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

Ladies and gentlemen, welcome to this telephone conference for the Sopra Steria 2023 Half Year Results Presentation. [Operator Instructions] I'll now hand the floor to Cyril Malarge. Over to you.

Thank you, very much. Good morning. Good morning, ladies and gentlemen. Welcome to this webcast to present the 2023 half year results for Sopra Steria. I will lead this presentation with Etienne du Vignaux, the group's CFO. I'll start with the highlights of the first half of 2023, then the operating position in all of our 5 reporting units, then Etienne will give us the details of the financial results, and I shall conclude with our 2023 priorities and our financial targets for the year. Then we will have a Q&A session. So what are the highlights of the first half of the year? Sopra Steria generated a solid performance in the first half. Consolidated revenue increased by 11.6% to reach EUR 2,840.1 million. Organic growth was 8.1%, thanks to Q2, which was sustained with 7.1% organic growth. Group profitability increased with operating margin on business activity up 0.8% when compared with the first half of 2022 and it reached 8.8%. Net profit attributable to the group was EUR 112.5 million, and it was stable when compared with H1 2022, given that there was a temporary increase in nonrecurring costs linked to recent acquisition announcements and decommissioning of low-margin activity. We also had a good cash performance over the half of the year with a free cash flow of EUR 122.9 million. So growth in this half of the year was driven by volume and sales prices. Volumes continue to be bolstered by our customers' digital transformation projects. Sales prices are obviously bolstered by our value ramp-up strategy, and this dynamic is confirmed in the second quarter, even if it was slightly less favorable because it includes 2 less working days than the same period 2022. Performance is explained by the positioning of Sopra Steria in very dynamic verticals. So the aeronautics sector, which is up over 10%; defense up over 20%; and the public sector, which is at approximately 8% growth. Consulting increased 11% over the half of the year. Despite the start of a slowdown, this activity did generate growth of 7%, which is similar to overall group levels. Growth dynamics came with solid operational performance. Operating margin on business activity was 8.8%, an increase of 0.8 points when compared with the same period in 2022. This also reflects a clear improvement over the past 3 years and places us on track to hit our 2023 and 2024 targets. This raise in profitability came with an increase in free cash flow, which was negative in the first half of the year, just a couple of years ago. And now the free cash flow is very much anchored in solid territory right at the first half of the year. H1 2022 was at EUR 122.9 million compared with EUR 66.3 million last year, even if this does include EUR 50 million of prepayments. From a business point of view, we had a first half which was very dynamic buoyed by digital transformation challenges that our customers have, and I'll highlight a few victories now. We had Airbus, which is the group's top customer with a contract that was won against 2 global consulting firms addressing major issues. So Airbus has got big challenges to accelerate their delivery of their aircraft. And we have a transformation project with them aiming to overhaul the supply chain. Other success now with health insurance, the [ Canam ] good consulting assignment, supporting them with simulation of a cybersecurity crisis. In the U.K., we won the biggest contract in the private sector for several years now, a EUR 100 million TCV with NS&I. So this is good news for our business in the financial services domain. I also wanted to highlight momentum in the first half with our new digital offers. So in the banking domain, 25 contracts with [ Pure ] from Sopra Banking, so this addresses regulatory reporting matters. We should also note that we won 3 big deals. So wholesale digital finance for a major contract with NETGEAR Capital, and this is a leader in dealership financing in the states and this was worth approximately $20 million, full SaaS contract for 20,000 dealerships across the world. Growth momentum generated in H1 2023 was also thanks to our growing presence in the tech ecosystem in Europe. So cybersecurity, cloud, AI, digital twinning, quantum computing, digital services dedicated to sustainable development and this is starting to pay off. So in cybersecurity, firstly, where just as a reminder, we generate EUR 250 million, thanks to 2,000 expert consultants. We've been listed last year as leader in Cyber Resiliency Services by NelsonHall. In the cloud net, ISG ranked us as a leader in public cloud across Europe, a leader again in cloud-native applications and application transformation services according to Quadrant. And then we've developed our partnerships, they continue to develop. So with Amazon, Google, OVH, Azure and then Numspot. In artificial intelligence, ranked in the Quadrant, again, leader in Intelligent Process Automation. We are also very active in the domain of -- in the digital domain. So helping our customers produce immersive virtual reality solutions for industry, and we've set up partnerships with Nvidia and SkyReal. We've also rolled out efforts to develop IT for green and these were congratulated by the market. So PAC Innovation Radar identified Sopra Steria as one of the best-positioned groups in Europe, best positioned for improving the environmental impact and