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Sodexo: Fiscal 2023 Results above guidance, Pluxee full spin-off expected early 2024
Issy-les-Moulineaux, October 26, 2023
Sodexo (NYSE Euronext Paris FR 0000121220-OTC: SDXAY)
Strong Group performance
Pluxee full spin-off and listing expected early 2024, subject to customary steps and market conditions
At the Board of Directors meeting held on October 25, 2023, chaired by Sophie Bellon, the Board closed the Sodexo Consolidated accounts for Fiscal 2023 ended August 31, 2023.
In the context of the spin-off, Pluxee has been classified as a discontinued operation in the Fiscal 2023 Sodexo consolidated financial statements.
Fiscal 2023 key figures and highlights
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For the purposes of clarity, Group includes Pluxee before classification as discontinued operation.
Before classification as discontinued operation and reported as part of the Sodexo group
Sodexo Chairwoman and CEO Sophie Bellon said:
“In Fiscal 2023, we have made good progress in the execution of our strategy which confirms the momentum of the last 2 years. We are on track to recover agility and profitable growth. Everyday, the transfer of operational accountability in the regions enables faster decision-making and increased mutualization.
The North American recovery is coming through, with solid growth in volumes, good commercial momentum and enhanced operational execution.
The transformation of our food offers is progressing in all geographies along with our approach to grow more selectively our FM business, which is now visible in contract signings.
Our perseverance on client retention is consistently paying off with another record year at 95.2%, and I am confident that in time, we will further raise the bar to 96%.
The Pluxee full spin-off is expected to be completed early 2024.
And we have continued to actively manage our portfolio with for example the recently announced sale of the Homecare activities.
I would like to warmly thank our teams for this strong year. Thanks to their hard work and unprecedented engagement, we exceeded our guidance while executing at pace on our strategy. We are set up to continue to achieve solid and profitable growth and to deliver on our ambition to be the leader in sustainable food and valued experiences at every moment in life: learn, work, heal and play.”
Sodexo Fiscal 2023 key figures and highlights
(with Pluxee as discontinued operation)
Given the proximity of the Pluxee spin-off and the support from Bellon SA for the operation, Pluxee is accounted for as a discontinued operation and therefore is consolidated in the P&L at the net profit level. As a result, the commentary down to net profit includes only the Sodexo continued operations.
By geography, for the full year:
CSR results mirror the good financial performance
In Fiscal 2023, Sodexo's solid financial performance was accompanied by continued progress on its sustainability commitments:
Sodexo Governance
At the Shareholders meeting on December 15, 2023, the following renewals and appointments will be proposed:
Sodexo* Outlook
*excluding Pluxee
Given the strategic progress made in Fiscal 2022 and 2023, Sodexo is on track to pursue its recovery in North America, enhance efficiency and agility, continue to transform the food offers and operations and grow selectively in Facilities Management. Commercial excellence, data and digital investments and supply management support, will all contribute to better commercial momentum and better margins.
The Underlying revenue organic growth exit rate in the fourth quarter of Fiscal 2023 was over +10%.
With continued inflation being passed through, pricing is expected to average out at 3-4% for Fiscal 2024. The contribution from net new business should be above 2%, amplified by cross-selling.
As a result, Sodexo (excluding Pluxee) Fiscal 2024 and 2025 guidance:
Pluxee full Spin-off
The project to spin-off Pluxee has advanced significantly.
The listing is expected early 2024 on Euronext Paris, subject to approval of the listing prospectus by the Dutch Authority for the Financial Markets ( Stichting Autoriteit Financiële Markten ) and its passporting to the French Autorité des marchés financiers, the Euronext admission decision and market conditions.
Existing double voting rights of Sodexo shareholders will be maintained at Pluxee, which will be legally registered in the Netherlands allowing Bellon SA to continue playing a long-term controlling shareholder role in Pluxee. Tax residency will remain in France.
The proposed full spin-off will be put to a shareholder vote during a dedicated General Meeting to be held early 2024.
Pluxee plans to hold a Capital Markets Day shortly before the dedicated General Meeting to present its strategic plan and the next phase of value creation. The Fiscal 2024 and mid-term guidance will be provided on this occasion.
The spin-off will have no significant tax impact for Sodexo and its shareholders, at least in France and in the USA.
