Sopra Steria Group SA (SOP) Earnings Call Transcript & Summary

[Audio Gap] H1 2020 results presentation for the Sopra Steria Group, which will be led by Vincent Paris, group's CEO; and Étienne du Vignaux, the group's CFO. There will be a Q&A session after the presentation. [Operator Instructions] I will now hand the floor to Vincent Paris. Over to you.

Thank you, and good morning, everybody. Welcome to this H1 2020 results presentation for Sopra Steria. This presentation I will be giving with Étienne du Vignaux, and there'll be 4 parts of the presentation. During the first part, I'll talk about the highlights of the first semester. We'll be focusing on the resilient nature of our activity. The second focus will be the way we've managed the crisis and the way we continue to manage the crisis. And then the third focus will be on each operational division. The second part of the presentation will be presented by Étienne who will talk about the key figures and the financial result for the first semester. And then the third section will be focused on our priorities and our targets for the coming period. And then as per usual, we'll have a Q&A session. What I'd like to suggest is that we get stuck into the highlights of the first semester and we felt that it was important to highlight the fact that we have quite a resistant profile for 3 reasons. The first reason is that we -- since the merger -- this is nothing new. Since 2015, we have been focused on top 100 customers at group level. And throughout this period, we've been very much focused on these customers so that we can get to know them better and we can support them. Obviously, throughout the crisis, customers have been suffering, but they suffer less if we're supporting them properly. Then we also have recurring revenue. 40% of our business comes from recurring revenue. It's important to state that during this type of period. And then, obviously, we have revenue from the public sector, so defense, homeland security and then, obviously, we have our vertical positions. Our strategic verticals have not changed. So 2 -- 3, we have the financial sector, public sector and then aerospace and defense, which are our main verticals. Second important point is our sales performance. Obviously, we had a good commercial presence. Very close to our customers to the small deals, but also to the big deals. You can see them on the slide. I won't go over them all. But I'd like to talk about 3 that are quite important during this time. The first of which is Airbus. Obviously, it's difficult. We'll come to this. But this didn't stop us winning a 5-year project for managing the infrastructure in 4 countries: France, Germany, U.K. and Spain. So it's a very important structuring project. And the second key reference that we have is a major German banking group. So EUR 150 million project, which covers the build and the run for an ERP, SAP project for a core banking system. So this is very important on the German market. And then the third reference that I'd like to share with you is a reference which is EU visa. So the European agency that manages all the Schengen projects, as you know, and we are currently building one of the most important biometric systems in the world. So it's worth this -- over 400 million European citizens that are managed by this system. So it's highly significant. And then obviously, you can see all the logos on the slide. There's been a lot of renewals in the public sector and then in our geographies, which is obviously very important for the coming period. Another important point with regards to our positioning. Obviously, we're trying to improve our positioning with greater added value, further up the stream with regards to our customer and we made good progress in the first semester. We're happy that we're #2 in France as listed by teknowlogy | PAC. And then we're top 3 for specialized lending solutions and then, obviously, consulting as well. As you know, we've been making a big effort to establish our consulting division, and we've had market recognition in the domains that we are targeting, where we've been recognized as being excellent and differentiating. And obviously, this market recognition is good, and we will be continuing in this direction. Now if we look at revenue. Obviously, the way we've been able to resist is judged by our revenue. So minus 2.6% growth. We were -- we had minus 8.4% in the second semester. Now I'm going to talk about one of the sectors where we've obviously struggled the most. So that's the aerospace sector, which represented 10% of the group's revenue. So there's a big contrast between the pace that we had last year and then the start of this year. So 11% organic growth. We're at minus 20% in the second semester. And then for the coming quarters, we think to be between minus 25% and minus 30%. Obviously, this sector is very much driven by Airbus. And for the full year, we're expecting negative growth of 15%. If we look at the 2 other key factors, we've seen the operating margin is very resistant 6.1% top level compared with 6.8% last year. With regards to free cash flow, we've had good performance, plus EUR 37.1 million in the semester compared with minus EUR 21.8 million. So 2 comments. Obviously, Étienne will come back to this, but we've got EUR 57 million of nonrecurrable favorable effect that impacts this figure. And then obviously, the fact that we've had negative growth is -- just favors the figures, but it has nonetheless been a good performance, and it shows that the teams have rallied and we've respected our customer commitments. You have the key figures here. We had EUR 2,166.7 million in turnover. Operating profit on business activity EUR 132.8 million, 6.1% of revenue. Net profit attributable to the group is EUR 43.7 million, 2% of our revenue. Free cash flow of EUR 37.1 million. Net financial debt EUR 495.9 million. And then, finally, the U.K. pension fund deficit is EUR 94.1 million