New version of the Registration Document
Fiscal 2019
Universal
Registration
Document
including the
Integrated Report
C O N T E N T S
SODEXO AT A GLANCE
1
1
UNLOCKING OUR POTENTIAL
Our fundamentals
Message from Sophie Bellon
Our Board of Directors
11 Global megatrends
Our value creation model
Message from Denis Machuel
Our Executive Committee
General principles
for corporate officers’ compensation
Our evolution
Our materiality matrix
Our corporate responsibility
Our Human Resources strategy
Our Risk Management
Our profession, our markets
Our key figures
2
2
GROWING OUR BUSINESS RESPONSIBLY
Being client and consumer centric
Enhancing operational efficiency
Nurturing talent
Anchoring corporate responsibility
1
2
4
6
8
10
12
14
16
18
20
22
24
26
27
28
36
40
42
45
48
51
New version of the Registration Document
Fiscal 2019
Universal
Registration
Document
including the
Integrated Report
A B O U T O U R I N T E G R AT E D R E P O R T
The chapter 1 of this Universal Registration Document refl ect s
Sodexo’s decision to adopt the practice of integrated reporting,
b ased on the recommendations of the International Integrated
Reporting Council (IIRC) and our roadmap for corporate
responsibility, Better Tomorrow 2025.
Managers from various departments within the Group took part
in a series of workshops to jointly create the report, ensuring
there is a common perspective on Sodexo’s overall economic,
social and environmental performance.
This Integrated Report covers F iscal 2019 and draws on information
from the Universal Registration Document in which it is published.
3
3
CONSOLIDATED INFORMATION
3.1 Fiscal 2019 Activity Report
3.2 Extra-financial reporting
3.3 Consolidated financial statements
as of August 31, 2019
3.4 Notes to the consolidated financial statements
3.5 Statutory Auditors’ Report on the
consolidated financial statements
3.6 Supplemental Information and condensed
Group organization chart
4
4
INFORMATION ON THE ISSUER
4.1 Sodexo S.A. Individual Company Financial
Statements
4.2 Notes to the Individual Company Financial
Statements
4.3 Supplemental Information on the Individual
Company Financial Statements
4.4 Statutory Auditors’ Report
5
5
CORPORATE GOVERNANCE
5.1 Shareholding structure*
5.2 Board of Directors
5.3 Other information
5.4 Risk management
5.5 Compensation
6
6
SHAREHOLDERS AND SHARE CAPITAL
6.1 Sodexo Share Performance
6.2 Financial Communications Policy
6.3 Shareholders
6.4 Additional general informations and
the bylaws of the Company
7
7
COMBINED ANNUAL SHAREHOLDERS MEETING,
JANUARY 21, 2020
7.1 Agenda
7.2 Resolutions submitted to the Combined
Annual Shareholders Meeting of January 21,
2020
7.3 Statutory Auditors’ Report
8
8
APPENDICES
8.1 Glossary
8.2 Responsibility for the Universal Registration
Document and the Audit of the Financial
Statements
8.3 Reconciliation Tables
55
56
69
86
93
144
150
155
156
158
176
179
187
189
190
218
226
240
259
261
266
268
273
277
278
279
294
297
298
301
303
S O D E X O
AT A G L A N C E
SUSTAINABLE AND INCLUSIVE BUSINESS MODEL
Founded in 1966 by Pierre Bellon, Sodexo is the global leader in
Quality of Life services.
Sodexo is the world’s only company off ering On-site Services,
Benefi ts & Rewards Services and Personal & Home Services.
Sodexo’s services contribute to the performance of our clients,
the satisfaction of our consumers, the fulfi llment of our teams and the economic,
social and environmental development of our local communities.
KEY FIGURES AS OF AUGUST 31, 2019
22
billion euro in
consolidated revenues
470,000
employees
67
countries
100
million consumers
served daily
#1
France-based
private employer
worldwide(1 )
69%
employee
engagement rate(2 )
#1
#2
in its industry sector
in both the Dow Jones
Sustainability Index (DJSI)(3 )
and the 2019 SAM
Sustainability Yearbook(4 )
in its sector
among Fortune
magazine’s 2019 list of
World’s Most Admired
Companies
and #1
in the categories of
Innovation and Social
responsibility
1 2019 Forbes Global 2000 ranking.
2 2018 employee engagement survey sent to 386,262 Sodexo employees of whom 62% responded.
3 The Dow Jones Sustainability Indices (DJSI) provide a global ranking of the companies most advanced in the area of sustainable development. They are
jointly compiled by the Standard & Poor’s Dow Jones Indices and SAM.
4 The SAM Sustainability Yearbook is the world’s most comprehensive publication on corporate sustainability performance. More than 2,6 00 companies were
evaluated according to economic, fi nancial, social and environmental indicators.
Source : Sodexo
This Universal Registration Document was fi led on November 20 , 2019 with the AMF, as competent authority under Regulation (EU) 2017/1129, without prior approval
pursuant to article 9 of said regulation.
The Universal Registration Document may be used for the purposes of an off er to the public of securities or admission of securities to trading on a regulated market if
completed by a securities note and, if applicable, a summary and any amendments to the Universal Registration Document. The whole is approved by the AMF in
accordance with Regulation (EU) 2017/1129.
This Universal Registration Document is available on Sodexo’s website, www.sodexo.com and on the website of the AMF, www. amf-france.org.
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1
UNLOCKING
OUR
POTENTIAL
Whether enjoying a healthy lunch with colleagues, working effi ciently
in a well-designed workspace, appreciating a cultural performance
or interacting with one’s community, Sodexo, world leader in
Quality of Life services, enhances the moments that touch our daily
lives, ensuring that they have a positive impact on our health and
well-being as well as on our neighborhoods, our cities and our planet.
Since 1966, the Group has remained committed to this mission
of sustainably improving quality of life for those it serves and for
the communities in which it operates. Together, fueled by the energy
and professionalism of its 470,000 employees, Sodexo has embarked
on a new phase of profi table and sustainable growth .
2
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Our
B oard
of D irectors
P. 8
Message
from
Sophie Bellon
P. 6
Our
fundamentals
P. 4
Our
profession,
our markets
P. 28
Our risk
management
P. 27
Key
fi gures
P. 36
Our H uman
R esources
strategy
P. 26
Our
corporate
responsibility
P. 2 4
11 G lobal
megatrends
P. 10
Our
value creation
model
P. 12
Message
from
Denis Machuel
P. 14
Our E xecutive
C ommittee
P. 16
Our
materiality
matrix
P. 22
Our general
principles for
Offi cers’
compensation
P. 18
Our
evolution
P. 20
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1 U N L O C K I N G O U R P O T E N T I A L
OUR FUNDAMENTALS
A GLOBAL,
INDEPENDENT,
PEOPLE-FOCUSED COMPANY
Sodexo is the community of our consumers, clients, employees
and shareholders. To meet their expectations, we have built a business model
based on profi table organic growth in revenues.
The strength of this model is refl ected in our fundamentals.
Since Sodexo’s inception, our mission, our values and our ethical principles have guided the work of all employees.
OUR MISSION
OUR VALUES
OUR ETHICAL PRINCIPLES
Improve the quality of life of
our employees and those we serve,
and contribute to the economic,
social and environmental
development of the communities,
regions and countries in which
we operate.
• Service spirit
• Team spirit
• Spirit of progress
• Loyalty
• Respect for people and equal
opportunity
• Transparency
• Business integrity
4
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A CONSUMER AND
CLIENT-FOCUSED CULTURE
One of the keys to our ability to
develop and expand a unique range of
Quality of Life services has been our
in-depth understanding of the needs
of clients and end-users. To leverage
our knowledge of the challenges
faced by our clients and to adapt to
the globalization of our markets, our
organization is structured around
global client segments for our
On-site Services. This segment-based
approach enables us to better
capitalize on our size and global
footprint, thereby increasing the value
we bring to our clients. This model
also helps us to meet the needs of our
consumers, which can diff er greatly
from segment to segment.
DEVELOPING OUR EMPLOYEES
Sodexo is one of the world’s largest
employers and a company of people
at the service of other people.
Our people have been at the core
of our development in the past
but will be even more so in the
future. Sodexo’s continued growth
is the result of the performance,
development, professionalism and
engagement of its diverse teams.
Recognizing each individual’s
contribution to the Group’s success
is a priority. We are committed to
being an employer of choice by
providing jobs, learning opportunities
and internal progression for our
people that will enable them to
thrive within the Group.
AN INTEGRATED OFFER THROUGH
THREE ACTIVITIES
Through our three activities:
On-site Services, Benefi ts & Rewards
Services, and Personal & Home
Services, we off er a holistic response
to client needs and provide services
that enable us to accompany
consumers throughout their lives.
We leverage the synergies that
exist among our three activities,
such as business development
opportunities and global brand
awareness. Shared organizations
and infrastructure generate
cost savings while multiple
career gateways off er signifi cant
opportunities for our employees.
A WORLDWIDE COMPANY
RESPONDING TO MAJOR
GLOBAL TRENDS
Major global trends are bring ing
new quality of life issues to
the surface. Demographic changes
such as aging populations
and urbanization are leading to
an explosion in the need for home
care services and facilities for
the elderly.
Operating in 67 countries and with
undisputed leadership in developing
economies, Sodexo’s global network
enables us to customize our integrated
off er while delivering a consistently
high level of services worldwide.
These services in turn create value
for our clients and improve
the daily life of our consumers
while respecting our economic,
social and environmental
commitments.
1
INDEPENDENCE ENSURED
THROUGH FOUNDING
FAMILY SHAREHOLDING
Independence enables us to sustain
our values, focus on a long-term
strategy, maintain management
continuity and ensure our
sustainability.
Our independence is ensured through
the Bellon family shareholding:
Mr and Mrs Pierre Bellon
and their children control 72.6 %
of our controlling holding company,
Bellon SA.
As of August 31, 2019, Bellon SA
held 42.2% of Sodexo’s capital and
56.6% of the exercisable voting rights.
In June 2015, Mr and Mrs Pierre Bellon
and their children entered into
an agreement for a duration of
50 years, which prevents his direct
descendants from freely disposing
of their shares in Bellon SA. The sole
asset of Bellon SA is its holding in
Sodexo shares and Bellon SA does
not intend to sell this shareholding
to third parties.
The sustained commitment required to
build a truly international organization
and a strong management team,
nurture lasting client relationships
and develop a successful integrated
off er, refl ects this vision.
OPERATING WITH INTEGRITY AND RESPECTING HUMAN RIGHTS
Central to its values and ethical principles, respect for human rights is a pillar of Sodexo’s commitment to business integrity
and essential to its mission. Sodexo conducts its business in a manner that does not infringe upon the human rights of
others and works to identify, prevent and mitigate any adverse impacts that may result from its business activities. All
employees and partners are expected to observe this commitment, which is based on the international human rights
principles set forth in the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work,
the United Nation’s Guiding Principles on Business and Human Rights and Sodexo’s Human Rights Policy and Fundamental
Rights at Work charter and Guide.
See Chapter 3, page 74 .
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5
1 U N L O C K I N G O U R P O T E N T I A L
MESSAGE FROM SOPHIE BELLON
SOPHIE BELLON
CHAIRWOMAN OF THE BOARD
OF DIRECTORS
Environmental challenges, migrant
Today, accelerated technological
crises, aging populations, the
progress is contributing to
growth of inequality, the collapse of
these global trends, profoundly
community solidarity, the breakdown
of integration and social mobility, of
education and training... Companies
everywhere are now expected to show
that they are making a contribution
in fi elds that go far beyond the
scope of their actual activity. But
transforming our markets. Traditional
supply and demand mechanisms for
services are changing. The direct link
we have with the end-users of our
services is growing stronger. All this
is inspiring us to review our value
creation models.
few companies are as involved in the
In this complex environment, we
major issues facing our world today
as Sodexo. Very few are able to have
an impact as defi nitive as ours.
Our presence in 67 countries around
remain focused on our top priority:
accelerating profi table growth. We
intend to succeed in the battles we
will choose to take on: our markets
are evaluated at 900 billion euros,
the world, our 470,000 employees
off ering tremendous opportunity for
caring for 100 million people every
development. It will be increasingly
day, our strong local presence, the
important for us to make the right
wide scope of our business activities
choices if we want to fully benefi t
and the diverse sectors in which we
from this opportunity.
operate allow us to make signifi cant
economic, social and environmental
contributions. This has been a central
aspect of Sodexo’s mission from the
To build a promising future, we
need to make winning bets through
active targeting of investments.
The market potential in the food
beginning, and an integral part of
services industry, in particular, is
how we measure our performance.
immense – over 300 billion euros.
“Making selective choices will allow us to achieve
our goal of one day improving the quality of life
of over one billion people around the world.”
Sophie Bellon
6
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1 U N L O C K I N G O U R P O T E N T I A L
“Healthy management practices
and the stability provided by our fi nancial
independence have given us a strong, solid
foundation. We have the capacity to make
the investments our growth will require.”
1
At a time when food is at the heart
We pay rigorous attention to human
our growth will require. With our
of many challenges, whether social,
development, another vital aspect
business fundamentals that have
been the backbone of our success
for 53 years, with Denis Machuel
and our Sodexo employees, and with
the support of our Board of Directors,
we will make the choices that will
allow us to go further and faster to
address the constantly-evolving
needs of our clients and consumers.
It is the commitment of our
employees to their clients,
their consumers, their teams
and their regions that will make
this possible. I want to thank
them because their hard work
and dedication have made Sodexo
the major company it is today.
environmental or health-related, we
of our future. The people who care
want to mobilize the unparalleled
for our consumers every day, listen
expertise that we have developed over
to our clients, and train and engage
the years to promote healthy meals
their teams will continue to be our
that preserve natural resources and
most precious resource in the future.
promote social balance.
In today’s world, attracting new
One thing is certain: making selective
choices will allow us to satisfy our
hereditary appetite for conquest
and help achieve our goal of one day
talent and identifying and developing
the talent we already have is a major
challenge and an essential element of
our diff erentiation.
improving the quality of life of over
I do not believe in a world that
one billion people around the world.
will continue to progressively
This goal is more than just a slogan.
We want to continue serving people in
their own communities, at the heart
of the social and economic realities
in which they live. Our employees live
and work there too, and it’s where
our added value is brought to life.
The maintenance of these social
disintermediate forever. Infl uenced
by technological progress, social
connections and human capital will
continue to create more and more
value. But the pace is accelerating:
never before has the tension been so
high between short and long-term
challenges.
connections and the vitality of these
Healthy management practices
local ecosystems must help inform
and the stability provided by our
and guide our future decisions. Local
fi nancial independence have given us
reality will continue to be our key to
a strong, solid foundation. We have
understanding the needs of the world.
the capacity to make the investments
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1 U N L O C K I N G O U R P O T E N T I A L
OUR BOARD OF DIRECTORS
SHARING A LONG-TERM VISION
For Sodexo, the long-term vision that accompanies family control,
is a key to the company’s success. Under the leadership of Chairwoman
Sophie Bellon, the Board of Directors, composed of seven women and fi ve men,
determines the strategic orientations of the company.
THE BOARD OF DIRECTORS AS OF AUGUST 31, 2019
Independent
Directors
6
4
Family
Directors
EMMANUEL BABEAU
SOUMITRA DUTTA
Deputy Chief Executive
Offi cer of Schneider
Electric SE
Dean and Professor
of Management,
Cornell University
SOPHIE BELLON
Chairwoman
of the Board
ASTRID BELLON
Member of the
Orientation Committee,
Pierre Bellon Foundation
ROBERT BACONNIER
SOPHIE STABILE
Director
Founder and Chairwoman
of Révérence
Chairwoman of the Audit
Committee
COMPOSITION OF
THE BOARD OF DIRECTORS
12
members
(Before and aft er 2020
Shareholders Mee ting)
FRANÇOISE BROUGHER
Chief Operating Offi cer,
Pinterest
CÉCILE TANDEAU
DE MARSAC
Chairwoman of
the Compensation and
Nominating Committees
Directors proposed for nomination
at 2020 Shareholders Meeting
2
Employee
representatives
VÉRONIQUE LAURY
LUC MESSIER
PHILIPPE BESSON
Head of Projects
and Sponsorship
CATHY MARTIN
Regional Manager
FRANÇOIS-XAVIER
BELLON
Founder and
Chief Executive Offi cer
of LifeCareers Ltd
NATHALIE
BELLON-SZABO
Chief Executive Offi cer,
Sodexo Sports & Leisure
Worldwide, On-site Services
Audit Committee
member
Nominating
Committee member
Compensation
Committee member
8
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PIERRE BELLON
Chairman Emeritus
Founder of Sodexo
and Chairman of the
Supervisory Board
of Bellon SA
BOARD OF DIRECTORS KEY FIGURES AS OF AUGUST 31, 2019
60%
Independent
D irectors*
91 %
Average
attendance rate
4
N ationalities
60%
Women*
14
Average years
in offi ce
56
Average age
1
7 Knowledge
of the services sector
Executive management 7
of international
companies
7 Strategy –
Mergers and
Acquisitions
BOARD OF
DIRECTORS’ AREAS
OF EXPERTISE
Finance 8
6 Marketing
and Sales
Sustainable development – 6
Societal commitment
and human resources
4 Digital –
New Technologies
BOARD OF DIRECTORS COMMITTEES
AUDIT
COMMITTEE
5 members
75% Independence*
97% Average
attendance rate
NOMINATING
COMMITTEE
4 members
50% Independence
100% Attendance rate
REMUNERATION
COMMITTEE
4 members
100% Independence*
100% Attendance rate
* Excluding employee representatives.
s
For more information
on Sodexo’s governance,
see Chapter 5.
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1 U N L O C K I N G O U R P O T E N T I A L
11 GLOBAL MEGATRENDS
ADAPTING OUR OFFERS
TO BUILD THE FUTURE
Preparing for the future means being aware of the world’s great
transformations. By defi ning and analyzing 11 major megatrends with
demographic, social, environmental, economic and technological implications,
we are fi ne-tuning our strategy and adapting our off ers.
Half of the world’s top 500 companies did not exist
25 years ago. This speaks volumes about the pace and
magnitude of the changes we are undergoing, from Europe
to Asia, from the Americas to Africa and Australia. Whether
social, environmental, economic or technological, these
changes are occurring at an unprecedented speed and scale.
Understanding these 11 megatrends allows us to invest
the right resources where they are needed, for example,
by developing new businesses or strengthening our global
footprint. We are also evolving our off erings to respond to new
expectations while creating value for our company.
1 . D E M O G R A P H I C S H I F T S
Sodexo responds to these challenges
Developed countries are faced with a rapidly
aging population due in part to slow population
growth estimated at 2.9% between 2015 and 2030.
Meanwhile, developing countries are expected to
experience average population growth of 18.5%
between 2015 and 2030(1).
1 billion
humans will be older
than 65 in 2030,
and will represent 13% of
the world’s population(2).
• We are developing a range of services that
enhance quality of life for seniors at home,
such as Amelis and Comfort Keepers©.
2 . U R B A N I Z A T I O N
Rapid urbanization is contributing to the
increase in GDP per capita, but the emergence of
mega-cities (>10 million inhabitants) is creating
enormous economic and social challenges. In 2030,
megacities will generate 72% of global GDP.
24
of the world’s 31 megacities
in 2030
will be in developing
countries(3).
• We off er foodservices solutions adapted to
the increased mobility of employees.
• We have strong positions in Brazil, China
and India.
3 . E M E R G I N G M I D D L E C L A S S
Education and technologies are transforming
consumption modes and habits. The middle class,
whose purchasing power is on the rise and which
will represent most of the consumers in 2022,
are dedicating an increasing share of their budget
to leisure and culture.
60%
of the world’s population
will be part of the middle
class in 2030,
compared to 27% in 2009(4).
• We have strong expertise in the fi eld of sporting
and cultural events.
• We off er services focused on sports, wellness
and quality of life to meet the aspirations of
the growing middle class.
4 . G L O B A L E C O N O M Y
Capital, information and talent are now
interconnected and trade is growing, providing
companies with new sources of growth.
At the same time, consumers prefer locally-sourced
products.
The share of exports in GDP
will increase
from 26% in 2010 to
33% in 2030(5).
• We encourage innovations from the front line
and share best practices among our sites.
• We source responsibly and give preference to fair
trade-certifi ed products.
1 Roland Berger Trend Compendium, UN DESA.
2 United Nations, Population Division.
3 GCIF Working Paper No. 4: Population predictions of the 101 largest cities in the 21st century.
4 The unprecedented rise of the middle class: Homi Khara.
5 McKinsey Global Institute, Boston Consulting Group RB Trend Compendium 2030.
10
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5 . D E V E L O P I N G E C O N O M I E S
Sodexo responds to these challenges
Developing economies are creating wealth for
millions of people. Their weight in the world
economy is increasing due to rapid population
growth seven times faster than that of developed
countries, combined with the rise of the middle
class.
By 2025, almost
50%
of the world’s Fortune
500 companies
will be based in developing
markets(1).
6 . P U B L I C D E F I C I T S
The weight of public debt is leading governments
to consider more effi cient ways to provide public
services and to outsource certain services. Between
now and 2030, rising public defi cits and persistent
youth unemployment will strongly impact public
policies and taxation.
Public debt will amount to
98%
of world GDP in 2035(2).
• We are positioned as a major provider of services
in developing economies and contributing to
their local communities’ economic and social
development.
• We have invested in leading technology
companies in China and India.
• We partner with local authorities to create
and operate Public-Private Partnerships (PPP).
• We off er competitive Quality of Life services
that enable public spending to be optimized.
1
7 . E N V I R O N M E N T A L I S S U E S A N D R E S O U R C E S C A R C I T Y
8.6 billion inhabitants in 2030: the demographic
boom is weighing on natural resources,
heightening global warming and disrupting
traditional consumption patterns.
Energy, water and food
consumption will increase by
50, 40 and 20%
respectively by 2030(3).
• We are deploying facilities management
services to help reduce carbon emissions from
the sites while advocating sustainable use of
resources.
• We are investing in the deployment of
WasteWatch, our global food waste prevention
program.
8 . E M P O W E R E D C O N S U M E R S
Consumers and clients now have unlimited access
to information and expect personalized services
and experiences. The niche culture is growing
and B to B is naturally following in the footsteps
of B to C.
9 . D I G I T A L T R A N S F O R M A T I O N
Technology disrupts the relationship between
companies and users and responds to their new
expectations. As the value of data grows, off ering
new insights and usages, companies are able to
increasingly personalize their off ers.
1 0 . U S E V S . O W N E R S H I P
Why buy if you can subscribe or rent? Collaborative
platforms are revolutionizing business models
and buying behaviors. With their lower capital
intensity, these business models can generate
much more rapid growth than traditional ones.
1 1 . F U T U R E O F W O R K
69%
of shoppers are willing
to trade their personal
information
for personalized services(4).
85%
of websites are tracking
internet users’ online
behaviors to propose
personalized off ers(7).
• We create comfortable, safe and healthy working
environments.
• We improve quality of life through diversifi ed
off ers and innovations such as click-and-collect(5),
delivery of meals and subscriptions(6)…
• Our digital platforms and apps provide
information about menus, restaurant patronage,
user accounts, restaurants and shops accepting
Sodexo service vouchers and cards, and
reservations at Childcare centers.
Online shipments will
increase by
25% per year
through 2020 and by 15%
beginning in 2021(8).
• We are developing concierge and car-sharing
options.
• We off er work space booking platforms like
Neo-Nomade or Wx, which provide companies
with the fl exibility they need while contributing to
the work-life balance of employees.
Disruptive technologies such as artifi cial
intelligence, robotics or the Internet of Things…
all are profoundly transforming the world of
work. To succeed, companies must support
employability and attract talent.
60%
of jobs have at least one- third
of their work load that can be
automated(9).
• We will train employees and help them
re-skill to adapt to new requirements and
the automatization of the work environment.
• We are using robots to deliver meals at
universities in the U.S.
1 McKinsey: The Shift ing Global Business Landscape.
2 Joseph Gagnon with Marc Hinterschweiger, June 2011. The Global Outlook for Government Debt Over the Next 25 Years. Implications for the Economy and
Public Policy.
3 PwC megatrends.
4 EY- Empowered Customer.
5 Click-and-collect enables online reservations and collection of purchases at the point of sale.
6 Digital platforms allow subscribers to receive basic products and ingredients at a special rate to make their own meals.
7 Forrester Research.
8 Statista, Roland Berger Trend Compendium 2030, McKinsey Institute: A future that works, UN Population Division, Accenture: Harnessing Revolution.
9 McKinsey Institute: Jobs Lost, Jobs gained.
S O D E X O - F I S C A L 2 0 1 9 U N I V E R S A L R E G I S T R AT I O N D O C U M E N T
11
1 U N L O C K I N G O U R P O T E N T I A L
OUR VALUE CREATION MODEL
CREATING VALUE BY IMPROVING QUALITY
I N P U T S / R E S O U R C E S
O U R B U S I N E S S
11 MEGATRENDS
See page 10
470,000
engaged
employees
HUMAN
22
billion euros
in consolidated
revenues
ECONOMIC
Innovation
insight gained
from
100 million
consumers
Y D I G I T A L AND INN
O
V
A
T
I
O
N
BENEFITS &
REWARDS
SERVICES
80%
IMPROVING
QUALITY OF LIFE
Employee benefi ts
20%
Services
d iversifi cation
D B
E
R
E
W
O
P
ON-SITE
SERVICES
70%
Food services
30%
Facilities
management
services
RELATIONSHIPS
Sustainable
processes
R esponsibly-
sourced raw
materials
NATURAL RESOURCES
PERSONAL & HOME
SERVICES
A
N
C
H
Homecare
Childcare
O
RING CORPOR A T E R E S P O
S I B I L IT Y
N
OUR VALUES
• Service spirit
• Team spirit
• Spirit of progress
OUR ETHICAL PRINCIPLES
• Loyalty
• Respect for people
and equal opportunity
• Transparency
• Business integrity
12
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W W W. S O D E X O . C O M
1 U N L O C K I N G O U R P O T E N T I A L
OF LIFE
S TA K E H O L D E R S
O U T C O M E S / I M PA C T S
1
EMPLOYEES
SUPPLIERS/
AFFILIATED MERCHANTS/NGOS
CLIENTS/INSTITUTIONS
CONSUMERS
SHAREHOLDERS/COMMUNITIES
81. 6%
R etention rate
of total workforce
HUMAN
+10.7 %
Average annual
Total Shareholder
Return
(5 years)
ECONOMIC
5. 5
billion euro
spent
with SMEs(1)
RELATIONSHIPS
113,826
tons
CO2 reduction(2)
NATURAL RESOURCES
All fi gures are for Fiscal 2019, unless otherwise stated
OUR MISSION
OUR AMBITION
Improve the quality of life of our employees and
those we serve, and contribute to the economic,
social and environmental development of the
communities, regions and countries in which we
operate.
1 Small and Medium Enterprise, for more information, see page 75 .
2
Scopes 1 and 2, c ompared to 2011 baseline.
Our ambition is to one day improve
the quality of life of one billion
individuals around the world.
S O D E X O - F I S C A L 2 0 1 9 U N I V E R S A L R E G I S T R AT I O N D O C U M E N T
13
1 U N L O C K I N G O U R P O T E N T I A L
MESSAGE FROM DENIS MACHUEL
DENIS MACHUEL
CHIEF EXECUTIVE OFFICER
ENTERING A NEW PHASE OF GROWTH
This fi scal year was a pivotal period
execution on certain large contracts
for Sodexo: we entered a new phase
and our targeting and signing
of growth thanks to our renewed
discipline is improving, though
focus on operational discipline.
our client retention and business
Our Focus on Growth strategic
agenda is working and has started
development are not where we would
like them to be.
to deliver results. Our consolidated
In North America, we are confi dent
revenues for the year reached
22 billion euro – with organic
growth, at +3.6%, exceeding our
expectations in nearly all regions,
particularly in North America.
This is Sodexo’s best organic growth
over the last seven fi scal years.
Our On-site Services grew by
3.3%. In all segments, our growth
refl ects the trust that renowned
clients – whether it’s the fi nancial
services group Nomura in London,
UNESCO in Paris, the Ronald Reagan
Presidential Library and Museum
near Los Angeles or the Tokyo
Organising Committee of the
Olympic and Paralympic Games in
2020 – have shown us over the past
year.
in our new management teams,
notably in our Education and
Healthcare & Seniors segments,
as they take the necessary steps
to revitalize our performance
in this growth market.
Our operating margin for the year
of 5.5% is in line with our objectives.
Thanks to our renewed focus on
operating discipline, we have reduced
our SG&A costs, while still generating
on-site operating productivity
gains. We are focusing on expanding
our Fit for the Future program to
continue optimizing SG&A costs, and
accelerating the roll out of our global
performance management
framework STEP (Sodexo Targets for
Enhanced Performance). We look to
these initiatives to bring further
Our Benefi ts and Rewards Services
also performed well, growing by
operating discipline throughout
Sodexo and generate additional
8.5% overall and our Personal
productivity gains.
and Home Services has continued
to expand through an active
acquisition strategy, as evidenced
by the acquisitions of Pronep in
Brazil and The Good Care Group in
the United Kingdom.
We are reinvesting these productivity
gains in sales and marketing, training
and talent management, digital
and IT for the greatest impact to
deliver solid and recurring top line
growth. This will enable us to seize
We must maintain our momentum
opportunities in our market, valued
as we are still seeing disparities in
at over 900 billion euro, including
our performance. We have enhanced
300 billion euro for food services.
“Our Focus on
Growth strategic
agenda is working
and has started to
deliver results”
Denis Machuel
14
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1 U N L O C K I N G O U R P O T E N T I A L
Through our Love of Food culinary
expertise platform, we are staying
ahead of upcoming food trends
that have the potential to become
mainstream. We are pursuing,
for instance, great opportunities
from the rapid growth of
vegetarianism and fl exitarianism,
especially among younger
consumers. Aft er launching over
200 plant- based recipes in 2018,
we created, in partnership with
Knorr, Unilever and WWF- UK, over
40 dishes that include 50 ingredients
of the future, which are healthy,
benefi cial to biodiversity and
have a lower carbon footprint.
We are introducing these menus
in kitchens globally, and they are
currently available at 5,000 Sodexo
restaurants in Belgium, the United
States, France and the United
Kingdom.
To go even further, we are building
innovative food service concepts
that off er healthy, sustainable food
while reducing waste from farm
to fork. One notable example is
the restaurant we developed with
fashion giant Inditex in Arteixo,
in Spain to feed the company’s
1,600 employees. The menu is
“Our growth is not only an indicator
of our fi nancial performance, it also
refl ects the legitimacy of our mission
and the positive impact of Sodexo”
1
Digital is driving our growth as
Our growth is not only an indicator
we create unique experiences to
of our fi nancial performance, it
meet the needs of clients and
also refl ects the legitimacy of our
consumers for a simpler, more
mission and the positive impact of
personalized service. A good example
Sodexo. In a world that is beginning
can be seen with the acquisition of
to understand the limits of hyper
Zeta, a digital company specialized
consumption, the impact of human
in payment solutions, that allows
connections, the reality of social-
us to develop “one-stop” platforms
economic inequalities and the
leveraging synergies across our
urgency of climate change, our
business activities. Whether for our
on-site food service off ers, with our
restaurant merchant partners, for
managing travel and the related
expenses, or personal services,
with Zeta, we give our clients and
consumers unparalleled freedom
of choice and services. The platform
is currently being rolled out in
Asia-Pacifi c and we see tremendous
potential for it in all our markets.
I would like to warmly thank our
teams, who have demonstrated
mission to improve quality of life has
never been more relevant. With our
leadership in promoting the full
value of food, making sustainable
and local food more accessible, and
ensuring more inclusive growth
within and across communities,
we are paving the way for a growth
that is profi table and responsible,
putting people fi rst and being more
environmentally sustainable.
made up of 65% local products from
their ability to meet our
short supply chains, oft en coming
commitments and their rigor in
directly from the farm, including
implementing our Focus on Growth
over 40 organically farmed products.
strategic agenda. These eff orts
The restaurant – operating on a LEED
make Sodexo a more solid company
Gold-certifi ed site – uses no plastic,
and I am convinced that we are on
and left overs are systematically
the right path to better growth over
repurposed .
the coming years.
S O D E X O - F I S C A L 2 0 1 9 U N I V E R S A L R E G I S T R AT I O N D O C U M E N T
15
1 U N L O C K I N G O U R P O T E N T I A L
OUR EXECUTIVE COMMITTEE
ACCELERATE GROWTH
The Executive Committee’s mission is to accelerate Sodexo’s growth
while ensuring that corporate responsibility remains anchored at
the heart of its business. This diverse team combines transversal expertise
and skills representative of all the Group’s activities, segments
and geographic regions.
THE EXECUTIVE COMMITTEE AS OF SEPTEMBER 1, 2019
Nathalie Bellon-Szabo
Chief Executive Offi cer,
Sports & Leisure worldwide,
On-site Services
Nationality: French
Sean Haley
Group Chief Executive
Offi cer of Service
O perations
Region Chair, UK & Ireland,
On-site Services
Nationality: British
Sarosh Mistry
Region Chair for North
America, On-site Services
Chief Executive Offi cer,
Homecare Services
worldwide
Nationality: American
Denis Machuel
Group Chief Executive Offi cer
Chairman of the Executive
Committee
Nationality: French
Lorna Donatone
Region Chair
for Latin America
Nationality: American
Sylvia Metayer
Group Chief Growth Offi cer
N ationalities : French, British
and Canadian
Cathy Desquesses
Group Chief
People Offi cer
Nationality: French
Tony Leech
Chief Executive Offi cer,
Government worldwide,
On-site Services
Nationality: Australian
Belen Moscoso Del Prado
Group Chief Digital &
Innovation Offi cer
Nationality: Spanish
Johnpaul Dimech
Chief Executive Offi cer
Geographic Regions
Region Chair, Asia Pacifi c,
On-site Services
Nationality: Australian
Satya-Christophe Menard
Chief Executive Offi cer,
Schools & Universities
worldwide, On-site Services
Nationality: French
Sunil Nayak
Chief Executive Offi cer,
Corporate Services
worldwide, On-site Services
Nationality: Indian
16
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W W W. S O D E X O . C O M
1 U N L O C K I N G O U R P O T E N T I A L
EXECUTIVE COMMITTEE KEY FIGURES AS OF SEPTEMBER 1, 2019
8
nationalities
33 %
Women
48 %
Non-French
3
52,8
Average seniority
Average age
1
Anna Notarianni
Region Chair, France,
On-site Services
Nationality: French
Marc Rolland
Group Chief Financial
Offi cer
Nationality: French
Marc Plumart
Chief Executive Offi cer,
Healthcare & Seniors
worldwide, On-site Services
Nationality: French
Dianne Salt
Group Chief
Communications Offi cer
Nationality: Canadian
Didier Sandoz
Chief Executive Offi cer,
Personal & Home Services
Nationality: French
Aurélien Sonet
Chief Executive Offi cer,
Benefi ts & Rewards Services
Nationality: French
Simon Seaton
Chief Executive Offi cer,
Energy & Resources
worldwide, On-site Services
Nationality: British
Bruno Vanhaelst
Group Chief Sales and
Marketing Offi cer
Nationality: Belgian
Damien Verdier
Group Chief Corporate
Respon sibility Offi cer
Nationality: French
This year, we bid farewell to a long-serving member of our senior
management team who is retiring, Nicolas Japy.
Under Nicolas’ leadership, Sodexo developed a significant footprint
in developing markets and in the Energy & Resources segment.
We would like to thank Nicolas for his contribution to Sodexo’s success.
For more details on Sodexo’s Governance, please see Chapter 5.
S O D E X O - F I S C A L 2 0 1 9 U N I V E R S A L R E G I S T R AT I O N D O C U M E N T
17
1 U N L O C K I N G O U R P O T E N T I A L
OUR GENERAL PRINCIPLES FOR CORPORATE OFFICERS’ COMPENSATION
A COMPETITIVE
COMPENSATION POLICY
In the interest of Sodexo and its stakeholders and in accordance with
our values, the Board of Directors ensures that the company off ers a competitive
remuneration policy to attract and engage the best talent to deliver
performance and achieve Sodexo’s long-term strategy.
CÉCILE TANDEAU DE MARSAC
Chairwoman of the Compensation Committee
“
Compensation policy is an essential lever for profi table growth. Through a balance between individual
and collective recognition, long term and short term, it aims to strengthen our culture of performance.
Our goal is to attract, motivate, retain and mobilize all our talents for our success.
”
PRINCIPLES FOR COMPENSATION
EVOLUTION OF REMUNERATION
COMPLIANCE
ALIGNMENT
OF INTERESTS
COMPETITIVENESS
TRANSPARENCY
COMPLETENESS
BALANCE
PERFORMANCE
The remuneration policy for Executive Committee members is
aligned with that of the Chief Executive Offi cer.
FISCAL 2019
Sophie Bellon
Denis Machuel
No change
• Maximum variable payout reduced from
200% to 150%
• Compensation for full fiscal year
(nominated in January 2018)
• Performance shares: TSR on a peer
group only
FISCAL 2020
Sophie Bellon
Denis Machuel
No change
• Removal of exceptional compensation
option
Performance shares:
• Vesting period reduced from 4 to 3 years
• No grant in Fiscal 2020
• Next grant in November 2020
• In the exceptional case that rights are
maintained on departure, they will be based
on a pro rata of effective presence
COMPENSATION STRUCTURE
100%
NOT SUBJECT TO
PERFORMANCE
CONDITIONS
75%
SUBJECT
TO PERFORMANCE
CONDITIONS
E
EN TIV
C
M IN
R
E
T
-
G
N
O
L
:
D
E
S
A
B
-
50%
PERFORMANCE
SHARES
25%
FIXED
25%
ANNUAL
VARIABLE
E
R
A
H
S
%
0
5
25%
NOT SUBJECT
TO PERFORMANCE
CONDITIONS
N
O
I
T
A
S
N
E
P
M
O
C
L
A
U
N
N
A
:
H
S
A
5 0 % C
100%
FIXED
SOPHIE BELLON
DENIS MACHUEL
18
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W W W. S O D E X O . C O M
1 U N L O C K I N G O U R P O T E N T I A L
ANNUAL VARIABLE REMUNERATION FOR DENIS MACHUEL
As a reminder, the guidance communicated to the markets on November 8, 2018 for Fiscal 2019 was organic revenue growth of
between 2% and 3% and an underlying operating margin of between 5.5% and 5.7%, excluding currency eff ect.
AMOUNT PAID
FOR FISCAL 2019
WEIGHT
OF CRITERIA
FISCAL 2019
RESULTS
ACHIEVEMENT LEVEL
COMPENSATION
POLICY
FOR FISCAL 2020
WEIGHT
OF CRITERIA
Organic growth*
20%
3.6 %
Underlying operating profit margin excluding currency effect
20%
5.5%
100 %
86 %
Net income growth (in millions of euro)
10%
665
0 %
Free cash flow (in millions of euro)
20%
907
175 %
Health and Safety (lost time injury rate)
10%
0.86
100%
Talent management
DJSI
10%
90%
70 %
10%
Sector leader
100%
20%
20%
20%
20%
10%
10%
10%
1
Total variable compensation
100%
99 %
100%
* The organic growth criteria has been capped at 100% despite outperformance during Fiscal 2019, due to the UOP margin performance being at the low end of the guidance
range.
LONG TERM COMPENSATION (PERFORMANCE SHARES) FOR DENIS MACHUEL
PERFORMANCE CONDITIONS – 4 YEARS
Organic growth
Underlying operating profit margin excluding currency effect
TSR performance
Share of women at the highest level of hierarchy
FISCAL 2019
WEIGHT
25%
25%
30%
20%
* No Fiscal 2020 long-term compensation to take into account reduction of vesting period.
FISCAL 2020*
WEIGHT
25%
25%
30%
20%
COMPENSATION AWARDED (in thousand euro)
Maximum
4,950
Maximum
4,950
Achieved
3,629
Target
3,600
1,836
893
900
675
675
Sophie Bellon Denis Machuel
Chairman
CEO
2018-2019
Fiscal 2020 Compensation policy
Fixed compensation
Annual variable compensation
Long term compensation
Annual variable compensation:
maximum authorized on
a basis salary of €900,000
Long term compensation:
maximum authorized on
a basis salary of €900,000
For more information, see Chapter 5.5.
S O D E X O - F I S C A L 2 0 1 9 U N I V E R S A L R E G I S T R AT I O N D O C U M E N T
19
1 U N L O C K I N G O U R P O T E N T I A L
OUR EVOLUTION
SUSTAINABLE
AND PROFITABLE GROWTH
Since 1966, Sodexo has been dedicated to the goal of improving
quality of life, convinced of its contribution to both higher
organizational performance and societal progress. This consistent
focus has enabled us to grow profi tably and sustainably while
providing continuous development opportunities for our employees.
I NTERNATIONAL
DE VE LOPMENT AND
ACQU ISITIONS
35 countries
Development in Belgium,
Italy, Spain, Africa
and the Middle East
40 countries
Development in North America,
South America, Russia
and South Africa
QU ALI TY
OF L I FE
OF FE RS AND
SE R VICES
1967
First multi-service
contract
for the management of CNES
(French Space Agency)
in Guyana
Opening of
foodservices
in schools
and hospitals
KE Y MOMENTS
1976
1st meal voucher
1 , 0 0 0
€9 . 3 m
1966
Sodexo founded
by Pierre Bellon
3 6 , 0 0 0
1 5 , 0 0 0
€2 1 3 m
1983
Initial public offering on
the Paris Stock Exchange
€1 . 2 b n
1992
Creation
of the Sodexo
Management
Institute
1965
1970
1975
1980
1985
1990
20
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W W W. S O D E X O . C O M
1 U N L O C K I N G O U R P O T E N T I A L
2019
Sodexo strengthens its presence
in the Homecare market by taking a majority
stake in Pronep in Brazil and the acquisition
of The Good Care Group in the UK
4 7 0 , 0 0 0
E M P L OY E E S
C O N S O L I D AT E D
R E V E N U E S
80 countries
€2 2 b n
2018
Sodexo becomes a leader
in the Sports & Leisure segment
globally with the acquisition
of Centerplate
3 8 0 , 0 0 0
72 countries
Including Brazil,
China, India
Acquisitions:
1995
Gardner Merchant (UK)
Partena (Sweden)
1998-2001
Marriott Management
Services (U.S.)
2 8 6 , 0 0 0
€1 5 . 3 b n
Acquisitions (2000-2010)
Sogeres and Score Group (France),
Wood Dining Services, Circles,
Comfort Keepers® (USA),
Zehnacker (Germany),
Radhakrishna Hospitality
Services Group (India),
VR (Brazil)
67 countries
1
S H A R E P R I C E *
€1 0 3 . 1 0
DONNÉES COURBES
EN ATTENTE
€1 0 . 5 b n
New Quality of Life
services: facilities
management services,
vouchers and cards services
Rapid growth in
new markets:
technical maintenance,
energy and water
consumption
efficiency, spatial
planning
2005
Appointment
of Michel Landel as
Chief Executive Officer
2007
Sarbanes–Oxley
Act conformity,
Section 404
2009
Launch of our corporate
responsibility roadmap
Development of integrated Quality
of Life services, for key global accounts.
Explosion in need for in-home services
and offers
2019
Implementation of
the strategic agenda,
Focus on Growth
2016
• Appointment
of Sophie Bellon as
Chairwoman of the Board
of Directors,
on January 26
• Launch of the Sodexo
Ventures fund
2017
Better Tomorrow 2025,
renewing our corporate
responsibility commitments
2018
Denis Machuel
becomes CEO on
January 23
2000
2005
2010
2015
2019
* As of August 31, 2018
S O D E X O - F I S C A L 2 0 1 9 U N I V E R S A L R E G I S T R AT I O N D O C U M E N T
21
1 U N L O C K I N G O U R P O T E N T I A L
OUR MATERIALITY MATRIX
SHARING A COMMON VISION
Our position in the value chain enables us to develop strong relationships
with multiple stakeholders. In 2019, we conducted a second materiality
study to confi rm the validity of our corporate responsibility roadmap.
We renewed the process of identifi cation and ranking of key issues
and impacts in consultation with internal and external stakeholders
and the support of Business for Social Responsibility (BSR)(1).
Critical
s
r
e
d
l
o
h
e
k
a
t
s
r
o
f
e
c
n
a
t
r
o
p
m
I
Disclosure and
Transparency
Respect for
Human Rights
Supply Chain
Environmental
Impact
Supply Chain Labor Practices
Fundamental
Rights
at Work
Packaging and
Non-organic
Waste
Business Integrity
Climate Mitigation, Resilience
and GHG(2) emissions
Healthy and Sustainable Eating
Food Quality and Safety
Food Waste
Occupational
Health and Safety
Governance
Water and Effluents
Diversity
and Inclusion
Women
Empowerment
Antimicrobial
Resistance
Data Privacy
and Protection
Technology
Food
Resource
Security
Animal Welfare
Stakeholder Collaboration
Employee Well-being
and Engagement
Local
Socio-economic
Impact
Hunger and Malnutrition
Energy
Wellness Solutions
Employee Training
and Development
Talent Attraction
and Retention
High
Importance for Sodexo
Critical
Fundamentals
Individuals
Communities
Environment
1 BS R is a non-profi t organization that has been developing sustainable business strategies and solutions through consulting, research, and cross-sector
collaboration for 25 years.
2 GHG: greenhouse gas.
22
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W W W. S O D E X O . C O M
1
1 U N L O C K I N G O U R P O T E N T I A L
Update of the issues
The evolution of the major contemporary issues - social, societal
and environmental - as well as the evolution of the market
and the expectations of the various stakeholders led Sodexo to
conduct its second materiality analysis in 2019.
This year, Sodexo not only identifi ed and prioritized the issues
of internal and external stakeholders, but also incorporated two
new dimensions into its process: enterprise risk management
and strategic planning. This improvement provides a relevant
and comprehensive answer to current issues.
Governance, Technology, Data Priva cy and Protection and
Disclosure and Transparency are the four new issues introduced
in the 2019 assessment. When compared to the previous study,
Climate Mitigation, Healthy and Sustainable Eating, Food Waste
and Diversity and Inclusion are seen as issues with higher
importance for both stakeholders and Sodexo.
Prioritization of issues
The prioritization of previously defi ned issues and their impacts
have been established in consultation with internal and external
stakeholders.
Sodexo has involved its employees through numerous
workshops, interviews, surveys and internal data searches of its
clients. The workshops and interviews conducted by BSR brought
together representatives from the Strategy, Communication,
Risk Management, Corporate Responsibility, Marketing, Digital
and Innovation, Human Resources, Purchasing and Investor
Relations teams. Leaders have also provided feedback through
surveys.
Sodexo also sought the views of its external stakeholders.
Interviews were conducted with suppliers, clients and NGO partners.
Lastly, the analysis of external data from investors, rating agencies
and competitors greatly contributed to the assessment of the
importance of the new issues.
Improve the impact on individuals, communities
and the environment
All of the consultations allowed the quantitative and qualitative
assessment of the issues, identified by the Sodexo teams
upstream.
Thirty issues have been clearly defi ned and prioritized according
to the Sodexo impacts identifi ed in the Corporate Responsibility
Roadmap: Better Tomorrow 2025.
The results of the materiality analysis will optimize the
implementation of our commitments and the management of
the risks associated with the material issues.
CRITICAL ISSUES AND IMPACTS ON BUSINESS ACTIVITIES
CRITICAL ISSUE
Disclosure and Transparency
Disclosure of financial and sustainability performance information is clear,
comparable, accessible and enables consumers, investors, other stakeholders
and management to make informed decisions.
Respect for Human Rights
Commitment to respect human rights throughout the value chain, as well
as practices and procedures aimed at preventing, mitigating and ultimately,
addressing the adverse human rights impacts that may result directly from
Sodexo’s activities or that can be directly related to the business through supplier
relationships.
Climate Mitigation, Resilience and GHG(1) emissions
Action for climate and alignment with the objectives of the Paris agreement
on climate through the value chain to moderate the impact on climate change,
increase resilience and adaptability, reduce greenhouse gas emissions and meet
the growing expectations of stakeholders.
Business Integrity
The norms and principles that govern the actions and behavior of an individual
in the business organization regarding the prevention of unfair competition,
treatment with stakeholders, prevention of corruption, conflicts of interest,
confidentiality, the use of assets, the integrity of the financial statements and
the Group’s files, the responsibilities of the employees and the declaration of
the violations.
Healthy and Sustainable Eating
Health attributes and nutritional provisions of the menus, including reduction
of sugar, salt and fat, as well as additives and portion control; menus that meet
the criteria for sustainable food, especially based on seasonal and local products.
Food Quality and Safety
Quality and safety standards respected throughout the value chain of the
products served.
Food Waste
Prevention and reduction of food waste through programs, initiatives, innovative
systems, technologies, awareness raising and behavior, etc. and the application
of circular economy principles. Reuse, recycling and recovery of food waste
downstream.
KEY PERFORMANCE INDICATOR
RISK
MANAGEMENT
See p. 24,
36-39,
236
In 2019, 97.4% of workforce working in countries
having the Group Human Rights policy available
in at least one official language (p. 74 ) .
See p. 5,
74, 235,
236
In 2019, 62% reduction in carbon emissions
intensity – compared to baseline year 2011
(p. 77 ) .
See p. 54,
76 , 77 ,
235
In 2019, 98.1 % of workforce working in
countries having the Sodexo Statement of
Business Integrity available in at least one
official language (p. 74 ).
See p. 5,
74 , 236
In 2019, 83.3% of On-site Services activity
provided Health and Wellness Services including
physical wellness services (p. 75 ).
See p. 75 ,
232
In 2019, 98.6% of On-site Services revenues of
countries having either ISO 9001 or ISO 22000
certification for food safety (p. 75 ).
See p. 75 ,
235
In 2019, 69.2% of Group revenues of countries
working to deliver on the United Nations’ food
waste objective (p. 78 ).
See p. 52,
78 , 235
Occupational Health and Safety
Exposure of workers to potential health and safety hazards that may cause
injury or illness. Risk control defined by global standards, including for specific
risks such as those occurring during a commute.
Sodexo’s employees were absent for an average
of 8.3 days, due to occupational accidents or
sickness and/or personal accidents or sickness
during Fiscal 2019 (p. 73 ).
See p. 44,
46, 73 ,
235
1 GHG: greenhouse gas.
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OUR CORPORATE RESPONSIBILITY
OUR STAKEHOLDER RELATIONS
The success of Sodexo, a service provider, employer and corporate citizen,
depends on its ability to build enduring relationships with stakeholders
through its numerous programs of responsible action.
SODEXO’S IMPACT
Employees
ACTION TAKEN
Sodexo offers jobs in local communities and training that
promotes career development and internal promotion.
From the latest global survey, conducted in Fiscal 2018,
employee engagement rate: 69 % up 1 point from the previous
survey.
Clients
Sodexo can provide clients with a range of services that directly
impact strategic business issues such as the motivation of their
employees and the competitiveness and attractiveness of their
company.
Consumers
Sodexo is able to improve quality of life for millions of people
by helping consumers adopt healthier and more sustainable
lifestyles.
Suppliers, Affiliated merchants
Sodexo seeks mutually beneficial relationships with its
commercial partners and encourages them to meet its high
standards for quality, working conditions, business integrity
and environmental stewardship.
Institutions and NGOs
Sodexo continues to widen its eco-system to tackle global issues
of working conditions, human rights, diversity and inclusion,
carbon emissions, nutrition, food waste and the fight against
hunger.
Good execution, innovation and corporate responsibility are key
factors in Sodexo’s ability to retain and develop relationships
with its clients.
Sodexo’s client retention rate was 93.3% in Fiscal 2019.
92.2 % of North America client sites implement actions that
proactively address Sodexo’s 10 Golden Rules of Nutrition,
Health and Wellness.
Sodexo employs 5,138 registered dietitians worldwide.
92.3% of Group revenues are from countries having specific
initiatives to integrate SMEs (Small and Medium Enterprises)
into Sodexo’s Value Chain.
Developing new relationships with a view to advancing the
implementation of the Partner Inclusion Program.
Successful relationships with the Organization for Economic
Co-operation and Development (OECD), the World Wildlife Fund
(WWF), the International Labour Office (ILO), the United Nations,
the Global Sustainable Seafood Initiative (GSSI), the Seafood
Task Force, Academic institutions such as Harvard, Cornell or
Audencia.
The company is also linked through an International Framework
Agreement with International Union of Food and Allied Workers
(IUF).
Sodexo initiated the creation of the International Food Waste
Coalition (IFWC) and the Global Coalition for Animal Welfare
(GCAW).
Investors
Bellon family share ownership guarantees Sodexo’s
independence and stability. All of our family, institutional and
individual shareholders provide the support necessary for the
Group’s development.
Government and Regulators
Sodexo’s activities are covered by numerous laws in the field
of food safety, health and safety in the workplace, public
procurement, payments, etc.
A large part of its business is contracted with government
entities.
Shareholders from around the world choose Sodexo for its solid
growth, the long-term rate of return and its commitment to
Corporate Responsibility.
Launch of Shareholders Club.
Sodexo participates in consultations organized by governments.
Sodexo is registered on the Transparency register of the
European Commission and the European Parliament.
Sodexo conducts an ethical lobbying policy at Group level in all
interactions with politicians and decision-makers.
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BETTER TOMORROW 2025:
OUR CORPORATE RESPONSIBILITY
ROADMAP
Adapted to the challenges of today and tomorrow
and comprised of nine commitments, Better Tomorrow 2025 drives
the deployment of our corporate responsibility actions and measures
their impact in the 67 countries where we operate.
1
Our nine commitments are consistent with the most material issues identifi ed through the Materiality process. They are based
on tangible and measurable objectives that allow all of our entities to monitor and drive progress.
OUR 9 COMMITMENTS AND 2025 OBJECTIVES
OU R RO LE AS
A N E M P L O Y E R
OUR I MPA CT ON
I N D I V I D U A L S
OUR IMPACT ON
C O M M U N I T I E S
OUR IMPACT ON
T H E E N V I R O N M E N T
Improve
the Quality of Life
of our employees,
safely
80%
Employee
Engagement Rate
Ensure a diverse workforce
and inclusive culture that
refl ects and enriches
the communities we serve
Foster a culture of
environmental responsibility
within our workforce and
workspaces
100%
of our employees work
in countries that have
gender balance
in their management
populations
100%
of our employees
are trained
on sustainable practices
Provide and encourage
our consumers to access
healthy lifestyle choices
Promote local development
and fair, inclusive
and sustainable
business practices
Source responsibly
and provide management
services that reduce
carbon emissions
OU R RO LE AS
A SERVICE
PROVI DER
OUR ROLE A S
A C O R P O R A T E
C I T I Z E N
100%
of our consumers
are off ered healthy
lifestyle options
every day
Fight hunger
and malnutrition
100 million
Stop Hunger
benefi ciaries
10 billion euro
of our business
value will
benefi t SMEs(1)
34%
reduction
of carbon emissions(2)
Drive diversity
and inclusion as a catalyst
for societal change
500,000
women in communities
educated through job
training centers
Champion sustainable
resource usage
50%
reduction in
our food waste
(1) See Chapter 3.2.6. 2 (p. 75) .
(2) Absolute reduction in Scope 1, Scope 2 and Scope 3 carbon emissions, compared to a 2011 baseline.
Better Tomorrow 2025 was developed in accordance with the United Nations Sustainable Development Goals (SDGs).
The SDGs are a set of global goals in 17 key areas, requiring action by governments, businesses and society to achieve a more just
and sustainable world by 2030. All our commitments are aligned with these goals.
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OUR HUMAN RESOURCES STRATEGY
NURTURING TALENT,
PROMOTING PROFITABLE
GROWTH AND PREPARING
TOMORROW’S WORKFORCE
As a company of people serving people,
Sodexo recognizes that employees are central to its ability
to create sustainable value and profi table growth.
Sodexo’s human resources
strategy contributes to achieving
its long-term growth objectives.
It promotes empowerment,
performance and accountability,
anticipating resource and skill
needs, investing in employee
development and ensuring a safe,
diverse and inclusive working
environment that improves quality
of life and fosters professional
growth. The company’s strategy
enables it to manage the identifi ed
risks for its 410,000 consumer-
and client-facing employees and
its 60,000 managers.
A STRATEGY TO ENHANCE
OPERATIONAL EFFICIENCY
To reinforce operational
effi ciencies and provide access
to more sustainable employment,
Sodexo leverages personnel
management programs to connect
employees with local job
opportunities.
In response to shortages in skills
and employee turnover, Sodexo
helps employees develop skills
through comprehensive training
programs and the accelerated use
of new technologies. Other initiatives
include new training centers
(see page 50 ) that enable people
to learn new skills, increasing their
employability and providing the Group
with the right capabilities to deliver
its services. In order to anticipate
workforce needs, Sodexo implements
workforce planning processes and tools.
To ensure fair employment practices
(compensation, data management),
Sodexo is continuously improving
its processes, governance and
tools, including deploying a Human
Resources Information System (HRIS)
starting in 2020.
A STRATEGY TO ENABLE
PROFITABLE GROWTH
To reinforce its performance
culture, Sodexo launched Aspire
in 2019, a simplifi ed performance
assessment and development
tool for its 60,000 managers
worldwide. Aspire links managers’
objectives with the KPIs for the
company’s strategic STEP(1)
framework. Progress is monitored
through ongoing collaborative and
constructive dialogue and feedback.
A new compensation philosophy
rewards individual contributions
to the company’s collective success
through annual bonus and
performance shares. (See page 49 ).
Site managers conduct frequent
surveys of their teams as does
the Group on a periodic basis for all
employees. Results are used to form
action plans that address identifi ed
issues and enhance engagement.
A STRATEGY TO ANTICIPATE
FUTURE NEEDS
To sustain a pipeline of talent needed
to manage its business today
and tomorrow, Sodexo leverages
succession planning, talent reviews and
competency models to help managers
project their future career paths.
Based on the 11 worldwide megatrends
(see pages 10-11 ), the Human Resources
community is actively evaluating
options for our future of work: evolution
of our roles, leveraging technologies,
new profi les, way of working, etc., in
a fast-changing competitive environment.
#1
France-based private
employer worldwide(2)
81.6%
E mployee retention rate
12.4
Average hours of training
provided annually per
employee
(excluding Germany and the U.S.A.)
1 STEP for Sodexo Targets for Enhanced Performance.
2 2019 Forbes Global 2000 ranking.
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OUR RISK MANAGEMENT
RISK MANAGEMENT
AND MAIN RISKS
Operational managers are the fi rst line of defense for identifying
and managing risks in their area of activity. Support and transversal functions
defi ne the procedures and standards and provide tools and process es for
operational staff to manage the risks. Internal audit makes an independent
assessment of risk management and recommendations for improvement.
1
RISK MANAGEMENT PROCESS I N THREE LINES OF DEFENSE
BOARD/AUDIT COMMITTEE
EXECUTIVE COMMITTEE
Report
Report
Report
Inform
FIRST LINE OF DEFENSE
SECOND LINE OF DEFENSE
THIRD LINE OF DEFENSE
OPERATIONAL
MANAGEMENT
SUPPORT/
TRANSVERSAL
FUNCTIONS
INTERNAL
AUDIT
R
E
G
U
L
A
T
O
R
S
E
X
T
E
R
N
A
L
A
U
D
I
T
O
R
S
/
MAIN RISKS
Each year, a risk profi le is established based on the risk assessments carried out by senior management of the main entities and
interviews with senior executives. The following risks are considered the most signifi cant for Sodexo:
MEDIUM
HIGH
CLIENT &
CONSUMER CENTRIC
Client retention
Consumer expectations
Bidding risk
Competition
OPERATIONAL
EFFICIENCY
Client contract execution
Technology and information security
TALENT
Talent management and development
CORPORATE
RESPONSIBILITY
EXTERNAL
ENVIRONMENT
Labor shortage
Food, services & workplace safety
Environmental impact
Compliance with laws and regulations
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OUR PROFESSION, OUR MARKETS
IMPROVING
QUALITY OF LIFE:
A UNIQUE ARRAY OF SERVICES
Sodexo believes no asset is more valuable to any business than its people
and that improving their quality of life is key to lasting performance.
An essential partner for companies and organizations, our unmatched off er
of On-site Services helps them to better serve consumers and increase
their effi ciency. Our Benefi ts & Rewards Services and Personal & Home Services
complete our off er to help ensure a better tomorrow for all.
On-site
Services
Benefi ts &
Rewards
Services
Personal &
Home Services
• BUSINESS &
ADMINISTRATIONS
- Corporate Services
- Energy & Resources
- Government & Agencies
- Sports & Leisure
- Others
• HEALTH CARE & SENIORS
• EDUCATION
- Healthcare
- Seniors
- Schools
- Universities
• EMPLOYEE BENEFITS
• SERVICES DIVERSIFICATION
• CHILDCARE
• CONCIERGE SERVICES
• HOMECARE
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On-site Services
Increase a company’s effi ciency,
take care for patients in the hospital, promote academic
growth, provide safety and comfort on a remote site:
our services delivered directly on site improve quality of life
for millions of consumers and enable our clients to improve
their performance. From foodservices and the design of workplaces
to the sterilization of medical devices, reception and cleaning services,
our customized, innovative solutions are adapted to our clients’ needs,
organized into three segments: Business & Administrations,
Healthcare & Seniors and Education.
1
CONSIDERABLE GROWTH POTENTIAL
REVENUES BY CLIENT SEGMENT
On-site Services
activity market potential(1)
is estimated at
900
B I L L I O N
EURO(2 )
Sodexo estimate
KEY FIGURES(1 )
96 %
of Group revenues
Source: Sodexo
BUSINESS &
ADMINISTRATIONS
55%
HEALTHCARE &
SENIORS
25%
EDUCATION
20%
21.1
billion euro
in consolidated
revenues
455,351
employees
1
Including Personal & Home Services .
2 Note: Market estimates are likely to evolve over time, given the growing reliability of information sources in various countries.
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On-site Services
BU SIN ESS &
ADMINI STRAT IONS
REVENUES BY CLIENT
SUB-SEGMENT
ENERGY &
RESOURCES
12%
CORPORATE
SERVICES
51%
GOVERNMENT &
AGENCIES
11%
SPORTS &
LEISURE
15%
OTHERS
11%
KEY FIGURES
55 %
of On-site Services
revenues
11,577
million euro
in revenues
275,262
employees
Source: Sodexo
Corporate Services – Enhancing quality
of life at work
Professional growth and employee quality of life
are drivers of individual and collective performance
for companies as well as key diff erentiators in
the competition for talent. Sodexo’s solutions help
clients create engaging work experiences, optimize
the equipment employees use and improve the
effi ciency of the buildings they occupy. From food
to facilities management services, our solutions
respond to the challenges of company attractiveness,
engagement and operational performance.
Energy & Resources – Ensuring safety, comfort
and performance in harsh environments
Working and living conditions of employees
in onshore and off shore oil and gas, mining,
engineering and construction companies are oft en
extreme. Sodexo delivers integrated, innovative services
to its clients throughout the world.
Hospitality, accommodation, site management,
logistics, transportation and leisure: all services that
ensure residents’ quality of life, safety and comfort.
While contributing to the development of local
communities, our solutions optimize our
clients’ operational effi ciency and ability to attract
and retain talent despite cyclical, volatile markets.
Government & Agencies – Honored to serve
the public interest
Ensuring high-quality services while responding to
budgetary constraints: this is a major challenge
for our clients, whether they are armed forces,
local authorities, national and international
institutions or prisons. Sodexo serves government
personnel, military communities, off enders, and
those who are reintegrating society aft er prison.
From technical maintenance to foodservices, to
the management of complex logistics in peacekeeping
operations abroad, to training and reintegration
assistance to reduce the recidivism rate of off enders
upon release, this wide range of services requires
fl exibility, rigor and reliability.
Sports & Leisure – Delivering unique experiences
and exceptional moments
Recognized partner of organizers of major sporting
and cultural events and manager of exceptional places
for more than 20 years, Sodexo develops solutions
that meet the expectations of a demanding clientele
worldwide. Combining technique and creativity, our
turnkey solutions cover ticketing, travel, foodservices,
safety, logistics, marketing and technical and artistic
organization. In the digital age, Sodexo helps clients
to integrate new technologies into their events
by off ering innovative and personalized services.
Multiple benefi ts that contribute to the success
of prestigious events such as Royal Ascot, the Super
Bowl in the United States, the Tour de France and
the Rugby World Cup, and make exceptional
places shine such as the Eiff el Tower, Lido of Paris,
La Maison Lenôtre, Bateaux Parisiens, Yachts de Paris
as well as Bateaux London and the National Gallery
in the United Kingdom.
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On-site Services
Healthcare – Supporting quality care
1
A market leader for more than 20 years, Sodexo
contributes to the quality of life, well-being and safety
of patients, visitors and healthcare facility staff .
We lead our clients through the changing healthcare
landscape. By providing them with professional
and standardized services, we respond to their
challenges of patient satisfaction and improving
performance. In developing countries, Sodexo also
helps clients meet the rigorous standards required
by international accreditation agencies. Faced with
the growing number of patients being treated in
day hospitals or outpatient units, Sodexo is leveraging
its ability to deliver home-based services to develop
services outside the traditional hospital care
environment.
Seniors – Responding to the challenges
of an aging population
The demographic weight of seniors and the increase
in life expectancy are raising signifi cant societal
challenges. With many seniors remaining independent
longer, the demand for home care services is growing.
At the same time, the progression of chronic diseases
in the elderly is increasing the workload in nursing
homes. These developments require more and
more solutions to support the senior communities .
To meet these challenges, Sodexo off ers a range of
high value-added integrated services designed to
improve the quality of life for seniors in residences
or in a health facility. Adapted for all ages and degrees
of dependence, these services are dedicated to their
physical, moral and social well-being. They also
relieve families, while enhancing the attractiveness
and performance of institutions. With the shortage
of healthcare staff , Sodexo deploys specialized
processes and training to provide its clients with
motivated, qualifi ed employees who perform their
job with kindness.
HEALTHCA RE &
SEN IOR S
REVENUES BY CLIENT
SUB-SEGMENT
SENIORS
28%
HEALTHCARE
72%
KEY FIGURES
25 %
of On-site Services
revenues
5,210
million euro
in revenues
87,98 0
employees
Source: Sodexo
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Schools – Providing a fulfilling educational
environment
Sodexo supports schools around the world in improving
the quality of life of students by serving nutritious
meals to fuel their performance and delivering
maintenance and operations services to create
healthy, safe learning environments that promote
education and engage faculty and staff . Our expertise
allows us to use better employee training resources,
enhanced processes and leading-edge technology to
deliver savings to communities. We drive responsible
and positive solutions for communities in terms of
procurement, employment and waste management.
Sodexo implements innovative programs to help
schools adopt good environmental practices, educate
students about waste and combat unhealthy eating
habits.