their sustainable development as part of their operating model. Now let's just spend a couple of moments on AI. It has the potential to significantly impact production in several different business lines, so our customers' business lines, but also our business lines. So we're convinced that this paradigm shift should be integrated, we should integrate AI, and we've decided to accelerate our investment in this domain. So for Sopra Steria, AI is nothing new. We set up our first skill center based on IBM Watson that goes back to 2016. For 4 years now, we've been a founding member of a consortium with 13 industrial partners' confidence AI. So we've been able to address challenges in terms of industrializing AI. And today, these efforts have been integrated into our development platforms. We've decided to accelerate our efforts in this domain with the rAIse program, which aims to amplify production of AI across our activities. So using AI to develop reliable solutions, we've got 4,000 experts in data and in AI within the group. We're creating a new center of excellence with 200 specialists, and we've got 3,400 business consultants who are specialists in the domain, and they are the group's ambassadors to develop use cases, which will enable them to improve and overhaul their business processes. So with this outlook, we're obviously updating our offers. We're integrating AI into our methodology and our tools. And through this program, we've decided to use these components in our internal platform called Engine, which is -- which can already be accessed by 10,000 of our developers. So we are convinced that Sopra Steria has a major role to play for our customers when it comes to using AI with transformative and responsible usage of AI, and we are here to help them deliver the promise. The first semester 2023 had good external growth to reinforce our European status and our positioning on our strategic vertical markets. The acquisitions of Tobania and then the upcoming acquisition of Ordina address this target, and they enable us to expand our presence in the Benelux with the creation of a new region with EUR 700 million of revenue and over 4,000 employees. We're obviously balancing out the group's geographical portfolio with the Benelux will become the third biggest region for Sopra Steria. Revenues include the recent acquisitions of CS, Tobania and Ordina, which is upcoming. So 39% in France, 15% in the U.K., 11% in the Benelux, 8% in Scandinavia, 7% in Germany, 8% in other Europe and then 12% in software activities. And as you know, the acquisition of CS Group is generating a genuine change in status in the defense and security and space sectors, and it enables the group to reinforce their positions in aerospace, nuclear and cybersecurity. Now I would like to suggest that we review the operating position by reporting unit. Let's start with France. Revenue reached EUR 1,198.9 million in H1, organic growth of 6.9%. The most buoyant verticals were aerospace, defense, transport and public sector should note the contribution of CS Group, which is consolidated in the company's figures since the 1st of March. So contribution over 4 months of EUR 106.5 million and organic growth of 8.7%. Operating margin on business activity was EUR 108.8 million or 9.1% of revenues compared with 9.7% in the first half of 2022. This difference is a result of the dilutive impact of CS Group. Now if we move to the United Kingdom, revenues reached EUR 461 million, organic growth of 8.3%, a double-digit growth in our 2 JVs, SSCL and NHS, good growth in the aerospace, defense and security sector. I'd also like to highlight that we won and renewed major contracts with SSCL and NHS, but beyond these JVs, we've also confirmed growth -- return to growth in the private sector, so growth of 3%. And then the operating margin on business activity was EUR 52.4 million or 11.4% of turnover, so a 0.9% improvement when compared with the same period last year. Now other Europe. Revenues reached EUR 819.8 million organic growth of 11.4%. The most buoyant entities were Scandinavia, Spain, Italy and the Benelux. We should note that in Germany, there was a return to growth at 8.2%, a return to nominal levels of operating performance going back to 2022. Operating profit on business activity was EUR 72.8 million, 8.9%, a clear improvement, both given the performance in Germany, but also an improvement in profitability in other countries in this reporting unit. Now for Sopra Banking Software, revenues of EUR 218 million, organic growth of 4%. Operating profit on business activity EUR 2.8 million, 1.3% of revenues, and this comes from arbitration. So we decided to support sales and that's starting to yield positive results in the digital domain, so more sustained investment to revive our sales of digital offerings. As I mentioned, organic growth of 4%, mainly driven by subscriptions, which almost had 10% growth. So for all our digital offerings, digital banking suite, regulatory reporting with pure 25 deals signed in the first half, wholesale digital audit and then instant payment based on our PM2 digital platform. License is up 5.3%. And then services revenue also increased by 5%. Now if we hand to other solutions, revenue reached EUR 142.4 million, organic growth of 5.3%. Growth in Human Resources Solutions was 4.2%, good return to growth in real estate, which grew by 7.6%. Operating profit on business activity was EUR 14.3 million, 10%, an improvement of 1.2% when compared with the same period in 2022. Now I suggest we hand the floor to Etienne who will go over the financial results.

