Thank you. Good morning. Welcome to this webcast organized this morning following the announcement that we've just made with regards to our planned acquisition of Ordina. I'll be leading this meeting with Etienne du Vignaux, Group CFO, and I'd like to suggest that we go over the main components of the transaction, and then we'll have a Q&A session afterwards. First of all, a few words on the transaction context, which we're delighted to present this morning. This is obviously a strategic milestone for Sopra Steria. On the 21st of March, 2023, we signed a Merger Protocol with Ordina in order to acquire 100% of ordinary shares, making up the company's capital. The offer price stands at EUR 5.75 per share, which represents a total value of EUR 480 million for 100% of shares.
This offer is unanimously supported by the board at Ordina and the Dutch Legal Foundation that has a priority share. Irrevocable commitments from the part of the two key shareholders who represent 26% of capital has been signed, they will tender their shares to the public offer that Sopra Steria is launching for Ordina shares. It's a transaction that is subject to the usual approvals from authorities, the European Commission and the Netherlands Authority for the Financial Markets, this should be finalized in the fourth quarter of 2023. Ordina. If we take a look at them, it's a historical recognized player in digital services in the Benelux, a company that was created in 1973.
It employs over 2,800 people listed in the Netherlands, where it generates two-thirds of its turnover, and it is also present in Belgium and then Luxembourg, where it generates a third of its revenues. Present in the public sector. Public sector customers represent 43% of its business. Financial services, which represent 26% of its revenues. It's also present in utilities, transport and life science. So it is a good performing company. Revenue of EUR 429 million in 2022, 8.9%. Average growth since 2020 is approximately 8%. Operational margin between 8% and 9% between 2020 and 2022, and net profit of 5.6% of revenues in 2022.
The company is not in debt and generates solid free cash flow with a transformation rate, a conversion rate of 77%. The planned acquisition of Ordina will enable us to create a leading player in digital services in the Benelux, very close to top 10 with revenues of, pro forma revenues of EUR 700 million and employees, 4,000 employees distributed over the Netherlands and Belgium, helping us to reach a critical mass in Belgium with. We've got the market, which represents significant growth potential. Growth in the IT services market is expected to be at 8% over the coming years.
We look at the size of the market, the weighting of the customers in the public sector, public sector and financial services are also significant. This is an important area of development for Sopra Steria. The merger will give us access to greater business and greater and more significant business potential. One of Sopra Steria's strategic thrusts is European expansion so that we can develop our market share in geographical regions where there's strong potential for growth. This is a necessary area so that we can reinforce the strategic relationships that we have with our targeted customers, also our capacity to recruit talent, obviously drawing on a very strong employer brand.
The Ordina acquisition addresses this twofold target, and obviously, it's got a very credible positioning in sovereignty and digital trust. It will balance out the group's geographical portfolio with a pro forma basis. Benelux will then become the third-largest geography for Sopra Steria. The revenue for Sopra Steria, including recent acquisitions of CS Group and Tobania, and this planned acquisition will be distributed as follows. We'll have 39% in France, 15% in the U.K., 11% in the Benelux, 8% in Scandinavia, 7% in Germany, 8% in the rest of Europe, and then 12% for software activities. This geographical expansion is fully aligned with the group's strategy. Focus on strategic customers, establishing long-term relationships, concentrating on strategic vertical markets.
Ordina generates most of its business in the public sector, in financial services, and then utilities and transport. It's positioning as a partner in our customers' digital transformation, supporting digital sovereignty and trust, and then obviously a focus on local proximity with customers. Etienne du Vignaux?
Thank you. Just a couple of words on the complementarities of this transaction. The merger of these two entities, Ordina and Sopra Steria, will have significant complementarities from a business and operational point of view. First of all, critical mass will be reached in public sector, defense and security, financial services. Transport will enable us to access more significant business potential. Ordina client base will benefit from Sopra Steria's end-to-end capacities, so hybrid cloud, cybersecurity and Sopra Banking Software solutions.
Its customers will also have access to the group's delivery model support, offshore India, Poland, Spain. The merger of the two entities will strengthen hiring capability and operational efficiency. Out of a full year, on a recurring basis, we're expecting EUR 10 million of synergies, complementarities, operational complementarities over two years. Now let's go to the Q&A section. Thank you.
Ladies and gentlemen, if you'd like to ask a question, press on the star key on your telephone keypad. The star key to ask a question. We have a 1st question from Nicolas David from Oddo.