Universities – Enhancing quality of life to recruit,
engage and retain students
With its integrated services model, Sodexo takes
a holistic data-driven approach to improving
performance and enhancing quality of life on campus
and in the community. Sodexo collaborates with
University leaders to support their vision, mission and
goals, creating the best possible student experience
through strategic, sustainable enhancements to the
physical, social and academic environments. From
modern, comfortable student accommodations to
chef-inspired cuisine to beautifully manicured grounds
and clean, safe learning environments, Sodexo is
committed to providing a positive and fulfi lling
experience that will boost a university’s ability
to recruit, engage and retain its students.
On-site Services
EDUCATI ON
REVENUES BY CLIENT
SUB-SEGMENT
UNIVERSITIES
55%
SCHOOLS
45%
KEY FIGURES
20 %
of On-site Services
revenues
4,280
million euro
in revenues
92,109
employees
Source: Sodexo
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Benefits &
Rewards Services
With its range of nearly 250 services,
Sodexo Benefi ts & Rewards Services (BRS) seeks to unlock
the potential of people and to keep businesses moving forward.
Its off er strengthen employee experience and ease mobility. Driven by
technological innovation, BRS’s Quality of Life solutions go beyond its widely
recognized vouchers and cards and the workplace. Today, it is creating services
that improve engagement, recognition, work-life balance, travel and expense
management, health and well-being. Through its customized guidance and bespoke
off ers, BRS is responding to the main human resource challenge companies
and organizations are facing today: increasing employee engagement
to contribute to business success.
1
4 %
of Group revenues
440,000
clients
EUROPE, ASIA,
UNITED STATES
57%
KEY FIGURES
892
million euro
in revenues
36
million
benefi ciaries
and consumers
REVENUES BY REGION
Source: Sodexo
4,901
employees
1.3
million affi liated
merchants
LATIN
AMERICA
43%
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Benefits & Rewards Services
EM P LOYEE EX PERI ENCE
ENH ANCED BY
EM PL OYEE B ENEFITS
M OB IL ITY AND EXPENSE
AT THE HEAR T
OF SER VI CES
DI VE RS IF ICATION
In a particularly competitive environment,
companies must diff erentiate themselves to
attract and retain talent. Today, wages are no
longer enough: quality of life at work, recognition,
the work environment and work-life balance
are leading clients to demand innovative and
personalized solutions to improve the quality of daily
life of their employees and reinforce engagement
and motivation; this also contributes to improved
company performance.
From Meal Pass to the Sport Pass, our solutions
encourage healthier lifestyles, promote a better
work-life balance and facilitate personal development.
Sodexo also off ers companies services designed
to enhance the eff orts of their employees:
incentive and recognition programs; professional
development tools such as training, mentoring
and coaching. These solutions help unite teams
around common objectives, recognize their work
and reward their eff orts.
Business travel, the associated expenses
and daily commutes can be complex for businesses
to manage. For employees, these mobility issues are
oft en stressful, with potential impacts on effi ciency,
motivation and even health.
Sodexo off ers simple and easy-to-access solutions
via unique platforms including fuel cards, Mobility
Pass, which covers travel expenses between home
and work, travel booking and management of
business expenses.
Advantageous solutions for companies to help
them better manage their employees’ travel and
business expenses by ensuring real-time visibility
but also for employees in helping to simplify their
movements and improve their quality of life.
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Personal & Home
Services
Sodexo offers a range of Personal & Home Services that respond to
demographic trends and contemporary lifestyles.
Present at each key stage of life, our services cover three areas: Childcare services,
designed to take care of the youngest children while making life easier for parents;
Concierge services, to enhance the development and well-being of our clients’ employees
in the workplace; Home care services, to make life easier for seniors and adults who want
to maintain their independence while enjoying the comfort of their home.
1
Childcare
Sodexo responds to one of the main concerns of parents in France and Germany: fi nding care for their pre-school
children. Real alternatives to traditional c hildcare facilities that are oft en full and poorly adapted to the time
constraints of active parents, our structures have been designed to improve the quality of life of children and
their parents.
Concierge Services
With its corporate concierge services , Sodexo helps companies to make their employees’ daily life easier.
Booking a restaurant, running errands, fi nding a plumber... employees of our corporate clients can benefi t
from a broad range of services at their workplace that improve their well-being, helping to strengthen their
commitment and performance.
Home Care
With their population increasing around the world, seniors today are healthier and want to stay at home
as long as possible. To enhance their independence and quality of life at home, Sodexo off ers personal assistance
and support solutions in Brazil, Germany, France, Norway and the UK, such as carrying groceries, preparing
balanced meals, assisting with travel or basic nursing care.
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1 U N L O C K I N G O U R P O T E N T I A L
OUR KEY FIGURES
MEASURING
OUR PERFORMANCE
Sodexo’s Fiscal 2019 operating performance was marked
by an increase in organic growth.
OUR FINANCIAL KEY FIGURES
EVOLUTION OF CONSOLIDATED REVENUES
AND ORGANIC GROWTH
ON-SITE SERVICES REVENUES BY REGION
20,245
20,698 20,407
19,815
21,954
+3.6%
+2.5% +2.5%
+1.9%
+1.6%
NORTH
AMERICA
45%
9,572 million euro
EUROPE
39%
8,129
million euro
Fiscal
2015
Fiscal
2016
Fiscal
2017
Fiscal
2018
Fiscal
2019
Group consolidated revenues
in millions of euro
Organic growth
in percentage
REVENUES BY ACTIVITY AND CLIENT SEGMENT
4%
BENEFITS & REWARDS
SERVICES
32%
Facilities
Management
services
AFRICA,
ASIA,
AUSTRALIA,
LATIN AMERICA &
MIDDLE EAST
16%
3,366 million euro
UNDERLYING OPERATING PROFIT BEFORE CORPORATE
EXPENSES & INTRAGROUP ELIMINATION BY ACTIVITY
AND CLIENT SEGMENT
21%
BENEFITS & REWARDS
SERVICES
79%
ON-SITE SERVICES*
46%
Business &
Administrations
20%
Education
96%
ON-SITE
SERVICES*
64%
Foodservices
25%
Healthcare &
Seniors
21%
Education
55%
Business &
Administrations
33%
Healthcare &
Seniors
*
Including Personal and Home Services.
For more information see Chapter 3 .
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UNDERLYING OPERATING PROFIT
AND OPERATING MARGIN
SHAREHOLDERS AS OF AUGUST 31, 2019
1,226
1,165
5.9%
6.1%
1,340
6.5%
1,200
1,128
5.5%
5.5%
55.7%
PUBLIC
40.6%
FOREIGN
INSTITUTIONAL
SHAREHOLDERS
Fiscal
2015
Fiscal
2016
Fiscal
2017
Fiscal
2018
Fiscal
2019
Underlying operating profit
in millions of euro
Operating margin
in percentage
11%
FRENCH
INSTITUTIONAL
SHAREHOLDERS
Source: Nasdaq
42.2%
BELLON SA
1.1%
EMPLOYEES*
1%
TREASURY
SHARES
4.1%
INDIVIDUALS
1
NET DEBT AS A PERCENTAGE OF SHAREHOLDERS’
EQUITY* AND CASH CONVERSION
38%
27%
17%
165%
136%
9%
98%
11%
93%
123%
*
Including shares resulting from restricted share plans held in registered
form by employees and still subject to a lock-up period.
EARNINGS PER SHARE, DIVIDEND PER SHARE AND
PAY-OUT RATIO
4.60
4.21
4.85
4.40
4.56
2.20
2.40
2.75
2.75
2.90
58%
55%*
50%
50%
48%
Fiscal
2015
Fiscal
2016
Fiscal
2017
Fiscal
2018
Fiscal
2019
Fiscal
2015
Fiscal
2016
Fiscal
2017
Fiscal
2018
Fiscal
2019
Earnings per share
in euro
Dividend per share
in euro
Operating profit
in percentage
* Debt net of cash and cash equivalents, restricted cash and financial
assets related to Benefits & Rewards Services activity, less bank
overdrafts.
* Dividend subject to approval at the January 21, 2020 Shareholders
Meeting.
SODEXO SHARE PRICE TREND FROM SEPTEMBER 1, 2018
THROUGH AUGUST 31, 2019
SODEXO: +15%
CAC 40: +1%
TSR (TOTAL SHAREHOLDER RETURN)
+10.7 % per year over the past five fiscal years
Market price at the end of the period
– market price at the beginning of the period
+ dividends paid over the period
Market price at the beginning of the period
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1 U N L O C K I N G O U R P O T E N T I A L
OUR EXTRA-FINANCIAL KEY FIGURES
Adapted to the challenges of today and tomorrow and comprised of nine commitments, Better Tomorrow
2025 tracks the deployment of our corporate responsibility actions and measures their impact in the
countries where we operate.
1
Improve quality of life for our employees, safely
As the number one France-based private employer worldwide(1) , employing over 470,000 people from diverse backgrounds,
we are committed to being an employer of choice.
Employees worldwide
END OF YEAR WORKFORCE
422,844 425,594 427,268
… in a safe work environment
460,663 470,237
Also see Chapter 3.2.4.1 .
• 0.86 lost time injury rate for fi scal 2019
Investment in employee development
TRAINING (FISCAL 2019)
• 12.4 average hours of training provided annually per
employee (excluding Germany and the U.S.A.)
INTERNAL PROMOTION RATES BY CATEGORY
(FISCAL 2019)
On-site employees
On-site managers
Off-site employees
Off-site managers
2.2%
8.8%
4.3%
7.6%
Absenteeism
Sodexo’s employees were absent for an average of 8.3 days, due
to occupational accidents or sickness and/or personal accidents
or sickness during Fiscal 2019.
Fiscal
2015
Fiscal
2016
Fiscal
2017
Fiscal
2018
Fiscal
2019
Engaged employees
RETENTION RATE
For total workforce
For site managers
81.6%
87.2%
• 69% Employee engagement rate (+1 point)(2)
2
Ensure a diverse workforce and inclusive culture that refl ects and enriches
the communities we serve
WORKFORCE BY GENDER AND BY CATEGORY (AS OF AUGUST 31, 2019)
10
people
60%
20
people
65%
203
people
63%
40%
35%
37%
52,179
people
470,237
people
56%
55%
44%
45%
Bord
of Directors(a)
Executive
Committee
Group
Managers(b)
Management
Employees
Women
Men
a Excluding employee representatives b Objective: women 40% of Group Senior Executives
1 2019 Forbes Global 2000 ranking.
2 2018 employee engagement survey sent to 386,262 Sodexo employees of whom 62% responded.
38
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1 U N L O C K I N G O U R P O T E N T I A L
3
Foster a culture of environmental
responsibility within our workforce
and workspaces
• 97.6% of Group revenues from countries employing
environmental experts
4
Provide and encourage our
consumers to access healthy
lifestyle choices
• 92.2 % of North America client sites implement actions
that proactively address Sodexo’s 10 Golden Rules of
Nutrition, Health and Wellness
7
Fight hunger
and malnutrition
• More than 1 million euro invested in programs to
empower women working to end hunger in their communities
1
• 122,000 volunteers committed
• 1 U.S. dollar given equals 1 U.S. dollar invested in the
fi ght against hunger.
8
Drive diversity and inclusion as
a catalyst for societal change
• 93.8% of Group revenues of countries with initiatives to
improve the quality of life of women
5
Promote local development,
fair, inclusive and sustainable
business practices
9
Champion sustainable
resource usage
• 69.2% of Group revenues of countries working to deliver
• 95.7 % of spend with contracted suppliers having signed
on the United Nations’ food waste objective
Sodexo’s Supplier Code of conduct.
• 5.5 billion euro of our business value benefi ting SMEs
6
Source responsibly and provide
management services that reduce
carbon emissions
• 80.3 % of sustainable fi sh and seafood of total of fi sh and
seafood procured
Source : Sodexo
BETTER TOMORROW
2025
OBJECTIVES
For more information,
see Chapter 3.2.
Disclosure and Transparency
At Sodexo, we believe that disclosure of fi nancial and sustainability performance information, in a clear, comparable
and accessible manner, enables consumers, investors, other stakeholders and company management to make informed
decisions. Since Sodexo’s creation, our financial, social, societal and environmental performance has been publicly
disclosed through our Universal Registration Document. To ensure transparency, the information and indicators have
been audited by an independent third party for each of the past seven years.
Sodexo has been the industry leader of the Dow Jones Sustainability Index for the past 15 years and holds Gold Standard
certifi cation from EcoVadis.
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39
2
GROWING
OUR BUSINESS
RESPONSIBLY
With the size of our potential markets and our leadership in
multiple domains – including foodservices and facilities management,
our commitment to social and environmental responsibility, innovation
and the leveraging of digital technologies – the opportunities for growth
are considerable. To capture these opportunities, our strategic agenda
is focused on returning to sustained growth through four pillars: being
client and consumer centric, enhancing operational effi ciency, nurturing
talent and anchoring corporate responsibility in everything we do.
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Being client
and consumer
centric
p.42
Enhancing
operational
effi ciency
p.45
Empowerment
a nd
Accountability
Nurturing
talent
p.48
Anchoring
corporate
responsibility
p.51
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2 G R O W I N G O U R B U S I N E S S R E S P O N S I B LY
Being client
and consumer
centric
Sodexo has adopted a focused approach to client
and consumer centricity to achieve its growth and profitability objectives.
Essential for anticipating the needs of our clients and retaining them, this approach also
allows us to better understand their markets and to diff erentiate our services from those of
our competitors. Through constant innovation, the Group develops and refi nes its service
off ers to respond to consumer expectations and client challenges, whether local or global,
throughout the world and across all of its segments and activities. The broad range
of Quality of Life services Sodexo teams deliver to consumers helps clients improve
their performance, optimize costs, achieve operational effi ciencies and drive
employee engagement. From Paris’ premier tourist destination to the most remote
regions of Australia, Sodexo’s response is the same:
putting the identifi ed needs of clients and consumers fi rst!
93.3 %
Sodexo client
retention rate
100
million
consumers served by
Sodexo teams worldwide
each day
32%
of On-site Services revenues
generated through facilities
management services
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NEW GASTRONOMICAL OFFERING TO MATCH
THE IRON LADY’S STATURE
Enhancing the visitor experience at the Eiff el Tower
In partnership with two celebrated chefs and the startup Ubudu(1) , Sodexo is creating a spectacular new culinary experience,
to delight visitors at one of the world’s most iconic monuments.
Who says you can’t improve on an icon like the Eiff el Tower, which celebrated its 130th anniversary in 2019 and is visited
by six million people each year?
The Umanis consortium, led by Sodexo, was awarded a new 10-year foodservices contract in 2018 by Société d’Exploitation
de la Tour Eiff el (SETE). The challenge is daunting: to give visitors a culinary experience that lives up to this undisputed showcase
of French know-how.
REFRESHING THE VISITOR EXPERIENCE
Sodexo combines its expertise
in delivering foodservices at
exceptional venues, partners with
two Michelin-starred chefs, Frédéric
Anton and Thierry Marx each aspect
of the visitor experience, from the
design of dining areas to the culinary
off er and a regionally-anchored
socio-environmental approach.
The objective is clear: to reinvent
the reception and itinerary for visitors
that highlights the excellence of French
cuisine and the quality of Paris regional
products. The initiative encompasses
all of the site’s dining off ers: the Jules
Verne, under the control of Frédéric
Anton; the Brasserie, managed by
Thierry Marx; the Bistro; the Champagne
Bar; and the new Gustave Eiff el lounge,
catering to business professionals.
Finally, the carry-out on the Tower’s
forecourt is enriched with an original
mobile off er, developed with Ubudu,
featuring digital ordering and delivery
of seasonal products by scooters.
Sky-high goals for the next
10 years:
+35%
in total revenues
+50%
in the number of consumers
served each year
AN ENVIRONMENTALLY RESPONSIBLE,
SUSTAINABLE APPROACH
Sodexo’s expertise in eco-responsible
practices (sustainable purchasing
charter signed with suppliers,
minimization of packaging materials)
led to the design of an ambitious and
diff erentiating environmental plan,
reinforced by the personal commitment
of the partner chefs, both recognized
for their actions promoting local cuisine
and low-waste food production.
Sodexo also created the “Artisans
Guild of the Eiff el Tower,” a network
of Paris region artisans selected
for their remarkable know-how and
their eco-responsible commitment.
Guild members, selected by a panel
chaired by Thierry Marx, off er their
fi nest local and seasonal products
to the monument’s visitors. This
original initiative provides another
opportunity to highlight how the best
of local expertise contributes
economically and socially to
the Tower’s ecosystem.
“I am delighted that the Sodexo-led
Umanis consortium is supporting
us in this project, alongside Frédéric
Anton and Thierry Marx, two iconic
and talented chefs. Our collective
ambition is to reinvent the experience
of visitors to the Tower, making it
a gastronomic destination in its own
right and a showcase of culinary
excellence.”
Patrick Branco Ruivo
General Manager of the Eiff el Tower
operating company (SETE)
2
1 Ubudu, a partner of the Umanis Group, off ers operational effi ciency solutions through a platform combining advanced geo-location technologies.
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REMOTE LIFELINE FOR CONSUMERS AND CLIENTS
Facilitating daily life, MyWay App connects resident communities
On remote sites in Australia, Sodexo’s new app is enhancing quality of life for residents while helping clients ensure a safer,
more engaging environment.
In an increasingly connected world, feelings of isolation are becoming a thing of the past, even for employees of companies
operating in some of the world’s most remote locations. Whether they work on an off shore platform or a mine site, residents can
now access real-time information and services with a few clicks on their mobile phone.
QUALITY OF LIFE AT THE ENDS
OF THE EARTH
Sodexo conceives MyWay App using a
consumer-centric design methodology
to understand user expectations
and needs. A set of standard and
customized features facilitates site
entry, life on site and departure,
ordering of meals and retail items,
activity reservations, maintenance
requests, incident reporting/tracking
and communication between team
members.
Users benefi t from information on
the site’s health and fi tness off erings,
regular communication on balanced
eating and Sodexo’s Mindful program,
which helps them make informed
choices to achieve their fi tness and
leisure goals without having to sacrifi ce
quality or taste.
MyWay App also responds to client
needs by facilitating dialogue with
residents and generating valuable data
on their satisfaction levels. This in turn
helps pinpoint opportunities to improve
quality and services that are critical to
maximizing employee engagement.
MY SAFETY
MyWay App will soon include features to
enhance safety management. Through
the app, users will be able to instantly
report hazards and safety issues and
upload photos. Site managers will use it
to send safety alerts and communicate
other urgent/critical safety messages
to residents. In the event of severe
weather, for example, residents will be
quickly notifi ed of hazardous conditions
via MyWay App and provide immediate
feedback on their situation and need
for help. The app’s locator function will
enable emergency assistance to be
rapidly directed to the right location.
Following the 2019 launch at Sodexo
sites in Australia, MyWay App is
being rolled out to client sites in more
countries in Fiscal 2020.
19
sites in Australia
where MyWay App
is deployed
7,453
people have downloaded
MyWay App
9,199
service requests
from 20% of users
AND ALSO
DIGITAL COMMUNITY
To help clients to better anticipate and respond to their consumers’ needs, Sodexo’s concierge services subsidiary Circles
launched an innovative digital platform in 2019 called the Digital Community Manager. This platform perfectly satisfi es the
personal, local and professional needs of consumers. The Digital Community Manager connects users to their organization’s
community, the local community and the Sodexo community of services and events. Part of a multichannel strategy, the
platform enlivens daily life of communities by reinforcing a sense of belonging and social responsibility for users, whether for
employees in a company, students on a campus or seniors in a retirement home.
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Enhancing
operational
effi ciency
2
To reinvigorate growth, efficient execution is key.
Sodexo has launched initiatives across all of its businesses and segments
to enhance food and labor productivity and simplify the organization,
in order to free-up fi nancial capacity to accelerate the launch of new off ers,
digital solutions and sales and marketing eff orts.
At the heart of the Group’s strategy is the STEP ( Sodexo Targets for Enhanced
Performance ) framework, designed to drive operational performance at site,
country, regional and global levels through consistent language and common
operational indicators. Innovative programs tailored to the specifi c characteristics
of our business such as I PROMISE for On-site Services or Rydoo for Benefi ts &
Rewards Services contribute to improving operational effi ciency.
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DELIVERING ON OUR PROMISE
Continuous improvement initiative in On-site Services
In order to provide an ever more effi cient response to its clients and consumers, Sodexo is deploying I PROMISE,
an innovative digital program that enables site management teams to involve all employees in a process of continuous
improvement while promoting the exchange of best practices.
Through I PROMISE, site and regional managers implement new processes, tools and innovative solutions that allow them to
improve their performance and enhance client satisfaction. Also designed to free up time, this approach supports one
of Sodexo’s strategic objectives: to improve operational effi ciency.
Site managers collaborate online to share ideas with their peers and use engaging and interactive tools, such as a simulation
game combining short videos and quizzes to identify good and bad situations on sites and a digital journey with 10 missions
focusing on operational excellence.
SHIFTING TO HIGHER VALUE-ADDED
ACTIVITIES
I PROMISE makes it possible to
ensure conformity of services with
contractual commitments and to
determine opportunities for progress
and associated risks.
Another key objective is the elimination
of activities that do not add value
for the client or contribute to Sodexo’s
profi table growth. By reducing
the administrative burden, this frees
managers to focus on innovative
15 countries
deployed: Argentina, Brazil,
Canada, Chile, Colombia, Finland,
France, India, Ireland, Norway,
Peru, Spain, Sweden, UK, U.S.
1,300
sites by the end of Fiscal 2019
+125
best practices and innovations
available online through
INNOV’hub intranet
1.5hr
Average time savings per week
reported by site managers
approaches that benefi t the client.
The I PROMISE toolkit includes visual
management tools(1) to enable the team
to progress, lean management tools(2)
to improve productivity, best practices
sharing and benchmarking with similar
sites.
I PROMISE is supported by a reward and
recognition program to motivate Sodexo
employees to continuously increase
the value they provide clients and to
highlight the best innovations.
PROMISING RESULTS
Following the roll-out of I PROMISE to
1,300 sites as of the end of Fiscal 2019,
thousands of action plans had been
launched and Lean Management tools
were being deployed. Site managers
reported freeing up an average of
90 minutes per week to focus their
attention on adding value for clients
and provided highly positive feedback
on the benefi ts of sharing best
practices.
A new way of thinking and a reinforced
culture of continuous improvement is
taking hold.
“Nestlé needed to make a signifi cant
step change with how we could deliver
better value FM and workplace services
without sacrifi cing the employee
experience. We knew we needed to
harness Lean thinking using the scale
and experience of Sodexo to assist with
this goal. We believe that I PROMISE can
be the tool that delivers that goal by
promoting operational excellence and
service innovations.”
Martin Bell
Global FM Operations Management,
Nestlé Global Business Services
AND ALSO
PROTECTING OUR PEOPLE
For Sodexo, the health and safety of
its employees is a fundamental issue
that requires a process of continuous
improvement.
To maintain health and safety
standards at the highest level, Sodexo
has put in place a global HSE(3) “Zero
Harm” program. Sodexo Safety Nets
are based on a risk prevention approach
supported by a dynamic risk assess-
ment tool, “3 Checks For Safety.”
Sodexo’s behavior safety program is
built around four strategic enablers
of our “Zero Harm” mindset:
• Leadership: safety depends
on a culture where everyone
understands and takes
responsibility for their own
health and safety and that of
their colleagues, clients and
consumers.
• Communications &
Engagement: as the working
environment and business
changes, communicating and
engaging with teams, clients
and suppliers is increasingly
important.
• Training & Competence:
Everyone must have the right
training and competencies,
coupled with the right tools and
equipment to ensure quality,
safe and effi cient services.
• Compliance & Learning:
Sodexo has put in place
mandatory compliance standards.
Incidents and accidents are
reported using a global HSE
tool, Salus. An investigation
is conducted for any serious
accident and teams are
encouraged to identify new and
more eff ective ways of working.
1 Visual management is a management method that uses visual information to drive objectives.
2 Lean management is a system of work organization and management to improve the quality and profi tability of a company’s production by avoiding
the waste of its resources.
3 Health, Safety and Environment (HSE): for Sodexo, the scope of HSE includes occupational health and safety, food safety and the environment.
46
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2 G R O W I N G O U R B U S I N E S S R E S P O N S I B LY
SIMPLIFYING MANAGEMENT OF BUSINESS TRIPS
Rydoo confi rms its strong growth
Launched in June 2018, Rydoo grew its revenues by 40% in Fiscal 2019 and now has more than 680,000 users in
62 countries. The business travel and expense management application aims to become one of the world leaders in
the sector.
Rydoo simplifi es the lives of employees and organizations by off ering a “one-stop-shop” solution combining business travel
and expense management: thanks to its integrated approach, Rydoo covers all employee needs, whether it is booking travel or
managing expense reports. Sodexo made the fi rst demonstration through an internal deployment of the SaaS(1) solution, which
achieved an average adoption rate of 93% in its fi rst month.
FLEXIBILITY AND CUSTOMIZATION
Rydoo is a unique solution that
each company can adapt to its
needs, thanks to its complementary
modules. The mobile application allows
employees to manage their business
expenses from a simple photo or to
easily book a trip, in accordance with
the company’s travel policy. This way,
everyone within the organization can
focus on what really matters and forget
about paper expense reports.
Thanks to its centralized payment
system, employees no longer have
to advance their travel expenses
and fi nancial services receives only
a monthly invoice for all trips made,
along with a consolidated report.
This complete automation, highly
appreciated by the Finance Department,
translates into real savings: Rydoo
reduces the cost of processing business
expenses by 87%.
Financial Departments have an
accurate visibility on the incurred costs.
Finally, its business model, based on
the number of active users, allows
better control of budgets and off ers
a scalable solution to organizations.
Rydoo’s success is in line with the
dynamic business travel market,
which is expected to approach
30 billion euro in France in 2019
and reach 1,550 billion euro worldwide
by 2022.
A CUSTOMER’S EXPERIENCE:
LAVAZZA UK
Present in more than 90 countries,
the Italian coff ee leader, Lavazza,
chose Rydoo to digitize the
management of the expense reports
of its UK-based itinerant sales teams.
Its objective: to replace an aging
system of forms designed via Excel fi les,
manually fi lled-in, and to eliminate
paperwork maintained by employees.
The mobile solution and the digitization
of receipts made it easier to analyze
expenses and track advances.
The speed and frequency of
reimbursement of employees has
increased. Lavazza UK’s IT Department
appreciated the ease with which Rydoo
was deployed and quickly adopted by
users. The feedback from employees
was also extremely positive, underlining
the very intuitive use of the solution.
“The huge advantage is that everyone,
wherever they are, can submit
their expenses in no time and that
their approval is just as fast via the
application. The mobile solution was
decisive for us in terms of accessibility.”
Mark Mathews
IT Director, Lavazza UK
40%
Revenue growth in Fiscal 2019
8,200
clients
680,000
users
4.4/5
User satisfaction rate
(G2 Crowd)
Ranked in the Top 100 B2B
Software of G2 Crowd, leading
user testing platform
1 SaaS: Soft ware as a Service
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Nurturing
talent
Sodexo’s employees – designers and providers of
the company’s services to its clients – are central to its offer,
culture, success and future growth.
To maintain excellence in service quality while ensuring long-term
profi table growth, Sodexo focuses on three major challenges: reinforcing
a performance-based culture based on shared priorities and indicators, anticipating
needs in terms of resources, skills and competencies and off ering training,
learning and development opportunities at all levels.
Convinced that a safe, motivating and open work environment fosters individual
commitment and collective performance, the Group is fully committed to diversity
and inclusion, integrity and the continual reinforcement of health and safety.
Fiscal 2019 initiatives refl ect the company’s commitment to nurturing
the potential of the talent on which it depends and that will shape its future.
0.86
Lost time injury rate
12.4
Average hours
of training provided
annually per employee
(excluding Germany
and the U.S.A.)
11
Consecutive years in which Sodexo
has been listed by DiversityInc
among the Top companies for
LGBT Employees, for Talent
Acquisition for Women of Color
and for Executive Women
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REINFORCING A PERFORMANCE CULTURE
New compensation policy
Sodexo introduced a new compensation policy for its 60,000 managers in 2019 to better diff erentiate and reward individual
contributions to the Group’s collective success. The objective: promote the empowerment and accountability indispensable to
Sodexo ’s growth.
To empower managers and reward them for their contribution to the company’s results, Sodexo bases its compensation on a
philosophy of paying for performance. The objective is to reward results and to promote behaviors that foster sustainable and
profi table growth. This policy is based on sharing the collective value created to reward each person’s individual contribution.
Compensation policies and programs are intended to be straightforward and transparent, grounded in globally consistent
principles and guidelines that are adapted to specifi c local factors. A key focus is empowerment of the line manager.
COMPENSATION COMPONENTS
Base pay is the fi xed part of the
compensation package which
compensates employees for the
sustainable contribution they provide
to the organization. It is benchmarked
to enable Sodexo to attract and retain
required talent and evolves based on
job profi ciency, skills, behaviors and
potential.
Short-term incentives include an
annual variable performance bonus,
awarded based on the achievement of
set objectives. Based on a combination
of individual and collective performance,
bonuses are intended to compensate
people for taking smart risks, “walking
the extra-mile” and achieving
outstanding performance.
Long-term incentives are provided
mainly in the form of performance
shares, granted to a limited number
of individuals holding positions with a
signifi cant impact on business results
and/or demonstrating an outstanding
engagement and performance over
time and/or with recognized potential
and expectations for the future.
Sodexo’s new compensation policy
expands the attribution of performance
shares, previously reserved for senior
executives, to managers with high
potential and outstanding performance.
A HOLISTIC APPROACH
Benefi ts, as fl exible as possible to
match specifi c employee needs, are
also part of the total reward package
and a key element of Sodexo’s quality
of life employer promise. They include
tangible non-monetary reward elements
such as health insurance, retirement
or pension plans, life or disability
insurance and other benefi ts.
Each reward component is considered
in terms of the business’s ability to
27 %
of performance share
recipients in 2019 do not hold
senior management roles
2
fi nance it. Fundamental to an eff ective
compensation policy is its equity and
fairness and a recognition that it truly
results in the diff erentiation of people
based only on their contribution and
behaviors.
The objective: engaged, motivated and
high-performing teams that contribute
to a results-oriented culture that
creates value for clients and consumers.
AND ALSO
EMPLOYEE ROLE IN DIGITAL
TRANSFORMATION RECOGNIZED
Sodexo’s commitment to preparing
its employees to be part of the
Group’s digital transformation was
recognized with a Brandon Hall HCM
Excellence award. Its global Digital
Passport learning program was
designed by employees themselves
to develop the right mind-set, skills
and specialization to accelerate
the digital transformation at all
of the company’s operational
levels. The Excellence Awards
recognize organizations that have
successfully deployed transformative
programs, strategies and processes
that have contributed to company
performance.
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DEVELOPING SKILLS, OFFERING OPPORTUNITIES
Foodservices Apprenticeship Training Center launched in France
To address worker and skills shortages in the foodservices industry, Sodexo joined with Accor, The Adecco Group and Korian in
launching a joint apprenticeship training center in March 2019, to open in 2020. The center will enable people in France with
few qualifi cations to learn new skills, increasing their employability and providing the business with the resources it needs to
deliver its services.
The initiative leverages a new law in France facilitating the creation of such centers by companies, alone or in partnership with
other companies. Sodexo and its partners, all leaders in their market, joined forces to enhance the image of the foodservices
sector and address labor and skills shortages.
The partners’ shared objectives are to increase the industry’s attractiveness, particularly to young people, by off ering a
qualifying training path with a twofold objective: to boost employment through skills training targeted to industry needs and to
contribute to the performance and growth of the partner companies.
TEACHING SOFT SKILLS
In addition to raising awareness
and the image of foodservices
professions, the center will allow
the companies to defi ne the
educational content and adapt it
to their needs.
Beyond technical skills, this includes
imparting knowledge of workplace
health and safety issues as well as
developing the soft skills that are
critical in consumer-facing jobs,
such as a sense of service and
hospitality or empathy as well as
the ability to work as a team, a topic
of particular focus.
More than
11,000
employees hired
for foodservices jobs by
the 4 partner companies
in 2018
1,000
participants
per year in initial training
through apprenticeship or
continuing training
THREE PRIORITY AUDIENCES
Apprentices will benefi t from
the diversity of skills required by
four diff erent industry sectors and
innovative teaching methods.
Scheduled to begin in early 2020,
the training programs, for both initial
and continuing education, have
three goals: to attract young people,
off er qualifying training courses to
people that have separated from the
employment market and promote
employee development in partner
companies.
“This center will enable us to defi ne
the curriculum to respond to our
business needs, including focusing
on soft skills that are essential to
interactions with consumers.”
Anna Notarianni
Sodexo Region Chair, France,
On-site Services
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Anchoring
corporate
responsibility
Sodexo’s commitment to corporate responsibility is a source of differentiation
that drives employee engagement and responds to stakeholder expectations.
These include rising awareness of the impact of food choices on health, the amount
of food wasted globally and economic disparity in communities.
Through its corporate responsibility roadmap, Better Tomorrow 2025,
the company fosters diversity and inclusion and takes action in a number of areas,
from developing and advocating healthy and sustainable eating
choices to sourcing locally and inclusively.
Among its areas of particular focus are two highlighted in this report:
reducing its carbon footprint and ensuring the waste reduction on sites.
5,121,136
tons of CO2
Scope 3 Supply Chain
carbon emissions
5.5
56.2 %
billion euro
of Sodexo business value
benefi ting SMEs
of total of shell eggs
purchased by Sodexo are
cage free shell eggs
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FOOD SHOULD BE EATEN, NOT WASTED
Sodexo extends its leadership in fi ghting food waste
Sodexo is deploying innovative technology at its sites around the world to achieve its goal of halving food waste and losses
in its operations by 2025.
The Group extended its eff orts to fi ght against food waste by announcing in May 2019 the deployment of a data-driven
food waste prevention program, WasteWatch by Leanpath(1), at 3,000 sites within one year.
T he Group’s program for preventing food waste incorporates smart food waste measurement technology which enables
Sodexo teams to easily and rapidly capture food waste data and identify what is being wasted and why. Teams are then able
to implement targeted operational and behavioral changes to eliminate avoidable waste generated by kitchens or disposed by
consumers. On average, the program has been shown to be eff ective in reducing food waste by 50% on the sites on which
it has been deployed.
DEPLOYMENT EXAMPLE
In March 2018, a site in Singapore
implemented WasteWatch beginning
with training sessions for Sodexo
employees and end users, followed by
a trial run using the new equipment.
As the program was fully implemented,
initiatives were introduced to reduce
trim waste during food preparation
and raise awareness with students to
reduce post-consumer waste. Daily
production planning has helped reduce
food waste from overproduction and
chefs are contributing new ideas to
further reduce food waste. WasteWatch
implementation has helped the client
meet its sustainability goals and
generated a strong positive response
from the team and the surrounding
school community.
FIGHTING PLASTIC WASTE IN OCEANS
Single-use plastics have traditionally
been a staple of the Food services
industry due to their ability to preserve
food, and so reduce food waste.
At the same time, it pollutes oceans,
harming marine life wildlife and the
wider environment. To reduce its
dependence on plastics, Sodexo has
implemented innovative packaging
and recycling solutions that are more
environmentally friendly - reusable
materials, bioplastics, organic
materials. We have committed
to reducing single-use plastics in
15 countries that represent around 70%
of our revenues.
“Our goal is to prevent food waste
throughout the value chain and
empower other stakeholders to join
this eff ort. Collaboration is the most
eff ective way to reduce food waste but
it’s also the most challenging.”
Damien Verdier
Group Chief
Corporate Responsibility Offi cer
69.2%
of Group revenues
are from countries
working to deliver on
the United Nations’ food
waste objective
1 Leanpath is the global leader in food waste measurement and prevention.
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REDUCING CARBON EMISSIONS
Sodexo collaborates with its clients and suppliers to help them to achieve
their sustainability goals
Sodexo has been working with the World Wildlife Fund (WWF) to measure and reduce the Group’s carbon footprint since
2010. As part of its Better Tomorrow 2025 roadmap , the Group tracks progress toward achieving its 2025 objective to
reduce carbon emissions by 34%.
Sodexo has achieved signifi cant carbon emissions reductions in Scope 1 and 2 (direct GHG(1) emissions from the combustion
of energy and electricity). However, there is far greater potential to improve environmental outcomes through the reduction
of Scope 3 carbon emissions (indirect emissions), which represent most of the Group’s footprint. Sodexo therefore revised its
methodology to calculate and capture emissions reductions achieved in its supply chain.
In May 2019, Sodexo submitted its 34% carbon emissions reduction objective for offi cial validation by the Science-Based
Target i nitiative (SBTi), in line with the most recent climate data and a warming trajectory limited to +1.5° C. This target was
validated by the SBTi in July 2019.
EMISSIONS REDUCTION
INITIATIVES
In addition to its food waste
prevention program , Sodexo is
taking a number of actions to reduce
its environmental impact, as well as
that of its clients and suppliers.
RESPONSIBLE SOURCING AND LOCAL AND SMALL
BUSINESS ENGAGEMENT
Today, more than half of Sodexo’s
carbon emissions come from our supply
chain, primarily from carbon intensive
commodities such as beef, dairy,
palm oil, soy and paper that can drive
deforestation.
Sodexo places a strong focus on
supporting local and small businesses
and suppliers who promote sustainable
agricultural practices, such as organic
dairy products supplier, Triballat Noyal,
which prioritizes use of renewable
energies and reduces production waste
through its ambitious recycling policy.
2
Physical certifi ed sustainable
palm oil represents
34.7 %
of the total volume
purchased by Sodexo
5.5
billion euro
of Sodexo business value
benefi ting SMEs
1 Greenhouse gas.
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SUSTAINABLE EATING: PROMOTING
PLANT-BASED MEAL OPTIONS
92.2 %
of North America client
sites implement actions
that proactively address
Sodexo’s 10 Golden
Rules of Nutrition,
Health and Wellness
Sodexo is working with Knorr ,
Unilever and WWF to off er delicious,
plant-based, environmentally
sustainable dishes in 5,000 Sodexo
restaurants in Belgium, the United
States, France and the United Kingdom.
In August 2019 Sodexo announced
a partnership with Impossible Foods
to off er their plant-based burger
across 1,500 food service sites within
North America. When com pared
alongside a traditional meat-based
burger, the Impossible Burger™ used
96% less land, 87% less water and
89% less GHG emissions.
“Joining forces with chefs and the
food industry is an important step
to changing the way we produce and
consume food, moving away from an
over-reliance on carbon heavy foods
towards more plant-based diets.”
Sarah Halevy
WWF Sustainable Diet Manager
SUPPORTING A SHIFT TO INNOVATIVE
ENERGY SOLUTIONS THROUGH CREDIBLE
MANAGEMENT EXPERTISE
Sodexo’s energy management experts
help clients increase their effi ciency,
reducing energy consumption and costs
while achieving sustainability goals.
Sodexo off ers a global holistic energy
service which covers energy strategy,
compliance, procurement, monitoring
and technologies which drive effi ciency.
Sodexo’s energy solutions help many
clients achieve six-fi gure annual energy
cost savings and attractive return on
investment.
“By working collaboratively
and embracing Sodexo values,
we’ve been able to explore and
implement innovations to help
benefi t the facility’s sustainability
now and in the future.”
Gary Brown
Energy Manager
Manchester University NHS Foundation
Trust
47%
62%
91.1%
reduction in carbon emissions
(compared to 2011 baseline)
absolute, for scopes 1 and 2
reduction in carbon emissions
(compared to 2011 baseline)
intensity, for scopes 1 and 2
of Group revenues
of countries hold one or more
ISO 14001 certifi cations
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3
CONSOLIDATED
INFORMATION
3.1
Fiscal 2019 Activity Report
3.1.1 Fiscal 2019 year highlights
3.1.2 Fiscal 2019 performance
3.1.3 Consolidated fi nancial position
3.2
Extra-financial reporting
3.2.1 470,000 employees serving clients
and consumers
3.2.2 Engaged talents
3.2.3
Investment in talent development
3.2.4 Flexible organization, respectful of
employees, off ering good working
conditions
3.2.5 Running business with integrity and
respect for human rights wherever
Sodexo operates
3.2.6 Our commitments as a service provider
56
56
58
66
69
69
71
72
73
74
75
3.2.7 Our commitments as a corporate citizen 77
3.2.8 Our reporting methodology
79
3.2.9 Report by one of the Statutory
Auditors appointed as an
independent third party, on
the consolidated non-fi nancial
performance statement in the
Management Report
3.3
Consolidated financial
statements as of August 31, 2019
3.3.1 Consolidated income statement
3.3.2 Consolidated statement
of comprehensive income
3.3.3 Consolidated statement
of fi nancial position
3.3.4 Consolidated cash fl ow statement
3.3.5 Consolidated statement of changes in
shareholders’ equity
3.4
Notes to the consolidated
financial statements
86
86
87
88
90
91
93
3.5
Statutory Auditors’ Report
on the consolidated financial
statements
144
3.6
Supplemental Information and
condensed Group organization chart 150
3.6.1 Financial ratios
3.6.2 Two-year fi nancial summary
3.6.3 Exchange rates
3.6.4
Investment policy
150
151
152
153
154
81
3.6.5 Condensed Group organization chart
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C O N S O L I D A T E D I N F O R M A T I O N
3 F i s c a l 2 0 1 9 A c t i v i t y R e p o r t
3.1 FISCAL 2019 ACTIVITY REPORT
3.1.1 Fiscal 2019 year highlights
3.1.1.1 Financial results
• Organic revenue growth for the year, at +3.6%, is above
the original guidance range of +2 to +3% given in
November 2018 and the revised guidance of “around +3%”
in July 2019. The underlying operating profi t margin was in
line with our comments in July and at the lower end of the
original guidance range (5.5% to 5.7%, excluding currency
impact) at 5.5%.
• Other operating income and expenses reached 141 million
euro, compared to 131 million euro the previous year.
Restructuring costs amounted to 46 million euro in Fiscal 2019
compared to 42 million euro in Fiscal 2018. Lower acquisition
costs and higher gains on the sale of assets nearly off set higher
amortization and depreciation of acquired intangible assets.
• Reported net profi t was 665 million euro, up +2.2%. Basic
EPS was 4.56 euro up +3.6%, helped by a lower average share
count following the share buy-back program in Fiscal 2018.
• On-site Services organic revenue growth of +3.3% has
signifi cantly improved relative to previous years, refl ecting:
• Underlying Net profit totaled 765 million euro, up +8.3%,
with underlying EPS at 5.25 euro, up +10.1%.
• a return to growth in revenue in North America, at +1.8%
for the full year, and sustained growth of +4.6% in all
other regions;
• mixed performance on key indicators:
–
client retention rate has decreased 50 basis points to
93.3% due to losses in Healthcare in the second half.
Excluding the one large contract exited, retention was
up 10 bps. All other regions and segments are stable or
improved;
– new sales development was down 50 basis points to 6.3%,
due to stricter selectivity in the bidding process;
–
same site sales growth was +3.1%, up from +2.6% in
Fiscal 2018, reflecting a combination of more inflation
pass-through, solid cross-selling, offset somewhat by
a net negative impact from IFRS 15 implementation of
about 20 basis points ;
– with the award of the Summer 2020 Olympics hospitality
contract, the two major sports events in Japan (the
Rugby World Cup and the Olympics) should contribute
approximately 100 basis points of comparable site growth
for Fiscal 2020.
• Benefits & Rewards Services organic revenue growth was
+8.5%, well balanced between Europe, Asia and USA at +8.6%
and Latin America at +8.3%.
• The underlying operating margin was stable at 5.5% as
published and excluding the currency impact. Productivity
gains compensated investments in growth.
• The dividend to be proposed at the Shareholders Meeting
on January 21, 2020, is 2.90 euro, up +5.5% on the previous
year, compared to an EPS up +3.6%. As a result, the pay-out
is at 64%, or 55% relative to Underlying EPS.
• Free cash flow reached 907 million euro, representing a
strong performance following an exceptional performance in
Fiscal 2018 at 1,076 million euro(1) and despite a signifi cant
increase in net capex at 415 million, or 1.9% of revenues,
against 298 million euro in the previous year. As a result, cash
conversion remained high at 136% vs 165% in Fiscal 2018.
• After taking into account acquisitions and dividends,
consolidated net debt at the end of the period was down
slightly to 1,213 million euro compared to 1,260 million euro
at August 31, 2018. As a result, the Group’s fi nancial position
remained strong, with a net debt ratio at 0.9, just below the
target level of 1-2.
• Acquisitions, net of disposals, amounted to 301 million
euro for the year, including:
•
•
•
i n O n - s i t e F o o d s e r v i c e s , N o v a e a n d A l l i a n c e i n
Partnership, strengthening the Group’s presence in high
end Corporate Services in Switzerland and public-sector
Education in the United Kingdom;
in Homecare, several companies, strengthening the
Group’s positions in North America, France, and the
United Kingdom, and entering Brazil, the Nordics market
and Asia;
in Childcare, with the acquisition of Crèches de France,
doubling our presence in the French market and entering
the German market with Elly & Stoffl ;
1 Including a tax reimbursement and related interest for a total of 51 million euro.
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• during the year, the Group also acquired minority stakes
in the digital/tech companies Meican in China and Zeta in
India, which were already providing On-site and Benefi ts
& Rewards operations with technology platforms in their
home countries. The strategy is to deploy these platforms
in other countries around the world.
• Sodexo’s engagement in Corporate Responsibility
continues to be recognized within the investment community,
by remaining the top-rated company in its sector within the
Dow Jones Sustainability Index (DJSI) for the 15th consecutive
year, and the highest marks in SAMs “Sustainability Yearbook”
for the 12th consecutive year in 2019 .
3.1.1.2 Evolution in Governance
At the next Shareholders Meeting, on the recommendation of the
Nominating Committee, the Board will propose, as independent
directors:
• the following appointments:
• Véronique Laury, the former Chief Executive Officer
of Kingfisher, a UK retail FTSE100 company, with the
Castorama and B&Q brands. She will bring to the Board
her strong consumer knowledge, as well as sales and
marketing expertise in a B to C environment;
• Luc Messier has both Canadian and American citizenships.
He will bring significant international operational
experience, notably in the energy sector, through
executive management positions held with large French
and American multinational companies (ConocoPhilips,
Technip, Bouygues, Pomerleau);
• the following reappointments:
• Sophie Stabile, notably for her experience in operations
and fi nance in the services sector as well as her expertise
in mergers and acquisitions;
• Cécile Tandeau de Marsac, notably for her experience in
marketing and in human resources in an international
group undergoing signifi cant organizational changes.
In addition, the Board offers its sincere thanks for their
tremendous contributions to the Board to:
• Robert Baconnier, whose mandate expires at the Annual
Shareholders Meeting to be held on January 21, 2020, and
who has announced his intention to retire as director, which
he has been since February 8, 2005;
• Astrid Bellon who has expressed her wish to no longer be a
Board director from January 21, 2020, which she has been
since July 26, 1989, to fully devote herself to her role on the
Orientation Committee of the Pierre Bellon Foundation as
well as to her personal projects.
Should these appointments and renewals be approved by
shareholders at the General Meeting on January 21, 2020, the
Board would be composed of 12 members, including 2 employee
representatives. Amongst the 10 named by the Assembly , 7 are
independent, 6 are female and the average age is 55 years old.
C O N S O L I D A T E D I N F O R M A T I O N
F i s c a l 2 0 1 9 A c t i v i t y R e p o r t
3.1.1.3 Focus on Growth
3
The Group’s strategic agenda Focus on Growth has oriented
the actions to generate productivity, by enhancing operational
effi ciency, to free up the means to continue to invest in growth
by being more client and consumer centric. There has been a
focused effort to put food back into the heart of everything
we do. We are reinforcing discipline into our organization,
by nurturing talent with new training, a new performance
development framework Aspire, and considerable management
changes, particularly in North America.
Anchoring corporate responsibility is exemplified by the
launch in Fiscal 2019 of a global focus on food waste, with the
program Waste Watch, powered by Leanpath, to be deployed in
3,000 sites by the end of Fiscal 2020.
The STEP project, Sodexo’s performance management
framework, is expected to focus management on the operational
KPIs. The deployment is progressing in line with plan. The
standardized cloud-based dashboard including 21 operational
KPIs, with cost of worked hour, spend per consumer or food costs
for example, went live in September 2019, for certain segments,
in six countries and is expected to be available on 7,500 sites by
February 2020.
3.1.1.4 Enhanced discipline across
the Group
The reignition of growth in Fiscal 2019 has been accompanied by
signs of greater discipline in the organization.
This is demonstrated by the following elements:
• our Lost time injury rate (LTIR) has continued to improve,
down 11.1 % in Fiscal 2019, to reach 0.86;
• while revenue retention was at 93.3%, due in particular to the
exit of one large contract in Healthcare, gross profi t retention
was higher at 95%;
• the gross profi t margin of new contracts signed during the
year was 20 basis points higher in Fiscal 2019 than in the
previous year;
•
in Corporate Services, the share of local contracts in the sales
pipeline represented 80%. These smaller, local contracts
ramp-up faster and can offset the impact of the larger
startups, which ramp-up more slowly.
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3.1.1.5 Growth investments fi nanced by productivity
In line with the strategic agenda, productivity gains are being
achieved. On-site, clear signs of better control of food costs
and labor management are coming through, although some of
this has been off set by continued wage infl ation, particularly
in North America. Off -site, the results of the Fit for the Future
program to streamline, standardize and mutualize SG&A costs
are also helping to reduce costs.
This productivity has been reinvested back into the business.
The key focus has been to accelerate growth, not just on a
short-term basis, but also on a medium and long-term basis.
The increase in investments in Onsite Services has been
directed towards widening and improving the digital offers,
data management, IT upgrade, improving and digitalizing sales
and marketing. In Benefits & Rewards, the focus has been on
transforming the organization with a new sales model, digital
marketing, data management optimization, innovative payment
solutions, enhancing the platforms and infrastructures for the
digital solutions of the traditional benefi ts business.
3.1.2 Fiscal 2019 performance
3.1.2.1 Consolidated income statement
(in millions of euro)
Revenue
Organic growth
UNDERLYING OPERATING PROFIT
UNDERLYING OPERATING PROFIT MARGIN
Other operating expenses
Operating profit
Net financial expense
Effective tax rate
GROUP NET PROFIT
EPS (in euro)
UNDERLYING NET PROFIT
Underlying EPS (in euro)
FISCAL 2019
(ENDED
AUGUST 31, 2019)
FISCAL 2018
(ENDED
AUGUST 31, 2018)
DIFFERENCE
DIFFERENCE
AT CONSTANT
RATES
21,954
+3.6%
1,200
5.5%
(141)
1,059
(100)
20,407
+7.6%
+6.2%
+1.6%
1,128
5.5%
(131)
997
(90)
+6.4%
+6.0%
=
=
+6.2%
+5.8%
29.0%
27.1%
665
4.56
765
5.25
651
4.40
706
4.77
+2.2%
+3.6%
+8.3%
+10.1%
+1.7%
+7.8%
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C O N S O L I D A T E D I N F O R M A T I O N
F i s c a l 2 0 1 9 A c t i v i t y R e p o r t
3.1.2.2 Currency eff ect
Exchange rate fl uctuations 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
Benefi t & 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.
€1=
U.S. dollar
Pound sterling
Brazilian real
AVERAGE RATE
FISCAL 2019
AVERAGE RATE
FISCAL 2018
AVERAGE RATE
FISCAL 2019 VS.
FISCAL 2018
CLOSING RATE
FISCAL 2019 AT
08/31/2019
CLOSING RATE
FISCAL 2018 AT
08/31/2018
CLOSING RATE
08/31/2019 VS.
08/31/2018
1.134
0.885
4.384
1.193
0.884
4.075
+5.2%
-0.1%
-7.0%
1.104
0.906
4.588
1.165
0.897
4.859
+5.6%
-0.9%
+5.9%
Sodexo operates in 67 countries. The percentage of total revenues and underlying operating profi t denominated in the main currencies
are as follows:
(FISCAL 2019)
U.S. dollar
Euro
UK pound sterling
Brazilian real
% OF REVENUES
% OF UNDERLYING
OPERATING PROFIT
42%
25%
9%
5%
48%
3%
10%
20%
3
The currency effect is determined by applying the previous
year’s average exchange rates to the current year fi gures except
in hyper-infl ationary economies where all fi gures are converted
at the latest closing rate for both periods when the impact is
signifi cant.
As a result, for the calculation of organic growth of the On-site
Services activities in Argentina, Peso fi gures for Fiscal 2019 and
Fiscal 2018 have been converted at the exchange rate of 1 euro =
63.975 ARS vs 44.302 ARS for Fiscal 2018.
Starting Fiscal 2019 Venezuela is accounted for using the
equity method. Consequently, Venezuela is no longer included
in revenue.
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C O N S O L I D A T E D I N F O R M A T I O N
3 F i s c a l 2 0 1 9 A c t i v i t y R e p o r t
3.1.2.3 Revenues
REVENUES BY ACTIVITY
REVENUES BY SEGMENT
(in millions of euro)
FISCAL 2019
FISCAL 2018
RESTATED
ORGANIC
GROWTH
ORGANIC
GROWTH
EXTERNAL
GROWTH
CURRENCY
EFFECT
TOTAL GROWTH
Business & Administrations
11,577
10,938
+3.5%
+1.9%
+3.5%
+0.4%
+5.8%
Healthcare & Seniors
Education
5,210
4,280
4,768
3,855
+2.1%
+4.6%
+5.5%
+1.0%
+2.8%
+9.3%
+4.7%
+2.5%
+3.9%
+11.0%
ON-SITE SERVICES
21,067
19,561
+3.3%
+3.3%
+2.7%
+1.7%
+7.7%
BENEFITS & REWARDS
SERVICES
Elimination
892
( 4)
850
+8.5%
+8.5%
+0.1%
-3.7%
+4.9%
( 4)
TOTAL GROUP
21,954
20,407
+3.6%
+3.6%
+2.6%
+1.5%
+7.6%
Fiscal 2019 consolidated revenues totaled 22 billion euro, up
+7.6% year-on-year. This growth is the result of organic growth
of +3.6%, a contribution from acquisitions of +2.6%, with in
particular the full year impact of the Centerplate acquisition,
and positive currency movements for +1.5%, helped by the
strength of the U.S. dollar more than off setting the weakness in
the Brazilian Real.
On-site Services
On-site Services organic revenue growth was +3.3% in
Fiscal 2019, the highest rate of growth achieved in the last
seven years. All regions and segments contributed to this
growth.
The Fiscal 2019 KPIs were mixed: net new business was neutral
with Development at 6.3%, compensating for Retention at
93.3%. Comparable site sales growth was strong at +3.1%.
DEVELOPMENT STRONG IN MOST REGIONS
At 6.3%, the development rate was down 50 basis points .
This reflects a more active selection process to identify the
contracts where the Group believes it can add value to the
client while generating good margins. The Corporate Services
strategy to improve the mix of signatures between large global
accounts which ramp-up over years and small local accounts
which ramp-up rapidly is also having an impact. In Healthcare,
the new management team is regenerating the pipeline. In
Sports & Leisure, as expected, development was low, due to the
successful and substantial renewals program in North America
which mobilized the teams. All other regions and segments
have improved their development rates and Sodexo was chosen
recently to manage hospitality for the 2020 Summer Olympics
in Japan. The contribution of the Rugby World Cup and the
Olympics will add around 100 basis points to comparable unit
growth in Fiscal 2020.
CLIENT RETENTION IMPACTED BY A LARGE HEALTHCARE
CONTRACT EXIT IN NORTH AMERICA
SOLID COMPARABLE SITE SALES GROWTH
Retention was 93.3% in Fiscal 2019, down 50 basis points
relative to Fiscal 2018. Excluding a large contract exit in
Healthcare North America, where profi tability was inadequate,
retention would have been up 10 basis points (bps). This large
contract will terminate in the fi rst quarter of Fiscal 2020.
Comparable site sales growth of +3. 1% is up 50 basis points
relative to Fiscal 2018, reflecting a combination of more
infl ation pass-through and solid cross-selling, off set somewhat
by a net negative impact from the IFRS 15 implementation of
about 20 basis points .
The primary focus of the new Healthcare management team
in North America is to return to operational excellence on
existing contracts and improving productivity, and where this is
impossible closing the contract.
In Fiscal 2019, Food services organic growth improved, while
non-food services continue to perform well with high single-digit
growth. Non-food services represent 34% of On-site Services
revenue.
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ON-SITE SERVICES REVENUES BY REGION
REVENUES BY REGION
(in millions of euro)
North America
Europe
Africa, Asia, Australia, Latam, Middle East
C O N S O L I D A T E D I N F O R M A T I O N
F i s c a l 2 0 1 9 A c t i v i t y R e p o r t
FISCAL 2019
FISCAL 2018
RESTATED ORGANIC
GROWTH
9,572
8,129
3,366
8,707
7,690
3,163
+1.8%
+3.2%
+7.9%
ONSITE SERVICES TOTAL
21,067
19,561
+3.3%
Outside North America, representing 55% of On-site Services revenue, organic growth was +4.6%.
Brexit
In June 2016, the United Kingdom voted to leave the European Union. Sodexo has been present in the United
Kingdom since 1988 and has around 35,000 employees there today. The Group’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 oft en for Government authorities and Government services. Action plans have been put in
place to limit the impact of a hard or no deal Brexit on food prices and availability. We have noticed a slowdown in
new business opportunities even though same site sales growth and client retention remain solid. Of course, growth
in activity will remain dependent upon growth in GDP and employment in the country.
Business & Administrations
REVENUES
REVENUES BY REGION
(in millions of euro)
North America
Europe
Africa, Asia, Australia, Latam, Middle East
3
FISCAL 2019
FISCAL 2018
RESTATED ORGANIC
GROWTH
3,263
5,371
2,942
2,822
5,313
2,804
+1.9%
+2.5%
+6.8%
BUSINESS & ADMINISTRATIONS TOTAL
11,577
10,938
+3.5%
Fiscal 2019 Business & Administrations revenues totaled 11.6
billion euro, with organic growth of +3.5%.
In North America organic growth was up +1.9% reflecting
strong growth in Corporate Services, driven by same site sales
growth, new contracts and solid retention, compensating weaker
organic growth in other segments. Government & Agencies same
site sales growth was impacted negatively by the renewal of the
U.S. Marines Corp contract, although the trend is improving
progressively quarter by quarter, as the new contract ramps
up. In Sports & Leisure, organic growth was negative due to the
exit of some less profi table contracts. The very substantial and
successful contract renewal program this year mobilized the
sales teams, resulting in low levels of new development. Energy
& Resources remains volatile, quarter by quarter, and impacted
by a tough comparable base in the fi rst quarter due to a large
one-off project in Fiscal 2018.
In Europe, sales were up +2.5% organically. Corporate Services
continued to generate solid growth due to cross-selling, an easier
comparative base in Benelux, and strong growth in southern
and eastern Europe. Summer tourism in Paris was better than
expected partially compensating a contract loss in France.
Government & Agencies improved quarter by quarter during the
year . Energy & Resources turned positive in the second half.
In Africa, Asia, Australia, Latin America, Middle East
organic revenue growth remains strong at +6.8% for the year,
refl ecting strong growth in same site sales and new business
in Corporate Services in all regions, progressive improvement
quarter by quarter in Energy & Resources growth, and a
successful Pan-American Games in August in Peru.
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3 F i s c a l 2 0 1 9 A c t i v i t y R e p o r t
Healthcare & Seniors
REVENUES BY REGION
(in millions of euro)
North America
Europe
Africa, Asia, Australia, Latam, Middle East
HEALTHCARE & SENIORS TOTAL
FISCAL 2019
FISCAL 2018
RESTATED ORGANIC
GROWTH
3,211
1,678
321
5,210
3,001
1,493
+1.5%
+0.9%
274
+17.4%
4,768
+2.1%
Healthcare & Seniors revenues amounted to 5.2 billion euro,
up +2.1% organically.
In North America, organic growth was +1.5%. The renewed
management team is focused on improving execution and
productivity, generating more cross-selling on existing
contracts, passing through infl ation and putting more discipline
into the sales process. Retention was impacted this year due
to the loss of several contracts and one large contract exit for
which profi tability has been an issue. These contracts started
to fall out of revenues in the fourth quarter but will continue
to do so in the fi rst half of Fiscal 2020. Development has also
been slow due to a much more selective process, impacting the
pipeline of opportunities. However, the contracts signed are more
robust. Seniors organic growth improved progressively quarter
by quarter, after the loss of a significant contract in the first
quarter.
In Europe, organic growth was +0.9%. The slow market dynamic
in both Hospitals and Seniors and the resulting negative net
new business in most countries has hampered growth. On the
other hand, same site sales growth was strong, particularly in
northern Europe. The pipeline is showing signs of improvement,
particularly in the UK.
In Africa, Asia, Australia, Latin America, Middle East organic
revenue growth has remained strong all year, at +17.4% despite
the comparable base becoming more and more challenging
quarter aft er quarter. The growth refl ects new contract startups
in Brazil and Asia, as clients seek to benefi t from the transfer of
the Group’s expertise, and particularly strong same site sales
growth across the regions. The development rate has slowed
down slightly during the year but remains well over the average
for the segment.
Education
REVENUES BY REGION
(in millions of euro)
North America
Europe
Africa, Asia, Australia, Latam, Middle East
EDUCATION TOTAL
FISCAL 2019
FISCAL 2018
ORGANIC GROWTH
3,098
1,079
102
4,280
2,884
+2.2%
885
86
+12.0%
+12.3%
3,855
+4.7%
Revenues in Education were 4.3 billion euro, up +4.7%
organically.
North America was up +2.2%, or +3.6% excluding the IFRS 15
impact(1). While net new business from last year was neutral,
same site sales growth has been solid, helped by inflation
pass-through, some impact from extra working days, and solid
summer works. The selling season in Fiscal 2019 remained
broadly neutral, with higher retention but lower development.
In Europe, organic growth was +12%. This strong performance
is driven by solid prior year contract wins in the UK and the
startup in January of the new School contract in the Yvelines
department, the biggest School contract ever signed in France,
combining both food and facilities management services.
In Africa, Asia, Australia, Latin America, and the Middle
East, organic growth was +12.3%, despite an ever higher
comparable base, resulting from the opening of several new
School and University contracts in China, Singapore and India.
1 First time implementation of IFRS 15 in Fiscal 2019 has had a negative impact of 20 basis points on Fiscal 2019 Group organic growth. However, this is made
up of a signifi cant impact in Education in North America and a lesser positive impact disseminated broadly around the other segments and regions.
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F i s c a l 2 0 1 9 A c t i v i t y R e p o r t
Benefi ts & Rewards Services
Benefits & Rewards Services revenue amounted to 892 million
euro, up +4.9%. Currencies had a negative impact of -3.7%,
due principally to the weakness of the Brazilian real and the
Turkish lira. The scope change was negligible. Organic growth
in revenues was strong at +8.5%, with a very strong fi rst nine
months, and then a slowing down against a higher comparable
base in the fourth quarter.
REVENUES BY ACTIVITY
(in millions of euro)
Employee benefits
Diversification services*
BENEFITS & REWARDS SERVICES
*
Including Incentive & Recognition, Mobility & Expenses and Public Benefits.
FISCAL 2019
FISCAL 2018
ORGANIC GROWTH
709
183
892
677
173
850
+9.4%
+5.0%
+8.5%
Employee Benefit revenues were up +9.4% organically,
compared to organic growth in issue volume (13.5 billion
euro) of +7.1%. In Brazil, growth was strong in the first half,
slowing down in the second due to the strong comparable base
and economic environment which became progressively more
diffi cult. Growth was strong in Europe.
Services Diversification was up +5% organically, or
+18.7% excluding some portfolio rationalization in Incentive
& Recognition, resulting from strong double-digit growth in
Mobility & Expense and rapid development in Corporate Health
& Wellness off ers.
REVENUES BY NATURE
(in millions of euro)
Operating Revenues
Financial Revenues
BENEFITS & REWARDS SERVICES
3
FISCAL 2019
FISCAL 2018
ORGANIC GROWTH
818
74
892
777
73
850
+8.4%
+9.1%
+8.5%
Operating revenues were up +8.4%, with solid growth in
western Europe, double digit growth in eastern and southern
Europe and strong growth in Latin America.
Financial revenues were up +9.1% as a result of continued
volume growth across the regions this year and an increase in
interest rates in Turkey, Czech Republic and Romania, where
we also had an exceptionally high float due to exceptionally
high issuance at the end of the previous fiscal year. Growth
was slower in the fourth quarter due to the decline in Brazilian
interest rates.
REVENUES BY REGION
(in millions of euro)
Europe, Asia and USA
Latin America
BENEFITS & REWARDS SERVICES
FISCAL 2019
FISCAL 2018
ORGANIC GROWTH
508
384
892
473
377
850
+8.6%
+8.3%
+8.5%
In Europe , Asia and USA, organic growth in revenues remains
strong at +8.6%. This performance is due to a solid performance
in western Europe, double-digit growth in eastern and southern
Europe, and Turkey. Rydoo, the end-to-end travel and expense
management system is growing very strongly as are the
Corporate Health & Wellness off ers.
Organic growth in Latin America was +8.3% refl ects strong
growth in activity in the fi rst half of the year, following on from
the strong pick-up in Brazil in the third quarter of Fiscal 2018.
Growth slowed down in the fourth quarter due to the higher
comparable base. Momentum in Mexico remained good and
growth in Chile was strong.
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3 F i s c a l 2 0 1 9 A c t i v i t y R e p o r t
3.1.2.4 Underlying operating profi t
Fiscal 2019 Underlying operating profi t amounted to 1.2 billion
euro, up +6.4%, or +6% excluding the currency eff ect. Underlying
operating margin was 5.5%, stable relative to the previous year,
on current and constant exchange rates. The On-site Services
margin was stable at 5% and the Benefi ts & Rewards Services
margin at 31% was up 20 basis points , or +110 basis points ,
excluding the currency mix effect of the weakness of the
Brazilian Real.
