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

Good morning, ladies and gentlemen, and welcome to this 2025 Annual Results Presentation for Sopra Steria. [Operator Instructions] I'll now hand the floor to Rajesh Krishnamurthy, CEO. Over to you.

Good morning, ladies and gentlemen. I'm very happy to talk to you today for my first presentation of results as CEO of Sopra Steria. I took up office on the 2nd of February. The first weeks have been very intense. They've enabled me to start talking in depth with management teams to meet employees in several different entities and to talk to various different customers and strategic partners. What I can observe confirms the conviction or the strong belief that led me to join the group. Sopra Steria has got solid fundamentals, recognized technological foundations and a unique European positioning in a sector which is undergoing reconfiguration. I spent over 30 years in technology, consulting and large-scale transformation in Europe, in Asia and in the Americas. I have experience in rapid growth environments, in demanding competitive landscapes and within organizations which are experiencing in-depth transformation. This experience taught me that lasting growth is based on strategic coherence, strict execution and the capacity to rally talents in the long term. It's exactly this potential that I see at Sopra Steria. The group has got a strong European presence and exposition to strategic sectors like defense, aeronautics, space, public sector and financial services. Against the backdrop, which has been marked by technological sovereignty matters, security of critical systems and industrialization and artificial intelligence, I'd say this positioning is a genuine competitive advantage. Sopra Steria has also got differentiating factors in consulting, platform, engineering for complex systems. And the combination of this expertise is essential to support our customers' in-depth transformations. The coming weeks will be spent deepening my understanding of the group, broadly listening and refining our strategic priorities. My goals are clear: boost the group's development trajectory, boost its operational performance and consolidate its role as a European stakeholder in technology and digital services. Now I'll hand the floor to Etienne du Vignaux for the detailed presentation of the 2025 results, and I'll be back for the conclusion.

