Authorization

Solid Sodexo First Half Fiscal 2019 Results

Solid Sodexo First Half Fiscal 2019 Results

Organic growth at +3.1%, slightly above expectations



All growth KPIs improved



Underlying Operating Margin as expected



Guidance maintained

Issy-les-Moulineaux, April 11, 2019 - Sodexo (NYSE Euronext Paris FR 0000121220-OTC: SDXAY). At the Board of Directors meeting held on April 9, 2019 andAchaired by Sophie Bellon, the Board closed the Consolidated accounts for the First Half of Fiscal 2019 ended FebruaryA28, 2019.Financial performance for First Half Fiscal 2019:

(in millions of euro)



FIRST-HALF
FISCAL 2019 (ENDED FEBRUARY 28, 2019)



FIRST-HALF
FISCAL 2018(ENDED FEBRUARY 28, 2018)



DIFFERENCE



DIFFERENCE CONSTANT RATES



Revenue



11,045



10,293



+7.3%



+6.8%



Organic growth



+3.1%



+1.7%



A



A



UNDERLYING OPERATING PROFIT



647



627



+3.1%



+3.3%



UNDERLYING OPERATING PROFIT MARGIN



5.9%



6.1%



-20bps



-20bps



Other operating expenses



(69)



(73)



A



A



OPERATING PROFIT



578



554



+4.2%



+4.1%



Net financial expense



(54)



(44)



A



A



Effective tax rate



28.8%



25.9%



A



A



GROUP NET PROFIT



364



372



-2.3%



-2.6%



EPS (in euro)



2.50



2.51



-0.4%



A



UNDERLYING NET PROFIT



413



397



+4.1%



+4.3%



UNDERLYING EPS (in euro)



2.84



2.67



+6.2%



A



Net Capital expenditure



205



123



A



A



Free cash flow



14



125



A



A



Debt Ratio



1.3



1.1



A



A


ASodexo CEO Denis Machuel said:

a?? Growth has been encouraging in the second quarter in both Onsite Services and Benefits & Rewards. Client retention, development and same site sales growth KPIs are all improving. The margin is down slightly in Onsite Services, as expected, and up slightly in Benefits & Rewards. We have accelerated our capital expenditure in the Education and Sports & Leisure segments. These are good signs that our focus on growth agenda is beginning to move the cursor. AI am pleased with the progressive improvement in growth in North America, in Q1 and then in Q2. Steady progress is being made by the new Health Care North America team in reasserting discipline and accountability throughout the organization. We are also achieving strong growth in Brazil both in the Benefits & Rewards business as well as Onsite, helped by an improving economic environment. We maintain our guidance both in top line organic growth and underlying operating profit margin.a??
AHighlights of the period

Organic revenue growth for the First Half Fiscal 2019, at +3.1%, was slightly better than expected, resulting from an encouraging second quarter performance at +3.6%, with growth accelerating in all segments, and in Benefits & Rewards Services.



On-site Services organic revenue growth of +2.8% reflects:

Growth in North America turned positive in the first quarter at +0.2%, and accelerated in the second quarter to +2.4%. Europe was solid at +3% and the region Africa, Asia, Australia, Latin America, Middle East continues to grow at +6.9%, despite the ever higher comparable base.



All growth Key Performance Indicators are better year on year:

Client retention is up +40 bps;



New sales development increased + 70 bps;



Same site sales growth is +20 bps.







Benefits & Rewards Services organic revenue growth is +10.1%. Organic growth in Europe remains sustained at +8.2% and is strong in Latin America at +12.5%, as the economic environment improves steadily in Brazil.



Underlying operating profit increased +3.1%, resulting in an underlying operating margin of 5.9%, down 20 bps at constant exchange rates, principally due to:

A 30bps decline in On-site Services margins resulting from timing differences between investments in growth and expected efficiency gains, but also due to the renewal of the major Marine Corps contract in the USA.



A 30bps improvement in Benefits & Rewards due to strong recovery in Brazil and lower digital migration costs, particularly in India, following the significant investment required last year.





Other operating income and expenses amounted to 69 million euro, down from 73 million euro last year.



Reported net profit of 364AmillionAeuro was down -2.3%. Basic EPS was a?2.50, down by only -0.4%, due to a lower share count as a result of the share buy-back in the previous fiscal year. Underlying Net profit totaled 413 millionAeuro, up +4.1%.



Free cash flow was 14 million euro, a normal level for the First Half, despite a substantial increase in capital expenditure, which reached 1.9% of revenues for the period. As a result, the net debt ratio at the end of the period was 1.3x against 1.1x at the end of the First Half last year.



Acquisitions, net of disposals, amounted to 234 million euro, in First Half Fiscal 2019 with CrA?ches de France, doubling the Groupa??s presence in the child-care market in France, Novae Restauration, significantly enhancing the Groupa??s presence in the high-end catering market Switzerland, Pronep, with which we have entered the Brazilian home care market and Alliance in Partnership in the UK, a specialist education caterer, reinforcing our focus on high quality, locally sourced and seasonal meals at competitive prices.