Pluxee will be allocated a portion of Sodexo's current indebtedness for a total amount of 0.6 billion of euros and Pluxee proforma capital structure will be consistent with a strong Investment Grade credit rating.
The Board of Pluxee will be comprised of:
The Animation (services) contract between Bellon SA and Pluxee will be similar to that of Sodexo.
BNP Paribas, Citigroup, J.P. Morgan and Société Générale are acting as Lead Equity Capital Market Advisors to Sodexo and Pluxee, and Goldman Sachs and Natixis are acting as Other Equity Capital Market Advisors, in the contemplated listing of Pluxee.
The Group has signed 2 new banking facilities for Pluxee to ensure it has a solid and flexible financing structure in place post the listing. These comprise a €650m 5-year Revolving Credit Facility and a €1.5bn 12-month Bridge Facility. The RCF facility will provide liquidity headroom for Pluxee. The bridge facility will be used to repay existing intercompany debt, and is intended to be refinanced by a bond market issuance in due course and subject to market conditions. BNP Paribas and Société Générale are acting as Coordinators, Mandated Lead Arrangers and Bookrunners, and each of Banco Santander, S.A., Citibank, N.A., London Branch, J.P. Morgan SE, Crédit Industriel et Commercial and ING Bank N.V., French Branch are acting as Mandated Lead Arrangers.
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Conference call
Sodexo will hold a conference call (in English) today at 9:00 a.m. (Paris time), 8:00 a.m. (London time) to comment on its Fiscal 2023 results.
Those who wish to connect:
Access Code: 07 26 13
A live audio webcast is also available on www.sodexo.com.
The press release, presentation and webcast will be available on the Group website www.sodexo.com in both the “Newsroom” section and the “Investors – Financial Results” section.
Sodexo Fiscal 2024 financial calendar
These dates are indicative and may be subject to change without notice. Regular updates are available in the calendar on our website www.sodexo.com
About Sodexo
Founded in Marseille in 1966 by Pierre Bellon, Sodexo is the global leader in sustainable food and valued experiences at every moment in life: learn, work, heal and play. The Group stands out for its independence, its founding family shareholding and its responsible business model. Its portfolio of activities includes Sodexo Food and Facilities Management Services and Pluxee Employee Benefit Solutions, activity for which the Group announced a spin-off and listing project in early 2024. This diversified offer meets all the challenges of everyday life with a dual goal: to improve the quality of life of our employees and those we serve, and contribute to the economic, social and environmental progress in the communities where we operate. For Sodexo, growth and social commitment go hand in hand. Our purpose is to create a better everyday for everyone to build a better life for all.
Sodexo is included in the CAC Next 20, CAC 40 ESG, CAC SBT 1.5, FTSE 4 Good and DJSI indices.
Sodexo Key figures
Disclaimer
This press release contains forward-looking statements, including on the proposed spin-off and listing of Benefits & Rewards Services. Forward-looking statements give the current expectations and projections of Sodexo relating to its financial condition, results of operations, plans, objectives, future performance and business. These statements may include, without limitation, any statements preceded by, followed by or including words such as “target,” “believe,” “expect,” “aim,” “intend,” “may,” “estimate,” “plan,” “project,” “will,” “should,” “would,” “could” and other words and terms of similar meaning. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond Sodexo' control that could cause the Sodexo' actual results, performance or achievements to be materially different from the expected results, performance or achievements expressed or implied by such forward-looking statements. These risks and uncertainties include those discussed or identified under section 6.4.3 of the Universal Registration Document of Sodexo, filed with the French Autorité des marchés financiers (AMF) on 9 November 2022 and available on the Company's website (www.sodexo.com) and the AMF's website (www.amf-france.org). Such forward-looking statements are based on numerous assumptions regarding Sodexo' present and future business strategies and the environment in which it will operate in the future.
Accordingly, readers of this press release are cautioned against relying on these forward-looking statements.
These forward-looking statements are made as of the date of this press release. This press release does not contain or constitute an offer of securities for sale or an invitation or inducement to invest in securities in France, the United States or any other jurisdiction.