Thank you, Cyril. Hello everybody. As usual, we're going to start with the consolidated income statement. Now, Cyril has told you more about the main aggregates. First, the consolidated revenue is EUR 2.84 billion, therefore, up 8.1%, up organically speaking and then operating profit on business activity at EUR 251 million, therefore, an 8.8% margin rate, therefore, 80 basis points more versus H1 2022. Between this and the profit from recurring operations, there are share-based payment expenses, EUR 28.4 million. Therefore, 1% of the half year revenues. This includes the WeShare plan that was launched again during the first half of 2023. Given the share price, these expenses will represent 0.7% of our revenues this year. Then amortization of allocated intangible assets are down a little, a bit less than EUR 50 million for this half year, therefore, 0.5% of total revenues. This does not include amortization for the acquisitions made this year, for which price allocation will be done in the months to come. Profit from recurring operations is therefore EUR 207.8 million, therefore 7.3% of our revenues, therefore, up 50 basis points versus H1 2022. Other operating income and expenses, EUR 3.7 million, for a bit more than 20% of revenues. I'll come back to this in a minute. And then the operating profit totaled EUR 177.1 million, therefore, 6.2% of our revenues and is up 9% versus the first half of 2022. Between this and the net profit, we have the cost of financial debt, which is under control, EUR 6.4 million for the first half. And we have an increase of EUR 200 million in debt versus H1 2022. The other financial income and expenses, our interest expenses on the pension obligations in IFRS 16. Then the tax expense is almost stable in value. That is EUR 42.5 million. And then if we deduct the minority interest, the net profit is at EUR 122 million. Then other expenses and operational represent -- well, half of those EUR 50 million represent the acquisition expenses. And during the second half, these expenses will be below 1% of our total revenue. Then if we look at effective tax rate, it's 25.8% effective tax rate, the normative rate, as we said at the beginning of the year was 26% more or less for the full year 2023. Then the cash generation, as Citi said, was very solid during this half year. The main items that are worth talking about is EBITDA, EUR 53 million more than during H1 2022 and a very good performance in terms of WCR as you can see, which has offset the prepayments due to restructuring costs for instance. This includes EUR 50 million of anticipated net prepayments. That's due to the operational teams even with -- stated from the number, free cash flow is up versus 2022. Therefore, a very good performance. Thanks to this good cash generation, the debt -- the financial debt is under control. If we take into account these cash outs due to the different acquisitions and financial investments that represented more than EUR 438 million during the first half. The dividends, EUR 85 million, more or less, the net financial debt is at EUR 558.9 million at midyear. This translates into a number of ratios. First, the gearing ratio that is net debt to equity 30% and the net debt to EBITDA that is pro forma before IFRS 16 is slightly above 1 and well below the maximum authorized, which is 3 in the credit contracts of the group, for which we have covenants. Therefore, the situation is very solid, very solid balance sheet. On the following page, you have the debt structure of the group. We have EUR 1.3 billion in available undrawn amounts, including an RCF maturity in 2028 for EUR 1.1 billion. That's not been drawn upon so far. That's for the main figures. Here's a quick reminder about the main acquisitions of the year after the offering. And the group has 100% of the capital structure of CS Group that was consolidated on the 1st of March. That's when we took control. For Tobania in Belgium, we have 100%. It's been consolidated since the 1st of March for these 2 entities. The integration process is underway. Then as far as Ordina is concerned, the takeover bid was launched on the 19th of July as the public offering, really in line with our timeline and is open until the 26th of September. The next technical milestone is the AGM for Ordina on the 6th of September 2023. This is in the AFM document, the Netherlands market authority. This will be finalized before the end of the year. And finally, before I hand over to Cyril again, here is another reminder about our SSCL joint venture in the U.K. As you know, Sopra Steria today has 75% of the joint venture. The remainder of 25% is in the cabinet office. And SSCL was set up in 2013, they're celebrating their 10th birthday. And as is originally planned in the contract, we started discussions with the cabinet office on the put option that they have as a stake. SSCL is a real success in terms of quality of services but economies and savings are generated for the different administrations. It's one of the main supplier of shared services for the government, Ministry of Defense and Met police and other customers. They've increased their revenues threefold over the period to January last year EUR 337 million, with a net earning of EUR 36 million. Of course, the decision to exercise this option is in the hands of the government, no decisions being made so far. But if the cabinet office decided to sell in favor of Sopra Steria, then the group would own 100% of this entity and such a transaction would be accretive on the EPS of the group. Now I'll hand over to Cyril again, who is going to tell you more about the outlook and objectives for 2023.