Sodexoa??s engagement in corporate responsibility continues to be recognized within the investment community, with the highest marks in SAMa??s a??Sustainability Yearbooka??,for the 12thAconsecutive year. Sodexo also remains the top-rated company in its sector within the Dow Jones Sustainability Index (DJSI), for the 14th consecutive year confirming Sodexoa??s commitment to Quality of Life.

Board compositionThe following changes to the board have been approved by the Board of Directors since the Annual General Meeting of the shareholders on January 22, 2019.

Sophie Stabile has replaced Emmanuel Babeau as Chair of the Audit committee and has joined the Compensation Committee;



Emmanuel Babeau has resigned from the Compensation Committee;



Robert Baconnier has resigned from the Audit Committee;



CAcile Tandeau de Marsac has replaced FranAoise Brougher as Chair of the Nominating Committee.

As a result, the composition of the board committees is now as follows:

Audit Committee:

Sophie Stabile, Committee Chair, Independent Director



Emmanuel Babeau, Independent Director



FranAois-Xavier Bellon



Soumitra Dutta, Independent Director



Cathy Martin, Director representing employees





Nominating Committee:

CAcile Tandeau de Marsac, Committee Chair, Independent Director



Sophie Bellon



Nathalie Bellon-Szabo



FranAoise Brougher, Independent Director





Compensation Committee:

CAcile Tandeau de Marsac, Committee Chair, Independent Director



Sophie Stabile, Independent Director



FranAoise Brougher, Independent Director



Philippe Besson, Director representing employees
A





Following the recommendation of the Nominating Committee, the Board will propose, at the next Shareholders meeting, the appointment of Luc Messier as an independent Director of the company. Mr. Messier holds both Canadian and American citizenship, and will bring significant international operational experience, notably in the oil and gas sector, through executive management positions held with large French and American multinational companies (ConocoPhilips, Technip, Bouygues, Pomerlau). He has lived and worked in Asia, Africa, Europe, and North America, most recently for several years in the United States, where he currently resides.


ASodexo Chairwoman, Sophie Bellon said:

a?? I am very pleased to propose Luc Messier as a new Board Member. He will bring valuable operational experience garnered from the different companies and countries in which he has worked, notably the United States.Board renewal continues to be an important priority. Fostering new momentum, open discussions and best practice within the Boardroom are key to support and accelerate the execution of our strategy and the achievement of our objectives.a??
AOutlookGrowth in the First Half Fiscal 2019 of +3.1% was slightly above expectations. For the Second Half, we see continued growth in developing economies, although the comparable base is high, some contracts being exited and improvement in North America remaining challenging. Therefore, the Group maintains its objective of organic revenue growth of between 2 and 3%.The action plans are being executed with a clear focus on growth and on margin protection to ensure that the underlying operating margin for the year should be between 5.5% and 5.7%, excluding the currency impact. The strategic agenda is aimed at delivering market leading growth. The first steps to return to this performance are to achieve organic growth of more than 3% from Fiscal 2020. Margin improvement will come with the right levels of growth, the objective being a return to an underlying operating margin sustainably over 6%. Conference callSodexo will hold a conference call (in English) today at 9:00Aa.m. (Paris time), 8:00 a.m. (London time) to comment on its results of First Half Fiscal 2019. Those who wish to connect from the UK may dial +44A(0)A207A192A8000 or from France +33 (0)1 76 70 07 94, or from the USA +1 866 966 1396, followed by the passcode 1764637.The press release, presentation and webcast will be available on the Group website www.sodexo.com in both the "Latest News" section and the "Finance - Financial Results" section.Fiscal 2019 financial calendar

Nine-month revenues



July 8, 2019



Annual results



November 8, 2019



Annual Shareholdersa?? Meeting



January 21, 2020

About SodexoFounded in Marseille in 1966 by PierreABellon, Sodexo is the global leader in services that improve Quality of Life, an essential factor in individual and organizational performance. Operating in 72 countries, Sodexo serves 100Amillion consumers each day through its unique combination of On-site Services, Benefits and Rewards Services and Personal and Home Services. Sodexo provides clients an integrated offering developed over more than 50 years of experience: from foodservices, reception, maintenance and cleaning, to facilities and equipment management; from services and programs fostering employeesa?? engagement to solutions that simplify and optimize their mobility and expenses management, to in-home assistance, child care centers and concierge services. Sodexoa??s success and performance are founded on its independence, its sustainable business model and its ability to continuously develop and engage its 460,000Aemployees throughout the world. Sodexo is included in the CACA40, FTSE 4 Good and DJSI indices.