Thank you, Rajesh. Good morning, ladies and gentlemen. Let's start with the highlights of 2025. Firstly, we're satisfied that we achieved all the targets at the start of the year. First of all, organic growth in revenue at minus 2.2% within the guidance that we set between minus 2.5% and plus 5%. Operating margin on business activity was at 9.5% in the mid of the range between 9.3% and 9.8% and free cash flow was at 6% of revenue, also in the middle of the range announced at the start of the year of between 5% and 7% of revenue. And above the indication that we gave at the bottom of the range in the first half, but I'll come back to that point. So against this backdrop of performance aligned with our objectives, the net profit attributable to the group was up significantly, up 18.3% when compared with 2024 to hit EUR 296.8 million, so net margin of 5.3%, an increase of 1 point. Basic earnings per share were up 22.2% to hit EUR 15.23. Another highlight at the end of the year was the return to growth. So since the fourth quarter 2024, revenue was contracting, but the last quarter in 2025 saw a return to growth. Revenue was up organically by 1.8% in Q4 2025. Now if we look at the geographies, we've seen positive momentum in the South of Europe, in Italy, in Spain and in Switzerland. France and the U.K. returned to growth with plus 1.6% in France in Q4 compared with minus 2.5% over 9 months and then plus 8.8% in the U.K. versus minus 8.3% over the first 9 months. In terms of the sectors now, Financial Services grew throughout the fourth quarter, and we saw a return to growth in Aeronautics, 10% in Defense, Space and Security and then public sector, especially in France and the U.K. I want to highlight a rebound in consulting, plus 5.1%, driven by acceleration in Aeronautics. We saw growth in Spain, Italy, Belgium and Germany and a stabilization in France. We've also won new references, synergies with Aurexia have got off to a good start as well. In total, the group's operating performance was solid, notwithstanding an adverse environment. This operating profit on business activity contracted slightly, but remained close to 10%. Free cash flow was at the group's normative level. And then return on capital employed before tax was above 20%, which is our midterm goal. Thanks to good cash performance in the second half of the year, conversion rate of operating profit on business activity was 63.8% with EUR 340.9 million of free cash flow. So that gives us a free cash flow yield above 10% to 10.7%. The dividend proposed for 2025 is EUR 5.30 per share. As a reminder, it was EUR 4.65 in 2024. This increase shows an improvement in net result and then it also comes following a buyback program for EUR 150 million to increase the number of treasury shares, and that was concluded in January 2025. We've also had some good commercial momentum accelerating since the first half of 2025. I'll give you a few key commercial wins, which illustrate the group's positioning. First of all, the contract with NATO, which shows our capacity to expand into new high-growth potential customers in the defense domain. We've also won a first pilot, so building a secure interoperable and sovereign ecosystem for data sharing between European countries. We've also rolled out our sovereign data security solution, Datasphere. We've rolled that out. So doing joint analysis training and education that's been set up. We've also won a significant reference in AI for the Trusted Digital. There will be an ad hoc press release on the matter this morning. So that's probably one of the biggest contracts of this type in France, value estimated at tens of millions of euros. So this is a major AI contract. In the U.K., another domain now, we've won another contract of over GBP 10 million. So for financing accounting on the platform that we launched in October for NHS SBS. And then we've also won another contract with the CNES, the National Space Studies Center. So that's critical space surveillance and this is operation of a new traffic monitoring system based on a catalog of over 40,000 space objects and anticollision technology. So our customers are calling on us more and more for new gen technologies in order to operate their transformations. For 2 years now, we've considerably ramped up our efforts in this domain in order to increase the share of this business out of our total business. The number of certifications that we have in data, AI, cloud, ServiceNow, SAP, this has increased by 50% over 2 years and 18% just in 2025. At the end of 2025, we think the weight of new gen -- next-gen tech is about 60% of our business and AI, obviously, we've made this a priority, and we're convinced of its potential and positive impact that it can have for digital services. So 2025 saw a clear acceleration, AI, so as a production tool, we've timed by 2, the number of active licenses that we have with GitHub, Copilot, Claude, Gemini. We've also established the architecture so that we can make available to all of our employees, analysts, all the AI, all the agents that we use within software engineering, we made that available, and we've increased by 50% the number of consultants that we have in the AI for business practice. We've also seen an increase in the number of projects for our customers throughout 2025. Most of the group's priority accounts launched AI projects. In France, the number of customers who launched AI projects was up 44%. And one of the most significant supplier listings that we have in this country was won by Sopra Steria. So we don't believe in the theory that AI is going to kill off digital services companies. We see it as an accelerator for Sopra Steria because AI will enable a progressive overhaul of our customers' business processes, we think we're in a good position to support them in the long term. Now for some more highlights for 2025. We've also had geopolitical events of sovereignty, defense and security stakes. Against this backdrop, Sopra Steria has got a favorable positioning. Our business is focused on Europe. Our strategic sectors are the public sector, defense, space, security and aeronautics and then financial services. And these verticals represent 70% of the group's revenue. Sopra Steria is positioned as a legitimate partner to address sovereignty matters for European customers, for European countries. We're talking about defense. The group's revenue in 2025, so armies, defense industries was about EUR 1 billion, so 20% of the group's revenue. I'd also like to spend a couple of minutes talking about sovereignty and defense. So we've mentioned the geopolitical situation. We've also seen extra territoriality issues the states have raised, but we are not limiting ourselves to data security. We're focused on resilience, technological mastery and ethics. We're ensuring continuity in businesses and models. Obviously, you have to take into account cybersecurity risks and data protection. But then you have to think about technological dependency and the choice of algorithms that we're making. For our customers, understanding their technological dependency issues and helping them orientate themselves to alternatives is becoming quite critical. So this is a priority as part of their strategic plan. Sopra Steria is extremely legitimate when it comes to these matters. We are a European group. We're independent. Our strategy is exclusively built in Europe for Europe, and we're one of the 2 exclusive partners for SAP in Europe. The group has also given its exposition to sensitive sectors like defense and public sector. We've developed specific solutions, which address sovereignty matters. So hosting sensitive data, for example, SecNumCloud, sovereign solutions developed by the group, maintenance MCO solutions, data security, I've mentioned Datasphere and then also secure platforms like Blue Jay. More specifically, you've understand that the group has got big ambitions in defense, space and security. We're a key stakeholder for over 40 years in the domain. We're one of the top 10 leaders in the industrial and technological defense space in France, and we're also a member of the ITDB in Europe. Our positioning as an industrial player in France, specialized in critical systems. Our customers are the armed forces, government agencies, I mentioned NATO, industrial players in defense, TELUS, Airbus, Defense and Space, we can aim for roughly 10% growth over the coming years. And we also intend to invest in this domain with targeted acquisitions. Just as a reminder, in December, we announced that we started exclusive negotiations to welcome Starion and Nexova, so 2 specialists in space and security, and their revenue is around EUR 100 million. Now let's look at the operating performance by reporting unit. You've got the summary here, and I'll go straight to France. Revenue stood at EUR 2.409 billion, so down organically of 1.5%. Fourth quarter posted growth of 1.6%, following 9 months with a contraction of 2.5%. This return