compared with EUR 113 million at the end of last year. So those are the highlights. So I think it's quite important to focus on the way we manage this crisis and that we're still managing it. Obviously, as you know, a company has to strike a balance between short-term and long-term decisions. This is even more true during a crisis period. Obviously, we shouldn't go too far. We shouldn't compromise long-term project, and we have to think about the way we manage our employees, our partners, our customers, our subcontractors. We've done everything that we could to build a long-term project and make sure that we have all the right components. We've adapted to the crisis. There's been short-term decisions, obviously, focus on sales and profitability with a savings plan that I'll come back to. But at the same time, we've carried on investing the important investments for the group, so the brand, tooling and then obviously, our products. And at the same time, we've confirmed the acquisition of Sodifrance which will give us a greater footprint in insurance and social protection in France. Obviously, service continuity is essential. As soon as the crisis started, we set ourselves 2 priorities. The first was obviously protecting our employees' health and then service continuity came after this for our customers. Today, and this has been the case right since the start of the crisis, 90% of our employees have been able to work from home. If we're not at 100%, it's not for technical or feasibility reasons. It's our customers who have made decisions. For confidentiality and security reasons, they didn't want our staff working from home, but 90% of the staff have been working remotely. Obviously, we've been managing the group with short-decision cycles. We've been managing things weekly with daily priorities and then offer development to be able to address COVID-19 requirements. Customers have obviously had a lot of questions, and we've done everything that we can to address their issues. So for example, in terms of consulting all our customers, who are wondering how can they work in agile mode when they've got their staff working remotely, it's very difficult. So we've pushed various different consulting offers in this domain, managing our project portfolio, obviously, making savings, but not compromising the future. We've been focused on this type of offering, and it's been quite an offering -- interesting offering, and we have [ QATON ] which is an offer that we've pushed, managed remote queuing. This is something that we've seen in the retail and the administration domain. These are not high-volume offers, but it's an important positioning which just mean we can create a close relationship with our customers in a time when they're asking themselves a lot of questions. And then the last topic, but not the least, obviously, we've been very much focused on internal communication during this crisis period. We've tried to stay close to our employees. Human resources. Obviously, in a company like ours, a service company, this has to be at the core of everything we do. Once again a decision striking the balance between short- and long-term decisions with prioritized information, labor dialogue. We have used furlough schemes. So a few subsides provided by a few governments in our geographies. But we did this responsibly. We maintained salaries for all employees who were impacted by these schemes. And then very -- with a very targeted approach and a responsible approach, we've got a few figures. All of the compensation that we've received at group level is EUR 7.4 million. In France, it's about EUR 4 million, with a salary math of EUR 1.4 billion. So we're very responsible with regards to this approach. Just a side point, obviously, we haven't digested the attack that we suffered with regard to furlough schemes. Obviously, someone commented that we were using these schemes unfairly. This was -- we were attacked once, but this was unacceptable. And I'd like to say that we did use these schemes responsibly. Now if we come back to human resources. Long-term issues now, obviously. More than ever, we've made an effort to structure our training resources with founding a group academy with business training, which will be rolled out across the group. We have clear objectives. Obviously, the world is changing quicker. Technology is changing quicker. And so employees' skills and motivation is very important. And obviously, training is important. And we want to be a benchmark in the industry. We're going to build up this academy over several quarters. And then another short-term point, obviously, cost management. We had a cost-savings plan which we launched straightaway. I'll give you 3 figures with regards to what we've done in the first half of 2019. So a drop of minus 49% travel expenses. Obviously, this came mainly in the second quarter. Fees and advertising dropped by 13%. And then subcontracting on our projects was reduced by 13% compared with the first half of 2019. Once again, in juxtaposition to the short-term actions, we've also had long-term measures with a sustainable development policy, which is at the heart of our strategy. We haven't set this down. We even accelerated it. On the 19th of May with over 154 companies, we signed the United Nations Global pact and the Science Based Target initiative. So aiming to limit global warming by 1.5 degrees. At the same time, we're working on other key items for the future, which is digital sobriety. This is something that we do on the side of our business. It's fully integrated into our offers. We're training our employees little by little. And this is something that's going to be a key differentiating factor in the coming years. In terms of visibility, we're happy to see that our positioning has improved, the ESG positioning. So we've got EcoVadis. We made progress here as well. And we were very happy to be part of the 80 companies that are part of the ESG index. So