In advance of the spin-off, Pluxee will publish a prospectus that has been approved by the Dutch Authority for the Financial Markets (Stichting Autoriteit Financiële Markten) and passported to the French Autorité des marchés financiers. The prospectus will include special purpose financial statements for Pluxee on a stand-alone basis for the fiscal years 2021, 2022 and 2023 under International Financial Reporting Standards as adopted by the European Union. As Pluxee did not operate on a stand-alone basis in the past, the historical financial information to be included in the prospectus may deviate from the Pluxee results presented as part of the Sodexo group results.
Fiscal 2023 Activity Report
1 Fiscal 2023 Performance of Sodexo (with Pluxee as discontinued operations)
1.1 Consolidated income statement
1.2 Revenues
Fiscal 2023 Sodexo continuing activities consolidated revenues reached 22.6 billion euros, up +11.7% year-on-year, driven by organic growth of +11.0%, positive currency impact of +1.5% and net contribution from acquisitions and disposals of -0.8%.
Fiscal 2023 organic revenue growth was up +11.0%, benefiting from higher attendance and average spend related to post-Covid ramp-up in Corporate Services, Sports & Leisure and Universities, as well as a consistent pricing effect of more than 5% throughout the year. Net new business contribution accelerated quarter on quarter to reach 2% in the second half. The end of the Testing Centers contract in the UK impacted the first three quarters and accounted for -1.2% in the full year organic growth. Finally, an accounting change related to the revenue recognition in a large Energy & Resources contract affected the organic growth of the year by -0.5%, and by -2.3% for the fourth quarter alone where the change was implemented retroactively for the full year.
Organic growth was boosted by a strong recovery in Food services up +16%. FM services were up +3%, or +6% excluding the impact of the end of the Testing Centers contract in the UK. Food services represented 64% of total On-Site revenues during the period, increasing from 60% in Fiscal 2022, and almost back up to pre-Covid levels.
Key performance indicators improved significantly in Fiscal 2023:
North America
Fiscal 2023 North America revenues totaled 10.5 billion euros, up +13.9% organically. This strong growth resulted from the post-Covid recovery in the first half, and the acceleration of revenue contribution from net development and cross-selling in the second half. The growth was also driven by consistent 5% of price revisions throughout the fiscal year, although with a slight decrease in the fourth quarter as the cost inflation drivers on cost plus accounts declined.
Organic growth in Business & Administrations was +23.4%, boosted by the return to the office and new contracts in Corporate Services, increased activity in Sports events, convention centers and airport lounges, with increased passenger counts and higher spend per capita, as well as inflation pass-through. Although coming from a smaller base, Convenience solutions and Entegra also contributed to the momentum with strong organic growth.
In Healthcare & Seniors , revenues were up +8.8% organically, driven by price increases, cross-selling and retail volume improvement. The net new development contribution has accelerated through-out the year with the full impact of the Ardent mobilization, now visible in the second half.
In Education , organic growth was up +9.1% compared to the previous year, driven by Universities up +13.4%, benefiting from strong attendance levels, price increases, and a higher level of board plans, retail sales and event catering. In Schools, growth was slightly negative, the impact of price adjustments being offset by decreases in meal volumes related to the reduction of government waiver eligibility for students.
Europe
Fiscal 2023 Europe revenues totaled 8.1 billion euros , up +7.5% organically, or +10.6% excluding the impact of the end of the Testing Centers. The growth was driven by strong price revisions, continued improvement in return to the office and very strong Sports & Leisure activity. Thanks to a strong fourth quarter in Sports & Leisure in France and new business in Government in the United Kingdom, combined with high level of growth in Corporate services, organic growth in the fourth quarter in Europe was +9.0%, trending favorably compared to the third quarter which was at +6.9% excluding the impact of Testing Centers affected by strikes and bank holidays.
In Business & Administration , organic growth was +12.2%, boosted by strong price revisions, continued improvement in the return to the office, significant IFM project works and retail picking up, particularly in Continental Europe. Sports & Leisure growth was very strong, boosted by record sales in tourism in France, sports events (Roland Garros and Tour de France), and an increase in number and size of corporate events.
This was somewhat offset by contract losses in Energy & Resources in Northern Europe.
In Healthcare & Seniors , organic growth of -2.4% was impacted by the end of the Testing Centers. The rest of the business was +9.1%, with the contribution of new openings and solid occupancy in Seniors particularly in France.