Thank you, Etienne. So I'd like to suggest that we look at the 2023 outlook. So clearly, we see that we have a broadly solid market, but in an increasingly tense and certain macro environment, I'd like to remind you that we have quite a resilient profile. The group has a resilient profile to focus on the top 100 key strategic customers representing 70% of our total revenue. We concentrate our best results and resources and solutions on to them. And this means that there's less variability with regards to our business mix. Then our activity as our business has got almost 40% of recurring revenue, so application and application maintenance, infrastructure as well. And then the share of our customers in the public -- semipublic sector, obviously, this has got fewer cycles. This represents 36% of the group's total revenues. And our positioning on the aerospace sector represents over 23% of the group's term revenues. So these sectors seem to be solid for the future. Now subcontracting also provides us with a certain level of flexibility with regards to the macro environment, so we can adopt our positioning where necessary. We confirm our priorities for the second half of 2023 performance, so transforming our offers and then our human resources. With regards to performance, we are focused on performance, resolutely determined to manage our HR pyramids, offshore. We're working on productivity, reducing our real estate footprint, integrating acquisitions. And now with regards to our offers, we're obviously going to keep the momentum going in consulting. We obviously want to change our operating model by setting expertise and skills centers, which will provide more structure so that we can develop our technological expertise and all of our major customers will be able to benefit from this. Then with regards to human resources, we'll obviously remain focused on the right level of recruitment on gaining loyalty and retaining employees and training employees. Against this backdrop, we have decided to raise our organic revenue growth target, and we confirm all of our other targets. For revenue, we're aiming at least 6% growth when our initial guidance was between 5% and 3%. For our other targets, we continue to target operating margin, our business activity of just over 9% and a free cash flow of at least EUR 300 million. For 2024, we confirm our target of reaching an operating margin on business activity of around 10%. So there you go, we've come to an end of the presentation of the 2023 half year results. So I thank you for listening, and I'd like to suggest that we move on to the Q&A session.

[Operator Instructions] Laura Metayer, Morgan Stanley.

Congratulations for this good first half. I have 3 questions to ask. The first one on your margin in the U.K. it's higher than the historic levels. What are the reasons? Are there one-off effects that you've seen during this first half? Second question, what are the reasons for the operating margin to reach 10% next year? I know that there are a number of drivers. Could you tell us more about this? And the third question has to do with organic growth in France during Q2 that was slower than Q1. Do you think that there's going to be another slowdown during the second half of the year?