Good morning. My first question is could I have details on the synergies or the complementarities we're talking about, margin, and not necessarily top line. Could you comment, this item, perhaps the amounts are not that high, so could we have some more details beyond two years? A second question is, what are the assumptions that you're making in terms of financing costs at this stage? The last question, with this operation, can we consider that you're going to have a break, a break in terms of M&A for the next year, or are you still looking at targets?
With regards to the complementarities, EUR 10 million, it regards margin. We're not talking about revenue here in this figure. We're confident that we'll be able to hit this two years after closing the transaction. With regards to the financing costs, today, as indicated, the group has the capacity to finance this transaction.
The group, in addition to its cash, it has got credit facilities of EUR 1.1 million. This doesn't impact the group's debt position. Obviously this is something that we're studying. With regards to next steps, with regards to your last question, Nicolas, obviously we have to digest the acquisitions that have been announced, so CS, Tobania and now Ordina. We have to secure the integration and at the same time, we remain alert to market opportunities focused on our M&A strategy, which supports the company's strategy. There might be some small acquisitions which reinforce us in terms of expertise or positioning in various sectors. Obviously we're going to digest the acquisitions that we've made.
With regards to revenue synergies, do you not want to announce the amount or? Revenue synergies, we feel that we're capable of generating very good business synergies. We're remaining cautious, but obviously we'll be building this up, and in the public sector, in Financial Services, utilities and transport, there are clearly very advantageous synergies which we should leverage through this transaction.
Thank you. Very clear. Good luck for this transaction.
Ladies and gentlemen, if you'd like to ask a question, please press star one on your telephone keypad. We have a question from Laurent Daure from Kepler Cheuvreux.
Thank you. Good morning, Cyril, Etienne. I have got two questions this morning. The first one is on Ordina's profitability. They're between 8% and 9%, but struggling to generate a higher margin. That's kind of the observation that we made when we look at this company in terms of margin. Now, my next question, in terms of the vertical and finance, could we have a few more details in terms of the customer portfolio? Obviously we're focused on the financial services vertical in the coming quarters. From this point of view, are you reassured?
Good morning, Laurent. With regards to margin, clearly there's two factors here. There's the synergies which Etienne du Vignaux has mentioned. That's the first part of the answer. The second part of the answer is that Ordina's strategy, which involves being a trusted IT partner, moving to a digital business partner.
They've started working in Belgium, and that's going to be rolled out in the Netherlands. This means that we're expecting the margins to increase in the Netherlands significantly. Beyond the operation with Sopra Steria. If we look forward two, three years, we think that we can reach an operational margin above 10% in this region. With regards to financial services, Well, Ordina is working with Dutch banks and Belgian banks, which are large international groups. We can talk about names like ABN AMRO, Rabobank, BNP. With these banks, they've established a long-term relationship. Obviously this is something that we looked at given the context of this transaction. We're not gonna have an excessive amount of confidence, but what we've seen has reassured us.
With regards to margin, is there a big disparity between the geographical regions?
Yes, there is a gap. There's a bit of a gap. I'm not gonna say a big gap. Obviously, we see this gap where they've rolled out their strategy in one region compared to another. There is potential for improvement for the Netherlands.
In Belgium, they've got double-digit margin.
Yes. Yes, absolutely.
Okay, merci.
Thank you.
We've got the next question from Derric Marcon, Société Générale.
Good morning, gentlemen. Thank you for taking my question. I've got a few questions. The first one is on customer strategy. Sopra Steria has got a focused customer strategy, focused on a certain number of customers. Is this the same at Ordina?
How will you manage differences if there are any? Talk about your top ten or your customer focus. How does it work at Sopra Steria and Ordina? Business split for Ordina, could you give us a few details? The weighting of consulting, infrastructure management, or do they just have application management? How have they progressed with the cloud platforms? My next question is more about the market. Think about your competitors in this region. They're describing the market, the Dutch market as being a little bit different to the other markets in Europe with platforms. There's body shopping going on on this market. A project offering which is obviously supported by global players or Indian players.
How do you see this market and its specific features compared to the rest of your geographical regions? The next question, offshore, nearshore delivery. Do they have any facilities here?
