significant one was delivered a couple of weeks ago, very successful, great migration operation. There's a few additional works that need to be done at the end of the year and start of 2026. But as I said, the program stops in the first half of 2026, business will be at zero. So we're talking about EUR 100 million less between the 2 financial years. In the short term, we're very much aligned with what we're anticipating in operational terms, so migration of the last banks a couple of weeks ago and in terms of revenue as well. So we'll see an acceleration of the contraction in Q4 with regards to Q3.

Now for the for the third question on the Benelux. So rate of negative growth in the Benelux. We've seen Q3, which contracted slightly less than the first half and less than other countries. But if we look at Benelux, yes, it did contract, and we're expecting Q4 to be aligned with Q3. So it's different markets, the Netherlands and then Belgium. So we've got 60% of turnover in Belux and then the rest in the Netherlands, but that's the situation which has not yet stabilized. We've taken decisions with regard to this business. Everything is public. I can say it again. We've appointed a new leader and then we've got another new leader for Belux in the autumn.

The next question comes from Laurent Daure at Kepler Cheuvreux.

Etienne, I've got several points. First, when you reconfirm your guidance, obviously, I was expecting you to be at the bottom of the range when it comes to revenue growth. Is there a risk in terms of the margin given the lower levels of revenue? Is that going to have an impact? So what will mean that in the end of Q4, you'll be at 9.3%. What are the risks here? And then for the U.K., obviously, I understand the postponement, but we've gone from Q2 minus 5%, minus 9.5%. We're seeing that you're losing momentum with NHS. So obviously, if we lose momentum with NHS, you won't hit your U.K. targets. Is there anything else that you've lost? Or is there a contract that's ended quite naturally before the launch of a new contract? Can we just have a few more details with regards to the U.K.?

And then finally, with regards to the Netherlands, given the market where do you stand with the Ordina integration? I think, obviously, that was quite difficult in Belgium. It seemed to be a bit more simple in the Netherlands. What were perhaps the pitfalls or the difficulties that you might have encountered with the integration? Has that been solved? Or is it the market?

Thank you for your questions. Yes. So for margin, we've got good visibility over where we'll end up at the end of the year. But that's -- if we're upholding our guidance, then we're obviously confident in our capacity to hit it. So we have 0.1 point might change things a little bit, but we're confident in our guidance, and we won't be commenting further on that. Obviously, we're managing our costs very closely. So that could obviously -- and then obviously, with regards to the revenue, I've mentioned as well, we're confident in our guidance as it stands today. In the U.K., perhaps we need to talk about NHS a little bit more, double-digit growth in the first half, especially in Q2, which grew strongly. And we're seeing the seasonality of this 25%.

So if we compare growth with the first half and then Q3, and we're expecting growth that's comparable with the first half in Q4. So a big impact of the volume. NHS is obviously 3 stakeholders here. We've got the volume of the purchases. It's the hospital trusts that are managed by NHS. So we can have different swing impacts but we went live in October with the new purchasing platform, which obviously means we can acquire new customers and produce volume. So we're confident with regards to the growth in NHS with SSCL, the changes aren't as significant. So in the private sector, you're still growing? Private sector in the U.K., yes, we posted growth, but it is 10% of the business. So do bear that in mind. So that's for the U.K.

Third question on the Netherlands, Netherlands and the Benelux because obviously, this question applies to Belgium and Luxembourg. The situation with regards to the reporting unit, obviously, we had a contraction in Q3 -- so there are disparities. Sopra Steria was not present in the Netherlands. So that was Ordina, which is -- which had this business. So there wasn't necessarily an integration in the Netherlands. But the original CEO of Ordina has left, and we've appointed a new CEO at the start of August, who is responsible for turning things around, but there are no integration issues specifically.

In Belgium, we've bought 2 companies, Tobania and then Ordina. And Sopra Steria had a long-standing presence in the region as well. So there was an integration. Integration work has been done. The companies have been merged. Information has been brought together. The companies are now organized. We've also taken a decision to cut out the layer, so the Benelux layer as of the 1st of January 2026. So in the organizational chart, in the original organization with Ordina, we had 2 countries and then the Benelux layer on top of that. So that's going to be rationalized in the short term.

Decisions have been taken. And then obviously, a new CEO has been appointed for Belux as well. So Ordina, if we look at the Netherlands, there's obviously a market struggling in the Netherlands with smaller in the Belux, obviously, the merger, bringing the teams together that we had our management focus on internal matters rather than business. So we're going to turn things around now with a new leader, Teams are concentrated, and we've simplified the organization.

[Operator Instructions]

Next question from Derric Marcon at Bernstein.