Now I'll try and answer these different questions. First, our margin in the U.K. What are the drivers? Well, that's quite simple. There are 2 main drivers. The first one is that if you look at our platform, BPS business, it's mature nowadays. We have some platforms that are up and running that generate volume. And this volume leads to an improvement in profit. That's the first thing. Secondly, if you look at IT services, we have worked a lot, so as to look at the low-margin projects to deal with that. And this is paying off today. Question #2, you have said the 10% objective in 2024. Well, we have 5 reporting units, and each of these 5 reporting units will be able to improve their margins in 2024. So this improvement in 2024 is not just based on the performance of one reporting unit or several, but all of these reporting units will be contributing. And the main drivers, well, that is going up market for digital services. We've changed our operating model so that we have more digital with more value added and also consulting. The consulting business, which is quite fruitful now. And the selling prices, the price at which we sell our products and services, which is going up quite a lot during the first half. And this momentum will last for a certain while. And then we zoom in on the profit we get from our operations. So at the end of the day, each main reporting unit will be able to contribute. And your third question was about organic growth in France. I don't think there's going to be a sharp decrease during the second half. So this will be more or less what we've seen on the market. Yes, I can add something, it says Mr. du Vignaux on France, you saw there were 2 days less versus the second quarter of 2022, and therefore, this has weighed on the organic growth in France. It was at 9.6% during Q1, 4.5% in Q2. This is to be corrected from the working days that will no longer have during the second half of the year.

Next question, Nicolas David, ODDO BHF.

Congratulations for these excellent results. I have 3 questions. Your guidance upgrade as far as your growth is concerned. Is this upgrade clearly linked to a better half year than expected? Or were there other conditions, more favorable conditions that you're thinking about during H2. If yes, from which regional zone or from which business line? Question #2. You are talking about the low-profit contracts that will be terminated, which contracts and which zones or regions, please? And next, will you continue during H2 and next year will you continue with these low-margin contracts? And then third question, what about the impact of these actions on the adjusted operating margin and the negative impact on the growth of your company today? And a technical question on the calendar effect. I'd like to come back to this. Could you give us an estimate on Q2 growth and first half margin if you have the numbers and the swing in the second half because I think it's going to be a positive swing during H2.

Okay. Good. I will answer the first question to start with, and well, this guidance upgrade as far as growth is concerned, it comes from 2 things. And to be clear, first, the beginning of the year was really good. And Q2 was probably better than the one that we estimated when we worked on our guidance at the beginning of the year. But also, we made our own forecast and the visibility we have for the second half of the year is really correct. And therefore, we thought that we have enough confidence to upgrade our revenue guidance for the year. Etienne will answer the second question.

Yes, the ending, the low-margin contracts. This is something that we've managed proactively. It's not new. We do this -- we always do this, but we tend to zoom in on that. And during the first half, more particularly, we stopped to be terminated a number of historic operations, for instance, in Singapore. It's a small business activity, but then this had its own effect in terms of restructuring costs, as I said earlier on. We closed down this business. And this was a really tiny thing in terms of revenue. So the effect will not really be negative on our growth. It will not be really visible. And we do this throughout the company, throughout the group. And we look at our portfolio, and that's what we call portfolio management. We look at low margin contracts, and we take systematic action plans on that. We sometimes need to renegotiate and sometimes we terminate these contracts when we say when we look at the contract, when we see that structurally speaking, this is dilutive for the group. And then what about the calendar effect, the third question. Yes, it's important during the second quarter, 2 days fewer than the first and it's always neutral during the second half. There's 1 day less in Q3 to be specific. And otherwise, no other difference for most of our geographies for Q4 of the year. I have another question. So this had an impact on your first half margin, I think this calendar effect, I think, because -- that's one of the reasons why your performance has been really good if we restate the numbers from that. If you smooth out the numbers throughout the year, you will see that this is not the only effect. It's not just the math. It's not that easy if you look at working days, and there are many business activities like in the U.K., they're not very sensitive to the calendar effect. It's mainly the activities is the other activities with more materials at stake. There are geographies that have seen no effect of the calendar effect on their business in general.