(in millions of euro)
Business & Administrations
Healthcare & Seniors
Education
On-site Services
UNDERLYING
OPERATING
PROFIT
FISCAL 2019
DIFFERENCE
DIFFERENCE
(EXCLUDING
CURRENCY
EFFECT)
UNDERLYING
OPERATING
PROFIT MARGIN
FISCAL 2019
DIFFERENCE
MARGIN
DIFFERENCE
IN MARGIN
(EXCLUDING
CURRENCY MIX
EFFECT)
487
342
220
+8.0%
+7.1%
4.2%
+0 bps
+0 bps
+9.6%
+6.3%
6.6%
+30 bps
+20 bps
-1,4%
-5.7%
5.1%
-70 bps
-70 bps
1,049
+6.4%
+3.9%
5.0%
+0 bps
+0 bps
Benefits & Rewards Services
276
+5.7%
+12.7%
31.0%
+20 bps
+110 bps
Corporate expenses & Intragroup eliminations
(126)
-4.7%
-4.1%
UNDERLYING OPERATING PROFIT
1,200
+6.4%
+6.0%
5.5%
+ 0 bps
+0 bps
In On-site Services, underlying operating profi t was up 6.4%,
or 3.9% excluding the currency impact. Margin was stable. The
performance by segment, excluding the currency eff ect, is as
follows:
• Business & Administrations Underlying operating profit
increased by +7.1% and the operating margin was stable at
4.2%. As expected the productivity generated by the business
during the year was reinjected into more sales, marketing,
digital spend, new offers to accelerate growth. The timing
differences between investments and productivity gains,
visible in the fi rst half fi gures, were covered as expected, helped
by some client renegotiations to establish better levels of
profi tability in some of the larger contracts started up recently,
and in particular for the U.S. Marine Corps contract (USMC);
•
in Healthcare & Seniors the increase in Underlying operating
profit and margin was respectively +6.3% and +20 basis
points , reflecting the enhanced discipline of the new team,
particularly in North America. Productivity is improving due to
the introduction of new systems to better manage staffi ng and
food costs and generally, more rigorous management of the
STEP operational KPIs. Infl ation is covered by price increases;
•
in Education, underlying operating profit fell by -5.7%
and the margin by -70 basis points due to previous year
churn, particularly in North America and the startup of
many new contracts. The first half was also impacted by
strikes in France. North American wage infl ation has been
passed through. However, wage inflation has continued in
Fiscal 2019, absorbing most of the productivity achieved
during the year.
In Benefits & Rewards Services, underlying operating profi t
and margin were up respectively +12.7% and +110 basis points ,
excluding currency impacts. This is due to the strong recovery
in volumes and a relative stabilization of interest rates in Brazil,
despite weakness in the last quarter. Investments are continuing,
to implement the digital transformation of the organization.
3.1.2.5 Group net profi t
Other operating income and expenses were 141 million
euro versus 131 million euro in the previous year. Restructuring
costs reached 46 million euro compared to 42 million euro in
the previous year. While amortization and depreciation of
acquired intangible assets were up against the previous year
linked principally to the ongoing effects of the Centerplate
acquisition and some intangibles impairment, this was nearly
compensated by lower acquisition costs and net gains from the
sale of subsidiaries, linked to the exit of some countries.
64
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W W W. S O D E X O . C O M
(in millions of euro)
OTHER OPERATING INCOME
Gains related to consolidation scope changes
Gains on changes of post-employment benefits
Other
OTHER OPERATING EXPENSES
Restructuring and rationalization costs
Acquisition-related costs
Losses related to consolidation scope changes
Losses on changes of post-employment benefits
Amortization and impairment of acquired intangible assets
Impairment of non-current assets
Other
C O N S O L I D A T E D I N F O R M A T I O N
F i s c a l 2 0 1 9 A c t i v i t y R e p o r t
FISCAL 2019
FISCAL 2018
11
9
1
1
10
3
-
7
(152)
(141)
(46)
(11)
-
(4)
(85)
-
(6)
(42)
(15)
(18)
-
(52)
-
(14)
OTHER OPERATING INCOME AND EXPENSES
(141)
(131)
As a result, the Operating Profit was 1,059 million euro, up
+6.2%.
euro in the previous year due notably to the contribution from
the joint venture managing the Rugby World Cup.
3
Net financial expenses increased by 10 million euro, to
100 million euro essentially due to the absence of the exceptional
interest payment from the French State on the dividend tax
reimbursement of 7 million euro last year. The remainder is due
to higher debt resulting from the acquisition of Centerplate in
January 2018 and the share buy-backs last year and the related
refi nancing. A new 9-year sterling bond was issued in June 2019,
partially off setting a repayment of a tranche from the 2014 USPP
in March 2019. Though they have reduced the Group’s short-term
funding from commercial paper at negative interest rates, these
operations have ensured that the average debt maturity remains
over 5 years and provided a hedge for sterling cashflow. The
blended cost of debt was 2.6% as of August 31, 2019, compared
to 2.5% at the end of Fiscal 2018.
The effective tax rate returned to a more normal level at 29.0%
aft er the exceptional 27.1% in Fiscal Year 2018 which benefi ted
from a positive one-off in France from the reimbursement of the
3% contribution on distributed dividends over the period 2013-
2017. It now fully reflects the positive impact of the tax rate
reduction in the USA.
The share of profit of other companies consolidated by
the equity method was 4 million euro. Profit attributed to
non-controlling interests was 21 million euro, aft er 13 million
As a result, Group net profit was 665 million euro, up +2.2 %.
Underlying net profit amounted to 765 million euro, up +8.3%,
or +7.8% excluding the currency impact, adjusted for Other
operating income and expenses at a normalized tax rate.
3.1.2.6 Earnings per share
Published EPS was 4.56 euro, up +3.6%. The 160-basis point
accretion relative to the change in net profi t is due to the eff ect
of the 300 million euro share buy-back during the previous
year resulting in a lower weighted average number of shares of
145,721,534 relative to 148,077,776 shares for Fiscal 2018.
Underlying Earnings per share amounted to 5.25 euro, up
+10.1%.
3.1.2.7 Proposed dividend
At the Shareholder’s Meeting to be held on January 21, 2020,
the Board of Directors will recommend a dividend of 2.90 euro
per share for Fiscal 2019, up +5.5% relative to the prior year,
refl ecting the increase in EPS of +3.6%. This proposal refl ects
the Board’s confi dence in the Group’s strategy. As a result, the
pay-out ratio will be 64%, or 55% on Underlying EPS.
S O D E X O - F I S C A L 2 0 1 9 U N I V E R S A L R E G I S T R AT I O N D O C U M E N T
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3 F i s c a l 2 0 1 9 A c t i v i t y R e p o r t
3.1.3 Consolidated financial position
3.1.3.1 Cash fl ows
Cash fl ows for the period were as follows:
(in millions of euro)
Operating cash flow
Change in working capital excluding change in BRS financial assets*
Net capital expenditure
Free cash flow
Net acquisitions
Share buy-backs
Dividends paid to shareholders
Other changes (including scope and exchange rates)
(Increase)/decrease in net debt
FISCAL 2019
FISCAL 2018
1,139
182
(415)
907
(301)
(7)
(403)
(150)
47
1,140
221
(286)
1,076
(697)
(300)
(411)
(316)
(648)
* Excluding change in financial assets related to the Benefits & Rewards Services activity (-53 million euro in Fiscal 2019 and -228 million euro in Fiscal 2018). Total
change in working capital as reported in consolidated accounts: in Fiscal 2019: 129 million euro = 182 million euro - 53 million euro and in Fiscal 2018: -7 million
euro = 221 million euro - 228 million euro.
Operating cash fl ow was stable at 1,139 million euro against an
exceptionally strong level last year, helped by low cash taxes and
net interest paid, linked to the dividend tax reimbursement in
Fiscal 2018. The positive infl ow of working capital of 182 million
euro remained strong, helped by the strongly favorable cut-off
impact at the end of August of the Rugby World Cup, the growth
in the business and ongoing improvements in operational cash
management throughout the Group.
Net acquisitions and disposals of subsidiaries came out at
301 million euro from particularly high 697 million euro in
the previous year, reflecting, in particular, the acquisition of
Centerplate for a total of 610 million euro. After taking into
account dividend payments of 403 million euro, and Other
changes, principally linked to currency impacts and consolidation
scope changes, consolidated net debt fell during the year by
47 million euro to 1,213 million euro at August 31, 2019.
Net capital expenditure, including client investments amounted
to 415 million euro, representing 1.9% of revenues, compared to
1.4% of revenues last year. This refl ects higher IT investments,
connected to the upgrading of certain systems, a significant
increase linked to Education and the higher levels of investments
required to support the retention efforts of Sports & Leisure,
particularly within Centerplate in North America. As previously
announced, this rate is expected to increase over the next few
years to around 2.5%, as client retention and development of
sales improve in Education and Sports & Leisure.
Free cash fl ow reached 907 million euro, a strong performance
despite the significant increase in net capex. Previous year
performance was boosted by a significant reduction in cash
taxes, linked to the exceptional tax reimbursement in France
and a decline in the U.S. tax rate. As a result, cash conversion
reached 136% compared to 165% in Fiscal 2018.
3.1.3.2 Acquisitions for the period
In Fiscal 2019, given the focus on accelerating growth in On-
site Services and resolving the issues in North America, the
acquisitions were predominantly focused on:
• Homecare with entry into the Brazilian and Norwegian
markets through Pronep and Prima Omsorg and acquiring
density in the UK, France, USA with respectively The Good
Care Group, Domicil+ and franchisees, and a small entry in
the Asian market;
• Childcare with a substantial increase in size in France
through the acquisition of Crèches de France and an entry
into the German market through Elly & Stoffl ;
• the other acquisitions included a strengthening of the Group’s
position in Education in the UK with Alliance in Partnership
and the development of Food services in Switzerland with the
acquisition of Novae.
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3.1.3.3 Condensed consolidated statement of fi nancial position at August 31, 2019
(in millions of euro)
AUGUST 31, 2019
AUGUST 31, 2018
AUGUST 31, 2019
AUGUST 31, 2018
Non-current assets
Current assets excluding cash
9,455
5,111
7,944
Shareholders’ equity
4,456*
3,283
4,628
Non-controlling interests
42
45
Restricted cash- Benefits &
Rewards
Financial assets- Benefits &
Rewards
Cash
678
615
Non-current liabilities
4,722
4,330
442
1,781
427
Current liabilities
8,247
7,622
1,666
TOTAL ASSETS
17,467
15,280
TOTAL LIABILITIES
AND SHAREHOLDERS’ EQUITY
17,467
15,280
Gross debt
Net debt
Gearing
Net debt ratio
4,079
1,213
27%
0.9
3,940
1,260
38%
1.0
* The main impact refl ects the reevaluation of certain fi nancial assets in the context of fi rst-time application of IFRS 9.
3
As of August 31, 2019, net debt was 1,213 million euro,
representing a gearing of 27%, compared to 38% as of
August 31, 2018, and a net debt ratio of 0.9, just below the
Group’s target range of 1 to 2.
The Group’s financial position remains strong with cash flow
covering investments, acquisitions and the dividend. As a result,
gearing and net debt ratio have improved. During the year, the
Group continued to improve the maturity of its debt with the
Issuance of a new GBP bond of 250 million pounds sterling
(276 million euro), the repayment of the first tranche of the
2014 USPP of 150 million U.S. dollars (132 million euro) and a
100 million euro reduction of commercial paper issued.
At the end of Fiscal 2019, the Group had unused lines of credit
totaling 1. 8 billion euro and an operating cash position of
2,866 million euro (including restricted cash for 678 million euro,
financial assets for 442 million euro and 35 million euro of
bank overdrafts). As a reminder, the cash position includes
2,136 million euro for Benefi ts & Rewards Services.
3.1.3.4 Outlook
The Focus on Growth strategic agenda has delivered growth of
more than 3% this year. There are many action plans around the
Group with initiatives to enhance quality of new and renewed
contracts, operational effi ciency and growth.
For Fiscal 2020, while growth in North America remains
challenging as the Healthcare contract losses fall out of revenues
and with net new business being only neutral in Education,
growth in all other areas and segments should continue to
accelerate.
This year also benefi ts from two major sports events in Japan,
with the Rugby World Cup in the first quarter and the 2020
Summer Olympics in the fourth quarter.
The Group is continuing to identify new Fit for the Future
initiatives to generate SG&A savings. This will complement the
operational productivity coming through due to more discipline
and STEP implementation. These savings will continue to be
reinvested in accelerating growth.
As a result, for Fiscal 2020 the Group is expecting:
• organic revenue growth of around 4%, including the
major sports events;
• stable underlying operating profit margin for the year,
excluding the currency impact and any impact from
IFRS 16 implementation.
Mid-term, the Group aims to deliver market leading profi table
growth. Current Group investments, activity mix and geographic
presence provide us with the opportunities to capture this
growth. Sodexo is capable of accelerating organic growth over
the years to come while ensuring a sustainable and inclusive
business model.
As organic growth increases, growth investments will be kept
under control, so that the effects of enhanced discipline and
effi ciency gains will feed margin expansion.
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3.1.3.5 Alternative Performance Measure defi nitions
Blended cost of debt
The blended cost of debt is calculated at period end and is
the weighted blended fi nancing rate on borrowings (including
derivative fi nancial instruments and commercial papers) and
cash pooling balances at period end.
Free cash fl ow
Please refer to the section entitled Consolidated fi nancial position.
Growth excluding currency eff ect
The currency eff ect is determined by applying the previous year’s
average exchange rates to the current year fi gures except in hyper-
infl ationary economies where all fi gures are converted at the latest
closing rate for both periods when the impact is signifi cant.
As a result, for the calculation of organic growth of the On-site
Services activities in Argentina, Peso fi gures for Fiscal 2019 and
Fiscal 2018 have been converted at the exchange rate of 1 euro
= 63.975 ARS vs 44.302 ARS for Fiscal 2018.
Issue volume
Issue volume corresponds to the total face value of service
vouchers, cards and digitally-delivered services issued by the
Group (Benefi ts & Rewards Services activity) for benefi ciaries 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 fi scal year, calculated
using the exchange rate for the prior fi scal 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
fi scal year, revenue generated during the current period up
until the fi rst anniversary date of the acquisition is excluded;
for businesses divested (or loss of control) during the prior
fi scal year, revenue generated in the comparative period of
the prior fi scal 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 fi scal 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 the On-site
Services activities in Argentina, Peso fi gures for Fiscal 2019
and Fiscal 2018 have been converted at the exchange rate of
1 euro = 63.975 ARS vs 44.302 ARS for Fiscal 2018.
Underlying Net profi t
Underlying Net profi t presents a net income excluding signifi cant
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 profi t per share
Underlying Net profit per share presents the Underlying net
profi t divided by the average number of shares.
Underlying operating profi t margin
The underlying operating profit margin corresponds to
Underlying operating profi t divided by revenues.
Underlying operating profi t margin at constant
rates
The underlying operating profit margin at constant rates
corresponds to Underlying operating profi t divided by revenues,
calculated by converting 2019 figures at Fiscal 2018 rates,
except for countries with hyperinfl ationary economies.
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3.2 EXTRA-FINANCIAL REPORTING
3.2.1 470,000 employees serving clients and consumers
3.2.1.1 Workforce by segment and activity
WORKFORCE
BREAKDOWN
FISCAL 2019
CHANGE
FISCAL 2019
FISCAL 2018*
Business & Administrations þ
Healthcare and Seniors þ
Education þ
TOTAL ON-SITE SERVICES þ
BENEFITS & REWARDS SERVICES þ
GROUP HEADQUARTERS AND SHARED STRUCTURES þ
275,262
87,980
92,109
455,351
4,901
9,985
+2,736
+3,369
+3,563
+9,678
+521
-625
TOTAL þ
470,237
+9,574
* Reclassified for inter-segment reallocation .
58.5%
18.7%
19.6%
96.8%
1.0%
2.1%
100%
59.2%
18.4%
19.2%
96.7%
1.0%
2.3%
100%
The total number of employees has increased by +2.1%, well
below revenue growth of +7.6%, or even organic growth of
+3.6%.
to some closures in the fourth quarter. The growth of Homecare
in the U.S. and the UK also contributes to the increase in the
number of employees.
In Business and Administrations, the growth in headcount
refl ects strong growth in Asia and Latin America especially with
large new openings in Brazil and Mexico. In North America and
Europe the headcount is stable.
In Education the increase in workforce is driven by new business
with the very substantial Yvelines school contract in France,
many new contracts and acquisitions in the UK, as well as the
acquisition of Crèches de France (Childcare).
In Healthcare, the increase in workforce is mainly due to the
opening of many new sites in Brazil and India, while the number
of people is down slightly in Europe and in North America due
In Benefits & Rewards the growth in Travel and expense
management (Inspirus and Rydoo) revenues explains the
increase of headcounts.
3
3.2.1.2 Workforce by region
North America
Europe
Africa, Asia, Australia, Latin America, Middle East
TOTAL
FISCAL 2019
FISCAL 2018
33.1%
30.0%
36.9%
34.1%
29.9%
36.0%
100.0%
100.0%
The increasing share of workforce in Africa, Asia, Australia, Latin
America, Middle East is driven by the strong growth in activity
in Brazil, India and Mexico. Despite the Childcare and Homecare
acquisitions in France and the UK, the share in Europe remains
stable, in line with the growth in activity. The decline in North
America is due to the slower growth in the region and the recent
contract exits in Healthcare segment.
Note: From 3.2.1.3, all Fiscal 2018 workforce fi gures exclude Centerplate (27,696 employees as of August 31, 2018).
þ Indicators verifi ed to the level of “reasonable” assurance by KPMG.
þ Indicators verifi ed to the level of “reasonable” assurance by KPMG.
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3.2.1.3 Workforce by category
Board þ(1)
Executive Committee þ
Group Senior Executives þ(2)
Managers þ
All Employees þ
FISCAL 2019
FISCAL 2018
TOTAL
% FEMALE
TOTAL
% FEMALE
10
20
203
52,179
470,237
60%
35%
37%
44%
55%
11
19
203
49,743
432,967
55%
37%
34%
43%
55%
(1) Excluding the 2 members of the Board who are employee representatives.
(2) Group Senior Executive includes the key functions reporting directly to a Group Executive Committee member, higher level sales and operations and high potentials.
The share of women on the Executive Committee decreased
slightly due to the turnover, but, remains at a healthy 35% level.
On the other hand, the share of women has increased in the
Group Senior Executives community which is an important
talent pool for the future Executive Committee members as well
as among managers.
BETTER TOMORROW
2025
OBJECTIVE
100% of our employees work
in countries that have gender
balance in their management
populations
% of employees working in countries that have gender balance in their management populations
3.2.1.4 Workforce by age group and average seniority
FISCAL 2019
50.4%
Under 30 years
30-40 years
40-50 years
50-60 years
Over 60 years
TOTAL
(in number of years)
Managers
Employees
AVERAGE SENIORITY
FISCAL 2019
FISCAL 2018
EMPLOYEES
MANAGERS
EMPLOYEES
MANAGERS
28.6%
22.7%
21.6%
19.0%
8.1%
100%
12.1%
29.6%
29.1%
22.1%
7.0%
100%
27.4%
23.6%
22.3%
19.4%
7.3%
100%
11.9%
30.7%
29.5%
21.9%
6.0%
100%
FISCAL 2019
FISCAL 2018
8.6
4.6
5.1
8.3
4.8
4.8
3.2.1.5 New hires excluding acquisitions and contract transfers
Employees
Managers
TOTAL
FISCAL 2019
FISCAL 2018
CHANGE
175,599
161,365
+14,234
9,353
6,117
+3,236
184,952
167,482
+17,470
New entrants have increased in Fiscal 2019, mainly driven by Centerplate (only consolidated in this analysis since Fiscal 2019) and
the Homecare acquisitions and in countries that are growing strongly such as Brazil and India.
In some countries, new hires are slightly down in correlation with an increase in employee retention.
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C O N S O L I D A T E D I N F O R M A T I O N
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Resignations (less than 3 months)
Resignations (after 3 months)
TOTAL RESIGNATIONS
Dismissals or redundancy
Retirement and other reasons
TOTAL NUMBER OF DEPARTURES
3.2.1.7 Retention of talents
Retention Rate for Total Workforce þ
Retention Rate for Site Management þ
FISCAL 2019
FISCAL 2018
CHANGE
35,297
85,317
33,353
81,770
+1,944
+3,547
120,614
115,123
+5,491
42,152
33,972
6,638
4,093
+8,180
+2,545
169,404
153,188
+16,216
FISCAL 2019
FISCAL 2018
81.6%
87.2%
80,9%
86,6%
The retention rate is calculated on the basis of resignations aft er more than 3 months of service. The improvement compared to Fiscal
2018 is principally in North America and India, due to retention initiatives such as ensuring timely induction of new joiners in India.
3
RETENTION RATE FOR SITE MANAGERS
COUNTRIES
> 90%
80%-90%
< 80%
Argentina, Belgium, Brazil, Canada, Chile, France, Germany, Italy, Netherlands, Russia, Spain
China, Colombia, Finland, Sweden, UK, USA
India
3.2.2 Engaged talents
BETTER TOMORROW
2025
OBJECTIVE
80% employee
engagement rate
The employee engagement rate – expressing both satisfaction,
and involvement and promotion – is a key performance indicator
for Sodexo, which seeks to become one of the most admired
companies by its employees in the world.
In April 2018, Sodexo conducted its seventh international
engagement survey for all employees with at least six months
seniority, representing 386,262 employees in 55 countries. The
survey, conducted online, attracted a high participation rate of
62% (versus 57% in 2016). For the fi ft h consecutive survey, the
employee engagement rate increased. In 2018, it reached 69%,
+1 pointcompared to the previous survey, well above the 64%
benchmark rate(1).
Local survey results are then shared with teams to develop
tangible action plans. These plans are used to improve
performance on issues such as absenteeism, health and safety
and employee retention, in order to continue to enhance Quality
of Life for employees, to in turn enhance quality of life for
consumers and productivity for clients.
JUNE 2018
JUNE 2016
CHANGE
Number of respondents
Employee e ngagement Rate þ
% of employees rating Sodexo as the best employer in its sector
% of employees believing that Sodexo values diversity (such as age, gender,
culture and origin, religion, sexual orientation and providing opportunities for
individuals with disabilities) in the workplace
% of employees considering Sodexo to be a socially
and environmentally responsible company
239,520
208,775
69%
84%
82%
80%
+15%
+1 pt
-4 pts
68%
88%
80%
+2 pts
80%
-
1 Aon Hewitt client companies.
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3.2.3
Investment in talent development
3.2.3.1 Developing our employees
Sodexo is convinced that the satisfaction of its clients and consumers depends largely on the skills and talents of its employees.
The Learning and Development Department off ers Sodexo employees a wide range of professional and learning programs.
Total number of training hours(1)
4,017,650
3,362,594
+19.5%
Average number of hours of training per employee(1)
% of client sites providing training on sustainable practices
12.4
(2)
-
10.9
+14.3%
49.2%
(1) The number of training hours excludes the USA due to data quality issues and Germany due to Work Council.
(2) This indicator is not available for Fiscal year 2019 as the site survey process is being reviewed. The indicator will be disclosed starting Fiscal year 2020, based on
a new methodology.
FISCAL 2019
FISCAL 2018
CHANGE
Excluding the USA, the number of hours of training increased
in Fiscal 2019 due to Responsible Business Conduct campaign.
The Learning and Development focus in Fiscal 2019 has
been on supporting the strategic agenda with key programs
designed to reinforce the fundamentals of the Focus on Growth
strategic agenda: being clients and consumer centric, enhancing
operational effi ciency, nurturing talent and anchoring corporate
responsibility. Notable launches in Fiscal 2019 include:
• Unleash – this program is an online program available,
on demand to all managers worldwide to support them in
developing their fundamental management capabilities. The
program is available in more than ten languages and covers
themes such as team feedback, team communication and
objectives setting;
• the On-Site Manager Academy has been developed to
support On-Site Managers in driving growth, managing and
engaging their teams and delivering operational effi ciency.
This blended learning journey also supports them in their
personal development and in providing them with a strong
network to drive their own development and that of their
business. All regions globally have launched the Academy
with nearly 5,000 participants currently on the program;
• the Digital Passport is designed to accelerate digital
transformation by providing the right mind-set, skills and
specialization to Sodexo’s employees. Over 8,000 have
already participated in the digital passport across the fi rst
countries to go live (India, Brazil, China, Nordics).
BETTER TOMORROW
2025
OBJECTIVE
100% of our employees
are trained on sustainable
practices
Training our employees on environmental issues improves
our services, raises awareness, and changes behaviors. We
encourage our teams to report any issues which concern them
so that we can prevent environmental incidents. This is backed
by a robust compliance process to ensure we adhere to the laws,
regulations, Group standards and contractual commitments
that help ensure a healthier environment. In order to reach our
ambitious 2025 target we have decided to implement a global
training program starting Fiscal year 2020. The fi rst indicator
will be disclosed in the Fiscal 2020 reporting.
3.2.3.2
Internal promotion at the heart of Sodexo’s model
The Company encourages employees to develop a career plan, to explore new professional horizons and take on new responsibilities.
This is dependent upon providing multiple opportunities through continued growth, the evolution of the portfolio of activities and the
variety of its professions.
% of off-site managers promoted internally
% of on-site managers promoted internally
% of employees promoted internally
FISCAL 2019
FISCAL 2018
7.6%
8.8%
2.2%
6.6%
8.7%
2.9%
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3.2.4 Flexible organization, respectful of employees, offering
good working conditions
Because people work better when they work in a professionally
fulfi lling, stable and secure environment, Sodexo ensures that
its employees are the fi rst to benefi t from its mission to improve
Quality of Life. Sodexo is committed to improving the well-being
of its employees.
The Group’s organizational model ensures continuity of service
quality, while remaining attentive to the expectations of its
employees, in accordance with local regulations. Part-time
work and use of fi xed-term contracts provide the fl exibility for
business needs.
Around the world, Sodexo promotes work flexibility for its
employees, taking into account their lifestyle and ways of
working. The Group facilitates a good work-life balance,
improving individual performance. Committed and effective,
Sodexo employees are thus able to deliver quality service to
clients and consumers.
FISCAL 2019
FISCAL 2018
% Workforce working
part-time
28.4%
24.7%
The increase in the share of part-time workers in Fiscal 2019 is
mainly due to the integration of Centerplate.
3.2.4.1 Ensuring employee safety
Sodexo has continued to strengthen its prevention programs
for the management of workplace health and safety including
providing all members of the Group Executive Committee with
individual leadership coaching during Fiscal 2019. Sodexo Safety
Nets (preventive controls) and Life Safety (Hazardous activities)
programs provide better understanding of risks and causes of
accidents, enabling focused improvement actions. The biggest
LTIR improvements in Fiscal 2019 were achieved by the Energy &
Resources and Sports & Leisure segments. These outcomes are a
potential source of improvement in employees’ engagement and
quality of life and a source of effi ciency gains through reductions
in work stoppages and absenteeism.
Sodexo’s Health and Safety Policy guides our actions in this area
by defi ning minimum expectations for each business entity and
is based on OHSAS 18001.
3
% of Group revenues of countries having one or more OHSAS 18001 or ISO 45001 certification þ
Number of work related accidents requiring leave þ
Average number of work day absences per employee due to work-related accident or illness
and non-work-related accident or illness
Lost Time Injury Rate (LTIR)
Best performance: Lost Time Injury Rate (LTIR) – Energy & Resources segment
% LTIR reduction
% of Group revenues of countries employing environmental experts
FISCAL 2019
FISCAL 2018
88.4 %
3,426
8.3
0.86
0.10
11.1%
97.6%
85.2%
3,699*
8.3
0.97
-
6.5%
96.9%
* The Fiscal 2018 Number of work related accidents requiring leave incorrectly included 173 occupational illness cases for North America. The Fiscal 2018 number
has, therefore, been restated to correct this error.
Sodexo’s LTIR is the frequency of accidents per 200,000 hours worked. 200,000 hours worked is a proxy for 100 full time equivalent
employees working for a full year.
3.2.4.2 Collective agreements for health and safety
Sodexo develops and maintains open and constructive dialogue with duly recognized trade unions or other legal representatives of
its employees on issues of mutual concern.
In France, more than 10 Committees and a dedicated team are working on the subject. All of our managers throughout the
organization have been incentivized on the reduction of the Lost Time Injury Rate (LTIR).
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In Sodexo’s International Framework Agreement with the IUF
(International Union of Food, agriculture, Hotel Restaurant
Catering, Tobacco and Allied Worker ’s Associations), the
commitments include protection of health and safety through
prevention and improvement measures while conforming
with local legislation. Where appropriate, Sodexo’s collective
agreements may include provisions regarding health and safety.
% of workforce covered by collective agreements
% of workforce working in countries that have collective agreements
and are covered by these agreements
FISCAL 2019
FISCAL 2018
40.3%
43.9%
88.8%
89.2%
3.2.5
Running business with integrity and respect for human
rights wherever Sodexo operates
Sodexo lives by its core values and its ethical principles. Every
employee in the Group is expected to understand and to act in
accordance with these values and principles. At the center of our
ethical principles is our commitment to business integrity. To
ensure integrity in all business dealings, Sodexo has adopted
strict principles formulated in its Statement of Business
Integrity. The statement is supported by a guide describing
concrete situations that employees might encounter.
Sodexo’s commitments to Human Rights and Fundamental
Rights at Work are described in the Human Rights Policy and
the Fundamental Rights at Work charter.
The Group’s Human Rights policy is based on the UN Guiding
Principles on Business and Human Rights, the Universal
Declaration of Human Rights and the International Labour
Organization’s (ILO) Declaration on Fundamental Principles and
Rights at Work.
Our occupational Health and Safety policy is encapsulated in the
Group Health and Safety Policy and the Environmental Policy is
covered by Better Tomorrow 2025.
Our responsible business requirements in relation to suppliers
and sub-contractors are described in the Sodexo Supplier Code
of conduct, to which suppliers and sub-contractors are required
to commit, as a condition of doing business with Sodexo. This
Supplier Code of conduct is supported by a Guide to help our
suppliers understand and act on their obligations.
To further strengthen the Group’s responsible business conduct
and governance standards, and to review the impact of legal
and regulatory developments, a Group Ethics and Compliance
Committee has been established. This Committee brings together
the heads of all relevant functions who will play a central role in the
defi nition, implementation and monitoring of the systems designed
to ensure that all Group activities are robust and compliant.
% of workforce working in countries having the Sodexo Statement of Business Integrity available
in at least one official language
% of Group revenues of countries having implemented Sodexo’s 10 People Fundamentals þ
% of workforce working in countries having the Group Human Rights policy available in at least
one official language
% of workforce working in countries implementing action plans to integrate people with
disabilities into the workplace
FISCAL 2019
FISCAL 2018
98.1%
87.9%
96.8%
80.5%
97.4%
96.9%
99.1%
-
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3.2.6 Our commitments as a service provider
3.2.6.1 Provide and encourage our consumers to access
healthy lifestyle choices
BETTER TOMORROW
2025
OBJECTIVE
100% of our consumers
are offered healthy lifestyle
options every day
Serving 100 million consumers each day, we recognize our
responsibility to understand and respond to their specifi c needs
and their long-term aspirations.
It is both an opportunity and an obligation for Sodexo to
promote and encourage healthier choices that improve quality
of life for millions of people.
% of On-site Services revenues of countries having a system to ensure that
employees with food service responsibilities are trained in compliance with local laws
and regulations and Global Food Safety and Hygiene Policy
% of Group revenues of countries having one or more ISO 9001 certification
% of On-site Services revenues of countries having either ISO 9001
or ISO 22000 certification for food safety þ
FISCAL 2019
FISCAL 2018
CHANGE
95.8 %
94.3%
96.0%
-0.2 pt
94.4%
-0.1 pt
98.6%
98.5%
+0.1 pt
3
% of On-site Services revenues of countries providing Health and Wellness Services
including physical wellness services
83.3%
81.4%
+1.9 pt
% of North America client sites implementing actions that proactively address
Sodexo’s 10 Golden Rules of Nutrition, Health and Wellness þ
Number of registered dietitians employed by Sodexo
92.2 %
5,138
89.1 %
+3.1 pts
5,306
-3.2%
The number of dietitians employed by Sodexo has decreased compared to the previous year, mainly due to Seniors in the U.S. sites
closure in Healthcare, and to the optimization of the number of dietitians per site.
3.2.6.2 Promote local development, fair, inclusive and sustainable
business practices
BETTER TOMORROW
2025
OBJECTIVE
10 billion euro of
our business value
will benefit SMEs
Since its founding, Sodexo has worked to contribute to the
economic and social development of the communities, regions
and countries where it operates.
We are committed to making a positive impact on quality of life
for people in local communities through our business activities.
This is why we support communities, and contribute to creating
positive interactions with mutual benefi ts.
FISCAL 2019
FISCAL 2018
CHANGE
% of Group revenues of countries having specific initiatives to integrate SMEs
(Small and Medium Enterprises) into Sodexo’s Value Chain
92.3%
91.8%
+0.5 pt
Our business value benefiting SMEs (in billions of euro)
5.5
4.4
+25 %
% in kg of certified sustainable coffee
58.1%
50.1%
+8 pts
% of spend with contracted suppliers having signed the Sodexo Supplier Code
of conduct þ
95.7 %
93.6%
+2.1 pts
Our business value benefi ting SMEs has signifi cantly increased in Fiscal 2019, mainly due to more robust tracking systems put in
place in Asia helping to better capture the data. The increase of the reporting scope for this indicator to 83% in Fiscal 2019, from 70%
in Fiscal 2018 has also helped to improve performance.
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3.2.6.3 Source responsibly and provide management services
that reduce carbon emissions
A rich and resourceful planet is indispensable to quality of life in
the long term. This is why Sodexo strives for a healthier planet
in all we do.
Sourcing responsibly and managing services that contribute
to reducing carbon emissions are two major areas of our
business activities that refl ect our commitment to protecting
the environment.
Today, more than half of Sodexo’s carbon emissions come from
its supply chain, primarily from carbon intensive commodities
such as beef, dairy, palm oil, soy and paper that can also have
an impact on deforestation.
In 2018 Sodexo co-founded the Global Coalition for Animal
Welfare (GCAW), the world’s first food industry-led initiative
aimed at advancing animal welfare globally. The global platform
unites major companies and animal welfare experts in improving
animal welfare standards at scale and in meeting consumer
demand for food products from animals reared in systems
that promote good welfare. Sodexo measures the percentage of
animal welfare certifi cation on a species by species basis. We
publicly report our progress on cage-free eggs and sustainable
fi sh and seafood annually.
Sustainable supplies
% of physical certified sustainable palm oil (extended scope in Fiscal 2019)(1)
% of cage free shell eggs (of the total of shell eggs purchased by Sodexo)
% of cage free liquid eggs (of the total liquid eggs purchased by Sodexo)
% of On-site Services revenues of countries having the 2018 Sodexo Animal Welfare
Supplier charter available in at least one official language
% of certified sustainable fish and seafood as a % of total fish and seafood
% of sustainable fish and seafood which is sustainable as a % of total seafood (in kg)(2)
FISCAL 2019
FISCAL 2018
CHANGE
34.7 %
56.2 %
60.8%
89.1%
36.3%
80.3 %
n/a
37.6%
+18.6 pts
51.1%
+9.7 pts
95.5%
-6.4 pts
38.7%
-2.4 pts
80.7%
-0.4 pt
% of spend on certified sustainable paper disposables as a %
of total paper disposables þ
67.3 %
70.4%
-3.1 pts
(1) In Fiscal 2019, we have increased our palm oil data collection scope, from top 2 products to total products containing palm oil.
(2) A s per Sodexo Sustainable Seafood Sourcing Guide.
Cage free shell eggs and cage free liquid eggs indicators have
increased significantly compared to last year. These results
reflect all the effort put in place in countries for a more
responsible sourcing, including enhanced traceability and
transparency throughout our supply chain.
In Fiscal 2019, we have increased our palm oil data collection
scope, from top 2 products to all products containing palm oil.
The previous published results based on top two commodities
represented 59.5% in Fiscal year 2018.
In Fiscal 2018, Sodexo issued a new, more demanding Animal
Welfare charter which is gradually deployed across the business.
Countries which have not yet implemented the new charter are
using the previous policy.
BETTER TOMORROW
2025
OBJECTIVE
34% reduction of carbon
emissions
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FISCAL 2018
CHANGE
Reduction in carbon emissions
% of Group revenues of countries having one or more ISO 14001 certification
91.1%
90.8%
+0.3 pt
Scope 1 and Scope 2 emissions energy consumption (in MWh)
601, 724
669,688*
-67,964
Scope 1 and Scope 2 (market based) emissions (tCO2)
126, 230
144,468*
-18,238
% reduction in carbon emissions (compared to 2011 baseline) absolute
% reduction in carbon emissions (compared to 2011 baseline) intensity
Scope 3 Supply Chain carbon emissions (tCO2)
47%
62%
5,121,136
40%*
53%*
+7 pts
+9 pts
* The figures reflect the 2017 results. In Fiscal 2019, we reduced the historical one-year delay in reporting and decided not to extrapolate the Fiscal 2018 data.
For the fi rst time, Scope 3 supply chain information has been
collected and verifi ed during the annual audit process.
The continued reduction in our direct Scope 1 and Scope 2
energy consumption and emissions compared to the 2011
baseline is mainly due to the implementation of effi cient energy
management actions such as purchase of renewable energy and
equipment upgrade. In Fiscal 2019 we have surpassed our 34%
carbon reduction target for Scopes 1 and 2.
3.2.7 Our commitments as a corporate citizen
3
3.2.7.1
Fight hunger and malnutrition
To act for a hunger-free world is to act for better quality of life.
Sodexo employees in the U.S. created Stop Hunger in 1996.
Stop Hunger is a global non-profit network working towards
a hunger-free world. The United Nations has set the goal of
bringing the world out of hunger in a sustainable way by 2030,
making a fairer and a happier world.
Thanks to Sodexo, which administratively supports Stop
Hunger, 100% of donations made to Stop Hunger go directly
to fi nancing activities and sustainable solutions to support the
poorest local communities by empowering women, which we
believe represents the most eff ective way to eliminate hunger.
Up to 150 million more people could be fed by giving them
access to the same resources as men. That is why Stop Hunger
has made women’s empowerment its priority and invested,
over three years, nearly 4 million U.S. dollars in programs to
support women who are taking action against hunger in their
communities.
Stop Hunger relies on partnerships with 1,200 local and
international NGOs, as well as on Sodexo’s unique ecosystem
and in particular its employees.
For more information, read the Stop Hunger activity report:
http://www.stop-hunger.org/files/live/sites/stophunger/
fi les/05-news/2019/StopHunger_ActivityReport_2019.pdf
BETTER TOMORROW
2025
OBJECTIVE
100 million stop hunger
beneficiaries
Funds invested in programs to empower women working to end hunger
in their communities (in thousands of euro)
1,092
1,063
+2.7%
FISCAL 2019
FISCAL 2018
CHANGE
In addition to projects already launched in Fiscal 2018, in
2019 we continued our support to the WIA (Women In Africa),
because we share the same vision and desire to support the
empowerment of African women and the development of their
businesses. A further 19 initiatives in 13 countries, recently
selected, will be co-financed for 3 years by the Stop Hunger
Endowment Fund and the local Stop Hunger entity to support
these women who are taking charge of the destiny of their local
communities.
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3.2.7.2 Drive diversity and inclusion as a catalyst for societal change
Each individual’s unique background, experience, and abilities
are at the heart of our vibrant workforce and truly refl ect the
communities we serve. We strive to build a diverse and inclusive
culture where our employees feel valued and respected as
individuals. We also work closely with diverse local businesses
encouraging new points of view, sparking innovation, and
ultimately contributing to a positive impact on communities.
Sodexo has always placed the advancement of women at the heart
of its vision for economic, social and environmental development.
Our local partnerships contribute to the social fabric of the
communities, regions and countries where we operate. We
actively seek to bring diverse businesses into our network of
suppliers, including minority-owned, women-owned, disabled-
owned or LGBT-owned companies.
From social entrepreneurship projects for underprivileged women
to supporting causes that move the needle on diversity, we are
committed to making a positive impact in local communities.
BETTER TOMORROW
2025
OBJECTIVE
500,000 women in
communities educated through
job training centers
% of Group revenues of countries with initiatives to improve the quality of life of women
93.8%
89.1%
+4.7 pts
FISCAL 2019
FISCAL 2018
CHANGE
% of Group revenues of countries with initiatives to improve the quality of life of women increased signifi cantly mainly due to the
implementation of initiatives in Argentina, Germany and Norway.
3.2.7.3 Champion sustainable resource usage
Given its position in the value chain, the breadth of its offer
and the myriad opportunities it has to engage, Sodexo is
well placed to contribute to more efficient and reduced
consumption of resources. Successful action and collaboration
can have significant positive impacts on the consumption
of our clients, Sodexo’s operations, its industry sectors and
supply chains.
Sodexo has developed a waste roadmap adopting the circular
economy approach, with the following key elements:
• value chain collaboration and leadership: we aim to
reinforce collaboration within and across the value chain as
a way to drive circular economy and thus, contribute to the
UN SDG 12.3 target of halving food waste at the retail and
consumer levels and reduce food losses along production and
supply chains, including post-harvest, by 2030;
• operational excellence: we leverage the expertise of our
470,000 employees to provide our clients with best in class
waste management services that will help them manage
resources more sustainably. We make sure our teams are
trained and encouraged to innovate, for the benefi t of our
clients and consumers;
• client and consumer engagement: With 100 million
consumers served every day , we are in a unique position to drive
behavior change toward waste reduction;
• marketing & communications: through our global actions,
we help inform clients and consumers so they understand
and support the waste prevention challenge;
• measuring and public reporting: We ensure that waste
management is an integral part of site management and
require our sites to measure and report their performance.
BETTER TOMORROW
2025
OBJECTIVE
50% reduction in
our food waste
% of Group revenues of countries working to deliver on the United Nations’ food waste
objective
69.2%
65.9%
+3.3 pts
FISCAL 2019
FISCAL 2018
CHANGE
The increase in this indicator is due to the active participation of Spain and Peru which have put in place initiatives such as
participation in multi-stakeholder groups and taskforces like Comunidad Por El clima and CCori Optimal Cooking.
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3.2.8 Our reporting methodology
Choice of indicators
Fiscal 2019 workforce indicators
In Fiscal 2019, we continue to disclose our Corporate
Responsibility related information and data in our Integrated
Report (chapter 1), chapter 2 and chapter 3 of the present report.
• As part of the Integrated Report we have presented our Value
Creation Model, our Materiality Matrix and our Corporate
Responsibility Roadmap Better Tomorrow 2025. These three
elements are linked and interdependent.
• Chapter 2 contains information of our concrete actions
responding to key issues identified in our Materiality
assessment.
• Chapter 3 presents our key performance indicators and their
progress compared to the previous year.
Sodexo’s Corporate Responsibility strategy requires that
workforce and environmental performance be measured with
clear indicators. These indicators take into consideration the
decentralized and primarily client site-based nature of Sodexo’s
operations and were selected to meet the following reporting
objectives:
• to comply with legal requirements such as the European non-
fi nancial Directive;
• to address the expectations of other external stakeholders,
including shareholders and rating agencies;
• to provide reporting that is consistent with the requirements
of the Global Reporting Initiative (GRI) and the United Nations
Global Compact.
In addition, Sodexo’s indicators:
• are key in allowing us to monitor progress in the areas
identifi ed as key topics following our materiality assessment;
•
include measures of the tangible benefi ts Sodexo brings to
its clients;
• enhance employee knowledge about Sodexo, increasing
awareness and engagement;
• provide visibility on progress for Group and country
management.
As part of its progressive journey, Sodexo has added some
additional indicators this year and will continue to do so (see
List of indicators).
Scope of consolidation
Indicators generally include all entities which are fully
consolidated for fi nancial reporting purposes, with the following
exceptions:
• a new country added during the fi scal year is included in the
reporting scope in the following fi scal year; and
• acquired entities are included as from the date of acquisition.
Additional restrictions may be applicable and are specifi ed in
the section below.
3
Workforce indicators are consolidated for all Sodexo entities,
except for:
• the number of training hours which excludes the U.S. and
Germany data (see limitations section below);
• the average number of work day absences per employee due
to work-related accidents or illnesses and non-work-related
accidents or illnesses excludes accident or illness and non-
work-related accident or illness for Brazil (includes work-
related accidents or illnesses for Brazil).
Safety indicators cover On-site Services activity only,
representing more than 96% of Group revenues and 97% of our
total workforce.
Fiscal 2019 societal and environmental indicators
Societal and environmental indicators are calculated and
consolidated for entities representing over 92% of Group
revenues, except for:
• business value benefiting SMEs covering 83% of Group
revenues;
• Scopes 1 and 2 carbon emissions covering 81% of Group
revenues;
• Scope 3 Supply Chain Carbon emissions covering 65% of On-
Site Services activity revenues.
The business value benefiting SMEs represents the total
purchases for our On-site Services activity added to the emitted
vouchers value for Benefi ts and Rewards activity.
In order to streamline the collection and reporting process for
the societal and environmental indicators, we have changed the
reporting period. The new reporting period starts on June 1, 2018
and ends on May 31, 2019.
Certain environmental indicators are applicable only to On-site
Services or to Benefits & Rewards Services due to the nature
of the indicator itself; for example, an indicator relating to the
percentage of sustainable seafood purchased relates only to
On- site Services entities which provide Food services.
Reporting framework and tools
S o d e x o ’ s c o m m i t m e n t s t o s o c i a l a n d e n v i r o n m e n t a l
responsibility have always been central to the Group’s
fundamentals. The Group reinforced its workforce and
environmental reporting in 2005 with the publication of its
first Corporate Responsibility Report and further developed
its sustainability performance processes in 2009 when its
Corporate Responsibility roadmap, the Better Tomorrow Plan
was launched. At the time, the Group committed to report
its progress regularly and transparently. In 2016, Sodexo
reconfirmed its commitment to continued progress as an
employer, a service provider and a corporate citizen through an
updated version of our roadmap, Better Tomorrow 2025.
Each year, Sodexo endeavors to improve its processes and to
this end, has implemented a reporting tool with two modules for
gathering and consolidating information.
Consistency checks are embedded within the tools and
additional control testing is performed.
The consolidation of workforce data is performed by Group
Human Resources with the exception of the Health and Safety
data which is consolidated by Group Health and Safety and the
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consolidation of environmental data is performed by Group
Corporate Responsibility.
Certain strategic workforce indicators are consolidated monthly
or quarterly for a detailed follow up as part of STEP dashboard.
All information published in this report was also examined by
the Group’s external auditors.
In addition to the “limited assurance” delivered by the external
auditors in relation to indicators published for the requirements
of European directive, Sodexo obtained a higher level of assurance
called “reasonable assurance” for the following key indicators:
• % of Group revenues of countries having implemented
Sodexo’s 10 People Fundamentals;
• total Workforce, per activity and client segment;
• retention rate for total workforce;
• retention rate for site management;
• departures related to Resignation of Continuous Contract
> 3 months (Excluding Site Loss)
• % of women’s representation on the Board of Directors;
• % of women’s representation on the Executive Committee;
• % of women’s representation among Group Senior Leaders;
• % of women in management positions;
• % of women’s representation in total workforce;
• number of work related accidents requiring a leave (LTSC);
• % of Group revenues of countries having one or more
OHSAS 18001 or ISO 45001 certifi cation;
• % of On-site Services revenues of countries having either
ISO 22000 or ISO 9001 certifi cation for food safety;
• % of spend with contracted suppliers having signed the
Sodexo Supplier Code of conduct;
• % of spend on certifi ed sustainable paper disposables as a %
of total paper disposables.
Limitations
Sodexo employs 470,237 people, in 67 countries, with diff ering
regulations and operates on a signifi cant number of client sites
of diff erent sizes and types of activity.
• Certain indicators therefore require some specifi c explanation
as follows:
• number of work-related accidents requiring a leave:
–
–
–
excludes commuting accidents,
includes Sodexo workforce only,
excludes temporary labor, sub-contracted labor and other
personnel that are not Sodexo employees,
– may have insignificant differences created by the way
that work-related illness is accounted for locally;
• average number of days absence:
–
includes absences for work-related accidents and illness
as well as personal accidents and illness,
– may have insignificant differences created by the way
the number of days of absence is accounted for locally;
as some include weekend and others only working days,
the minimum number of days of absence from which the
absence is recorded;
• the number of hours of training in the U.S. is based on
an estimation. The estimation is an extrapolation of
data declared by employees representing 10% of the
population. Solutions are under discussion in order to
disclose this metric based on actual data in the next
years.
• Certain information is extremely diffi cult to gather given the
nature of the Group’s activities.
• total business value benefi tting SMEs : Data for Sodexo
On site Services USA includes non-contracted suppliers;
• 19% of the total volume of fi sh and seafood purchased
by Sodexo cannot be categorized as per Sodexo Seafood
Guide (green, orange or red species), thus the result for
Fiscal 2019 is underestimated. A process will be put in
place to eliminate this limit next year;
• Scope 1 and Scope 2 energy consumption and related
carbon emissions are extrapolated for the Group based on
the energy consumption and carbon emissions calculation
for a set of 24 major countries representing 81% of Group
revenues;
• Scope 1 includes energy consumption and carbon
emissions related to the fuel consumed by vehicles used by
Sodexo as well as from its consumption of natural gas for
the offi ces and sites where Sodexo has operational control;
• Scope 2 includes the electricity consumption for the
offices and sites where Sodexo has operational control
and is market-based;
• this year, for the fi rst time, we are publishing our Scope 3
Supply Chain emissions calculation (indirect emissions),
based on 65% revenue coverage, with the objective to
increase the scope in Fiscal 2020 and report full Scope 3
emissions (also including client sites footprint).
The calculation of carbon emissions related to the supply
chain takes into account the following elements:
–
–
the emissions of the 30 most important commodities
for Sodexo (in terms of volume of purchase and carbon
impact). These products represent 85% of our purchases,
transportation from the last point of processing to the
delivered site,
–
emission factors by product.
• One of Sodexo’s missions is to improve quality of life for
its employees and all who it serves. Sodexo’s services are,
in the majority of cases, provided by its own employees
on a signifi cant number of client sites where the Company
operates throughout the world. The following information is
therefore not applicable or not material for Sodexo:
• preventive or corrective actions with regard to discharges
into the atmosphere, water and soil with a significant
negative impact on the surrounding environment;
• consideration of noise and any other activity-specific
pollution;
land usage;
importance of sub-contracting.
•
•
Reconciliation tables
The reconciliation table is included in the section “Other
information” of this report.
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3.2.9 Report by one of the Statutory Auditors appointed as an
independent third party, on the consolidated non-financial
performance statement in the Management Report
This is a free English translation of the Statutory Auditors’ report issued in French and it is provided solely for the convenience
of English-speaking readers. This report should be read in conjunction with, and construed in accordance with, French law and
professional auditing standards applicable in France.
For the year ended August 31, 2019
SODEXO
255, quai de la Bataille de Stalingrad
92866 Issy-les-Moulineaux Cedex 9
To the Annual General Meeting,
In our capacity as the Statutory Auditor of your company (hereinaft er the “entity”) appointed as the independent third party, certifi ed
by the French Accreditation Committee (Comité Français d’Accréditation or COFRAC) under number 3-1049(1), we hereby report to you
on the consolidated non-fi nancial performance statement for the year ended August 31st 2019 (hereinaft er the “Statement”), included
in the Group Management Report, in accordance with the legal and regulatory provisions of Articles L. 225 102-1, R. 225-105 and
R. 225-105-1 of the French Commercial Code (Code de commerce).
3
Responsibility of the entity
It is the Board of Directors’ responsibility to prepare a Statement in accordance with legal and regulatory provisions, including a
presentation of the business model, a description of the main non-fi nancial risks, a presentation of policies applied to mitigate these
risks and the outcomes of those policies, including key performance indicators.
The Statement has been prepared applying the procedures of the entity (hereinaft er the “Guidelines”), the most signifi cant aspects of
which are presented in the Statement and available upon request at the entity’s headquarters.
Independence and quality control
Our independence is defi ned by the provisions of Article L. 822-11-3 of the French Commercial Code and the French Code of Ethics for
statutory auditors (Code de déontologie). Moreover, we have implemented a quality control system that includes documented policies
and procedures to ensure compliance with applicable ethical rules, professional standards, laws and regulations.
Responsibility of the Statutory Auditor appointed as independent third party
On the basis of our work, it is our responsibility to express a limited assurance opinion about whether:
• the Statement complies with the provisions of Article R. 225-105 of the French Commercial Code (Code de commerce);
• the information provided (hereinaft er the “Information”) is fairly presented in accordance with Article R. 225-105-I(3) and II of
the French Commercial Code (Code de commerce) concerning policy outcomes, including key performance indicators and actions
relating to the main risks.
It is our responsibility to express, at the request of the entity and outside of the scope of accreditation, reasonable assurance that
information selected(2) by the entity and identifi ed with the symbol √ has been prepared, in all material respects, in accordance with
the Guidelines.
However, it is not our responsibility to express an opinion on:
• the entity’s compliance with other applicable legal and regulatory provisions, particularly relating to Duty of Care and the fi ght
against corruption and tax evasion;
• the compliance of products and services with applicable regulatory provisions.
1 Accreditation scope available at www.cofrac.fr.
2 Refer to the list of key indicators in Appendix 1 of this report.
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3 E x t r a - f i n a n c i a l r e p o r t i n g
Nature and scope of our work
We performed our work described below in compliance with Article A. 225-1 et seq. of the French Commercial Code (Code de commerce),
defi ning the conditions under which the independent third party performs its engagement, and with the professional guidance
issued by the French Institute of Statutory Auditors (Compagnie nationale des commissaires aux comptes or CNCC) relating to this
engagement and with ISAE 3000 (international standard on assurance engagements other than audits or reviews of historical fi nancial
information).
We conducted work to form an opinion on the Statement’s compliance with legal and regulatory provisions and the fair presentation
of the Information therein:
• we gained an understanding of the activity of all companies in the consolidation scope, of the Entity’s exposure to the main social
and environmental risks relating to the business activity and, of its eff ects on respect for human rights and the fi ght against
corruption and tax evasion, including any related policies and their outcomes;
• we assessed the appropriateness of the Guidelines in terms of their relevance, completeness, reliability, neutrality and clarity, by
taking into consideration, where relevant, the sector’s best practices;
• we verifi ed that the Statement covers every category of information required under Article L. 225-102-1, Paragraph III concerning
social and environmental matters as well as respect for human rights and the fi ght against corruption and tax evasion;
• we verifi ed that the Statement presents the business model and the main risks relating to the activity of all companies in the
consolidation scope, including – if relevant and proportionate – risks due to its business relationships, products or services, as well
as policies, actions and outcomes, including key performance indicators;
• we verifi ed that the Statement presents the disclosures required under article R. 225-105, Paragraph II, of the French Commercial
Code if they are relevant given the main risks or policies presented;
• we obtained an understanding of the process for selecting and validating the main risks;
• we enquired about the existence of internal control and risk management procedures implemented by the entity;
• we assessed the consistency of the outcomes and key performance indicators with the main risks and policies presented;
• we verifi ed that the Statement covers all companies in the consolidation scope in accordance with Article L. 233-16 within the
limits specifi ed in the Statement;
• we assessed the data collection process implemented by the entity to ensure the completeness and fair presentation of the
Information;
• For key performance indicators and the other quantitative outcomes(1) that we considered the most important, we set up:
• analytical procedures to verify that collected data is correctly consolidated and that any changes to the data are consistent,
• tests of details based on sampling to verify that defi nitions and procedures are correctly applied and to reconcile data with
supporting documents. The work was carried out with a selection of entities contributing(2) to the reported data and represents
between 39% and 57% of consolidated data of key performance indicators and outcomes selected for these tests;
• we referred to documentary sources and conducted interviews to corroborate the qualitative disclosures (actions and outcomes)
that we deemed the most important(3) ;
• we assessed the overall consistency of the Statement based on our understanding of all companies within the consolidation scope.
We believe that the work carried out, based on our professional judgment, is suffi cient to provide a basis for our limited assurance
opinion. A higher level of assurance would have required us to carry out more extensive procedures.
Means and resources
Our work drew on the skills of seven individuals and was conducted between May and November 2019 for a total working time of
approximately twelve weeks.
To assist us in conducting our work, we called on our fi rm’s sustainable development and corporate social responsibility (CSR)
specialists. We conducted around ten interviews with the individuals responsible for preparing the Statement.
1 See the list of key performance indicators and other results in Appendix 1 of this report.
2 Entities selected in the context of legal limited assurance:
- Sodexo On-Site Services: Sodexo France, Sodexo USA, Sodexo Chile.
Complementary entities selected under reasonable assurance, outside the scope of accreditation:
- On-Site Services: Sodexo India, Sodexo Italy.
- Sodexo Benefi ts & Rewards: Sodexo India.
3 See the list of key performance indicators and other results in Appendix 1 of this report.
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C O N S O L I D A T E D I N F O R M A T I O N
E x t r a - f i n a n c i a l r e p o r t i n g
OPINION
Based on our work, we have no material misstatements to report that would call into question the compliance of the non-fi nancial
performance statement with the applicable regulatory provisions, or the fair presentation of the Information, taken as a whole, in
accordance with the Guidelines.
COMMENTS
Without qualifying our opinion, in accordance with article A. 225-3 of the French Commercial Code, we draw your attention to the
following matters:
Training and Scope 3 greenhouse gas emissions indicators, related to year ended August 31st, 2019, respectively cover 57% and 65%
of the group turnover, as mentioned in chapter “3.2.8 Our reporting methodology” of the Statement.
Reasonable assurance on a selection of non-fi nancial information
Nature and scope of our work
With regard to the information selected by the entity and identifi ed with the symbol √ in chapter 3, we conducted the same procedures
as those described in the paragraph “Nature and scope of our work” (for the most important non-fi nancial information). However,
these procedures were more in-depth, particularly regarding the number of tests.
Consequently, the selected sample represents between 51% and 58% of the information identifi ed with the symbol √.
We believe that these procedures enable us to express reasonable assurance regarding the information selected by the entity and
identifi ed with the symbol √.
Conclusion
In our opinion, the information selected by the entity and identifi ed with the symbol √ in chapter 3 has been prepared, in all material
respects, in accordance with the Guidelines.
3
French original signed by:
Paris-La Défense, November 6, 2019
KPMG SA
Fanny Houlliot
Partner
Sustainability Services
Caroline Bruno Diaz
Partner
Audit
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C O N S O L I D A T E D I N F O R M A T I O N
3 E x t r a - f i n a n c i a l r e p o r t i n g
Appendix 1
SOCIAL INDICATORS
Total employees
Total employees per activity and client segment
Retention rate for total workforce
Retention rate for site management
Number of Departures related to Resignation of continuous employment > 3 months excl. site loss
Total New Hires Excluding Acquisitions & Transfers
Number of work days absence due to work-related accident or illness and non-work-related accident or illness
Total number of training hours
Average number of hours of training per employee
% of total workforce participated in at least one training during the fiscal year
% of women’s representation on the Board of Directors
% of women’s representation on the Executive Committee
% of women’s representation among Group Senior Leaders
% of women in management positions
% of women’s representation in total workforce
% of Group revenues of countries having implemented Sodexo's 10 People Fundamentals
HEALTH & SAFETY INDICATORS
Number of work related accidents requiring a leave
Lost Time Injury Case
% of LTIR reduction
% of Group revenues of countries having one or more OHSAS 18001 or ISO 45001 certification
ENVIRONMENTAL INDICATORS
Scope 1 and Scope 2 emissions energy consumption
Scope 1 and Scope 2 (market-based) emissions
% reduction in carbon emissions (compared to 2011 baseline) absolute
% reduction in carbon emissions (compared to 2011 baseline) intensity
Scope 3 Supply Chain carbon emissions
ASSURANCE LEVEL
Reasonable
Reasonable
Reasonable
Reasonable
Reasonable
Limited
Limited
Limited
Limited
Limited
Reasonable
Reasonable
Reasonable
Reasonable
Reasonable
Limited
ASSURANCE LEVEL
Reasonable
Limited
Limited
Reasonable
ASSURANCE LEVEL
Limited
Limited
Limited
Limited
Limited
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C O N S O L I D A T E D I N F O R M A T I O N
E x t r a - f i n a n c i a l r e p o r t i n g
SOCIETAL INDICATORS
% of Group revenues of countries employing environmental resources
ASSURANCE LEVEL
Limited
% of On-site Services revenues of countries having either ISO 9001 or ISO 22000 certification for food safety
Reasonable
Our business value benefiting SMEs (in billions of euro)
% of spend with contracted suppliers having signed the Sodexo Supplier Code of conduct
% of physical certified sustainable palm oil
% of cage free shell eggs (of the total of shell eggs purchased by Sodexo)
% of cage free liquid eggs (of the total liquid eggs purchased by Sodexo)
% of sustainable fish and seafood which is sustainable as a % of total fish and seafood
Limited
Reasonable
Limited
Limited
Limited
Limited
% of spend on certified sustainable paper disposables as a % of total paper disposables
Reasonable
Appendix 2
QUALITATIVE SOCIAL INFORMATION
Sodexo’s Health & Safety policy
Programs and other measures in favour of the development of talents skills and the results
QUALITATIVE ENVIRONMENTAL INFORMATION
Innovative environmental actions implemented to fight against climate change and to reduce greenhouse gas emissions
The « WasteWatch » program related to organic waste prevention and the results
QUALITATIVE SOCIETAL INFORMATION
Actions implemented to promote transparency and business integrity
The food offers and other promoting measures for a healthy food balance towards the consumers
The Group Human Rights policy
The actions of partnership and sponsorship
3
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C O N S O L I D A T E D I N F O R M A T I O N
3 C o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s a s o f A u g u s t 3 1 , 2 0 1 9
3.3 CONSOLIDATED FINANCIAL STATEMENTS
AS OF AUGUST 31, 2019
3.3.1 Consolidated income statement
(in millions of euro)
Revenues
Cost of sales
Gross profit
Selling, General and Administrative costs
Share of profit of companies consolidated by the equity method that directly
contribute to the Group’s business
Underlying operating profit
Other operating income
Other operating expenses
Operating profit
Financial income
Financial expense
Share of profit of other companies consolidated by the equity method
Profit for the year before tax
Income tax expense
Net profit for the year
Of which:
Attributable to non-controlling interests
PROFIT ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
Basic earnings per share (in euro)
Diluted earnings per share (in euro)
NOTES
FISCAL 2019
FISCAL 2018
3
4.1
4.1
4.9
3
4.1
4.1
4.2
4.2
4.9
4.3
4.4
4.4
21,954
20,407
(18,756)
(17,320)
3,198
3,087
(2,000)
(1,963)
2
4
1,200
1,128
11
(152)
1,059
44
(144)
4
963
(277)
686
21
665
4.56
4.50
10
(141)
997
46
(136)
2
909
(245)
664
13
651
4.40
4.34
86
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C O N S O L I D A T E D I N F O R M A T I O N
3.3.2 Consolidated statement of comprehensive income
(in millions of euro)
NET PROFIT FOR THE YEAR
NOTES
FISCAL 2019
FISCAL 2018
686
664
Components of other comprehensive income that may be reclassified
subsequently to profit or loss
Change in fair value of cash flow hedge instruments
4.16 and 4.14
Change in fair value of cash flow hedge instruments reclassified to profit or loss
4.16 and 4.14
Currency translation adjustment
Currency translation adjustment reclassified to profit or loss
Tax on components of other comprehensive income that may be reclassified
subsequently to profit or loss
4.14
4.14
4.14
190
(3)
(245)
Share of other components of comprehensive income (loss) of companies
consolidated by the equity method, net of tax
4.14 and 4.9
(7)
(1)
3
Components of other comprehensive income that will not be reclassified
subsequently to profit or loss
Remeasurement of defined benefit plan obligation
4.17.1 and 4.14
4
79
Change in fair value of financial assets revalued through other comprehensive
income
2.1.2, 4.11.2
and 4.14
Tax on components of other comprehensive income that will not be reclassified
subsequently to profit or loss
4.14
TOTAL OTHER COMPREHENSIVE INCOME (LOSS), AFTER TAX
COMPREHENSIVE INCOME
Of which:
Attributable to equity holders of the parent
Attributable to non-controlling interests
175
(5)
354
1,040
1,021
19
(13)
(180)
485
471
14
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3 C o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s a s o f A u g u s t 3 1 , 2 0 1 9
3.3.3 Consolidated statement of financial position
Assets
(in millions of euro)
NON-CURRENT ASSETS
Property, plant and equipment
Goodwill
Other intangible assets
Client investments
Companies consolidated by the equity method
Financial assets
Derivative financial instrument assets
Other non-current assets
Deferred tax assets
TOTAL NON-CURRENT ASSETS
CURRENT ASSETS
Financial assets
Derivative financial instrument assets
Inventories
Income tax receivable
Trade and other receivables
Restricted cash and financial assets related to the Benefits & Rewards Services
activity
Cash and cash equivalents
TOTAL CURRENT ASSETS
TOTAL ASSETS
NOTES
AUGUST 31, 2019
AUGUST 31, 2018
4.5
4.6
4.7
4.8
4.9
4.11
4.16
4.12
4.20
4.11
4.16
4.12
4.12
4.11
4.13
684
6,158
801
626
62
999
5
20
99
619
5,664
704
558
83
190
3
18
105
9,455
7,944
58
7
294
125
36
15
280
176
4,626
4,121
1,120
1,781
8,012
1,042
1,666
7,336
17,467
15,280
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C O N S O L I D A T E D I N F O R M A T I O N
NOTES
AUGUST 31, 2019
AUGUST 31, 2018
590
248
3,618
4,456
42
4,498
590
248
2,445
3,283
45
3,328
3,902
3,537
7
403
171
88
151
-
389
190
88
126
4,722
4,330
35
182
0
99
58
4,892
2,981
8,247
28
420
1
98
73
4,222
2,780
7,622
4.14
4.15
4.16
4.17
4.19
4.18
4.20
4.13
4.15
4.16
4.18
4.19
3
Shareholders’ equity and liabilities
(in millions of euro)
SHAREHOLDERS’ EQUITY
Share capital
Additional paid-in capital
Reserves and retained earnings
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
NON-CONTROLLING INTERESTS
TOTAL SHAREHOLDERS’ EQUITY
NON-CURRENT LIABILITIES
Borrowings
Derivative financial instrument liabilities
Employee benefits
Other non-current liabilities
Provisions
Deferred tax liabilities
TOTAL NON-CURRENT LIABILITIES
CURRENT LIABILITIES
Bank overdrafts
Borrowings
Derivative financial instrument liabilities
Income tax payable
Provisions
Trade and other payables
Vouchers payable
TOTAL CURRENT LIABILITIES
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES
17,467
15,280
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3 C o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s a s o f A u g u s t 3 1 , 2 0 1 9
3.3.4 Consolidated cash flow statement
(in millions of euro)
OPERATING ACTIVITIES
NOTES
FISCAL 2019
FISCAL 2018
Operating profit of consolidated companies
1,057
993
Elimination of non-cash and non-operating items
Depreciation, amortization and impairment of intangible assets and property, plant and equipment
Provisions
Disposal (gains) losses and other non-cash items
Dividends received from companies consolidated by the equity method
4.9
Interest paid
Interest received
Income tax paid
Operating cash flow
Change in working capital from operating activities
Change in inventories
Change in trade and other receivables
Change in trade and other payables
Change in vouchers payable
Change in financial assets related to the Benefits & Rewards Services activity
NET CASH PROVIDED BY OPERATING ACTIVITIES
INVESTING ACTIVITIES
365
(39)
37
10
(129)
42
(204)
317
(15)
20
19
(117)
51
(128)
1,139
1,140
129
(3)
(384)
406
164
(53)
1,268
(7)
(6)
(160)
193
194
(228)
1,133
Acquisitions of property, plant and equipment and intangible assets
(400)
(329)
Disposals of property, plant and equipment and intangible assets
Change in client investments
Change in financial assets and share of companies consolidated by the equity method
Acquisitions of subsidiaries
Disposals of subsidiaries
NET CASH USED IN INVESTING ACTIVITIES
FINANCING ACTIVITIES
Dividends paid to Parent company shareholders
Dividends paid to non-controlling shareholders of consolidated companies
Purchases of treasury shares
Sales of treasury shares
Increase in share capital
Change in non-controlling interests
Proceeds from borrowings (excluding leasing)
Repayment of borrowings
NET CASH PROVIDED BY/(USED IN) FINANCING ACTIVITIES
CHANGE IN NET CASH AND CASH EQUIVALENTS
Net effect of exchange rates and other effects on cash
Net cash and cash equivalents, beginning of year
4.8
4.14
4.14
4.15
4.15
NET CASH AND CASH EQUIVALENTS, END OF YEAR
4.13
17
(31)
(94)
(308)
7
31
11
(40)
(683)
11
(809)
(1,000)
(403)
(19)
(11)
4
1
(1)
278
(257)
(408)
52
58
1,638
1,746
(411)
(13)
(371)
25
1
(5)
645
(215)
(345)
(212)
(130)
1,980
1,638
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C O N S O L I D A T E D I N F O R M A T I O N
3.3.5 Consolidated statement of changes in shareholders’ equity
NUMBER
OF SHARES
OUTSTANDING
SHARE
CAPITAL
ADDITIONAL
PAID-IN
CAPITAL
RESERVES AND
COMPREHENSIVE
INCOME
CURRENCY
TRANSLATION
ADJUSTMENT
ATTRIBUTABLE
TO EQUITY
HOLDERS OF
THE PARENT
NON-CONTROLLING
INTERESTS
TOTAL
TOTAL SHAREHOLDERS’ EQUITY
4.14
4.14
147,454,887
590
248
3,375
(930)
3,283
45
3,328
530
530
147,454,887
590
248
3,905
(930)
3,813
530
3,858
686
354
1,040
45
21
(2)
19
665
356
1,021
190
190
665
166
831
(403)
(7)
33
(5)
4
(403)
(22)
(425)
3
(7)
33
(5)
4
(7)
33
(5)
4
0
0
(in millions of euro)
Notes
Shareholders’ equity as of
August 31, 2018
Impact of IFRS 9 & IFRS 15
first-time application(1)
Shareholders’ equity as of
September 1, 2018
Net profit for the year
Other comprehensive income
(loss), net of tax
Comprehensive income
Dividends paid
Capital reduction by
cancelling treasury shares
Treasury share transactions
Share-based payment
(net of income tax)
Change in ownership interest
without any change of control
Other(2)
SHAREHOLDERS’ EQUITY AS
OF AUGUST 31, 2019
147,454,887
590
248
4,358
(740)
4,456
42
4,498
(1) See note 2.1.2 “New accounting standards and interpretations required to be applied”.
