2017 full-year results

Published on 09 March 2018

A robust performance in a transition year.

SPIE well positioned to benefit from renewed market momentum.

2017 highlights
  • Growth in revenue, EBITA and Adjusted net income
    -   +24.8% revenue growth at constant currency (+5.8% excluding SAG)
    -   EBITA up +13.5%; Group margin at 6.3%
    -   Adjusted(1) EPS(2) at €1.37 (+7.4%)
  • Pick up in France revenue
    -   +1.1% organic growth in 2017, strong improvement in H2 (+2.8%)
  • Acceleration of European development
    -   SAG integration well on track; SPIE now a leader in Germany
    -   Significantly strengthened footprint in the Netherlands with 5 bolt-on acquisitions
  • A record year for bolt-on M&A, funded by strong Free Cash Flow
    -   €321m total full-year revenue acquired through 11 targeted bolt-on acquisitions
    -   102% cash conversion(3); strong Free Cash Flow, at €234 million, after restructuring costs
  • Successful refinancing of bank debt
    -   New bank facilities fully committed, with lower cost and extended maturity (2023)
  • Recommended dividend up +5.7%: €0.56 per share(4)
  • Good momentum in 2018
    -   Group organic growth to improve
    -   Improving market environment in continental Europe
    -   Continued delivery on bolt-on M&A strategy
    -   Group EBITA margin at 6.0% or more, higher than 2017 pro forma level(5)

(1) Adjusted for amortisation of allocated goodwill and exceptional items
(2) Earnings per share, fully diluted
(3) Ratio of Cash flow from operations for the financial year to EBITA for the same year
(4) Subject to shareholders approval at the next Annual General Meeting on May 25th, 2018
(5) Including all acquisitions made in 2017 as if they had been consolidated starting in January 1st, 2017, 2017 pro forma EBITA margin would have been 5.9%

(1) Restated in accordance with IFRS 5 (refer to notes to 2017 consolidated financial statements for further details)

Gauthier Louette, Chairman & CEO, commented:

‘2017 was a year of significant changes for SPIE, with the acquisition of SAG, the largest ever, a record level of bolt-on acquisitions, the launch of an ambitious reorganisation in France and the disposal of non-core activities. In 2017 we also had to face operational challenges in the UK, which impacted our financial performance.
As it emerges from these structural changes, we believe that the Group is stronger, truly European and well positioned to benefit from a renewed market momentum.

Going forward, we expect further revenue growth, with improving organic trends and strong bolt-on M&A. Even if it will be masked in 2018 by consolidation impacts from last year’s acquisitions, underlying margin improvement will resume.’

2017 results

Consolidated revenue was €6,126.9 million in 2017, up +24.0% year-on-year, due to the consolidation of SAG since April 1st, 2017 (+19.0%) and to the continued strong contribution from bolt-on acquisitions (+7.1%). Organic growth was -1.3% as expected, with declines in Oil & Gas and in the UK offsetting positive growth in most of our geographies. Foreign exchange impact was -0.8%.

EBITA was €388.0 million, up +13.5% compared to 2016. EBITA margin was 6.3%, compared to 6.9% in 2016 on a restated(1) basis (6.8% reported), reflecting margin pressure in France, adverse market conditions at Oil & Gas, as well as the one-off write-downs which affected the UK in the second quarter of 2017.

Cash conversion was 102%, with Operating Cash Flow at €394.6 million. Free Cash Flow was strong, at €234.4 million, after €57.8 million of restructuring cash costs.

Adjusted net income Group share (before amortisation of allocated goodwill and exceptional items) amounted to €212.3 million, with adjusted EPS (fully diluted) at €1.37, up +7.4% compared to 2016.

Net income Group share amounted to €110.4 million, lower than its 2016 level of €184.0 million, primarily due to higher restructuring costs and allocated goodwill amortisation in 2017, as well as a one-off €35.8 million net gain from deferred tax adjustment in 2016.