this references the most responsible companies in this domain. This is something key that we're going to carry on investing in. And then the third focus that I'd like to share with you is obviously the reporting position for each of our -- the operating positioning for our reporting units. Group level turnover was EUR 2,166.6 million, with an ROA of 6.1% compared with 6.8% last year. So in France, we've obviously had a big impact, a drop in production in the aeronautics sector at the start of the year. This was about 20% of the turnover in France. So obviously, this is highly significant. We've resisted, especially in the public sector and in the defense domain. But nonetheless, we had negative growth of 5.5%. Margin resisted at 8.2% compared with 9.3% last year. And our key focus has been short term, lots of energy to try and drive down our bench, which we've driven down since the month of April. It's not quite a nominative level. We'll be working on this in the second half of the year to get back to a normal recurring situation when compared with previous years. With regards to the United Kingdom, you can see organic growth of minus 4.7%. Operating profit on business activity was at 4.6% compared with 6.1% last year. As per usual, for several semesters now, we can see contracts in the different businesses that we have in the U.K. We've been penalized in 2 different areas. Obviously, we're a smaller player. We're weaker in the private sector. So we've struggled to resist in this area. And then with the public sector, we had halt of the visa issuing service at the end of May because of the crisis, obviously, between late March and May. So this has penalized us in terms of figures and margin. But fortunately, the services has restarted, and we're going to come back to normal values throughout the second half of the year. And then at the same time, 2 activities with the 2 joint ventures that we have, SSCL and NHS, did well. Very little impact of the crisis or no impact at all. We should have a growth with SSCL in the second semester with confirmation of the contract renewal with the MoD. So we're looking -- we're expecting improvements in the U.K. in the second semester. For the rest of Europe, a good score. Business was quite resilient. Different things that have helped us, obviously, Sopra F -- Financial Technology, the subsidiary that we have with the 7 Sparda banks in Germany. So we've had growth and profitability here. So a positive impact on our margin. We generated the margin in the first semester. This has obviously boosted our activity. And then another key factor that I wish to highlight is excellent performance in Scandinavia, in particular Norway. So about 80% of its business is in the public sector where we've had good growth above 9%. And then they've also improved profitability. The other countries and the other geographies were resilient. They were either flat or slight negative growth, but the margin was resilient and the organic growth was 6.6% in this unit. And we've improved the operating profit on business activity, which went from 6.5% to 7.4% this year. Now for our software activity, so Sopra Banking Software. Organic growth of minus 10.9%. There were 2 impacts of the crisis. We had a drop of licenses compared with last year, so about EUR 7 million. And then we also had a drop in service activity in the second quarter. These were the 2 key factors which explain this drop. In terms of result, we did slightly better than last year. But obviously, our target is in -- we're not targeting improvements in profitability this year. We've got a lot of key action plans which are going to be important for the future, and that's what we're pushing. So there's 4 key areas which will condition our future. For several years now, we've invested in this digital layer for Sopra Banking Software. So this is shared. This is common across all of our core banking systems, so SAB and Amplitude. We're going to open up our core banking systems with this digital layer, so opening up to the external ecosystem. This is important. And the second investment area regards the Sparda banks. So this is highly structuring for the future. A lot of banks are watching us, eagerly awaiting our results and this is going to be key for the future. So we're focused on the development of this platform for the Sparda banks. That will take several semesters. And then for specialized lending, 2020 is a pivotal year. Obviously, we set ourselves the target of commissioning the version 4.7 of Cassiopae at the end of the first quarter, and this is what we did. So several customers are using this version. They've accepted to wait. So obviously, the project was launched 1 year, 1.5 years ago. So we've launched this as planned. And then we've also resolved the project issues that we've had with major customers. We have the same targets. We have a standardized version of this software for Cassiopae. And then business development, which we're going to relaunch at the end of this year and more heavily in 2021. So the key message here is that we're following our operational plan in these 4 areas, and this is going to be key for Sopra Banking Software project. And then the last comment I would like to make regards other solutions. More difficult half year than what we've had previously, minus 5% organic growth, 5% operating profit on business activity. We're normally around 15% for this sort of activity. Obviously, this is -- we've seen a drop in license activity by about EUR 3 million, and then we've had about 15 projects which have been deferred from the first half of the year. So the key message here is that we're confident with regards to our capacity to make up for this and to come back to levels that are closer to levels that we've known previously. So improvements in the second half. Those are the highlights that I wanted to share with you. Now I'll hand the floor to Étienne who will talk about our financial results.