Key figures (as of August 31, 2018)

20.4 billion euro in consolidated revenues

460,000 employees

19thlargest employer worldwide

72 countries

100 million consumers served daily

15.0 billion euro in market capitalization (as of April 10, 2019)

Forward-looking statementsThis press release contains statements that may be considered as forward-looking statements and as such may not relate strictly to historical or current facts. These statements represent management's views as of the date they are made and Sodexo assumes no obligation to update them. The reader is cautioned not to place undue reliance on these forward-looking statements.Contacts

Analysts and Investors



Press



Virginia Jeanson
Tel : +33 1 57 75 80 56
virginia.jeanson@sodexo.com



Mathieu Scaravetti
Tel: +33 1 57 75 81 28
Mathieu.scaravetti@sodexo.com


1

A



A



A



A



ACTIVITY REPORT

FOR FIRST HALF FISCAL 2019



A


AFISCAL 2019 FIRST HALF ACTIVITY REPORT (September 1, 2018 to February 28, 2019)Revenue Analysis

REVENUES BY SEGMENT
(In millions of euro)



H1 FY19



H1 FY18



RESTATED ORGANIC
GROWTH



A



ORGANIC
GROWTH



EXTERNAL
GROWTH



CURRENCY
EFFECT



TOTAL
GROWTH



Business & Administrations



5,645



5,295



+2.8%1



A



+1.2%



+6.3%



-0.9%



+6.6%



Health Care & Seniors



2,552



2,359



+2.2%1



A



+5.6%



+0.4%



+2.1%



+8.2%



Education



2,420



2,228



+3.6%



A



+3.6%



+1.8%



+3.2%



+8.6%



On-site Services



10,617



9,882



+2.8%



A



+2.8%



+3.9%



+0.7%



+7.4%



Benefits & Rewards Services



430



413



+10.1%



A



+10.1%



+0.2%



-6.3%



+4.1%



Elimination



-2



-2



A



A



A



A



A



A



TOTAL GROUPE



11,045



10,293



+3.1%



A



+3.1%



+3.7%



+0.5%



+7.3%

First-half fiscal 2019 consolidated revenues totaled 11 billion euro, up +7.3% year-on-year. Currency effects during the period were limited to +0.5%, due to the strength of the dollar compensating the decline in the Brazilian Real. The contribution from acquisitions net of disposal of subsidiaries was +3.7%, with the impact of Centerplate for the first 4 months of the period and the smaller acquisitions since the beginning of the year. As a result, organic revenue growth was +3.1%, with a significant acceleration in the second quarter which was up +3.6%.Brexit:In June 2016, the United Kingdom voted to leave the European Union. Sodexo has been present in the country since 1988 and has around 35,000 employees there today. The Groupa??s business should not be materially impacted by the United Kingdom leaving the European Union. The Group is a local player, working with local suppliers and employees, and very often for Government authorities and Government services. Action plans have been put in place to limit the impact of a hard Brexit on food prices and availability. We have noticed a slowdown in new business opportunities. However, same site sales growth remains solid. Analysis of organic revenue growth in On-site ServicesOn-site Services organic revenue growth of +2.8% reflects:

Growth in North America turned positive in Q1 at +0.2%, and accelerated in Q2 to +2.4%. Europe was solid at +3% and the Rest of the World continues to grow at +6.9%, despite the ever higher comparable base.



All growth Key Performance Indicators are better year on year:

Client retention is 97.8%, up by +40 bps;



New sales development is 3%, an increase of +70 bps



Same site sales growth is 2.5%, +20 bps.



Business & Administrations

REVENUES BY REGION
(In millions of euro)



H1 FY19



H1 FY18



RESTATED ORGANIC GROWTH



North America



1,571



1,258



+0.8%



Europe



2,657



2,638



+2.1%



Africa, Asia, Australia, LatAm, Middle East



1,418



1,399



+5.9%



BUSINESS & ADMINISTRATIONS TOTAL



5,645



5,295



+2.8%

First Half Fiscal 2019 Business & Administrations revenues totaled 5.6 billion euro, with organic growth of +2.8%.First Half revenues in North America were up +0.8%. The decline of -1.3% in the first quarter due to a previous year large one-off project in Energy & Resources was more than compensated by the return to positive organic growth in the second quarter. Strong growth in Corporate Services was driven by same site sales growth and new contracts. Government & Agencies activity was down due to the renewal of the Marine Corps at lower comparable unit sales. The consolidation impact of the acquisition of Centerplate ended in December. Centerplate is currently going through a significant renewal process; most contracts have been renewed and, often extended to other services, successfully and some less profitable ones have been exited.In Europe, sales were up +2.1% organically. After a strong start to the year, tourism in Paris slowed down in the second quarter. Corporate services continued to generate solid growth due to cross selling in all countries. Government & Agencies stabilized in the second quarter, after the exit of British Army contracts. Energy & Resources performance in the North Sea is stabilizing.In Africa, Asia, Australia, Latin America, Middle East organic revenue growth was +5.9% reflecting strong growth in both new business and same site sales in Corporate services offset somewhat by the end of several large construction projects and a low level of contract signatures in Energy & Resources.Health Care & Seniors

REVENUES BY REGION
(In millions of euro)