to growth is explained by a clear improvement in Aeronautics, good momentum in the public sector, rebound in growth in Defense, Space and Security and Transport and also a clear improvement in Consulting when compared with the start of the year, Q4 was stable. Operating profit on business activity was at 9% at the same level as 2024 despite an increase in social charges, which impacted the results in 2025. In the U.K. revenue stood at EUR 909.9 million, so down organically by 4.3%. After negative growth of 8.3% over the first 9 months, we saw growth in Q4 at 8.8% when compared with 2024, thanks to solid growth in the SSCL and NHS SBS platforms and then a less challenging base for comparison. Operating margin on business activity stood at 9.6% compared with 12.1% of 2024. For an external observer, the changes in business in the U.K. is not easy to understand given the variations from one quarter to another. So let's take a step back and look at the different components that make up the U.K. business. So we're investing for several years now in BPS, so next-gen BPS activity and various growth drivers, which will compensate the transformation of the previous generation BPO activities. So this is mainly driven by SSCL so which we've got visibility up to 2028, but we see a progressive erosion obviously generated by Agentic AI. So at the same time as this, we've developed other platforms. We expect significant growth that applies to NHS, SBS. That one went live in October 2025. A new platform is being commissioned, which will enable us to win market share. For financial services, debt management, we've seen initial success with NS&I in defense, a domain where we've launched a new secure platform as part of the [ DCAP ] program and then our digital services as well, where we've got new generation services based on AI, Cloud, ServiceNow, et cetera. So in total, we're targeting over EUR 1 billion in revenue in the U.K. Based on a lot more in the past, this platform logic with a vertical approach for health, financial services and defense. Now let's move on to Europe. Revenue was down 2.8% on an organic basis. So minus 3.2% over 9 months of the year to hit EUR 1,990.6 million. Spain, Italy and Switzerland continued to grow, whereas Germany, Scandinavia and Benelux saw different momentum over the first 9 months of the year. The SFT program generated EUR 162.9 million in 2025 compared with EUR 170.8 million in 2024. So the impact of its planned conclusion was 0.2 points on the reporting unit in 2025. For 2026, we're anticipating EUR 45 million in revenue, around EUR 30 million in Q1 and then EUR 5 million per quarter over the remaining 3 quarters. To finish, operating margin -- operating profit on business activity was 8.7% compared with 9.1% in 2024. Now let's finish with Solutions, which posted revenue of EUR 337.6 million, organic growth of 2.6%. Human Resources Solutions was up over 3.2%. Property Management contracted slightly with a contraction of 1.7%. Specialized Lending Solutions were up over 10%. Operating margin was at 16.7%, so that's up 4.2 points when compared with 2024. All business units, so Human Resources, Property Management and Specialized Lending contributed to an improvement in profit. We will start immediately. We'll have a look at the income statement. Revenues at EUR 5.648 billion, therefore, down 2.2% in terms of total change and organic change. Thus, the operating profit on business activity fared well at EUR 534 million with a margin rate of 9.5%. Let me tell you that this includes a dilutive aspect of 3 basis points due to social charges that increased in France and in the U.K. beginning of 2025. Share-based payment expenses reached EUR 20.5 million, therefore, up EUR 3.2 million due mainly to social charges again that went up. The amortization of allocated intangible assets decreased significantly to reach EUR 22.8 million due to the fact that we came to the end of the amortization of customer relations after the amalgamation with Sopra Steria. I will go through the other operating income and expenses in a minute. They represent a bit less than 0.9% of the revenue for the year. Operating profit totaled EUR 441.2 million, therefore, a margin rate of 7.8% to be compared with 8% in '24. Financial result is made up of the cost of financial debt and other financial income and expenses was similar to the one we had in '24. The tax expense is something I'll be discussing in a minute, reached EUR 96.7 million. Therefore, the consolidated net profit was up 17% to reach EUR 304.2 million, which included in 2024. The net loss of discontinued activities for a total of minus EUR 58.3 million. After including the interest that didn't confer any control, EUR 7.4 million, the net attributable profit reached EUR 296 million, therefore, a margin rate net, which is 5.3% to be compared with 4.3% in 2024. Now back to the other operating income and expenses. They include mainly a number of acquisition expenses, restructuring costs and reorganization costs totaling EUR 51.8 million, similar order of magnitude versus 2024 and proceeds of EUR 4.5 million, which include proceeds due to a modification of the pension schemes in the U.K. I wanted to say this not because of the amount, which is rather low, but because it illustrates the fact that the group is actively managing its pension funds in the U.K. The other operating income and expenses represent less than 0.9% of consolidated revenue in 2025. The tax charge totaled EUR 96.7 million, therefore, an effective tax rate of 24%. The normative rate, excluding exceptional contributions of France is assessed at 25% more or less in France for 2025. And for 2026, we expect a 27% rate that includes the exceptional level in France that will be continued occasionally. Now back to the cash generation. The free cash flow was solid and higher than the brackets and numbers given at the end of the first half of '25, thanks to good cash performance during the second half of the year. It reached EUR 340.9 million, therefore, 6% of our revenue. EBITDA contracted by more or less EUR 70 million. The difference with the decrease of EUR 30 million of operating profit on business activity is due to a change in the net reversals of provisions. Almost all of those are offset by the recognition of operating expenses during the year. As we expected at the beginning of the year, the WCR change led to a cash consumption in 2025 with the progressive stop of the SFT program that we announced. This being said, the end of the year was rather good, better than we thought at the end of summer. Excluding SFT, the DSO at the end of December is to be compared to the one we had in 2024, that is 45 days, which is a very good performance. What we expect is a comparable level for 2026. As to nonrecurring items, we have to factor them in, in 2026. There are disbursements due to taxes and occasional taxes that were up in France and Norway and restructuring costs that were higher -- that will be higher in 2026 because we're going to stop the SFT program. These one-off impacts will be impacting the free cash flow for the first half, and therefore, it will be more seasonally marked. Therefore, that's why we expect for 2026 free cash flow that will be 5% of our revenue. The net financial debt was at EUR 246.7 million, therefore, down more than 35% compared to the end of December 2024. The sharp reduction in the debt is to be explained, thanks to the robustness of free cash flow, which more than offset the amount allocated to the change in scope dividends and share buyback. I must say that the share buyback totaled, as you can see, EUR 63.7 million, and they include EUR 43.5 million of disbursements, which was due to the fact that at the end of January 2025, we bought EUR 150 million of shares announced in October 2024. The balance sheet is even more solid in 2025. The net financial debt at the end of the year represented 11.5% of equity and 0.4x EBITDA pro forma numbers for 2025 before IFRS 16 impact. And then we had questions on the balance sheet once we reported for the first half. I must say 2 things right now. First, the group has not had in 2025 or the previous years to consider non-deconsolidating receivables assignments. And as you can see in the simplified balance sheet, which is an annex to this presentation is that the line called receivables and linked lines, including the bills to be made, reached EUR 1.290 billion, therefore, an amount which has not changed more or less since 2024, which represents 22.8% of our total revenue, which means the average level that we had seen over the past 7 years. Now as far as financing is concerned, the group still has comfortable financing with lines that we can use for a total amount of EUR 2 billion, more or less 2/3 were available as of the 31st of December '25. Maturity will go from July '26 to '29. That's for the numbers for 2025. Now I'll hand over again to Rajesh, who's going to be talking us through the annual objectives.

