Fiscal 2021 Universal Registration Document

The significant step-up in the underlying operating margin since the second half Fiscal 2020 at -1.5% reflects the improvement in activity levels, very tight cost control, numerous contract renegotiations in the On-site activities, more active portfolio management, and the contribution from the GET efficiency program.

The GET efficiency program has provided a significant improvement in profitability. Half was aimed at protecting the gross profit margin by adapting On site costs to the new post-Covid levels of activity and to compensate for the end of government aid. The other half of the program was aimed at structurally reducing SG&A for the long-term by simplifying the structures in the Group, to free up capacity to invest in growth and to enhance margins.

At the end of Fiscal 2021, the GET program had cost 312 million euro and generated 218 million euro of savings, with a cash impact of 217 million euro. For Fiscal 2022, there will be further exceptional costs of 18 million euro linked to a few initiatives having continued past the year end, significant further savings of 176 million euro and cash-out of 93 million euro.

The program which ends in Fiscal 2022, should exceed expectations in terms of cost reduction as the total amount is estimated at 394 million euro, 44 million euro above target, and the ratio of savings to costs is expected to be 119%, above the target of 100%.

At current rates, Fiscal 2021 On-site Services underlying operating profit was up +1.8% and the margin rose to 2.9%, up +30 bps compared to the previous year. The margin was relatively stable between the first half at 2.9% and the second half at 3%, despite the traditional profitability gap.

The performance by segment at constant rates is as follows:

• Business & Administrations underlying operating profit increased by +6.5% and the operating margin was up +20 bps at 1.2%. This represents a significant improvement in margins since the beginning ofthe pandemic, from -3.3% in second half Fiscal 2020, to 0.4% in first half 2021 and 1.9 % in the second half. This improved performance reflects positive margins in most sub-segments, and in particular in Energy & Resources and Government & Agencies which are both ahead relative to Fiscal 2019 . Only Sports & Leisure is loss-making due to incompressible fixed costs and very low volumes, until the fourth quarter ;
• in Healthcare & Seniors, the +10.7% increase in underlying operating profit led to a +40 bps increase in the margin which reached 6.5%, only 10 bps below the level in Fiscal 2019. Net new business has been positive on margins and costs have been strictly controlled, compensating the absence of retail sales ;
• in Education, underlying operating profit was up +6.2% and the margin by +30 bps to 2.4%, reflecting strict cost management and contract renegotiations. The margin seasonality remained very significant. The return to higher margins is dependent upon the full reopening of Schools and Universities in North America, which started in August 2021.
• in Benefits & Rewards Services, underlying operating profit was down -7.8%, but up +5.9% excluding currency impacts. The margin was 25%, down -120 bps, due to the currency mix effect of the weakness in particular of the Brazilian real, but up +40 bps at constant rates. In the first half, the margin had started to recover strongly from 20.8% in the second half of Fiscal 2020 to 23.6% in the first half Fiscal 2021, with a further increase to 26.2% in the second half. The progressive pick-up in margins during the year reflects the progressive pick-up in revenues.