Net Debt was €1,531.9 million at December 31st, 2017, up from €909.4 million at December 31st, 2016. The increase reflects the placing, in March 2017, of a €600 million bond to finance the acquisition of SAG. The net debt to EBITDA(2) leverage ratio was 3.3x.

A dividend of €0.56 per share, representing a 5.7% increase on 2016, will be proposed to the Annual General Meeting of Shareholders on May 25th, 2018. Since an interim dividend of €0.16 per share was paid in September 2017, the final dividend payment on May 31st, 2018 (ex date: May 29th, 2018) will be €0.40 per share if approved.

(1) Restated in accordance with IFRS 5 (refer to notes to 2017 consolidated financial statements for further details)
(2) Earnings before interest, taxes, depreciation and amortization for the last twelve months, computed as if all 2017 acquisitions had been consolidated starting in January 1st, 2017 and including SAG synergies

(1) Restated in accordance with IFRS 5 (refer to notes to 2017 consolidated financial statements for further details)

Performance by segment


With a +1.1% organic growth over the full year, revenue picked up in France in 2017, after four years of decrease. Organic growth in the second half of the year was higher than anticipated, at +2.8% (-1.1% in the first half). Growth came mostly from the Industrial and Telecom sectors, while activity in the Commercial sector remained very competitive. Growth from acquisitions was +6.3%, primarily reflecting the consolidation of SAG’s French activities since April 2017, as well as bolt-on acquisitions.

Strong competition in the Commercial sector and, to a lower extent, low initial margins in fiber-to-the-home deployment contracts resulted in margin decreasing to 6.3% in 2017.

2017, SPIE initiated an ambitious reorganisation of its activities in France, in order to address more effectively the evolution of clients’ needs. Following the ‘Ambition 2020’ project, which led to the creation of two entities dedicated to Technical Facility Management (SPIE Facilities) and Telecom and Energy infrastructure (SPIE CityNetworks), SPIE is now completing the move from a regional multi-technical structure to a national, market-focused organisation, with the creation of two new divisions addressing the Industrial and the Commercial markets. SPIE France, a newly-created company, will thus regroup five entities: SPIE Facilities, SPIE CityNetworks, SPIE ICS, SPIE Industrie & Tertiaire (which will include two divisions, dedicated to the Industry and Commercial sectors) and SPIE Nuclear. This organisation is similar to that adopted in other countries. It aims at maintaining a strong proximity with customers through a dense footprint, while maximising commercial responsiveness and ensuring top-tier expertise and innovation.

Germany & Central Europe

EBITA for the Germany & Central-Europe segment was €120.0 million in 2017, up +166% compared to 2016, with an EBITA margin of 6.3%. Revenue grew by +104% due to acquisitions, while organic growth was +0.8%.

The acquisition of SAG in March 2017 marked a turning point in SPIE’s development in Germany. The integration is making fast and substantial progress and synergies are being delivered according to plan. SPIE’s position on the German market was further enhanced by two bolt-on acquisitions and the Group plans to continue growing in this country. At our historical German operations, EBITA margin made further progress thanks to contract selectivity and strong customer activity across the board.

In Switzerland, after the restructuring carried out in 2016, SPIE started to benefit from a much stronger organisation and is now actively looking to grow while continuing to improve its margins.

North-Western Europe

EBITA for the North-Western Europe segment amounted to €54.3 million, down -6.3% compared to 2016, with EBITA margin at 4.1%. Revenue grew by +10.7%, including strong growth from acquisitions, at +15.6%, and a -2.4% organic decline.

In the Netherlands, five bolt-on acquisitions enabled SPIE Nederland to gain leadership positions in the Smart City and Retail Installation markets, while strengthening its ICT capabilities. On the back of supportive market conditions, organic growth was solid and EBITA grew significantly.

In the UK, SPIE reported a small positive EBITA despite the one-off loss recorded in the second quarter of 2017, as well as increased margin pressure in a more challenging economic environment, which led to negative organic growth. Having initiated the exit from low value-added activities, SPIE will focus on a smaller portfolio of core services going forward.