Thank you very much, Vincent. Good morning, ladies and gentlemen. Well, to start with, we're going to have a look at the consolidated income statement for the group. Revenue at EUR 2,166.7 million, therefore, down minus 2.6% for the first half. And then we have operating profit on business activity EUR 132.8 million, that is 6.1% on revenues. And the decrease in operating profit in absolute value is EUR 18 million, but contained, as Vincent said, thanks to the cost-reduction measures and also traveling expenses but also subcontractors and other costs. And as Vincent said before, the group used only sometimes furlough schemes partially during the second quarter, and the total sum that we received was EUR 7.4 million, which is quite marginal compared with the pay package. Now for current -- for profit from recurring operations, we have charges of EUR 2.2 million. Therefore, half what we had in 2019. And then we have amortization of allocated intangible assets up EUR 19.1 million. And apart from the effect of acquisitions such as SAB in 2019, we have a one-off item, EUR 3.8 million, and we have to accelerate amortization in the financial accounts due to our PLM activity in aerospace. Then other operating income and expenses up again, reaching EUR 23.8 million for this half. I'll tell you more about this in a minute. Therefore, the operating profit reached EUR 87.7 million. Therefore, 4% of revenues to be compared with 5.2% last year. Before we look at net profit, let's have a look at the financial result, which is quite stable. A slight increase in the net financial expenses. The cost of the gross debt is still under control and a slight decrease in other financial expenses. This amount also since last year has included the debt interest charges on -- in compliance with IFRS 16. And then the tax level is down. And therefore, the net profit is EUR 43.7 million. Therefore, 2% of our revenues to be compared with 2.8%. Therefore, 80 basis points. Then let's have a look at the following page, other operating income and expenses, EUR 23.8 million for this half, a bit more than EUR 7 million, which is the direct consequence of COVID crisis. We have a line called other expenses at EUR 7.5 million with a depreciation of assets, a license to operate granted by the U.K. government for visa services, as Vincent said earlier on, and this service was stopped completely during the COVID crisis, and now they're starting again. And we have also EUR 3 million in this line for logistics costs directly connected to the measures taken internally to react to the COVID crisis. Then a few comments about the outlooks. I can tell you that these other operating income and expenses will be of an equivalent amount due to reskilling measures to be rolled out in some entities. The business level will not be the one we had before the crisis. And therefore, we have to redeploy our staff who -- thanks to internal mobility, they will be redeployed. Then the tax level for the group. As you can see, the effective tax rate is 31.2% for the half year. This doesn't represent the annual percentage which will be close to the one we had in 2019, that is 33.4%. And this amount -- tax amount includes also the French CVAE. That is the contribution on value-added companies, which is purely French tax based on value-added created, which is stable and is not affected by the changes in the results. Annually, it represents EUR 25 million more or less. Then let's have a look at the structure of the debt. What's very important is that it's stable. And it's even decreased a little at less than EUR 500 million at the end of June -- 30th of June. And this is due to the fact that we've had a good performance on our free cash flow, positive at EUR 37.1 million for the first half. And usually, the first half is the moment when we use cash. And cash out then connected to M&A is modest at EUR 9.2 million, and it's going to be less the case during H2. During H2, we'll have more cash outs due to acquisitions that we announced before, such as Sodifrance. And then we'll zoom in on free cash flow at EUR 37.1 million. And in the group, we've improved on our free cash flow for the past 3 years. The teams were ready before the crisis. And of course, since the beginning of the crisis, we are even more careful about the way we manage our free cash flow. And this vigilance focuses on the payables. And we don't want to pay -- as you know, our supply is too late, but we have a good collection of receivables. And the customers pay in time in almost all geographies. There's, however, some tension here and there at the end of the first half. And we'll be careful about this at the end of the year. And last comment on the free cash flow. As you can see on the right-hand side, the group has had more than EUR 50 million. That is EUR 57 million from favorable nonrecurring items. And half of those -- a bit less than half of those will be cashed out during the second half. For instance, the profit sharing in France and also postponement of some VAT in the U.K. voted by the British Parliament. Then if we continue with the financing structure of the group, it's not really changed much during this half. The group has a solid financial position. The group's never have to use these lines -- undrawn lines, that is RCF, EUR 900 million. That didn't budge and nothing has been drawn. The total available amount -- undrawn amount is at EUR 1.1 billion. And if you look at net debt-to-equity ratio, we're at 34.4% to be compared with 36.1% at the end of 2019. Therefore, an improvement. And therefore, we can now show you another important ratio, which is net financial debt-to-EBITDA at 1.3, which is more or less what we had at the end of 2019. Good performance at the end of June. Usually, the ratio worsens a little between the 31st of December and 30th of June. These are the half year figures. Now I'll hand over to Vincent who will be talking about the outlook.