(2) Including the effects of hyperinflation, recognition of commitments to repurchase non-controlling interests.
S O D E X O - F I S C A L 2 0 1 9 R E G I S T R AT I O N D O C U M E N T
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3 C o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s a s o f A u g u s t 3 1 , 2 0 1 9
NUMBER
OF SHARES
OUTSTANDING
SHARE
CAPITAL
ADDITIONAL
PAID-IN
CAPITAL
RESERVES AND
COMPREHENSIVE
INCOME
CURRENCY
TRANSLATION
ADJUSTMENT
ATTRIBUTABLE
TO EQUITY
HOLDERS OF
THE PARENT
NON-CONTROLLING
INTERESTS
TOTAL
TOTAL SHAREHOLDERS’ EQUITY
4.14
4.14
150,830,449
603
534
3,084
(685)
3,536
(3,375,562)
(14)
(286)
651
65
716
(411)
300
(348)
44
(0)
(10)
651
(245)
(180)
(245)
471
34
13
0
14
3,570
664
(180)
485
(411)
(16)
(427)
(348)
(348)
44
(0)
(10)
44
13
(9)
14
0
(in millions of euro)
Notes
Shareholders’ equity as of
August 31, 2017
Net profit for the year
Other comprehensive income
(loss), net of tax
Comprehensive income
Dividends paid
Capital reduction by
cancelling treasury shares
Treasury share transactions
Share-based payment
(net of income tax)
Change in ownership interest
without any change of control
Other*
SHAREHOLDERS’ EQUITY AS
OF AUGUST 31, 2018
147,454,887
589
248
3,375
(930)
3,283
45
3,328
*
Including the effects of hyperinflation and the recognition of put options written over non-controlling interests other than in connection with business
combinations.
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C O N S O L I D A T E D I N F O R M A T I O N
3.4 NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
DETAILED LIST OF NOTES
1.
SIGNIFICANT EVENTS
2.
2.1
2.2
2.3
2.4
2.5
2.6
2.7
2.8
2.9
ACCOUNTING POLICIES
Basis of preparation of the fi nancial statements
Use of estimates
Principles and methods of consolidation
Business combinations and goodwill
Intangible assets
Property, plant and equipment
Leases
Impairment of assets
Client investments
2.10
Inventories
2.11 Trade and other receivables
2.12 Financial instruments
2.13 Cash and cash equivalents
2.14 Borrowing costs
2.15 Sodexo treasury shares
2.16 Provisions
2.17 Employee benefi ts
2.18 Vouchers payable
2.19 Share-based payment
2.20 Deferred taxes
2.21 Trade and other payables
2.22
Income statement
2.23 Earnings per share
2.24 Cash fl ow statement
3.
3.1
3.2
3.3
4.
4.1
4.2
4.3
4.4
OPERATING SEGMENTS
By business segment
By signifi cant country
By type of service
NOTES TO THE FINANCIAL STATEMENTS
AS OF AUGUST 31, 2019
Operating expenses by nature and other
operating income and expenses
Financial income and expense
Income tax expense
Earnings per share
94
94
94
96
96
97
98
98
99
99
100
100
100
100
101
101
101
101
101
102
102
102
103
103
104
104
104
105
105
106
106
106
107
107
108
4.5
4.6
4.7
4.8
4.9
Property, plant and equipment
Goodwill
Other intangible assets
Client investments
Companies consolidated by the equity method
4.10
Impairment of assets
4.11 Financial assets
4.12
Income tax, trade and other receivables
4.13 Cash and cash equivalents
4.14 Statement of changes in shareholders’ equity
4.15 Borrowings
4.16 Derivative fi nancial instruments
4.17 Long-term employee benefi ts
4.18 Provisions
4.19 Trade and other payables
4.20 Deferred taxes
4.21 Financial instruments
4.22 Share-based payment
4.23 Business combinations
4.24 Commitments and contingencies
4.25 Related parties
4.26 Compensation, loans, post-employment benefi ts
and other benefi ts granted to Board members,
the Executive Committee, and the Group Chief
Executive Offi cer of Sodexo
4.27 Group employees
4.28 Disputes and litigation
4.29 Subsequent events
5.
5.1
5.2
5.3
5.4
6.
7.
FINANCIAL RISK MANAGEMENT
OBJECTIVES AND POLICY
Exposure to foreign exchange
and interest rate risk
Exposure to liquidity risk
Exposure to counterparty risk
Policy for managing the Company’s capital
structure
SCOPE OF CONSOLIDATION
AUDITORS’ FEES
109
110
112
113
113
114
115
117
117
118
119
123
124
127
128
129
130
132
135
135
136
137
137
138
138
139
139
139
139
140
140
143
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3 N o t e s t o t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s
_ Sodexo is a société anonyme (a form of limited liability company) domiciled in France, with its
headquarters located in Issy-les-Moulineaux.
Sodexo’s consolidated fi nancial statements for the fi scal year ended August 31, 2019 were approved
by the Board of Directors on November 6, 2019 and will be submitted to the Annual Shareholders
Meeting on January 21, 2020.
1. SIGNIFICANT EVENTS
During the 2018-2019 financial year, the Group significantly
strengthened its Personal & Home Services off ering, particularly
in the Child care market with the acquisition of Crèches de France
and Elly & Stoffl in Germany, and in the Homecare market with
the acquisition of The Good Care Group in the United Kingdom,
Domicil + in France and Pronep in Brazil. Sodexo also acquired
Novae Restauration in Switzerland, and Alliance in Partnership
in the UK which operates in Education, as well as International
Club of Suppliers in the U.S.
The impacts of these business combinations on the consolidated
financial statements at August 31, 2019 are detailed in
note 4.23 “Business combinations”.
In addition, the Group has invested through its strategic
investment fund Sodexo Ventures in Meican, a Chinese
technology company focused on digital food solutions in the
corporate environment.
Finally, in June 2019, the Group carried out a 250-million
pounds sterling nine-year bond (redeemable in June 2028)
bearing interest at an effective annual rate of 1.814%. This
bond issue , which was largely oversubscribed and placed with
European investors, is an integral part of the active management
of the Group’s debt, partly to refi nance the British acquisitions
of this year and allowing a naturel hedge of the Group assets in
pounds sterling.
2. ACCOUNTING POLICIES
2.1 Basis of preparation of
the fi nancial statements
2.1.1 Basis of preparation of financial
information for Fiscal 2019
Pursuant to European regulation 1606/2002 of July 19, 2002, the
consolidated fi nancial statements of the Sodexo Group have been
prepared in accordance with International Financial Reporting
Standards (IFRS) as issued by the International Accounting
Standards Board (IASB) and approved by the European Union as
of the year end. A comprehensive list of the accounting standards
adopted by the European Union is available for consultation
on the European Commission website at https://ec.europa.eu/
commission/index_en.
Information for the comparative year presented has been
prepared using the same principles.
The IFRS application dates as approved by the European
Union have been the same as those for the IFRS standards
published by the IASB for the Company’s past three fi scal years.
Consequently, any diff erences between the two sets of standards
arising out of delays in approval by the European Union had no
impact on the consolidated fi nancial statements.
The numbers shown in the tables were prepared in thousands
of euro and are presented in millions of euro unless otherwise
indicated.
2.1.2 New accounting standards
and interpretations required to be applied
The accounting policies used by the Group to prepare its
consolidated financial statements for the fiscal year ended
August 31, 2019 are the same as those used for the consolidated
fi nancial statements as of August 31, 2018, except for the fi rst-
time application of IFRS 9 and IFRS 15 as described hereaft er.
2.1.2.1 FIRST-TIME APPLICATION OF IFRS 9
“FINANCIAL INSTRUMENTS”
IFRS 9 specifies the principles of recognition and financial
reporting for fi nancial instruments. These principles have been
applied by the Group effective September 1, 2018, replacing
those required by IAS 39 “Financial Instruments: Recognition
and Measurement”. IFRS 9 introduces:
• a new classification of financial instruments, which
determines valuation and accounting rules, based on the
management model and the contractual specifi cations of the
fi nancial instruments (Tier 1);
• a new model of depreciation of financial assets, based on
expected credit losses, replacing the model previously based
on incurred credit losses (Tier 2); and
• new principles on hedge accounting (Tier 3).
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The nature and impacts of the main changes in accounting
policies arising from the application of IFRS 9 are summarized
in the following paragraphs.
Tier 1: Classifi cation and measurement of fi nancial assets
and liabilities
The standard presents a new model for the classifi cation and
measurement of financial assets, based on the contractual
characteristics of cash flows and on the economic model for
managing these assets. The four categories prescribed by IAS 39
for the classifi cation of fi nancial assets have been replaced by
the following three categories:
• fi nancial assets measured at amortized cost;
• fi nancial assets measured at fair value through profi t or loss;
•
financial assets measured at fair value through other
comprehensive income.
The main impact for Sodexo relates to the 19.61% stake held by
the Group through its subsidiary Sofi nsod, in the share capital of
Bellon SA, the company that controls Sodexo S.A. Under IAS 39,
the Group previously recognized its interest in Bellon SA at cost
(32.4 million euro). The application of IFRS 9 led the Group to
measure this investment at fair value in accordance with IFRS 13
“Fair value measurement”, and to recognize future changes in fair
value in Other Comprehensive Income. The measurement of the
fair value of the interest in Bellon SA is presented in note 4.21
“Financial Instruments”.
Tier 2: Impairment of fi nancial assets
The IAS 39 fi nancial asset impairment model, based on incurred
losses, has been replaced by a model based on expected
credit losses, leading to the recognition of an impairment for
the expected losses on receivables and long-term financial
assets as of their initial recognition. Within the Group, this
new impairment model is only applicable to financial assets
measured at amortized cost (consisting mainly of trade
receivables). The application of this model has a limited impact
on the Group’s financial statements: the difference between
the expected credit losses at maturity assessed by applying
the simplified model provided by IFRS 9 and the impairment
recognized for the incurred credit losses was 23 million euro
before tax as of September 1, 2018.
Tier 3: Hedge Accounting
The Group chose to adopt the new general hedge accounting
model introduced by IFRS 9, whereby hedge accounting must
be aligned with its risk management objectives and strategy.
IFRS 9 also requires a more qualitative and prospective approach
to assessing hedge eff ectiveness. These new principles have no
impact on the Group fi nancial statements.
The total impact of these changes as of the first application
is 530 million euro (net of tax) and was accounted for in
shareholders’ equity on September 1, 2018, with no restatement
of the comparative periods presented in accordance with the
option provided by the transitional provisions of IFRS 9. The
following table presents fi rst-application impacts recorded in
shareholders’ equity on September 1, 2018:
N o t e s t o t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s
C O N S O L I D A T E D I N F O R M A T I O N
(in millions of euro)
Bellon SA shares
Impairment of financial assets
Deferred tax assets
Deferred tax liabilities on long-term capital gain
TOTAL
IMPACT AS OF
SEPTEMBER 1, 2018
564
(23)
6
(17)
530
2.1.2.2 FIRST-TIME APPLICATION OF IFRS 15 “REVENUE FROM
CONTRACTS WITH CUSTOMERS”
IFRS 15, which defines the principles for recognizing revenue,
replaced IAS 18 “Revenue” and IAS 11 “Construction Contracts”,
along with the related interpretations, as from September 1, 2018
for the Group. IFRS 15 applies to all contracts with customers
except for leases, fi nancial instruments and insurance contracts,
which are addressed in other standards. IFRS 15 defi nes a single
framework for recognizing revenue. It introduces new concepts
and principles regarding revenue recognition, particularly in
terms of identifying performance obligations and allocating the
transaction price to performance obligations when there are
several diff erent performance obligations in a given contract.
The analysis of transactions and contracts for the different
material sources of revenue showed that the accounting policies
applied by the Group to recognize revenues remain appropriate
under IFRS 15, except in specifi c cases. The only change relates
to the accounting treatment of certain contracts in relation
to On-site Services, which have been reassessed to refl ect the
change in qualifi cation between agent and principal (leading to
the recognition of the related revenue on a gross or net basis),
and the recognition as a deduction from the revenues of fees or
rent paid by the Group in certain circumstances to its clients
(previously recorded as operating expenses).
Considering the limited impact of the fi rst-time application of
IFRS 15 on the Group fi nancial statements because of the nature
of its activities, the cumulative catch-up method has been
applied, allowing for the change in revenue recognition to be
recognized in opening equity in Fiscal 2019, as of September 1,
2018. Accordingly, an immaterial negative impact of -1 million
euro was recognized in Fiscal 2019 opening shareholders’
equity. The impact of IFRS 15 for Fiscal 2019 was not material.
The accounting principles for recognizing revenue applied by the
Group are described in note 2.22.2.
2.1.3 Accounting standards and interpretations
issued but not yet applicable
The Group has not elected to early adopt any standards,
interpretations or amendments not required to be applied in
Fiscal 2019.
The Group has not applied any IFRSs that had not yet been
approved by the European Union as of August 31, 2019.
It is currently analyzing the impacts of applying IFRS 16
“Leases” and IFRIC 23 “Uncertainty over income tax treatments”.
The Group does not expect the application of the other
standards, amendments or interpretations to have a material
impact on its consolidated fi nancial statements.
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3 N o t e s t o t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s
•
IFRS 16 “Leases”, applicable to the Group as from the
fiscal year opening on September 1, 2019
2.2 Use of estimates
IFRS 16 eliminates the current dual accounting model for
lessees, which distinguishes between on-balance sheet
finance leases and off-balance sheet operating leases. In
accordance with the new standard, all leases will now have to
be recognized on the balance sheet, with the recognition of an
asset representing the right to use the underlying asset, and a
lease liability corresponding to the present value of the fixed
lease payments over the reasonably certain term of the lease
agreement (considering renewal or early termination options
expected to be exercised). Only short-term leases and leases
of low-value assets are exempt from this requirement. IFRS 16
will also affect the presentation of lease transactions in the
consolidated income statement (with rental expense replaced
by depreciation expense and interest expense).
The implementation of IFRS 16 has been subject to a dedicated
project within the Group. During Fiscal 2019, the Group
continued its work on collecting data relating to the leases in
place in its various business segments and regions. In addition,
the Group adapted its processes and its IT systems in order
to be able to present its consolidated fi nancial statements in
compliance with IFRS 16 as of Fiscal 2020. As at August 31,
2019, the Group finalized the inventory of contracts and
is deploying its tool dedicated to lease management and
accounting.
The Group will apply IFRS 16 as of September 1, 2019 using
the simplified retrospective approach, without restating the
comparative consolidated fi nancial statements at of August 31,
2019. The Group has also opted to apply the two exemptions
proposed in the standard (leases for periods of 12 months or
less and leases for which the underlying asset is of low value).
Subject to the outcome of the discussions under way at the
IASB and IFRIC and based on the portfolio of existing contracts
and their current contractual terms, the Group estimates
that the amount of the liability it will need to recognize in the
consolidated statement of fi nancial position could be close to
1.3 billion euro. This amount is not directly comparable to the
operating lease commitments presented as off -balance sheet
commitments in note 4.24.2. The diff erence is mainly explained
by the diff erence in the lease terms considered (the reasonably
certain term of the leases used to determine the lease liability to
be recognised in accordance with IFRS 16 being generally longer
than the non-cancellable term used to determine the off -balance
sheet commitments), partly off set by the discounting eff ect.
•
IFRIC 23 “Uncertainty over income tax treatments”,
applicable to the Group as from the fiscal year opening
on September 1, 2019
IFRIC 23 clarifi es how to apply the recognition and measurement
requirements in IAS 12 “Income Taxes” when there is uncertainty
over the acceptability of a particular tax treatment under tax
law.
The possible effects of applying IFRIC 23 are currently being
analyzed.
T h e p r e p a r a t i o n o f f i n a n c i a l s t a t e m e n t s r e q u i r e s t h e
management of Sodexo and its subsidiaries to make estimates
and assumptions which aff ect the amounts reported for assets,
liabilities and contingent liabilities as of the date of preparation
of the fi nancial statements, and for revenues and expenses for
the period.
These estimates and valuations are updated continuously based
on past experience and on various other factors considered
reasonable in view of current circumstances and are the basis for
the assessments of the carrying amount of assets and liabilities.
Actual results may diff er substantially from these estimates if
assumptions or circumstances change.
Signifi cant items subject to such estimates and assumptions
include the following:
•
•
impairment of current and non-current assets (notes 4.10
to 4.12);
fair value of financial assets and derivative financial
instruments (notes 4.16 and 4.21);
• provisions and litigation (notes 4.18 and 4.28);
• valuation of post-employment defi ned benefi t plan assets
and liabilities (note 4.17);
• recognition of deferred tax assets (note 4.20);
• share-based payment (note 4.22);
• valuation of goodwill and intangible assets acquired as part
of a business combination, as well as their estimated useful
lives (note 4.23).
2.3 Principles and methods
of consolidation
2.3.1
Intragroup transactions
Intragroup transactions and balances, and unrealized losses
and gains between Group companies, are eliminated. Unrealized
losses are eliminated in the same way as unrealized gains,
unless they represent an impairment loss.
2.3.2 Consolidation methods
A subsidiary is an entity directly or indirectly controlled by
Sodexo S.A. The Group controls a subsidiary when it is exposed or
has rights to obtain variable benefi ts from its involvement with
the subsidiary and has the ability to infl uence those benefi ts
through its power over the subsidiary. In determining whether
control exists, voting rights granted by equity instruments are
taken into account only when they give the Group substantive
rights. The fi nancial statements of subsidiaries are included in
the consolidated fi nancial statements from the date on which
control is obtained to the date on which control ceases to be
exercised.
Associates are companies in which Sodexo S.A. directly or
indirectly exercises significant influence over financial and
operating policy without exercising exclusive or joint control.
Joint ventures are joint arrangements in which Sodexo S.A.
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directly or indirectly exercises joint control and has rights
to the net assets of the arrangement. Associates and joint
ventures are consolidated by the equity method. Sodexo has
a number of equity interests in project companies established
in connection with Public-Private Partnership (PPP) contracts.
These contracts enable governments to call upon the private
sector for the design, construction, fi nancing and management
of public infrastructure (hospitals, schools, barracks, prisons),
with detailed performance criteria. An analysis is performed for
each of these equity interests, in order to determine whether
they qualify as associates or joint ventures.
Sodexo only makes equity and subordinated debt investments
in such projects when it acts as a service provider to the project
company.
Further information on the main entities consolidated as of
August 31, 2018 is provided in note 6 “Scope of consolidation”.
2.3.3 Foreign currency translation
The exchange rates used are derived from rates quoted by the
European central bank and on other major international fi nancial
markets.
2.3.3.1 FOREIGN CURRENCY TRANSACTIONS
Monetary assets and liabilities denominated in foreign
currencies at the period end are translated using the closing
rate. The resulting translation differences are reported in
fi nancial income or expense.
Non-monetary foreign-currency assets and liabilities reported at
historical cost are translated using the exchange rate at the date
of the transaction. Non-monetary assets and liabilities reported
at fair value are translated using the exchange rate at the date
when the fair value was determined.
Transactions for the period are translated at the exchange rate
at the transaction date.
Translation diff erences on monetary items that are in substance
part of a net investment in a foreign operation consolidated by
Sodexo are reported in other comprehensive income until the
disposal or liquidation of the investment.
2.3.3.2 FINANCIAL STATEMENTS DENOMINATED
IN FOREIGN CURRENCIES
Countries with stable currencies
The separate fi nancial statements of each consolidated entity
are presented on the basis of the primary economic environment
(functional currency) in which the entity operates.
For consolidation purposes, all foreign-currency assets and
liabilities of consolidated entities are translated into the
reporting currency of the Sodexo Group (the euro) at the closing
exchange rate, and all income statement items are translated
at the average exchange rate for the period. The resulting
translation diff erences are recognized in other comprehensive
income under “Currency translation adjustment”.
N o t e s t o t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s
C O N S O L I D A T E D I N F O R M A T I O N
Countries with hyperinfl ationary economies
For these countries, the diff erence between profi t or loss for the
period translated at the average rate and profi t or loss for the
period translated at the closing rate is recognized in fi nancial
income or expense.
Since July 1, 2018, Argentina has been classifi ed as a country
with a hyperinflationary economy. However, the impacts of
hyperinfl ation in that country were not material at Group level
during Fiscal 2019.
2.4 Business combinations
and goodwill
The purchase method is used to account for acquisitions of
subsidiaries by the Group. Fair value of the consideration
corresponds to the fair value of assets acquired, equity
instruments issued by the purchaser and liabilities assumed
as of the date of the acquisition. Costs directly related to the
acquisition are expensed as incurred in the income statement.
On initial consolidation of a subsidiary or equity interest, the
Group measures all identifi able elements acquired at fair value
at the acquisition date, in the currency of the acquired entity.
Changes to the measurement of identifi able assets and liabilities
resulting from specialist valuations or additional analysis may
be recognized as adjustments to goodwill if they are identifi ed
within one year of the date of acquisition and result from facts
and circumstances existing at the acquisition date. Once this
one-year period has elapsed, the eff ect of any adjustments is
recognized directly in the income statement (unless it is the
correction of an error), including recognition of deferred tax
assets which are recognized in the income statement as a tax
benefi t if recognized more than one year aft er the acquisition
date. Goodwill arising on the acquisition of associates and
joint ventures is included in the value of the equity method
investment.
Goodwill is not amortized but is subject to impairment tests
immediately if there are indicators of impairment, and at least
once per year. Impairment test procedures are described in
note 2.8 “Impairment of assets”. Goodwill impairment losses
recognized in the income statement are irreversible.
2.4.1 Goodwill
Any residual difference between the fair value of the
consideration transferred (for example the amount paid),
increased by the amount of the non-controlling interest in the
acquired company (measured either at fair value or its share in
the fair value of the identifi able net assets acquired) and the fair
value as of the date of acquisition of the assets acquired and
liabilities assumed, is recognized as goodwill in the statement
of fi nancial position.
The Group measures non-controlling interests on a case-by-case
basis for each business combination either at fair value or based
on their percentage interest in the fair value of identifi able net
assets acquired.
3
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3 N o t e s t o t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s
2.4.2 Bargain purchases
When the fair value of the assets acquired and the liabilities
assumed as of the acquisition date is greater than acquisition
cost, increased by the amount of any non-controlling interest,
the excess – representing negative goodwill – is immediately
recognized in the income statement in the period of acquisition,
after reviewing the procedures for the identification and
measurement of the different components included in the
calculation.
2.4.3 Transactions in non-controlling interests
Changes in non-controlling interests, in the absence of either
assumption or loss of control, are recognized in shareholders’
equity. In particular, when additional shares in an entity already
controlled by the Group are acquired, the difference between
the acquisition cost of the shares and the share of net assets
acquired is recognized in equity attributable to equity holders of
the parent. The consolidated value of the assets and liabilities of
the subsidiary (including goodwill) remains unchanged.
2.4.4 Purchase price adjustments and/or
earn-outs
Purchase price adjustments and/or earn-outs related to business
combinations are recognized at their fair value as of the date of
acquisition even if they are considered to be not probable. Aft er
the date of acquisition, changes in estimates of the fair value
of price adjustments lead to an adjustment to goodwill only
if they occur within the time allowed (a maximum of one year
as of the date of acquisition) and if they result from facts and
circumstances that existed at the acquisition date. In all other
cases, the change is recognized in profi t or loss except when the
consideration transferred consists of an equity instrument.
2.4.5 Step acquisitions
In a step acquisition, the fair value of the Group’s previous
interest in the acquired entity is measured at the date that
control is obtained and is recognized in profit or loss. In
determining the amount of goodwill recognized, the fair value
of the consideration transferred (for example the price paid) is
increased by the fair value of the interest previously held by the
Group.
2.5
Intangible assets
Separately acquired intangible assets are initially measured
at cost. Intangible assets acquired in connection with a
business combination and which can be reliably measured, are
controlled by the Group and are separable or arise from a legal
or contractual right, are recognized at fair value separately
from goodwill. Subsequent to initial recognition, intangible
assets are measured at cost less accumulated amortization and
impairment losses.
Intangible assets other than certain trademarks having an
indefi nite useful life are considered to have fi nite useful lives,
and are amortized by the straight-line method over their
expected useful lives:
Integrated management software
Other software
Patents and licenses
Client relationships
Other intangible assets
3-7 years
3-4 years
2-10 years
3-20 years
3-20 years
Acquired trademarks with a finite useful life are generally
amortized over a period of less than ten years. Trademarks
that the Group considers as having an indefinite useful life
(notably based on criteria relating to their durability and brand
recognition) are not amortized.
In view of the legal characteristics of French commercial leases,
lease rights are considered as having an indefi nite useful life and
are not amortized.
The cost of licenses and soft ware recognized in the statement
of fi nancial position comprises the costs incurred in acquiring
the soft ware and bringing it into use, and is amortized over the
estimated useful life of the asset.
Subsequent expenditures on intangible assets are capitalized
only if they increase the expected future economic benefits
associated with the asset to which they relate. Other
expenditures are expensed as incurred.
2.6 Property, plant and equipment
Property, plant and equipment are measured at cost less
accumulated depreciation and impairment losses, except for
land, which is measured at cost less accumulated impairment
losses. Cost includes expenditures directly incurred to acquire
the asset, and in some cases may also include estimated
unavoidable future dismantling, removal and site remediation
costs.
Subsequent expenditures are included in the carrying amount
of the asset, or recognized as a separate component, if it is
probable that the future economic benefi ts of the expenditures
will fl ow to Sodexo and the cost can be measured reliably. All
other repair and maintenance costs are recognized as expenses
during the period in which they are incurred, except costs
incurred to improve productivity or extend the useful life of an
asset, which are capitalized.
Items of property, plant and equipment are depreciated over
their expected useful lives using the component-based approach,
taking account of their residual value. The straight-line method
of depreciation is regarded as the method that most closely
reflects the expected pattern of consumption of the future
economic benefits embodied in items of property, plant and
equipment.
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N o t e s t o t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s
C O N S O L I D A T E D I N F O R M A T I O N
The useful lives generally used by the Group are:
2.8.2.1 CASH GENERATING UNITS
Buildings
General fixtures and fittings
Plant and machinery
Motor vehicles
Boats and pontoons (depending on the
component)
20-30 years
3-10 years
3-8 years
4 years
5-15 years
The residual values and useful lives of items of property, plant
and equipment are reviewed at each period end and, if necessary,
adjusted.
The carrying amounts of items of property, plant and equipment
are tested for impairment if there is an indication that an item
may be subject to impairment.
2.7
Leases
Leases under which substantially all the risks and rewards
incidental to ownership of an asset are transferred to Sodexo
are classifi ed as fi nance leases and accounted for as follows:
• at inception of the lease term, the leased asset is recognized
as an asset at the lower of fair value or the present value of
the minimum lease payments;
• the corresponding liability is recognized in borrowings;
•
lease payments are apportioned between the fi nance charge
and the reduction of the outstanding liability so as to
produce a constant periodic rate of interest on the remaining
balance of the liability.
An asset held under a finance lease is depreciated over its
estimated useful life, or if there is no reasonable certainty that
the lessee will obtain ownership by the end of the lease term,
over the shorter of the lease term and its useful life.
Leases under which the lessor retains substantially all the risks
and rewards incidental to ownership of the asset are treated as
operating leases. Payments made under operating leases are
expensed as an operating item on a straight-line basis over the
term of the lease.
2.8
Impairment of assets
2.8.1
Impairment of assets with finite useful
lives
Property, plant and equipment and intangible assets with fi nite
useful lives are tested for impairment if there is any indication
of impairment. Impairment losses are recognized in the income
statement, and may be reversed subsequently.
2.8.2
Impairment of assets with indefinite
useful lives
Goodwill and other intangible assets considered to have an
indefinite useful life (such as certain trademarks) are tested
for impairment whenever there is an indication of impairment,
and at least annually, in the last quarter of the fi scal year. The
results of the impairment tests are then confi rmed using actual
data as of August 31.
Assets that do not generate cash inflows that are largely
independent of those from other assets, and hence cannot be
tested for impairment individually, are grouped together in Cash
Generating Units (CGUs).
Impairment tests are performed at the level of the CGU or group
of CGUs corresponding to the lowest level at which goodwill is
monitored by the Group.
Since Fiscal 2017, goodwill for the has been analyzed based on
the following operating segments in the Group’s organizational
structure (see note 3):
• On-site Services activity:
• Business & Administrations, which includes Corporate
Services, Energy & Resources, Government & Agencies,
Sports & Leisure and other non-segmented activities,
• Healthcare, combined with Seniors,
• Education, comprising Schools and Universities;
• the Benefits & Rewards Services activity corresponds to a
single CGU.
Goodwill is not tested for impairment at a higher level than the
operating segments before aggregation for segment reporting.
The assets allocated to each CGU or group of CGUs comprise:
• goodwill, which is allocated when the CGU or group of CGUs is
likely to benefi t from the business combination;
• other intangible assets, property, plant and equipment, client
investments and net working capital.
2.8.2.2
INDICATIONS OF IMPAIRMENT
The main indicators that a CGU may be impaired are a
significant decrease in the CGU’s revenues and underlying
operating profi t or material changes in market trends.
2.8.2.3 METHODS USED TO DETERMINE THE RECOVERABLE
AMOUNT
An impairment loss is recognized in the income statement
when the carrying amount of an asset or CGU is greater than its
recoverable amount.
Recoverable amount is the greater of:
•
fair value less costs of disposal, i.e., the amount obtainable
from the sale of an asset (net of selling costs) in an
orderly transaction between market participants at the
measurement date; and
• value in use, which is the present value of the future cash
flows expected to be derived from continuing use and
ultimate disposal of the asset or CGU.
The value in use of a CGU or group of CGUs is estimated using
aft er-tax cash fl ow projections based on business plans and a
terminal value calculated by extrapolating data for the final
year of the business plan. Business plans generally cover one to
fi ve years. These plans have been drawn up for each operating
segment resulting from the Group’s new organizational structure
as described in note 3.
Management both at Group and subsidiary levels prepares
underlying profi t forecasts on the basis of past performance and
expected market trends.
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The growth rate used beyond the initial period of the business
plans reflects the growth rate of the operating segment
concerned, taking into account the geographic regions in which
the operating segment conducts business.
Expected future cash flows are discounted at the weighted
average cost of capital calculated for the Group. For certain
CGUs or groups of CGUs a premium is added to the weighted
average cost of capital in order to refl ect the greater risk factors
affecting certain countries in which the operating segment
concerned conducts business.
The growth and discount rates used for impairment tests during
the period are provided in note 4.10 “Impairment of assets”.
2.8.2.4 RECOGNITION OF IMPAIRMENT LOSSES
An impairment loss recognized with respect to a CGU is allocated
initially to reducing the carrying amount of any goodwill
allocated to that CGU, and then to reducing the carrying amount
of the other assets of the CGU in proportion to the carrying
amount of each asset.
2.8.3 Reversal of impairment losses
Impairment losses recognized with respect to goodwill cannot
be reversed.
Impairment losses recognized with respect to any other
asset may only be reversed if there is an indication that the
impairment loss is lower or no longer exists. The amount
reversed is based on the new estimates of the recoverable
amount.
The increased carrying amount of an asset resulting from the
reversal of an impairment loss cannot exceed the carrying
amount that would have been determined for that asset had no
impairment loss been recognized.
2.9 Client investments
Some client contracts provide for a financial contribution by
Sodexo. For example, the Group may participate in financing
the purchase of equipment or fi xtures on the client site that are
necessary to fulfi ll service obligations, or it may make a fi nancial
contribution that will be recovered over the life of the contract.
These assets are generally amortized over a period of less than
10 years, but may be amortized over a longer period depending
on the contract duration. The amortization is recognized as a
reduction to revenues over the life of the contract.
In the cash flow statement, changes in the value of these
investments are presented as a component of investing cash
fl ows.
2.10 Inventories
Inventories are measured at the lower of cost or net realizable
value. Cost is determined by the FIFO (First In First Out) method.
2.11 Trade and other receivables
Trade and other receivables are initially recognized at fair
value, and are subsequently measured at amortized cost less
impairment losses recognized in the income statement.
Trade and other receivables are impaired to refl ect the expected
credit losses, assessed using an impairment matrix (application
of the simplifi ed impairment model as provided for in IFRS 9).
This method consists in applying for each aging balance
category a separate impairment rate based on historical
credit losses adjusted, when necessary, to take into account
prospective factors.
2.12 Financial instruments
Financial assets and liabilities are recognized in the statement
of fi nancial position on the transaction date, which is the date
when Sodexo becomes a party to the contractual provisions of
the instrument.
The fair values of fi nancial assets and derivative instruments
are generally determined on the basis of quoted market prices,
of values resulting from recent transactions or of valuations
carried out by the depositary bank.
2.12.1 Financial assets
Financial assets are measured and recognized in three main
categories:
•
•
•
financial assets measured at fair value through
other comprehensive income include investments in
non-consolidated entities, which correspond to equity
instruments that the Group has irrevocably elected to
classify in this category. When an equity instrument is
sold, the cumulative fair value adjustment recognized
in other comprehensive income is not transferred to the
income statement; only dividends are booked in the income
statement. For securities listed on an active market, fair
value is considered to equal market value. If no active
market exists, fair value is generally determined based on
appropriate fi nancial criteria for the specifi c security;
financial assets measured at amortized cost represent
debt instruments that give rise to contractual cash fl ows that
are solely payments of principal and interest on the principal
amount outstanding and that are held within a business
model whose objective is to hold assets to collect contractual
cash flows. They include financial and security deposits,
and loans to non-consolidated entities. These financial
assets are initially recognized at fair value in the statement
of financial position and subsequently at amortized cost,
using the eff ective interest rate method (which is equivalent
to acquisition cost as no signifi cant transaction costs are
incurred in acquiring such assets). They are impaired to cover
the estimated expected credit losses;
financial assets at fair value through profit or loss
include marketable securities with maturities greater than
three months and other financial assets held for trading
and acquired for the purpose of resale in the near term
(instruments that are not eligible to be classifi ed as fi nancial
assets measured at amortized cost or at fair value through
other comprehensive income). These assets are measured
at fair value, with changes in fair value recognized in
fi nancial income or expense in the income statement, with
the exception of changes in the fair value of fi nancial assets
related to the Benefi ts & Rewards Services activity which are
recognized in operating income or expense.
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2.12.2 Derivative financial instruments
Sodexo’s policy is to fi nance the majority of acquisition costs
insofar as possible in the currency of the acquired entity,
generally at fi xed rates of interest.
Derivative fi nancial instruments are initially recognized at fair
value in the statement of fi nancial position. Subsequent changes
in the fair value of derivative instruments are recognized in the
income statement, except in the case of instruments that qualify
as cash fl ow hedges.
For cash fl ow hedges, the necessary documentation is prepared
at inception and updated at each period end.
Gains or losses arising on the effective portion of the hedge
are recognized in other comprehensive income, and are not
recognized in the income statement until the underlying asset
or liability is realized. Gains or losses arising on the ineff ective
portion of the hedge are recognized in the income statement.
of purchase or may be withdrawn at any time at a known cash
value with no material risk of loss in value.
2.14 Borrowing costs
Borrowing costs directly attributable to the acquisition,
construction or production of a qualifying non-current asset
are included in the cost of that asset. Borrowing costs that
are not directly attributable to the acquisition, construction or
production of a qualifying non-current asset are recognized as
an expense using the eff ective interest method.
2.15 Sodexo treasury shares
Sodexo shares held by Sodexo S.A. itself and/or by other
Group companies are shown as a reduction in consolidated
shareholders’ equity at their acquisition cost.
The fair value of these derivative instruments is generally
determined based on valuations provided by the bank counter-
parties.
Gains and losses on acquisitions and disposals of treasury
shares are recognized directly in consolidated shareholders’
equity and do not aff ect profi t or loss for the year.
2.12.3 Commitments to purchase non-controlling
interests
2.16 Provisions
As required by IAS 32 “Financial instruments: Presentation”,
Sodexo recognizes commitments to purchase non-controlling
interests as a liability within borrowings in the consolidated
statement of financial position. Commitments to purchase
non-controlling interests given in connection with business
combinations are recognized as follows:
• the liability arising from the commitment is recognized
in other borrowings at the present value of the purchase
commitment;
• the corresponding non-controlling interests are cancelled;
• additional goodwill is recognized for the balance.
2.12.4 Bank borrowings and bond issues
All borrowings, including bank credit facilities and overdraft s, are
initially recognized at the fair value of the amount received less
directly attributable transaction costs.
Subsequent to initial recognition, borrowings are measured
at amortized cost using the effective interest method. The
effective interest rate is the rate that discounts estimated
future cash payments or receipts through the expected life of
a fi nancial liability to the net carrying amount of that liability.
The calculation includes the eff ects of transaction costs, and of
diff erences between the issue proceeds (net of transaction costs)
and reimbursement value.
2.13 Cash and cash equivalents
Cash and cash equivalents comprise current bank account
balances, cash on hand and short-term cash investments
in money-market instruments. Money-market instruments
correspond to authorized “short-term” or “standard” money-
market funds under the new regulation adopted by the European
Union (market funds that are eligible to the presumption as to
classification as cash equivalents pursuant to the common
AMF and ANC position issued in November 27, 2018) and have
an initial maturity of less than three months at the moment
A provision is recognized if the Group has a legal or constructive
obligation at the period end and it is probable that settlement
of the obligation will require an outflow of resources and the
amount of the liability can be reliably measured.
Provisions primarily cover commercial, employee-related and
tax-related risks and litigation (other than those related to
income tax) arising in the course of operating activities, and
are measured using assumptions that take account of the most
likely outcomes.
Where the effect of the time value of money is material, the
amount of the provision is determined by discounting the
expected future cash flows at a pre-tax discount rate that
refl ects current market assessments of the time value of money
and any risks specifi c to the liability.
A provision for onerous contracts is established where the
unavoidable costs of meeting the obligations under a contract
exceed the economic benefi ts expected to be received under it.
2.17 Employee benefi ts
2.17.1 Short-term benefits
Group employees receive short-term benefits such as
vacation pay, sick pay, bonuses and other benefits (other
than termination benefi ts), whose payment is expected within
12 months of the related service period.
These benefi ts are reported as current liabilities.
2.17.2 Post-employment benefits
In accordance with IAS 19 “Employee Benefi ts”, Sodexo measures
and recognizes post-employment benefi ts as follows:
• contributions to defi ned-contribution plans are recognized as
an expense; and
• defined benefit plans are measured using actuarial
valuations.
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Sodexo uses the projected unit credit method as the actuarial
method for measuring its post-employment benefi t obligations,
on the basis of the national or company-wide collective
agreements eff ective within each entity.
Factors used in calculating the obligation include length of
service, life expectancy, salary inflation, staff turnover, and
macro-economic assumptions specific to countries in which
Sodexo operates (such as infl ation rate and discount rate).
Remeasurement of the net obligation under defined benefit
plans, including actuarial gains and losses, differences
between the return on plan assets and the corresponding
interest income recognized in the income statement, and any
changes in the eff ect of the asset ceiling, is recognized in other
comprehensive income and have no impact on profi t for the
period.
Plan amendments and the establishment of new defined
benefit plans result in past service costs that are recognized
immediately in the income statement.
The accounting treatment applied to defi ned benefi t plans is as
follows:
• the obligation, net of plan assets, is recognized as a non-
current liability in the consolidated statement of fi nancial
position if the obligation exceeds the plan assets;
•
if the value of plan assets exceeds the obligation under the
plan, the net amount is recognized as a non-current asset.
Plan surpluses are recognized as assets only if they represent
future economic benefits that will be available to Sodexo.
Where the calculation of the net obligation results in an asset
for Sodexo, the amount recognized for this asset may not
exceed the present value of all future refunds and reductions
in future contributions under the plan;
• the expense recognized in the income statement comprises:
• current service cost, past service cost, if any, and the
effect of plan settlements, all of which are recorded in
operating income,
plan amendments and the establishment of new plans are
recognized immediately in the income statement.
2.18 Vouchers payable
Vouchers payable are recognized as a current liability at fair
value, which is the face value of vouchers in circulation or
returned to Sodexo but not yet reimbursed to affi liates.
2.19 Share-based payment
Some Group employees receive compensation in the form of
share-based payments, for which payment is made in equity
instruments.
The services compensated by these plans are recognized as an
expense, with the off set recognized in shareholders’ equity, over
the vesting period. The amount of expense recognized in each
period is determined by reference to the fair value of the equity
instruments granted, as of the grant date.
Each year, Sodexo reassesses the number of potentially
exercisable stock options that are expected to vest as well as the
number of shares that is likely to be delivered to benefi ciaries
of free shares based on the applicable vesting conditions. The
impact of any change in estimates is recognized in the income
statement, with the off set recognized in shareholders’ equity.
The features of the Group’s share-based payment plans are set
out in note 4.22 “Share-based payment”.
2.20 Deferred taxes
Deferred taxes are recognized on temporary diff erences between
the carrying amount of an asset or liability and its tax base, using
the tax rate that is expected to apply in the period when the asset
is realized or the liability is settled, based on tax rates (and tax
laws) that are enacted or substantially enacted at the period end.
Deferred taxes are not recognized on the following items:
• the interest expense (income) on the net defined
benefi t obligation (asset), calculated by multiplying the
obligation (asset) by the discount rate used to measure
the defined benefit obligation at the beginning of the
period.
•
•
initial recognition of goodwill;
initial recognition of an asset in a transaction that is not a
business combination and that aff ects neither accounting
profi t nor taxable profi t; and
Sodexo contributes to multiemployer plans, primarily in
the United States. These plans are accounted for as defined
contribution plans, as the information provided by the plan
administrators is insuffi cient for them to be accounted for as
defi ned benefi t plans (see note 4.17.1.3).
2.17.3 Other long-term employee benefits
Other long-term employee benefi ts are measured in accordance
with IAS 19. The expected cost of such benefits is recognized
as a non-current liability over the employee’s period of service.
Actuarial gains and losses and past service costs arising from
• temporary diff erences on investments in subsidiaries that are
not expected to reverse in the foreseeable future.
Taxes on items recognized directly in shareholders’ equity or
in other comprehensive income are recognized in shareholders’
equity or in other comprehensive income, respectively, and not
in the income statement.
Residual deferred tax assets on temporary diff erences and tax
loss carry-forwards (aft er off set of deferred tax liabilities) are
only recognized if their recovery is considered probable.
Deferred tax assets and liabilities are off set if there is a legally
enforceable right to set off current tax assets and liabilities and the
deferred taxes relate to the same taxable entity and tax authority.
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2.21 Trade and other payables
Trade and other payables are classifi ed as fi nancial liabilities
measured at amortized cost, as defined in IFRS 9 “Financial
instruments” (see note 2.1.2). They are initially recognized at
their nominal amount, which represents a reasonable estimate
of fair value in light of their short maturities.
2.22 Income statement
2.22.1 Income statement by function
represent any other unsatisfied performance obligation
at that date). Facilities management services mainly
represent routine or recurring services, whose benefi ts are
simultaneously received and consumed by customers as
they are performed by the Group, and therefore correspond
to performance obligations satisfi ed over time. Consequently,
the Group applies the practical expedient provided for in
IFRS 15 and recognizes the revenue for its right to bill
(invoicing based on contractual prices, which represent the
transaction prices of the diff erent promised services).
A a result, revenue recognition matches with billing for most
of the On-site Services.
Sodexo presents its income statement by function.
Principal versus Agent considerations:
Operating profi t comprises the following components:
• gross profi t;
• administrative and Sales Department costs; and
• other operating income and expenses.
In order to better focus the Group’s fi nancial communication on
recurring operating profi t and to simplify benchmarking with
competitors, the consolidated income statement has changed
as from Fiscal 2018 to include a new indicator, “Underlying
operating profi t”, which corresponds to operating profi t before
“Other operating income” and “Other operating expenses”.
Other operating income and expenses include the following:
• gains and losses arising from changes in the scope of
consolidation;
• gains and losses arising from changes in post-employment
benefi t obligations;
• restructuring and rationalization costs;
• M&A costs;
• amortization and impairment of client relationships and
trademarks;
• goodwill impairment;
•
impairment of non-current assets and other unusual or non-
recurring items representing material amounts.
Underlying operating profi t also comprises the Group’s share
of profi t of companies consolidated by the equity method that
directly contribute to the Group’s business.
Underlying operating profi t has replaced operating profi t in the
segment information, as it is now the main indicator reviewed
regularly by the Executive Committee, which is the Group’s main
operating decision-maker.
2.22.2 Revenues
Revenues reported by Sodexo relate to the sale of services in
connection with the ordinary activities of fully consolidated
companies as follows:
• On-site Services: revenues include all revenues stipulated
in the contract, considering whether Sodexo acts as principal
(the vast majority of cases) or agent.
Food services revenues are recognized when the customer
pays at the check-out (the date on which control of the
goods is transferred to the customer, since the sales do not
When a third party is involved in providing goods or services
to the customers (for example, a subcontractor), the Group
evaluates whether or not it obtains control of goods or
services before transferring control to the customer. When
the Group controls the good or service before it is transferred
to the customer, the revenue is recognized on a gross basis.
Otherwise, the revenue is recognized on a net basis. It should
be noted that the changes in revenue recognition principles
introduced by IFRS 15 led us to reassess the accounting
treatment of some contracts (revenue now recognized on a
gross basis for instances where we subcontract part of our
facilities management services, and on a net basis in some
specifi c cases).
Consideration payable to customers:
In certain cases, and mainly upon client requirements, the
Group pays fees or rent for the use of space or equipment
made available to us on sites that enable us to deliver our
services. In accordance with IFRS 15 principles applicable to
consideration payable to customers, we have considered that
such expenses should be recognized as a deduction from the
corresponding revenues (previously recognized as operating
expenses);
• Benefits & Rewards Services: revenues include mainly
commissions received from clients and affi liates, fi nancial
income from the investment of cash generated by the
activity, and profi ts from vouchers and cards not reimbursed.
Commissions received from clients in the Benefi ts & Rewards
Services activity are recognized when the vouchers are issued
and sent to the client or the cards are credited. Commissions
received from affi liates are recognized when the vouchers are
reimbursed or the cards are used. Profits from unreimbursed
vouchers and cards are recognized based on their expiration
date and the deadline for presentation for reimbursement by the
affi liate. It should be noted that the implementation of IFRS 15
has no signifi cant impact on revenue recognition for Benefi ts &
Rewards Services.
Revenues are measured at the fair value of the consideration
received or to be received, net of discounts and rebates as well as
Value Added Tax (VAT) and other taxes. The fi nancial component
of each commercial transaction is considered as negligible
and therefore is not recognized separately in accordance with
IFRS 15 provisions.
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2.22.3 Discount Allowances
As part of its food or other material supply contracts with
manufacturers and distributors, the Group can earn discounts,
rebates, or credits related to the purchases made under those
contracts. Vendor Discounts and Allowances (VDA) are earned
by the volume of materials purchased under the contract, by
the periodic purchase volumes exceeding certain contractually-
defi ned thresholds, or as fi xed amounts in exchange for certain
commitments such as vendor exclusivity arrangements. The
Group retains VDAs to the extent consistent with its client
contracts and applicable law. Our accounting policy for VDAs is
as follows:
• VDAs earned on purchases made through Sodexo-managed
food or facilities services contracts are recognized as a
reduction to Cost of Sales;
• VDAs earned on purchases made through procurement
management services contracts are recognized as Revenues.
VDAs are typically recognized in the period the purchases
are made based on the volume of materials purchased in the
period and the contractual VDA rate. VDAs earned based on
purchase volumes reaching contractually-defi ned thresholds are
recognized in proportion with the purchases made as soon as the
Group considers it probable that the thresholds will be reached.
If the Group does not consider it probable that its purchase
volumes will reach the contractually-defined thresholds, any
VDAs earned are recognized if and when the thresholds are
reached. Fixed-amount VDAs are recognized immediately unless
certain conditions need to be met in order for them to be earned
or if there is a clear link between the amount promised and the
future purchase volumes. In such cases, fi xed-amount VDAs are
recognized over the period of the related commitment.
added generated by the French subsidiaries, which is reported
under income tax expense because the Group considers that
it meets the defi nition of a tax on income contained in IAS 12
“Income Tax”.
Tax credits that do not affect taxable profit and are always
r e f u n d e d b y t h e F r e n c h g o v e r n m e n t i f t h e y h a v e n o t
been deducted from corporate income tax (including the
Competitiveness and Employment Tax Credit (CICE) introduced
in France under the third amended 2012 Finance Bill) are
recognized as subsidies and therefore deducted from the
expenses to which they relate.
2.23 Earnings per share
Earnings per share is calculated by dividing profi t for the period
by the weighted average number of ordinary shares outstanding
during the period, net of treasury shares.
In the calculation of diluted earnings per share, the denominator
is increased by the number of potentially dilutive shares, and the
numerator is adjusted for all dividends and interest recognized
in the period and any other change in income or expenses that
would result from conversion of the potentially dilutive shares.
Potential ordinary shares are treated as dilutive if and only if
their conversion to shares would decrease earnings per share or
increase loss per share.
A reconciliation between the weighted average number of
ordinary shares for the period and the weighted average number
of shares for the period adjusted for the eff ects of potentially
dilutive ordinary shares is presented in note 4.4 “Earnings per
share”.
2.24 Cash fl ow statement
2.22.4 Income tax expense
Income tax expense for the year comprises current taxes and
deferred taxes. It includes the cotisation sur la valeur ajoutée des
entreprises (CVAE), a business tax assessed on corporate value-
The cash fl ow statement analyzes changes in net cash and cash
equivalents, defi ned as cash and cash equivalents less current
bank overdraft s and credit bank balances payable on demand
that form an integral component of treasury management.
3. OPERATING SEGMENTS
The segment information presented below has been prepared
based on internal management data as monitored by the Group
Executive Committee, which is Sodexo’s chief operating decision-
maker: On-site Services and Benefi ts & Rewards Services.
For On-site Services, since the beginning of Fiscal 2017, the
Group has monitored this activity based on global client
segments rather than geographies to reflect the gradual
reorganization of the Group since September 2015. The Group
has progressively adapted the way it conducts its On-site
Services business, building an organization by global client
segment to better support clients wherever they are, both
locally and internationally, and by global function to ensure
optimized and standardized processes in all service off erings
and functional activities. These global client segments meet the
defi nition of operating segments in IFRS 8.
As explained in note 2.22.1, since Fiscal 2018, the Group has
introduced a new indicator, “Underlying operating profit”,
which is monitored by segment along with revenues, replacing
operating profi t. Consequently, Sodexo’s operating segments
and groups of operating segments are now as follows:
• On-site Services:
• Business & Administrations, which includes Corporate
Services, Energy & Resources, Government & Agencies,
Sports & Leisure and other non-segmented activities,
• Healthcare, combined with Seniors,
• Education, comprising Schools and Universities;
• Benefi ts & Rewards Services.
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The operating segments that have been aggregated carry out
similar operations – both in terms of type of services rendered
and the processes and methods used to deliver the services –
and have similar economic characteristics (notably in terms of
the margins they generate).
Segment assets and liabilities are not presented as they are not
included in the chief operating decision-maker’s measurement
of segment performance.
Since the beginning of the 2018-2019 fi scal year, some contracts
have been reallocated between segments. The most important
change concerns some European countries where, aft er several
years of restructuring, the activity is now segmented. Thus, the
activities operated in Hospitals and Seniors were transferred
from the Business & Administration segment (where all non-
segmented activities are reported) to the Healthcare & Seniors
segment.
No single Group client or contract accounts for more than 2% of
consolidated revenues.
3.1 By business segment
FISCAL 2019
(in millions of euro)
ON-SITE
SERVICES
BUSINESS &
ADMINISTRATIONS
HEALTHCARE
& SENIORS
EDUCATION
Revenues (third-party)
21,067
11,577
5,210
4,280
Inter-segment sales (Group)
TOTAL REVENUES
21,067
11,577
5,210
4,280
Underlying operating profit
1,049
487
342
220
BENEFITS &
REWARDS
SERVICES
ELIMINATIONS
AND
CORPORATE
EXPENSES
GROUP TOTAL
21,954
(4)
(4)
21,954
(126)
1,200
888
4
892
276
FISCAL 2018
(in millions of euro)
ON-SITE
SERVICES
BUSINESS &
ADMINISTRATIONS
HEALTHCARE
& SENIORS
EDUCATION
BENEFITS &
REWARDS
SERVICES
ELIMINATIONS
AND CORPORATE
EXPENSES
Revenues (third-party)
19,561
10,938
4,768
3,855
Inter-segment sales (Group)
TOTAL REVENUES
19,561
10,938
4,768
3,855
Underlying operating profit
986
458
306
222
846
4
850
262
(4)
(4)
20,407
(120)
1,128
3
GROUP
TOTAL
20,407
3.2 By signifi cant country
The Group’s operations are spread across 67 countries, including two that each represent over 10% of consolidated revenues: France
(the Group’s home country) and the United States. Revenues and non-current assets in these countries are as follows:
AUGUST 31, 2019
(in millions of euro)
Revenues (third-party)
Non-current assets*
* Property, plant and equipment, goodwill, other intangible assets, and client investments.
AUGUST 31, 2018
(in millions of euro)
Revenues (third-party)
Non-current assets*
* Property, plant and equipment, goodwill, other intangible assets, and client investments.
FRANCE
UNITED STATES
OTHER
TOTAL
2,852
1,168
9,069
4,085
10,033
21,954
3,016
8,269
FRANCE
UNITED STATES
OTHER
TOTAL
2,721
1,084
8,243
3,827
9,443
2,635
20,407
7,546
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C O N S O L I D A T E D I N F O R M A T I O N
3 N o t e s t o t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s
3.3 By type of service
Revenues by type of service are as follows:
(in millions of euro)
Food services
Facilities management services
TOTAL ON-SITE SERVICES REVENUES
Benefits & Rewards Services
Eliminations
FISCAL 2019
FISCAL 2018
13,998
7,068
21,067
892
(4)
13,172
6,389
19,561
850
(4)
TOTAL CONSOLIDATED REVENUES
21,954
20,407
4. NOTES TO THE FINANCIAL STATEMENTS AS OF AUGUST 31, 2019
4.1 Operating expenses by nature and other operating income and expenses
4.1.1 Operating expenses by nature
(in millions of euro)
Depreciation, amortization and impairment losses
Employee costs
• Wages and salaries
• Other employee costs(1)
Purchases of consumables and change in inventory
Other operating expenses(2)
TOTAL NET OPERATING EXPENSES
FISCAL 2019
FISCAL 2018
(382)
(326)
(8,246)
(2,379)
(5,784)
(4,107)
(7,615)
(2,283)
(5,445)
(3,745)
(20,897)
(19,414)
(1) Other employee costs primarily comprise payroll taxes. They also include costs associated with defined benefit plans (note 4.17), defined contribution plans
(note 4.17) and free shares (note 4.22).
(2) Other operating expenses mainly include operating lease expenses (349 million euro for Fiscal 2019 and 343 million euro for Fiscal 2018), professional fees, other
purchases, sub-contracting costs and travel expenses.
4.1.2 Other operating income and expenses
(in millions of euro)
FISCAL 2019
FISCAL 2018
Gains related to consolidation scope changes
Gains on changes of post-employment benefits
Other
TOTAL OTHER OPERATING INCOME
Restructuring and rationalization costs
Acquisition-related costs
Losses related to consolidation scope changes
Losses on changes of post-employment benefits
Amortization and impairment of purchased intangible assets
Other
TOTAL OTHER NET OPERATING EXPENSES
9
1
1
11
(46)
(11)
(4)
(85)
(6)
(152)
3
7
10
(42)
(15)
(18)
(52)
(14)
(141)
106
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N o t e s t o t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s
C O N S O L I D A T E D I N F O R M A T I O N
4.2
Financial income and expense
(in millions of euro)
Gross borrowing cost(1)
Interest income from short-term bank deposits and equivalent
NET BORROWING COST
Interest income from loans and receivables at amortized cost
Other financial income(2)
Other financial expense
Net foreign exchange gains/(losses)
Net interest cost on net defined benefit plan obligation
Monetary adjustment for hyperinflation
Change in fair value of derivative financial instruments not qualified for hedge accounting
Other
NET FINANCIAL EXPENSE
Of which Financial income
Of which Financial expense
FISCAL 2019
FISCAL 2018
(121)
29
(92)
5
7
(11)
2
(6)
(1)
(4)
(100)
44
(144)
(110)
31
(79)
3
12
(10)
(2)
(7)
(7)
(90)
46
(136)
3
(1) Gross borrowing cost represents interest expense on financial liabilities at amortized cost and interest expense on hedging instruments.
(2) Including, in Fiscal 2018, 8 million euro in late payment interest received in relation to a refund of dividend tax and other taxes.
4.3
Income tax expense
4.3.1
Income tax rate reconciliation
(in millions of euro)
Profit for the year before tax
Share of profit of companies consolidated by the equity method
Profit before tax excluding share of profit of companies consolidated by the equity
method
Tax rate applicable to Sodexo S.A.
Theoretical income tax expense
Effect of jurisdictional tax rate differences
Reimbursement of additional tax on dividends paid
Permanently non-deductible expenses or non-taxable income
Other tax repayments/(charges), net
Tax loss carry-forwards used or recognized during the period but not recognized as a deferred
tax asset in prior periods
Tax loss carry-forwards arising during the period or prior years but not recognized as a deferred
tax asset
Actual income tax expense
Withholding taxes
TOTAL INCOME TAX EXPENSE
FISCAL 2019
FISCAL 2018
963
(6)
957
909
(6)
903
34.43%
34.43%
(330)
(311)
101
0
(49)
(9)
12
6
(269)
(8)
(277)
77
44
(7)
(13)
5
(34)
(239)
(6)
(245)
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3 N o t e s t o t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s
4.3.2 Components of income tax expense
(in millions of euro)
Current income taxes
Adjustments to current income tax payable in respect of prior periods
Provision for tax exposures
Utilization of tax credits, tax losses and temporary difference carry-forwards
CURRENT INCOME TAXES
Deferred taxes on temporary differences arising or reversing during the period
Deferred taxes on changes in tax rates or liability for taxes at new rates
Utilization of tax credits, tax losses and tax loss carry-forwards
DEFERRED INCOME TAXES
ACTUAL INCOME TAX EXPENSE
FISCAL 2019
FISCAL 2018
(295)
(217)
(5)
2
41
(257)
(29)
0
16
(12)
(269)
(1)
(1)
59
(160)
(55)
(21)
(4)
(80)
(239)
The eff ective tax rate, calculated on the basis of profi t for the period before tax and excluding the share of profi t of companies
consolidated by the equity method, decreased from 27.1% for Fiscal 2018 to 29% for Fiscal 2019. This increase is partially due to the
dividend contribution repayment which occurred in 2017-2018 for 44 million euro.
4.4 Earnings per share
The table below presents the calculation of basic and diluted earnings per share:
FISCAL 2019
FISCAL 2018
Profit for the year attributable to equity holders of the parent (in millions of euro)
665
651
Basic weighted average number of shares
Basic earnings per share* (in euro)
145,721,534
148,077,776
4.56
4.40
Average dilutive effect of stock option and free share plans
2,054,363
2,033,657
Diluted weighted average number of shares
Diluted earnings per share* (in euro)
147,775,897
150,111,433
4.50
4.34
* Basic and diluted earnings per share do not reflect the effect of the dividend premium to be paid on certain registered shares meeting the criteria described in
note 4.14. Based on the number of registered shares as of August 31, 2019, such shares total 9,336,529 (7,227,652 as of August 31, 2018).
All of the Group’s stock option and free share plans had a dilutive impact in both Fiscal 2018 and Fiscal 2019.
108
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N o t e s t o t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s
C O N S O L I D A T E D I N F O R M A T I O N
4.5 Property, plant and equipment
4.5.1 Gross value of property, plant and equipment
The tables below include assets held under fi nance leases.
(in millions of euro)
LAND AND
BUILDINGS
PLANT AND
EQUIPMENT
CONSTRUCTION
IN PROGRESS
AND OTHER
Gross value as of August 31, 2017
137
1,529
Increase
Decrease
Translation Adjustments
Reclassifications
Change in scope of consolidation
Other
Gross value as of August 31, 2018
Increase
Decrease
Translation Adjustments
Reclassifications
Change in scope of consolidation
Other
6
(8)
(1)
(32)
(4)
98
3
(1)
2
39
-
175
(106)
(45)
32
45
1,630
197
(102)
23
6
27
-
191
44
(15)
0
(21)
7
206
51
(12)
4
(33)
-
-
TOTAL
1,856
226
(129)
(45)
(20)
47
1,935
251
(115)
27
(25)
66
-
3
Gross value as of August 31, 2019
141
1,781
216
2,138
No item of property, plant and equipment is pledged as collateral for a liability.
4.5.2 Amortization and impairment of property, plant and equipment
(in millions of euro)
Amortization and impairment as of August 31, 2017
Depreciations and impairment
Reversals
Translation Adjustments
Reclassifications
Change in scope of consolidation
Other
Amortization and impairment as of August 31, 2018
Depreciations and impairment
Reversals
Translation Adjustments
Reclassifications
Change in scope of consolidation
Other
Amortization and impairment as of August 31, 2019
LAND AND
BUILDINGS
PLANT AND
EQUIPMENT
CONSTRUCTION
IN PROGRESS
AND OTHER
(80)
(3)
7
0
22
3
(51)
(9)
-
-
1
(14)
-
(73)
(1,069)
(178)
92
27
(5)
(5)
(117)
(18)
11
(0)
(2)
(0)
TOTAL
(1,266)
(199)
110
27
15
(2)
(1,138)
(126)
(1,316)
(185)
84
(14)
21
(14)
-
(22)
13
(3)
3
-
-
(216)
97
(17)
25
(28)
-
(1,246)
(135)
(1,454)
Depreciation and impairment losses are reported under either cost of sales or Administrative and Sales Department costs.
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3 N o t e s t o t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s
4.5.3 Net book value of property, plant and equipment
(in millions of euro)
Net carrying amount as of August 31, 2017
Net carrying amount as of August 31, 2018
Net carrying amount as of August 31, 2019
BUILDINGS
PLANT AND
EQUIPMENT
CONSTRUCTION
IN PROGRESS
AND OTHER
57
47
68
460
492
535
73
80
81
4.5.4 Property, plant and equipment held under finance leases
(in millions of euro)
Net carrying amount as of August 31, 2017
Net carrying amount as of August 31, 2018
Net carrying amount as of August 31, 2019
(in millions of euro)
Gross value
Amortization and impairment
Net book value
Maturities of payments under fi nance leases are provided in note 4.15.5.
4.6 Goodwill
Changes in goodwill were as follows during the fi scal year:
TOTAL
590
619
684
TOTAL
13
10
6
BUILDINGS
PLANT AND
EQUIPMENT
4
2
1
9
8
5
AUGUST 31, 2019
AUGUST 31, 2018
31
(25)
6
32
(22)
10
(in millions of euro)
Corporate Services
Government & Agencies
Sports & Leisure
Energy & Resources
Other non-segmented activities
Business & Administrations
Healthcare
Seniors
Healthcare & Seniors
Schools
Universities
Education
On-site Services
Benefits & Rewards Services
TOTAL
AUGUST 31, 2018
INCREASES DURING
THE PERIOD
DECREASES DURING
THE PERIOD
CURRENCY
TRANSLATION
ADJUSTMENT
AUGUST 31, 2019
1,001
359
415
320
325
2,420
998
424
1,422
352
855
1,207
5,049
615
5,664
6
107
113
117
117
78
78
307
307
23
3
18
10
7
62
42
14
56
11
46
57
174
15
188
1,024
362
439
329
438
2,595
1,040
554
1,595
441
901
1,342
5,531
630
6,158
110
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W W W. S O D E X O . C O M
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C O N S O L I D A T E D I N F O R M A T I O N
During the Fiscal year 2019 goodwill totaling 304 million euro
was recognized on the acquisition of Novae Restauration,
Alliance in Partnership in Schools, Pronep in Homecare,
Crèches de France, The Good Care Group, Domicil + and Elly &
Stoffl in Homecare and International Club of Suppliers, as well
as the adjustment on Sports & Leisure related to prior year ’s
acquisition of Centerplate Inc.
