First Half 2017 results

Published on 28 July 2017
H1 2017 highlights

- Total revenue growth at constant FX: +16.6% (+5.3% ex SAG)

- Bolt-on M&A ahead of full-year outlook: €267m annualised revenue secured

- SAG part of SPIE since March 31st, 2017

- Integration progressing well, first synergies already delivered

- Initiated divestment of Gas & Offshore activities (c.14% of SAG 2016 revenue)

- EBITA up +1.2% - Group margin impacted by underperformance in the UK in H1

- Full-year outlook slightly revised:

Revenue acquired in 2017 through bolt-on M&A: €270m to €300m on a full-year basis

Excluding SAG’s Gas & Offshore activities, and other discontinued activities:

. Group revenue to grow by 23% to 25% at constant FX (c.6% ex SAG, above previous expectation)

. Group EBITA margin between 6.3% and 6.5%, slightly below previous expectation

Cash conversion expected at c.100%

Adjusted(1) EPS to grow strongly, in line with previous expectations

(1) Adjusted for amortisation of allocated goodwill and exceptional items
(2) Restated in accordance with IFRS 5 (refer to notes to 2017 interim consolidated financial statements for further details).

Commenting on the results, Gauthier Louette, Chairman & CEO, declared: ‘We are reporting today our first set of results including SAG, which is already changing the reach and balance of the SPIE Group. The integration process is well on track and we have initiated the divestment of SAG’s Gas and Offshore activities, which do not fit within SPIE’s strategy. Revenue in the first half was in line with our expectations and we delivered strongly on bolt-on acquisitions, with a particular emphasis on the German market. Group margin was lower than in the first half of last year, mainly due to an underperformance in the UK, which has been fully addressed. We are confident that SPIE will deliver another year of strong EBITA growth in 2017.’

H1 2017 financial headlines

Consolidated revenue was €2,760.7 million in H1 2017, up +15.4% year-on-year, primarily due to the consolidation of SAG since April 1st, 2017 (+11.3%) and the continued strong contribution from bolt-on acquisitions (+6.4%). Organic growth was -1.1% and foreign exchange impact -1.2%.

EBITA was €145.5 million, up +1.2% year-on-year. EBITA margin was 5.3%, compared to a strong 6.0% in H1 2016 (up from 5.6% in H1 2015), mainly due to an underperformance in the UK. Furthermore, Group margin was negatively impacted by a change in segmental mix, as the share of Group revenue contributed by higher-margin segments (France and Oil & Gas and Nuclear) was lower than in H1 2016.

Net income (group share) was €34.0 million, a decrease compared with H1 2016 (€47.2 million), primarily due to non-recurring costs incurred in H1 2017 in connection with the acquisition of SAG and restructuring. Adjusted for non-recurring costs and allocated goodwill amortisation, Adjusted net earnings (group share) was €70.5 million, up 4.4% year-on-year.

Net debt was €1,907 million, up from €1,248 million at June 30th, 2016 due to the issuance of a €600 million bond on March 15th, 2017 to finance the acquisition of SAG, and to the seasonality of SAG’s working capital. This resulted in 4.0x leverage(1) at June 30th, 2017, up from 3.2x at June 30th, 2016.

(1) Net debt / pro-forma EBITDA on a trailing twelve-month basis

Comments by segment

(1)Restated in accordance with IFRS 5 (refer to notes to 2017 interim consolidated financial statements for further details).
(2)Restated in accordance with IFRS 5, based on the assumption that no further activity is discontinued in the 2nd half of 2017.


In the France segment, revenue growth was +3.9% year-on-year, driven by acquisitions, most notably the addition of SAG’s French activities. Organic growth was -1.1%, with good momentum at the recently created SPIE CityNetworks (telecoms and electrical grid services), and a slight increase in public sector activity, offset by high contract selectivity in the commercial sector. Current market trends and tendering activity remain consistent with our forecast of stabilized revenue over the full year of 2017, pointing to an improvement in the medium term.