Organic revenue growth in Education was +4.4%, reflecting in the first half some volume recovery following the impact of Covid lock downs in the previous year. The third quarter was affected by strikes in France and an overall increase in bank holidays, offset in the fourth quarter by positive impact of working days. Pricing contribution was lower than in most segments, particularly in France where passing on inflation was hampered by the use of inadequate indices. Revenues decreased by 61 million euros compared to prior year due to the disposal of the Childcare business during Fiscal 2022.
Rest of the World
Fiscal 2023 Rest of the World revenues were 4.1 billion euros . Organic Growth was up +11.5%. Excluding a change in revenue recognition on project works of one of our large Energy & Resources contracts, from a gross to net basis reflecting the changes in the way we operate this contract, the organic growth would have been +14.6%. The change was implemented during the fourth quarter, with retroactive impact for the full year.
Business & Administrations organic growth was up +11.5%, impacted by the accounting change, but +14.9% excluding this effect, driven by an increase in project works and successful negotiations on price adjustments in Energy & Resources, impact of the new openings and strong pricing in Corporate Services and mining in Latin America and Brazil, and strong performance in India and South East Asia, in particular in the tech sector.
Healthcare & Seniors revenue was +6.2% organically, with good development in India and China, partly offset by a decrease in Brazil as a result of the exit of several low performing contracts.
Education organic growth was +35.1%, with all schools reopened in China and strong volume growth in India.
1.3 Underlying Operating Profit
Fiscal 2023 Sodexo excluding Pluxee Underlying operating profit was 976 million euros, up +19.7%, or +17.1% excluding the currency effect. The Underlying operating profit margin, including Corporate expenses, was 4.3%, up +30 bps. The currency mix effect was negligible.
The increase in profitability in Fiscal 2023 was driven by operating leverage from higher revenue, especially in North America, combined with rigorous inflation management including sustained price increases and mitigation actions, improved supply chain economics, and disciplined corporate cost management.
1.4 Net profit from Continuing activities
*Fiscal 2023 effective tax rate is 24.6%, compared to an ETR of 28.8% in Fiscal 2022.
Other operating income and expenses of Sodexo excluding Pluxee amounted to -129 million euros compared to -3 million euros in the previous year. This significant increase is due to M&A costs, one-off spin-off costs of Pluxee this year (12 million euros) and restructuring costs principally related to the change in organization from global segments to geographies. Prior year also benefited from 52 million euros of net gains related to the disposals program, including the Childcare business.
As a result, the Operating Profit is 847 million euros compared to 812 million euros in the previous year.
Fiscal 2023 Net financial expenses increased to 101 million euros against 87 million euros in the previous year. The increase is mainly due to 14 million euros costs linked to the bond consent process related to the spin-off project of Pluxee. The blended cost of debt at Fiscal 2023 year-end was at 1.7%, 10 basis points higher than at Fiscal 2022 year end, mainly due to the increased costs associated with the USD floating rates swaps.
The tax charge was down significantly to 181 million euros, despite a higher pre-tax profit, leading to an Effective Tax Rate of 24.6% against 28.8% in the prior year. This improvement is explained by the decrease in the CVAE rate in France and the better pre-tax results in France where deferred tax assets are not recognized. In addition, improved financial outlook in some geographies (mainly Germany and Netherlands) have led to a recognition of deferred tax assets related to prior years losses, excluding which, the Effective Tax Rate would have been of 25.5%.
The share of profit of other companies accounted for using the equity method was 12 million euros, slightly up compared to 8 million euros last year. Profit attributed to non-controlling interests was 8 million euros compared to the previous year amount of 6 million euros.
As a result, Sodexo continuing operations net income amounted to 560 million euros, against 514 million euros in Fiscal 2022. Underlying net profit adjusted for Other operating income and expenses net of tax reached 659 million euros, compared to 525 million euros in Fiscal 2022.
1.5 Net profit from discontinued operation (Pluxee)
The following income statement for Pluxee is built by difference between Group (before classification of Pluxee as discontinued operation) and Sodexo income statement under IFRS 5. Therefore, it does not reflect Pluxee stand-alone. Notably, it is pre-Group Corporate cost allocation, and the Effective Tax Rate is under-estimated.