H1 FY19



H1 FY18



RESTATED ORGANIC GROWTH



North America



1,571



1,483



+1.3%



Europe



836



746



+1.7%



Africa, Asia, Australia, LatAm, Middle East



144



130



+16.9%



HEALTH CARE & SENIORS TOTAL



2,552



2,359



+2.2%

Health Care and Seniors revenues amounted to 2.6 billion euro, up +2.2% organically. AIn North America, organic growth was +1.3%, improving progressively quarter after quarter due to solid comparable unit growth helped by inflation pass-through and cross-selling. While Seniors retention has been weak, Health Care has been strong to date and development has been trending upwards.In Europe, organic growth was +1.7%, boosted by strong same site sales growth through cross-selling and the startup of a new contract in Benelux. However, new business started up last year makes the comparable base more difficult in the UK. The Nordics is still declining due to negative net lost business.In Africa, Asia, Australia, Latin America, Middle East organic revenue growth has remained strong all year, at +16.9% reflecting many new contract startups in Brazil, China and India, as clients seek to benefit from the transfer of the Groupa??s global expertise in these countries. Education

REVENUES BY REGION
(In millions of euro)



H1 FY19



H1 FY18



ORGANIC GROWTH



North America



1,795



1,696



+1.4%



Europe



573



488



+10.4%



Africa, Asia, Australia, LatAm, Middle East



52



43



+10.5%



EDUCATION TOTAL



2,420



2,228



+3.6%

Revenues in Education were 2.4 billion euro, up 3.6%. North America was up +1.4%, accelerating in the second quarter. While net new business from last year remains neutral, same site sales growth has been solid, helped by inflation pass-through. One less working day was more than compensated by strong retail sales in Universities and some project work in Schools.A In Europe, organic growth was +10.4%. This performance is driven by solid prior year contract wins, in the UK, some extra day impact and the start-up in January of the new Schools contract in the Yvelines department. AIn Africa, Asia, Australia, Latin America, Middle East, organic growth was +10.5% resulting from the opening of several new School and University contracts in China, India and Singapore.On-site Services Revenues by region

REVENUES BY REGION
(In millions of euro)



H1 FY19



H1 FY18



ORGANIC GROWTH



North America



4,937



4,438



+1.2%



Europe



4,066



3,872



+3.0%



Africa, Asia, Australia, LatAm, Middle East



1,614



1,572



+6.9%



ONSITE SERVICES TOTAL



10,617



9,882



+2.8%

North America is back to growth, at +1.2%. Outside North America, On-site revenue growth was +4.1%, with a slowdown in Africa Asia, Australia, Latin America and the Middle East due to several construction projects coming to an end, and compared to the previous year double-digit growth.Benefits & Rewards ServicesBenefits & Rewards Services revenue amounted to 430 million euro, up +4.1%. The currency effect of -6.3% resulted in particular from the weakness of the Brazilian Real and the Turkish Lira. The scope change was +0.2% from the integration of several sports card activities. Organic growth in revenues was +10.1%.Revenues

REVENUES BY ACTIVITY
(In millions of euro)



H1 FY19



H1 FY18



ORGANIC GROWTH



EXTERNAL GROWTH



CURRENCY EFFECT



TOTAL GROWTH



Employee benefits



341



329



+11,4%



A



A



A



Services diversification



88



84



+5,0%



A



A



A



BENEFITS & REWARDS SERVICES



430



413



+10,1%



+0,2%



-6,3%



+4,1%

Employee benefits were up +11.4% compared to total issue volume of 6.8 billion euro, up +8.1%.A Services diversification was up +5% with strong double-digit growth in Mobility & Expense and in Corporate Health and Wellness products offsetting a weak start of the year in Incentive and Recognition.

REVENUES BY REGION
(in millions of euro)



H1 FY19



H1 FY18



ORGANIC GROWTH



EXTERNAL GROWTH



CURRENCY EFFECT



TOTAL GROWTH



Europe, USA and Asia



244



229



+8.2%



A



A



A



Latin America



186



184



+12.5%



A



A



A



BENEFITS & REWARDS SERVICES



430



413



+10.1%



+0.2%



-6.3%



+4.1%

In Europe, Asia and the USA, organic growth in revenues was +8.2% with solid growth in Western Europe and double-digit growth in Eastern and Southern Europe. Good momentum in the traditional benefits, Mobility and Health and Wellness activities is compensating weaker Incentive and Recognition activity. The launch of Rydoo, the new end-to-end Travel and Expense management system, was completed in June 2018 and the business development is very strong.Organic revenue growth in Latin America was +12.5%, reflecting a strong recovery in Brazil, with growth in volumes, solid new business wins and a slightly more moderate competitive environment, thanks to a much-improved economic environment. Growth in Mexico remains strong. AA

REVENUES BY NATURE
(In millions of euro)



H1 FY19



H1 FY18



ORGANIC GROWTH



EXTERNAL GROWTH



CURRENCY EFFECT



TOTAL GROWTH



Operating Revenues



394



377



+10.1%



A



A



A



Financial Revenues



36



36



+10.4%



A



A



A



BENEFITS & REWARDS SERVICES



430



413



+10.1%



+0.2%



-6.3%



+4.1%

In First Half Fiscal 2019, financial revenues growth was slightly better than operating revenues growth due to high interest rates in Turkey and an exceptionally high float in Romania since Q4 2018. Rates are stable in Brazil.Underlying operating profit Fiscal 2018 Underlying operating profit amounted to 647 million euro, up +3.1%, or +3.3% excluding the currency effect. As a result, the Underlying operating margin was 5.9%, down -20Abasis points relative to the previous year. Underlying Operating profit by activity