In Belgium, EBITA grew slightly in 2017 as activity recovered, as anticipated, in the second half of 2017 after a slow start. In January 2018, SPIE was recognised as “Top employer in Belgium” for skills development at all levels, a good working environment and digitalization initiatives.

In December 2017, SPIE signed an agreement for the sale of its Moroccan subsidiary, in line with the Group’s strategy to focus on European markets.

Oil & Gas and Nuclear

The Oil & Gas and Nuclear segment turned in a €48.9 million EBITA, or 9.9% of revenue in 2017. Revenue contracted by -12.9% (-11.8% on an organic basis).

SPIE’s Nuclear activities saw, as planned, a modest decrease in revenue (-2.3%), linked to the “Grand Carénage” phasing, with no impact on margins.

In Oil & Gas, revenue contracted by -17.4% at constant currency and margins decreased as anticipated. In-depth restructuring was effectively completed in 2017 to adapt central and regional overhead structures to current activity levels.

A record year for bolt-on M&A

SPIE delivered strongly on its bolt-on acquisitions strategy in 2017, with 11 companies acquired, representing a record level of €321 million of full-year revenue (excluding SAG).

Underpinned by the Group’s strong Free Cash Flow, bolt-on acquisitions are the driving force of SPIE’s growth model in very fragmented markets. 2017 bolt-on M&A activity was primarily focused on Germany and The Netherlands and, to a lesser extent, on France. It allowed the Group to scale up positions in attractive markets, progress towards a balanced activity portfolio, develop ICT capabilities and acquire niche expertise (see appendix).

The aggregate EBITA multiple for these transactions was 6.0x(1).

Cash generation - Financing

Free cash flow and net debt

Cash conversion was 102% in 2017, with Operating Cash Flow at €394.6. Structurally negative, net working capital represented -26 days of revenue at December 31st, 2017 (-27 days excluding SAG), in line with December 31st, 2016 level. Net capital expenditure remained very low, at €36.2 million or 0.6% of revenue. After interest, taxes paid and restructuring cash costs, Free Cash Flow was strong, at €234.4 million, after a €57.8 cash outflow from restructuring.

Net debt at December 31st, 2017 was €1,531.9 million, compared to €909.4 million at December 31st, 2016. The increase reflects the issue, in March 2017, of a €600 million bond (fixed-rate, euro-denominated, with a 7-year maturity and an annual coupon of 3.125%) to finance the acquisition of SAG. The net debt to EBITDA(2) leverage ratio was 3.3x.

In 2017, SPIE initiated the disposal of four non-core activities, with closing and cash proceeds expected in 2018.

(1) Before synergies and impact of working capital improvement – Based on an adjusted normative EBITA for Ziut
(2) Earnings before interest, taxes, depreciation and amortization for the last twelve months, computed as if all 2017 acquisitions had been consolidated starting in January 1st, 2017 and including SAG synergies


In March 2018, SPIE successfully secured the refinancing of its bank debt through two fully-committed undrawn new facilities: a term loan of €1,200 million and a revolving credit facility of €600 million, both maturing in 2023 (vs. 2020 for existing facilities) and fully unsecured and unguaranteed (vs. guarantees from SPIE’s main subsidiaries for existing facilities). These facilities will bear interest equal to EURIBOR (or any other applicable base rate) plus an opening margin of 1.70% for the term loan and 1.30% for the revolving credit facility, compared with 2.38% and 2.28% respectively for the existing facilities (see appendix).

In March 2017, SPIE successfully issued a €600 million bond, in order to finance the acquisition of SAG (fixed-rate, euro-denominated, with maturity in 2024 and an annual coupon of 3.125%). Upon completion of the above refinancing, guarantees provided by SPIE’s main subsidiaries for this bond will be automatically released in accordance with its terms and conditions.

SPIE intends to continue to actively manage its debt and diversify its sources of financing.

Liquidity remained high, at €920.1 million at December 31st, 2017 (including €520.1 million net cash and €400 million of undrawn revolving credit facility).

SPIE’s long term corporate credit rating remains at BB (Standard & Poor’s) and Ba3 (Moody’s).