Thank you. So to finish this presentation, a few comments on our priorities and our targets for the end of this year, 2020. I think if there are 2 words which highlight -- which describe the period that we have ahead of us, it is uncertainty and caution. Uncertainty because, obviously, there may well be a second wave of the epidemic in our geographies. And uncertainty because, obviously, some customers may make some brutal decisions. They might decide to drop their budget. They might stop projects before the end of the year. So all of this is a key factor that we have to consider. Obviously, this isn't going to change the way we manage the crisis. We're going to carry on adapting to the context week on week. And then obviously, the objectives that we have at group level is to come out of the group stronger with all the levers that I spoke about in the first semester, which we will carry on using in the second semester to confirm with the context on our customers' expectations. So we're not going to stop our transformation. Obviously, our offers are being transformed. Digital is more and more prevalent. And the good news is that we don't know what society is going to be like after this COVID crisis, but we do know that it's going to be more digital. And this is pushing companies like us, provided that we are state-of-the-art and aligned with our customer expectations. So we're obviously going to carry on working on this. Our key financial targets for 2020, with the market conditions that we have today, we are hoping for organic revenue growth of between minus 2% and minus 4% for the full year; operating margin on business activity between 6% and 7%; and then free cash flow between EUR 80 million and EUR 120 million. Those are the key factors that we want to share with you. What I'd like to do now is to move on to the questions.