The goodwill amounts for the above acquisitions are provisional.
In the meantime, some contracts have been reallocated between
segments since the beginning of Fiscal 2019. The most important
change concerns some European countries where, aft er several
years of restructuring, the activity is now segmented. Goodwill
previously disclosed among non-segmented activities has
been revised accordingly. The activities operated in Healthcare
& Seniors have been therefore transferred from the Business &
Administration segment (where all non-segmented activities
were reported until then) to the Healthcare & Seniors segment.
(in millions of euro)
Corporate Services
Government & Agencies
Sports & Leisure
Energy & Resources
Other non-segmented activities
Business & Administrations
Healthcare
Seniors
Healthcare & Seniors
Schools
Universities
Education
On-site Services
Benefits & Rewards Services
TOTAL
AUGUST 31, 2017
INCREASES DURING
THE PERIOD
DECREASES DURING
THE PERIOD
CURRENCY
TRANSLATION
ADJUSTMENT
AUGUST 31, 2018
1,022
4
357
64
302
303
2,048
992
416
1,408
339
842
1,181
4,637
671
5,308
353
35
39
431
5
5
12
12
448
14
462
(25)
2
(2)
(16)
(17)
(58)
6
3
9
1
13
14
(35)
(70)
(1)
(1)
(1)
(1)
(105)
1,001
359
415
320
325
2,420
998
424
1,422
352
855
1,207
5,049
615
5,664
3
Increases in goodwill recognized in Fiscal 2018 primarily relate
to (i) the acquisitions of The Good Eating Company (United
Kingdom) in the Corporate Services activity, Morris Corporation
(Australia) in the Energy & Resources activity, Centerplate Inc.
(United States) in the Sports & Leisure activity, Gym4less (Spain)
in the Benefit & Rewards activity, Kim Yew (Singapore) in the
Education activity, and the acquisition of a controlling interest
in FoodChéri (France).
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3 N o t e s t o t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s
4.7 Other intangible assets
4.7.1 Gross value of other intangible assets
(in millions of euro)
Gross value as of August 31, 2017
Increase
Decrease
Translation Adjustments
Reclassifications
Change in scope of consolidation
Other
Gross value as of August 31, 2018
Increase
Decrease
Translation Adjustments
Reclassifications
Change in scope of consolidation
Other
Gross value as of August 31, 2019
LICENSES AND
SOFTWARE
CLIENT RELATIONSHIPS,
TRADEMARKS A
ND OTHER
525
82
(25)
(13)
3
5
577
106
(36)
9
(4)
-
-
652
629
29
(3)
(27)
1
219
847
82
(6)
28
(13)
42
-
980
4.7.2 Depreciation and impairment of other intangible assets
(in millions of euro)
LICENSES AND
SOFTWARE
CLIENT RELATIONSHIPS,
TRADEMARKS
AND OTHER
Depreciation and impairment August 31, 2017
(350)
(293)
Depreciations
Impairments
Reversals
Translation Adjustments
Reclassifications
Change in scope of consolidation
Other
Depreciation and impairment August 31, 2018
Depreciations
Impairments
Reversals
Translation Adjustments
Reclassifications
Change in scope of consolidation
Other
(50)
(1)
15
9
1
(0)
(376)
(63)
-
34
(5)
2
-
-
(49)
(18)
1
16
(1)
(0)
(344)
(63)
(24)
4
(6)
10
-
-
TOTAL
1,154
111
(28)
(40)
3
224
1,424
188
(42)
37
(17)
42
-
1,632
TOTAL
(643)
(99)
(20)
16
25
0
(0)
(720)
(126)
(24)
38
(11)
12
-
-
Depreciation and impairment August 31, 2019
(408)
(423)
(831)
112
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W W W. S O D E X O . C O M
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C O N S O L I D A T E D I N F O R M A T I O N
Amortization and impairment losses are reported under either cost of sales or Administrative and Sales Department costs, except for
amortization and impairment of client relationships and trademarks, which are recognized in “Other operating expenses”.
4.7.3 Net value of other intangible assets
(in millions of euro)
Net carrying amount as of August 31, 2017
Net carrying amount as of August 31, 2018
Net carrying amount as of August 31, 2019
4.8 Client investments
LICENSES AND
SOFTWARE
CLIENT RELATIONSHIPS,
TRADEMARKS
AND OTHER
175
201
244
336
503
557
TOTAL
511
704
801
(in millions of euro)
FISCAL 2019
FISCAL 2018
Carrying amount as of September 1
Increases during the fiscal year
Decreases during the fiscal year
Newly consolidated companies
Currency translation adjustment and other movements
Carrying amount as of August 31
558
137
(105)
1
35
626
547
83
(94)
18
5
558
3
4.9 Companies consolidated by the equity method
When Sodexo is legally or constructively obligated to make payments on behalf of companies consolidated by the equity method, a
provision is made under liabilities in the consolidated statement of fi nancial position for its share in the negative shareholders’ equity
of the said companies (see note 4.18). Changes in the Group’s share of the net assets of companies consolidated by the equity method
in Fiscal 2018 and Fiscal 2019 are shown below:
(in millions of euro)
FISCAL 2019
FISCAL 2018
Carrying amount as of September 1
Of which Companies consolidated by the equity method
Of which Provisions
Share of profit for the period
Other comprehensive income (loss)*
Dividend paid for the period
Changes in scope of consolidation
Currency translation adjustment
Other movements
Carrying amount as of August 31
Of which Companies consolidated by the equity method
Of which Provisions
* Corresponding to changes in fair value of derivatives used for hedging purposes, net of tax (note 4.14).
77
83
(6)
6
(7)
(10)
2
(17)
51
62
(9)
82
89
(7)
6
(1)
(19)
9
77
83
(6)
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3 N o t e s t o t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s
4.10 Impairment of assets
Accumulated impairment losses against property, plant and
equipment and intangible assets (including goodwill) amounted
to 58 million euro as of August 31, 2019 (38 million euro as
of August 31, 2018), taking into account a net charge of
24 million euro in Fiscal 2019 (versus a net reversal of 18 million
euro in Fiscal 2018).
Assets with indefi nite useful lives were tested for impairment as
of August 31, 2019 using the methods described in note 2.8.2.
The main assumptions used were as follows (and any impairment losses were recognized in other operating expenses):
Corporate Services
Energy & Resources
Government & Agencies
Sports & Leisure
Healthcare
Seniors
Schools
Universities
Other non-segmented activities
Benefits & Rewards Services
FISCAL 2019
FISCAL 2018
DISCOUNT RATE(1)
LONG-TERM
GROWTH RATE(2)
DISCOUNT RATE(1)
LONG-TERM
GROWTH RATE(2)
6.8%
7.2%
6.4%
6.3%
6.4%
6.6%
6.3%
6.2%
6.4%
8.0%
2.4%
3.0%
2.2%
2.3%
2.4%
2.2%
2.2%
2.5%
2.0%
3.2%
7.3%
7.6%
6.9%
6.8%
6.9%
6.8%
6.9%
6.7%
7.1%
8.2%
2.4%
3.0%
2.2%
2.3%
2.4%
2.0%
2.2%
2.5%
2.2%
3.2%
(1) The discount rate defined by the Group has been increased for certain operating segments in order to incorporate more significant risk factors affecting certain
countries in which the operating segment concerned conducts business.
(2) The long-term growth rate serves to calculate the terminal value based on data in management’s business plans.
The discount rates used by segment were set based on the weighted average of the discount rates for each geographic region, taking
into account the relative weighting of each segment in the Group’s revenues:
Continental Europe
North America
United Kingdom and Ireland
Latin America
Rest of the world (excluding Latin America)
Group
SENSITIVITY ANALYSIS
DISCOUNT RATE
FISCAL 2019
FISCAL 2018
6.4%
6.2%
6.3%
8.5%
7.0%
6.2%
7.0%
6.7%
6.8%
8.7%
7.4%
6.7%
Sodexo has analyzed the sensitivity of goodwill impairment test
results to diff erent long-term growth rates and discount rates.
would not result in an impairment of the assets tested for
any of the CGUs or groups of CGUs tested.
• The results of this sensitivity analysis indicated no probable
scenario where a change in the discount rate or long-term
growth rate would result in the recoverable amount of a CGU
or group of CGUs becoming less than its carrying amount. In
fact, the results of the impairment testing demonstrate that
even an increase of 200 basis points in the discount rate or
a reduction of 200 basis points in the long-term growth rate
• The Group also performed a sensitivity analysis on the
operational assumptions used in order to determine whether a
5% decrease in projected net cash fl ows over the time period of
the business plans prepared by management and in terminal
value would result in the recognition of an impairment loss
in the Group’s consolidated financial statements as of
August 31, 2019. The results of this analysis did not indicate
any risk of impairment for any of the CGUs or groups of CGUs.
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C O N S O L I D A T E D I N F O R M A T I O N
In addition, the Group is particularly attentive to economic
trends in the Sport & Leisure segment, which accounted for
approximately 8% of consolidated revenue in Fiscal 2019.
Indeed, some of the assets are sensitive to the tourism level,
which can be highly impacted by events out of the control of
the Group, particularly in France, the United Kingdom and the
United States. This has been taken into account in the business
plans prepared by the management, but actual results may
nonetheless diff er from business plan estimates if assumptions
or conditions change.
4.11 Financial assets
4.11.1 Current and non-current financial assets
(in millions of euro)
CURRENT
NON-CURRENT
CURRENT
NON-CURRENT
AUGUST 31, 2019
AUGUST 31, 2018
Investments in non-consolidated companies – OCI
Cost
Impairment
Carrying amount
Financial assets related to the Benefits & Rewards Services
activity, including restricted cash
Cost*
Impairment
Carrying amount
Receivables from investees
Cost
Impairment
Carrying amount
Loans and deposits
Cost
Impairment
Carrying amount
TOTAL FINANCIAL ASSETS
Cost
Impairment
Carrying amount
3
902
(6)
896
17
17
103
(16)
86
999
1,022
(23)
999
1,042
1,042
36
36
1,078
1,078
1,078
1,120
1,120
59
58
1,178
1,1 78
1,178
97
(6)
91
18
18
101
(20)
81
190
216
(26)
190
* The split between financial assets at amortized cost and cash and cash equivalent is presented in note 4.21.
PRINCIPAL INVESTMENTS IN NON-CONSOLIDATED COMPANIES
The Group holds 19.61% of the shares in Bellon SA, the Parent
company of Sodexo S.A., carried at a value of 708 million euro.
In accordance with IFRS 9, this financial asset is, as from
September 1, 2018, measured at fair value through other
comprehensive income (the impact of the shares revaluation has
been recognized in opening equity, as explained in note 2.1.2).
The method used for determining the fair value of this
investment is described in note 4.21 “Financial instruments”.
RESTRICTED CASH AND FINANCIAL ASSETS RELATED TO
THE BENEFITS & REWARDS SERVICES ACTIVITY
Restricted cash of 678 million euro included in “Financial assets
related to the Benefi ts & Rewards Services activity” primarily
in funds set aside to comply with regulations governing the
issuance of service vouchers in France (304 million euro),
Romania (161 million euro), China (53 million euro) and India
(49 million euro). The funds remain the property of Sodexo but
are subject to restrictions on their use. They may not be used for
any purpose other than to reimburse affi liates and must be kept
separate from the Group’s unrestricted cash. Restricted cash is
invested in interest-bearing instruments.
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Restricted cash and fi nancial assets related to the Benefi ts & Rewards Services activity breaks down as follows by currency:
(in millions of euro)
Euro
U.S. dollar (USD)
Brazilian real (BRL)
Other currencies
AUGUST 31, 2019
AUGUST 31, 2018
432
5
343
340
400
8
323
311
TOTAL RESTRICTED CASH AND FINANCIAL ASSETS RELATED TO
THE BENEFITS & REWARDS SERVICES ACTIVITY
1,120
1,042
4.11.2 Changes in current and non-current financial assets
CARRYING AMOUNT
(in millions of euro)
AUGUST 31,
2018
IFRS 9
IMPACT
SEPTEMBER 1,
2018
INCREASE/
(DECREASE)
DURING
THE PERIOD
CHANGES IN
SCOPE OF
CONSOLIDATION
IMPAIRMENT
CHANGE IN FAIR VALUE
INCOME
OCI
CURRENCY
TRANSLATION
ADJUSTMENT
AND OTHER
AUGUST 31,
2019
Investments in
non-consolidated
companies
Financial assets
related to the Benefits
& Rewards Services
activity, including
restricted cash
Receivables from
investees
Loans and deposits
TOTAL FINANCIAL
ASSETS
91
564
655
73
170
(3)
896
1,042
1,042
53
4
20
1,120
18
117
18
117
(1)
21
1,268
564
1,832
146
17
145
4
174
22
2 ,177
2
2
CARRYING AMOUNT
(in millions of euro)
Investments in non-consolidated
companies
Financial assets related to the Benefits
& Rewards Services activity, including
restricted cash
Receivables from investees
Loans and deposits
TOTAL FINANCIAL ASSETS
1,104
AUGUST 31,
2017
INCREASE/
(DECREASE)
DURING
THE PERIOD
CHANGES IN
SCOPE OF
CONSOLIDATION
CHANGE IN FAIR
VALUE
IMPAIRMENT
CURRENCY
TRANSLATION
ADJUSTMENT
AND OTHER
AUGUST 31,
2018
88
2
(1)
1
91
909
18
89
228
25
255
(94)
1,042
18
117
(7)
(100)
1,268
10
9
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4.12 Income tax, trade and other receivables
(in millions of euro)
GROSS AMOUNT
IMPAIRMENT
CARRYING
AMOUNT
GROSS AMOUNT
IMPAIRMENT
CARRYING
AMOUNT
AUGUST 31, 2019
AUGUST 31, 2018
Other non-current assets
Income tax receivable*
Advances to suppliers
Trade receivables
Other operating receivables
Prepaid expenses
Non-operating receivables
20
125
7
20
125
7
18
176
9
18
176
9
3,947
(137)
3,810
3,614
(109)
3,505
523
289
10
(13)
510
289
10
412
203
8
(18)
393
203
8
TOTAL TRADE AND OTHER RECEIVABLES*
4,777
(150)
4,626
4,247
(126)
4,121
* After deducting sold receivables, notably 41 million euro worth of CICE tax credits that have been derecognized (46 million euro in Fiscal 2018) as their sale involved
the transfer of substantially all of the risks and rewards related to ownership of the receivables.
The maturities of trade receivables as of August 31, 2019 and August 31, 2018 respectively were as follows:
AUGUST 31, 2019
AUGUST 31, 2018
3
BREAKDOWN OF TRADE RECEIVABLES DUE AS OF AUGUST 31:
GROSS AMOUNT
IMPAIRMENT
GROSS AMOUNT
IMPAIRMENT*
Less than 3 months past due
More than 3 months and less than 6 months past due
More than 6 months and less than 12 months past due
More than 12 months past due
TOTAL TRADE RECEIVABLES DUE AS OF AUGUST 31
Total trade receivables not yet due as of August 31
TOTAL TRADE RECEIVABLES AS OF AUGUST 31
510
88
51
117
765
3,182
3,947
(11)
(8)
(13)
(83)
(115)
(22)
(137)
406
68
110
88
672
2,941
3,614
(10)
(7)
(13)
(70)
(100)
(9)
(109)
* The amount shown for impairment as of August 31, 2018 does not include the additional accrual resulting from the first-time application of IFRS 9 recognized in
opening equity (comparative figures not restated, as provided for in the new standard).
During the fi scal years presented, the Group was not aff ected by any signifi cant change resulting from client bankruptcies. In addition,
given the geographic dispersion of the Group’s activities and the wide range of client industries, there is no material concentration of
risk in individual receivables due but not written down.
4.13 Cash and cash equivalents
(in millions of euro)
Marketable securities
Cash*
TOTAL CASH AND CASH EQUIVALENTS
Bank overdrafts
TOTAL CASH AND CASH EQUIVALENTS NET OF BANK OVERDRAFTS
AUGUST 31, 2019
AUGUST 31, 2018
374
1,407
1,781
(35)
1,746
365
1,301
1,666
(28)
1,638
*
Including 8 million euro allocated to the liquidity contract signed with an investment services provider, which complies with the Code of conduct drawn up by the
French financial markets association (Association française des marchés financiers – AMAFI) and approved by the French securities regulator (Autorité des Marchés
Financiers – AMF), for the purpose of improving the liquidity of Sodexo shares and the regularity of the quotations.
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Marketable securities comprised:
(in millions of euro)
Short-term notes
Term deposits
Mutual funds and other
TOTAL MARKETABLE SECURITIES
Cash and cash equivalents break down as follows by currency:
(in millions of euro)
Euro
U.S. dollar (USD)
Brazilian real (BRL)
Pound sterling (GBP)
Canadian dollar (CAD)
Other currencies
AUGUST 31, 2019
AUGUST 31, 2018
197
150
27
374
199
138
29
365
AUGUST 31, 2019
AUGUST 31, 2018
(116)
580
261
305
125
590
(43)
493
242
280
106
560
TOTAL CASH AND CASH EQUIVALENTS NET OF BANK OVERDRAFTS
1,746
1,638
More than 72% of the Group’s cash and cash equivalents,
restricted cash and financial assets related to the Benefits &
Rewards Services activity, is held with A1- or A2-rated fi nancial
institutions.
As of August 31, 2019, the Group held 1,448,566 Sodexo
shares with a carrying amount of 145 million euro to cover its
obligations under free share plans for Group employees. These
treasury shares are deducted from shareholders’ equity at cost.
No signifi cant amount of cash or cash equivalents was subject
to any restrictions as of August 31, 2019.
4.14 Statement of changes
in shareholders’ equity
As of August 31, 2019, the share capital of Sodexo S.A. was
made up of 147,454,887 shares (unchanged from August 31,
2018), with a par value of 4 euro each.
As part of the share buyback program launched by the Board
of Directors on April 10, 2018 using the authorization given
in the seventeenth resolution of the January 23, 2018 Annual
Shareholders Meeting, during Fiscal 2018 Sodexo purchased
3,356,732 of its own shares, representing 2.2% of its share
capital, for 299 million euro, and on August 29, 2018 it
carried out a 300 million euro capital reduction by canceling
3,375,562 shares. The Company’s share capital was therefore
comprised of 147,454,887 shares as of August 31, 2018
(compared to 150,830,449 as of August 31, 2017), with a par
value of 4 euro each.
As of August 31, 2018, the Group held 1,869,352 Sodexo
shares with a carrying amount of 177 million euro to cover its
obligations under stock option and free share plans for Group
employees.
Total dividends paid out in Fiscal 2019, adjusted for treasury
shares, amounted to 403 million euro (411 million euro in
Fiscal 2018), representing a dividend of 2.75 euro per share and,
where applicable, a dividend premium of 0.275 euro per share.
The Company’s bylaws confer double voting rights on shares
held in registered form for more than four years.
Furthermore, since Fiscal 2013, shares held in registered form
for at least four years and still held in that form when the
dividend becomes payable, are entitled to a dividend premium
equal to 10% of the dividend paid on the other shares. The
number of shares eligible for this dividend premium may not
exceed 0.5% of the share capital for any single shareholder.
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Items recognized directly in Other Comprehensive Income (OCI) (Group share) are shown below:
(in millions of euro)
Financial assets measured at fair value through
other comprehensive income
Share of other components of comprehensive income
(loss) of companies consolidated by the equity method
Remeasurements of net defined benefit obligation
Currency translation adjustment
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)
(GROUP SHARE)
FISCAL 2019
FISCAL 2018
INCREASE/
(DECREASE)
DURING THE
YEAR, PRE-TAX
INCOME TAX
(EXPENSE)/
BENEFIT
INCREASE/
(DECREASE)
DURING
THE YEAR,
NET OF TAX
INCREASE/
(DECREASE)
DURING THE
YEAR, PRE-TAX
INCOME TAX
(EXPENSE)/
BENEFIT
INCREASE/
(DECREASE)
DURING
THE YEAR,
NET OF TAX
175
(8)
5
190
362
(4)
1
(1)
170
(7)
4
(1)
79
(13)
190
(245)
(1)
66
(245)
(4)
356
(167)
(13)
(180)
4.15 Borrowings
Changes in borrowings during Fiscal 2019 and Fiscal 2018 were as follows:
AUGUST 31,
2018
INCREASES
REPAYMENTS
DISCOUNTING
EFFECTS AND
OTHER
CURRENCY
TRANSLATION
ADJUSTMENT
CHANGES IN
SCOPE OF
CONSOLIDATION
AUGUST 31,
2019
3
(in millions of euro)
Bond issues
Private Placements and bank borrowings
Finance lease obligations
Other borrowings
2,191
1,727
9
30
277
0
0
1
0
(244)
(4)
(11)
TOTAL BORROWINGS
3,957
278
(260)
Net fair value of derivative financial
instruments
(17)
0
2
TOTAL BORROWINGS INCLUDING
DERIVATIVE FINANCIAL INSTRUMENTS
3,940
278
(257)
4
(1)
(0)
(6)
(4)
(1)
(5)
(4)
79
0
(5)
71
9
80
0
16
0
27
43
0
2,468
1,577
5
34
4,084
(6)
43
4,078
AUGUST 31,
2017
INCREASES
REPAYMENTS
DISCOUNTING
EFFECTS AND
OTHER
CURRENCY
TRANSLATION
ADJUSTMENT
CHANGES IN
SCOPE OF
CONSOLIDATION
AUGUST 31,
2018
(in millions of euro)
Bond issues
Private Placements and bank borrowings
Finance lease obligations
Other borrowings
1,889
1,582
11
27
298
344
2
3
0
(211)
(4)
(2)
TOTAL BORROWINGS EXCLUDING
DERIVATIVE FINANCIAL INSTRUMENTS
3,509
647
(217)
Net fair value of derivative financial
instruments
(9)
0
2
TOTAL BORROWINGS INCLUDING
DERIVATIVE FINANCIAL INSTRUMENTS
3,500
647
(215)
4
0
0
(2)
2
(2)
0
0
11
0
1
12
(8)
4
0
1
0
3
4
0
4
2,191
1,727
9
30
3,957
(17)
3,940
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3 N o t e s t o t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s
4.15.1 Borrowings by currency
(in millions of euro)
Bond issues
Euro
Sterling pound
TOTAL
Private Placements(1) and bank borrowings
U.S. dollar (USD)
Euro
TOTAL
Finance lease obligations
Euro
Other currencies
TOTAL
Other borrowings(2)
Euro
Other currencies
TOTAL
AUGUST 31, 2019
AUGUST 31, 2018
CURRENT
NON-CURRENT
CURRENT
NON-CURRENT
9
1
10
23
141
164
3
0
3
1
4
5
2,184
274
2,458
1,409
4
1,413
2
0
2
11
18
29
15
15
152
240
392
3
1
4
9
9
2,176
2,176
1,334
1
1,335
4
1
5
8
13
21
TOTAL BORROWINGS EXCLUDING DERIVATIVE
FINANCIAL INSTRUMENTS
Net fair value of derivative financial instruments(3)
TOTAL BORROWINGS INCLUDING DERIVATIVE
FINANCIAL INSTRUMENTS
181
(7)
3,903
1
420
(14)
3,537
(3)
174
3,904
406
3,534
(1) Including the proceeds of the U.S. private placements described in note 4.15.3.2 and the commercial paper issued by Sodexo S.A. described in note 4.15.3.3.
(2) Including 23 million euro as of August 31, 2019 (18 million euro as of August 31, 2018) corresponding to liabilities recognized in connection with put options written
over non-controlling interests in certain subsidiaries.
(3) Described in note 4.16.
For borrowings other than bond issues, amortized cost is
equivalent to historical cost (nominal amount) insofar as no
signifi cant transaction costs are incurred.
4.15.2 Bond issues
On June 24, 2014, Sodexo S.A. completed a bond issue
structured in two tranches:
• a 600-million euro tranche redeemable at par on January 24,
2022 and bearing interest at an annual rate of 1.75%, with
interest payable annually on January 24;
• a 500-million euro tranche redeemable at par on June 24,
2026 and bearing interest at an annual rate of 2.50%, with
interest payable annually on June 24.
Accrued interest on these bonds amounted to 9 million euro as
of August 31, 2019.
On October 14, 2016 Sodexo S.A. issued bonds for 600 million
euro redeemable in April 2027 and bearing interest at an annual
rate of 0.75%, with interest payable annually on April 14. On
August 1, 2017, the Company increased this issue with an
additional 200 million euro of bonds. Accrued interest on these
bonds was 2 million euro as of August 31, 2019.
On May 22, 2018, Sodexo S.A. issued bonds for 300 million euro
redeemable in May 2025 and bearing interest at an annual rate
of 1.125%, with interest payable annually on May 22. Accrued
interest on this bond was 1 million euro as of August 31, 2019.
On June 26, 2019, Sodexo S.A. issued bonds for 250 million
pounds sterling redeemable in June 2028 and bearing interest
at an annual rate of 1.75%, with interest payable annually on
June 26. Accrued interest on this bond was 1 million euro as of
August 31, 2019.
None of the above-described bonds are subject to financial
covenants.
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4.15.3 Other borrowings
4.15.3.1 CREDIT FACILITIES
4.15.3.1.1 July 2011 multicurrency confi rmed
credit facility
On July 18, 2011, Sodexo S.A. contracted a multicurrency credit
facility for a maximum of 600 million euro plus 800 million
U.S. dollars, with an original maturity date of July 18, 2016. This
facility has been amended on a number of occasions with the
most recent amendment being in July 2019 with a new maturity
date of July 2024, with two options to extend the maturity by one
year each, up to July 2026. The maximum available limits under
this facility now are 589 million euro plus 785 million U.S dollars.
The most recent amendment also incorporates a sustainability
clause that links the credit facility cost to Sodexo’s ability to
comply with its public commitment to reduce its food waste by
50% by 2025.
Amounts drawn on this facility carry fl oating interest indexed on
the LIBOR and EURIBOR rates. This credit facility is not subject
to any covenants.
No amounts had been drawn down on the facility as of either
August 31, 2019 or August 31, 2018.
4.15.3.1.2 Bilateral confi rmed credit facility
On December 20, 2017, the Group obtained two 150-million
euro bilateral confi rmed credit facility, both are due to expire in
December 2019.
On March 5, 2018, the Group obtained a third 150-million euro
bilateral confi rmed credit facility expiring in March 2020.
No amounts had been drawn down on any of these facilities as
of August 31, 2019.
4.15.3.2 U.S. PRIVATE PLACEMENTS
During Fiscal 2019, Sodexo, Inc. redeemed the full outstanding
balance of the first tranche of its March 4, 2014 U.S. Private
Placement (150 million U.S. dollars).
The features of the Group’s outstanding private placements as of August 31, 2019 are as follows:
DATE OF THE PLACEMENT
March 29, 2011
TOTAL PLACEMENT DATED MARCH 29, 2011
March 4, 2014
TOTAL PLACEMENT DATED MARCH 4, 2014
TOTAL PLACEMENT DATED JUNE 27, 2018
TOTAL U.S. PRIVATE PLACEMENTS
* After deducting 150 million U.S. dollars redeemed on March 4, 2019.
PRINCIPAL OUTSTANDING
(in millions of U.S. dollars)
FIXED
INTEREST RATE
MATURITY
3
133
74
207
150
525
175
100
950*
400
1,557
4.85%
March 2021
4.95%
March 2023
3.44%
March 2021
3.99%
March 2024
4.14%
March 2026
4.34%
March 2029
3.70%
June 2023
These borrowings are subject to two financial covenants
calculated by reference to the Group’s consolidated financial
statements:
• net debt (excluding restricted cash) must not exceed
3.5 times EBITDA (operating profit plus amortization and
depreciation) for the past 12 months;
• net assets adjusted for cumulative foreign exchange gains
or losses since August 31, 2007 must not be less than
1.3 billion euro.
If the covenants are not respected, the lenders may, with a qualifi ed
majority, require early reimbursement of these borrowings.
The Group was in compliance with these covenants as of
August 31, 2019, February 28, 2019 and August 31, 2018.
4.15.3.3 COMMERCIAL PAPER
As of August 31, 2019, 140 million euro of the commercial paper
programs set up by Sodexo S.A. and Sodexo Finance had been
used, compared to 240 million euro as of August 31, 2018.
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4.15.4 Interest rates
In order to comply with the Group’s financing policy,
substantially all borrowings are long term and at fi xed interest
rates.
As of August 31, 2019, 97% of the Group’s borrowings were at fi xed
rate. The average rate of interest as of the same date was 2.6%. As
of August 31, 2018, 94% of the Group’s borrowings were at fi xed
rate. The average rate of interest as of the same date was 2.5%.
The bond issues and borrowings from financial institutions
described above include customary early redemption clauses.
These clauses include cross-default and change-in-control
clauses which apply to all of the borrowings.
4.15.5 Maturity of borrowings
AUGUST 31, 2019
CARRYING AMOUNTS
(in millions of euro)
Bond issues
Private placements and bank borrowings
Finance lease obligations
Other borrowings
TOTAL BORROWINGS
MORE THAN
3 MONTHS AND
LESS THAN
6 MONTHS
MORE THAN
6 MONTHS AND
LESS THAN
1 YEAR
LESS THAN
3 MONTHS
1 TO 5 YEARS
MORE THAN
5 YEARS
2
164
1
0
167
1
1
7
2
4
589
1,869
1,165
248
2
27
2
TOTAL
2,468
1,577
5
34
13
1,784
2,119
4,084
Excluding the impact of derivative financial instruments described in note 4.16.
For borrowings expressed in a foreign currency, amounts are translated at the year-end closing rate.
Maturities include interest accrued as of the period end.
Credit facility renewal rights are taken into account in determining maturities.
AUGUST 31, 2019
UNDISCOUNTED CONTRACTUAL MATURITIES
(in millions of euro)
Bond issues
Private placements and bank borrowings
Finance lease obligations
Other borrowings
Impact of derivative financial instruments
excluding those related to PPP companies
MORE THAN
3 MONTHS AND
LESS THAN
6 MONTHS
MORE THAN
6 MONTHS AND
LESS THAN
1 YEAR
LESS THAN
3 MONTHS
1 TO 5 YEARS
MORE THAN
5 YEARS
2
165
1
1
4
5
1
28
28
2
5
710
1,929
1,327
275
2
29
2
TOTAL
2,673
1,799
5
37
TOTAL BORROWINGS
168
10
62
2,068
2,206
4,515
The undiscounted contractual maturities include payment of future interest not yet due.
AUGUST 31, 2018
CARRYING AMOUNTS
(in millions of euro)
Bond issues
Private placements and
bank borrowings
Finance lease obligations
Other borrowings
MORE THAN
3 MONTHS AND
LESS THAN
6 MONTHS
MORE THAN
6 MONTHS AND
LESS THAN
1 YEAR
LESS THAN
3 MONTHS
1 TO 5 YEARS
MORE THAN
5 YEARS
8
599
1,577
TOTAL
2,191
7
1
6
264
1
2
128
2
1
649
5
21
686
1,727
9
30
TOTAL BORROWINGS
267
14
139
1,274
2,263
3,957
Excluding the impact of derivative financial instruments described in note 4.16.
For borrowings expressed in a foreign currency, amounts are translated at the year-end closing rate.
Maturities include interest accrued as of the period end.
Credit facility renewal rights are taken into account in determining maturities.
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C O N S O L I D A T E D I N F O R M A T I O N
AUGUST 31, 2018
UNDISCOUNTED CONTRACTUAL MATURITIES
(in millions of euro)
Bond issues
Private placements and bank borrowings
Finance lease obligations
Other borrowings
Impact of derivative financial instruments
excluding those related to PPP companies
MORE THAN
3 MONTHS AND
LESS THAN
6 MONTHS
MORE THAN
6 MONTHS AND
LESS THAN
1 YEAR
LESS THAN
3 MONTHS
1 TO 5 YEARS
MORE THAN
5 YEARS
264
1
2
11
4
1
6
1
24
156
2
1
1
721
836
8
22
1
1,640
731
1
TOTAL
2,396
1,991
13
31
3
TOTAL BORROWINGS
267
23
184
1,588
2,372
4,434
The undiscounted contractual maturities include payment of future interest not yet due.
4.16 Derivative fi nancial instruments
The fair values of Sodexo’s derivative fi nancial instruments are as follows:
DERIVATIVE FINANCIAL INSTRUMENTS
(in millions of euro)
Currency instruments
Assets
Liabilities
Cross-currency swaps*
Assets
Liabilities
NET DERIVATIVE FINANCIAL INSTRUMENTS
IFRS CLASSIFICATION
AUGUST 31, 2019
AUGUST 31, 2018
Trading
Trading
Cash flow hedge
Cash flow hedge
3
6
12
(6)
(1)
0
(1)
5
10
11
(1)
7
8
(1)
17
* Corresponds to a euro-BRL cross-currency swap with a notional value of 120 million BRL as of August 31, 2019 for which accrued interest of 1 million euro was
recognized as a liability as of August 31, 2019.
The face values and fair values of currency instruments and cross-currency swaps are as follows by maturity:
(in millions of euro)
Currency lender positions
Czech crown/Euro
Polish zloty/Euro
Mexican peso/Euro
Currency borrower positions
Pound sterling/Euro
Brazilian real/Euro
Mexican peso/Euro
Swedish krona/Euro
Other
TOTAL FACE VALUE
Fair value
AUGUST 31, 2019
AUGUST 31, 2018
LESS
THAN 1 YEAR
1 TO 5 YEARS
MORE THAN
5 YEARS
TOTAL
LESS
THAN 1 YEAR
1 TO 5 YEARS
MORE THAN
5 YEARS
29
29
121
106
15
20
15
5
TOTAL
20
15
5
(55)
(1)
(103)
(88)
(31)
(119)
(3)
(9)
(43)
(26)
(1)
(6)
(27)
(13)
(57)
19
5
(3)
(18)
(5)
(10)
(52)
(68)
14
(6)
(6)
(19)
(31)
3
(1)
(1)
(9)
(18)
(5)
(16)
(71)
(99)
17
92
77
15
(46)
(3)
(18)
(13)
(12)
46
6
The face value represents the nominal value of currency hedging instruments, including amounts related to forward agreements.
Foreign currency amounts are translated at year-end closing rates.
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4.17 Long-term employee benefi ts
(in millions of euro)
Net defined benefit plan assets*
Net defined benefit plan obligation
Other long-term employee benefits
Employee benefits
*
Included in “Other non-current assets” in the consolidated statement of financial position.
AUGUST 31, 2019
AUGUST 31, 2018
(4)
244
159
399
(3)
237
152
386
4.17.1 Post-employment benefits
4.17.1.1 DEFINED CONTRIBUTION PLANS
Under a defined contribution plan, periodic contributions
are made to an external entity that is responsible for the
administrative and financial management of the plan. Under
such a plan, the employer is relieved of any future obligation
(the external entity is responsible for paying benefits to
employees as they become due and the employer is not required
to make additional payments related to prior or current years if
the entity does not have suffi cient funds).
Contributions to defined contribution plans – which were
recognized in operating expenses – were 446 million euro for
Fiscal 2019, compared to 404 million euro for Fiscal 2018.
Contributions made by the Group are expensed in the period to
which they relate.
4.17.1.2 DEFINED BENEFIT PLANS
The characteristics of Sodexo’s principal defi ned benefi t plans
are described below:
•
in France, the obligation primarily represents lump-sum
benefi ts payable on retirement if the employee is still with
the Company at retirement age. These obligations are
covered by specifi c provisions in the consolidated statement
of fi nancial position;
•
in the United Kingdom, Sodexo’s obligation relates to a
complementary retirement plan funded by externally held
assets, and calculated on the basis of:
•
•
for managers working in the private sector, a percentage
of fi nal base salary,
for managers working on public sector contracts, benefi ts
comparable to those off ered in the public sector,
• this plan was closed to new employees eff ective July 1,
2003 and the level of contributions was increased in order
to cover the shortfall in the fund.
The United Kingdom plan is regularly evaluated by the plan’s
actuary in compliance with UK law. A formal actuarial valuation
by the plan’s actuary is required to be conducted every three
years, and any shortfall identifi ed at that time must be addressed
through mutual agreement between the plan’s Trustee and Sodexo
UK. Following a consultation process with the members of the
pension plan carried out with a view to freezing benefi t accruals
for certain members, an agreement was signed in October 2012
between the plan’s Trustee and Sodexo UK whereby from
November 1, 2012 the plan would remain open only to employees
who transferred to Sodexo UK from the public sector, as Sodexo
UK has a legal obligation to pay them certain benefi ts. As part
of the 12-year plan to address the funding shortfall, Sodexo UK
also agreed to pay annual contributions of (i) 10 million pounds
sterling per year over the fi ve years from January 1, 2013 and
(ii) 7.5 million pounds sterling per year over the following seven
years. Lastly, in October 2012, Sodexo S.A. issued a Parent
company guarantee to the Trustee in order to cover Sodexo UK’s
obligations in connection with the plan. This guarantee is for
up to 100 million pounds sterling for a duration of 12 years. On
completion of the most recent valuation of the fund in July 2016,
Sodexo UK and the Trustee agreed to keep unchanged the amount
of contributions and the terms and conditions of the Parent
company guarantee as set in October 2012.
On October 26, 2018, a judgment was rendered by the High
Court of Justice of London in a case concerning the pension
plan of another company, on the subject of the equalization of
Guaranteed Minimum Pensions (“GMP equalization”) between
women and men. This judgment clarifi es the applicable statutory
provisions and confi rms the obligation for trustees of the United
Kingdom pension plans to eliminate inequalities in the minimum
guaranteed pensions of participants in these plans. The impact
of this decision has been recognized in Fiscal 2019 and was not
signifi cant.
In Continental Europe other than France, the main defined
benefi t plans are as follows:
•
in the Netherlands, certain employees are entitled to
complementary retirement or early retirement benefi ts.
In Fiscal 2017 Sodexo negotiated an agreement to convert
its pension plans in the Netherlands from defined benefit
to defi ned contribution plans as from January 1, 2016. The
entitlements accumulated up until that date under the plans
in their previous defi ned benefi t form have been frozen and
the plans are still accounted for as defi ned benefi t plans in
view of the related indexation commitments given by Sodexo.
These plans are fully funded;
•
in Italy, there is a legal obligation to pay a lump-sum
retirement benefi t (“TFR”).
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Changes in the present value of the defi ned benefi t plan obligation and the fair value of plan assets are shown below:
(in millions of euro)
BENEFIT
OBLIGATION
PLAN ASSETS
NET BENEFIT
OBLIGATION
BENEFIT
OBLIGATION
PLAN ASSETS
NET BENEFIT
OBLIGATION
As of September 1
1,201
(967)
234
1,293
(980)
313
FISCAL 2019
FISCAL 2018
Expense/(income) recognized in
the income statement
Current service cost
Past service cost
Effect of settlements
Interest cost/(income)
Remeasurement losses/(gains)
Actuarial losses/(gains) arising from
changes in demographic assumptions
Actuarial losses/(gains) arising from
changes in financial assumptions
Experience adjustments
Currency translation adjustment
Contributions made by plan members
Employer contributions
Benefits paid from plan assets
Benefits paid other than from plan assets
Changes in scope of consolidation
and other*
As of August 31
Of which:
48
17
1
0
31
145
(25)
0
0
0
(25)
(151)
(8)
0
199
(47)
(6)
1
0
(35)
(9)
105
(151)
0
8
0
(16)
35
0
(93)
1,450
(1,210)
Partially funded plans
1,321
(1,210)
Unfunded plans
129
23
17
1
0
6
(7)
(8)
48
(47)
2
1
(16)
0
(9)
12
240
111
129
46
17
(1)
30
(88)
(4)
(81)
(3)
22
(55)
(23)
(23)
9
9
(19)
(26)
55
(18)
17
1,201
(967)
1,076
125
(967)
23
17
(1)
7
(79)
(4)
(72)
(3)
3
(26)
(1)
234
109
125
*
Including a benefit obligation increase amounting to 53 million euro in Fiscal 2019, and assets for the same amount, linked to the retirement benefit obligations in
six UK companies for which the client (public sector) contractually bears all the deficit of the plan.
The amounts recorded in the income statement for defined
benefi t plans totaled 23 million euro in Fiscal 2019 (23 million
euro in Fiscal 2018) and break down as follows:
• net expense of 10 million euro (net expense of 9 million euro
in Fiscal 2018) in Administrative and Sales Department costs;
• net expense of 6 million euro in financial expenses (see
• net expense of 7 million euro (net expense of 7 million euro in
note 4.2).
Fiscal 2018) in cost of sales;
3
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3 N o t e s t o t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s
Defi ned benefi t plan assets comprise:
(in millions of euro)
Equities
Bonds
Real estate
Cash
Investment funds
Insurance and other
TOTAL DEFINED BENEFIT PLAN ASSETS
AUGUST 31, 2019
AUGUST 31, 2018
256
16
71
26
238
603
1,210
158
14
39
17
353
386
967
Recognized net actuarial gains arising from changes in fi nancial
assumptions amounted to 200 million euro, of which 157 million
euro in the United Kingdom, 23 million euro in Netherlands,
6 million euro in Switzeland and 1 million euro in the United
States. In the United Kingdom, these gains were mainly due to
the updated discount rate.
The following assumptions were used for actuarial valuations for the principal countries as of August 31, 2019 and 2018:
AUGUST 31, 2019
Discount rate(1)
Salary long-term inflation rate(2)
General long-term inflation rate
Net liability (in millions of euro)
Average term of the plans (in years)
FRANCE
NETHERLANDS
UNITED KINGDOM(4)
ITALY
0.75%-1.25%
1.25%-2.25%
1.8%-2.8%
0.30%
2.75%
1.75%
89
12
2%
3.5%
N/A
1.75%
2%-3%(3)
1.75%
10
20
38
19
20
8
(1) Discount rates in each country have been adapted to reflect the term of the plans. For the euro zone and United Kingdom, the Group uses discount rates based on
yield curves for high quality corporate bonds drawn up by an external actuary.
(2) The salary inflation rate disclosed includes general inflation.
(3) Retail Price Index (RPI): 3%; Consumer Price Index (CPI): 2% for Fiscal 2019.
(4) Excluding 89 million euro in retirement benefit obligations in the 6 UK companies (offset by an asset in the same amount).
AUGUST 31, 2018
Discount rate(1)
Salary long-term inflation rate(2)
General long-term inflation rate
Net liability (in millions of euro)
Average term of the plans (in years)
FRANCE
NETHERLANDS
UNITED KINGDOM(4)
0.75%-1%
1.25%-2%
2.5%-2.8%
2.75%
1.75%
83
11
2%
3.5%-3.6%
1.75%
2%-3%(3)
1.75%
9
19
65
22
21
8
ITALY
1%
N/A
(1) Discount rates in each country have been adapted to reflect the term of the plans. For the euro zone and United Kingdom, the Group uses discount rates based on
yield curves for high quality corporate bonds drawn up by an external actuary.
(2) The salary inflation rate disclosed includes general inflation.
(3) Retail Price Index (RPI): 3%; Consumer Price Index (CPI): 2% for Fiscal 2018.
(4) Excluding 36 million euro in retirement benefit obligations in the 6 UK companies (offset by an asset in the same amount).
With respect to the assumptions provided in the above table, for
Fiscal Year 2019, and excluding the 89 million euro retirement
benefi t obligations in the 6 UK companies (off set by an asset
in the same amount), a reduction of 1% in the discount rate
would increase the gross obligation to 1,633 million euro
(compared to 1,361 million euro based on the assumptions
used as of August 31, 2019), while a rise of 0.5% in the general
long-term infl ation rate would increase the gross obligation to
1,462 million euro.
Based on estimates derived from reasonable assumptions,
Sodexo will pay 18 million euro into defined benefit plans in
Fiscal 2020.
4.17.1.3 MULTIEMPLOYER PLANS
In the USA, as of August 31, 2019, the Company contributed
to 45 multiemployer defined benefit pension plans under the
terms of collective-bargaining agreements (“CBA”) that cover its
union-represented employees. The risks of participating in these
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C O N S O L I D A T E D I N F O R M A T I O N
multiemployer plans are diff erent than those of single-employer
plans in the following respects:
• assets contributed to the multiemployer plan by the
Company are used to provide benefits to all beneficiaries
of the plan, including beneficiaries of other participating
employers;
•
•
•
if a multiemployer plan is considered to be in “critical” status
as defi ned by the U.S. Pension Protection Act of 2006, the
plan will be required to adopt a rehabilitation plan which may
require the Company to increase its required contributions
to the plan;
if a participating employer ceases to contribute to the plan,
the unfunded obligations of the plan may have to be borne
by the Company and the other remaining participating
employers; and
if the Company ceases to participate in a multiemployer
plan, entirely or partially in excess of a threshold, or if
substantially all of the participating employers of a given
plan cease to participate, the Company may be required to
pay that plan an amount based on the value of unfunded
vested benefi ts of the plan and the Company’s pro-rata share
of total plan contributions, referred to as withdrawal liability.
The Company does not have the ability to account for these
multiemployer plans as defi ned benefi t plans because it does
not have timely access to information about plan assets, plan
obligations, actuarial gains and losses, service costs, and
interest costs. As such, the multiemployer plans are accounted
for as defi ned contribution plans.
The Company contributed 13 million euro for U.S. multiemployer
defi ned benefi t plans in 2019 and in 2018. Of the contributions
made by the Company, 43% and 6% were made to plans
considered to be in “critical” status or “endangered” status,
respectively, as defi ned by the U.S. Pension Protection Act of
2006 and per each plan’s most-recent notice of plan funding
status. Plans are generally considered to be in “critical” status
when they are funded at less than 65%, among other factors,
and are considered to be “endangered” when they are funded at
65% or more, but at less than 80%, among other factors.
4.17.2 Other employee benefits
Other employee benefi ts, in the amount of 159 million euro as
of August 31, 2019 (152 million euro as of August 31, 2018),
mainly comprise a liability related to a deferred compensation
program in the United States and obligations relating to long-
service awards.
The total expense recognized with respect to these benefits
in Fiscal Year 2019 was 9 million euro (12 million euro
in Fiscal 2018), of which 2 million euro (unchanged from
Fiscal 2018) related to a deferred compensation program in the
United States and was reported in fi nancial expenses.
4.18 Provisions
(in millions of euro)
Tax and social security exposures
Employee claims and litigation
Contract termination and loss-making contracts
Reorganization costs
Client/supplier claims and litigation
Negative net assets of associates*
Other provisions
TOTAL PROVISIONS
AUGUST 31,
2018
INCREASES/
CHARGES
REVERSALS
WITH
UTILIZATION
REVERSALS
WITHOUT
UTILIZATION
CURRENCY
TRANSLATION
ADJUSTMENT
AND OTHER
CHANGES IN
SCOPE OF
CONSOLIDATION
AUGUST 31,
2019
34
47
18
5
35
6
16
161
4
13
3
2
2
16
39
(12)
(13)
(7)
(2)
(9)
(13)
(57)
(4)
(6)
(1)
(1)
(5)
(7)
(24)
(1)
1
(6)
4
11
10
22
43
13
4
18
9
37
146
1
1
14
17
*
Investments in companies consolidated by the equity method that have negative net assets (see note 4.9).
3
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3 N o t e s t o t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s
(in millions of euro)
Tax and social security exposures
Employee claims and litigation
Contract termination and loss-making contracts
Reorganization costs
Client/supplier claims and litigation
Negative net assets of associates*
Other provisions
TOTAL PROVISIONS
AUGUST 31,
2017
INCREASES/
CHARGES
REVERSALS
WITH
UTILIZATION
REVERSALS
WITHOUT
UTILIZATION
CURRENCY
TRANSLATION
ADJUSTMENT
AND OTHER
CHANGES IN
SCOPE OF
CONSOLIDATION
AUGUST 31,
2018
34
63
7
13
13
7
17
4
17
8
1
8
4
(1)
(20)
(6)
(8)
(4)
(8)
(1)
(1)
(3)
(3)
(2)
(3)
(6)
(1)
(1)
154
42
(42)
(15)
(11)
34
47
18
5
35
6
16
161
1
10
21
1
33
*
Investments in companies consolidated by the equity method that have negative net assets (see note 4.9).
Provisions for exposures and litigation are determined on a case-by-case basis and rely on management’s best estimate of the
outfl ows deemed likely to satisfy legal or implicit obligations to which the Group is exposed as of the end of the fi scal year.
Current and non-current provisions are as follows:
(in millions of euro)
CURRENT
NON-CURRENT
CURRENT
NON-CURRENT
AUGUST 31, 2019
AUGUST 31, 2018
Tax and social security exposures
Employee claims and litigation
Contract termination and loss-making contracts
Reorganization costs
Client/supplier claims and litigation
Negative net assets of associates*
Other provisions
TOTAL PROVISIONS
2
23
8
2
16
7
58
20
20
5
2
2
9
29
88
6
26
8
3
28
2
73
28
21
10
2
7
6
14
88
*
Investments in companies consolidated by the equity method that have negative net assets (see note 4.9).
4.19 Trade and other payables
(in millions of euro)
Operating payables
Non-operating payables
TOTAL OTHER NON-CURRENT LIABILITIES
Advances from clients
Trade payables
Employee-related liabilities
Tax liabilities
Other operating payables
Deferred revenues
Non-operating payables
TOTAL TRADE AND OTHER CURRENT PAYABLES
TOTAL TRADE AND OTHER PAYABLES
AUGUST 31, 2019
AUGUST 31, 2018
158
13
171
483
2,517
1,184
327
151
135
94
4,892
5,063
163
27
190
341
2,226
1,101
285
114
120
35
4,222
4,412
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Employee-related liabilities mainly include short-term employee
benefi ts.
have been approved in advance). Each supplier is free to
choose whether or not to sell each of its invoices;
The Sodexo Group has set up several reverse factoring programs
in its main operating countries, which give its suppliers the
opportunity of being paid in advance. In practice these programs
involve sales of trade receivables to a factor, organized by
Sodexo.
Relations between the parties concerned are governed by two
totally separate contracts:
• Sodexo’s suppliers can, if they wish, sign a master agreement
with the factor enabling them to sell their invoices before
their scheduled due date, under conditions that take into
consideration the Group’s credit risk.
As of August 31, 2019, the total amount of receivables sold by
Sodexo’s suppliers under these reverse factoring programs was
431 million euro (370 million euro as of August 31, 2018).
• the Sodexo Group signs a master agreement with the factor,
pursuant to which it undertakes to pay on the scheduled due
dates the invoices sold by its suppliers to the factor (which
Trade payables that have been financed through a reverse
factoring program as of the fi scal year-end are still classifi ed as
trade payables and included in the total trade payables fi gure.
MATURITIES OF TRADE AND OTHER PAYABLES
(in millions of euro)
Less than 3 months
More than 3 months and less than 6 months
More than 6 months and less than 12 months
More than 1 year and less than 5 years
More than 5 years
TOTAL TRADE AND OTHER PAYABLES
4.20 Deferred taxes
Movements in deferred taxes were as follows in Fiscal 2019:
CARRYING AMOUNT
UNDISCOUNTED
CONTRACTUAL VALUE
3,592
3,592
306
917
156
91
306
917
164
101
5,063
5,080
3
AUGUST 31,
2018
IFRS 9
IMPACT
SEPTEMBER 1,
2018
DEFERRED
TAX BENEFIT/
(EXPENSE)
DEFERRED TAX
RECOGNIZED IN OTHER
COMPREHENSIVE
INCOME
CURRENCY
TRANSLATION
ADJUSTMENT
AND OTHER
AUGUST 31,
2019
(in millions of euro)
• Employee-related liabilities
• Fair value of financial instruments
• Intangible assets
156
15
(51)
156
15
(51)
• Other temporary differences
(212)
(17)
(229)
• Tax loss carry-forwards
71
TOTAL NET DEFERRED TAX
(21)
(17)
Of which Deferred tax assets
105
71
(38)
105
Of which Deferred tax liabilities
(126)
(17)
(143)
(13)
(3)
13
(26)
16
(12)
(1)
1
0
(4)
0
(3)
(3)
(6)
(4)
8
6
1
140
8
(42)
(251)
93
(52)
99
(151)
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3 N o t e s t o t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s
Movements in deferred taxes were as follows in Fiscal 2018:
(in millions of euro)
• Employee-related liabilities
• Fair value of financial instruments
• Intangible assets
• Other temporary differences
• Tax loss carry-forwards
TOTAL NET DEFERRED TAX
Of which Deferred tax assets
Of which Deferred tax liabilities
AUGUST 31,
2017
DEFERRED
TAX BENEFIT/
(EXPENSE)
DEFERRED TAX
RECOGNIZED IN OTHER
COMPREHENSIVE
INCOME
CURRENCY
TRANSLATION
ADJUSTMENT
AND OTHER
AUGUST 31,
2018
268
1
(70)
(218)
69
50
187
(137)
(117)
(12)
21
20
(4)
(80)
(12)
17
14
(2)
(14)
6
21
156
15
(51)
(212)
71
(21)
105
(126)
Deferred tax assets arising on tax loss carry-forwards and not
recognized because their recovery is not considered probable
totaled 93 million euro as of August 31, 2019 (99 million euro
as of August 31, 2018), including 19 million euro generated
by subsidiaries prior to their acquisition (9 million euro as of
August 31, 2018).
Temporary differences on employee-related liabilities relate
primarily to post-employment benefi ts.
Other temporary differences mainly include deferred taxes
recognized on the tax-deductible portion of the amortization that
is recognized on goodwill in certain countries, which amounted
to 248 million euro as of August 31, 2019 (225 million euro as
of August 31, 2018).
4.21 Financial instruments
The table below presents the categories of fi nancial instruments,
their carrying amount and their fair value, by item in the
consolidated statement of fi nancial position.
The levels used for the classifi cation of fi nancial instruments are
as follows:
• Level 1: Instruments traded on an active market;
• Level 2: Instruments measured through inputs other than
quoted prices included within Level 1 and that are observable;
• Level 3: Instruments whose fair value is determined using
valuation techniques based on unobservable inputs.
FAIR VALUE LEVEL 3: MEASUREMENT OF BELLON SA
SECURITIES
The Group holds, through its wholly-owned subsidiary
Sofi nsod, a 19.61% stake in Bellon SA, a company that controls
Sodexo S.A. with 42.22% of its shares and 56.58% of its voting
rights exercisable on August 31, 2019. This shareholding does
not give the Group signifi cant infl uence over Bellon SA, as voting
rights attached to Bellon SA shares cannot be exercised by
SOFINSOD, in accordance with the provisions of article L.233-31
of Code de Commerce.
Due to the application of IFRS 9, the Group has assessed for
the first time this investment at its fair value, determined
in accordance with IFRS 13, and opted for accounting for
subsequent changes in fair value in other non-recyclable items
of consolidated comprehensive income.
The management conducted a fair value assessment of the
equity participation in the fi rst application of IFRS 9, with the
support of two independent experts. The valuation of the fair
value of the investment depends, among other things, on the
revalued net asset value (NAV) of Bellon SA which has limited
debt and holds no assets other than shares of Sodexo S.A. These
shares are valued at their closing share price for the calculation
of the NAV of Bellon SA.
The bylaws of Bellon SA include a clause which restricts the
sale of Bellon SA shares to non-shareholder third parties,
subject to the prior approval of its Supervisory Board. Bellon SA
is controlled 72.6% by Mr. and Mrs. Pierre Bellon, and their
four children who signed in June 2015 a 50-year agreement
preventing the direct descendants of Mr. and Mrs. Pierre Bellon
from freely disposing of their Bellon SA shares. The sole asset
of Bellon SA being its interest in Sodexo, it can be inferred that
Bellon SA does not intend to sell this interest to third parties.
These specifi cations imply very limited liquidity of the interest
that Sofinsod holds in Bellon SA. The valuation method used
by management (Level 3 of the hierarchy defi ned by IFRS 13)
incorporates this illiquidity on the one hand, as well as all the
characteristics of the holding’s ownership structure, on the
other hand. This method results in a discount to net asset value
on Bellon SA estimated at 40% as of September 1, 2018 and
August 31, 2019.
As of September 1, 2018, the fair value of the investment was
assessed at 596 million euro, leading the Group to recognize
a gross impact of 564 million euro. The after-tax impact of
547 million euro as of September 1, 2018 was recorded in the
opening balance sheet, aft er recognition of a 3.1% deferred tax
liability.
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As of August 31, 2019, the fair value of the investment is assessed at 708 million euro, and its change since the opening of the year
has been recorded in other non-recyclable items of comprehensive income.
FINANCIAL ASSETS
(in millions of euro)
CATEGORY
NOTE
CARRYING
AMOUNT
FAIR VALUE
LEVEL 1
LEVEL 2
LEVEL 3
TOTAL
AUGUST 31, 2019
FAIR VALUE LEVEL
Marketable securities
Restricted cash and financial
assets related to
the Benefits & Rewards Services
activity
Trade and other receivables
Other financial assets
Financial assets
at fair value through
profit or loss
Financial assets
at amortized cost
Cash and cash
equivalents
Financial assets
at amortized cost
Financial assets
at fair value through
other comprehensive
income
Financial assets at
amortized cost
4.13
374
374
27
347
374
4.11
804
804
4.11
315
315
315
315
4.12
4,626
4,626
4.11
896
896
896
896
4.11
162
162
Derivative financial instrument
assets
4.16
12
12
12
12
3
FINANCIAL LIABILITIES
(in millions of euro)
Bond issues*
Bank borrowings
Other borrowings
Bank overdrafts
Trade and other payables
Vouchers payable
Derivative financial instrument
liabilities
CATEGORY
Financial liabilities
at amortized cost
Financial liabilities
at amortized cost
Financial liabilities
at amortized cost
Financial liabilities
at amortized cost
Financial liabilities
at amortized cost
Financial liabilities
at amortized cost
AUGUST 31, 2019
FAIR VALUE LEVEL
NOTE
CARRYING
AMOUNT
FAIR VALUE
LEVEL 1
LEVEL 2
LEVEL 3
TOTAL
4.15
2,468
2,553
4.15
1,577
1,636
4.15
4.13
39
35
39
35
4.19
4,892
4,892
2,981
2,981
4.16
(7)
(7)
(7)
(7)
* Fair value is calculated on the basis of listed bond prices as of August 31, 2019.
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3 N o t e s t o t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s
AUGUST 31, 2018
FAIR VALUE LEVEL
FINANCIAL ASSETS
(in millions of euro)
CATEGORY
NOTE
CARRYING
AMOUNT
FAIR VALUE
LEVEL 1
LEVEL 2
LEVEL 3
TOTAL
Marketable securities
Financial assets at fair
value through profit
or loss
Restricted cash
and financial assets related to
the Benefits & Rewards Services
activity
Financial assets
at amortized cost
Cash and cash
equivalents
4.13
365
365
29
336
365
4.11
862
862
4.11
180
180
180
180
Trade and other receivables
Other financial assets
Loans and receivables
at amortized cost
Available-for-sale
financial assets
Loans and receivables
at amortized cost
4.12
4,121
4,121
4.11
91
N/A
4.11
135
135
Derivative financial instrument
assets
4.16
18
18
18
18
FINANCIAL LIABILITIES
(in millions of euro)
Bond issues*
Bank borrowings
Other borrowings
Bank overdrafts
Trade and other payables
Vouchers payable
Derivative financial instrument
liabilities
CATEGORY
Financial liabilities
at amortized cost
Financial liabilities
at amortized cost
Financial liabilities
at amortized cost
Financial liabilities
at amortized cost
Financial liabilities
at amortized cost
Financial liabilities
at amortized cost
AUGUST 31, 2018
FAIR VALUE LEVEL
NOTE
CARRYING
AMOUNT
FAIR VALUE
LEVEL 1
LEVEL 2
LEVEL 3
TOTAL
4.15
2,191
2,266
2,266
4.15
1,727
1,715
240
1,475
2,266
1,715
4.15
4.13
39
28
39
28
4.19
4,222
4,222
2,780
2,780
4.16
1
1
1
1
* Fair value is calculated on the basis of listed bond prices as of August 31, 2018.
There were no transfers between the various fair value hierarchy levels between Fiscal 2018 and Fiscal 2019.
4.22 Share-based payment
4.22.1 Stock option plans
PRINCIPAL FEATURES OF STOCK OPTION PLANS
Rules governing stock option plans are as follows:
• the option exercise price has no discount;
• contractual life of options: 6-7 years.
ESTIMATION OF FAIR VALUE AT DATE OF GRANT
The fair value of options granted and settled by delivery of
equity instruments is estimated at the date of grant using a
binomial model, which takes into consideration the terms and
conditions of grant and assumptions about exercise behavior.
MOVEMENTS DURING FISCAL 2019 AND FISCAL 2018
The table below provides the quantity, weighted average exercise
price (WAP) and movements of stock options during Fiscal 2019
and Fiscal 2018:
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FISCAL 2019
FISCAL 2018
NUMBER
WAP (in euro)
NUMBER
WAP (in euro)
45,765
(1,250)
(44,515)(1)
0
0
51.40
51.40
0
0
0
529,443
(11,075)
(472,603)(2)
45,765
45,765
50.39
51.06
50.27
51.40
51.40
Outstanding at the beginning of the year
Forfeited during the year
Exercised during the year
Outstanding at the end of the year
Exercisable at the end of the year
3
(1) The weighted average share price at the exercise date of options exercised in Fiscal 2019 was 90.87 euro.
(2) The weighted average share price at the exercise date of options exercised in Fiscal 2018 was 101.43 euro.
There were no longer any stock option plans outstanding at
August 31, 2019, since the last stock option grants in 2011
expired in December 2018.
Since the 2015 plan, a portion of the free shares awarded has
also been subject to a stock market performance condition as
follows:
4.22.2 Free share plans
PRINCIPLE FEATURES OF FREE SHARE PLANS
Rules governing free share plans are as follows:
•
•
free shares vest only if the beneficiary is still working for
the Group on the vesting date; in addition, some free share
grants are subject to a performance condition;
for the free shares awarded in 2015, for beneficiaries who
are French tax residents the vesting period is two years for
shares not subject to any performance condition and three
years for performance shares, provided in both cases that
the benefi ciary is still working for the Group on the vesting
date. For non-French tax residents, the vesting period is four
years. Free shares awarded to French tax residents are also
subject to a two-year lock-up period as from the vesting date;
•
for the free shares awarded since 2016, the vesting period
for all benefi ciaries is four years, with no subsequent lock-up
period. In addition, benefi ciaries must still be working for the
Group on the vesting date in order for the shares to vest;
• until 2018, the proportion of shares subject to a performance
condition ranges from 0% to 80% (depending on the total
number of shares awarded), except for the shares granted
to the Group Chief Executive Offi cer which consist solely of
performance shares;
• since 2019, all shares granted to the members of the Group
Executive Committee consist of performance shares.
The performance conditions other than those related to stock
market performance (“non-market performance conditions”)
were as follows:
•
•
for the free shares awarded in 2015, the non-market
performance condition is based on annual growth in Group
net income over a three-year period;
for the free shares awarded since 2016, the non-market
performance condition is based on annual growth in
consolidated underlying operating profi t (before exceptional
items and excluding currency eff ects) over a four-year period.
For the 2018 plan, a portion of the shares is also subject to
the achievement of Corporate Responsibility objectives. In
2019, a condition based on organic growth has been added.
•
•
•
for the 2015 plan, a portion of the shares awarded to members
of the Group Executive Committee is subject to a Total
Shareholder Return (TSR) target. TSR is a measure of the
performance of a company’s shares over time. It combines
share price appreciation and dividends paid to show the total
return to the shareholder. For the free shares awarded in
2015, the TSR must have increased by at least 20% between
August 31, 2014 and the Annual Shareholders Meeting called to
approve the Fiscal 2018 fi nancial statements, in January 2018;
for the 2016 and 2017 plans, a portion of the shares awarded
to the members of the Group Executive Committee and to
benefi ciaries of more than 1,000 shares under the 2017 plan,
are subject to a TSR performance condition. For the shares
subject to this condition to vest, Sodexo’s TSR must be positive
and outperform the CAC 40 GR (Gross Total Return) index,
published by Euronext, between (i) January 27, 2016 and the
date of the Annual Shareholders Meeting called to approve
the Fiscal 2019 fi nancial statements for the 2016 plan, and
(ii) January 25, 2017 and the date of the Annual Shareholders
Meeting called to approve the Fiscal 2020 fi nancial statements
for the 2017 plan;
for the 2018 plan, a portion of the shares awarded to
the members of the Group Executive Committee and to
benefi ciaries of more than 250 shares, Sodexo’s TSR will be
compared to that of two peer groups. The fi rst peer group is
made up of 12 companies selected based on their size, the
similarity of their operations to those of Sodexo and the fact
that they all operate in the outsourcing and shared services
industry. The second peer group comprises CAC 40 companies.
In both cases, the number of shares that will vest will depend
on Sodexo’s ranking within the peer group, with no shares
vesting if Sodexo’s ranking is below the third quartile. The
starting share price used will be the average of the share prices
quoted over the thirty (30) calendar days preceding the plan
grant date. The end share price used to measure the overall
stock market performance will be the average of the share
prices quoted over the thirty (30) calendar days preceding the
performance assessment date (March 27, 2022);
•
for the 2019 plan, Sodexo’s TSR will be compared to that of
the peer group made up of 12 companies selected based on
their size, the similarity of their operations to those of Sodexo
and the fact that they all operate in the outsourcing and
shared services industry. This condition is only applicable to
the shares awarded to the Group Chief Executive Offi cer and
to the members of the Group Executive Committee.
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ESTIMATED FAIR VALUE AT DATE OF GRANT
The fair value of free shares is estimated at the date of grant
based on the share price at that date after deductions for
dividends on the shares that will not be paid to beneficiaries
during the vesting period and, where applicable, a lock-up
discount. The lock-up discount is determined based on the cost
for the employee of a two-step strategy consisting of selling the
shares forward for delivery at the end of the lock-up period and
purchasing the same number of shares for immediate delivery,
with the purchase financed by a loan, taking into account
market inputs.
The fair value of free shares subject to a performance condition
based on Total Shareholder Return is estimated using a binomial
model that takes into account the vesting conditions.
MOVEMENTS IN FISCAL 2019 AND FISCAL 2018
The table below shows movements in free shares in Fiscal 2019 and Fiscal 2018:
Outstanding at the beginning of the year
Granted during the year
Forfeited during the year
Delivered during the year
Outstanding at the end of the year
FISCAL 2019
FISCAL 2018
3,025,219
2,801,195
845,090
931,880
(170,620)
(145,391)
(458,225)
(583,325)
3,241,464
3,025,219
The weighted average fair value of the free shares granted in Fiscal 2019 was 91.3 euro for shares granted in Fiscal 2019 (66.61 euro
for shares granted in Fiscal 2018).