Fiscal 2023 Pluxee revenue amounted to 1,099 million euros, up +27.1%, helped by a +0.6% impact from currencies. As a result, organic growth was +26.9%.
* Including Incentive & Recognition, Mobility & Expenses and Public Benefits.
Employee Benefits organic growth was +28.5%, accelerating quarter by quarter, and reaching +35.7% in the fourth quarter. Issue volume amounted to 16.6 billion euros for the year and was up +13.8% organically, boosted by double digit growth across all the product range supported by strong portfolio growth and a dynamic trajectory in face value, especially in Brazil.
Services Diversification was up +19.8% organically for the year, resulting from the strong performance of public benefits, boosted by two major contracts in Austria and Romania.
Organic revenue growth was strong across all geographies, respectively +24.7% in Europe, USA and Asia, and +31.0% in Latin America. This performance was due to strong growth in all major markets supported by a solid portfolio development and increase face values. In addition, the positive impact of change in regulation in Brazil and the contribution from rising interest rates through out the fiscal year also helped.
Operating revenues organic growth was +18.0%, fueled by the face value increase and positive net new development.
Financial revenues organic growth was +145.6%,due to the further increase in interest rates in the Euro zone and Central Europe.
Underlying operating profit was up +47.0%. The margin increased to 33.1% up +450 bps or +480 bps excluding currencies, resulting from operating leverage, fueled by strong growth in business volumes across all regions, despite sustained investments in Tech & Digital, and significant increase in interest rates boosting financial revenues and margins.
Pluxee Other operating income and expenses include 19 million euros of spin-off costs.
The increase in Pluxee net financial expense is the result of the intercompany debt costs.
The tax charge was up to 80 million euros.
As a result, Pluxee net income (group share) amounted to 234 million euros, against 181 million euros in Fiscal 2022. Given the accounting of Pluxee as discontinued operations, the net income is presented in the Group Income Statement on a separate line after income from continuing operations.
2 Consolidated financial position
(with Pluxee as discontinued operations)
2.1 Cash flows
(1) The Group does not believe the accounting treatment introduced by IFRS16 modifies the operating nature of its lease transactions. Accordingly, to ensure the Group's performance measures continue to best reflect its operating performance, the Group considers repayments of lease liabilities as operating items impacting the Free cash flow, which integrates all lease payments (fixed or variable). To be consistent, the lease liabilities are not included in Net debt (treated as operating items).
(2) includes debt push-down from Sodexo to Pluxee for 0.6 billion euros
Free cash flow from continuing operations, adjusted for IFRS16, was 374 million euros against 326 million euros in Fiscal 2022.
Operating cash flow improved to 1,130 million euros against 977 million euros in the previous year, as a result of the improvement in Underlying operating profit.
The Working capital outflow in Fiscal 2023 of 222 million euros was similar to last year. It was affected by some residual unwinding of government Covid-linked payment delays in North America and Northern Europe, a change in supplier payment delays in Europe, as well as significant payroll timing impact in North America.
Net capital expenditure, including client investments, increased to 348 million euros, and 1.5% of revenues, compared to 262 million euros in the preceding year, at 1.3% of revenues. Gross capex was 520 million euros, or 2.3% of revenues of which more than 85% was client facing investments. The increase in capital expenditure compared to the prior year is mainly coming from more significant client investments in North America, in the Education and Healthcare segments, in particular with the Ardent contract, in Australia in Mining and in the UK related to new sales in Government and Healthcare. M&A activity was limited in Fiscal 2023 with net acquisition spend of 21 million euros.
In order to project the post spin-off financial position, intragroup loans and deposits between Sodexo and Pluxee are considered as settled as at August 31, 2023 in this table, even though they will be settled only just prior to the listing date of Pluxee. As a consequence, Other changes includes in Fiscal 2023 a 0.6 billion euros debt push-down to Pluxee.
The resulting restated net debt from continuing activities reduced by 590 million euros ending the year to 2,918 million euros at August 31, 2023.
Pluxee net debt increased by 397 million euros due to the 610 millions d'euros debt push-down (considered as settled as of August 31, 2023).
