SII : Interim management report fiscal 2022/2023

Interim management

report

Fiscal 2022

2023

1st Half Period to

September 30, 2022

Contents

1	INTERIM MANAGEMENT REPORT, 1ST HALF FISCAL 2022-2023
(PERIOD FROM APRIL 1ST TO SEPTEMBER 30, 2022)	3
1.1	A word from the chairman of the Management Board	4
1.2	Observations relating to the period's business and highlights of the period	4
1.3	Group performances	5
1.4	Fiscal 2022-2023 first half results	7
1.5	Risks	8
1.6	Information concerning related-party transactions	8
1.7	Outlook	8
1.8	Post closure events	8

2	CONSOLIDATED FINANCIAL STATEMENTS ON 9/30/2022	9
2.1	Consolidated financial statements	10
2.2	Comprehensive consolidated income statement	11
2.3	Consolidated cash-flow statement	12
2.4	Consolidated statement of changes in equity	13
2.5	Accounting principles	13
2.6	Significant accounting methods	14
2.7	Consolidated entities	18
2.8	Intangible assets	19
2.9	Goodwill	20
2.10	Tangible assets	21
2.11	Right-of-use and lease liabilities	22
2.12	Other financial assets	23
2.13	Deferred tax assets and liabilities	24
2.14	Operating receivables	25
2.15	Assets and liabilities related to customer contracts	26
2.16	Other current and non-current assets	26
2.17	Cash and cash equivalents	26
2.18	Issued capital and reserves	27
2.19	Financial liabilities and debt	28
2.20	Provisions	29
2.21	Operating liabilities	30
2.22	Other current liabilities	30
2.23	Payroll expenses	31
2.24	Depreciation and amortization expenses	31
2.25	Additions to provisions	31
2.26	Other non-current operating expenses	31
2.27	Net financial income	32
2.28	Tax expenses	32
2.29	Earnings per share	33
2.30	Segment reporting	34
2.31	Off-balance sheet commitments	34
2.32	Events subsequent to the end of the period	35
2.33	Average headcount	35
3	AUDITORS' REPORT	36
4	STATEMENT BY THE PERSON RESPONSIBLE FOR THE INTERIM FINANCIAL REPORT	38

This document is a full free translation of the original French text. In case of discrepancies, the French version shall prevail.

Interim1 management

report,

1st Half

Fiscal 2022-2023

(Period from April 1st to September 30, 2022)

1.1	A word from the chairman of the Management Board	4
1.2	Observations relating to the period's business and highlights of the period	4
1.3	Group performances	5
1.4	Fiscal 2022-2023 first half results	7
1.5	Risks	8
1.6	Information concerning related-party transactions	8
1.7	Outlook	8
1.8	Post closure events	8

1.1. A word from the chairman of the Management Board

The first half of the 2022-2023 financial year has been in line with the previous one: performance has been extremely good. The work carried out by our teams in France and abroad made it possible to post excellent performances both in terms of business and results.

This momentum was achieved in a favourable environment, driven by our clients' trust and our employees' dedication. These results have fully confirmed the suitability of the SII group's strategy.

In spite of the current macroeconomics environment, which significantly reduce our ability to

Eric Matteucci anticipate the future, we are entering the second half of the year with confidence and enthusiasm. Chairman of the

Management Board

1.2. Observations relating to the period's business and highlights of the period

The SII Group posted revenue of €477.2 million for the first half of the 2022-2023 financial year, up 26.8%. With the exception of Spain, all geographical entities contributed to this performance, even though the basis for comparison was high. This performance was driven by an activity rate at its highest level in nearly three years, and all the teams delivering excellent sales performance.

In France, despite one fewer working days, sales increase by 13% to €199.2 million. The performance was driven by an activity rate at its highest level (91%) and a growing number of staff during the period. It is also supported by all the sectors in which the SII Group operates.