(in millions of euro)



UNDERLYING OPERATING PROFIT
H1 FISCAL 2019



DIFFERENCE



DIFFERENCE (EXCLUDING CURRENCY EFFECT)



UNDERLYING OPERATING PROFIT MARGIN
H1 FISCAL 2019



DIFFERENCE MARGIN



DIFFERENCE
IN MARGIN
(EXCLUDING CURRENCY
MIX EFFECT)



Business & Administrations



205



+0.4%



+1.3%



3.6%



-30 bps



-30 bps



Health Care & Seniors



162



+9.6%



+5.8%



6.3%



+20 bps



+20 bps



Education



215



+1.7%



-2.0%



8.9%



-60 bps



-70 bps



ON-SITE SERVICES



581



+3.3%



+1.2%



5.5%



-20 bps



-30 bps



BENEFITS AND REWARDS
SERVICES



125



+1.0%



+11.8%



29.1%



-90 bps



+30 bps



Corporate expenses
& Intragroup eliminations



(60)



+0.8%



+0.8%



A



A



A



UNDERLYING OPERATING PROFIT



647



+3.1%



+3.3%



5.9%



-20 bps



-20 bps

The performance by segment, excluding the currency effect, is as follows:

Business & Administrations: Underlying operating profit was up +1.3% but the operating margin decreased by -30 basis points. This performance reflects timing disparity between efficiency gains and spending to accelerate growth. The US Marine Corps renewal also weighed on margins due to the step down in value. This will pick up over the life of the contract.



Health Care & Seniors: Underlying operating profit was up +5.8% and the margin +20 basis points. The management team is progressively reinstalling discipline down through the organization in North America. Efficiency gains have been secured, and inflation is covered by pricing increases.



Education: Underlying operating profit fell by -2% and the margin by -70 basis points. This decline is due to start-up costs of the Yvelines Schools contract in January and more general contract churn, particularly in North America. The semester was also impacted by strikes in France and lower working days in North America. In Universities, inflation has been passed through to clients.

In Benefits &ARewards Services, excluding currencies, the Underlying operating profit and margin were up respectively +11.8% and +30 bps, benefiting from the strong recovery in volumes and the stabilization of interest rates in Brazil. Investments were also down in migration costs. Nevertheless, the year-on-year weakness of the Real has significantly impacted the published margin which is down -90 bps.Group net profitOther operating income and expenseOther operating income and expenses were 69 million euro versus 73 million euro in the previous year period. Restructuring costs in the First Half amounted to 19 million euro against only 7 million euro in the previous year, but proportionally in line with full year figures in Fiscal 2018. However, acquisition costs were much lower compared to the previous year period in which the Centerplate costs were accounted for. Amortization and depreciation of client relationships increased to 43 million euro against 31 million euro in First Half Fiscal 2018, due to further brand impairment for 24 million euro, after 16 million euro last yearAs a result, the Operating Profit was 578 million euro up +4.2%. Net financial expenses increased by 10 million euro year on year essentially due to the absence this year of the exceptional interest payment on the dividend tax reimbursement last year of 7 million euro. The remainder is due to higher average debt resulting from the acquisition of Centerplate in January 2018 and the share buy-backs last year. The blended cost of debt was 2.3% as of February 28, 2019, compared to 2.2% at the end of First Half Fiscal 2018.The effective tax rate of 28.8% does not include any exceptional elements, unlike the previous year First Half tax rate of 25.9% which benefited from the one-off reimbursement of dividend taxes. The current rate reflects the full effect of the reduction in the US tax rate, which took effect in January 2018.The share of profit of other companies consolidated by the equity method was 2AmillionAeuro. Profit attributed to non-controlling interests was 11 million euro against 7 million euro in the previous year. As a result, Group net profit was 364 million euro, down -2.3%, or -2.6% excluding the positive currency impact. EPS was a?2.50, down by only -0.4%, due to a lower share count as a result of the share buy-back in the previous fiscal year.
Underlying net profit (adjusted for Other operating income and expenses at a normalized tax rate) amounted to 413Amillion euro, up +4.1% or +4.3% excluding the currency effect. Underlying EPS was 2.84a?, up +6.2%.Consolidated financial positionCash flowsCash flows for the period were as follows:

(in millions of euro)



FIRST-HALF FISCAL 2019



FIRST-HALF FISCAL 2018



Operating cash flow



648



650



Change in working capital
excluding change in BRS financial assets*



(428)



(402)



Net capital expenditure



(205)



(123)



FREE CASH FLOW



14



125



Net acquisitions



(234)



(674)



Share buy-backs/ Treasury stock



12



(49)



Dividends paid to shareholders



(403)



(411)



Other changes (including scope and exchange rates)



32



(43)



(INCREASE)/DECREASE IN NET DEBT since August 31



(579)



(1,052)



*A Excluding change in financial assets related to the Benefits and Rewards Services activity (+a?55m in H1 Fiscal 2019 and a?(73)m in H1 Fiscal 2018).
Total change in working capital as reported in consolidated accounts:
in H1 Fiscal 2019: a?(373)m = a?(428)m+a?55m and in H1 Fiscal 2018 a?(475)m = a?(402)m+a?(73)m