2.2 Adjusted condensed consolidated statement of financial position at August 31, 2023
(1) In order to project the post spin-off financial position, in this table intragoup loans and deposits between Sodexo and Pluxee are not eliminated (on the one hand €1,215m loan from Sodexo to Pluxee, presented in this table in Assets, into "interco loans / deposits with Pluxee" with counterpart in "Liabilities held for sale", and on the other hand deposits from Pluxee in Sodexo cash-pooling for €570m, presented in the table in Assets as a reduction of Cash with counterpart in "Assets held for sale". These restatements explain the gaps with the Consolidated financial position in note 4.1.3, in which intragroup loans are eliminated. Moreover, these intragroup loans are considered as settled as at August 31, 2023, and thus are part of the net debt calculation, as they will be settled just prior to the listing date of Pluxee.
As of August 31, 2023, Sodexo continuing operations net debt (adjusted to reflect the post spin-off situation) was 2,918 million euros, up significantly compared to the previous year at 1,268 million euros, which still included the Pluxee cash. As a result, gearing is at 64% and the net debt ratio is 2.4x for Sodexo continuing operations, compared to 1.0x last year for the Group including Pluxee. Restated with Pluxee as discontinued operations, net debt at the end of Fiscal 2022 would have been 3 508 million euros and the net debt ratio 3.4x.
Fiscal 2023 Net debt is shown adjusted post spin-off, including Sodexo continuing activities net debt reduction of 0.6 billion euros due to the push-down to Pluxee.
At year end, Sodexo continuing operations gross debt of 5.6 billion euros was 72% euro-denominated, 21% dollar-denominated and 6% sterling denominated, with an average maturity of 3.8 years, 95% at fixed rates and 100% covenant-free.
By the end of Fiscal 2023, Operating cash of Sodexo continuing operations adjusted post spin-off reached a total of 1,455 million euros.
At the year end, unused credit lines totaled 1.8 billion euros.
2.3 Acquisitions and disposals for the period
Fiscal 2023 has been a quiet period for both acquisitions and disposals of non-core activities and geographies.
2.4 Earnings per share
Published EPS was 5.44 euros against 4.75 euros in Fiscal 2022. The weighted average number of shares for Fiscal 2023 was more or less stable at 146,127,620 compared to 146,295,576 shares for Fiscal 2022. Underlying EPS was 6.21 euros, up +30% compared to the prior year.
2.5 Proposed dividend
The Board of Directors has proposed a dividend of 3.10 euros, up +29.2% compared to Fiscal 2022, in line with our policy of a pay-out-ratio of 50% of Underlying net profit.
2.6 Currency effect
Exchange rate fluctuations do not generate operational risks, because each subsidiary bills its revenues and incurs its expenses in the same currency.
The +1.5% positive impact of currencies on Sodexo continuing activities Fiscal 2023 revenues is linked to the weakness of the euro against the U.S. dollar during the first half of the year. However, the euro has been increasing since the end of the first half Fiscal 2023 and therefore the currency impact is negative in the second half. On the other hand, UK sterling was down -2.8% during the year, explaining a negative impact of currencies in Europe. The impact of currency mix on the Underlying operating margin was negligible. Group net income was impacted by a negative currency impact of -1.3%, mainly coming from Pluxee discontinued operations.
Sodexo (continuing activities) operates in 45 countries. The percentage of total revenues and Underlying operating profit denominated in the main currencies are as follows:
The currency effect is determined by applying the previous year's average exchange rates to the current year figures.
2.7 Outlook
Given the strategic progress made in Fiscal 2022 and 2023, Sodexo is on track to pursue its recovery in North America, enhance efficiency and agility, continue to transform the food offers and operations and grow selectively in Facilities Management. Commercial excellence, data and digital investments and supply management support, will all contribute to better commercial momentum and better margins.
The Underlying revenue organic growth exit rate in the fourth quarter of Fiscal 2023 was over +10%.
With continued inflation being passed through, pricing is expected to average out at 3-4% for Fiscal 2024. The contribution from net new business should be above 2%, amplified by cross-selling.
As a result, Sodexo (excluding Pluxee) Fiscal 2024 and 2025 guidance:
2.8 Subsequent events
In July 2023 the Company launched a consent solicitation process relating to its 4.4 billion euros of outstanding EUR and GBP bonds, in order to seek certain approvals and waivers to proceed with the proposed spin-off of the Benefits & Rewards Services activity (Pluxee). The proposal was approved in relation to 7 out of the 8 bonds series. The consent solicitation in relation to the 300 million euros 1.125% bonds due May 22, 2025 (the “May 2025 Bonds”) was terminated and, on October 25, 2023, the Board of Directors decided to redeem the May 2025 Bonds and to publish the make-whole redemption notice on October 26, 2023. Sodexo will redeem the total aggregate principal amount of the May 2025 Bonds outstanding on November 10, 2023.