2017 pro forma

On account of SPIE’s particularly high M&A activity in 2017, pro forma revenue and EBITA margin for 2017 (i.e. including all acquisitions made in 2017 as if they had been consolidated starting January 1st, 2017), are presented below for comparison purposes.

2017 pro forma revenue would have been €6,501 million.

2017 pro forma EBITA margin would have been 5.9%, reflecting the impact of the full-year consolidation of acquisitions made in 2017, in particular:

  • SAG (Germany & Central Europe, France), consolidated over 9 months in 2017: due to the seasonal nature of the activity, the first quarter, which will be consolidated for the first time in 2018, has historically reported a small operating loss;
  • Ziut (The Netherlands), consolidated over 4 months in 2017: this company is currently not profitable and due to the seasonality of its activity, margin tends to be even lower in the first part of the year.

See appendix for calculation details.

2018 outlook

SPIE expects strong revenue growth in 2018:

  • Acquisitions made in 2017 are expected to bring additional incremental revenue in 2018 in the order of €370 million (of which approximately €200 million from SAG);
  • Group organic growth is expected to improve compared to 2017;
  • Revenue acquired in 2018 through bolt-on acquisitions is expected to be c. €200 million.

As a result, Group revenue is expected to grow in excess of 7.0% at constant currency in 2018.

Group EBITA margin is expected to be 6.0% or more, higher than 2017 pro forma level(1).

Cash conversion is expected to be c.100%.

The dividend pay-out ratio will be c.40% of Adjusted Net Income attributable to the Group.

Consolidated financial statements

The consolidated financial statements of the SPIE Group as of and for the year ended December 31st, 2017 have been approved by the Board of Directors on March 8th, 2018. Audit procedures on the consolidated financial statements are complete and the Statutory Auditors' report is in the process of being issued.

The audited consolidated financial statements (full financial statements and notes) and the slide presentation of the 2017 consolidated annual results are available on our website www.spie.com, in the “Finance/Regulated Information” section.

(1) Including all acquisitions made in 2017 as if they had been consolidated starting in January 1st, 2017, 2017 pro forma EBITA margin would have been 5.9%

Conference call for investors and analysts

Date: Friday, March 9th, 2018 - 9.00 am Paris time - 8.00 am London time

Speakers: Gauthier Louette, Chairman & CEO - Denis Chêne, Group CFO


Certain information included in this press release are not historical facts but are forward-looking statements. These forward-looking statements are based on current beliefs, expectations and assumptions, including, without limitation, assumptions regarding present and future business strategies (including the successful integration of SAG) and the environment in which SPIE operates, and involve known and unknown risks, uncertainties and other factors, which may cause actual results, performance or achievements, or industry results or other events, to be materially different from those expressed or implied by these forward-looking statements.

Forward-looking statements speak only as of the date of this press release and SPIE expressly disclaims any obligation or undertaking to release any update or revisions to any forward-looking statements included in this press release to reflect any change in expectations or any change in events, conditions or circumstances on which these forward-looking statements are based. Such forward- looking statements are for illustrative purposes only. Forward-looking information and statements are not guarantees of future performances and are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of SPIE. Actual results could differ materially from those expressed in, or implied or projected by, forward-looking information and statements. These risks and uncertainties include those discussed or identified under Chapter 4 “Risk factors” in the 2016 Registration Document, which received the AMF visa n° R. 17 - 0017 on April 18th, 2017, and is available on the website of the Company (www.spie.com) and of the AMF (www.amf-france.org).

This press release includes only summary information and does not purport to be comprehensive. No reliance should be placed on the accuracy or completeness of the information or opinions contained in this press release.

This press release includes pro forma financial information in relation to the financial year ended December 31st, 2017, which has been prepared as if all acquisitions made by SPIE in 2017 (including SAG) had been completed as of January 1st, 2017. This pro forma financial information is provided for information purposes only and does not represent the results that would have been achieved if these acquisitions had actually been completed on such date.

This press release does not contain or constitute an offer of securities for sale or an invitation or inducement to invest in securities in France, the United States or any other jurisdiction.