SII : Annual financial report 2019/2020

Annual financial

report

2019

2020

YOURTECHNOLOGYPARTNER

8600

EMPLOYEES

SWEDEN

• CONTINENTS

18COUNTRIES

76LOCATIONS

UNITED KINGDOM	NETHERLANDS	POLAND
GERMANY

BELGIUM

	CZECH REP.	UKRAINE
	SWITZERLAND	ROMANIA
FRANCE

SPAIN

COLOMBIA

MOROCCO

CHILE

CANADA

ARGENTINA

INDIA

OURBUSINESS LINES

OUR SECTORS

ICT

EMBEDDED SOFTWARE

INFORMATION SYSTEMS

SYSTEM ENGINEERING

INFRASTRUCTURES

CONSULTING & TRAINING

Aerospace	Defence	Telecom	Banking	Retail	Digital	Electronics
		& Media	& Insurance		Security

Energy	Tourism	Automo琀ve Healthcare	Services Construc琀on	Food
	& Transport			& Beverage

# a c k n o w l e d g e m e n t s

With an average of 8,356 employees in fiscal 2019­2020, the SII Group posted consolidated revenue of €676.3m and generated net income of €27.2m.

We wish to thank our entire staff for making this performance possible. We owe our success to their technical and human skills, their professionalism, their trust, their creativity and their ability to work together and in good spirits at providing our customers with continually improved services.

On behalf of our entire staff, we also wish to thank our customers who, year in and year out, give us the opportunity to devise solutions with a high value­added for use in their future activities. Acknowledging this represents an encouragement and a powerful generator of energy and enthusiasm for our teams.

Participation in the development of new technologies

It is essential for companies to continually create and develop new services and products, or to devise innovative manufacturing processes.

Businesses are also constantly seeking to incorporate new technologies into their information systems.

These tasks require them to rely on increasingly advanced and diversified expertise, which they can only find through outsourcing.

Firms that do business with us are looking for specialized partners capable of contributing to their ongoing innovation efforts. This has been SII's field of expertise since its inception and represents know­how that generates most of the Group's revenue

This document is a full free translation of the original French text. In case of discrepancies, the French version shall prevail.

1

A talk with M. Éric Matteucci

Chairman of the Management Board

Your operating income is down. How do you view this financial year?

This financial year was expected to be the beginning of a new transition in the Group's organization. We had forecast a slightly more modest growth in activity than in previous years and the maintaining of the operating margin rate, which would have shown our ability to absorb our investments.

Our international global results are in line with our expectations, although some countries' contributions fall far short of the baseline scenario. The Group's remarkable performance in Poland, and the significant improvement in conditions in Chile, allowed us to compensate for the main underperformances in Germany and Spain.

The situation in France is different since our first difficulties began to appear in September 2019. We were at that time facing a less buoyant demand side market, while our recruitment performance was in keeping with our expectations. This contrast led to a drop in the activity rate for the full second half of the year. Our half­yearly results were in step with our ambitions. Our French performance in the second half of the year was disappointing.

That said, we have done a lot of work on the organization of the SII group, which is allowing us to be more efficient during the current period. I firmly believe that this will also be a considerable advantage for the continuation of the Group's development. As mentioned last year, this work is part of the groundwork for our future.

To add some figures to this analysis, we generated consolidated revenue of €676.3m, up more than 7%, operating income of €43.1m, representing an operating margin of 6.38%, net income, group share of €27.2m and cash flow from ordinary activity of €58.5m. These results make the Group's financial structure sounder.

What is the quantifiable impact of the Covid­19 health crisis?

The health threat did not really have a major impact prior to lockdown. It perhaps had an impact on our clients' morale, but this is difficult to quantify. The lockdown had a very clear impact on the activity rate, however, particularly in France. Firstly, we work in the defense sector. All projects were immediately halted and working from home was not possible. Outside this sector, some clients did not want to continue operating on a home­working basis, probably because they were not prepared technically. This immediately caused a drop­in activity of around 20% overnight. Our activity rate fell until the end of April 2020. The health crisis has created an economic crisis in sectors where we have a large presence, such as aeronautics, transport and tourism, and distribution. Things stabilized in May 2020 and we are working on winning back clients in the coming months.

With regard to our international activities, in a great many of the countries where we operate, activities switched almost entirely to home­working as lockdowns were introduced. Here again, it was the economic crisis that significantly drove down activity, especially in Germany and Spain.

We have tried to assess the immediate impact on our revenue volume in the first quarter of the financial year 2020/2021. We forecast a decrease in revenue of between ­8% and ­10% Group­wide, including ­15% to ­20% in France, and an activity level that should range from holding steady to growing slightly for our international operations (between 0% and +5%).

All this will of course have a substantial impact on the Group's operating margin, but at this stage it is impossible to make an accurate enough assessment.

2