The table below shows the grant dates of free shares outstanding as of August 31, 2019, the assumptions used to estimate their fair
value at the grant date and the number of free shares outstanding at the period end:
VESTING
PERIOD
(in years)
LOCK-UP
PERIOD
(in years)
EXPECTED
DIVIDEND YIELD
(in %)
RISK-FREE
INTEREST RATE
(in %)
LOAN INTEREST
RATE
(in %)
VOLATILITY*
(in %)
DATE OF GRANT
April 27, 2015
France
April 27, 2015
International
December 1, 2015
France
December 1, 2015
France
December 1, 2015
International
April 27, 2016
International
September 30, 2016
International
November 30, 2016
International
April 20, 2017
International
September 14, 2017
International
April 27, 2018
International
September 13, 2018
International
June 19, 2019
International
TOTAL
3
4
2
3
4
4
4
4
4
4
4
4
4
2
N/A
2
2
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
2.5%
2.5%
2.5%
2.5%
2.5%
2.5%
2.5%
2.5%
2.4%
2.4%
2.7%
2.7%
3%
0.1%
0.2%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
5.2%
5.2%
4.3%
4.3%
4.3%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
NUMBER
OF SHARES
OUTSTANDING
AS OF
AUGUST 31, 2018
0
0
0
0
2,350
715,355
11,600
10,000
21%
21%
22.5%
22.5%
22%
22%
22%
18.1%
792,379
18.1%
13,000
21.3%
854,520
21.3%
34,100
21.9%
808,160
3,241,464
* Applicable for the portion of the free share grants subject to the TSR performance condition. Volatility is determined by reference to the share’s historical weighted
average volatility over five years and the implicit volatility expected by the market.
4.22.3 Expense recognized during the fiscal year
The expense recognized in the Fiscal 2019 income statement for free shares was 33 million euro (44 million euro in Fiscal 2018).
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C O N S O L I D A T E D I N F O R M A T I O N
4.23 Business combinations
The main acquisitions carried out by the Group during the year are presented in note 4.6, “Goodwill”. A summarized amount of assets acquired
and liabilities assumed at the acquisition dates, measured on a provisional basis as of August 31, 2019, is provided in the table below:
(in millions of euro)
Intangible assets*
Property, plant and equipment
Other non-current assets (including client investments)
Trade receivables
Other current assets
Cash and cash equivalents
Borrowings
Other non-current liabilities
Net deferred tax liabilities
Other current liabilities
TOTAL IDENTIFIABLE NET ASSETS
Goodwill
Commitments written over non-controlling interests
Impact of acquisitions of control of companies consolidated by the equity method
CONSIDERATION TRANSFERRED
Cash acquired
Change in liabilities related to acquisitions of subsidiaries
IMPACT ON THE CASH FLOW STATEMENT
AUGUST 31, 2019
42
39
2
27
22
8
(44)
(36)
3
(76)
(13)
307
0
0
(307)
8
(299)
3
*
Intangible assets mainly include customer relationships and trademarks. The amortization periods for these intangible assets have been set by Management at a
maximum of 20 years based on the estimated attrition rate for the contracts concerned and the probable useful lives of the trademarks. Goodwill corresponds to the
positive difference between the acquisition price and the total fair value of the identifiable net assets.
Companies acquired during Fiscal 2019 contributed 223 million euro to consolidated revenues and 12 million euro to consolidated
underlying operating profi t following their consolidation.
Signifi cant entities acquired during the fi scal year are disclosed in chapter 6 (N).
4.24 Commitments and contingencies
4.24.1 Sureties
Commitments arising from surety arrangements (pledges, charges secured against plant and equipment, and real estate mortgages)
contracted by Sodexo S.A. and its subsidiaries in connection with operating activities during Fiscal 2019 are not material.
4.24.2 Operating lease commitments
Outstanding commitments arising in respect of operating leases are as follows:
(in millions of euro)
Less than 1 year
1 to 5 years
More than 5 years
TOTAL OPERATING LEASES COMMITMENTS
AUGUST 31, 2019
AUGUST 31, 2018
188
431
220
839
144
376
141
662
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3 N o t e s t o t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s
These commitments correspond to the rent to be paid over
the non-cancellable terms of leases taking into account the
contractual or legal provisions enabling leases to be terminated
before the end of the lease term (future minimum lease payment
due of the non-cancellable term of operating lease). They arise
under contracts worldwilde, the terms of which are negociated
locally, and relate primarily to:
• equipment on sites, office equipment and vehicles for
112 million euro (109 million euro as of August 31, 2018);
4.24.3 Other commitments given
• the rent for offi ce premises of 244 million euro (330 million
euro as of August 31, 2018), related mainly to the Group’s
corporate headquarters in Issy-les-Moulineaux (23 million
euro), the offices of Sodexo France (18 million euro) and
Sodexo, Inc. (52 million euro);
• minimum concession fee payments for sites in France and
the United States (404 million euro).
(in millions of euro)
Financial guarantees to third parties
Site management commitments
Performance bonds given to clients
Other commitments
TOTAL OTHER COMMITMENTS GIVEN
AUGUST 31, 2019
AUGUST 31, 2018
LESS THAN
1 YEAR
1 TO 5 YEARS
MORE THAN
5 YEARS
TOTAL
TOTAL
1
1
44
10
55
1
1
181
136
319
2
2
183
134
321
22
15
38
115
111
226
Financial guarantees to third parties mainly comprise bank
subordinated debt commitments under Public-Private Partnership
(PPP) contracts (see note 2.3.2) totaling 1 million euro.
The performance bonds given to clients relate to around twenty
sub-contracting contracts where the Group considers that it may
be exposed to indemnity payments if it is unable to fulfi ll the
service obligation. These bonds are subject to regular review by
the management of the business unit and a provision is recorded
as soon as payment under a bond becomes probable. For all
other contracts with a performance bond, Sodexo considers that
it can deploy the additional resources needed to avoid paying
compensation under the bond.
The Group also has performance obligations to clients, but
regards these as having the essential features of a performance
guarantee rather than an insurance contract designed to
compensate the client in the event of non-fulfillment of the
service obligation (compensation is generally due only where
Sodexo is unable to provide alternative or additional resources
to fulfi ll the obligation to the client).
In practice, given its size and geographical reach, Sodexo
considers itself capable of providing the additional resources
required to avoid paying compensation to clients protected by
such clauses.
At this time, no provision has been recorded in the consolidated
statement of fi nancial position with respect to these guarantees.
The “Other commitments” line mainly includes the 12-year
guarantee given by Sodexo S.A. in October 2012 to the Trustee
of the UK pension plan (i.e., until October 2024) for a maximum
of 100 million pounds sterling in order to cover Sodexo UK’s
obligations in connection with the plan.
4.25 Related parties
4.25.1 Principal shareholder
As of August 31, 2019, Bellon SA held 42.22% of the capital of
Sodexo and 56.58% of the exercisable voting rights.
Bellon SA invoiced 3.3 million euro to Sodexo S.A. in Fiscal
2019 under an assistance and advisory services contract
(3.7 million euro in Fiscal 2018).
Bellon SA received dividends of 171.4 million euro from
Sodexo S.A. in February 2019 and the Group received dividends
of 2.9 million euro from Bellon SA during Fiscal 2019.
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4.25.2 Non-consolidated companies
Other transactions with related companies comprise loans advanced, commercial transactions, and off -balance sheet commitments
involving associates and non-consolidated companies.
(in millions of euro)
Loans
AUGUST 31, 2019
AUGUST 31, 2018
GROSS
IMPAIRMENT
CARRYING AMOUNT
CARRYING AMOUNT
44
0
44
44
OFF-BALANCE SHEET COMMITMENTS
AUGUST 31, 2019
AUGUST 31, 2018
Financial guarantees to third parties
Performance bonds given to clients
TRANSACTIONS
Revenues
Operating expenses
Financial income and expense, net
1
181
2
183
FISCAL 2019
FISCAL 2018
238
(3)
2
228
0
2
4.26 Compensation, loans, post-employment benefi ts and other benefi ts
granted to Board members, the Executive Committee, and the Group Chief
Executive Offi cer of Sodexo
The compensation, loans, post-employment benefi ts and other benefi ts granted to Board members, the Executive Committee, and
the Group Chief Executive Offi cer of Sodexo in offi ce as of August 31, 2019 and August 31, 2018 respectively for Fiscal 2019 and
Fiscal 2018 comprise the following:
3
(IN EURO)
Short-term benefits
Post-employment benefits
Fair value of free shares at the grant date
FISCAL 2019
FISCAL 2018
15,429,580
15,424,760
1,264,567
882,048
14,022,288
8,304,389
These benefits include directors’ fees, and all forms of
compensation and benefits paid (or earned during the period
for offi ces held) by Bellon SA, Sodexo S.A. and/or other Sodexo
Group companies.
Denis Machuel, Group Chief Executive Offi cer since January 23,
2018, is paid by Sodexo S.A. but he likewise does not have an
employment contract with Sodexo S.A.
The Company has entered into non-compete clauses with the
Group Chief Executive Offi cer and the members of the Executive
Committee with a maximum term of 24 months in order to
protect the Group by restricting their freedom to hold a position
as employee or director, or carry out any consulting work, for
any of Sodexo’s competitors, either directly or through another
legal entity.
4.27 Group employees
The following table shows the breakdown of Group employees:
TOTAL HEADCOUNT AS OF AUGUST 31
AUGUST 31, 2019
AUGUST 31, 2018
470,237
460,663
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4.28 Disputes and litigation
• The Company is in dispute with the Brazilian tax authorities
regarding the tax deductibility of the amortization of goodwill
recognized on the purchase of VR in March 2008. For the
record, in Fiscal year 2017, Sodexo Pass do Brasil received a
tax reassessment notice from the Brazilian tax authorities for
fi scal years 2010, 2011 and 2012 relating to the deductibility
for tax purposes of the amortization of goodwill recognized
on the purchase of VR in March 2008. The reassessment
amounted to 102 million euro (breaking down as 30 million
euro in principal and 72 million euro in penalties and late
payment interest).
Sodexo Pass do Brasil is fi rmly disputing this reassessment,
which the Brazilian tax authorities originally envisaged during
a previous tax audit covering fi scal years 2008 and 2009 but
then abandoned. The Company considers that the goodwill
amortization was valid, both in terms of its underlying
reasons and the way it has been recorded. Therefore, the
Company considers that there is a strong probability of
winning the dispute with the tax authorities, and this has been
confi rmed by its tax advisors. Consequently, no provision was
recorded for this dispute in the consolidated statement of
fi nancial position as of August 31, 2017.
This dispute was presented on August 14, 2018 for a
judgment of the competent administrative court. The court
ruled in favor of Sodexo Pass do Brasil as it considered
that the goodwill and corresponding amortization were
legitimately recognized on the acquisition of VR. The
judgment therefore confirms that Sodexo Pass do Brasil
acquired a full business structure when it purchased VR.
This judgment can be reversed on appeal. The Group believes,
however, that the risk of change in this judgement is low.
In addition, the tax savings generated by this tax depreciation
were offset in the consolidated accounts of the Group by
a deferred tax expense of the same amount for each of
the financial periods concerned, in accordance with the
IFRS rules. The balance of the related deferred tax liability
amounts to 69 million of euro at the end of the fi nancial year
(65 million of euro as of August 31, 2018).
• On October 9, 2015, Octoplus filed a complaint with the
French Competition Authority (Autorité de la concurrence)
concerning several French meal voucher issuers, including
Sodexo Pass France SA. Following the hearing of the parties
concerned, the Competition Authority decided on October 6,
2016 to pursue investigation on the merits, without
requesting protective measures.
On February 27, 2019, the prosecution services sent their
fi nal investigation report to Sodexo Pass France. The Group
contested both grievances in its response fi lled on April 29,
2019. The hearing before the college of the Competition
Authority took place on July 18, 2019 and its decision may
be issued before the end of the 2019.
The Competition Authority has broad discretion to determine
on a case-by-case basis the financial fines it may impose
in accordance with the principles of proportionality and
individuality. In view of the diffi culty in assessing the extent
to which the Competition Authority may take into account
the arguments which have been put forward by Sodexo
Pass France in its defense and due to the multiple factors
contributing, where appropriate, to the determination of
a fi ne, it is not possible to reliably estimate the amount of
the potential fi ne that might be incurred in the event of an
adverse decision, even though it might have a significant
impact on the Group’s consolidated fi nancial statements. In
this context, no provision has been made as at August 31,
2019, at this stage of the investigation.
•
In Brazil, Sodexo and its main competitors have a diff erent
interpretation from that of the Tax Administration on the
deductibility of PIS/COFIN on certain purchases that are
made at a zero rate. Proceedings are pending before the
Superior Courts and, based on the opinion of our counsel,
the Group considers that its chances of success in these
proceedings are good and therefore did not consider
necessary at this stage to provision for appropriations
deducted to date.
• On January 28, 2019, the International Center for Settlement
of Investment Disputes (ICSID) delivered its decision in
Sodexo’s arbitration claim against the Hungarian State in
the Group’s favor. Due to changes in the regulatory and fi scal
environment in Hungary related to the issuance of food and
meal vouchers, Sodexo had fi led a claim for ICSID arbitration
in July 2014 against the Hungarian state.
This decision represents an important step in the process of
resolving this dispute. However, the Hungarian state having
applied for annulment of this decision on May 27, 2019, the
Group has considered it was too early to record an income
based on the decision of ICSID.
To the best of the Company’s knowledge, there have been no
governmental, judicial or arbitral proceedings (including any
such proceedings which are pending or threatened of which
Sodexo is aware) which may have, or have had in the past 12
months, material eff ects on Sodexo and/or the Group’s fi nancial
position or profi tability.
Sodexo is also involved in litigation arising from its ordinary
activities. The Group does not believe that liabilities relating to
such litigation will in aggregate be material to its activities or to
its consolidated fi nancial position.
4.29 Subsequent events
No significant event has occurred between the year end and
the date on which the consolidated fi nancial statements were
approved by the Board of Directors.
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5. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICY
5.1 Group e xposure to foreign exchange and interest rate risk
The policies and procedures are designed to prevent speculative
positions. Furthermore, under them :
• substantially all borrowings must be at fi xed rates of interest,
or converted to fi xed-rate using hedging instruments;
•
in the context of fi nancing policy, foreign exchange risk on
loans to subsidiaries must be hedged;
• the maturity of hedging instruments must not exceed the
maturity of the borrowings they hedge.
5.1.1 Analysis of sensitivity to interest rates
As of August 31, 2019 and August 31, 2018, a 0.5% increase or
decrease in interest rates would have had no material impact on
profi t before tax or on shareholders’ equity as substantially all
liabilities at those dates were at a fi xed rate of interest.
SENSITIVITY TO EXCHANGE RATES
5.1.2 Analysis of sensitivity to foreign exchange
rates and exchange rate exposures on
principal currencies
Because Sodexo has operations in 67 countries, all components
of the fi nancial statements are infl uenced by foreign currency
translation effects, and in particular by fluctuations in the
U.S. dollar. However, exchange rate fl uctuations do not generate
any operational risk, because each of the Group’s subsidiaries
invoices its revenues and incurs its expenses in the same
currency.
Sodexo S.A. uses derivative instruments to manage the Group’s
risk exposure resulting from the volatility of exchange rates.
IMPACT OF A 10% APPRECIATION
OF THE EXCHANGE RATE
OF THE FOLLOWING CURRENCIES
AGAINST THE EURO
(in millions of euro)
U.S. dollar (USD)
Brazilian real (BRL)
Pound sterling (GBP)
AUGUST 31, 2019
AUGUST 31, 2018
3
IMPACT ON
REVENUES
IMPACT ON
OPERATING
PROFIT
IMPACT
ON PROFIT
BEFORE TAX
IMPACT ON
SHAREHOLDERS’
EQUITY
IMPACT ON
REVENUES
IMPACT ON
OPERATING
PROFIT
IMPACT
ON PROFIT
BEFORE TAX
IMPACT ON
SHAREHOLDERS’
EQUITY
911
112
190
45
20
16
37
20
16
245
86
66
828
104
178
55
21
10
40
19
14
237
77
83
5.2 Exposure to liquidity risk
5.3 Exposure to counterparty risk
The nature of the Group’s bank borrowings and bond issues as of
August 31, 2019 is described in detail in note 4.15.
Exposure to counterparty risk is limited to the carrying amount
of fi nancial assets.
As of August 31, 2019 and August 31, 2018, more than 99%
of the Group’s consolidated borrowings was raised on capital
markets and bank fi nancing covered less than 1% of the Group’s
financing needs. The maturity dates of the main borrowings
range between Fiscal 2019 and Fiscal 2029.
In addition, 97% of the Group’s borrowings correspond to
long-term fixed-rate debt raised on the capital markets. The
remaining 3% corresponds to short-term variable-rate debt, also
raised on the capital markets. This amount can be refi nanced at
any time thanks to:
(i) the Group’s multi-currency confirmed credit facility of
589 million euro plus 785 million U.S. dollars which expires
in July 2024; and
(ii) three bilateral confirmed lines of credit amounting
to 150 million euro each two of which are expiring in
December 2019 and the third in March 2020.
As of August 31, 2019, none of these facilities had been used.
Group policies and procedures are to manage and spread
counterparty risk. For derivative financial instruments, each
transaction with a bank is required to be based on a master
contract modeled on the standard contract issued by the French
Bankers’ Association (AFB) or the International Swaps and
Derivatives Association (ISDA).
Counterparty risk relating to customer accounts receivable
is immaterial. Due to the Group’s geographic and segment
spread, there is no concentration of risk on past due individual
receivables for which no provision has been recorded. Moreover,
the Group has not observed any signifi cant change in impacts
relating to customer default during the year.
The main counterparty risk is bank-related. The Group has
limited its exposure to counterparty risk by diversifying its
investments and limiting the concentration of risk held by each
of its counterparties. Transactions are conducted with highly
creditworthy counterparties taking into consideration country
risk. The Group has instituted a regular reporting of the risk
spread between counterparties and of their quality.
To reduce this risk further, in Fiscal 2011 the Group implemented
an international cash pooling mechanism between its main
subsidiaries (with a netting facility), reducing the amount of
liquidity held by third parties by concentrating it in the Group’s
fi nancial holding companies.
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The maximum counterparty represents approximately 18%
(14% as of August 31, 2018) of the Group’s operating cash
(including restricted cash and financial assets related to the
Benefi ts & Rewards Services activity) and is with a banking group
whose rating is A-1.
5.4 Policy for managing
the Company’s capital structure
Sodexo takes a long-term view in managing its capital structure,
with the objective of ensuring the Group’s liquidity, optimizing
its fi nancial structure and allowing shareholders to benefi t from
its strong cash fl ow generation.
Contributing to decisions made may be objectives for earnings
per share or estimated future cash flows, or for balancing
various components of the consolidated statement of fi nancial
position in order to meet the net debt criteria defi ned by Group
management and communicated to the marketplace, notably
a net debt to equity ratio of less than 75%. The net debt to
equity ratio corresponds to net debt as a proportion of total
shareholders’ equity (including minority interests), with net
debt defined as the difference between gross borrowings and
total cash, and total cash defi ned as cash and cash equivalents
plus restricted cash and fi nancial assets related to the Benefi ts
& Rewards Services activity less bank overdraft s.
6. SCOPE OF CONSOLIDATION
The main companies consolidated as of August 31, 2019 and
presented in the table below together represent over 80% of
consolidated revenues, operating profit, profit for the period
attributable to equity holders of the parent, and shareholders’
equity. The other entities individually represent less than 0.8%
of each of these items.
The first column shows the percentage interest held by the
Group, and the second column the percentage of voting rights
held by the Group. Percentage interests and percentages of
voting rights are only shown if less than 97%.
Companies newly consolidated during the year are indicated by
the letter “N”.
% INTEREST
% VOTING
RIGHTS
PRINCIPAL ACTIVITY
COUNTRY
France
Sodexo S.A.
Sodexo Entreprises (consolidated)
Sodexo Santé Médico Social
Société Française de Restauration et Services
(consolidated)
Segsmhi (Le Lido)
Sogeres
Lenôtre SA (consolidated)
Sodexo Pass France SA
Crèche Attitude (consolidated)
Foodchéri
87%
87%
Sodexo Pass International SAS
Sofinsod SAS
Etin SAS
Holding
On-site
On-site
On-site
On-site
On-site
On-site
Benefits & Rewards
On-site
On-site
Holding
Holding
Holding
France
France
France
France
France
France
France
France
France
France
France
France
France
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C O N S O L I D A T E D I N F O R M A T I O N
% INTEREST
% VOTING
RIGHTS
PRINCIPAL ACTIVITY
COUNTRY
Americas
Sodexo do Brasil Comercial SA (consolidated)
Sodexo Pass do Brasil Serviços E Comércio SA
Sodexo Pass do Brazil Servicos de Inovacao Ltda
Sodexo Facilities Services Ltda
Sodexo S.A.S.
Sodexo Canada Ltd (consolidated)
Centerplate Canada
Sodexo Chile SPA (consolidated)
On-site
Benefits & Rewards
Benefits & Rewards
On-site
On-site
On-site
On-site
On-site
Sodexo Soluciones de Motivacion Chile SA
Benefits & Rewards
Brazil
Brazil
Brazil
Brazil
Colombia
Canada
Canada
Chile
Chile
Europe
Sodexo, Inc. (consolidated)
Centerplate Ultimate Holdings, Corp.
Sodexo Remote Sites LLC
Sodexo Remote Sites USA Inc.
CK Franchising Inc.
Circle Company Associates, LLC
Denali Universal Services LLC
Inspirus LLC
Sodexo Global Services, LLC
Sodexo Peru SAC
Sodexo Services GmbH (consolidated)
Sodexo Beteiligungs BV & Co. KG
GA-tec Gebäude und Anlagentechnik GmbH
Sodexo Services Solutions Austria GmbH
Sodexo Belgium SA (consolidated)
Imagor SA
Sodexo Pass Belgium SA (consolidated)
Compagnie Financière Aurore International
Rydoo NV
Sodexo Iberia SA (consolidated)
Centerplate ISG Espana SL
60%
60%
3
On-site
United States
On-site
United States
On-site
United States
On-site
United States
On-site
United States
On-site
United States
On-site
United States
Benefits & Rewards
United States
Holding
United States
On-site
Peru
On-site
On-site
On-site
On-site
On-site
Benefits & Rewards
Benefits & Rewards
Holding
Benefits & Rewards
On-site
On-site
Germany
Germany
Germany
Austria
Belgium
Belgium
Belgium
Belgium
Belgium
Spain
Spain
N
Novae Restauration SA
Sodexo Italia SpA (consolidated)
On-site
Switzerland
On-site
Italy
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Sodexo Nederland BV (consolidated)
On-site
Netherlands
Sodexo Pass Česka Republika AS
Benefits & Rewards
Czech Republic
% INTEREST
% VOTING
RIGHTS
PRINCIPAL ACTIVITY
COUNTRY
Centerplate UK Ltd
Sodexo Ltd (consolidated)
Sodexo Global Services UK Ltd
On-site
United Kingdom
On-site
United Kingdom
Holding
United Kingdom
Sodexo Motivation Solutions UK Ltd
Benefits & Rewards
United Kingdom
Sodexo Ventures UK Limited
N
N
AIP Catering Limited
GCG Holdings Limited
Sodexo Finances USD Ltd
Sodexo Holdings Ltd
Purchasing Systems Ltd
Sodexo Management Services Ltd
Sodexo Finance Designated Activity Company
Holding
United Kingdom
On-site
United Kingdom
On-site
United Kingdom
Holding
United Kingdom
On-site
United Kingdom
On-site
United Kingdom
On-site
United Kingdom
Holding
Ireland
Sodexo Pass Romania Srl
Benefits & Rewards
Romania
Sodexo Avantaj Ve Odullendirme Hizmetleri AS
Benefits & Rewards
Sodexo AB
Asia, Pacific, Middle East, Africa
Sodexo Australia Pty Ltd (consolidated)
Sodexo Remote Sites Australia Pty Ltd
Sodexo Food Solutions India Private Ltd
Sodexo (China) Enterprise Management
Services Co., Ltd
Sodexo Management Company Ltd Shanghaï
Sodexo Services Asia
Teyseer Services Company LLC
49%
49%
Kelvin Catering Services (Emirates) LLC
49%
49%
On-site
On-site
On-site
On-site
On-site
On-site
Holding
On-site
On-site
Turkey
Sweden
Australia
Australia
India
China
China
Singapore
Qatar
United Arab
Emirates
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7. AUDITORS’ FEES
PRICEWATERHOUSECOOPERS
KPMG
AUDITORS :
PRICEWATERHOUSECOOPERS AUDIT
NETWORK
AUDITORS : KPMG SA
NETWORK
(in millions of euro excluding VAT)
AMOUNT
%
AMOUNT
%
AMOUNT
%
AMOUNT
%
Audit of individual company financial statements and consolidated financial statements
Issuer
Consolidated subsidiaries
TOTAL AUDIT SERVICES
Other services
Issuer
Consolidated subsidiaries
TOTAL OTHER SERVICES
TOTAL FEES
0,7
0,3
1,0
0,0
0,2
0,2
1,2
58%
25%
83%
0%
17%
17%
100%
n/a
4,4
4,4
0,0
0,6
0,6
5,0
n/a
88%
88%
0%
12%
12%
100%
0,7
1,0
1,7
0,1
0,0
0,1
1,8
39%
56%
94%
6%
0%
6%
100%
n/a
2,8
2,8
0,0
0,4
0,4
3,2
n/a
88%
88%
0%
12%
12%
100%
Services other than the certifi cation of accounts provided by PricewaterhouseCoopers Audit to the consolidated subsidiaries mainly
consist of professional services in the context of acquisition due diligence, technical consultations and tax compliance services.
Services other than the certifi cation of accounts provided by KPMG SA to the consolidating entity mainly consist of professional
services in the context of the non-fi nancial performance; Services other than the certifi cation of accounts provided to the consolidated
subsidiaries mainly consist of professional services in the context of acquisition due diligence, issuance of attestations and tax
compliance services.
3
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3.5 STATUTORY AUDITORS’ REPORT
ON THE CONSOLIDATED FINANCIAL
STATEMENTS
This is a free translation into English of the Statutory Auditors’ report issued in French and is provided solely for the convenience
of English speaking readers. This report includes information specifi cally required by European regulations or French law, such
as information about the appointment of Statutory Auditors. This report should be read in conjunction with, and construed in
accordance with, French law and professional auditing standards applicable in France.
(For the year ended August 31, 2019)
SODEXO
255 Quai de la Bataille de Stalingrad
92866 Issy-les-Moulineaux Cedex 9, France
To the Shareholders,
OPINION
In compliance with the engagement entrusted to us by your Shareholders’ Meeting, we have audited the accompanying consolidated
fi nancial statements of Sodexo for the year ended August 31, 2019.
In our opinion, the consolidated fi nancial statements give a true and fair view of the assets and liabilities and of the fi nancial position
of the Group at August 31, 2019 and of the results of its operations for the year then ended in accordance with International Financial
Reporting Standards as adopted by the European Union.
The audit opinion expressed above is consistent with our report to the Audit Committee.
BASIS OF THE AUDIT OPINION
Audit framework
We conducted our audit in accordance with professional standards applicable in France. We believe that the audit evidence we have
obtained is suffi cient and appropriate to provide a basis for our opinion.
Our responsibilities under these standards are further described in the “Responsibilities of the Statutory Auditors relating to the audit
of the consolidated fi nancial statements” section of our report.
Independence
We conducted our audit engagement in compliance with the independence rules applicable to us, for the period from September 1, 2018
to the date of our report, and, in particular, we did not provide any non audit services prohibited by article 5(1) of Regulation (EU)
No. 537/2014 or the French Code of Ethics (Code de déontologie) for Statutory Auditors.
Emphasis of matter
Without qualifying our opinion, we draw your attention to note 2.1.2 “New accounting standards and interpretations required to be
applied” to the consolidated fi nancial statements, which describes the methods used and the impact of the fi rst-time application at
September 1, 2018 of IFRS 9, “Financial Instruments” and IFRS 15, “Revenue from Contracts with Customers”.
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C O N S O L I D A T E D I N F O R M A T I O N
JUSTIFICATION OF OUR ASSESSMENTS – KEY AUDIT MATTERS
In accordance with the requirements of articles L. 823-9 and R. 823-7 of the French Commercial Code (Code de commerce) relating to
the justifi cation of our assessments, we inform you of the key audit matters relating to the risks of material misstatement that, in our
professional judgment, were the most signifi cant in our audit of the consolidated fi nancial statements, as well as how we addressed
those risks.
These matters were addressed as part of our audit of the consolidated fi nancial statements as a whole, and therefore contributed
to the opinion we formed as expressed above. We do not provide a separate opinion on specifi c items of the consolidated fi nancial
statements.
Measurement of the recoverable amount of goodwill
(Notes 2.8.2 and 4.10 to the consolidated fi nancial statements)
Description of risk
At August 31, 2019, the goodwill balance amounted to 6,158 million euro, representing the largest item on the balance sheet. An
impairment loss is recognized if the recoverable amount of goodwill as determined during the annual impairment test or during a
specifi c test carried out where there is an indication of impairment, is lower than its carrying amount.
Recoverable amount is typically determined based on the present value of future cash fl ows and requires signifi cant judgment from
management, in particular as regards the preparation of business forecasts, as well as the discount and long-term growth rates used.
Accordingly, we deemed the measurement of the recoverable amount of goodwill to be a key audit matter, due to the size of the
goodwill balance and the inherent uncertainty of certain inputs, in particular the likelihood of achieving forecast results included in
such measurement.
How our audit addressed this risk
We performed a critical review of the methods applied by management to determine the recoverable amount of goodwill. Our audit
work consisted in:
• assessing the components of the carrying amount of cash-generating units (CGUs) or groups of CGUs, corresponding to the level
at which goodwill is monitored by the Group, and their consistency with those used in projecting future cash fl ow forecasts;
• assessing the consistency of the projected future cash fl ows with the economic environments in which the Group operates;
• assessing the consistency of the growth rates used to project future cash fl ows with available external analyses;
• assessing the reasonableness of the discount rates applied to estimated future cash fl ows, verifying in particular that the various
inputs used to calculate the weighted average cost of capital for each CGU or group of CGUs were suffi cient to approximate the
return expected by market participants for similar activities;
• verifying that note 4.10 to the consolidated fi nancial statements contains the appropriate disclosures on the sensitivity of the
recoverable amount of goodwill to changes in the main assumptions used.
Supplier discount allowances
(Note 2.22.3 to the consolidated fi nancial statements)
Description of risk
Vendor Discount Allowances (VDA) received by the Group from suppliers in the context of Sodexo managed food or facilities services
contracts are recognized as a reduction in cost of sales.
The Group has a large number of supplier purchasing agreements that provide for VDAs based on quantities purchased or other
contractual conditions, including exceeding thresholds or respecting commitments, such as vendor exclusivity arrangements. These
agreements may be signed at a local, regional or global level.
Due to the number of such agreements within the Group and the fact that their anniversaries do not always coincide with the Group’s
fi scal year, the measurement of VDAs requires signifi cant estimates from management and is therefore deemed to be a key audit
matter.
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How our audit addressed this risk
We tested the eff ectiveness of the controls implemented by management to avert or detect any errors in estimating the value of VDAs.
Our audit procedures included, on a sample basis:
• analyzing supplier agreements and the proper application of their terms and conditions in determining the VDAs recognized for the
fi scal year, in particular as regards purchasing volumes, including the estimation of VDA accruals at the end of the reporting period;
• verifying the existence of the most material receivables recognized at the end of the reporting period with regard to accrued VDAs,
as well as the consistency of their calculation with the terms and conditions of the supplier agreements;
• comparing the VDAs eff ectively received aft er the end of the reporting period with the receivables recognized at the end of the
reporting period in order to assess the reliability of the Group’s estimates.
Post-employment benefi ts
(Notes 2.17.2 and 4.17 to the consolidated fi nancial statements)
Description of risk
The Group contributes to defi ned benefi t pension plans, mainly in France, the United Kingdom, the Netherlands and Italy.
At August 31, 2019, the Group recognized a net benefi t obligation of 244 million euro, corresponding to the diff erence between the
fair value of the plan assets and the present value of the net benefi t obligation.
Assumptions used in calculating the obligation include length of service, life expectancy, salary infl ation, staff turnover, and the
discount and infl ation rates, and therefore involve the judgment of management. Any change in these key assumptions could have a
signifi cant impact on the net benefi t obligation. Accordingly, this subject was deemed to be a key audit matter.
How our audit addressed this risk
We were informed of the procedures implemented by the Group for measuring the net benefi t obligation.
With the support of our actuaries, we assessed the key assumptions and data used by the Group’s actuaries to measure the net
benefi t obligation with regard to the main defi ned benefi t plans, most notably in France, the United Kingdom, the Netherlands and
Italy, and evaluated their fi ndings.
We compared the key assumptions taken from the measurement models with external data and tested the sensitivity of the net
benefi t obligation to changes in these key assumptions.
We also obtained external confi rmation of the plan assets or implemented other audit procedures to confi rm their existence and proper
valuation.
Tax risks
(Notes 2.16, 4.18 and 4.28 to the consolidated fi nancial statements)
Description of risk
The Group has operations in numerous countries around the world and, in the normal course of business, is subject to regular
inspections by local tax authorities.
Such inspections, covering corporate income tax, as well as other taxes, levies and similar payments, may give rise to tax adjustments
and disputes with tax authorities.
Estimates of the impacts of these tax risks and any related provisions involve signifi cant judgment by management, especially as
regards the expected outcome of disputes in progress or the probability of identifi ed risks occurring. Accordingly, we deemed this
subject to be a key audit matter.
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How our audit addressed this risk
We held meetings with management to gain an understanding of the internal control procedures implemented to identify tax risks
and uncertain tax positions, and, when necessary, determine any provisions.
With the support of our tax experts, we also:
• held meetings with the Group tax department and local management to assess the latest status of any inspections in progress and
tax adjustments notifi ed by the tax authorities, and to monitor developments in any disputes in progress;
• consulted the recent decisions and correspondence of Group companies with the tax authorities, and gained an understanding of
the correspondence between the companies concerned and their tax advisors;
• analyzed the responses of the tax advisors to our requests for information or their analyses of disputes in progress;
• conducted a critical review of the estimates and positions adopted by management;
• verifi ed that the latest developments had been factored into the risk analysis and the estimates of the provisions set aside in the
statement of fi nancial position.
Measurement of the fair value of the Group’s interest in Bellon SA
(Notes 2.1.2, 2.12.1, 4.11 and 4.21 to the consolidated fi nancial statements)
Description of risk
Through its subsidiary Sofi nsod, the Group holds a 19.61% interest in Bellon SA, which holds a controlling interest in Sodexo SA with
42.22% of the share capital and 56.58% of the exercisable voting rights at August 31, 2019.
In accordance with IFRS 9, the Group accounts for its investment as a non-current financial asset at fair value through other
comprehensive income (not recyclable).
Following the fi rst-time application of IFRS 9 at September 1, 2018, the Group measured the fair value of the investment at 596 million
euro. At August 31, 2019, management determined that the fair value was 708 million euro using the same methods.
With the support of two independent experts, management developed a method to measure the fair value of the investment based on
the net asset value (NAV) of Bellon SA, taking into account the specifi c characteristics of this investment as described in note 4.21
to the consolidated fi nancial statements. Management therefore considered that the investment’s fair value corresponded, at both
September 1, 2018 and August 31, 2019, to the Group’s share in Bellon SA’s NAV, less a 40% discount.
Determining the fair value of Sodexo’s interest in Bellon SA requires signifi cant judgment from management as regards the choice of
measurement method and the use thereof, in particular the discount applied to Bellon SA’s NAV.
Accordingly, we deemed the measurement of the fair value of Sodexo’s interest in Bellon SA to be a key audit matter, due to the size
of the item on the balance sheet and the degree of judgment inherent in certain inputs used to determine fair value.
How our audit addressed this risk
We performed a critical review of the methods applied by management to determine the fair value of the interest in Bellon SA.
With the assistance of our asset valuation experts, our procedures consisted in:
•
familiarizing ourselves with the work of management and the management-appointed independent experts to develop a
measurement method for the investment and determine the terms and conditions of its implementation;
• assessing the consistency of the measurement method used with the specifi c characteristics of the investment;
• assessing the appropriateness of the inputs used to determine the 40% discount applied to Bellon SA’s NAV in measuring the fair
value of the investment;
• verifying that note 4.21 to the consolidated fi nancial statements contains the appropriate disclosures on the measurement method
used by management and the terms and conditions of its implementation.
3
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SPECIFIC VERIFICATIONS
As required by legal and regulatory provisions and in accordance with professional standards applicable in France, we have also
verifi ed the information pertaining to the Group presented in the Board of Directors’ management report.
We have no matters to report as to its fair presentation and its consistency with the consolidated fi nancial statements.
We attest that the information pertaining to the Group provided in the management report includes the consolidated non-fi nancial
information statement required under article L. 225-102-1 of the French Commercial Code. However, in accordance with the
requirements of article L. 823-10 of the French Commercial Code, we have not verifi ed the fair presentation and consistency with the
consolidated fi nancial statements of the information given in that statement, which will be the subject of a report by an independent
third party.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
Appointment of the Statutory Auditors
We were appointed Statutory Auditors of Sodexo by the Shareholders’ Meetings held on February 22, 1994 for PricewaterhouseCoopers
Audit and on February 4, 2003 for KPMG Audit.
At August 31, 2019, PricewaterhouseCoopers Audit and KPMG Audit were in the twenty-sixth and seventeenth consecutive year of
their engagement, respectively.
RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE
RELATING TO THE CONSOLIDATED FINANCIAL STATEMENTS
Management is responsible for preparing consolidated fi nancial statements giving a true and fair view in accordance with International
Financial Reporting Standards as adopted by the European Union and for implementing the internal control procedures it deems
necessary for the preparation of consolidated fi nancial statements that are free of material misstatement, whether due to fraud or
error.
In preparing the consolidated fi nancial statements, management is responsible for assessing the Company’s ability to continue as a
going concern, disclosing, as applicable, matters related to going concern, and using the going concern basis of accounting, unless it
expects to liquidate the Company or to cease operations.
The Audit Committee is responsible for monitoring the fi nancial reporting process and the eff ectiveness of internal control and
risk management systems, as well as, where applicable, any internal audit systems, relating to accounting and fi nancial reporting
procedures.
The consolidated fi nancial statements were approved by the Board of Directors.
RESPONSIBILITIES OF THE STATUTORY AUDITORS RELATING TO THE AUDIT
OF THE CONSOLIDATED FINANCIAL STATEMENTS
Objective and audit approach
Our role is to issue a report on the consolidated fi nancial statements. Our objective is to obtain reasonable assurance about whether
the consolidated fi nancial statements as a whole are free of material misstatement. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with professional standards will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to infl uence the economic decisions taken by users on the basis of these consolidated fi nancial statements.
As specifi ed in article L. 823-10-1 of the French Commercial Code, our audit does not include assurance on the viability or quality of
the Company’s management.
As part of an audit conducted in accordance with professional standards applicable in France, the Statutory Auditors exercise
professional judgment throughout the audit.
They also:
•
identify and assess the risks of material misstatement in the consolidated fi nancial statements, whether due to fraud or error,
design and perform audit procedures in response to those risks, and obtain audit evidence considered to be sufficient and
appropriate to provide a basis for their opinion. The risk of not detecting a material misstatement resulting from fraud is higher
than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control;
• obtain an understanding of the internal control procedures relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the eff ectiveness of the internal control;
• evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management
and the related disclosures in the notes to the consolidated fi nancial statements;
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• assess the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast signifi cant doubt on the Company’s
ability to continue as a going concern. This assessment is based on the audit evidence obtained up to the date of the audit report.
However, future events or conditions may cause the Company to cease to continue as a going concern. If the Statutory Auditors
conclude that a material uncertainty exists, they are required to draw attention in the audit report to the related disclosures in
the consolidated fi nancial statements or, if such disclosures are not provided or are inadequate, to issue a qualifi ed opinion or a
disclaimer of opinion;
• evaluate the overall presentation of the consolidated fi nancial statements and assess whether these statements represent the
underlying transactions and events in a manner that achieves fair presentation;
• obtain suffi cient appropriate audit evidence regarding the fi nancial information of the entities or business activities within the
Group to express an opinion on the consolidated fi nancial statements. The Statutory Auditors are responsible for the management,
supervision and performance of the audit of the consolidated fi nancial statements and for the opinion expressed thereon.
Report to the Audit Committee
We submit a report to the Audit Committee which includes, in particular, a description of the scope of the audit and the audit program
implemented, as well as the results of our audit. We also report any signifi cant defi ciencies in internal control that we have identifi ed
regarding the accounting and fi nancial reporting procedures.
Our report to the Audit Committee includes the risks of material misstatement that, in our professional judgment, were the most
signifi cant for the audit of the consolidated fi nancial statements and which constitute the key audit matters that we are required to
describe in this report.
We also provide the Audit Committee with the declaration provided for in article 6 of Regulation (EU) No. 537/2014, confi rming our
independence within the meaning of the rules applicable in France, as defi ned in particular in articles L. 822-10 to L. 822-14 of the
French Commercial Code and in the French Code of Ethics for Statutory Auditors. Where appropriate, we discuss any risks to our
independence and the related safeguard measures with the Audit Committee.
3
Neuilly-sur-Seine and Paris-La Défense, November 6, 2019
The Statutory Auditors
PricewaterhouseCoopers Audit
Jean-Christophe Georghiou
KPMG Audit
Département de KPMG SA
Caroline Bruno Diaz
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3.6 SUPPLEMENTAL INFORMATION AND
CONDENSED GROUP ORGANIZATION CHART
3.6.1 Financial ratios
Gearing ratio
Net debt ratio
Debt coverage
Financial independence
Return on equity
Return on capital employed (ROCE)
Interest cover
FISCAL 2019
FISCAL 2018
Borrowings (1) – operating cash (2)
Shareholders’ equity and non-controlling interests
27%
37.9%
Borrowings (1) – operating cash (2)
Earnings before Interest, Taxes, Depreciation and Amortization
(EBITDA) (3)
0.9
1.0
Borrowings
Operating cash flow
Non-current borrowings
3.6 years
3.5 years
Shareholders’ equity and non-controlling interests
86.8%
106.3%
Profit attributable to equity holders of the parent
Equity attributable to equity holders of the parent
(before profit for the period)
Operating profit after tax (4)
Capital employed (5)
Operating profit
Net borrowing cost
17.6%
24.7%
15.5%
16.4%
11.6
12.6
Financial ratios have been computed based on the following key indicators:
Non-current borrowings
3,909
3,537
FISCAL 2019
FISCAL 2018
(1) Borrowings
+ current borrowings excluding overdrafts
- derivative financial instruments recognized as assets
(2) Operating cash
(3) Earnings before Interest,
Taxes, Depreciation and Amortization
(EBITDA)
(4) Operating profit after tax
(5) Capital employed
Cash and cash equivalents
+ financial assets related to the Benefits & Rewards Services
activity
- bank overdrafts
Operating profit
+ depreciation and amortization
Operating profit
Effective tax rate
Property, plant and equipment
+ goodwill
+ other intangible assets
+ client investments
+ working capital excluding restricted cash and financial assets
of the Benefits & Rewards Services activity
183
(12)
4,079
1,781
1,120
(35)
2,866
1,059
365
1,446
1,059
29,0%
753
684
6,158
801
626
(3,408)
4,861
421
(18)
3,940
1,666
1,042
(28)
2,680
997
317
1,314
997
27.1%
727
619
5,664
704
558
(3,104)
4,441
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C O N S O L I D A T E D I N F O R M A T I O N
3.6.2 Two-year financial summary
Total shareholders’ equity
Equity attributable to equity holders of the parent
Non-controlling interests
Borrowings(1)
Non-current borrowings
Current borrowings
Cash and equivalent, net of bank overdrafts
Financial assets of the Benefits & Rewards Services activity (including restricted cash)
Net borrowings(2)
Revenue
Operating profit
Profit for the period
Profit attributable to non-controlling interests
Profit attributable to equity holders of the parent
FISCAL 2019
FISCAL 2018
4,498
4,456
42
4,079
3,903
176
1,746
1,120
1,213
21,954
1,059
686
21
665
3,328
3,283
45
3,940
3,534
406
1,638
1,042
1,260
20,407
997
664
13
651
3
Weighted average number of shares
145,721,534
148,077,776
Earnings per share (in euro)
Dividend per share paid during the fiscal year (in euro)
Share price at August 31 (in euro)
Highest share price in the fiscal year (in euro)
Lowest share price in the fiscal year (in euro)
4.56
2.75
103
104.95
84.92
4.40
2.75
89.72
114.05
78.10
(1) Including net financial instruments at fair value, excluding bank overdrafts.
(2) Cash and cash equivalents + restricted cash and financial assets of the Benefits & Rewards Services activity – borrowings.
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3.6.3 Exchange rates
ISO CODES
CFA
ZAR
DZD
SAR
ARS
AUD
BRL
BGN
CAD
CLP
CNY
COP
KRW
CRC
DKK
AED
USD
GNF
HKD
HUF
INR
IDR
ILS
JPY
KZT
KWD
LBP
MGA
MYR
MAD
MXN
MZN
NOK
NZD
OMR
PEN
CLOSING EXCHANGE RATE
AT AUGUST 31, 2019
AVERAGE EXCHANGE RATE
FISCAL 2019
COUNTRIES
Africa
South Africa
CURRENCY
1 EURO =
1 EURO =
CFA (thousands)
0.655957
0.655957
Rand
16.829900
16.166472
Algeria
Dinar (thousands)
0.132452
0.134551
Saudi Arabia
Argentina
Australia
Brazil
Bulgaria
Canada
Chile
China
Riyal
Peso
Dollar
Real
Lev
4.145800
4.251915
63.975290
63.975290
1.639800
1.600774
4.587900
4.383893
1.955800
1.955800
Dollar
1.465800
1.503486
Peso (thousands)
0.796240
0.772224
Yuan
7.890800
7.762257
Colombia
Peso (thousands)
3.798000
3.628884
South Korea
Won (thousands)
1.333210
1.295776
Costa Rica
Denmark
United Arab Emirates
United States
Colon (thousands)
0.627210
0.669458
Krone
Dirham
Dollar
7.456200
7.463240
4.060300
4.163829
1.103600
1.133866
Guinea
Guinea Franc (thousands)
10.136770
10.310348
Hong Kong
Hungary
India
Dollar
8.654900
8.885842
Forint (thousands)
0.331070
0.322743
Rupee (thousands)
0.078837
0.079854
Indonesia
Rupiah (thousands)
15.654570
16.273843
Israel
Japan
Shekel
3.889900
4.115329
Yen (thousands)
0.117280
0.125195
Kazakhstan
Tenge (thousands)
0.428010
0.427054
Kuwait
Lebanon
Dinar
0.335900
0.344107
Pound (thousands)
1.662670
1.706952
Madagascar
Ariary (thousands)
4.088000
4.011068
Malaysia
Morocco
Mexico
Mozambique
Norway
New Zealand
Oman
Peru
Ringgit
Dirham
4.641200
4.690382
10.621200
10.839473
Peso
22.156700
22.009574
Metical
67.440000
69.726782
Kroner
Dollar
Rial
Sol
10.038000
9.713779
1.749000
1.695499
0.425341
0.436251
3.751000
3.774781
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C O N S O L I D A T E D I N F O R M A T I O N
COUNTRIES
Philippines
Poland
Qatar
CLOSING EXCHANGE RATE
AT AUGUST 31, 2019
AVERAGE EXCHANGE RATE
FISCAL 2019
CURRENCY
1 EURO =
1 EURO =
Peso
Zloty
Riyal
57.462000
59.300456
4.381200
4.294881
4.025700
4.129098
Czech Republic
Koruna (thousands)
0.025914
0.025746
Romania
United Kingdom
Russia
Singapore
Sweden
New Lei
Pound
4.728400
4.711225
0.905650
0.885108
Ruble (thousands)
0.073415
0.074334
Dollar
Krona
1.531200
1.547685
10.839500
10.480621
Switzerland
Swiss Franc
1.090900
1.125652
Tanzania
Thailand
Tunisia
Turkey
Uruguay
Venezuela
Vietnam
Shilling (thousands)
2.534910
2.609144
Baht
Dinar
33.754000
36.072825
3.170577
3.323496
New Lira
6.441800
6.348273
Peso
40.472000
38.033444
3
Bolivar (thousands)
2,448,545.229907
2,448,545.229907
Dong
25,642.070000
26,387.457098
ISO CODES
PHP
PLN
QAR
CZK
RON
GBP
RUB
SGD
SEK
CHF
TZS
THB
TND
TRY
UYU
VEF
VND
3.6.4 Investment policy
(in millions of euro)
Acquisitions of property, plant equipment and intangible assets, plus client investments
Acquisitions of equity interests
FISCAL 2019
FISCAL 2018
415
301
286
697
Investments in progress as of August 31, 2019:
• other fi rm commitments to acquire equity interests: as of the
date of this document Sodexo has not made any signifi cant
fi rm commitment to acquire equity interests.
Because of the nature of the Group’s activities, investments
represent less than 2% of revenues and mainly relate to
investments on the Group’s sites, which are used to support
operating activities and are fi nanced by operating cash. None
of these investments is individually signifi cant in Fiscal 2018.
The main acquisitions made during Fiscal 2019 are indicated
in note 4.6, “Goodwill”, to the consolidated fi nancial statements.
A detailed description of changes in investments is provided in
notes 4.5, 4.7 and 4.8 to the consolidated fi nancial statements.
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3.6.5 Condensed Group organization chart
SODEX0 SA
Holds directly
or indirectly
100% of the
subsidiaries
indicated
U N I T E D K I N G D O M
N O R T H A M E R I C A
SODEXO LTD
SODEXO HEALTHCARE SERVICES LTD
SODEXO PRESTIGE LTD
SODEXO DEFENCE SERVICES LTD
KALYX LIMITED
SODEXO EDUCATION SERVICES LTD
SODEXO IRELAND LTD
SODEXO, INC
CENTERPLATE ULTIMATE HOLDINGS, CORP.
CK FRANCHISING, INC
SODEXO REMOTE SITES LLC
SODEXO CANADA LTD
F R A N C E
SOGERES SA
SODEXO ENTREPRISES SAS
SODEXO SANTE MEDICO SOCIAL SAS
SOCIETE FRANCAISE DE RESTAURATION ET
SERVICES
SODEXO SPORTS ET LOISIRS
SODEXO JUSTICE SERVICES
E U R O P E
SODEXO ITALIA SPA
SODEXO BELGIUM SA
SODEXO GERMANY BV
SODEXO IBERIA SA
SODEXO AB (SWEDEN)
SODEXO NEDERLAND BV
S O U T H A M E R I C A
A S I A A U S T R A L I A
B E N E F I T S
A N D R E W A R D S
S E R V I C E S
SODEXO CHILE SA
SODEXO DO BRASIL COMERCIAL SA
SODEXO FACILITIES MANAGEMENT SCES LTDA
(BRASIL)
SODEXO PEROU SAC
SODEXO SAS (COLOMBIA)*
SODEXO MANAGEMENT CO. LTD SHANGHAÏ
SODEXO SINGAPORE PTE LTD
SODEXO AUSTRALIA PTY LTD
SODEXO REMOTE SITES AUSTRALIA PTY LTD
SODEXO FOOD SOLUTIONS INDIA PRIVATE LTD
SODEXO FACILITIES MANAGEMENT SERVICES INDIA
PRIVATE LTD
KELVIN CATERING SERVICES (UNITED ARAB
EMIRATES) *
SODEXO PASS INTERNATIONAL SAS (FRANCE)
SODEXO PASS FRANCE SA
SODEXO PASS DO BRASIL SERV. E COMERCIO SA
SODEXO PASS CESKA REPUBLICA AS
SODEXO PASS BELGIUM SA
SODEXO MOTIVATION SOLUTIONS UK LTD
INSPIRUS LLC (USA)
* Third party non-controlling interest
NB: The operating subsidiaries indicated for each geographic area or activity are those with the highest revenues for Fiscal year 2019.
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4
INFORMATION
ON THE ISSUER
4.4
Statutory Auditors’ Report
179
4.4.1 Statutory Auditors’ Report on the
fi nancial statements
4.4.2 Statutory Auditors’ Report on related-
party agreements and commitments
179
183
4.1
Sodexo S.A. Individual Company
Financial Statements
4.1.1
Income statement
4.1.2 Balance sheet
156
156
157
4.2
Notes to the Individual Company
Financial Statements
158
4.3
Supplemental Information
on the Individual Company
Financial Statements
4.3.1 Five-year fi nancial summary
4.3.2 Appropriation of earnings
4.3.3 Supplier and client dues
176
176
177
177
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4 S o d e x o S . A . i n d i v i d u a l c o m p a n y f i n a n c i a l s t a t e m e n t s
4.1 SODEXO S.A. INDIVIDUAL COMPANY
FINANCIAL STATEMENTS
4.1.1 Income statement
(in millions of euro)
Revenues
Other operating income
Purchases
Employee costs
Other operating expenses
Taxes other than income taxes
Depreciation, amortization and increase in provisions
Operating profit
Financial income/(expense), net
Exceptional income/(expense), net
Employee profit-sharing
Income taxes
Net income
NOTES
FISCAL 2019
FISCAL 2018
3
4
5
6
128
317
(1)
(76)
114
238
(1)
(64)
(337)
(251)
(9)
(6)
16
580
(22)
-
23
597
(10)
(2)
24
459
(64)
-
62
481
156
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4.1.2 Balance sheet
Assets
(in millions of euro)
NON-CURRENT ASSETS, NET
Intangible assets
Property, plant and equipment
Financial investments
TOTAL NON-CURRENT ASSETS
CURRENT AND OTHER ASSETS
Accounts receivable
Prepaid expenses, other receivables and other assets
Marketable securities
Cash
TOTAL CURRENT AND OTHER ASSETS
TOTAL ASSETS
Liabilities and equity
(in millions of euro)
SHAREHOLDERS’ EQUITY
Share capital
Additional paid-in capital
Reserves and retained earnings
Restricted provisions
TOTAL SHAREHOLDERS’ EQUITY
Provisions for contingencies and losses
LIABILITIES
Borrowings
Accounts payable
Other liabilities
TOTAL LIABILITIES AND PROVISIONS
TOTAL LIABILITIES AND EQUITY
S o d e x o S . A . i n d i v i d u a l c o m p a n y f i n a n c i a l s t a t e m e n t s
I N F O R M A T I O N O N T H E I S S U E R
NOTES
AUGUST 31, 2019
AUGUST 31, 2018
7
7
7-9
7
9
9
11
38
4
6,618
6,660
66
471
145
84
766
9
1
5,897
5,907
70
436
177
112
795
7,426
6,702
NOTES
AUGUST 31, 2019
AUGUST 31, 2018
590
248
2,010
15
2,863
384
590
248
1,818
15
2,671
342
13
10
14-15
3,609
3,407
14
14
44
526
4,563
7,426
28
254
4,031
6,702
4
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4 N o t e s t o t h e I n d i v i d u a l C o m p a n y F i n a n c i a l S t a t e m e n t s
4.2 NOTES TO THE INDIVIDUAL COMPANY
FINANCIAL STATEMENTS
DETAILED LIST OF NOTES
1.
1.1
1.2
1.3
SIGNIFICANT EVENTS
Capital transactions
Acquisition and investments in subsidiaries
Borrowings
2.
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
2.1 Non-current assets
2.2
Accounts receivable
2.3 Marketable securities (excluding treasury shares)
Treasury shares – restricted share and stock option
plans
Foreign currency transactions
Debt issuance costs
Retirement benefi ts
French tax consolidation
ANALYSIS OF NET REVENUES
FINANCIAL INCOME AND EXPENSE, NET
161
EXCEPTIONAL ITEMS, NET
ANALYSIS OF INCOME TAX EXPENSE
NON-CURRENT ASSETS
DEPRECIATION AND AMORTIZATION
AMOUNT AND MATURITY OF
RECEIVABLES AND OTHER ASSETS
10. PROVISIONS AND IMPAIRMENT
11. MARKETABLE SECURITIES
12. TREASURY SHARES
13. SHAREHOLDERS’ EQUITY
13.1 Share capital
13.2 Changes in shareholders’ equity
159
159
159
159
159
159
160
160
160
160
160
160
160
161
162
162
163
163
164
164
165
165
166
166
166
2.4
2.5
2.6
2.7
2.8
3.
4.
5.
6.
7.
8.
9.
15. BOND ISSUES AND OTHER BORROWINGS
167
15.1 Bond issues
15.2 Other borrowings
15.3 Borrowings from related companies
16. ACCRUED EXPENSES – DEFERRED
REVENUES AND PREPAID EXPENSES
17. RELATED-PARTY INFORMATION
18. FINANCIAL COMMITMENTS
18.1 Commitments made by Sodexo S.A.
18.2 Commitments received by Sodexo S.A.
18.3 Financial instrument commitments
19. PRINCIPAL FUTURE ADJUSTMENTS TO
THE TAX BASIS
20. RETIREMENT BENEFIT COMMITMENTS
167
167
168
168
169
170
170
170
170
171
171
20.1 Retirement benefi ts payable by law or under collective
agreements
171
20.2 Commitments related to a supplemental pension plan 171
21. DIRECTORS’ FEES
22. FRENCH TAX CONSOLIDATION
22.1 Benefi t arising from French tax consolidation
22.2 Tax losses reclaimable as of August 31, 2019
23. AVERAGE NUMBER OF EMPLOYEES
24. CONSOLIDATION
25. POST-BALANCE SHEET EVENTS
26. LIST OF SUBSIDIARIES AND OTHER
171
171
171
171
172
172
172
173
14. AMOUNT AND MATURITY OF LIABILITIES
166
EQUITY INVESTMENTS
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N o t e s t o t h e I n d i v i d u a l C o m p a n y F i n a n c i a l S t a t e m e n t s
I N F O R M A T I O N O N T H E I S S U E R
1. SIGNIFICANT EVENTS
1.1
Capital transactions
During Fiscal year 2019, Sodexo S.A. purchased 1,431,455 of its
own shares for 138 million euro, to be used for restricted shares
grants.
in 2003, the company is the leading independent player in
high-end catering services for French-speaking Switzerland, with
700 employees serving a network of over 80 prestigious client sites.
1.3
Borrowings
1.2 Acquisition and investments in
subsidiaries
On October 31, 2018 Sodexo acquired Novae, significantly
expanding its footprint in the attractive Swiss market. Founded
On June 26, 2019, Sodexo S.A. issued bonds for 250 million
pounds sterling redeemable in June 2028 and bearing interest
at an annual rate of 1.75%, with interest payable annually on
June 26. Accrued interest of this bond was 1 million euro as of
August 31, 2019.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The individual company financial statements have been
prepared in accordance with the plan comptable général of 2014
and regulation no. 2014-03 issued by the Autorité des normes
comptables (ANC), as amended by regulation no. 2016-07 dated
November 4, 2016.
The accounting policies applied in preparing the individual
company fi nancial statements for Fiscal 2019 are the same as
those applied for Fiscal 2018. The financial statements have
been prepared using the historical cost convention.
In accordance with regulation no. 2015-06 issued by the ANC,
merger deficits are included in “Other financial assets” (see
note 7, “Non-current assets”).
ANC regulation no. 2015-05 concerning forward financial
instruments and hedging transactions has been effective for
Sodexo S.A. since September 1, 2017 (see note 2.5 below for
further details).
The amounts presented in the tables in these notes are in
millions of euro.
Exceptional items comprise items that do not relate to ordinary
activities, and certain items that do relate to ordinary activities
but are of an exceptional nature.
The balance sheet and income statement of Sodexo S.A. include
amounts for branches in metropolitan France and in French
overseas departments and regions.
2.1 Non-current assets
Non-current assets are valued at acquisition cost or historical cost.
Acquisition cost comprises the amount paid plus all incidental
costs directly related to the acquisition or to the installation of the
asset, and incurred to enable the asset to function as intended.
Depreciation is calculated over the useful life of the asset using
the straight-line method, which is considered to best refl ect the
underlying economic reality.
2.1.1
Intangible assets
Software is amortized over four to five years and integrated
management software packages are amortized over three to
seven years, depending on their expected useful lives.
The diff erence between the accounting and tax amortization of
intangible assets is recognized as exceptional amortization.
2.1.2
Property, plant and equipment
The straight-line depreciation lives generally used are:
Buildings
General fixtures and fittings
Plant and machinery
Vehicles
Office and computer equipment
Other property, plant and equipment
20 years
3-10 years
4-10 years
4 years
3-10 years
5-10 years
2.1.3
Financial investments
Equity investments and other fi nancial investments are carried
on the balance sheet at cost. At each balance sheet date, a
provision for impairment is recorded if the value in use of these
assets is less than their net carrying amount including any
merger defi cits allocated to the assets for accounting purposes.
The value in use of investments is determined on the basis of
net asset value, profitability and the future prospects of the
investee.
When the carrying amount of an investment is higher than the
net book value of the share of net assets of the subsidiary, the
valuation is also supported by comparing the carrying amount
4
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4 N o t e s t o t h e I n d i v i d u a l C o m p a n y F i n a n c i a l S t a t e m e n t s
of the investment to its value in use based on discounted future
cash fl ows, using the following parameters:
Treasury shares acquired for cancellation purposes are recognized in
other fi nancial assets and no provision for impairment is recorded.
• after-tax cash flows derived from business plans and a
terminal value calculated by extrapolating the data for the
final year of the business plan using a long-term growth
rate specifi c to the business activity and geographic region
Business plans generally cover one to fi ve years;
• the cash flows are discounted using a rate based on the
weighted average cost of capital.
Based on the estimated value in use, an investment may be
maintained at a carrying amount in excess of the share of book
net assets held.
Costs incurred to acquire shares in companies recognized at cost
are recognized for tax purposes as exceptional amortization over
a fi ve-year period.
Receivables related to equity investments are recognized at
face value. A provision for impairment is recorded where the
recoverable amount is less than the carrying amount.
When an equity investment is sold or liquidated, any provision
for impairment previously recognized against that investment is
released and recorded as exceptional income.
2.5
Foreign currency transactions
Foreign currency revenues and expenses are translated using the
exchange rate as of the transaction date. Foreign currency liabilities
and receivables are translated in the balance sheet at the exchange
rate prevailing as of the balance sheet date. Any diff erence arising
from the retranslation of foreign currency liabilities and receivables
at the closing exchange rate is recorded in the balance sheet.
Unrealized foreign exchange losses at the balance sheet date are
recognized to the extent the underlying balance is not hedged.
In accordance with the ANC regulation no. 2015-05, for foreign
currency transactions a distinction is now made between commercial
transactions and fi nancial transactions, with the exchange gains and
losses on these transactions recognized as follows:
• within operating profi t, under “Other operating expenses” for
commercial transactions;
• within “Financial income/(expense), net” for financial
transactions. It includes the premiums on currency hedges
recognized over the duration of the contracts.
2.2 Accounts receivable
2.6 Debt issuance costs
Accounts receivable are recognized at face value. An allowance
for doubtful accounts is recorded where the recoverable amount
is less than the carrying amount.
Debt issuance costs are recognized as a deferred charge asset in the
balance sheet and amortized straight-line over the term of the debt.
2.3 Marketable securities
(excluding treasury shares)
Marketable securities are recognized at acquisition cost, with
any unrealized losses at the balance sheet date covered by a
provision for impairment.
2.4
Treasury shares – restricted
share and stock option plans
A provision is recorded when it is probable that stock option or
restricted share plans will give rise to an outfl ow of resources.
The amount of the provision is based on the cost of the treasury
shares acquired (or to be acquired) for allocation to each plan.
For stock option plans, the provision is net of the option exercise
price.
Depending on the plan terms, the provision is recognized over
the period in which the services are rendered by the benefi ciaries,
as applicable.
The provision is released upon delivery of the shares and
recognition of a capital loss in an amount equal to the average
cost of the delivered shares, less the option exercise price in the
case of shares delivered upon exercise of stock options.
When treasury shares are neither allocated to a plan nor held for
the purpose of being cancelled, they are valued at the lower of
the average purchase price and the average market price for the
last month of the fi scal year.
2.7
Retirement benefi ts
Retirement benefi t obligations due to active employees by law
or under collective agreements are included in off -balance sheet
commitments. Commitments under supplementary retirement
plans are estimated using the projected unit credit method
based on fi nal salary and are also included in off -balance sheet
commitments, net of any plan assets.
2.8
French tax consolidation
Sodexo S.A. is the lead company in the French tax consolidation,
and has sole liability for income taxes for the entire French tax
group. Each company included in the French tax consolidation
recognizes the income tax for which it would have been liable
had there been no French tax consolidation. Any income tax
gains or losses arising from the French tax consolidation are
recognized in the Sodexo S.A. fi nancial statements.
In connection with position statement no. 2005-G issued on
October 12, 2005 by the Urgent Issues Committee of the Conseil
national de la comptabilité on the conditions under which a provision
may be recognized by a Parent company covered by a French tax
consolidation, Sodexo S.A. has elected the following accounting
treatment: a provision for taxes is recognized in the financial
statements of Sodexo S.A. to cover tax losses of subsidiaries which
are used to offset income in the French tax consolidation and
which will probably be reclaimed by the subsidiary. All tax losses
incurred by operating subsidiaries are regarded as probable of being
reclaimed by the subsidiary, given that the subsidiary will be able
to off set such losses against income once it returns to profi tability.
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I N F O R M A T I O N O N T H E I S S U E R
3. ANALYSIS OF NET REVENUES
(in millions of euro)
Revenues by business activity
On-site Services
Holding company services
TOTAL
Revenues by geographic region
France
French overseas departments and regions
TOTAL
FISCAL 2019
FISCAL 2018
-
128
128
128
-
128
4
110
114
110
4
114
4. FINANCIAL INCOME AND EXPENSE, NET
(in millions of euro)
FISCAL 2019
FISCAL 2018
Dividends received from subsidiaries and equity investments
Interest income
Interest expense
Net foreign exchange gain/(loss)
Net change in provisions for financial items
TOTAL
4
711
16
(82)
(45)
(20)
580
541
20
(72)
(6)
(24)
459
The amount of interest expense includes a merger defi cit of 2 million euro relating to the reorganization of the Group’s legal structure.
The net change in provisions for fi nancial items primarily corresponds to the net total of charges to and releases of provisions for
impairment of equity investments for 17 million euro.