Etienne, I've got several questions. I just want to pick up Laurent's question in the U.K. Even at NHS at minus 10%, SSCL has contracted slightly. On the other side, we've got NS&I, which is up. So the minus 10% isn't that easy to explain. So could you give us a bit more information with regards to how we get there so that we can understand what explains it?

Next question on France. So revenue linked to financial services that you've won in Q4? Are we going to see a positive impact from this? Or do we have to wait for 2026 to see the positive impact? And what scale are we talking about? And then third question on the U.K. So keep coming to the U.K., EUR 10 million postponement with regards to the defense program. What impact will that have on 2026? What's the delta here? So what's the size of this contract? What's the annual contract revenue?

And then last question on deal signings. In July, you were quite happy with the level of deals signed over the first half and then at the end of the first half, has this positive trend continued into Q3? And does this give you more visibility with regards to 2026?

So we don't give 2026 guidance at this stage of the year, but thank you for your questions. So with regards to the U.K., I've already given a lot of information here. So we've got the block of the joint ventures. I've given you the details for them. The swing is explained by NHS. SSCL contracted slightly in H1 and then in Q3, then we're expecting growth in Q4. I can't give you more details than that.

So you're at minus 10%? How do you hit minus 10% with NHS and then positive SSCL?

NS&I is a big positive impact of this. NS&I is one contract, among others. We've got contracts with SSCL, which represent about EUR 100 million over a quarter. So for the U.K., with regards to what we're expecting 5% to 7% in Q3. We're expecting growth in Q4 organically in the U.K. So at the end of October, obviously, we're quite confident with regards to where we'll stand at the end of the year.

Next question now on France. Yes, the contracts that have been signed, I didn't sign them, it was my teams. But in the financial sector, that's going to produce revenue in Q4. And then we've got a significant contract that was signed with SocGen that's public. That's called [ Ultra Conso. ] So that's -- we've got some significant contracts that we'll see positive in Q4. We're working on that and on the ramp-up on the recruitment as well, working with our partners there. It might seem paradoxical, but the public sector. We saw a contraction in Q3 similar to Q2, but we're anticipating a better situation in Q4 despite the political situation, which we're all aware of. Those are our forecast based on the deals that we've signed throughout the summer or before the summer.

So that answers your question on the pace at which deals have been signed. The summer, traditionally speaking, isn't a period where we sign a lot of deals, not huge positive or negative changes here. But we're confident in what we said at the end of July. Now for the U.K., third question on the U.K. Yes, the impact of 2026, this is a contract we're expecting about EUR 20 million in 2026.

And deal signings in general?

Yes, in general, we're seeing the trend is decent. We're signing deals. There are things in the pipeline. I'll reiterate that in France, we're not seeing a significant slowdown. There is a bit of a wait-and-see attitude, but we're not expecting things to stop. That might have an impact in 2026. Obviously, we're all aware of the budget negotiations underway, which might impact some of the launches in the public sector, but it's too soon to comment on that.

The next question comes from Thomas Poutrieux at BNP Paribas.

First question, I'll start with the impact of price on the top line in Q3. Are you seeing an outlook for improvement from this point of view in the coming quarters? Second question on cash collection from your customers. Obviously, we've seen free cash flow generation over H1 and the impact here. Could we have some more information on cash collection, whether you're aligned with your expectations? And then third question on potential for improvement in margin in 2026. Obviously, we've got a growth environment. What are the levers that you could activate to improve margin next year? And then last point, we've seen some press articles on the suspension of your Atos software for CNAM. Could you just give us an idea of the annual contribution here of this contract? And let's know what has been rolled out?

Thank you for your question. So price impact, obviously, it's difficult because we've got an average price -- we don't have an average price at group level. France consulting and integration prices are stable here in Q3, stable, but it's not increasing significant competitive pressure. The market is contracting in France. Obviously, you've seen our competitors' publications, but prices are stable here. Now the second question on free cash flow, cash collection, cash generation. So at the end of July, we had said the situation was a little bit difficult this year, more difficult than last year. We had 5 extra days DSO when compared with last year at the end of July. So at the end of September, we've reduced this gap. We've now got 2 days extra.

So that's -- the situation has improved. Obviously, challenged for the end of the year, but that's quite traditional cash collection at the end of the year. There's always a big drive at the end of the year. So that's still ahead of us. The teams are concentrated on that. That's something we're working on, on a weekly basis or even a daily basis. So with regards to June, we've improved the situation, and we're expecting a bigger drive. This is not specific to us. Obviously, all companies focus on this at the end of the year up until the 31st of December.

Now for margin or outlook for margin in 2026, we're currently building our budget. Your vision of MoRO's growth might not necessarily be what we have. So we're building our budget now, and we'll give you more information on that at the end of February as usual. The levers that we have always still the same, obviously, properly managing our operations, the cost of our projects, fixed price would be better here. And then we can think about the average margin at entity level and be quite happy at that. But obviously, when you look at the detail of this, some projects are at different levels. So this is ongoing work, which is never finished. So we're always striving to improve margin of our operations.