Thank you, Etienne. So the 2025 results and particular return to the growth in Q4 constitute solid foundations to attack 2026 with confidence. The group has been managed between October 2025 and February 2026 with an approach based on continuity and a high-quality transition team. The budget process was conducted seriously, thoroughly with a bottom-up approach involving all countries and all business lines. The goals or the objectives of the results of this are coherent, they're realistic, and they've been approved by the Board of Directors. For 2026, we are targeting organic growth in revenue between 1% and 2%. This objective includes a nonrecurring negative impact of around 2% arising from the planned conclusion of the SFT program. So this is a one-off limited to 2026. Without SFT, the growth organic -- the organic growth target would be between plus 3% and plus 4%. This momentum is based on a return to growth in nearly all of our geographies, and we've got a solid outlook in financial services, defense, space, aeronautics and public sector, in particular, in France. Operating margin on business activity at least 9.5%, a slight improvement when compared with 2025. Free cash flow of around 5% of revenue. These objectives reflect a progressive recovery trajectory with discipline and under control. They reflect both the current market context and our willingness to progressively improve our operational performance. I would like to highlight that 2026 will also be a year of strategic works, more in-depth strategic works. We will carry on reinforcing our positioning in positive domains like next-gen technology, AI, sovereignty and defense, while continuing our efforts to improve operational excellence. Now let's open the Q&A session, and Etienne will be your main speaker for any financial items. But for me, I'll be delighted to start meeting you in the coming weeks and share our vision and the group's ambitions.