S O D E X O - F I S C A L 2 0 1 9 R E G I S T R AT I O N D O C U M E N T
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I N F O R M A T I O N O N T H E I S S U E R
4 N o t e s t o t h e I n d i v i d u a l C o m p a n y F i n a n c i a l S t a t e m e n t s
5. EXCEPTIONAL ITEMS, NET
(in millions of euro)
FISCAL 2019
FISCAL 2018
Net change in provision for negative net assets of subsidiaries and equity investments
Net expense on treasury shares and commitments under stock option plans
Net change in restricted provisions and exceptional depreciation
Net change in provisions for tax losses reclaimable by subsidiaries included
in the French tax consolidation
Debt forgiveness/subsidies given
Net gain/(loss) on asset disposals
Other
TOTAL
The net loss on asset disposals includes gains and losses on
equity investments sold in connection with the reorganization
of the Group’s legal structure.
(17)
(8)
-
(5)
-
8
-
(3)
(14)
2
(13)
-
(36)
-
(22)
(64)
The 8 million euro net expense on treasury shares and
commitments under stock option plans comprises:
• a 41 million euro loss on the sale of treasury shares in
connection with the exercise of stock options and delivery of
restricted shares;
• a 33 million euro net decrease in the provision for restricted
share grants.
6. ANALYSIS OF INCOME TAX EXPENSE
(in millions of euro)
Operating income
Financial income/(expense), net
Exceptional income/(expense), net
Employee profit-sharing
TOTAL
* This amount includes the 24 million euro tax gain arising from the French tax consolidation.
PRE-TAX INCOME
INCOME TAXES
AFTER-TAX INCOME
16
580
(22)
-
574
(9)
5
27*
-
23
7
585
5
-
597
162
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I N F O R M A T I O N O N T H E I S S U E R
7. NON-CURRENT ASSETS
(in millions of euro)
Intangible assets
Property, plant and equipment
Financial investments
• Equity investments
• Receivables related to equity investments
• Other financial assets
TOTAL FINANCIAL INVESTMENTS
TOTAL
GROSS VALUE AT
AUGUST 31, 2018
ADDITIONS
DURING
THE PERIOD
DECREASES
DURING
THE PERIOD
14
12
5,981
52
15
6,048
6,074
20
1
932
41
9
982
1,003
-
-
197
39
-
236
236
OTHER
MOVEMENTS
DURING
THE PERIOD
55
4
GROSS VALUE AT
AUGUST 31, 2019
NET VALUE AT
AUGUST 31, 2019
89
17
38
4
(79)
6,637
6,488
-
63
(16)
43
54
87
6,778
6,884
43
87
6,618
6,660
In accordance with ANC regulation no. 2015-06, the merger
defi cits are included in “Other fi nancial assets” for 74 million
euro.
Sodexo S.A. participated in the recapitalization of its subsidiaries
in Brazil and Ireland.
In addition, Sodexo S.A. created and acquired new foreign
subsidiaries in connection with the Group’s international
expansion during the fi scal year and participated in the share
capital increases of several of its existing subsidiaries.
“Other movements during the period” were due to the
reorganization of the Group’s legal structure.
8. DEPRECIATION AND AMORTIZATION
4
(in millions of euro)
Intangible assets
Property, plant and equipment
TOTAL
ACCUMULATED
DEPRECIATION AND
AMORTIZATION
AUGUST 31, 2018
INCREASES
DURING
THE PERIOD
DECREASES
DURING
THE PERIOD
OTHER
MOVEMENTS
DURING
THE PERIOD
ACCUMULATED
DEPRECIATION AND
AMORTIZATION
AUGUST 31, 2019
5
10
15
4
1
5
-
-
-
42
2
44
51
13
64
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4 N o t e s t o t h e I n d i v i d u a l C o m p a n y F i n a n c i a l S t a t e m e n t s
9. AMOUNT AND MATURITY OF RECEIVABLES AND OTHER ASSETS
(in millions of euro)
Equity investments
Receivables related to equity investments
Other financial assets
TOTAL FINANCIAL INVESTMENTS
Accounts receivable
Prepaid expenses, other receivables and other assets
TOTAL ACCOUNTS AND OTHER RECEIVABLES*
TOTAL
GROSS VALUE
LESS
THAN 1 YEAR
MORE
THAN 1 YEAR
AMORTIZATION
AND PROVISIONS
CARRYING
AMOUNT
6,637
54
87
6,778
68
471
539
7,317
-
45
13
58
68
306
374
432
6,637
149
6,488
9
74
11
-
43
87
6,720
160
6,618
-
165
165
2
-
2
66
471
537
6,885
162
7,155
* After deducting sold receivables, notably 41 million euro worth of CICE tax credits that have been derecognized as their sale involved the transfer of substantially all
of the risks and rewards related to ownership of the receivables.
There is no commercial paper included in accounts receivable.
10. PROVISIONS AND IMPAIRMENT
(in millions of euro)
AUGUST 31, 2018
INCREASES AND
CHARGES DURING
THE PERIOD
DECREASES,
RELEASES AND
RECLASSIFICATIONS
DURING THE PERIOD
OTHER
MOVEMENTS
DURING
THE PERIOD
AUGUST 31, 2019
Provisions for contingencies and losses
342
124
Impairment
• financial investments
• current assets
TOTAL IMPAIRMENT
TOTAL
Increases and decreases:
• operating items
• financial items
• exceptional items
152
3
155
497
82
28
1
29
45
-
45
169
111
9
75
84
3
57
51
-
384
(9)
-
(9)
(9)
160
2
162
546
As of August 31, 2019, the main provisions for contingencies
and losses were for the following:
• subsidiaries in negative net equity positions for 22 million
euro;
• restricted share grants for 209 million euro;
•
foreign exchange losses for 30 million euro.
•
losses reclaimable by subsidiaries included in the French tax
consolidation for 111 million euro;
164
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I N F O R M A T I O N O N T H E I S S U E R
11. MARKETABLE SECURITIES
(in millions of euro)
Treasury shares
Cash in the liquidity contract account
TOTAL
GROSS VALUE
AUGUST 31, 2019
NET VALUE
AUGUST 31, 2019
NET VALUE
AUGUST 31, 2018
137
8
145
137
8
145
160
17
177
12. TREASURY SHARES
MOVEMENTS IN TREASURY SHARES DURING THE FISCAL YEAR
Number of shares held
September 1, 2018
Acquisitions
Disposals
Cancellation of treasury shares leading to a reduction in capital and additional paid-in capital
Allocation as treasury shares held for cancellation
August 31, 2019
Gross value of shares held (in millions of euro)
September 1, 2018
Acquisitions
Disposals
Cancellation of treasury shares leading to a reduction in capital and additional paid-in capital
Allocation as treasury shares held for cancellation
August 31, 2019
MARKETABLE SECURITIES OTHER FINANCIAL ASSETS
1,869,352
1,431,455*
(1,852,241)*
-
-
1,448,566
177
138*
(170)*
-
-
145
4
-
-
-
-
-
-
-
-
-
-
-
-
* Acquisitions and disposals include the implementation of the liquidity contract signed with an investment services provider, which complies with the decision 2018-01
of the French securities regulator (Autorité des marchés financiers – AMF), for the purpose of improving the liquidity of Sodexo shares and the regularity of the
quotations.
Disposals of treasury shares also include those resulting from the exercise of stock options and delivery of free shares granted to employees in prior years.
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4 N o t e s t o t h e I n d i v i d u a l C o m p a n y F i n a n c i a l S t a t e m e n t s
13. SHAREHOLDERS’ EQUITY
13.1 Share capital
As of August 31, 2019, the Company’s share capital totaled
589,819,548 euro and comprised 147,454,887 shares, including
68,751,968 with double voting rights.
payable for the related fi scal year, qualify for a 10% dividend
premium, provided that they do not represent over 0.5% of the
capital per shareholder.
Since Fiscal 2013, all shares held in registered form for at least
four years and still held in that form when the dividend becomes
13.2 Changes in shareholders’ equity
(in millions of euro)
Shareholders’ equity at end of previous fiscal year
Dividends approved by Shareholders Meeting and paid
Dividends on treasury shares
Net income for the fiscal year
Restricted provisions
Cancellation of treasury shares leading to a reduction in capital and additional paid-in capital
Other – Premiums/discounts on currency forwards
SHAREHOLDERS’ EQUITY AT END OF FISCAL YEAR
2,671
(407)
5
597
-
-
(3)
2,863
In accordance with article L.225-210 of the French Commercial Code, Sodexo has reserves in addition to the legal reserve at least
equal to the value of treasury shares held.
14. AMOUNT AND MATURITY OF LIABILITIES
LIABILITIES
(in millions of euro)
Bond issues
Borrowings from related companies
Other borrowings
SUB-TOTAL BORROWINGS
Accounts payable*
Other liabilities
TOTAL
* Only accounts payable and accrued expenses are included in this line item.
There is no commercial paper included in payables.
GROSS AMOUNT
LESS THAN 1 YEAR
1 TO 5 YEARS MORE THAN 5 YEARS
2,493
618
498
3,609
44
526
4,179
13
17
7
37
44
526
607
600
21
491
1,880
580
-
1,112
2,460
-
-
-
-
1,112
2,460
166
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W W W. S O D E X O . C O M
N o t e s t o t h e I n d i v i d u a l C o m p a n y F i n a n c i a l S t a t e m e n t s
I N F O R M A T I O N O N T H E I S S U E R
ACCOUNTS PAYABLE BY AMOUNT AND DUE DATE
(in millions of euro)
Non-Group accounts payable*
Group accounts payable
TOTAL
TOTAL
< 30 DAYS
31-44 DAYS
45-75 DAYS
76-90 DAYS
> 90 DAYS
37
7
44
37
7
44
-
-
-
-
-
-
-
-
-
-
-
-
* Only accounts payable and accrued expenses are included in this line item.
15. BOND ISSUES AND OTHER BORROWINGS
15.1 Bond issues
None of the above-described bonds are subject to financial
covenants.
On June 24, 2014, Sodexo S.A. completed a bond issue
structured in two tranches:
• a 600-million euro tranche redeemable at par on January 24,
2022 and bearing interest at an annual rate of 1.75%, with
interest payable annually on January 24;
• a 500-million euro tranche redeemable at par on June 24,
2026 and bearing interest at an annual rate of 2.50%, with
interest payable annually on June 24.
Accrued interest on these bonds amounted to 9 million euro as
of August 31, 2019.
On October 14, 2016 Sodexo S.A. issued bonds for 600 million
euro redeemable in April 2027 and bearing interest at an annual
rate of 0.75%, with interest payable annually on April 14. On
August 1, 2017, the Company increased this issue with an
additional 200 million euro of bonds. Accrued interest on these
bonds was 2 million euro as of August 31, 2019.
On May 22, 2018, Sodexo S.A. issued bonds for 300 million euro
redeemable in May 2025 and bearing interest at an annual rate
of 1.125%, with interest payable annually on May 22. Accrued
interest on this bond was 1 million euro as of August 31, 2019.
On June 26, 2019, Sodexo S.A. issues bonds for 250 million
pounds sterling redeemable in June 2028 and bearing interest
at an annual rate of 1.75%, with interest payable annually on
June 26. Accrued interest on this bond was 1 million euro as of
August 31, 2019.
15.2.2 U.S. Private Placements
15.2 Other borrowings
15.2.1 July 2011 multicurrency confirmed
credit facility
On July 18, 2011, Sodexo S.A. contracted a multicurrency credit
facility for a maximum of 600 million euro plus 800 million
U.S. dollars, with an original maturity date of July 18, 2016. This
facility has been amended on a number of occasions with the
most recent amendment being in July 2019 with a new maturity
date of July 2024, with two options to extend the maturity by
one year each, up to July 2026. The maximum available limits
under this facility now are 589 million euro plus 785 million U.S
dollars.
The most recent amendment also incorporates a sustainability
clause that links the credit facility cost to Sodexo’s ability to
comply with its public commitment to reduce its food waste by
50% by 2025.
Amounts drawn on this facility carry fl oating interest indexed on
the LIBOR and EURIBOR rates. This credit facility is not subject
to any covenants.
No amounts had been drawn down on the facility as of either
August 31, 2019 or August 31, 2018.
4
The features of the Group’s outstanding U.S. private placements as of August 31, 2019 are as follows:
DATE OF THE PLACEMENT
March 29, 2011
SUB-TOTAL
June 27, 2018
SUB-TOTAL
TOTAL
* After deducting 147 million U.S. dollars redeemed on March 29, 2018.
PRINCIPAL OUTSTANDING
(in millions of U.S. dollars)
FIXED INTEREST RATE
MATURITY
4.85%
4.95%
March 2021
March 2023
3.7%
June 2023
133
74
207*
400
400
607
S O D E X O - F I S C A L 2 0 1 9 R E G I S T R AT I O N D O C U M E N T
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I N F O R M A T I O N O N T H E I S S U E R
4 N o t e s t o t h e I n d i v i d u a l C o m p a n y F i n a n c i a l S t a t e m e n t s
The borrowing is subject to two fi nancial covenants calculated
by reference to the Group’s consolidated fi nancial statements:
• net debt (excluding restricted cash) must not exceed
3.5 times EBITDA (operating profit plus amortization and
depreciation) for the past 12 months;
• net assets adjusted for cumulative foreign exchange gains
or losses since August 31, 2007 must not be less than
1.3 billion euro.
If the covenants are not respected, the lenders may, with
a qualified majority, require early reimbursement of these
borrowings.
The Group was in compliance with these covenants as of
August 31, 2019, February 28, 2019 and August 31, 2018.
15.2.3 Commercial paper
As of August 31, 2019, borrowings under the Sodexo S.A.
commercial paper programs are nil, compared with 80 million
euro as of August 31, 2018.
The bond issues and borrowings from financial institutions
described above have customary early redemption clauses.
There clauses include cross-default and change in control
clauses, which apply to all of the borrowings.
15.3 Borrowings from related
companies
On September 14, 2017, Sodexo S.A. borrowed 580 million euro
from its subsidiary Sodexo Finance Designed Activity Company
redeemable in September 2034. Accrued interest on this
borrowing was 15 million euro as of August 31, 2019.
16. ACCRUED EXPENSES – DEFERRED REVENUES AND PREPAID
EXPENSES
ACCRUED EXPENSES
(in millions of euro)
Borrowings
Accounts payable
Tax and employee-related liabilities
TOTAL
DEFERRED REVENUES AND PREPAID EXPENSES
(in millions of euro)
Deferred revenues
Prepaid expenses
36
18
25
79
1
18
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I N F O R M A T I O N O N T H E I S S U E R
17. RELATED-PARTY INFORMATION
(in millions of euro)
Assets – Gross values
Equity investments
Receivables related to equity investments
Other investment securities
Advances to suppliers
Accounts receivable
Other operating receivables
Due from related companies
Non-operating receivables
TOTAL
Liabilities
Accounts payable
Due to related companies
TOTAL
Income statement
Revenues
Other operating income
Other operating expenses
Financial income
Financial expenses
Exceptional income
Exceptional expenses
RELATED PARTIES
ASSOCIATED COMPANIES
OTHER
TOTAL
6,613
42
-
-
65
814
14
-
24
12
-
-
-
-
-
-
7,548
36
6,596
342
6,938
126
250
(228)
751
(65)
233
(219)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,637
54
-
-
65
814
14
7,584
6,596
342
6,938
126
250
(228)
751
(65)
233
(219)
4
Related parties: fully consolidated companies.
Associated companies: companies accounted for under the equity method, and non-consolidated companies in which Sodexo S.A. has
an equity interest of more than 10%.
Other: companies accounted for under the equity method, and non-consolidated companies in which Sodexo S.A. has an equity
interest of less than 10%.
There has been no related-party transaction that is both material and falls outside the framework of normal business dealings
concuded at conditions that are not arms-length.
S O D E X O - F I S C A L 2 0 1 9 R E G I S T R AT I O N D O C U M E N T
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I N F O R M A T I O N O N T H E I S S U E R
4 N o t e s t o t h e I n d i v i d u a l C o m p a n y F i n a n c i a l S t a t e m e n t s
18. FINANCIAL COMMITMENTS
18.1 Commitments made by Sodexo S.A.
(in millions of euro)
AUGUST 31, 2019
AUGUST 31, 2018
Performance bonds given to Sodexo Group clients
Financial guarantees to third parties
Retirement benefit commitments
Other commitments
TOTAL
1,606
5,598
13
137
7,354
1,559
4,137
12
142
5,850
Financial guarantees to third parties concern (i) guarantees for
loans granted to Sodexo S.A. subsidiaries, (ii) guarantees related
to reverse factoring programs set up by Sodexo S.A. subsidiaries,
capped at 580 million euro (of which 123 million euro was
guaranteed as of August 31, 2019), and (iii) a 1,400 million
euro guarantee given in Fiscal 2018 for a new commercial paper
program.
Sodexo S.A. has issued a guarantee for the repayment of
bonds for 1,100 million U.S. dollars issued in March 2014 by
Sodexo, Inc. in a private placement with U.S. investors.
The leases for the Group’s corporate headquarters in Issy-
les-Moulineaux increased commitments for office leases by
23 million euro.
Other commitments notably include the guarantee issued by
Sodexo S.A. in October 2012 to cover Sodexo UK’s retirement
plan obligation in the United Kingdom (i.e., until October 2024).
This guarantee was issued to the plan trustee for a maximum
100 million pounds sterling with a 12-year term.
18.2 Commitments received by Sodexo S.A.
(in millions of euro)
Commitments received
AUGUST 31, 2019
AUGUST 31, 2018
2,950
2,921
Commitments received mainly correspond to counter-guarantees by Sodexo, Inc. of Sodexo S.A.’s fi nancial borrowings, which increased
due to the new borrowings set up during the year.
18.3 Financial instrument commitments
The ongoing commitments as of the end of the year were as follows:
DESCRIPTION
INCEPTION DATE
EXPIRATION DATE
NOMINAL AMOUNT
MARKET VALUE AS OF
AUGUST 31, 2019
Forward currency purchase
April 2011
June 2019
April 2021
June 2028
USD 633 million
GBP 250 million
EUR 118 million
EUR 4 million
Swap hedging the currency and interest rate risk on loans
to Sodexo do Brasil Comercial SA
November 2018
May 2020
November 2020
BRL 120 million
< EUR 1 million
Sodexo may use derivative fi nancial instruments in order to hedge its exposure to volatility in interest and currency exchange rates.
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I N F O R M A T I O N O N T H E I S S U E R
19. PRINCIPAL FUTURE ADJUSTMENTS TO THE TAX BASIS
INCREASES
(in millions of euro)
DECREASES
(in millions of euro)
Exceptional amortization
15
Employee profit-sharing
Other non-deductible provisions
-
2
The future tax liability related to this unrealized tax diff erence was 4 million euro, calculated at a rate of 34.43%.
20. RETIREMENT BENEFIT COMMITMENTS
20.1 Retirement benefi ts payable
20.2 Commitments related to
by law or under collective
agreements
Sodexo S.A. is required to pay benefits to retiring employees on
the terms stipulated in a company-wide collective agreement. The
amount of the commitment has been calculated on the basis of rights
vested at the balance sheet date, taking into account assumptions
about fi nal salary, discount rates and employee turnover.
This commitment, which is not recognized as a liability in
the balance sheet, was estimated at 5 million euro as of
August 31, 2019.
21. DIRECTORS’ FEES
a supplemental pension plan
Commitments related to a supplemental pension plan were
estimated using the projected unit credit method based on fi nal
salary and net of funding for the plan. These commitments,
amounting to 8 million euro, are not recognized in the fi nancial
statements.
4
Directors’ fees paid to Board members during the fi scal year represented less than 1 million euro (refer to section 5.5.3.1).
22. FRENCH TAX CONSOLIDATION
22.1 Benefi t arising from French tax
22.2 Tax losses reclaimable
consolidation
as of August 31, 2019
Sodexo S.A. recognized a benefit of 24 million euro from the
French tax consolidation for Fiscal 2019. This benefi t represents
the diff erence between the aggregate of the income tax benefi ts
recognized by the French subsidiaries included in the French tax
consolidation and the income tax liability of Sodexo S.A. as lead
company in the French tax consolidation.
The amount of potentially reclaimable tax losses from
subsidiaries included in the French tax consolidation as of
August 31, 2019 was 321 million euro, resulting in a provision
of 111 million euro (using a rate of 34.43%).
S O D E X O - F I S C A L 2 0 1 9 R E G I S T R AT I O N D O C U M E N T
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I N F O R M A T I O N O N T H E I S S U E R
4 N o t e s t o t h e I n d i v i d u a l C o m p a n y F i n a n c i a l S t a t e m e n t s
23. AVERAGE NUMBER OF EMPLOYEES
The average number of employees is an average of the number
of employees who were present at the end of each quarter, and
includes employees working at Sodexo S.A. branches in France
and the French overseas departments and regions.
Managers
Supervisors
Other
Apprentices
TOTAL
AUGUST 31, 2019
AUGUST 31, 2018
358
30
37
9
434
303
29
31
7
370
24. CONSOLIDATION
Sodexo S.A. is consolidated in the fi nancial statements of Bellon SA, which has its registered offi ce at 17-19, place de la Résistance,
Issy-les-Moulineaux, France. The consolidated fi nancial statements of the Sodexo Group are presented in chapter 3 of this Universal
Registration Document.
25. POST-BALANCE SHEET EVENTS
No signifi cant events occurred between the end of the reporting period and the date on which the Board of Directors approved the
fi nancial statements.
172
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I N F O R M A T I O N O N T H E I S S U E R
26. LIST OF SUBSIDIARIES AND OTHER EQUITY INVESTMENTS
(in thousands of euro)
CAPITAL
OTHER
SHAREHOLDERS’
EQUITY
PERCENTAGE
INTEREST
IN CAPITAL
GROSS
NET
BOOK VALUE OF INVESTMENT
LOANS
AND
ADVANCES
GRANTED,
NET
GUARANTEES
GIVEN
REVENUES
FOR MOST
RECENT
FISCAL YEAR
INCOME
FOR MOST
RECENT
FISCAL YEAR
DIVIDENDS
RECEIVED
DURING THE
FISCAL YEAR
Detailed information
French subsidiaries
Sodexo Pass
International SAS
Sodexo
Entreprises
406,656
290,193
100,00% 662,056
662,056
51,697
17,798
100,00% 201,669
201,669
Sofinsod SAS
82,683
267,137
100,00% 133,860
133,860
Sogeres
2,153
17,204
92,26% 107,717
107,717
Sodexo GC
15,095
(2,840)
100,00%
72,218
72,218
Lenôtre SA
2,606
(25,898)
100,00%
62,394
1,517
SEVPTE
92
5,896
100,00%
34,659
34,659
Société Française
de Restauration
et Services
1,899
(17,142)
100,00%
31,741
16,411
Foodchéri
273
(808)
86,99%
29,920
29,920
Sodexo Ventures
France
Sodexo
Afrique SARL
143
(1,345)
100,00%
23,425
2,900
1,624
(2,816)
100,00%
14,539
17
Ouest Catering
516
240
100,00%
7,900
7,900
French equity investments
-
-
-
-
-
-
Foreign subsidiaries
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
95,493
80,823
1,250
701,235
12,214
16,132
-
-
-
-
-
-
261,851
11,104
479,554
2,448
8,500
-
(650)
97,602
(10,607)
-
-
54,890
5,823
6,599
2,140
268,373
(17,387)
200
9,394
(7,950)
-
-
-
-
-
-
-
-
(592)
(379)
(148)
1,535
-
-
-
-
-
-
4
Sodexo, Inc.
4
1,642,206
100,00% 2,120,844 2,120,844
- 1,342,011 8,201,700
228,987
301,641
Sodexo Finance
Designed Activity
Company
Sodexo Holdings
Ltd
Sodexo do Brasil
Comercial SA
Sodexo
Beteiligungs BV
& Co. KG
Sodexo Australia
Pty Ltd
379,830
491,764
100,00% 807,830
807,830
- 2,730,308
419,197
7,775
100,00% 555,305
555,305
-
1,104
-
-
45,084
-
-
140,700
119,991
221,377
98,58% 446,729
446,729
27,207
9,062
625,785
25,476
192
178,290
100,00% 195,456
195,456
96,838
(51,606)
100,00% 117,928
117,928
Novae Holding SA
229
84
100,00% 112,045
112,045
Sodexo Food
Solutions India
Private Limited
12,177
(4,606)
100,00% 110,442
110,442
Sodexo AB
10,000
31,727
100,00% 101,264
101,264
Sodexo
Services Asia
86,466
23,823
100,00%
89,462
89,462
-
-
5,035
23,600
72,516
(13,716)
-
-
-
-
302
117,610
883
344,431
7,537
-
-
-
-
-
-
27,184
-
4,134
16,314
-
-
-
-
-
-
S O D E X O - F I S C A L 2 0 1 9 R E G I S T R AT I O N D O C U M E N T
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I N F O R M A T I O N O N T H E I S S U E R
4 N o t e s t o t h e I n d i v i d u a l C o m p a n y F i n a n c i a l S t a t e m e n t s
(in thousands of euro)
CAPITAL
OTHER
SHAREHOLDERS’
EQUITY
PERCENTAGE
INTEREST
IN CAPITAL
GROSS
NET
BOOK VALUE OF INVESTMENT
LOANS
AND
ADVANCES
GRANTED,
NET
GUARANTEES
GIVEN
REVENUES
FOR MOST
RECENT
FISCAL YEAR
INCOME
FOR MOST
RECENT
FISCAL YEAR
DIVIDENDS
RECEIVED
DURING THE
FISCAL YEAR
Sodexo
Nederland B.V.
Compagnie
Financière Aurore
International
Sodexo
Belgium SA
45
25,205
100,00%
80,435
80,435
58,010
210,516
100,00%
68,920
68,920
16,765
22,277
98,54%
43,428
43,428
Sodexo Iberia SA
3,467
14,678
98,86%
26,804
26,804
Sodexo
Entegre Hizmet
Yonetimi AS
Sodexo Global
Services UK
Limited
Sodexo Technical
Services India
Pvt. Ltd
Sodexo
Mexico SA de CV
Sodexo
Inversiones SA
Sodexo Facilities
Management
Services India
Private Ltd
Sodexo One-Site
Services Israel Ltd
Sodexo
Argentina SA
9,305
-
100,00%
25,530
25,530
24,844
100,346
100,00%
24,391
24,391
621
6,264
100,00%
20,994
20,994
5,838
1,395
100,00%
17,434
17,434
14,187
24,536
100,00%
16,100
16,100
10,726
(500)
100,00%
14,191
14,191
-
878
100,00%
12,869
12,869
201
3,716
99,57%
12,822
12,822
Sodexo Chile SpA
11,563
11,824
100,00%
10,999
10,999
Kalyx Limited
17
201,871
100,00%
9,430
9,430
Sodexo SRL
7,622
(5,720)
100,00%
8,872
-
Sodexo Singapore
Pte Ltd
Sofinsod
Insurance
Designed Activity
Company
8,817
3,142
100,00%
8,614
8,614
7,868
(626)
100,00%
7,868
7,868
Sodexo Maroc SA
2,608
(1,752)
100,00%
7,667
3,461
Sodexo OY
5,046
3,661
100,00%
7,054
7,054
Sodexo Italia SPA
1,898
72,682
100,00%
7,029
7,029
Sodexo S.R.O.
2,608
(2,174)
100,00%
6,420
434
Sodexo Euroasia
63
16,263
100,00%
6,214
6,214
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
800
274,256
(23,734)
-
-
517
-
-
3,957
328,889
1,699
1,867
-
246,674
2,188
2,796
4,657
54,542
878
-
-
89,221
64,832
-
-
-
38,408
1,505
65,811
1,246
46,359
-
3,830
-
106,429
1,810
5,270
41,656
(87)
2,949
50,714
(2,160)
26,414
366,782
4,730
-
175,983
27,975
300
14,154
(2,478)
-
65,257
845
5,500
-
400
1,883
23,316
(255)
-
-
-
-
139,061
2,123
919
419,322
17,732
14,311
29,400
(1,532)
74,778
8,101
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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I N F O R M A T I O N O N T H E I S S U E R
BOOK VALUE OF INVESTMENT
OTHER
SHAREHOLDERS’
EQUITY
PERCENTAGE
INTEREST
IN CAPITAL
GROSS
NET
LOANS
AND
ADVANCES
GRANTED,
NET
GUARANTEES
GIVEN
REVENUES
FOR MOST
RECENT
FISCAL YEAR
INCOME
FOR MOST
RECENT
FISCAL YEAR
DIVIDENDS
RECEIVED
DURING THE
FISCAL YEAR
(in thousands of euro)
CAPITAL
Foreign equity investments
Sodexo GmbH
308
307,301
37,37%
38,702
38,702
Mentor Technical
Group Corporation
3
19,968
45,00%
18,423
18,423
Eat Club, Inc.
49,021
(27,478)
17,05%
18,395
18,395
Socat LLC
600
3,237
49,00%
11,372
11,372
-
-
-
-
-
-
-
-
-
-
(82)
-
1,590
599
56,965
(6,264)
-
31,034
1,153
824
Aggregate information
Other French
subsidiaries
Other foreign
subsidiaries
Other French
equity
investments
Other foreign
equity
investments
TOTAL
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18,779
16,692
10
43,576
35,766
21,935
13,498
44,048
1,787
1,419
-
1,786
10,155
7,584
272
-
- 6,636,866 6,487,692
40,987 4,324,358
-
-
-
-
-
-
-
-
-
-
26,451
22,526
86
8,656
727,215
4
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4.3 SUPPLEMENTAL INFORMATION ON
THE INDIVIDUAL COMPANY FINANCIAL
STATEMENTS
4.3.1 Five-year financial summary
(in millions of euro)
FISCAL 2019(1)
FISCAL 2018
FISCAL 2017
FISCAL 2016
FISCAL 2015
Capital at end of period
Share capital
590
590
603
615
629
Number of ordinary shares outstanding
147,454,887 147,454,887 150,830,449 153,741,139 157,132,025
Maximum number of potential new shares issuable by
conversion of bonds
-
-
-
-
Income statement data
Revenues excluding taxes
Earnings before income tax, employee profit-sharing,
depreciation, amortization and provisions
Income tax
Employee profit-sharing
Earnings after income tax, employee profit-sharing,
depreciation, amortization and provisions
Dividend payout
Per share data
Earnings after income tax and employee profit-sharing
but before depreciation, amortization and provisions
Earnings after income tax, employee profit-sharing,
depreciation, amortization and provisions
Net dividend per share(2)
Dividend premium per eligible share(2)
128
632
24
-
597
430
114
450
62
-
481
407
119
428
14
-
396
417
132
587
(15)
-
616
371
-
86
370
(14)
-
324
347
4.44
3.47
2.93
3.72
2.27
4.05
2.90
0.29
3.26
2.75
2.62
2.75
0.275
0.275
4.01
2.40
0.24
2.06
2.20
0.22
(1) Subject to approval by the Annual Shareholders Meeting to be held on January 21, 2020.
(2) The Board of Directors proposes that the Annual Shareholders Meeting on Juanuary 21, 2020 approve the payment of a cash dividend of 2.90 euro per share. In
addition, and in accordance with the system adopted by the Annual Shareholders Meeting held on January 24, 2011, shares held in registered form since at least
August 31, 2011 and still held in that form when the dividend becomes payable February 3, 2020, will automatically be entitled, without any additional formality, to
a 10% dividend premium, representing an additional 0.29 euro per share (provided that the shares eligible for the dividend premium do not represent over 0.5% of
the share capital for any single shareholder).
(in millions of euro)
Employee data
FISCAL 2019
FISCAL 2018
FISCAL 2017
FISCAL 2016
FISCAL 2015
Average number of employees during the fiscal year
Salary expense for the fiscal year
Social security and other employee benefits paid during the
fiscal year
434
55
22
370
44
20
360
40
16
337
40
16
301
39
21
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I N F O R M A T I O N O N T H E I S S U E R
4.3.2 Appropriation of earnings
(in millions of euro)
Net income
Retained earnings
Retained earnings(2)
Retained earnings(3)
Transfer to legal reserve
Transfer from long-term capital gains reserve
Distributable earnings
Net dividend
Dividend premium(4)
Reserves
Retained earnings
FISCAL 2019(1)
FISCAL 2018
FISCAL 2017
FISCAL 2016
FISCAL 2015
597
481
396
1,276
1,202
1,223
23
18
11
-
-
-
-
-
-
-
-
-
616
966
12
-
-
-
324
981
8
-
-
-
1,896
1,701
1,630
1,594
1,313
427
405
415
369
346
3
-
2
-
2
-
2
-
1
-
1,465
1,294
1,213
1,223
966
Number of shares outstanding
147,454,887 147,454,887 150,830,449 153,741,139 157,132,025
Number of shares entitled to a dividend
147,454,887 147,454,887 150,830,449 153,741,139 157,132,025
Earnings per share (in euro)
4.05
3.26
2.62
4.01
2.06
(1) Subject to approval by the Annual Shareholders Meeting to be held on January 21, 2020.
(2) Corresponding to dividends not paid on treasury shares.
(3) Corresponding to the 10% dividend premium not paid.
(4) The Board of Directors proposes that the Annual Shareholders Meeting on January 21, 2020 approve the payment of a cash dividend of 2.90 euro per share. In
addition, shares held in registered form since at least August 31, 2011 and still held in that form when the dividend becomes payable on February 3, 2020, will
automatically be entitled, without any additional formality, to a 10% dividend premium, representing an additional 0.29 euro per share (provided that the shares
eligible for the dividend premium do not represent over 0.5% of the share capital for any single shareholder).
4
4.3.3 Supplier and client dues
INVOICES RECEIVED AND PAST DUE AS OF AUGUST 31, 2019
(in millions of euro)
0 DAYS
1-30 DAYS
31-60 DAYS
61-90 DAYS
OVER 91 DAYS
TOTAL (1 DAY
AND OVER)
Classified as late payment
Number of invoices
Amount (incl. VAT)
% of total purchases (net of VAT) for the
fiscal year
562
17
-
6
-
2
-
1
-
-
968
9
9.3%
3.1%
1.3%
0.5%
0.2%
5.1%
Invoices related to disputed or unrecognized payables and not classified as late payment
Number of invoices
Amount (incl. VAT)
Reference payment terms used
-
-
Contractual payment terms
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INVOICES ISSUED AND PAST DUE AS OF AUGUST 31, 2019
(in millions of euro)
0 DAYS
1-30 DAYS
31-60 DAYS
61-90 DAYS
OVER 91 DAYS
TOTAL (1 DAY
AND OVER)
Classified as late payment
Number of invoices
Amount (incl. VAT)
291
30
-
5
-
9
% of total purchases (net of VAT) for the
fiscal year
8.1%
1.2%
2.4%
Invoices related to disputed or unrecognized receivables and not classified as late payment
-
-
-
-
22
1,486
35
5.7%
9.3%
Number of invoices
Amount (incl. VAT)
Reference payment terms used
67
2
Contractual payment terms
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4.4 STATUTORY AUDITORS’ REPORT
4.4.1 Statutory Auditors’ Report on the financial statements
This is a free translation into English of the Statutory Auditors’ Report issued in French and is provided solely for
the convenience of English speaking readers. This report includes information specifically required by European
regulations or French law, such as information about the appointment of Statutory Auditors. This report should
be read in conjunction with, and construed in accordance with, French law and professional auditing standards
applicable in France.
For the year ended August 31, 2019
SODEXO
255, quai de la Bataille-de-Stalingrad
92866 Issy-les-Moulineaux Cedex 9, France
To the shareholders,
Opinion
In compliance with the engagement entrusted to us by your Shareholders Meeting, we have audited the accompanying fi nancial
statements of Sodexo for the year ended August 31, 2019.
In our opinion, the fi nancial statements give a true and fair view of the assets and liabilities and of the fi nancial position of the
Company at August 31, 2019 and of the results of its operations for the year then ended in accordance with French accounting
principles.
The audit opinion expressed above is consistent with our report to the Audit Committee.
4
Basis of the audit opinion
Audit reference framework
We conducted our audit in accordance with professional standards applicable in France. We believe that the audit evidence we have
obtained is suffi cient and appropriate to provide a basis for our opinion.
Our responsibilities under these standards are further described in the “Responsibilities of the Statutory Auditors relating to the audit
of the fi nancial statements” section of our report.
Independence
We conducted our audit engagement in compliance with the independence rules applicable to us, for the period from September 1,
2018 to the date of our report, and, in particular, we did not provide any non-audit services prohibited by article 5(1) of Regulation
(EU) No. 537/2014 or the French Code of Ethics (Code de déontologie) for Statutory Auditors.
Justifi cation of our assessments – key audit matters
In accordance with the requirements of articles L. 823-9 and R. 823-7 of the French Commercial Code (Code de commerce) relating to
the justifi cation of our assessments, we inform you of the key audit matters relating to the risks of material misstatement that, in
our professional judgment, were the most signifi cant in our audit of the fi nancial statements, as well as how we addressed those risks.
These matters were addressed as part of our audit of the fi nancial statements as a whole, and therefore contributed to the opinion we
formed as expressed above. We do not provide a separate opinion on specifi c items of the fi nancial statements.
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Valuation of equity investments
Description of risk
The balance of equity investments at August 31, 2019 represented 6,488 million euro, the largest asset on the balance sheet. Equity
investments are carried at cost, and at each balance sheet date, may be impaired based on their value in use.
As described in note 2.1.3 to the fi nancial statements, value in use is determined by management on the basis of net asset value,
profi tability and the future prospects of the investee.
When the carrying amount of an investment is higher than the net book value of the share of net assets of the subsidiary, value in use
is determined based on discounted future cash fl ows, using business plans prepared by management and covering one to fi ve years.
In preparing such business plans, management is required to exercise judgment.
Accordingly, we deemed the valuation of equity investments and any related receivables or provisions for contingencies to be a key
audit matter, due to the inherent uncertainty of certain components of the valuation, in particular the likelihood of achieving forecast
results used to calculate value in use.
How our audit addressed this risk
In order to assess the reasonableness of the estimate of the value in use of equity investments, based on the information provided to
us, our audit work consisted mainly in verifying that the estimated values determined by management were based on an appropriate
measurement method and underlying data, and, depending on the investee concerned:
•
for valuations based on historical data: verifying that the equity values used were consistent with the fi nancial statements of the
entities concerned, and that any adjustments to equity were based on documentary evidence;
•
for valuations based on forecast data:
• obtaining forecast future cash fl ows of the investees concerned, and assessing their consistency with the business plans drawn
up by management,
• assessing the consistency of the growth rates used for projected cash fl ows with available external analyses, in light of the
economic environments in which the investees operate,
• assessing the reasonableness of the discount rates applied to estimated future cash fl ows, verifying in particular that the
various inputs used to calculate the weighted average cost of capital for each investee were suffi cient to approximate the return
expected by market participants for similar activities.
Our audit work also consisted in:
• assessing the recoverability of receivables related to equity investments;
• verifying the recognition of provisions for contingencies where the Company is exposed to the losses of investees with negative
equity.
Specifi c verifi cations
In accordance with professional standards applicable in France, we have also performed the specifi c verifi cations required by French
legal and regulatory provisions.
Information given in the Management Report and in the other documents provided to the shareholders
with respect to the Company’s fi nancial position and the fi nancial statements
We have no matters to report as to the fair presentation and the consistency with the fi nancial statements of the information given in
the Board of Directors’ Management Report and in the other documents provided to the shareholders with respect to the Company’s
fi nancial position and the fi nancial statements.
We attest to the fair presentation and the consistency with the fi nancial statements of the information about payment terms referred
to in article D.441-4 of the French Commercial Code.
Information with respect to Corporate Governance
We attest that the section of the Board of Directors’ Report relating to Corporate Governance sets out the information required by
articles L. 225-37-3 and L. 225-37-4 of the French Commercial Code.
Concerning the information given in accordance with the requirements of article L. 225-37-3 of the French Commercial Code relating
to remuneration and benefi ts received by corporate offi cers and any other commitments made in their favor, we have verifi ed its
consistency with the fi nancial statements or with the underlying information used to prepare these fi nancial statements, and, where
applicable, with the information obtained by your Company from companies controlling it or controlled by it. Based on this work, we
attest to the accuracy and fair presentation of this information.
Concerning the information given in accordance with the requirements of article L. 225-37-5 of the French Commercial Code relating
to those items your Company has deemed liable to have an impact in the event of a takeover bid or exchange off er, we have verifi ed its
consistency with the underlying documents that were disclosed to us. Based on this work, we have no matters to report with regard
to this information.
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Other information
In accordance with French law, we have verifi ed that the required information concerning the purchase of investments and controlling
interests and the identity of the shareholders and holders of the voting rights has been properly disclosed in the Management Report.
Report on other legal and regulatory requirements
Appointment of Statutory Auditors
We were appointed Statutory Auditors of Sodexo by the Shareholders Meetings held on February 22, 1994 for PricewaterhouseCoopers
Audit and on February 4, 2003 for KPMG Audit.
At August 31, 2019, PricewaterhouseCoopers Audit and KPMG Audit were in the twenty-sixth and the seventeenth consecutive year
of their engagement, respectively.
Responsibilities of management and those charged with governance for the
fi nancial statements
Management is responsible for preparing fi nancial statements giving a true and fair view in accordance with French accounting
principles, and for implementing the internal control procedures it deems necessary for the preparation of fi nancial statements that
are free of material misstatement, whether due to fraud or error.
In preparing the fi nancial statements, management is responsible for assessing the Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern, and using the going concern basis of accounting, unless it expects to
liquidate the Company or to cease operations.
The Audit Committee is responsible for monitoring the fi nancial reporting process and the eff ectiveness of internal control and
risk management systems, as well as, where applicable, any internal audit systems, relating to accounting and fi nancial reporting
procedures.
The fi nancial statements were approved by the Board of Directors.
Responsibilities of the Statutory Auditors relating to the audit of the fi nancial
statements
4
Objective and audit approach
Our role is to issue a report on the fi nancial statements. Our objective is to obtain reasonable assurance about whether the fi nancial
statements as a whole are free of material misstatement. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with professional standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to infl uence the economic decisions taken by users on the basis of these fi nancial statements.
As specifi ed in article L. 823-10-1 of the French Commercial Code, our audit does not include assurance on the viability or quality of
the Company’s management.
As part of an audit conducted in accordance with professional standards applicable in France, the Statutory Auditors exercise
professional judgment throughout the audit. They also:
•
identify and assess the risks of material misstatement in the fi nancial statements, whether due to fraud or error, design and
perform audit procedures in response to those risks, and obtain audit evidence considered to be suffi cient and appropriate to
provide a basis for their opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control;
• obtain an understanding of the internal control procedures relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the eff ectiveness of the internal control;
• evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management
and the related disclosures in the notes to the fi nancial statements;
• assess the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast signifi cant doubt on the Company’s
ability to continue as a going concern. This assessment is based on the audit evidence obtained up to the date of the Audit Report.
However, future events or conditions may cause the Company to cease to continue as a going concern. If the Statutory Auditors
conclude that a material uncertainty exists, they are required to draw attention in the Audit Report to the related disclosures in
the fi nancial statements or, if such disclosures are not provided or are inadequate, to issue a qualifi ed opinion or a disclaimer of
opinion;
• evaluate the overall presentation of the fi nancial statements and assess whether these statements represent the underlying
transactions and events in a manner that achieves fair presentation.
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Report to the Audit Committee
We submit a report to the Audit Committee which includes, in particular, a description of the scope of the audit and the audit program
implemented, as well as the results of our audit. We also report any signifi cant defi ciencies in internal control that we have identifi ed
regarding the accounting and fi nancial reporting procedures.
Our report to the Audit Committee includes the risks of material misstatement that, in our professional judgment, were the most
signifi cant for the audit of the fi nancial statements and which constitute the key audit matters that we are required to describe in
this report.
We also provide the Audit Committee with the declaration provided for in article 6 of Regulation (EU) No. 537/2014, confi rming our
independence within the meaning of the rules applicable in France, as defi ned in particular in articles L. 822-10 to L. 822-14 of the
French Commercial Code and in the French Code of Ethics for Statutory Auditors. Where appropriate, we discuss any risks to our
independence and the related safeguard measures with the Audit Committee.
Neuilly-sur-Seine and Paris-La Défense, November 6, 2019
The Statutory Auditors
PricewaterhouseCoopers Audit
Jean-Christophe Georghiou
KPMG Audit
Department of KPMG SA
Caroline Bruno-Diaz
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4.4.2 Statutory Auditors’ Report on related-party agreements
and commitments
This is a free translation into English of the Statutory Auditors’ Special Report on related-party agreements
and commitments issued in French and is provided solely for the convenience of English speaking readers. This
report should be read in conjunction with, and construed in accordance with, French law and professional auditing
standards applicable in France.
Shareholders’ Meeting held to approve the fi nancial statements for the year ended August 31, 2019
SODEXO
255, quai de la Bataille-de-Stalingrad
92866 Issy-les-Moulineaux Cedex 9, France
To the shareholders,
In our capacity as Statutory Auditors of Sodexo, we hereby report to you on related-party agreements and commitments.
It is our responsibility to report to shareholders, based on the information provided to us, on the main terms and conditions of the
agreements and commitments that have been disclosed to us or that we may have identifi ed as part of our engagement, as well as
the reasons given as to why they are benefi cial for the Company, without commenting on their relevance or substance or identifying
any undisclosed agreements or commitments. Under the provisions of article R. 225-31 of the French Commercial Code (Code de
commerce), it is the responsibility of the shareholders to determine whether the agreements and commitments are appropriate and
should be approved.
Where applicable, it is also our responsibility to provide shareholders with the information required by article R. 225-31 of the
French Commercial Code in relation to the implementation during the year of agreements and commitments already approved by the
Shareholders’ Meeting.
We performed the procedures that we deemed necessary in accordance with professional standards applicable in France to such
engagements. These procedures consisted in verifying that the information given to us is consistent with the underlying documents.
4
Agreements and commitments to be approved by the Shareholders Meeting
Agreements and commitments authorized and entered into during the year
We were not informed of any agreement or commitment authorized and entered into during the year to be submitted for approval at
the Shareholders’ Meeting pursuant to the provisions of article L. 225-38 of the French Commercial Code.
Agreements and commitments authorized and entered into since the year end
We were informed of the following commitment, authorized and entered into since the year end, which was authorized in advance by
the Board of Directors.
SUPPLEMENTAL PENSION PLAN FOR DENIS MACHUEL, GROUP CHIEF EXECUTIVE OFFICER
• Purpose and reasons given as to why they are benefi cial for the Company:
Since he was appointed a member of the Sodexo Group’s Executive Committee in September 2014, Denis Machuel has been a
benefi ciary of a defi ned benefi t pension plan governed by article 39 of the French General Tax Code (Code général des impôts) and
article L. 137-11-1 of the French Social Security Code (Code de la sécurité sociale), set up for the Group’s most senior executives who
hold an employment contract with one of its French companies.
Following his appointment as Group Chief Executive Officer, at its meeting on April 27, 2018, on the recommendation of the
Compensation Committee, the Board of Directors decided to authorize Denis Machuel to continue to be a benefi ciary of this plan.
This commitment to Denis Machuel was approved by the Shareholders’ Meeting of January 22, 2019. According to the Board of
Directors, it is intended to help Sodexo reward and retain its Group Chief Executive Offi cer.
Following the publication of France’s new law on Business Growth and Transformation dated May 22, 2019 (known as the “Pacte Act”)
and the government order dated July 3, 2019 on supplemental occupational pension plans transposing the pension portability directive,
the Board of Directors, on the recommendation of the Compensation Committee, decided at its meeting on November 6, 2019 to:
• close, with eff ect from December 31, 2019, the supplemental defi ned benefi t pension plan governed by article L. 137-11-1 of
the French Social Security Code of which Denis Machuel is currently a benefi ciary;
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• set up, with eff ect from January 1, 2020, a new supplemental defi ned benefi t pension plan governed by article L. 137-11-2 of the
French Social Security Code of which Denis Machuel will be a benefi ciary, regardless of whether or not he is a corporate offi cer
of the Company at the time of his retirement.
According to the Board of Directors, this commitment to extend and replace the previous pension plan is intended to help Sodexo
reward and retain its Group Chief Executive Offi cer.
• Terms and conditions:
In accordance with article L. 137-11-2 of the French Social Security Code, Denis Machuel’s entitlements under the new supplemental
pension plan – expressed as a percentage of his compensation for the year concerned – will accrue subject to the achievement of
conditions related to his professional performance.
Denis Machuel’s entitlements under the plan will correspond to 0.5% of his total fi xed and variable compensation for the fi rst fi ve
years, then to 1% per year thereaft er, up to 10% of said compensation , to which will be added the pensions due to him by the
compulsory plans.
Additionally, his entitlements will accrue subject to the same performance condition as that set for the previous supplemental pension
plan, namely the achievement of at least 80% of the annual targets set by the Board of Directors for the Group Chief Executive
Offi cer’s variable compensation.
Agreements and commitments already approved by the shareholders’ meeting
Agreements and commitments approved in previous years
a) that were implemented during the year
In accordance with article R. 225-30 of the French Commercial Code, we were informed of the following agreements and commitments,
which were approved by the Shareholders’ Meeting in previous years and implemented during the year.
SERVICE AGREEMENT BETWEEN BELLON SA AND SODEXO
• Persons concerned:
Sophie Bellon, Nathalie Bellon-Szabo, Astrid Bellon, François-Xavier Bellon, members of the Board of Directors of Sodexo and members
of the Management Board of Bellon SA.
• Purpose and reasons given as to why they are benefi cial for the Company:
A service agreement has been in place between the Company and Bellon SA, Sodexo’s managing holding company, since 1991.
At its meetings on November 15, 2016 and July 10, 2017, the Board of Directors, on the recommendation of the Audit Committee,
approved the revision of this agreement, which was approved by the Shareholders’ Meeting of January 23, 2018.
The new agreement came into eff ect on November 17, 2016 for a period of fi ve years.
According to the Board of Directors, under the terms of this agreement, Sodexo can call upon the professional experience and expertise
of the three Bellon SA managers holding the positions of Chief Financial Offi cer, Chief Human Resources Offi cer and Chief Strategy
Offi cer.
• Terms and conditions:
Under the terms of this agreement, Bellon SA invoices Sodexo for the compensation of the Chief Financial Offi cer, Chief Human
Resources Offi cer and Chief Strategy Offi cer during the secondment period. Their compensation is rebilled for the exact amount and
includes a fi xed and variable portion, as well as any related payroll taxes.
The total fees rebilled under this agreement, and changes compared with the previous year, are reviewed by the Audit Committee
annually. In addition, and in compliance with the law, the agreement is reviewed every year by the Board of Directors.
The annual rebilled fees payable to Bellon SA are approved each year by the Board of Directors of Sodexo, without directors who are
members of the Bellon family taking part in the deliberations or the vote.
For the year ended August 31, 2019, the fees billed by Bellon SA under this agreement amounted to 3,162,500 million euro excluding
taxes, relating to the compensation (including payroll taxes) paid to the Chief Financial Offi cer, Chief Human Resources Offi cer and
Chief Strategy Offi cer.
Supplemental health and benefit plans for Sophie Bellon, Chairwoman of the Board of Directors
• Purpose and reasons given as to why they are benefi cial for the Company:
Sophie Bellon is a member of the national social welfare plans governed by the French general social security regime, as required by
article L. 311-3, 12° of the French Social Security Code, which states that the Chairs of the Boards of Directors of French joint stock
corporations (sociétés anonymes) must be members of such plans.
At its meeting on November 17, 2015, on the recommendation of the Compensation Committee, the Board of Directors decided that,
following the termination of her employment contract, in her capacity as Chairwoman of the Board of Directors, Sophie Bellon would
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S t a t u t o r y A u d i t o r s ’ R e p o r t
continue to be a member of the supplemental health and benefi t plans set up by Sodexo. Her membership of these plans will be subject
to the same conditions as all of the Sodexo employees who are plan members.
This commitment to Sophie Bellon was approved by the Shareholders’ Meeting of January 24, 2017. According to the Board of
Directors, it is intended to help Sodexo retain its Chairwoman of the Board of Directors by allowing her to continue to be covered by
supplemental health and benefi t plans.
• Terms and conditions:
Sophie Bellon is a member of the following plans under the same conditions as all of the Sodexo employees who are plan members:
• an “incapacity, disability or death” benefi t plan, fi nanced in part by Sodexo, which, in the event of an employee’s death, provides
for the payment of a death benefi t equal to 215% of their annual compensation, up to a maximum amount of eight (8) times
the French Social Security Code’s annual ceiling, and which is increased for dependent children;
• an additional “incapacity, disability or death” benefi t plan, fi nanced in full by Sodexo, which is reserved for employees whose
annual gross compensation is greater than eight (8) times the French Social Security Code’s annual ceiling and which, in
the event of an employee’s death, provides for the payment of a death benefi t equal to 200% of the portion of their annual
compensation that is greater than eight (8) times the French Social Security Code’s annual ceiling;
• a supplemental health insurance plan, which all Sodexo employees are entitled to, fi nanced in part by Sodexo.
Supplemental health and benefit plans for Denis Machuel, Group Chief Executive Officer
• Purpose and reasons given as to why they are benefi cial for the Company:
Denis Machuel is a member of the national social welfare plans governed by the French general social security regime, as required by
article L. 311-3, 12° of the French Social Security Code, which states that the Chief Executive Offi cers of French joint stock corporations
must be a member of such plans.
At its meeting on January 23, 2018, on the recommendation of the Compensation Committee, the Board of Directors decided that,
following the termination of his employment contract as a result of his appointment as Group Chief Executive Offi cer, Denis Machuel
would continue to be a member of the supplemental health and benefi t plans set up by Sodexo. His membership of these plans will be
subject to the same conditions as all of the Sodexo employees who are plan members.
This commitment to Denis Machuel was approved by the Shareholders’ Meeting of January 22, 2019. According to the Board
of Directors, it is intended to help Sodexo retain its Group Chief Executive Offi cer by allowing him to continue to be covered by
supplemental health and benefi t plans.
• Terms and conditions:
Denis Machuel is a member of the following plans under the same conditions as all of the Sodexo employees who are plan members:
• an “incapacity, disability or death” benefi t plan, fi nanced in part by Sodexo, which, in the event of an employee’s death, provides
for the payment of a death benefi t equal to 215% of their annual compensation, up to a maximum amount of eight (8) times
the French Social Security Code’s annual ceiling, and which is increased for dependent children;
• an additional “incapacity, disability or death” benefi t plan, fi nanced in full by Sodexo, which is reserved for employees whose
annual gross compensation is greater than eight (8) times the French Social Security Code’s annual ceiling and which, in
the event of an employee’s death, provides for the payment of a death benefi t equal to 200% of the portion of their annual
compensation that is greater than eight (8) times the French Social Security Code’s annual ceiling;
• a supplemental health insurance plan, which all Sodexo employees are entitled to, fi nanced in part by Sodexo.
Supplemental pension plan for Denis Machuel, Group Chief Executive Officer
• Purpose and reasons given as to why they are benefi cial for the Company:
Since he was appointed a member of the Sodexo Group’s Executive Committee in September 2014, Denis Machuel has been a
benefi ciary of a defi ned benefi t pension plan governed by article 39 of the French General Tax Code and article L. 137-11-1 of the
French Social Security Code, set up for the Group’s most senior executives who hold an employment contract with one of its French
companies.
Following his appointment as Group Chief Executive Officer, at its meeting on April 27, 2018, on the recommendation of the
Compensation Committee, the Board of Directors decided to authorize Denis Machuel to continue to be a benefi ciary of this plan.
This commitment to Denis Machuel was approved by the Shareholders’ Meeting of January 22, 2019. According to the Board of
Directors, it is intended to help Sodexo reward and retain its Group Chief Executive Offi cer.
• Terms and conditions:
Under this supplemental pension plan (subject to a minimum of fi ve (5) years presence in the plan), as a member of the plan for at
least fi ft een (15) years, the pension paid to Denis Machuel can represent up to 15% of the average of his last three (3) years’ fi xed
compensation preceding his retirement, to which are added the pensions due to him under compulsory pension plans, provided that
he is employed by, or is a corporate offi cer of, the Company at the time of his retirement.
The Chief Executive Officer ’s entitlements under this plan (1% per year up to a maximum of 15%) will accrue subject to the
achievement of at least 80% of his annual variable compensation targets. If the achievement rate is reached, then an additional
1% contribution to the defi ned benefi t plan will accrue for the year concerned. However, if the achievement rate is less than 80%, no
defi ned benefi t contribution will accrue for that year.
4
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4
I N F O R M A T I O N O N T H E I S S U E R
b ) That were not implemented during the year
In addition, we were informed that the following agreements and commitments, which were approved by the Shareholders’ Meeting in
previous years, were not implemented during the year.
NON-COMPETE AGREEMENT ENTERED INTO WITH DENIS MACHUEL, GROUP CHIEF EXECUTIVE OFFICER
• Purpose and reasons given as to why they are benefi cial for the Company:
On April 27, 2018, on the recommendation of the Compensation Committee, the Board of Directors approved in advance the conclusion
of a non-compete agreement, the purpose of which is to restrict Denis Machuel’s freedom to carry out certain activities following the
end of his term as Chief Executive Offi cer of the Company. The activities concerned are (i) holding any position as a corporate offi cer,
employee or consultant, and (ii) carrying out any consulting work for certain of the Sodexo Group’s competitors, as set out in the
agreement, either directly or through another legal entity.
Because of his duties within the Group, Denis Machuel has knowledge of Sodexo’s business, strategy and customers in each of its
activities, which, according to the Board of Directors, justifi es the need for a non-compete agreement.
This non-compete agreement entered into between the Company and Denis Machuel on August 30, 2018, and amended on November
6, 2018, will apply for a period of twenty-four months (24) as from the date on which his duties as Chief Executive Offi cer cease.
However, the Board of Directors may decide to waive the Company’s right to enforce this agreement when Denis Machuel leaves the
Group.
This commitment to Denis Machuel was approved by the Shareholders’ Meeting of January 22, 2019.
• Terms and conditions:
As consideration for this agreement, Denis Machuel will receive an indemnity representing twenty four (24) months of the gross fi xed
compensation that he received during the twelve (12) months preceding the entry into force of this agreement. This indemnity will not
be paid if Denis Machuel retires, and in any event will not be paid once he reaches the age of sixty-fi ve (65).
If Denis Machuel fails to fulfi ll his obligations under this agreement, he will not receive the indemnity described above, and he will
have to repay any amounts that he has already received. In addition, he will be liable to pay a fi xed penalty representing twelve (12)
months of his most recent gross annual compensation.
Neuilly-sur-Seine and Paris-La Défense, November 19, 2019
The Statutory Auditors
PricewaterhouseCoopers Audit
Jean-Christophe Georghiou
KPMG Audit
Department of KPMG SA
Caroline Bruno-Diaz
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5
CORPORATE
GOVERNANCE
5.1
Shareholding structure
5.2
Board of Directors
5.2.1 Composition and operating
189
190
5.4
Risk management
5.4.1 Group Policies
5.4.2 Description of the risk management
approach
5.4.3 Risk factors
procedures of the Board of Directors
190
5.2.2 Compliance with the AFEP-MEDEF Code 217
5.4.4 Group Internal Audit Department
5.3
Other information
5.3.1 Other information concerning
corporate offi cers and senior
management of the Company
5.3.2 Related-party agreements and
commitments
5.3.3 Ethics and compliance
5.3.4 Vigilance Plan
5.3.5 Personal data protection
218
218
219
220
221
224
5.5
Compensation
5.5.1 Compensation policy applicable to
corporate offi cers
5.5.2
Information on the components of
compensation paid or awarded to
corporate offi cers
5.5.3 Compensation of directors other than
corporate offi cers
5.5.4 Compensation policy for members of
the Executive Committee
5.5.5 Description of the long-term incentive
plan for managers
226
226
230
231
238
240
240
246
251
253
253
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5
In accordance with article L.225-37 of the French Commercial Code, this chapter includes the Board of Directors’ Corporate Governance
Report. It provides information on (i) the composition of the Board of Directors and the preparation and organization of the Board’s
work and any restrictions placed by the Board on the Chief Executive Offi cer’s powers, (ii) the components of corporate offi cers’
compensation packages and compensation policy (disclosed in compliance with article L.225-37-2 of the French Commercial Code),
(iii) transactions in Sodexo shares disclosed by corporate offi cers during the fi scal year ended August 31, 2019, and (iv) Sodexo’s
ownership structure.
Certain information that forms an integral part of the Corporate Governance Report is provided in other sections of this Universal
Registration Document. Information on shareholder participation in Annual Shareholders Meetings is set out in chapter 6,
section 6.4.12; the table of authorizations for share capital increases is in section 6.3.8; and information that could have an impact
in the event of a public tender off er is provided in section 6.3.
In accordance with article L.225-235 of the French Commercial Code, the Board of Directors’ Corporate Governance Report has been
submitted in full to the Company’s Statutory Auditors.
The Corporate Governance reference framework used by Sodexo is the AFEP-MEDEF corporate governance Code for listed companies
in France (hereaft er the “AFEP-MEDEF Code”). The Company’s application of the recommendations contained in this Code is presented
in section 5.2.2 below.
Lastly, this chapter also describes the Group’s risk management and internal control procedures (section 5.4) as well as its corporate
responsibility vigilance plan drawn up in compliance with the applicable French legislation on companies’ duty of vigilance in this
domain (section 5.3.4).
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S h a r e h o l d i n g s t r u c t u r e
5.1 SHAREHOLDING STRUCTURE*
M R . A N D M R S . P I E R R E B E L L O N
A N D T H E I R C H I L D R E N
O T H E R M E M B E R S
O F T H E B E L L O N F A M I L Y
72.6%
B E L L O N S A
F A M I L Y H O L D I N G C O M P A N Y
7.8%
E M P L O Y E E S
1.1%
42.2%
P U B L I C
T R E A S U R Y S H A R E S
S O D E X O
55.7%
1.0%
S O F I N S O D
19.6%
5
For further information about the Group’s shareholding structure, see chapter 6 of this Registration document.
* Percentages have been rounded to the nearest tenth.
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5 B o a r d o f D i r e c t o r s
5.2 BOARD OF DIRECTORS
5.2.1 Composition and operating procedures of the Board
of Directors
Sodexo is a French public limited company (société anonyme)
governed by a Board of Directors. Since September 1, 2005,
the roles of Chairman of the Board of Directors and Chief
Executive Offi cer have been separated. This governance structure
creates a clear segregation between the strategic planning and
oversight functions that are the responsibility of the Board of
Directors, and the operational and executive functions that are
the responsibility of senior management.
The rules and operating procedures of the Board of Directors are
defi ned by law, the Company’s by-laws and the Internal Rules of
the Board. In addition, three specialized Committees have been
set up by the Board in order to enhance the Board’s eff ectiveness
and the Company’s governance.
Directors hold office for a term of three years and may be
reappointed. Exceptionally, the Shareholders Meeting may, on the
recommendation of the Board of Directors, appoint or reappoint
one or several directors for a period of one or two years.
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5.2.1.1 Composition as of August 31, 2019
NUMBER OF
DIRECTOR/
OFFICER
POSITIONS
HELD IN
OTHER
LISTED
COMPANIES
FIRST
APPOINTMENT
TO THE BOARD
TERM EXPIRES
(AT THE ANNUAL
SHAREHOLDERS
MEETING CALLED
TO APPROVE
THE FINANCIAL
STATEMENTS
FOR THE YEAR
INDICATED)
BOARD COMMITTEES
SENIOR–
ITY
(YEARS)
NUMBER
OF SODEXO
SHARES
HELD
INDEPENDENT
DIRECTOR(1)
MEMBER OF
THE AUDIT
COMMITTEE
MEMBER
OF THE
NOMINATING
COMMITTEE
MEMBER
OF THE
COMPENSA–
TION
COMMITTEE
NAME
DATE OF BIRTH
NATION–
ALITY
e
h
t
f
o
n
a
m
o
w
r
i
a
h
C
s
r
o
t
c
e
r
i
D
f
o
d
r
a
o
B
s
r
o
t
c
e
r
i
d
t
n
e
d
n
e
p
e
d
n
I
r
o
t
c
e
r
i
D
r
o
t
c
e
r
i
D
g
n
i
t
n
e
s
e
r
p
e
r
s
e
e
y
o
p
m
e
l
Sophie Bellon
08/19/1961
1
07/26/1989
Fiscal 2020
30
7,964
Emmanuel
Babeau
02/13/1967
2
01/26/2016
Fiscal 2021
3
400
X
Robert Baconnier 04/15/1940
02/08/2005
Fiscal 2019(2)
14
410
X(3)
Françoise
Brougher
09/02/1965
1
01/23/2012
Fiscal 2020
Soumitra Dutta
08/27/1963
1
01/19/2015
Fiscal 2020
Sophie Stabile(4 )
03/19/1970
3
07/01/2018
Fiscal 2019
Cécile Tandeau
de Marsac(4 )
04/17/1963
01/24/2017
Fiscal 2019
7
4
1
2
400
400
100
400
X
X
X
X
Astrid Bellon
04/16/1969
07/26/1989
Fiscal 2021
30
39,000
François-Xavier
Bellon
09/10/1965
07/26/1989
Fiscal 2021
30
36,383
Nathalie
Bellon-Szabo
01/26/1964
07/26/1989
Fiscal 2020
30
1,147
Philippe Besson
09/21/1956
06/18/2014
Fiscal 2019(5 )
Cathy Martin
06/05/1972
09/10/2015
Fiscal 2020
5
4
-
N/A(6 )
-
N/A(6 )
Chair
Chair
Chair
5
(1) Independent director based on the criteria set out in the AFEP-MEDEF Code.
(2) Robert Baconnier, who has been a director of Sodexo since February 8, 2005 and whose term of office expires at the close of the Annual Shareholders Meeting to be
held on January 21, 2020, has stated that he does not wish to stand for reappointment as a director.
(3) For further information on the qualification of Robert Baconnier as an independent director, see the note on “Compliance with the AFEP-MEDEF Code” at section 5.2.2
below.
(4 ) At the Annual Shareholders Meeting to be held on January 21, 2020, the Board of Directors will recommend that shareholders reappoint Sophie Stabile and Cécile
Tandeau de Marsac as directors for a three-year term, expiring in 2023.
(5 ) Philippe Besson was originally appointed as a director representing employees in 2014 by the most representative trade union in the Group’s French entities,
as defined in the applicable legislation. He was reappointed in 2017 by that same trade union, and his current term of office expires at the close of the Annual
Shareholders Meeting to be held on January 21, 2020.
(6 ) In accordance with French law and the AFEP-MEDEF Code, directors representing employees are not included in the calculation of the representation of men and
women on the Board or the percentage of independent directors.