[Operator Instructions] We've received the first question. Nicolas David, ODDO BHF.

I have several questions in a row. First, the tariff environment during Q2. Some have said that they would pass on the number of cost to clients. For instance, traveling costs that they didn't have to incur. And therefore, this could lead to a price decrease. Is that something that you've done? Has that led to this decrease in Q2? What do you think about H2 for price decreases and structural price decreases that we could expect in such an environment that we are experiencing at present? And I have 2 other questions on the annual guidance and a question on your margin. Your margin guidance says that H2's profitability is going to be a lot lower year-on-year compared with H1 between 130 bps during H2, I think. H1 was really good. You were quite resilient. So what is it that we have to pay attention to? Why are you saying that your margin would drop more during the second half? Because as you said, your company didn't really use the furlough scheme or equivalent, and I'd like to have more details on this. And the third question has to do with FCF. And you're saying 100 to -- EUR 80 million to EUR 120 million and you're going to have EUR 60 million during the second half of the year, that's for free cash flow. And whereas in the past, you generated more than EUR 250 million. I know there's the EUR 57 million to be taken into account. But why would you say that you've been that conservative in your guidance?

Hello, and thank you. So broadly speaking, with regards to sales prices, I can say that our sales price basically hasn't changed. We had increased it last year with added value ramp-up approach. I'm not saying that no customers have made the type of request that you've mentioned. But broadly speaking, we've been resilient. Here and there, we've obviously had to make some concessions, but our sales price has not changed. With regards to the guidance now with -- in terms of profitability, I'd like to remind you that the first quarter was normal, one might say. The drop in margin with regards to last year came in the second quarter. We had a lot of projects underway in the second semester. So week-on-week, we are improving this. But obviously, we are cautious. It's too soon today to give you more detailed information about the second half of the year. Obviously, we're going to work on the same topics that I've described previously. Our goal is to improve our situation week-on-week with all the different action plans that I've talked about. And we're hoping that the macroeconomic context won't change too much. So that's everything for margin. And then I'll let Étienne talk about the free cash flow.

Obviously, you've spoken about our targets. So above EUR 180 million. Obviously, the result will be down. So when we look at these results, we'll have an FCF, which is lower. At the 30th of June, we had good cash collection. Customers were paying well, which obviously has an impact on our working capital requirements. But obviously, we're going to be paying a lot of attention to this. Any company that publishes their results pay attention to this. We're expecting a deterioration -- a slight deterioration in DSO at the end of the year, but it's too soon to draw any conclusions. That's what we think today. But the last thing that we could add is that we have favorable impact on the results. So that's -- we're expecting cash next year.

Okay. Could you perhaps tell us more about pricing? I understand what you're saying about the end of Q2. But do you think that the environment is going to toughen or ease? For instance, maybe the industries would react differently between aerospace and other…

Well, if you will, we think we're going to have about the same prices. Obviously, there's a lot of negotiation, but we are seeing that the market is starting to bounce back. So we're heading in the right direction. But there is a lot of competition, and everyone is very much focused on short term. So either we'll keep our pricing as it stands or we might have to make a few reductions. Or if we gain new market share, this might have an impact. But I can't see a drastic reduction in our prices, given the environment that we have today. Obviously, if the situation gets a lot tougher in September, then this might change things. But that's not what we're seeing today.

We have another question, Kepler Cheuvreux, Laurent Daure.

I have several questions to ask.

I think we have a technical difficulty. We'll listen to Exane BNP, Thomas Poutrieux.

I have 2 questions to ask about Sopra Banking. I think you said that licenses were down EUR 7 million during H1 2020 versus 2019. I wanted to know if these numbers are correct. That's a decrease of 35%. Could you confirm this, please? And question number two. When do you think you're going to be back to organic growth on licenses? Do you think this will happen before the end of the year or maybe Q1 or Q2 next year?