Operating cash flow totaled 648 million euro, stable on the previous year. The increase in operating cashflow was offset by higher cash taxes, amounting to 64 million euro versus 46 million euro in the previous year, and higher net interest paid. Last year, both benefited from the exceptional dividend tax reimbursement, and associated exceptional interest payment. The traditional negative Working capital variation in the First Half of 428 million euro is principally due to the difference in activity levels between August 31 and February 28. In line with the Centerplate contract renewal campaign and enhanced retention in Education, net capital expenditure increased substantially to 205 million euro for the period, representing 1.9% of revenues, versus 123 million euro in First Half Fiscal 2018, or 1.2% of revenues. More than two thirds of this increase in investments is attributable to the Education and Sports & Leisure segments. Free cash flow was 14 million euro. The underlying performance on cash is solid given the significant increase in capital expenditure. Note that the Free cash flow last year was exceptionally high due to the dividend tax reimbursement and related interest payment which together amounted to around 50 million euro. Net acquisitions and disposals of subsidiaries returned to a more modest level at 234 million euro from the higher levels of the previous year linked the acquisition of Centerplate for a total of 610 million euro. The combination of increased capital expenditure, more modest acquisitions and the annual dividend which was held stable on a smaller number of shares, consolidated net debt rose during the year by 579Amillion euro to 1,839Amillion euro at February 28, 2019.Acquisitions for the period During the First Half Fiscal 2019, the Group completed four acquisitions:

CrA?ches de France, doubling the Groupa??s presence in the child-care market in France,



Novae Restauration, significantly enhancing the Groupa??s presence in the high-end catering market in Switzerland,



Pronep providing an entry point into the Brazilian home care market.



Alliancein Partnership in the UK, a specialist education caterer, reinforcing our focus on high quality, locally sourced and seasonal meals at competitive prices.

Total revenues generated by acquisitions during the period contributed 3.7% to growth in the First Half Fiscal 2019, influenced by the last months of the consolidation of Centerplate. The contribution in the next two quarters will be lower but is expected to be between 2 and 2.5% for the full year.Condensed consolidated statement of financial position
at February 28, 2019

(in millions of euro)



FEBRUARY 28,A2019



FEBRUARY 28,A2018



A



(in millions of euro)



FEBRUARY 28,A2019



FEBRUARY 28,A2018



Non-current assets



9,147



7,981



A



Shareholders' equity



3,999



3,343



Current assets
excluding cash



5,581



5,207



A



Non-controlling interests



46



34



Restricted cash
Benefits and Rewards



577



495



A



Non-current liabilities



4,615



3,956



Financial assets
Benefits and Rewards



458



465



A



Current liabilities



9,055



8,335



Cash



1,950



1,519



A



A



A



A



TOTAL ASSETS



17,714



15,668



A



TOTAL LIABILITIES AND SHAREHOLDERSa?? EQUITY



17,714



15,668



A



A



A



A



GROSS DEBT



4,753



4,062



A



A



A



A



NET DEBT



1,839



1,663



A



A



A



A



GEARING



45%



49%



A



A



A



A



NET DEBT RATIO



1.3



1.1

As a result of IFRS 9, effective since the beginning of Fiscal 2019, the Group now values its financial investments at fair value. As a result, the Groupa??s 19.6% stake in Bellon SA, Sodexoa??s controlling shareholder, and other financial assets have been revalued by 688 million euro. The value of the Bellon SA stake has been revised from the historic cost of 32 million euro to a fair value of 662 million euro as of February 28, 2019. For further information, please refer to note 6.2.2. to the Financial Statements.As of February 28,A2019, net debt was 1,839Amillion euro, representing a gearing of 45%, compared to 49% as of February 28,A2018, and a net debt ratio of 1.3, well within the Groupa??s target range of 1 to 2. Despite the seasonally higher level of debt at the end of the First Half of the year, the Groupa??s financial position remains strong. At the end of the period, the Group had unused lines of credit totaling 1.6 billion euro. The operating cash position totaled 2,914 million euro as of February 28, 2019, including bank overdrafts for 72 million euro. The Benefits & Rewards Services position was 2,171 million euro, including 577Amillion euro of restricted cash and 458 million euro of financial assets of more than three months.Subsequent events

On April 8, 2019, Sodexo announced the acquisition of The Good Care Group. With this acquisition, Sodexo is expanding its services in the UK live-in care market and will be ranked second nationally in the live-in care market and among the top five in the private-paid care market



As of March 4, 2019, Sodexo Inc reimbursed 150 million US dollars of a loan, at maturity, subscribed by American investors in 2014.

Related party transactions

The main related party transactions are presented in Notes 6.4.11 to the First Half Fiscal 2019 consolidated financial statements.

Main risks and uncertainties

The main risks and uncertainties are not materially different from those described in the Risk Management section of the Fiscal 2018 Registration Document file with the AutoritA des MarchAs Financiers (AMF) on November 22, 2018 except for litigations mentioned in note 6.4.12 of the First Half Fiscal 2019 consolidated financial statements.