[Operator Instructions] The first question comes from Nicolas David from ODDO.

Rajesh and Etienne, congratulations from me. I've got 3 questions. The first, could you give us a little bit more color on Q1 compare the growth that you had with Q4? What's changing? What are the variables here? We're seeing strong momentum in public sector in Q4 in France versus exceptional? Or has this been built into the budget? Or will we see this in Q1? And then with SFT in Q1, there shouldn't decline, but how does that stand compared with Q4, which generated growth. So could we have a little bit more information so that we can understand organic growth? Second question on the guidance for margin. So at the bottom of the range, 9.5%. What would drive you towards the bottom of the range? Obviously, you've had a return to growth, reduction of the bench and then we've got the SFT that wasn't necessarily very profitable. So these are positive things when it comes to margin. And then the U.K. had a lower margin in 2025. So can we see -- will we see an improvement in margin in the U.K.? And then the last question on the U.K. as well. Thank you very much for the details on strategy. Should we understand that there's a risk of phasing or erosion of BPS. Is that going to come before the growth drivers kick in? Or will that be at the same time? Are we going to have a bit of a dip in growth in the U.K. at the start of the phase for 2026 to 2029?

Thank you for your questions, Nicolas. I'll start with the first one on Q1 2026. How is this reflected when we compare with how we end the year and how we're starting the year. We've closed the month of January. I'm not going to give you the figures, but we've got them. So we obviously refined our forecast, and this confirms the budget approach. So the start of the year is aligned with our forecast. And then in terms of the guidance in Q1, we've got similar figures to the annual guidance. So the pace in Q1 is comparable with what we've indicated for the full year guidance. Now for the public sector in France, yes, it got off to a difficult start or a slow start, budget delays in France -- it finished the year better than what it started. So the end of 2025 was more dynamic. I think that even if this year, the budget came a little bit late, administrations are kind of used to this way of working, if I may say. So this year in 2026, the budget was voted late, but that was kind of expected, and it's going to be managed. So we're less concerned than what we were at the start of last year when it comes to the start, given the fact that the budget wasn't voted on the 31st of December. Now for the next question on margin. So the guidance isn't 9.5%. It's at least 9.5%. So it's not quite the same thing. Rajesh said it, we're expecting a slight improvement in margin. We're at the start of the year now. The environment around us is quite unstable, public sector. There's a lot going on around us. And we're comfortable with this guidance for the time being. For the U.K. The question is on the outlook, the 3- to 4-year outlook. I said it earlier. With regards to traditional BPO activity, we've got visibility up until 2028. These are long-term contracts. If they were to transition, then that transition would take several years. We're not going to have a sudden stop or a sudden loss in revenue. We've got quite a good level of visibility through to 2028.

Just on margin, so 9.5%, that's to be taken into account. But -- so if there's any bad surprises or anything that impacts the top line, how is that taken into account? Is there any pressure on margins, which could compensate for the positive factors like the bench that's going down or a favorable calendar effect?

Yes, there's a slight impact from social charges, 30 basis points. It's not nothing on the operating margin on business profit. So the impact was over -- it's a marginal impact, but it is known. That has been integrated into the guidance.

And then for BPS, good visibility. But what -- does this integrate deflation?

Well, we need to look at the broad situation in the U.K. There's things impacting BPO. Obviously, this is not new to us. We've been doing this for over 10 years. We're seeking productivity gains, but we obviously want to win market share and ramp up the volumes. I indicated growth for NHS. We'll have growth here. We've got this new platform, which we've already announced in Q3 for NHS SBS. That went live in October. It was successful, and we're expecting growth, new hospitals, new trusts who will be joining the business. Then for the rest, from SSCL activity, we've got the transformation to conduct. We want to make gains. That is our goal, integrate new technologies. And then obviously, the question is how we share these gains with the customers, but we deliver outputs. We're not working on a time and material basis. We deliver services that will benefit our customer. So we want to -- and we're working to improve our productivity. Agentic AI is a way of making productivity gains, and it's up to us to be good and demonstrate this, sell more value to our customers.

Crystal clear. Now back to SFT for Q4. I had the impression that their contribution was positive for Q4 2025. Could you confirm this, please? And then I'm done.