Gregory Ramirez, Bryan Garnier.

I have several questions to ask. First, we've seen an improvement in your profitability in Germany. Could you give us more colors on that? And how big is the improvement? For instance, the positive impact on SFT with the unraveling of a number of operations. I had the impression that this is something you would deal with next year. And then I have another question on SBS. When I look at your revenue growth for software, 3.4% and licenses are growing and subscriptions are growing faster. Does that mean that there's some type of erosion in the maintenance revenue in the revenues coming from maintenance? And the third question, I'd like to come back to the levers that you used to improve your margins by geographic area. You've seen -- you've improved everywhere, and there are levers everywhere, could we consider that of your different reporting units, there are levers that you can still use. How much can you use them still in 2024, 10% or 11% in France? Is that something you could think of? Is that feasible? And the margins, the CS margins diluted a little and there's also the integration of Ordina for what you call other Europe. Etienne will answer the first question.

Your question on Germany. We have a service integration historic business in Sopra Steria. We suffered during the first half last year, there were some losses during the first half of the year. And now they're back to the normative level. And that's the first thing. Now for SFT, it's -- if you look at volumes, the volumes are more or less the same, EUR 80 million in 6-month revenues for EUR 160 million for the full year 1 million. Now we're back to the black if you look at their first results, and there was a slight deficit last year during the first half. And the biggest impact is the fact that there's a recovery in Germany with a historic activity that had suffered due to one contract more particularly. Now that's the past.

I'll answer the second question. Sopra Banking Software, SBS versus the maintenance revenue. No, there's no erosion, which is a good thing. No erosion as far as maintenance is concerned. You should look at the full year as well. And you can't get this when we have the first half results. No, I'd say, well, of course, we're paying attention to this. Sopra banking is paying attention to this and then the levers we can use to improve our margins. But if we think about 2024, make a forecast or projections, you've asked about France and the integration of Ordina. Now for France, I can't give you numbers. It's too early, but we could say, yes, we have potential. We can target 10 and even more than 10%. Of course, we have what it takes to reach that. And yes, there are things we have to be careful about. There's the integration of CS. That's what we announced. When we made this acquisition, we said, well, we'll have the same margin levels as we have in France for 3 years. We said EUR 13 million to be delivered in 3 years, 20% the first year, 50% for the second year and 30% in the third year. We're deploying this plan, no surprises, but that's something to be remembered as well. Then the impact of Ordina. Well, first, we have to finish this type of process. As Etienne was saying before, we have to go to the very end of the process. So that's an area with EUR 700 million in revenues. They have the same levels of margins compared to the other region called Other Europe. So the integration of Ordina will contribute as well to the margins in 2024.

Next question Emmanuel Parot, Societe Dupont.

I have 3 questions to ask. The first has to do with Sopra Banking. I looked at the variations between -- in growth between SaaS and licenses. And it's more or less the same. We could have expected a bigger variance or GAAP. And the trend is rather flat or flattish, how come? Question #2, the put on SSCL, the put option. What about the multiple in the contract for the transfer? Is that something that's in the document? What about the potential cash out? Is there also a put option on the JVs? And third question on the KPIs. Net recruitment, could we know more about Q1 and Q2 if we set aside acquisitions to know more about the momentum? And what's your objective for Q3 perhaps? What's the momentum you are thinking about? And then the pricing policy versus the wage policy, I suppose that this KPI is rather good. Could you perhaps give us more numbers on that?

To answer your first question, the growth gap between SaaS and licenses, no, it's not really as surprising, not that surprising. Etienne wanted to say something?