EBITA margin was 5.8%, against a very strong 6.2% in H1 2016 (up from 5.7% in H1 2015). This reflected a still challenging environment in the commercial sector, as well as rapidly expanding activity with telecom operators, particularly in fiber-to-the-home deployment. Such digital network services typically have lower initial margins, and are expected to reach their full potential over time.

Germany & Central Europe

The Germany & Central Europe segment changed scale in H1 2017. On top of a robust +3.8% organic growth, revenue was markedly up year-on-year as a result of the consolidation of SAG in Q2 2017 (+52.4%) and the strong contribution from recent bolt-on acquisitions (+13.9%). EBITA was up +163%, with margin progressing to 4.9% (3.2% in H1 2016).

In Germany, the market background continued to be very supportive, translating into solid organic growth and further margin development at our historical operations. The integration of SAG is progressing well and the first synergies have already been delivered to plan. We have initiated the divesture of SAG’s Gas and Offshore activities (14% of SAG FY16 revenue), which is, therefore, accounted for as discontinued activity under IFRS 5.

In Switzerland, our operations are now aligned with the SPIE model, and on the way to profitable growth.

North-Western Europe

Revenue in the North-Western Europe segment grew strongly, by +9.2% in H1 2017, despite a -4.1% foreign exchange impact. Contribution from acquisitions was +13.7%, while organic growth was -0.4%. EBITA was €16.4 million (-34%), with margin at 2.4% (4.0% in H1 2016).

The steep EBITA decrease is entirely attributable to the underperformance in our UK business, where a loss was booked in our electricity distribution business. Corrective actions have been swiftly taken so that no further impact is expected in H2. An increasingly competitive environment has also led to reduced activity.

In the Netherlands, both revenue and margins were good in H1 2017, underpinned by excellent organic growth across the board and a good contribution from recent acquisitions. In Belgium, while activity this year is skewed towards H2, overall trends remained very solid, and margins made further progress.

Oil & Gas and Nuclear

Revenue in the Oil & Gas and Nuclear segment decreased by -12.5%, with EBITA margin at 8.4% in H1 2017 (compared to 10.0% in H1 2016 and 8.9% in H1 2015).

In our Oil & Gas activities (now less than 5% of Group revenue), we saw continued deterioration in customer activity, and we are actively managing the further downsizing of our operations. Revenue contracted and margins were affected, while remaining well-above Group average.

Our Nuclear activities turned in a robust performance, reflecting SPIE’s strong position on this market, with stable revenue year-on-year and solid margins. In light of H1 2017 performance, the full-year revenue decline linked to Grand Carénage cyclicality is expected to be more modest than initially forecast.

Continued strong bolt-on M&A

Momentum in bolt-on acquisitions has been very strong since the beginning of the year:

. On January 3rd, 2017, SPIE acquired Ad Bouman BV, active in the Dutch retail installation market. The company employs 22 people and generates annual revenue of approximately €5 million. Following the recent acquisition of Aaftink, this acquisition reinforces SPIE’s leading position in the Dutch retail installation market;

. On January 26th, 2017, SPIE acquired Maintenance Mesure Contrôle (‘MMC’), through its subsidiary SPIE Nucléaire. MMC, a specialist in predictive maintenance on electronuclear sites, employs 15 people and generates annual revenue of approximately €3 million;

. On April 6th, 2017, SPIE acquired PMS Sicherheitstechnik und Kommunikation GmbH in Germany. The company installs and maintains building security and communication systems, employs 24 people and generates annual revenue of approximately €3 million;

. On April 13th, 2017, SPIE acquired Lück Verwaltungs GmbH in Germany, a specialist in building technology services employing 1,000 people and generating annual revenue of approximately €130 million. SPIE will capitalize on this acquisition to develop its mechanical and electrical services capabilities in Germany, and progress towards a balanced activity portfolio, in keeping with its stated objectives;

. On May 10th, 2017, SPIE acquired Mer ICT in the Netherlands, a provider of integrated communication solutions with 20 employees and annual revenue of approximately €4 million;

. On July 11th, 2017, SPIE signed a protocol for the acquisition of Ziut BV in the Netherlands, an expert in installation, management and maintenance of public lighting, traffic control systems and video surveillance, employing 440 people and generating annual revenue of approximately
€114 million. With this acquisition, SPIE Nederland will step up its service offering in the Smart City market.