So with regards to licenses, I can confirm that there's a drop of EUR 7 million compared with last year. We're about EUR 27 million instead of EUR 20 million. So those are the figures for the first half. For the rest, we see that there's lots of deals. There's a strong pipeline. But obviously, we're waiting for decisions, and I can't make any commitments with regards to how our customers will react up until the end of the year. But I am confident about the long term with the 4 priorities that we've set ourselves. So licenses and, obviously, subscription as well. Obviously, much more customers are moving to a subscription model. I'm confident that we will generate growth, provided that market conditions remain the same as of 2021. Obviously, this depends on the context. So -- but we see that the pipeline is improving. We've also got greater visibility with regards to risks over time.

Okay. And then, well, I know you discussed with the banks your banking plans. I know it was difficult for some players on core banking during lockdown. And would you say that now it's easier to discuss with the top managers and to sell core banking with your banking clients? Could you perhaps tell us more about this?

So qualitatively, I could say, obviously, there's a lot of interest, especially in all of our product lines. We've seen this with the different analysts ranking. Customers want to know where we're going, what we're doing with all of our product lines. Once again, we are talking to our customers when we talk about core banking systems. Obviously, this is a long-term approach. We're seeing decision cycles that can be quite long. And then given the current context, this can obviously slow down decision-making cycles. But what's positive is the growing interest in the priorities that we set ourselves for our products for 2020.

For the time being, we have no questions on the phone. So now -- oh, yes, there's one. A telephone question that we've just received. Oh, no, sorry about this. My mistake. So now questions in writing. We've received 2 questions on the webcast platform. Gregory Ramirez from Bryan Garnier. Your guidance in terms of revenues is minus 2%, minus 4%, and your H2 is at minus 3.4%. What will the catalyst be to have such an improvement compared with the minus 8.4% during the second quarter?

Broadly speaking, I said it's not very easy to give detailed forecast. But we can say that for 3 months now, the context is improving for all our business activities. We've seen this with our bench that we have in each entity. The situation is a lot more positive now than what it was in April. So this means that we think the second quarter will be a low point. Obviously, we have some projects and deals underway today. But once again, it's very important to be cautious. Experience shows that customers can change their minds. We've got forecasts in all of our different areas that are improving -- that have been improving month-on-month. So this is the barometer we're using. But obviously, we're uncertain with regards to what can happen in the second half.

Next question from Dominique Raviart, NelsonHall. Will Sopra Steria accelerate offshore due to the crisis? And if so, how much?

We're going to keep the same offshore policy. We're going to do everything that we need to do for our contracts. It's very important to have platforms that are more or less far away given the customer contacts. We're looking at the situation according to our customers' contacts. We're looking at how we can push offshore. But at the same time, there are a lot of decisions. We're seeing what we can push. We're carrying on pushing offshore. But in terms of offshore business, last year, we saw a significant drop, especially in India. But our aim is to come back to the same levels that we had in 2019. We're trying to push without pushing too much, but we have observed a drop in the second quarter.

Next question Laurent Daure, Kepler Cheuvreux. With cash restructuring and that for the full year, that is 2020, what's your estimate, please?

Étienne speaking. Hello. We can aim for about EUR 50 million for all of our recurring items.

Next with regards to the bench at the end of the first half compared with the low point which was observed in the second quarter.

So we've got different situations from one geography to another. But basically, we've doubled the level of bench with the crisis. And little by little, we're coming back to a more nominal situation without -- we're not quite there at the end of the first half, but our goal is to drop this by about 20 percentage points. So drop our bench by 20%. Situation varies from entity to entity. Obviously, the aeronautics sector is quite different. I spoke about Norway. That's different again. But that's where we stand generally.

Now 2 other points, that's Laurent Daure's questions. What's the impact of the contract on visas that stopped between April and May?

So the margin impact is about EUR 8 million.