With regards to customer strategy, just a few bits of information. Their strategic customers represent almost half of their revenue. They have a well-founded relationship with their customer, deeply rooted relationship. Their churn rate is very close to zero, approximately 3%, that's significant. They're working with a long-term approach. We see our fundamental values reflected here as well. I've mentioned some major global banks, talking about major governmental departments as well.
We think their positioning is very close to our company's positioning, and what we want to be in Belgium as well. We feel that we're well aligned. In terms of the business mix now, Ordina is very digital. They're moving from development, they're developing high added value digital solutions, so a lot of expertise in low code/no code. This obviously supplements Sopra Steria's expertise in this domain. Business consulting is quite small at Ordina, but this is one of the strategic areas for development so that we can roll out squads, so business and digital squads for our customers so that we can roll out solutions with a very quick go-to market. Infrastructure management is also very small, almost zero, but.
I don't know all the figures, but almost zero. We've got expertise and niche expertise and solution expertise. The Dutch market now, yes, we've looked at this very closely. Yes, there are Indian players, but this also applies to Germany, but there are longstanding traditional players as well. We've got Capgemini, number one player. This is a traditional player as well. There are other major logos as well. We feel that it is a market that is one of the most mature in Europe, digital market. So this is gonna help the group ramp up its capacities in Europe. That's what we can say about the market. Last question with regards to onshore.
Today, Ordina is positioned as a local player, hasn't rolled out onshore capacities, and this is one of the levers, advantageous levers that we can activate in the coming months.
Can I have another question on the transformation plan? Starting with Belgium, which is being rolled out in the Netherlands, why didn't they do it the other way around? Is it the size? Is it easier to start in one region, or did they want to test in Belgium, see what would happen? Or was this a managerial question? Perhaps they had less skills at a given time in one of the areas.
I think they had a very pragmatic approach. They had a mix between teams and customers. I think it was rolled out quite naturally.
Thank you.
Thank you.
Ladies and gentlemen, a reminder, if you have any questions, please dial star button on your keypad. We have a question from Emmanuel Parot from Gilbert Dupont. Over to you. Could you speak into your microphone?
Can you hear me now?
Yes.
Okay. Good morning, if you can hear me. I had a question on Ordina's business with ministerial departments. Could you give us a little bit more detail in terms of the offering that they have in the public sector? Okay, is this comparable to what you're doing in the U.K.? That was my question.
We've got a very digital positioning that's quite interesting to highlight. With ministerial departments, we've got strong positioning with the police force, very strong to what we're doing in the U.K. Not just the U.K., in Belgium as well, it's very close, very close to what we're doing in France. That's quite an interesting factor. We are addressing matters which are close to what the group is addressing. This is an interesting area to leverage, join forces so that we can replicate this approach in other geographies. We're quite close to what Sopra Steria is doing.
Okay. In terms of profitability- Are there different levels of profitability between public and private customers?
No. No, it's quite close. Okay.
Okay. Thank you.
Are there any more questions?
An important question was, were you alone in this procedure? How was this organized? Was the company flagged by industry, consultancy firms? Was there a bidding process set up? Is this a discussion that come along? Do you know if you're competing with other players?
The company made an announcement last week saying that they were assessing various non-binding offers last week. We have submitted a binding offer at the end of the week, and we came to an agreement today. This is the result of a process which is structured and followed by the board of directors of Ordina, but we weren't alone in this procedure.
Thank you, gentleman.
Another question from Laurent Daure, Kepler Cheuvreux.
Just one question, a detail on what is the profile of the engineers that Ordina has in terms of seniority? What is the staff attrition rate?
Average age is very similar to Sopra Steria. In terms of HR, we've also seen our fundamental values reflected in the company. In terms of the HR pyramid, we're reassured. In terms of attrition market level, no specific issues here in terms of attrition.
Okay. Merci.
Thank you.
Thank you. Ladies and gentlemen, we've got no questions. I'll hand the floor back to Cyril Malargé for the conclusion.
Thank you. Just as a summary, I think Etienne will come back to the process and a few key items. Just as a summary, we're obviously very happy to announce this acquisition. We're confident that it shall be completed even if we have to run through the usual steps, approval from the European Commission in terms of competition. You've got the detailed schedule in the presentation, with settlement expected Q3, Q4 of this year. We're confident that this transaction will be completed. Thank you, Etienne. Thank you everybody for connecting this morning. This obviously reflects the interest that you have in Sopra Steria, and we're very happy to initiate this planned acquisition. I hope you have a very nice day. Thank you and goodbye.