Yes, certainly. We've given you the exact numbers for SFT. There's a table on that with the exact contribution during 2025. And I even gave you the breakdown per quarter in 2026. Now back to 2025, at the end of the year, that is Q4, a slight growth, even though there's a degrowth if you look at the whole year. And then there's going to be a marked decrease during Q1 and mainly starting as of Q2 2026, that is.

Next question from Michael Briest, UBS.

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Thank you for these questions. Now as far as restructuring is concerned, if it's for 2025, I gave you the numbers before. That is the level is EUR 50 million, more or less what we had in 2024. Now for '26, now you'll probably remember that the SFT business will have to go through major restructuring during the first half. And therefore, we think that the total expenses for restructuring will be going up in 2026, and that's due to the one-off impact of SFT that's going to weigh in terms of the charges. But there's no massive plan. I was thinking about what other players said in the same industry. Now the thing for us is to go back to growth and hiring people, recruitment, that is. So back to growth and recruitment. And by the way, in France, we talked about our recruitment objective not long ago, a number of weeks ago, that's quite ambitious for '26. Now the second question, that's the midterm objectives. Again, we'd like to repeat the midterm objectives. There's no reason to change them. Rajesh took you through these objectives. These are the ones that we mentioned a few years ago during the CMD. And the third question had to do with capital allocation, more specifically the share buybacks. And that's true at the beginning of last year, we continued with the EUR 150 million target that we announced in October 2024. And I'm certain that the Board of Directors is always asking themselves this question. This from the technical point of view, is something that we can use. We have all the authorizations to do that. So that's all I can say about the share buyback program.

The next question, Derric Marcon from Bernstein.

I have several questions to ask. Number one, your guidance range, there's a 1 point difference between the lower part and the upper part of the bracket, quite unusual. In the past, you had more safety buffers, if I can say, a bigger margin. Does that mean that at the beginning of 2026, your visibility is better than it was the case before? I suppose, yes, if you look at 2025. But what about the years before 2025? And could you give us more color about the reasons why you would reach the upper part of the bracket. What are the main assumptions that explain the difference between the lowest part and the upper part of the bracket. Now the second question, the U.K. back to what Nicolas said, that is your objective is EUR 1 billion for 2029. Now I'd like to know more about the underlying assumptions that you have. Have you factored in, for instance, the renewal of SSCL? If yes, what's the scope? What's the size that we're looking at? And could we know more about your mix that is the EUR 1 billion for 2029 between the new platform, the traditional BPO, the different business lines. And this to make comparisons with the private sector so that we better understand the setup of this business in the U.K. in 2029 versus this snapshot that we had for 2025? And thirdly, the EUR 1 billion target in the U.K., could we perhaps have an idea of the profit level that you expect by that time in the U.K. Now there's a decrease in 2025 compared to 2024. Could it be possible to go back to the 12% that we had by that time? Because you're making investments, will these investments continue? Or will the margin be capped?

Thank you very much for these questions. Now the first question is the guidance for our revenue. That's true. It's between 1% and 2%. And it takes into account, as Rajesh said, that there's a negative impact, which is 2 points negative impact because we have come to the end of SFT. So if you calculate the normative guidance, it would be between 3% and 4%. As we speak, well, the year has just started, Nicolas David asked the question before. We have confidence in our guidance. It's different from the previous years when we had uncertainties about the markets and how they would evolve. The market players were looking for a tipping point, a turnaround. There we are. We have it. We're back to growth in -- during the fourth quarter. So we have better visibility on our growth. Now the SFT topic is something that we fully comprehend. We had some uncertainties in the past on that. So we trust that the guidance now could be between 1% and 2%. Now the second question has to do with the U.K. We're not going to give you the mix breakdown for 2029. Things can happen. There's a renewal of contracts. I gave you the main trends per business line. And our ambition is to grow our revenue in the U.K. in 2029 and the U.K. margin. Now the margin is accretive for the group today. It will continue to be accretive, and it will be more than 10% in any case.

Okay, Etienne. But you said EUR 1 billion in 2029. And I suppose that the basic -- the working assumption is that SSCL will be continued. Maybe there's going to be deflation, not really totally offset by the volumes, but you're not going to lose the EUR 300 million, EUR 400 million connected to SSCL by 2029.

No, of course, we're not going to lose EUR 300 million, EUR 400 million regardless of the contracts we have in 2029 to meet the objective. Now, some contracts will end. Others will start. We're not making those detailed forecast. It's a general guidance by business domain or by business. Thank you very much.