Well, the numbers are, for the first half, for licenses, the growth is more or less 5%. But of course, we'll have to look at the yearly number, which really is very much based on Q4. And growth for subscription is 10%. That's the difference between the 2. That's something we expected. And this is very much in keeping with our forecast that we gave you at the beginning of the year. And if you look at the general trend, I can tell you, this will continue during the second half of the year. Then the put option for SSCL. Yes, it's a very crystal-clear contract. There's no value that's in the contract. No multiple in the contract. And then the parties have to appoint an independent expert who will be valuate -- giving value to -- or will be doing the valuation exercise for the company. That's what we have in a contract. There's no other put option on the other JVs, NHS SBS. For instance, there's no put from either of the parties. Third question about the recruitment. And during the first half, we recruited a bit more than 5,600 almost new people, 5,600. So that's half of the annual objective, quite in keeping with our plan, a bit less than last year because the attrition rate is totally different. The attrition rate. Well, we adopt our recruitment policy to attrition rates and the needs we have on the side of production. It was 15.7% during the first quote half, and it was at 19.3%, 9.3% sorry, in 2022, first half. We keep a close eye on this, and we manage this on a weekly basis. And then the salary ratio KPI. As you know, all of our business activities are not necessarily based on this ratio. I like giving the example we have in France. It is quite representative. For the first half, selling prices were up 6%, and the average salary increase was 4%.

Yes, Etienne. Now I didn't perhaps fully answer your question about the value of the SSCL put option in the book -- in the reference document, it's on the liability side of the balance sheet, which is EUR 130 million, more or less. Of course, we'll have to see which value is given by the independent experts that will be negotiated between the parties.

So what about the book value? The book value, will it change on a yearly basis?

Yes, it will change. Year after year, it will change. The book value will change, will evolve.

Okay. And as far as the hiring policy is concerned, recruitment, if you look at the same scope, what's the growth that you have for the first half of the year in your recruitment policy.

Well, for the first half, let me have a look at the numbers. Net growth is 0.8%. That's for the workforce for the first half. That's the increase, 0.8%.

Now we have a question from Laurent Daure at Kepler Cheuvreux.

So I've also got 3 questions. The first question regards margin targets for the full year. I know there's a more favorable comparison basis for the first half with Germany, with 80 basis points. Are there any information? Do you have any information on the second half, which might impact the margin? Is the margin going to be stable? Or will the second half as go down compared with second half? So that was the first question. Second question now on the performance of the different JVs. We weren't necessarily expecting growth. So what are the areas or the activities that have performed well? And then with regards to the JVs, the put option is there an obligation? Does the government have to -- will this impact the contracts underway? And then with the acquisitions ordinary coming along, could we have your feeling or a little bit of color on the 2, 3 coming years with regard to the impact on the accounts, with regards to what we've seen in the first half?

So I'll take the first 2 questions, then Etienne can go over the third one. So margin targets -- what can we say? You mentioned the comparison basis isn't the same between H1 and H2, given the situation in Germany. Then we've also got another factor which we should highlight in the first half. We've consolidated revenue from CS Tobania for 4 months, where we had 6 months in the second semester, and we know that this is a dilutive operation. So that's another bit of insight for you. This being said, I can't see the operating margin in the second half being below what we produced last year. With regards to the JV performance now in the U.K., yes, obviously, good performance driven by volumes. I'll remind you that we haven't got just one customer. We've got various customers, Ministry of Labor Affairs Department of Juster, home office, metropolitan police, defense, industrial construction Ministry as well. So we've outsourced whether it would be HR processes, payroll, recruitment, finance processes, HR processes for all of these customers. So we've renewed various contracts. All of these contracts are renewed up until 2025 as a minimum. And we've got the MOD up until 2027. So we've got a business here where we've got a certain degree of visibility for the coming semesters. Third question now on exceptional costs. So for the full year, we should have a ratio under what we saw in the first half. Obviously, we've got the acquisition of Orden, CS Group and Tobania. So for the full year in '24, we -- if we look forward, the second half of 2024 should be like 2022, more or less, that will be around EUR 55 million. And then if this is maintained in absolute value, the ratio will go down in 2024. That's what you should bear in mind.

So I haven't necessarily got the forecast for the next 3 to 4 years. So -- but that -- those are the figures that we've got in mind, so about 1%. So the EUR 55 million for next year, that's based on the assumption that you will close the ordinary deal?