And then we've got decision which we've already taken, but we'll see the positive impact of this in 2026. So our real estate footprint because obviously, we've got our leases that expire 3, 6, 9 years. So obviously, we'll see the impact of that in the P&L, but there is a trajectory that has been built. And then the ramp-up in value of our proposals, we always strive to win when it comes to volume and value when it comes to consulting, even if 2025 was a difficult year, consulting market was down for Sopra Steria and our competition. So I'm not going to give you a guidance neither on growth or profitability for 2026, but all these levers can be activated one by one.

Now your fourth question on Atos, we're not rolling -- we're not deploying Atos and we delivered in November 2024. So that was software that was delivered almost a year ago. The customer is CNAM in France, and that was delivered in accordance with the customer's specifications. So that was all tested and accepted at the end of November last year. And then the customer is responsible for rolling out the software on the ground. We're obviously there to help them, and we're still alongside the customer, but we have delivered a product that was compliant with recommendations, and I won't be commenting further than that. And we don't obviously give specific revenue by contract.

So that was your last question. Have you got any other questions?

The next question comes from Aditya Buddhavarapu from Bank of America.

Etienne, just one question for me. On the search for a new CEO, could you just comment on the type of profile that the Board is looking at in terms of the candidate?

I'll say -- I'll be giving you the answer in [Audio Gap] profile that we're looking for is an external profile that's been integrated. So a specialized recruitment firm has been appointed. We've got candidates and the process will be ongoing. I can't really say more at this stage aside from the fact that the procedure has been launched.

Understood. And just maybe one follow-up on France. So right now, you're not seeing any impact of the political situation. However, do you think you could maybe anticipate some delays to public sector contracts in H1 next year, similar to maybe something like you saw earlier this year if the current situation continues?

France, I reiterate that we're not seeing a short-term issue with regards to Q4 given the business that we already have. And then obviously, you're looking at the start of 2026. If -- obviously, it depends on the macro situation, if the budget isn't voted before the end of December in France, if it's voted late in 2026, that's what's happened last year, this year, then obviously, there will be a delay in the public sector where the ministries and the different entities can't start spending as was the case at the start of 2025. Today, that's not the assumption. We have a government. Debates are ongoing in the parliament. Obviously, I'm not going to be taking bets on the results, but the government does aim to have a budget confirmed at the 31st of December. So I can't say more than that at this stage.

The next question comes from Wolfgang Specht from Berenberg.

Two additional ones from my end. First one on workforce. I was surprised to see that you slightly increased the number of employees. So can you give us some details? Are you ramping up here for, let's say, the pipeline you see for 2026? Or is it rather balancing the increased attrition you are currently facing? And the second question would be on European operations here, the German market. Do you see yourself positioned to pitch for contracts related to the special budgets of the German government for improving the digital infrastructure? Or is this rather, let's say, outside of the scope you're able to deliver?

Thank you very much for your questions. So a question on headcount. Obviously, there was growth in headcount, so in France and in India, as indicated. So this is the necessary ramp-up for contracts that we've signed. So major contracts in financial services sector in France. We're very active in terms of recruitment so that we can support these contracts haven't generated revenue in Q3, but they will in Q4. So we need to recruit now to be able to produce in Q4 in the short term. So this recruitment reflects a rebound in business that we've obviously mentioned in H1, so France and then elsewhere as well. So this is a positive sign.

Now for the second question on Germany. Germany, excluding SFT, which is a specific operation, which I've already given -- which I've already detailed. So for the rest of the business, we've got a slight contraction in business in Q3. We're anticipating a stabilization in Q4, so about EUR 400 million per year, excluding SFT investment announced in the public sector, in particular, in Germany. That's an interesting outlook for us. In Germany, our strengths, our key business units are the financial sector and the public sector. So obviously, we've got a card to play in this sector.

Next question from Derric Marcon at Bernstein.

Sorry to come back. Can we just have some information on Scandinavia, which in Q3 dipped. So what's the outlook for future quarters?

So Scandinavia, which obviously usually produce double-digit growth. So we saw slight growth over 9 months. But Scandinavia for us is basically Norway. So we're a lot more modest in Sweden. So for Scandinavia, I'd say in the short term, the issue is staffing and getting contracts that we've already signed, getting them started. We've got some good deals at the end of H1, so public sector and then energy as well then the post office there. So these are programs that will be starting over the end of the year. So we've got recruitment and ramp-up. So this does give us a good outlook for 2026 in this geography.

There are no more questions for the time being. So we'll hand the floor back to the speakers for the conclusion.

So thank you very much for listening. Thank you for your questions, and we'll be seeing you next time. Goodbye.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]