Currency effect

Exchange rate fluctuations do not generate operational risks, because each subsidiary bills its revenues and incurs its expenses in the same currency. However, given the weight of the Benefit & Rewards business in Brazil, and the high level of the margins relative to the Group, when the Brazilian Real declines against the euro, it has a negative effect on the underlying operating margin due to a change in the mix of margins. Conversely, when the Brazilian Real improves, Group margins increase.



1a?=



AVERAGE RATE
H1 FY 19



AVERAGE RATE
H1 FY 18



AVERAGE RATE
H1 FY 19
VS. H1 FY18



REFERENCE RATE
FY 18



CLOSING RATE
H1 FY 19
AT 28/02/2019



CLOSING RATE
28/02/19
VS. 31/08/18



CLOSING RATE
28/02/19
VS. 28/02/18



U.S. DOLLAR



1.145



1.195



+4.4%



1.193



1.142



+2.1%



+6.5%



POUND STERLING



0.887



0.885



-0.3%



0.884



0.858



+4.5%



+2.9%



BRAZILIAN REAL



4.398



3.864



-12.1%



4.075



4.269



+13.8%



-7.8%

Note: Reference rate Fiscal 2018 is the average rate for Fiscal year 2018, used for organic growth calculation.Sodexo operates in 72Acountries. The percentage of total revenues and underlying operating profit denominated in the main currencies are as follows:

(H1a??19)



% OF REVENUES



% OF UNDERLYING OPERATING PROFIT



U.S. DOLLAR



43%



56%



EURO



26%



5%



UK POUND STERLING



8%



7%



BRAZILIAN REAL



5%



16%

The currency effect is determined by applying the previousAyeara??s average exchange rates to the currentAyear figures except in hyper-inflationary economies where all figures are converted at the latest closing rate for both periods when the impact is significant. As a result, for the calculation of organic growth of Benefits & Rewards in Argentina Peso figures for H1 FY 2019 and H1 FY 2018 have been converted at the exchange rate of 1a? = 44.045 ARS vs 44.302 ARS for FY 2018. Starting FY19 Venezuela is accounted for using the equity method. Consequently, Venezuela is no longer included in revenue. Inter-segment restatementsSince the beginning of Fiscal 2019, some contracts have been reallocated between segments. The major change was in some European countries, where after several years of restructuring, the business has now been segmented for the first time. As a result, the Hospitals and Seniors business is now reported in Health Care and Seniors while it was previously reported in Business & Administrations, as are all the non-segmented businesses.Given the low materiality of these changes, pro forma figures for FY 2018 are not required. FY 2019 organic growth and variations in UOP margin have been adjusted to take into account such changes.Below are the adjustments for these restatements for each quarter of Fiscal 2018.Alternative Performance Measure definitionsBlended cost of debtThe blended cost of debt is calculated at period end and is the weighted blended financing rate on borrowings (including derivative financial instruments and commercial papers) and cash pooling balances at period end.Financial Ratios Definitions

A



A



H1A2019



H1A2018



Gearing ratio



Gross borrowings(1)Aa?? operating cash(2)



45%



49%



Shareholdersa?? equity and nona??controlling interests



Net debt ratio



Gross borrowings(1)Aa?? operating cash(2)



1.3



1.1



Earnings before Interest, Taxes,ADepreciation andAAmortization (EBITDA)(3)

Financial Ratio Reconciliation

A



A



H1 2019



H1A2018



(1) Gross borrowings



Non-current borrowings



3,576



2,978



+ current borrowings excluding overdrafts



1,189



1,095



- derivative financial instruments recognized as assets



(13)



(12)



A



4,753



4,062



(2) Operating cash



Cash and cash equivalents



1,950



1,519



+ financial assets related to the Benefits and Rewards Services activity



1,035



960



- bank overdrafts



(72)



(81)



A



2,914



2,399



(3) Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA)



Operating profit



1,021



1,157



+ depreciation and amortization



347



296



A



1,368



1,453

Free cash flowPlease refer to the section entitled Consolidated financial position.Growth excluding currency effectThe currency effect is determined by applying the previousAyeara??s average exchange rates to the currentAyear figures except in hyper-inflationary economies where all figures are converted at the latest closing rate for both periods when the impact is significant. As a result, for the calculation of organic growth of Benefits & Rewards in Argentina Peso figures for H1 FY 2019 and H1 FY 2018 have been converted at the exchange rate of 1a? = 44.045 ARS vs 44.302 ARS for FY 2018. Issue volumeIssue volume corresponds to the total face value of service vouchers, cards and digitally-delivered services issued by the Group (Benefits and Rewards Services activity) for beneficiaries on behalf of clients.Net debtNet debt is defined as Group borrowing at the balance sheet date, less operating cash.Organic growthOrganic growth corresponds to the increase in revenue for a given period (the a??current perioda??) compared to the revenue reported for the same period of the prior fiscal year, calculated using the exchange rate for the prior fiscal year; and excluding the impact of business acquisitions (or gain of control) and divestments, as follows:

For businesses acquired (or gain of control) during the current period, revenue generated since the acquisition date is excluded from the organic growth calculation;



For businesses acquired (or gain of control) during the prior fiscal year, revenue generated during the current period up until the first anniversary date of the acquisition is excluded;



For businesses divested (or loss of control) during the prior fiscal year, revenue generated in the comparative period of the prior fiscal year until the divestment date is excluded;



For businesses divested (or loss of control) during the current fiscal year, revenue generated in the period commencing 12 months before the divestment date up to the end of the comparative period of the prior fiscal year is excluded.