Next question. Thomas Poutrieux, BNP Paribas.

I have a couple of questions to ask. I'll start with Aeronautics and Defense. You said that there's a 2-digit growth for Aeronautics in Q4. That's good news. And I was wondering, could we extrapolate on these numbers for Aeronautics and for the defense business in '26? And what have you -- is that something that you included in your guidance? And what you have in your guidance for the year? Second question, Belgium. Beginning of February, you talked about this contract, the i-Police contract with press articles that were released because the contract was to come to an end at the end of 2025 with probably the government or the Belgian public sector because they're quite reluctant to pay, I'd say. And therefore, did you have to set aside provisions in 2025 for that? Have you thought about any provisions in your guidance for 2026 on that contract? And since you're saying back to growth, now we're talking about Belgium in 2026, aren't we? And third question about the U.K. Now what you're saying is that during Q1, we enjoyed growth that was more or less in line with the annual guidance, even though the comparison basis is simple in the U.K. Does that mean that if we have 9% organic growth in Q4, we can't extrapolate this in Q1 '26. Therefore, that would mean a slowdown to be expected. And my question is, why would there be such a slowdown? And my final question is about specialized credit. You've said specialized credits were up 10% for Q4. I was wondering why? Is it a license with a client that was signed in Q4? Or is there an underlying trend that is improving for that business line?

Aeronautics and Defense, that's true. We are back to a positive year, a very positive year for Aeronautics. For 2026, we expect 5% or 10% growth in between 5% and 10%. Second question, Belgium. Our subsidiary, Sopra Steria Belgium communicated reporting on the 5th of February. There's a press release that's really crystal clear on that. And we have no danger as far as the balance sheet is concerned. No amounts were unpaid. We were paid by the Police for the projects that we've delivered on, on that project for which there was not much in terms of production in 2025. So no problem with the balance sheet and no need to set aside provisions on the balance sheet. Now 2026 in Belgium. That's true. We're going to be back to growth at the end of the year. This is a region or a country where the market was complicated in 2025. And the main managers have changed in Belgium. There's a different momentum. And therefore, we're going to grow again in Belgium during the second half of 2026. The third question was about the U.K. And could you repeat your question?

Certainly. I was thinking Q4 was really good in the U.K.

Okay. Okay. Extrapolating from the Q4 to Q1. No, no, no. My answer is no. We're not going to have 8.8%. No, no. if that's what you were thinking about, but perhaps some type of growth. We can't extrapolate from the Q4 number. As I said before, if you look quarter-by-quarter revenues, it's difficult to understand this in the U.K. So don't take this number. You shouldn't have done that, by the way, for Q3 either. And then the specialized credits. I agree with you. That's a business that's rather small, rather minimal. It doesn't really weigh much in terms of the solutions reporting unit. We sell licenses mainly at the end of the year. That's the reason. But the business is growing. It wasn't the case over the past years. And therefore, the margins are restored, which is good news.

The next question comes from Laurent Daure from Kepler Cheuvreux.

I've got several questions. I wanted to come back to Nicolas' comment on SFT. We can see that there's quite a weak impact in Q1, and that's going to accentuate into Q2. You said Q1 was aligned with annual guidance. So does this mean as of Q2, Q3, there are going to be contracts that are going to compensate ramp-up to have -- can we have a better idea of the quarterly phasing? My next question, you mentioned a slight drop in EBITDA, not at the same level as the EBIT. Could you give us some more details on why and what's in this? And then my third question, just to -- if we take a step back, think about where you stand with regards to the 2 major acquisitions, CS Group and Ordina, think about the margin compared with the initial targets.