. On July 12th, 2017, SPIE acquired JM Electricité in France, a specialist in electrical installation mainly active in the Marseille area. With 22 employees, JM Electricité generates revenue of approximately €5 million.

. On July 20th, 2017, SPIE acquired Probia Ingénierie in France, a company involved in the design and delivery of automated equipment for the agri-food industry, with annual revenue of approximately €3 million.

Upon signing of the acquisition of Ziut BV(1), total annualised revenue acquired will amount to
€267 million, well-ahead of our initial guidance.

(1) Subject to finalization of Works Councils consultation

Financing – Balance sheet

Working capital at June 30th, 2017 was a negative €(92.8) million and represented 6 days of revenue. Excluding SAG, it was €(108.3) million or 8 days of revenue, compared with 8 days at June 30th, 2016, and 2 days at June 30th, 2015.

Net debt at June 30th, 2017 was €1,907 million, compared to €1,248 million at June 30th, 2016. This increase resulted from the issuance of a €600 million bond on March 15th, 2017, in order to finance the acquisition of SAG (fixed-rate, euro-denominated, with a 7-year maturity and an annual coupon of 3.125%), and from the seasonality of SAG’s working capital. Subsequently, leverage(2) reached 4.0x at June 30th, 2017. Excluding the impact of the acquisition of SAG, leverage at June 30th, 2017 would have been 3.3x, compared with 3.2x at June 30th, 2016.

Liquidity remained high, at €490 million at June 30th, 2017 (including €340 million net cash and €150 million of undrawn Revolving Credit Facility).

(2) Net debt / last-twelve-months EBITDA as per Senior Facility Agreement

2017 full-year outlook

The outlook for 2017 is slightly revised due to the initiated divestiture of SAG’s Gas & Offshore activities (now accounted for as per IFRS 5 in the Group’s consolidated accounts) and lower margin expectations in the UK and in Oil & Gas.

Revenue acquired in 2017 through bolt-on acquisitions is now expected between €270 million and
€300 million on a full-year basis.

Excluding SAG’s Gas & Offshore activities and other discontinued activities:

. Group revenue is expected to grow by 23% to 25% at constant FX (c.6% ex SAG, above previous expectation);

. Group EBITA margin is expected between 6.3% and 6.5%, slightly below previous expectation.

Cash conversion is expected to be c.100%.

Adjusted EPS is expected to grow strongly, in line with previous expectation.

The dividend pay-out ratio will remain at c.40% of adjusted net income attributable to the Group. SPIE will pay an interim cash dividend of €0.16 (30% of the approved dividend for 2016) in September 2017.

Consolidated financial statements

The consolidated financial statements of SPIE SA as of and for the six months ended June 30th, 2017 have been authorised for issue by the Board of Directors on July 27th, 2017.

Auditors’ review of the consolidated financial statements is complete and the statutory auditors’ report on the 2017 half year financial information has been issued.

The consolidated financial statements (full financial statements and notes) and the slide presentation of the 2017 half-year results are available on our website, in the “Finance/Regulated Information” section.

Conference call for investors and analysts

Date: Friday, July 28th, 2017

9.00 am Paris time - 8.00 am London time


Gauthier Louette, Chairman & CEO

Denis Chêne, 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 ( and of the AMF (

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.

The historical figures (up to FY16) related to SAG included in this press release have been provided to SPIE by SAG within the context of the acquisition process. These historical figures have not been audited or subject to a limited review by the auditors of SPIE.

This press release includes pro forma financial information in relation to the financial year ended December 31st, 2016, which has been prepared as if the acquisition of SAG by SPIE had been completed as of January 1st, 2016. This pro forma financial information is provided for information purposes only and does not represent the results that would have been achieved if this acquisition 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.