For countries with hyperinflationary economies all figures are converted at the latest closing rate for both periods. As a result, for the calculation of organic growth of Benefits & Rewards in Argentina, all Peso figures for H1 FY 2019 and H1 FY 2018 have been converted at the exchange rate of 1a? = 44.045 ARS vs 44.302 ARS for FY 2018.

Underlying Net profit Underlying Net profit presents a net income excluding significant unusual and/or infrequent elements. Therefore, it corresponds to the Net Income Group share excluding Other Income and Expense and significant non-recurring elements in both Net Financial Expense and Income Tax Expense where relevant. Underlying Net profit per share Underlying Net profit per share presents the Underlying net profit divided by the average number of shares.Underlying operating profit margin The underlying operating profit margin corresponds to Underlying operating profit divided by revenuesUnderlying operating profit margin at constant rates The underlying operating profit margin at constant rates corresponds to Underlying operating profit divided by revenues, calculated by converting H1A2019 figures at FY 2018 rates, except for countries with hyperinflationary economies.2

A



A



A



A



CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS



A



A



A



A



CONSOLIDATEDAINCOME STATEMENT



(in millions of euro)



NOTES



FIRST-HALF
FISCAL 2019



FIRST-HALF
FISCAL 2018



REVENUES



6.3



11,045



10,293



Cost of sales



6.4.6



A(9,417)



(8,706)



GROSS PROFIT



A



1,628



1,587



Administrative and Sales Department costs



6.4.6



(981)



(964)



Share of profit of companies consolidated by the equity method
that directly contribute to the Groupa??s business



A



-



5



UNDERLYING OPERATING PROFIT



A



647



627



Other operating income



6.4.7



3



7



Other operating expenses



6.4.7



(72)



(80)



Operating profit



6.3



578



554



Financial income



6.4.8



19



27



Financial expense



6.4.8



(73)



(71)



Share of profit of other companies consolidated byAtheAequity method



A



2



1



PROFIT FOR THE PERIOD BEFORE TAX



A



526



511



Income tax expense



6.2.3 and 6.4.9



(151)



(131)



PROFIT FOR THE PERIOD



A



375



380



Of which:



A



A



A



Attributable to non-controlling interests



A



11



7



PROFIT ATTRIBUTABLE TO EQUITY HOLDERS OFATHEAPARENT



A



364



372



BASIC EARNINGS PER SHARE(in euro)



6.4.10



2.50



2.51



DILUTED EARNINGS PER SHARE (in euro)



6.4.10



2.46



2.47



CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME



(in millions of euro)



FIRST-HALF
FISCAL 2019



FIRST-HALF
FISCAL 2018



PROFIT FOR THE PERIOD



375



380



Components of other comprehensive income
that may be reclassified subsequently to profit or loss



A



A



Financial assets reassessed at fair value through OCI



126



2



Change in fair value of Cash Flow Hedge instruments



A



A



Change in fair value of Cash Flow Hedge instruments reclassified
to profit or loss



A



A



Currency translation adjustment



210



(119)



Currency translation adjustment reclassified to profit or loss



A



A



Tax on components of other comprehensive income
that may be reclassified subsequently to profit or loss



A



A



Share of other components of comprehensive income (loss) ofAcompanies
consolidated by the equity method, net of tax



1



(1)



Components of other comprehensive income
that will not be reclassified subsequently to profit or loss



A



A



Remeasurement of defined benefit plan obligation



(2)



A



Tax on components of other comprehensive income
that will not be reclassified subsequently to profit or loss



(17)



A



TOTAL OTHER COMPREHENSIVE INCOME (LOSS), AFTER TAX



318



(118)



COMPREHENSIVE INCOME



693



262



Of which:



A



A



Attributable to equity holders of the parent



681



256



Attributable to non-controlling interests



12



7



CONSOLIDATED STATEMENT OFAFINANCIALAPOSITION

Assets

(in millions of euro)



NOTES



FEBRUARY 28, 2019



AUGUST 31, 2018



NON-CURRENT ASSETS



A



A



A



Property, plant andAequipment



A



687



619



GoodwillA



6.4.2



6,049



5,664



Other intangible assets



A



698



704



Client investments



A



589



558



Companies consolidated by the equity method



A



87



83



Financial assets



A



893



190



Derivative financial instrument assets



6.4.4



2



A 3



Other non-current assets



A



19



A 18



Deferred tax assets



A



124



A 105



Total non-current assets



A
See also:
Leave a comment
News
  • Latest
  • Read
  • Commented
Calendar Content
«     2019    »
1234567
891011121314
15161718192021
22232425262728
2930