Thank you, Laurent. So SFT, we've given a precise phasing for 2026, EUR 30 million in the first quarter and then EUR 5 million per quarter for Q3 -- Q2, Q3, Q4. So normally, you've got all of the information you need to be able to restate the figures, excluding SFT, so you can establish normative growth. For the second question on EBITDA, yes, obviously, there's a difference of EUR 40 million between the drop in operating profit on business activity and the drop. So we've got net provisions. Obviously, we recover provisions every year, and these are consumed. So this EUR 40 million has got 2 blocks. We've got EUR 40 million in operating expenses. So these are operating provisions and then EUR 19 million for tax expenses disbursed over the year. That's what the difference is. We're talking about previous litigation or things that have been recovered last year. And then M&A, previous -- past M&A. So Ordina -- so Sopra's CS Group. CS Group, we've got positive commercial momentum. I reminded you of our positioning, which is highly relevant today in various domains, C2, command and control, anti-drone, security in Europe. So from a commercial point of view, I think we've got an advantageous positioning today. And in terms of profitability, we are on the trajectory that we established. So we've made progress this year. It's not quite at normative levels, but not far off. Now for Ordina and then all the acquisitions we made in the Benelux, we had Ordina, which was present in the Netherlands and then in Belgium. We've also acquired Tobania in Belgium. So we tripled the size of our footprint in Belgium. So the 2 markets because obviously, Belgium on one side and then the rest on the other -- in terms of growth, we're anticipating for these 2 markets in 2026, we're expecting to see progress. So progress in terms of growth. We've seen that the situation is progressively improving in Belgium. The Netherlands, which was a little bit tougher last year because that's a smaller entity for us. So the #1 priority is commercial momentum. We've got new management, which is now in place since Q3 in the 2 geographies, so the Benelux and the Netherlands. We plan to simplify the organization by getting rid of the Benelux layer that was inherited from Ordina and that came on top of the 2 geographies. So I think we are in marching order now. We've got motivated teams. We're ready to move forward, and we'll see growth, whether it be in terms of growth or margin as of 2026.

So 2 and 3 very clear. Question one, you didn't really answer my question because EUR 25 million less over half year, that's a 1.5 point impact on organic growth. We just want to be sure that we're not going to have a deceleration of growth because of SFT.

Well, you know that we don't give growth guidance quarter-by-quarter. We give the details of SFT because there was a significant impact from one quarter to another. But I will say that Q1 is getting off to a start, which is aligned with our forecast. We're going to take one last question now.

The next question comes from Aditya Buddhavarapu from Bank of America.

First one for Rajesh. Could you just talk about your -- since you've joined the company, some of your key observations you made and maybe what are your main priorities as you go through the next few months in terms of strategy or structure? Second question on AI. So you mentioned some good momentum in terms of clients who are using -- or signing up for AI projects. Can you just talk about what percentage of bookings or revenues linked to Gen AI right now? And on those, are you seeing -- how you're seeing pricing evolving if there's been any change related to that? And finally, on the U.K., could you also just clarify when you talk about the legacy BPS erosion, is that driven by just regular pricing changes? Or is there anything more specific to AI on that?

So for me, the priority in the first weeks is obviously to carry on deepening my understanding of the group. It's a group with a lot of history, a strong culture, lots of practices, which are deep rooted in its history. So firstly, I want to understand how the group works operationally, meet the teams, meet the customers, meet the partners. And the work that I've started to look at above all is how can we supplement integration procedures for acquisitions that we've already announced. We've spoken about CS, but also the activity in Belgium. How can we simplify the organization to be more present and more effective to leverage the growth expected in the domains that we've mentioned, defense, security, airline, et cetera. For me, those are the 2 priorities. And then talking about AI today, we've published the figures that we track, wins of new customers, but we haven't yet -- we can't structurally quantify all projects linked to AI. So this is something that we're going to work on. It's important for us, obviously, with the momentum that we're seeing today. But today, we can't currently communicate on the bookings linked to AI. But what we do observe is that most contracts do integrate an AI component. So AI, obviously, there's 2 dimensions here. We've got use of AI internally AI improving productivity test, documentation, support functions, et cetera. And this is something that we're industrializing at group level. And then part of the gains will come from the fact that we boost our competitiveness. And we've got AI for our customers. AI doesn't reduce complexity. It increases it. So it creates additional demand. We have to secure everything, data governance. So we can be a systems integrator stakeholder for critical systems. And this is our playing field, and this is where we see opportunities. And then for the third point, I'll hand that one back to Etienne perhaps.

Yes, for the U.K. linked to the question on AI, yes, BPO, BPS services must be integrated into the future for us, for our customers. We have to integrate AI possibilities, Agentic AI as well. We're working on that to bring value to our customers and BPS services, their outputs, we're not selling AI. We're not selling technology. We're selling services and results. So we want to try and increase this value. It's up to us to provide new services, and we think that's an opportunity for us providing that we can master this technology and provide the right solutions for our customers.

No more questions. hand the floor back to the speakers for the conclusion.

Thank you very much for your questions, and we'll be seeing you soon. Goodbye. [Statements in English on this transcript were spoken by an interpreter present on the live call.]