End of July 2023, Sodexo has signed an agreement for the acquisition of A.H. Management, independent convenience solutions, to accelerate food transformation and development in North America. A.H. Management, the premier convenience solutions operator in the Chicago region and Southeast Wisconsin, is one of the largest operators in the Mid-West. This acquisition, closed September 2023, will extend InReach's offerings in the fast-growing North American convenience market.
At the end of September 2023, the Group signed a disposal agreement for its worldwide Home care services including subsidiaries in the United States, in the United Kingdom, and in Scandinavian countries. The transaction is subject to the satisfaction of customary closing conditions and is expected to be finalized by the end of the calendar year.
2.9 Alternative Performance Measure definitions
Blended cost of debt
The 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
Please refer to Chapter 4, 4.3.1.
Free cash flow
Please refer to the section entitled Consolidated financial position.
Growth excluding currency effect
The currency effect is determined by applying the previous year's average exchange rates to the current year figures except in hyper-inflationary economies where all figures are converted at the latest closing rate for both periods when the impact is significant.
Issue volume
Issue volume corresponds to the total face value of service vouchers, cards and digitally delivered services issued by Benefits & Rewards Services for beneficiaries on behalf of clients.
Net debt
Net debt is defined as Group borrowing at the balance sheet date, less operating cash.
Organic growth
Organic growth corresponds to the increase in revenue for a given period (the “current period”) 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:
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 revenues.
Underlying 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 2023 figures at Fiscal 2022 rates, except for countries with hyperinflationary economies.
Fiscal 2023
Condensed consolidated financial statements
Notes to the Financial Statements will be found in the Universal Registration Document to be published on November 3, 2023
The comparative period presented in the consolidated income statement and in the consolidated cash flow statement disclosed in the document has been restated to reflect the classification as discontinued operations of Benefit & Rewards Service activity (Pluxee) in accordance with IFRS 5 “Assets held for sale and discontinued operations”. Restatements of previously published information are disclosed in note 3.2.
1. Consolidated income statement
2. Consolidated statement of comprehensive income
3. Consolidated statement of financial position
Assets
Shareholders' equity and liabilities
4.1.4 Consolidated cash flow statement
* Including 188 million euros corresponding to the depreciation of right-of-use assets recognized in Fiscal 2023 pursuant to IFRS 16 (200 million euros recognized in Fiscal 2022).
5. Consolidated statement of changes in shareholders' equity
* Corresponding to the application of the IFRS Interpretation Committee decisions issued in March, providing details on the accounting for configuration and customization costs of SaaS (Software as a Service) type software, and in April 2021, clarifying the calculation methods, in application of IAS 19 “Employee benefits”, for certain commitments relating to defined benefit plans.
6. Financial ratios
The key indicators 2022 used for below ratios have been calculated from an adjusted 2022 balance sheet, including the sames restatements as the one reported in the 2023 adjusted balance sheet (see Note 3.3.2) such as: Pluxee presented as assets and liabilities held for sale or for distribution and internal transactions not eliminated between Sodexo and Pluxee (loan for 478 million euros in 2022 and Pluxee deposits in Sodexo cash-pooling for 564 million euros reported as cash reduction)
Financial ratios have been computed based on the following key indicators:
(1) The Group does not believe the accounting treatment introduced by IFRS 16 modifies the operating nature of its lease transactions. Accordingly, to ensure the Group's performance measures continue to best reflect its operating performance, the Group considers repayments of lease liabilities as operating items impacting the Free cash flow, which integrates all lease payments (fixed or variable). Consistently, the lease liabilities are not included in Net debt.
(2) Average capital employed between the beginning and the end of the period.
(3) Reinstatement of the capital employed of Homecare services which gave rise to classification in assets held for sale and related liabilities as of August 31, 2023 and Childcare activity as of August 31, 2022.
(4) Below the underlying effective tax rate calculation:
Attachment
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