Outside France, organic growth reached an exceptional level of 40.6%. Revenue for the first half of the year reached €278.1 million. Poland, the largest contributor to international sales, grew by 40.1%. All countries with the exception of Spain, which is currently being restructured with the closure of some unprofitable activities, reported growth over the half-year. Germany returned to strong growth (at 34.5% over the period) as a result of continued synergies with the group and a rebound in activity in the industrial sectors. Other countries such as Romania, Chile, Canada and Czech Republic experienced growth beyond expectations.

Overall, all sectors showed strong growth. The Aerospace- Space-Defence sector, which contributed 20.4% of turnover, posted a 21.4% increase in activity. The Banking- Insurance sector, driven in particular by the challenges of innovation and transformation, grew by over 17.7%. The Energy and Telecoms sectors grew by 32.6% and 9.6% respectively. Other businesses (Industries, Services, Healthcare, Retail, Automotive and Transportation) experienced very strong growth (+42.9%).

This first half-year ended with an increase in workforce, with 10,475 employees (average of the period) compared to 9,434 for the entire previous fiscal year. The SII Group adapted its pace of hiring in line with eh strong demand. During the period, the group continued its efforts to maintain a high quality of life at work for its employees, whether telecommuting or on site, and to enhance the skills of its teams. On the other hand, the staff turnover is up compared to the same period of the previous fiscal year (28.0% vs 22.5%).

At the end of September 2022, the SII Group delivered an operating profit of €44.52 million. The operating margin was 9.3%. In France, even with an improvement of the AREH, the operating margin was down to 4.91% (5.85% at the end of September 2021), due to the continued investments and the difference between the growths of wages and sales prices. Internationally, the operating margin is stable at 12.49% (12.46% at the end of September 2021) thanks to the performance of Poland and the improvement of the operational margin in each countries where the group is.

After taking into account the financial result and taxes, the net result amounted to €34.9 million, i.e. a net margin of 7.3%.

The SII Group has a solid financial structure to support its development. As of September 30, 2022, the balance shows a net cash position of €121 million (excluding IFRS 16 lease liabilities) compared to €128.6 million at March 31, 2022. Shareholders' equity stood at €237.8 million compared to €219.1 million at March 31, 2022.

4	Groupe SII - Interim management report - 30 Septembre 2022

1.3. Group performances

1.3.1. Half year financial highlights, consolidated in accordance with IFRS

1

In €m,	2021-2022	2022-2023	Change
Period to September 30	H1	H1
Revenue	376.31	477.28	+26.8%
Operating income	35.22	44.52	+26.4%
Net operating margin	9.36%	9.33%	-0.03 pt.
Net income after minority interest	27.89	34.78	+24.7%
Average headcount	8,976	10,475	+1,499
Headcount at the end of period	9,348	10,741	+1,393

1.3.2. Half year financial highlights of French operations, consolidated in accordance with IFRS

In €m,	2021-2022	2022-2023	Change
Period to September 30	H1	H1
Revenue	176.34	199.18	+12.95%
Operating income	10.31	9.79	-5.08%
Average headcount	4,198	4,647	+449

1.3.3. Half year financial highlights of international operations, consolidated in accordance with IFRS

In €m,	2021-2022	2022-2023	Change
Period to September 30	H1	H1
Revenue	199.96	278.11	+39.08%
Operating income	24.91	34.74	+39.43%
Average headcount	4,778	5,828	+1,050

1.3.4. Revenue breakdown by sector

Customers present on a
multitude of markets	20.4%
	vs 21.5% in H1 2021-2022
Industries (8.3%)	Aerospace
Services (7.6%)	Space
Healthcare (6.7%)	Defence
Retail (5.1%)
Automotive (4.6%)
Transportation (3.7%)	18.5%
42.2%
vs 20.1% in H1 2021-2022
vs 37.6% in H1 2021-2022	Banking

Insurance

6.7%	12.2%
vs 6.5% in H1 2021-2022
vs 14.3% in H1 2021-2022
Energy
Telecom
	& Media

Groupe SII - Interim management report - 30 Septembre 2022

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