Independent directors
(excluding directors representing
employees)
60%
Average age
of directors
56
Female directors
(excluding directors representing
employees)
60%
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Changes in the composition of the Board of Directors and the specialized Board Committees in Fiscal 2019
DEPARTURE
APPOINTMENT
REAPPOINTMENT
Board of Directors
January 22, 2019:
Bernard Bellon
Audit Committee
Compensation Committee
Nominating Committee
January 22, 2019:
Robert Baconnier
April 9, 2019:
Emmanuel Babeau
April 9, 2019:
Sophie Stabile
January 22, 2019:
Emmanuel Babeau
Robert Baconnier (one-year
term)
Astrid Bellon
François-Xavier Bellon
On April 9, 2019, Sophie Stabile was appointed Chairwoman of the Audit Committee, taking over from Emmanuel Babeau who
previously chaired this Committee, and Cécile Tandeau de Marsac replaced Françoise Brougher as Chairwoman of the Nominating
Committee.
5.2.1.2 Chairman Emeritus
PIERRE BELLON
Born January 24, 1930
Nationality: French
Graduate of the École des hautes études commerciales (HEC)
Business address:
Sodexo
255, quai de la Bataille de Stalingrad
92130 Issy-les-Moulineaux (France)
Number of Sodexo shares held: 12,900
Main role: Chairman of the Supervisory Board, Bellon SA, and Chairman Emeritus, Sodexo S.A.
Background
Pierre Bellon joined Société d’Exploitations Hôtelières, Aériennes, Maritimes et Terrestres in 1958 as Assistant Manager. He later served as
Managing Director and then Chairman and Chief Executive Offi cer.
In 1966 he founded Sodexo S.A, where he served as Chairman and Chief Executive Offi cer until August 31, 2005. Following the Board decision
to separate the roles of Chairman of the Board of Directors and Chief Executive Offi cer, Pierre Bellon remained as Chairman of the Board of
Directors until the Shareholders Meeting of January 26, 2016, when he was named Chairman Emeritus.
In 1988, Pierre Bellon was appointed Chairman and Chief Executive Offi cer of Bellon SA before serving as Chairman of the Management Board
from 1996 to 2002 and Chairman of the Supervisory Board since February 2002.
Pierre Bellon has also served as:
• Vice President of CNPF (subsequently MEDEF), 1980-2005;
• President of the French National Center for Young Business Leaders (formerly the Center for Young Employers), 1968-1970;
• President of the French National Federation of Hotel and Restaurant Chains, 1972-1975;
• Member of the French Economic and Social Council, 1969-1979.
Other positions and corporate offices held
Companies linked to Sodexo
• Chairman of the Supervisory Board: Bellon SA
Companies not linked to Sodexo
• Chairman of the Supervisory Board: Sobelnat SCA
• Member of the Board of Directors: Association progrès
du management (APM), created by Pierre Bellon in 1987
• Chairman and Founder: Pierre Bellon Foundation
Other positions and corporate offices held within the past five years but no longer held
• Chairman of the Board of Directors: Sodexo SA (France) (Term ended: January 2016)
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5.2.1.3 Board members as of August 31, 2019
SOPHIE BELLON – CHAIRWOMAN OF THE BOARD OF DIRECTORS
Born August 19, 1961
Nationality: French
Graduate of the École des hautes études commerciales du Nord
(EDHEC)
First appointed: July 26, 1989
Expiration of current term: at the Annual Shareholders Meeting
held to approve the financial statements for Fiscal 2020
Business address:
Sodexo
255, quai de la Bataille de Stalingrad
92130 Issy-les-Moulineaux (France)
Member of the Nominating Committee
Number of Sodexo shares held: 7,964
Main role: Chairwoman of the Board of Directors, Sodexo
Background
Sophie Bellon began her career in 1985 with Crédit Lyonnais in the United States as a mergers and acquisitions advisor for the bank’s French
clientele in New York.
She joined Sodexo in 1994 as a senior analyst in the Group Finance Department. In 2001, she was appointed Project Manager – Strategic
Financial Planning within the Group Strategic Planning Department to develop and implement key performance indicators for the Group. In
September 2005, she was named Group Vice President of Client Retention and was responsible for the worldwide deployment of the initiative
on client retention.
In September 2008, she was appointed Chief Executive Offi cer of Corporate Services for Sodexo France. In that capacity, she also took over
responsibility for facilities management (FM) activities in France in September 2010.
In November 2013, Sophie Bellon was appointed Vice Chairwoman of the Sodexo Board of Directors (replacing Robert Baconnier), with specifi c
responsibility for increasing the pace of Research, Development and Innovation, particularly in Quality of Life services.
On January 26, 2016, Sophie Bellon became Chairwoman of the Board of Directors of Sodexo S.A.
Other positions and corporate offices held
Companies linked to Sodexo
Companies not linked to Sodexo
FRENCH COMPANIES
FRENCH COMPANIES
• Member of the Management Board: Bellon SA
• Chairwoman: PB Holding SAS
• Member of the Board of Directors: L’Oréal*, Chairwoman of the
Human Resources and Remuneration Committee, Chairwoman
of the Nominations and Governance Committee, Member of
the Audit Committee
• Member of the Board of Directors: Association nationale
des sociétés par actions (ANSA); Association française des
entreprises privées (AFEP); Association Comité France Chine
5
FOREIGN COMPANIES
None.
FOREIGN COMPANIES
None.
Other positions and corporate offices held within the past five years but no longer held
• Vice Chairwoman of the Board of Directors: Sodexo S.A. (Term ended: January 2016)
• Chairwoman of the Management Board: Bellon SA (France) (Term ended: September 2015)
• Founding member: Pierre Bellon Foundation (Term ended: September 2018)
• Co-Chair: Sodexo Women’s international Forum for Talent (SWIFT) (Term ended: June 2018)
* Listed company.
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5 B o a r d o f D i r e c t o r s
EMMANUEL BABEAU
Born February 13, 1967
Nationality: French
Graduate of the École supérieure de commerce de Paris (ESCP
Europe); degree in accounting and finance (DESCF)
First appointed: January 26, 2016
Expiration of current term: at the Annual Shareholders Meeting
held to approve the financial statements for Fiscal 2021
Member of the Audit Committee
Number of Sodexo shares held: 400
Business address:
Sodexo
255, quai de la Bataille de Stalingrad
92130 Issy-les-Moulineaux (France)
Main role: Deputy Chief Executive Offi cer, Schneider Electric SE
Background
Emmanuel Babeau is Deputy Chief Executive Offi cer in charge of Finance and Legal Aff airs at Schneider Electric SE.
He began his career at Arthur Andersen in late 1990. In 1993, he joined the Pernod Ricard Group as Internal Auditor and was appointed Head
of Internal Audit, Corporate Treasury and Consolidation in 1996. He subsequently held several executive positions at Pernod Ricard, notably
outside France, before becoming Vice President, Development in 2001. In June 2003, he was appointed Chief Financial Offi cer and in 2006 he
was named Group Deputy Managing Director of Finance.
He joined Schneider Electric in 2009 as Executive Vice President, Finance and a member of the Management Board. In 2013 he became Deputy
Chief Executive Offi cer in charge of Finance and Legal Aff airs and he was re-appointed in this role on April 25, 2017.
Other positions and corporate offices held
Companies linked to Sodexo
Companies not linked to Sodexo
FRENCH COMPANIES
None.
FOREIGN COMPANIES
None.
FRENCH COMPANIES
• Deputy Chief Executive Officer: Schneider Electric SE*
• Member of the Board of Directors: Sanofi *; Schneider
Electric Industries SAS**
• Member of the Supervisory Board: Aster Capital
Partners SAS**; Schneider Electric Energy Access**
representing Schneider Electric Industries SAS
• Managing partner: SCI GETIJ
FOREIGN COMPANIES
• Vice Chairman: Aveva Group plc* ** (UK)
• Member of the Board of Directors: Schneider Electric USA
Inc.** (USA); Schneider Electric (China) Co., Ltd.** (China);
Samos Acquisition Company Ltd.** (UK); Schneider Electric
Holdings Inc.** (USA); Carros Sensors Topco (formerly
InnoVista Sensors Topco Ltd)** (UK); Aveva Group plc* **
(UK); AO Schneider Electric (Russia)
Other positions and corporate offices held within the past five years but no longer held
• Chairman of the Managing Board: Schneider Electric Services International Sprl** (Belgium) (Term ended: July 2014)
• Member of the Board of Directors: Invensys Ltd.** (UK) (Term ended: July 2018)
• Member of the Supervisory Board: InnoVista Sensors SAS** (France) (Term ended: January 2018)
• Member of the Steering Committee: Aster Capital
* Listed company.
** Schneider Electric Group company.
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C O R P O R A T E G O V E R N A N C E
B o a r d o f D i r e c t o r s
Address:
Sodexo
255, quai de la Bataille de Stalingrad
92130 Issy-les-Moulineaux (France)
ROBERT BACONNIER
Born April 15, 1940
Nationality: French
Degree in Literature, graduate of the Institut d’études
politiques de Paris and of the École nationale d’administration
First appointed: February 8, 2005
Expiration of current term: at the Annual Shareholders Meeting
held to approve the financial statements for Fiscal 2019
Number of Sodexo shares held: 410
Main role: Director
Background
Robert Baconnier began his career in 1967 as a civil servant at the French Ministry of Economy and Finance and was assigned to the Internal Revenue
Service (Direction générale des impôts). From 1977 to 1979, he was Technical Advisor to the offi ce of the Minister of Economy and Finance, then
Deputy Director in the offi ce of the Minister for the Budget. From 1979 to 1983, he was Deputy Director in charge of the International Division of
the Tax Legislation Department. In 1983, he was appointed head of the Litigation Department of the French Internal Revenue Service. In 1986, he
became head of the French Internal Revenue Service. From 1990 to 1991, he was Paymaster General at the French Treasury.
In 1991, he joined the law fi rm Bureau Francis Lefebvre, where he served as Chairman of the Management Board until 2004.
He then held offi ce as Chairman and Chief Executive Offi cer of Association nationale des sociétés par actions (ANSA) until January 2012, when
he was named Chairman Emeritus. From 2010 to November 2013, he was Vice Chairman of the Board of Directors of Sodexo.
Other positions and corporate offices held
Companies linked to Sodexo
Companies not linked to Sodexo
FRENCH COMPANIES
None.
FOREIGN COMPANIES
None.
FRENCH COMPANIES
None.
FOREIGN COMPANIES
None.
Other positions and corporate offices held within the past five years but no longer held
None.
ASTRID BELLON
Born April 16, 1969
Nationality: French
Graduate of the École supérieure libre des sciences
commerciales appliquées (ESLSCA)
Master of Arts in Cinema Studies, New York
First appointed: July 26, 1989
Expiration of current term: at the Annual Shareholders Meeting
held to approve the financial statements for Fiscal 2021
Number of Sodexo shares held: 39,000
Main role: Member of the Orientation Committee of the Pierre Bellon Foundation
Background
Astrid Bellon is a member of the Management Board of Bellon SA.
Other positions and corporate offices held
Business address:
Sodexo
255, quai de la Bataille de Stalingrad
92130 Issy-les-Moulineaux (France)
5
Companies linked to Sodexo
Companies not linked to Sodexo
FRENCH COMPANIES
FRENCH COMPANIES
• Member of the Management Board: Bellon SA
• Member of the Orientation Committee: Pierre Bellon
Foundation
• Chairwoman: Sofrane SAS
• Legal Manager: Sobelnat SCA (permanent representative
of Sofrane SAS); SCI Lodestar
FOREIGN COMPANIES
None.
FOREIGN COMPANIES
None.
Other positions and corporate offices held within the past five years but no longer held
None.
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5 B o a r d o f D i r e c t o r s
FRANÇOIS-XAVIER BELLON
Born September 10, 1965
Nationality: French
Graduate of the European Business School
First appointed: July 26, 1989
Expiration of current term: at the Annual Shareholders Meeting
held to approve the financial statements for Fiscal 2021
Member of the Audit Committee
Number of Sodexo shares held: 36,383
Business address:
Sodexo
255, quai de la Bataille de Stalingrad
92130 Issy-les-Moulineaux (France)
Main role: Chief Executive Offi cer of LifeCarers Ltd
Background
François-Xavier Bellon joined the Adecco Group in 1990 as agency head in Orsay-les-Ulis (France). In 1992 he was appointed agency head in
Barcelona, before becoming Catalonia Regional Director.
In 1995, François-Xavier Bellon joined the Sodexo Group as Head of Sector and became Healthcare Head of Development in France. In 1999,
he was appointed Regional Director in Mexico, and subsequently held the role of Chief Executive Offi cer of the Mexican subsidiary until 2004.
In January 2004, he was appointed Chief Executive Offi cer of Sodexo UK and Ireland but later left the Group due to health problems.
From 2004 to 2006, he rejoined the Adecco Group and was Sales and Marketing Director of the Global Temporary Work Division of the Adecco
Group, based in Zurich and London.
In 2007, François-Xavier Bellon founded LifeCarers, a company based in the United Kingdom that provides home care services to dependent
people (people living in social isolation, people in recovery or people living with dementia), of which he is also the Chief Executive Offi cer..
Other positions and corporate offices held
Companies linked to Sodexo
Companies not linked to Sodexo
FRENCH COMPANIES
FRENCH COMPANIES
• Chairman of the Management Board: Bellon SA
• Chief Executive Officer: PB Holding SAS
FOREIGN COMPANIES
None.
FOREIGN COMPANIES
• Chief Executive Officer: LifeCarers Ltd. (UK)
• Member of the Board of Directors: LifeCarers Ltd. (UK)
Other positions and corporate offices held within the past five years but no longer held
• Advisor: Dr Clic Sociedad Limitada (Spain) (Term ended: June 2013); French Foreign Trade Commission (Term ended:
December 2018)
• Chief Executive Officer: Bright Yellow Group** (UK) (Term ended: April 2016)
• Member of the Board of Directors: Bright Yellow Group** (UK) (Term ended: April 2016); Bright Yellow Solutions Ltd.** (UK)
(Term ended: April 2016); Footprint Ltd (Term ended: April 2016); U1st Sports SA (Spain) (Term ended: January 2019); House of
HR (Belgium) (Term ended: January 2019)
** LifeCarers Ltd Group company.
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C O R P O R A T E G O V E R N A N C E
B o a r d o f D i r e c t o r s
NATHALIE BELLON-SZABO
Born January 26, 1964
Nationality: French
Graduate of the European Business School
First appointed: July 26, 1989
Expiration of current term: at the Annual Shareholders Meeting
held to approve the financial statements for Fiscal 2020
Member of the Nominating Committee
Number of Sodexo shares held: 1,147
Business address:
Sodexo
255, quai de la Bataille de Stalingrad
92130 Issy-les-Moulineaux (France)
Main role: Chief Executive Offi cer, Sodexo Sports and Leisure
Background
Nathalie Bellon-Szabo began her career in the foodservices industry in 1987. From 1989, she was an account manager for Scott Traiteur, and
then Sales Manager of Le Pavillon Royal.
She joined Sodexo in March 1996 as Sales Director for Sodexo Prestige in France, becoming a Regional Manager in 1999. In September 2003,
she was appointed Managing Director of Sodexo Prestige, and Managing Director of L’Affi che in January 2006. She was named Chairwoman of
the Management Board of the Lido in 2009. She became Chief Executive Offi cer of Sodexo Prestige Sports and Leisure in France on September 1,
2010 and Chairwoman of the Management Board of Lenôtre in 2012.
On September 1, 2015, Nathalie Bellon-Szabo was appointed Chief Executive Offi cer Sports and Leisure France, On-site Services and Chief
Operating Offi cer Sports and Leisure Worldwide, On-site Services. On June 19, 2018, she was appointed Chief Executive Offi cer Sports and
Leisure Worldwide and joined the Group Executive Committee.
Other positions and corporate offices held
Companies linked to Sodexo
Companies not linked to Sodexo
FRENCH COMPANIES
• Member of the Management Board: Bellon SA
• Chairwoman: Compagnie d’armateur fl uvial
et maritime SAS; Gedex SAS; Umanis SAS
• Chairwoman of the Management Board: Société du Lido
FRENCH COMPANIES
None.
(SEGSMHI); Lenôtre SA
FOREIGN COMPANIES
None.
FOREIGN COMPANIES
None.
Other positions and corporate offices held within the past five years but no longer held
• Chairwoman: Yachts de Paris SAS (France) (Term ended: November 2018); Société d’exploitation des vedettes Paris Tour
Eiff el SAS (France) (Term ended: November 2018); Sodexo Sports et Loisirs SAS (France) (Term ended: November 2018)
5
• Chairwoman of the Board of Directors: Millenia SA (France) (Term ended: December 2018)
• Member of the Board of Directors: Altima SA (France) (Term ended: December 2018)
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5 B o a r d o f D i r e c t o r s
PHILIPPE BESSON - DIRECTOR REPRESENTATING EMPLOYEES
Born September 21, 1956
Nationality: French
First appointed: June 18, 2014
Expiration of current term: at the Annual Shareholders Meeting
held to approve the financial statements for Fiscal 2019
Member of the Compensation Committee
Number of Sodexo shares held: N/A
Business address:
Sodexo
255, quai de la Bataille de Stalingrad
92130 Issy-les-Moulineaux (France)
Main role: Head of Projects for Sponsorship at Sodexo
Background
Philippe Besson joined the Sodexo Healthcare Division in 1981, as foodservices manager for the Paris Île de France region. He took part in
the World Youth Days in Paris, Rome and Cologne, was responsible for the Tour de France departure villages for Sodexo and managed athlete
foodservices for the Pacifi c Games.
He has been Head of Projects for Sponsorship since 2014.
Other positions and corporate offices held
Companies linked to Sodexo
Companies not linked to Sodexo
FRENCH COMPANIES
None.
FOREIGN COMPANIES
None.
FRENCH COMPANIES
None.
FOREIGN COMPANIES
None.
Other positions and corporate offices held within the past five years but no longer held
None.
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B o a r d o f D i r e c t o r s
FRANÇOISE BROUGHER
Born September 2, 1965
Nationality: dual French and American
Graduate of ICAM-Lille (Institut catholique d’arts et métiers)
(France) and Harvard University (United States)
First appointed: January 23, 2012
Expiration of current term: at the Annual Shareholders Meeting
held to approve the financial statements for Fiscal 2020
Member of the Nominating Committee
Member of the Compensation Committee
Number of Sodexo shares held: 400
Business address:
Sodexo
255, quai de la Bataille de Stalingrad
92130 Issy-les-Moulineaux (France)
Main role: Chief Operating Offi cer, Pinterest
Background
Françoise Brougher began her career in 1989 in a production unit of L’Oréal in Japan.
Aft er receiving her MBA in 1994, she joined the strategy consulting fi rm Booz Allen & Hamilton, dividing her time between Europe and the
United States.
In 1998, she joined the San Francisco-based Ocean Gem Pearl Corporation, an importer of black Tahitian pearls, as Chief Executive Offi cer.
From 2000 to 2005, she was Vice President of Strategy at California-based brokerage fi rm Charles Schwab Corporation.
In March 2005, she joined Google, where she managed the Business Operations Group for four years, becoming Vice President, Global SMB
Sales & Operations in 2009.
In April 2013, she joined San Francisco-based Square as Business Lead.
She has been Chief Operating Offi cer at Pinterest since February 2018.
Other positions and corporate offices held
Companies linked to Sodexo
Companies not linked to Sodexo
FRENCH COMPANIES
None.
FOREIGN COMPANIES
None.
FRENCH COMPANIES
None.
FOREIGN COMPANIES
• Executive Officer: Pinterest* (USA)
• Member of the Board of Directors: Blackbird Air (USA)
Other positions and corporate offices held within the past five years but no longer held
• Business Lead: Square* (USA) (Term ended: May 2017)
5
* Listed company.
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5 B o a r d o f D i r e c t o r s
SOUMITRA DUTTA
Born August 27, 1963
Nationality: Indian
Doctorate in Computer Science, Artificial Intelligence,
University of California, Berkeley, USA
First appointed: January 19, 2015
Expiration of current term: at the Annual Shareholders Meeting
held to approve the financial statements for Fiscal 2020
Member of the Audit Committee.
Number of Sodexo shares held: 400
Business address:
Sodexo
255, quai de la Bataille de Stalingrad
92130 Issy-les-Moulineaux (France)
Main role: Dean and professor of Management, Cornell University
Background
Soumitra Dutta began his career in 1985 as a research assistant at University of California, Berkeley, USA.
Between 1988 and 1990, he gained further research experience at General Electric. He then joined Insead, the international management
school based in Fontainebleau (France), where he served as lecturer then dean of technology and e-learning.
In 1999, he set up eLab@Insead, the school’s research and analytics center focused on big data analytics for businesses, which he headed
until 2012. In 2002, he was named dean of Executive Education at Insead. During his tenure at Insead, Soumitra Dutta also participated in
setting up and managing three strategy consultancies specialized in new technologies and innovation, which he developed before selling them.
Since 2012, he has been dean and professor of Management at Cornell SC Johnson College of Business at Cornell University, Ithaca, New York.
Other positions and corporate offices held
Companies linked to Sodexo
Companies not linked to Sodexo
FRENCH COMPANIES
None.
FOREIGN COMPANIES
None.
FRENCH COMPANIES
• Member of the Board of Directors: Dassault Systèmes*
FOREIGN COMPANIES
• Chairman of the Board of Directors: The Global Business
School Network (GBSN) (USA)
Other positions and corporate offices held within the past five years but no longer held
• Member of the Board of Directors: The Association to Advance Collegiate Schools of Business (AACSB) (USA) (Term ended:
February 2018)
* Listed company.
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C O R P O R A T E G O V E R N A N C E
B o a r d o f D i r e c t o r s
CATHY MARTIN – DIRECTOR REPRESENTING EMPLOYEES
Born June 5, 1972
Nationality: Canadian
First appointed: September 10, 2015
Expiration of current term: at the Annual Shareholders Meeting
held to approve the financial statements for Fiscal 2020
Business address:
Sodexo
255, quai de la Bataille de Stalingrad
92130 Issy-les-Moulineaux (France)
Member of the Audit Committee
Number of Sodexo shares held: N/A
Main role: Regional Manager, On-site Services, Education segment (Sodexo Canada)
Background
Aft er completing her studies in nutrition, Cathy Martin began her career in the foodservices industry in 1998.
In January 2000, she joined Sodexo as an on-site foodservices manager. Over the past 15 years, she has held various operating and project
management positions. In December 2014, she was named Regional Manager, On-site Services in the Education segment in Quebec, Canada.
Other positions and corporate offices held
Companies linked to Sodexo
Companies not linked to Sodexo
FRENCH COMPANIES
None.
FOREIGN COMPANIES
None.
FRENCH COMPANIES
None.
FOREIGN COMPANIES
None.
Other positions and corporate offices held within the past five years but no longer held
None.
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5 B o a r d o f D i r e c t o r s
SOPHIE STABILE
Born March 19, 1970
Nationality: French
Graduate of the École supérieure de gestion et finances (ESGF)
de Paris.
First appointed: July 1, 2018
Expiration of current term: at the Annual Shareholders Meeting
held to approve the financial statements for Fiscal 2019 (Renewal
proposed)
Chairwoman of the Audit Committee
Member of the Compensation Committee
Number of Sodexo shares held: 100
Business address:
Sodexo
255, quai de la Bataille de Stalingrad
92130 Issy-les-Moulineaux (France)
Main role: Founder and Managing Partner of Révérence
Background
Sophie Stabile began her career as a fi nancial auditor before joining the Accor group in 1999. In 2006, she was appointed Group Controller-
General, in charge of the consolidation process, the International Finance Departments and the Financial Control and Internal Audit Departments
as well as the Accor holding company and the group’s fi nance back offi ces. In 2010 she became Chief Financial Offi cer.
From 2015 to 2017 she served as Chief Executive Offi cer, HotelServices France and Switzerland, for AccorHotels.
In February 2018, she founded Révérence – a consulting, investment and private equity fi rm – of which she has been Managing Partner since
that date.
Other positions and corporate offices held
Companies linked to Sodexo
Companies not linked to Sodexo
FRENCH COMPANIES
None.
FOREIGN COMPANIES
None.
FRENCH COMPANIES
• Member of the Supervisory Board: Unibail-
Rodamco Westfi eld*
• Member of the Board of Directors: Ingenico*, SPIE*;
Bpifrance Participations SA; Bpifrance Investissement SAS
• Managing Partner: Révérence
FOREIGN COMPANIES
None.
Other positions and corporate offices held within the past five years but no longer held
• Chairwoman of the Supervisory Board: Orbis (Poland) (Term ended: 2016)
• Chief Executive Officer: HotelServices France and Switzerland, AccorHotels (France) (Term ended: 2017)
• Member of the Supervisory Board: Altamir* (France) (Term ended: March 2019)
* Listed company.
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B o a r d o f D i r e c t o r s
Business address:
Sodexo
255, quai de la Bataille de Stalingrad
92130 Issy-les-Moulineaux (France)
CÉCILE TANDEAU DE MARSAC
Born April 17, 1963
Nationality: French
Graduate of the École supérieure de commerce de Rouen
First appointed: January 24, 2017
Expiration of current term: at the Annual Shareholders Meeting
held to approve the financial statements for Fiscal 2019 (Renewal
proposed)
Chairwoman of the Compensation Committee
Chairwoman of the Nominating Committee
Number of Sodexo shares held: 400
Main role: Director
Background
Cécile Tandeau de Marsac began her career with Nestlé in 1987, holding various positions in Marketing and Communications before joining
the Human Resources Department in 2002, where she was in charge of career development in France. In 2005, she became Human Resources
Director for certain businesses and corporate functions at Nestlé France.
In 2007, she joined Rhodia as HR Director of a business unit in France, responsible for talent development for the Group. She subsequently took
part in two major projects, the transformation of Rhodia’s organizational structure and the subsequent integration of Rhodia’s teams following
its acquisition by Solvay.
From September 2012 to June 2019 she served as Chief Human Resources Offi cer, Solvay Group.
Other positions and corporate offices held
Companies linked to Sodexo
Companies not linked to Sodexo
FRENCH COMPANIES
None.
FOREIGN COMPANIES
None.
FRENCH COMPANIES
None.
FOREIGN COMPANIES
None.
Other positions and corporate offices held within the past five years but no longer held
• Chief Human Resources Officer, Solvay Group (Term ended: June 2019).
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5 B o a r d o f D i r e c t o r s
5.2.1.4 Directo rs proposed for appointment at the January 21, 2020 Annual
Shareholders Meeting
VÉRONIQUE LAURY
Born June 29, 1965
Nationality: French
Graduate of the Institut d’études politiques (IEP) of Paris
Business address:
Sodexo
255, quai de la Bataille de Stalingrad
92130 Issy-les-Moulineaux (France)
Number of Sodexo shares held: 0
Main role: Director
Background
Aft er graduating from Sciences Po in 1988, Véronique Laury joined Leroy Merlin and took over various functions in the marketing and sales
fi eld for about 15 years.
In 2003, she joined Kingfi sher, the European giant do-it-yourself company and Parent company of B&Q, Brico Dépôt, Castorama and Screwfi x.
She was in charge of the Sales and Marketing Department of Castorama (France) and later of B&Q (UK) before being named Head of the Group
sales and marketing strategy, taking over the responsibility of Group purchasing and brand development.
In 2013, Véronique Laury became Chief Executive Offi cer of Castorama France.
From September 2014 to September 2019, she was Chief Executive Offi cer of Kingfi sher, which is listed in the FTSE 100 (UK).
Other positions and corporate offices held
Companies linked to Sodexo
Companies not linked to Sodexo
FRENCH COMPANIES
None.
FOREIGN COMPANIES
None.
FRENCH COMPANIES
None.
FOREIGN COMPANIES
None.
Other positions and corporate offices held within the past five years but no longer held
• Chief Executive Officer: Kingfi sher plc.*
* Listed company.
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C O R P O R A T E G O V E R N A N C E
B o a r d o f D i r e c t o r s
LUC MESSIER
Born April 21, 1964
Nationality: dual Canadian and American
Graduate of the University of Sherbrooke (civil engineering)
and of UC Davis (Viticulture and Enology)
Business address:
Reus Technologies LLC
1999 Bryan Street
Dallas, TX 75201 (USA)
Number of Sodexo shares held: 0
Main role: President of Reus Technologies LLC (USA)
Background
Luc Messier began his career in engineering and project management at Pomerleau. He joined the Bouygues group in 1993 as an engineer,
project manager in Hong-Kong and in South Africa and was later appointed Chief Executive Offi cer of the Bouygues subsidiary handling
construction work in Hong Kong.
In 2003, he joined Technip as Chief Operating Offi cer and was then named President and Chief Executive Offi cer of Technip Off shore Inc. before
being appointed President and Chief Executive Offi cer of Technip USA.
Between 2007 and 2015, he served as Senior Vice President for ConocoPhillips, where he was responsible for projects, aviation and procurement.
Since 2015, he has been President of Reus Technologies LLC.
Other positions and corporate offices held
Companies linked to Sodexo
Companies not linked to Sodexo
FRENCH COMPANIES
None.
FOREIGN COMPANIES
None.
FRENCH COMPANIES
None.
FOREIGN COMPANIES
• Member of the Board of Directors: Bird Construction Inc.*
(Canada)
• Member of the Board of Directors: Ocean Installer
(Norway)
Other positions and corporate offices held within the past five years but no longer held
• Member of the Board of Directors: Mercury (USA)
• Member of the Board of Directors: Da Camera (USA)
• Member of the Board of Directors: Australia Pacifi c LNG (Australia)
• Member of the Board of Directors: Junior Achievement (USA)
5
* Listed company.
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5 B o a r d o f D i r e c t o r s
5.2.1.5 Departure of two directors at
the close of the January 21,
2020 Annual Shareholders
Meeting
Robert Baconnier will step down from the Board of Directors at
the close of the Annual Shareholders Meeting on January 21,
2020. As a widely recognized fi nancial expert, Robert Baconnier
has made a signifi cant contribution to the discussions of the
Board and the Audit Committee, notably in relation to fi nance,
mergers and acquisitions, tax, risk analysis and internal control.
Robert Baconnier served with great dedication and conviction as
Chairman of the Audit Committee, a role that was strengthened
by his in-depth knowledge of the Group and his financial
expertise. The Board of Directors has benefi ted greatly from the
objectivity he has always shown during the Board’s debates and
discussions, as well as his ability to convey his opinions and
beliefs and make balanced judgments in all circumstances. The
Chairwoman of the Board and all the other members commend
Robert Baconnier for his individual input to the Board’s work .
Astrid Bellon will also leave the Board of Directors at the close of
the January 21, 2020 Annual Shareholders Meeting in order to
fully devote herself to her role on the Orientation Committee of
the Pierre Bellon Foundation as well as to her personal projects.
The Chairwoman of the Board and all the other members thank
Astrid Bellon for her contribution to the Board of Directors,
of which she has been a member since 1989.
5.2.1.6 Principles governing
the composition of the Board
of Directors
The Board of Directors regularly assesses whether the
composition of the Board and of its specialized Committees is
well balanced, particularly in terms of diversity (gender mix,
nationality, age, competencies, etc.).
Diversity policy of the Board of Directors
CRITERIA
OBJECTIVES
IMPLEMENTATION AND RESULTS ACHIEVED IN FISCAL 2019
Director
independence*
Have at least one third of the Board’s
members considered independent in
accordance with the recommendations
for controlled companies in the AFEP-
MEDEF Code.
Gender balance*
Maintain an optimal gender mix on the
Board of Directors.
46%
42%
38%
INDEPENDENT
60%
NON-INDEPENDENT
40%
60%
54%
2 0 1 5
2 0 1 6
2 0 1 7
2 0 1 8
2 0 1 9
As of August 31, 2019 the Board of Directors had 12 members (including two directors representing employees),
comprising seven women (including one female director representing employees) and five men (including one
male director representing employees). This 60%/40% ratio of women to men gives the Board a good gender
balance and complies with the legal requirements in France, which require that the proportion of women and men
on corporate b oards be at least 40% for each gender.
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CRITERIA
OBJECTIVES
IMPLEMENTATION AND RESULTS ACHIEVED IN FISCAL 2019
C O R P O R A T E G O V E R N A N C E
B o a r d o f D i r e c t o r s
Directors’ ages
No more than one third of the directors
to be over 70 years old, in accordance
with the applicable legal requirements.
OVER 70 YEARS OLD
8%
UNDER 70 YEARS OLD
92%
Director nationality
The Board includes members from France, the United States, Canada and India.
Directors
representing
employees
Appointment of directors representing
employees.
Since 2015, the Company has had two directors representing
employees.
Philippe Besson is on the Compensation Committee and Cathy Martin
is on the Audit Committee.
*
In accordance with French law and the AFEP-MEDEF Code, directors representing employees are not included in the calculation of the representation of men and
women on the Board or the percentage of independent directors.
COMPETENCIES MATRIX
The image below shows the number of directors who have the competencies considered important for the Board:
EXECUTIVE
MANAGEMENT
OF INTERNATIONAL
COMPANIES
8
FINANCE
8
TO TAL
SUSTAINABLE
DEVELOPMENT,
SOCIETAL
COMMITMENT
AND HUMAN
RESOURCES
DIGITAL -
NEW
TECHNOLOGIES
MARKETING
AND SALES
STRATEGY –
MERGERS AND
ACQUISITIONS
KNOWLEDGE
OF THE SERVICE
SECTOR
6
4
6
7
6
5
Executive management of international
Digital – New Technologies
companies
Experience as a Chief Executive Offi cer, Executive
Committee member or other executive management
position in a large international company or a group
with a global operating presence.
Finance
Extensive experience in business fi nance
and fi nancial reporting processes, risk management,
accounting, cash management, tax, mergers
and acquisitions, and the fi nancial markets.
Sustainable development, Societal
Commitment and Human Resources
Experience in managing Environmental, Social
and Governance (ESG) issues, as well as human
resources management.
Expertise or recent experience in developing
and implementing digital strategies; experience in
companies with a strong digital focus.
Marketing and Sales
Experience in marketing, sales, distribution,
and BtoC brand management.
Strategy – Mergers and Acquisitions
Experience in defi ning strategies and managing
strategic issues; experience in external growth
transactions.
Knowledge of the service sector
Experience in the services industry, knowledge
of the Group’s business areas and competitive
environment.
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Competencies
The Board of Directors takes particular care in the selection of
its members. Directors are chosen for their ability to act in the
interests of all shareholders and for their expertise, experience
and understanding of the strategic challenges in markets where
the Group operates. The composition of the Board of Directors
is intended to adhere closely to the principles of diversity and to
refl ect the geographic mix of the business (insofar as possible),
to provide a range of technical skills, and to include individuals
with in-depth knowledge of Sodexo’s activities.
In a continuous process of Board renewal, the Board will propose
at the January 21, 2020 Annual Shareholders Meeting two new
candidates , Véronique Laury and Luc Messier, for appointment as
directors of the Company.
INDEPENDENCE
Véronique Laury was Chief Executive Officer of the Kingfisher
Group, based in London, from 2014 to September 2019.
Kingfisher, which is a FTSE100 listed company, is the p arent
company of the do-it-yourself retail chains Bricorama and B&Q.
Véronique Laury will bring to the Board her solid expertise in
consumer culture and sales and marketing.
Luc Messier, who has dual Canadian/American nationality, will
bring to the Group his international operational experience,
gained notably in the energy industry, where he held executive
positions in several large French and American multinationals.
He has lived and worked in Canada, Asia, Africa, Europe, and
more recently, the United States where he currently resides.
ANALYSIS BY THE BOARD OF DIRECTORS OF EACH DIRECTOR’S STATUS BASED ON THE INDEPENDENCE CRITERIA DEFINED
IN ARTICLE 8 OF THE AFEP-MEDEF CODE
AFEP-MEDEF CODE INDEPENDENCE CRITERION
EMPLOYEE/
CORPORATE
OFFICER IN THE
PAST 5 YEARS
CROSS-
DIRECTORSHIPS
SIGNIFICANT
BUSINESS
RELATIONSHIPS
CLOSE FAMILY
TIES
AUDITOR IN THE
PAST 5 YEARS
PERIOD
OF OFFICE
EXCEEDING
12 YEARS
STATUS OF
NON-EXECUTIVE
CORPORATE
OFFICER
STATUS
OF MAJOR
SHAREHOLDER
Sophie Bellon
Emmanuel Babeau
Robert Baconnier
Astrid Bellon
François-Xavier Bellon
Nathalie Bellon-Szabo
Françoise Brougher
Soumitra Dutta
Sophie Stabile
Cécile Tandeau de
Marsac
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
In this table, ✓ indicates an independence criterion that is met.
Business relationships
During Fiscal 2019, six(1) Board members were deemed independent
directors (see also section 5.2.2 below). No independent director,
the group or entity of which he or she is a member and in which he
or she exercises executive powers, has any signifi cant business ties
with the Company, its group or its management.
When examining the independent status of its directors, the
Board of Directors pays particular attention to any business
relations existing between the Sodexo Group and the entity
or group of which each independent director is a member or
director.
Cécile Tandeau de Marsac served as Chief Human Resources
Officer of Solvay until June 2019 and Emmanuel Babeau is
Deputy Chief Executive Offi cer of Schneider Electric and a director
of Sanofi . The Board carried out a quantitative and qualitative
analysis of their situations and the business relationships that
the Solvay, Schneider Electric and Sanofi groups have with
Sodexo. In this analysis, the Board of Directors determined that
agreements are negotiated between the parties at arm’s length.
The Board also determined that the business flows between
these groups (all activities combined and at the global level) are
1 In accordance with the AFEP-MEDEF Code, directors representing employees are not included in the calculation of the percentage of independent directors on
the Board.
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signifi cantly lower than the 1% materiality threshold retained
by the Board of Directors. Consequently, the Board of Directors
considers that Cécile Tandeau de Marsac and Emmanuel Babeau
are independent directors and that it should continue to benefi t
from their valuable experience in their respective fi elds.
5.2.1.7 Organization, operating
procedures and preparation
of the work of the Board of
Directors
Management of confl icts of interest
Since 2014 Sophie Stabile has been a member of the Board
of Directors of SPIE, which, in a number of limited and clearly
identified cases in the technical services field, could be
considered to be a competitor of Sodexo in Europe. Sodexo’s
Board of Directors has therefore put measures in place
to minimize this conflict of interest risk. In particular, no
commercially sensitive information concerning activities in
which Sodexo competes with SPIE may be disclosed or discussed
in her presence.
Accordingly, the Board of Directors considers that Sophie Stabile
complies with the recommendations of the AFEP-MEDEF Code to
which the Company refers and with the provisions of the Internal
Rules of the Board concerning confl ict of interest situations.
In addition, the Board of Directors’ Internal Rules state that
directors are required to disclose to the Board any actual or
potential confl icts of interest and must abstain from discussing
and voting on any matters associated with such conflicts of
interest.
Directors representing employees
On January 21, 2014, the Shareholders Meeting decided on the
conditions of appointment to the Board of Directors of one or
more directors representing employees. Directors representing
employees are appointed for a period of three years.
A fi rst director representing employees, Philippe Besson, was
appointed by the trade union that obtained the most votes in
the fi rst round of the most recent elections in France of union
representatives and took his seat on the Board at its meeting on
June 18, 2014. Philippe Besson was reappointed in 2017 by this
trade union for a three-year term which expires at the end of the
Annual Shareholders Meeting to be held on January 21, 2020.
A second director representing employees, Cathy Martin, was
appointed by the European Works Council and became a member
of the Board at its meeting on September 10, 2015. Cathy Martin
was reappointed by the European Works Council for a three-year
term, eff ective from the Annual Shareholders Meeting held on
January 23, 2018.
The Board does not have any directors representing employee
shareholders, as the amount of the Company’s capital held by
employees does not exceed the 3% threshold that triggers the
requirement for such a director, as set in article L.225-23 of the
French Commercial Code.
Sodexo is governed by a Board of Directors, which has been
chaired by Sophie Bellon since January 26, 2016.
Role of the Chairwoman of the Board of Directors
The Chairwoman of the Board of Directors represents the Board
and organizes and directs its work, and reports to the shareholders
at the Shareholders Meeting. The Chairwoman also represents the
Board of Directors in matters concerning third parties such as
employee representatives and Statutory Auditors. In addition, she
is responsible for shareholder relations, particularly concerning
Corporate Governance matters, and reports to the Board of
Directors on this role. The Chairwoman oversees the functioning
of all of the Company’s Corporate Governance structures and, in
particular, ensures that the Board members are able to fulfi ll their
duties. Moreover, in order to make the roles of the Chairwoman
of the Board of Directors and the Chief Executive Officer more
complementary, the Chairwoman assists the Chief Executive
Offi cer by providing him with support and acting as a strategic
sounding board. In addition to these duties, Sophie Bellon plays
an important role as ambassador of the Group.
Operating procedures of the Board of Directors –
Internal Rules
In addition to the Company’s bylaws, the Board of Directors is
governed by the Board’s Internal Rules, which notably set out
the Board’s mission, the minimum and maximum number of
Board members, the rules of the Directors’ charter, the minimum
number of Board meetings and the rules for allocating directors’
fees. The Internal Rules also set the criteria for assessing the
performance of the Board, organize the powers of the Chief
Executive Offi cer, and defi ne the policy for issuing guarantees.
The Internal Rules were amended by the Board of Directors in late
2018, in particular to comply with the new recommendations of
the June 2018 revised version of the AFEP-MEDEF Code.
The full version of the Board of Directors’ Internal Rules is
available on the Group’s website (www.sodexo.com) and a
summary of the principal components thereof is provided below.
The Directors’ charter
The main elements of the Directors’ charter are described below.
Each director should constantly be mindful of the corporate
interest, exercise good judgment (particularly of situations,
strategies and people), and look to the future in order to identify
the risks and strategic challenges that lie ahead. Each director
should also be focused, active and engaged, and act with integrity.
Each director must personally own at least 400 Sodexo shares
by the end of their first year of office (except for directors
representing employees to whom no such requirement applies
in accordance with French law).
5
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Except in cases of force majeure, all directors of Sodexo must
attend Shareholders Meetings.
It appoints the corporate offi cers responsible for managing the
Group’s general policies.
Any director of Sodexo who obtains undisclosed information
during the course of his or her duties is subject to insider trading
legislation. In accordance with the European Market Abuse
Regulation, the Company may draw up specifi c insider lists if
insider information has been identifi ed but a decision has been
taken to postpone the publication of the relevant information.
The Board of Directors ensures the existence and eff ectiveness
of the management of the Group’s commitments, risks and
internal control procedures, and oversees the quality of the
information provided to shareholders and the fi nancial markets
in the financial statements and in connection with major
fi nancial transactions.
Directors are prohibited from trading in Sodexo securities as
follows:
• during the period commencing 30 calendar days prior to the
date of publication of the half-year and annual consolidated
fi nancial statements and up to and including the date of their
publication;
It ensures the implementation of a mechanism for the prevention
and detection of corruption and infl uence peddling and receives
all the information necessary for this purpose.
The Board of Directors also ensures that the Chief Executive
Officer implements non-discrimination and diversity policies
and a vigilance plan.
• during the period commencing 15 calendar days prior to the
date of publication of the consolidated fi nancial information
for the fi rst and third quarters up to and including the date
of their publication.
As required by law, the Board of Directors approves the fi nancial
statements for publication, decides on appropriation of net
income, proposes dividends, and makes decisions on signifi cant
investments and the Group’s fi nancial policy.
Transactions in the Company’s securities carried out by
directors must be disclosed to the French securities regulator
(Autorité des marchés financiers – AMF) within three trading
days of the transaction date. Directors are required to inform the
Group Legal Department of all transactions in Sodexo securities.
Induction and training of directors
Upon joining the Board, all directors receive training adapted to
their specifi c needs. They meet the Chairwoman of the Board
of Directors, the Chief Executive Offi cer and Group executives.
Meetings are also organized with certain executives and external
advisors. Site visits are arranged to provide an overview of the
Group’s businesses and a better understanding of each activity.
Directors may also receive additional training on Corporate
Responsibility or other matters. Board member training is a
continuous process, throughout a mandate.
In addition, the Board ensures that directors representing
employees are given the necessary time to prepare their
participation in each Board meeting and that they receive the
number of training hours required under the applicable legal
provisions. Since joining Sodexo’s Board of Directors, Philippe
Besson and Cathy Martin have participated in several training
seminars organized by the French Institute of Directors (IFA)
as well as in-house training courses delivered by several of the
Company’s corporate functions, which are open to all of Sodexo’s
directors. Both Philippe Besson and Cathy Martin have been
off ered training that leads to certifi cation as Board directors,
and they began this training in Fiscal 2019.
Mission of the Board of Directors
The Board of Directors is a collegial body that acts in the
Company’s best interests, in line with the Group’s corporate
mission, and in the best interests of all of the Company’s
shareholders.
The Board defi nes Sodexo’s strategy, long-term objectives and
overall policies, in consideration of the social and environmental
issues related to its activities, and ensures that they are
properly implemented.
It regularly carries out the controls and verifications that it
deems appropriate (particularly concerning progress made on
the performance metrics set by the Board).
At least five days ahead of Board meetings, each director is
given briefi ng documents so that he or she can review and/or
investigate the issues to be discussed.
The Group’s senior executives make regular presentations to the
Board of Directors, in particular at the meeting during which the
budget is discussed:
• the Chief Executive Officer and the other operational
executives, each in their area of responsibility, discuss the
potential for growth, competitive positions, the ambition, the
strategy for achieving it and the principal elements of their
action plans;
• Group executives in each functional area (Human Resources,
Finance and Strategy) present their recommendations
regarding strategy and policy developments, progress
a c h i e v e d a n d t o b e a c h i e v e d a n d a c t i o n p l a n s f o r
implementation in the Group.
The Board of Directors performs periodic in-depth reviews of
the fi nancial statements at meetings attended as necessary by
members of the Group’s operational and functional management
teams as well as by the external auditors.
The Board of Directors meets at least once a year without
the presence of executive management and employee
representatives.
The Board of Directors is also kept regularly informed of
questions, comments or criticism from shareholders, whether at
meetings with shareholders or by mail, e-mail or conference call.
Board meetings during the fi scal year
BOARD MEETINGS
The Board of Directors met eight times during Fiscal 2019,
fulfi lling the minimum requirement of six meetings per year as
stated in the Board of Directors’ Internal Rules. The Board’s work
during the year mainly related to the following areas:
Corporate Governance
• approving the Management Report of the Board of Directors
and the Corporate Governance Report for Fiscal 2018;
• reviewing the Fiscal 2018 Registration document;
• assessing the operating procedures and membership structure
of the Board of Directors and the specialized Committees;
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• proposing the reappointment of directors whose terms of
• regularly reviewing strategic opportunities, especially in
offi ce were due to expire;
terms of external growth.
• proposing the appointment of a new director;
• assessing directors’ independence;
• reviewing the Board of Directors’ Internal Rules in order to
align them with the AFEP-MEDEF Code;
• reviewing the charters of the specialized Committees;
• carrying out its annual review of related-party agreements
and commitments;
• calling the Annual Shareholders Meeting, preparing the Board
of Directors’ Report to the Annual Shareholders Meeting,
reviewing the resolutions to be put to the shareholders’ vote,
and draft ing replies to the written questions received from
shareholders prior to the meeting;
• reviewing employee engagement;
• reviewing corporate responsibility issues; and
• more generally, examining the work carried out and
recommendations issued by the Nominating Committee and
the Compensation Committee.
Compensation
• reviewing the compensation of Board members;
• approving the compensation and benefi ts of the Chief Executive
Offi cer;
• approving the compensation and benefi ts of the Chairwoman
of the Board of Directors;
• approving a new compensation policy for corporate offi cers
to be submitted to the Annual Shareholders Meeting;
• reviewing gender pay equality;
• adopting the restricted and performance share plans (previously
referred to as “free shares”).
Financial statements and fi nancial management
• reviewing and approving the financial statements of the
Company and the Group for Fiscal 2018;
• appropriating net income for Fiscal 2018 and deciding on a
dividend payment;
• examining the Group budget for Fiscal 2019;
• examining Sodexo’s share performance and investors/analysts
feedback;
• regularly renewing the authorizations granted to the Chief
Executive Officer for issuing guarantees up to a certain
threshold;
• reviewing and approving the consolidated fi nancial statements
for the fi rst half of Fiscal 2019 and the Interim Financial Report;
• examining business trends for the end of Fiscal 2019;
• approving forecast documents; and
• more generally, examining the Statutory Auditors’ Reports
and analyzing the work of the Audit Committee and approving
its recommendations.
Group business and strategy
• regularly reviewing the Group’s various business activities and
segments, as well as their growth outlook and competitive
environments;
Each year, a whole day is devoted to presentations on strategic
issues given to the Board by operations and support teams, in
addition to the plans that are regularly presented during the
year at other Board meetings. These annual presentations are
an occasion for high-quality discussions between the directors
and the Company’s senior management team, and are extremely
appreciated by everyone involved.
ASSESSMENT OF BOARD OPERATING PROCEDURES
At least once a year, the Board of Directors devotes an agenda
item to discussing its operating procedures, and every three
years it organizes a formal external assessment.
The most recent formal assessment took place in 2017 and its
fi ndings were presented and discussed at the Board meeting on
June 14, 2017 and, more recently, the Board’s annual discussion
on this issue took place at its meeting on June 19, 2019.
From these discussions, it appeared that the general view of
the Board’s operating procedures was very positive and the
directors particularly appreciated their freedom of expression
and the Board’s spirit of collective intelligence. The directors also
consider that Board meetings are highly participative.
The Board’s membership structure has recently been
strengthened with the arrival of new independent directors with
solid competencies in fi nance, human resources and operations,
and the overall age profile is gradually getting younger.
Similarly, there has been a renewal of skills within the Board
Committees.
The induction and training courses off ered both to new directors
and directors representing employees are considered to be
particularly useful in terms of their impact on the quality of
the work of the Board and its specialized Committees as they
enhance each director’s individual contribution.
In response to the fi ndings of previous assessments of Board’s
operating procedures, Board and Audit Committee agendas now
include closer monitoring of performance and regular updates
on strategic plans.
Lastly, in this year’s discussion, the Board expressed its desire
that a Board meeting be held outside France.
Specialized Committees of the Board
To support its decision-making process, the Board of Directors
has three specialized Committees, each with its own charter
approved by the Board of Directors setting out its role,
responsibilities and operating procedures.
Broadly, the role of these specialized Committees is to examine
specifi c issues ahead of Board meetings and to submit opinions,
proposals and recommendations to the Board of Directors.
AUDIT COMMITTEE
Composition as of August 31, 2019:
• Sophie Stabile*, Chairwoman since April 2019, independent
director;
• Emmanuel Babeau*, independent director (Chairman of the
• analyzing client retention and sales eff ectiveness;
Committee until March 2019);
5
* Deemed a “fi nancial expert” as defi ned in article L.823-19 of the French Commercial Code.
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• François-Xavier Bellon, director;
• a review of the internal control process;
• Soumitra Dutta, independent director;
• the risk map, the audit plan and monitoring audit engagements;
• Cathy Martin, director representing employees.
• update of the internal audit charter;
The Audit Committee is responsible for ensuring that the
Group’s accounting policies are appropriate and consistently
applied, particularly with respect to material transactions. It also
verifi es that the procedures used for preparing and processing
accounting information (both financial and extra-financial)
are eff ective and it issues recommendations for ensuring the
integrity of such information.
It examines the Company’s fraud detection procedures and its
whistleblowing system. It is notably in charge of ensuring that
a procedure is in place for dealing with complaints from third
parties or employees (which may be anonymous) about any
irregularities concerning accounting or internal control practices
or any other area.
It issues observations and recommendations to the Company’s
senior management team about risks, particularly the structure,
scope and organization of risk management. Accordingly,
it periodically reviews senior Management Reports on risk
exposure (including social and environmental risks) and
prevention, and ensures that effective internal controls are
applied. It also regularly reviews the Internal Audit Reports and
is informed of the internal audit plan.
All Audit Committee members have recognized competencies
in fi nance and accounting, as confi rmed by their professional
background (see section 5.2.1.3). When Cathy Martin was
appointed as a member of the Audit Committee, she was
given specifi c in-house training on the Company’s accounting,
fi nancial and operating procedures.
The Audit Committee performs an annual review of the fees
paid to the Statutory Auditors of Sodexo and its subsidiaries,
assesses auditor independence and pre-approves certain non-
audit services. When necessary, it carries out the process for
appointing and re-appointing the Statutory Auditors.
In addition, it reviews the annual payment due under the service
agreement signed between Sodexo and Bellon SA (detailed in
section 5.3.2 of this Universal Registration Document), as well
as any changes in its amount from one year to the next.
To perform its role, the Audit Committee is assisted by the
Chief Executive Offi cer, the Chief Financial Offi cer, the Senior
Vice President Group Internal Audit and the Statutory Auditors,
who present their work to the Committee and answer any
questions that it may have. The Committee may also make
inquiries of any Group employee, without any Company
executives being present, and seek advice from outside experts.
It meets at least once a year with the Statutory Auditors
without management.
The Audit Committee met five times in Fiscal 2019 and the
attendance rate was 97%.
In addition to the above matters, the Committee’s work during
the year concerned the following:
• the impact of the fi rst-time application of IFRS 9, IFRS 15 and
IFRS 16;
• monitoring the Group’s fi nancing;
• monitoring the guarantees issued by the Company and the
related authorizations granted to the Chief Executive Offi cer
by the Board of Directors, and, more generally, monitoring
the Group’s off balance-sheet commitments;
• reviewing the non-audit services performed by the Statutory
Auditors;
• reviewing the fees paid to Bellon SA under the service
agreement with the Company;
• examining the Group’s scope of consolidation, the integration
process for newly acquired companies, and the accounting
restatements carried out in relation to acquisitions.
The Audit Committee also reviewed the annual consolidated
fi nancial statements for Fiscal 2018 and the interim consolidated
fi nancial statements for the fi rst half of Fiscal 2019. In addition, it
examined the sections of the Fiscal 2018 Registration document
relating to risk management and internal control procedures as
well as the content of the Interim Financial Report, and reviewed
the draft fi nancial press releases before they were submitted to
the Board of Directors.
Part of the meetings dedicated to reviewing the Group’s annual
and half-yearly results took place with the Statutory Auditors
and without management.
In addition to formal Committee meetings, the Chair of the Audit
Committee also had meetings during the fi scal year with the
Chief Executive Offi cer, the Senior Vice President Group Internal
Audit, the Chief Financial Offi cer and the Statutory Auditors.
NOMINATING COMMITTEE
Composition as of August 31, 2019:
• Cécile Tandeau de Marsac, Chairwoman since April 2019,
independent director;
• Sophie Bellon, Chairwoman of the Board of Directors;
• Nathalie Bellon-Szabo, director;
• Françoise Brougher, independent director (Chairwoman of the
Committee until March 2019).
This Committee:
• assesses regularly the competencies and experience represented
on the Board of Directors, and more generally the situation of
directors in relation to the criteria concerning the composition
of the Board of Directors specifi ed in the relevant legislation, the
AFEP-MEDEF Code and the Board’s Internal Rules;
• examines proposals made by the Chairwoman of the Board
of Directors in relation to director nominations. It may retain
the services of external executive search firms to identify
candidates, while ensuring that the backgrounds of short-
listed candidates are adapted to its current needs ;
• provides an opinion to the Board of Directors on the
appointment of the Chief Executive Officer and, as
appropriate, one or more Deputy Chief Executive Offi cers;
• the internal control system and combating cyber-risks;
• prepares succession plans for corporate offi cers;
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• ensures that it is able to propose potential replacements at
any time if the position of Chief Executive Officer were to
suddenly become vacant, while maintaining confi dentiality;
• ensures that succession plans are in place for the members of
the Group Executive Committee and regularly reviews those
plans.
• regularly reviews the training plans for directors as well as
the welcome and induction process for new directors.
The Nominating Committee met four times in Fiscal 2019 and
the attendance rate was 100%.
Other than the above matters, the Committee’s work during the
year included examining the following:
• the resolutions submitted to the Annual Shareholders
Meeting;
• the sections within its remit of the Corporate Governance
Report published in the Fiscal 2018 Registration document;
• succession plans;
• the Group’s talent retention strategy;
• a specifi c training plan for directors representing employees;
puts forward proposals about the Group’s executive incentive
policy, in particular performance share grants (including
the underlying performance conditions), and examines the
implementation of employee share ownership plans. Lastly, it
issues recommendations concerning the budget and allocation
procedures for directors’ fees.
The principles and rules applied by the Board of Directors in
determining the compensation and fringe benefits provided
to the corporate officers are described in section 5.5 of this
Registration document.
In connection with its work, the Compensation Committee may
use external specialists.
The Compensation Committee met fi ve times in Fiscal 2019 and
the attendance rate was 100%.
Its work carried out during the year notably concerned:
• corporate offi cer compensation packages (ex post and ex ante
say-on-pay votes);
• recent developments and new regulations concerning
executive pay, including pension plans;
• the Corporate Governance Report included in the Fiscal 2018
• regular updates on the recruitment of new directors;
Registration document;
• directors’ independence;
• the Board’s diversity policy;
• a skills matrix for directors identifying their competencies
and determining the profi les sought for future candidates.
COMPENSATION COMMITTEE
Composition as of August 31, 2019:
• Cécile Tandeau de Marsac, Chairwoman, independent
director;
• Sophie Stabile, independent director;
• Françoise Brougher, independent director;
• Philippe Besson – director representing employees.
This Committee makes proposals to the Board of Directors
relating to the compensation policy and packages of the Group’s
executives (corporate offi cers and non-corporate offi cers). It also
• the overall compensation policy for Executive Committee
members and the Group’s Top 200 managers;
• reviewing the budget for directors’ fees, which it kept
unchanged;
• the Group’s restricted and performance share plans;
• reviewing the Compensation Committee’s charter; and
• more generally, issuing recommendations to the Board of
Directors concerning corporate offi cers’ compensation and
the Group’s executive incentive system.
On June 19, 2019, the Committee recommended to the Board
that 810,990 restricted shares be granted to 2,144 people
(with some of the shares subject to performance conditions),
and expressed its opinion on the individual grants proposed
and the performance conditions defi ned for the Chief Executive
Offi cer.
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DIRECTORS’ ATTENDANCE RATES AT BOARD AND COMMITTEE MEETINGS DURING FISCAL 2019
BOARD MEETINGS(1)
AUDIT COMMITTEE
MEETINGS(2)
COMPENSATION
COMMITTEE MEETINGS(3)
NOMINATING
COMMITTEE MEETINGS(4)
Sophie Bellon
Emmanuel Babeau
Robert Baconnier
Astrid Bellon
Bernard Bellon
François-Xavier Bellon
Nathalie Bellon-Szabo
Philippe Besson
Françoise Brougher
Soumitra Dutta
Cathy Martin
Sophie Stabile
Cécile Tandeau de Marsac
Average rate
(1) Number of Board meetings: 8.
(2) Number of Audit Committee meetings: 5.
(3) Number of Compensation Committee meetings: 4.
(4) Number of Nominating Committee meetings: 5.
100%
100%
100%
63%
100%
81%
100%
100%
81%
100%
75%
88%
100%
91%
80%
100%
100%
100%
100%
97%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
ROLE OF THE CHIEF EXECUTIVE OFFICER AND THE EXECUTIVE COMMITTEE
The Chief Executive Officer has the authority to manage the
operations and functions of the Group. Limits are placed on
the powers of the Chief Executive Offi cer. These limits are set
by the Board of Directors based on the recommendations of the
Chairwoman of the Board.
The Chief Executive Offi cer is required to obtain the prior consent
of the Board to make any pledge, endorsement or guarantee as
follows:
• term greater than 15 years, regardless of the amount;
however, where the term is less than 25 years and the
amount is less than 100 million euro, and with prior approval
of the Chairwoman of the Audit Committee, this prior consent
is not required;
• term between 10 and 15 years and amount greater than or
equal to 15 million euro;
• term between 5 and 10 years and amount greater than or
equal to 30 million euro;
• term less than 5 years and amount greater than or equal to
50 million euro.
The total amount for which the Chief Executive Offi cer may make
any pledge, endorsement or guarantee between Board meetings
is limited to 150 million euro.
The Chief Executive Officer must also obtain prior consent
from the Board of Directors to commit the Company beyond
certain amounts related notably to acquisitions of interests
in companies for more than 50 million euro (enterprise value)
per transaction (100 million euro with the approval of the
Chairwoman of the Board), to disposals of shares in companies
for more than 20 million euro (enterprise value) per transaction,
and for medium- and long-term new financing of more than
100 million euro. The Chief Executive Offi cer must also obtain
the prior consent of the Board for decisions relating to the
startup of new activities.
Denis Machuel was appointed Chief Executive Officer on
January 23, 2018 to replace Michel Landel, who had held the
position since September 1, 2005. Following his appointment as
Chief Executive Offi cer, Denis Machuel’s employment contract
with a Sodexo subsidiary was terminated.
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DENIS MACHUEL – CHIEF EXECUTIVE OFFICER
Born April 19, 1964
Nationality: French
Graduate of the École nationale supérieure d’informatique
et de mathématiques appliquées de Grenoble (ENSIMAG)
Holds a Master of Science degree in Computer Science from
Texas A&M University
First appointed: January 23, 2018
Expiration of current term: Unlimited period
Number of Sodexo shares held: 23,100
Business address:
Sodexo
255, quai de la Bataille de Stalingrad
92130 Issy-les-Moulineaux (France)
Main role: Chief Executive Offi cer, Sodexo
Background
Denis began his career with Schneider Electric in Egypt, before assuming a position as consultant at Altran, with Dassault Électronique as
client. He remained with Altran for 16 years, holding several management positions including Altran Technologies UK’s Chief Executive Offi cer,
where he created the subsidiary. He then became Chief Executive Offi cer of Altran Technologies France before becoming Director of Strategy
and Off shore Operations.
In 2007, he joined Sodexo as Benefi ts and Rewards Services Chief Executive Offi cer for Central and Eastern Europe. In 2010, Denis took the
lead of Benefi ts and Rewards Services activity in Europe and Asia, before being appointed as Benefi ts and Rewards Services Chief Executive
Offi ce worldwide in January 2012. Denis joined Sodexo’s Executive Committee in January 2014. In January 2015, he also became Group Chief
Digital Offi cer and in September 2016, Denis was also appointed as Personal and Home Services Chief Executive Offi cer.
On January 23, 2018, Denis Machuel was appointed Chief Executive Offi cer of Sodexo.
Other positions and corporate offices held
Companies linked to Sodexo
Companies not linked to Sodexo
FRENCH COMPANIES
FRENCH COMPANIES
• Chairman of the Board of Directors: Sodexo Pass
None.
International
FOREIGN COMPANIES
• Chairman of the Board of Directors: Sodexo Pass Tunisie
(Tunisia); Shangai Sodexo Pass Service Limited (China);
Sistemas de Incentivos Empresariales (Panama)
• Member of the Board of Directors: Sodexo Pass Portugal
Unipessoal Lda (Portugal); Inspirus LLC (USA)
• Member of the Management Board: Sodexho Pass
Venezuela CA (Venezuela)
• Member of the Supervisory Board: iAlbatros Poland SA
(Poland)
FOREIGN COMPANIES
• Member of the Board of Directors: Catalyst
Other positions and corporate offices held within the past five years but no longer held
Denis Machuel has held numerous corporate offi ces in Sodexo Group subsidiaries within the past fi ve years. For ease of reference, not all of
these offi ces are listed here.
Executive Committee
The Chief Executive Officer is supported by an Executive
Committee.
the potential benefits of growth opportunities and the risks
inherent in its business operations.
The Executive Committee meets regularly, and is the linchpin
of the management structure. It is responsible not only for
discussing and developing strategies to be recommended to the
Board of Directors, but also for monitoring the implementation
of these strategies once the Board of Directors has approved
them. The Executive Committee tracks the implementation of
action plans, monitors business unit performance, and assesses
During Fiscal 2019 the following change took place in relation to
the Executive Committee’s members:
• Sarosh Mistry, CEO Home Care Services Worldwide, joined the
Executive Committee, having also been appointed as Region
Chair for North America (On-site Services), replacing Lorna
Donatone, who continued in her role as CEO, Geographic
Regions.
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As of August 31, 2019, Sodexo’s Executive Committee had 20 members (including Denis Machuel), 35% women with eight diff erent
nationalities. These members are as follows:
Denis Machuel
Chief Executive Officer
Nathalie Bellon-Szabo
CEO, Sports and Leisure Worldwide, On-site Services
Cathy Desquesses
Johnpaul Dimech
Lorna Donatone(1)
Sean Haley
Nicolas Japy(2)
Tony Leech
Group Chief People Officer
Region Chair, Asia Pacific , On-site Services
Region Chair, Latin America and CEO, Geographic Regions
CEO, Service Operations
Region Chair, UK & Ireland, On-site Services
CEO Energy & Resources Worldwide, On-site Services
CEO, Government & Agencies Worldwide, On-site Services
Satya-Christophe Menard
CEO, Schools & Universities Worldwide, On-site Services
Sylvia Metayer
CEO, Corporate Services Worldwide, On-site Services
Sarosh Mistry
Region Chair, North America, On-site Services
CEO, Home Care Services Worldwide
Belen Moscoso Del Prado
Group Chief Digital and Innovation Officer
Anna Notarianni
Region Chair, France, On-site Services
Marc Plumart
Marc Rolland
Dianne Salt
Didier Sandoz
Aurélien Sonet
Bruno Vanhaelst
Damien Verdier
(1) Will retire on December 31, 2019.
(2) Has retired on September 1, 2019.
CEO, Healthcare & Seniors Worldwide, On-site Services
Group Chief Financial Officer
Group Chief Communications Officer
CEO Personal and Home Services
CEO, Benefits and Rewards Services
Group Chief Sales and Marketing Officer
Group Chief Corporate Responsibility Officer
On September 1, 2019 the following changes took place:
• Simon Seaton replaced Nicolas Japy as CEO Energy &
Resources Worldwide (On-site Services);
• Sunil Nayak replaced Sylvia Metayer as CEO Corporate
Services Worldwide (On-site Services);
• Sylvia Metayer became Chief Growth Offi cer;
• Johnpaul Dimech replaced Lorna Donatone as CEO,
Geographical Regions;
• Damien Verdier’s role was changed to focus exclusively on
Corporate Responsibility and institutional relationships.
In relation to gender diversity within the Executive Committee,
t h e B o a r d o f D i r e c t o r s c o m p l i e s w i t h a p p l i c a b l e l a w ,
the recommendations set out in the AFEP-MEDEF Code and
best market practices. In line with this, 20% of the performance
shares granted to Executive Committee members are subject
to a specific diversity and inclusion vesting condition aimed
at promoting women to top management positions, i.e.
posts reporting directly to a member of the Group Executive
Committee. The targets are for 37% of top management posts
to be held by women in 2022 and 40% in 2025.
The Executive Committee is supported by a Group Investment
Committee whose members comprise the Chief Executive
Officer, the Chief Financial Officer and one or more CEOs
depending on the investment projects concerned. This
Committee considers and approves:
• signifi cant new contracts for the Group;
• any plan to invest in property, plant and equipment or
intangible assets as well as cumulative overruns of any
investment budget approved at the beginning of the fi scal
year;
• any plan to invest in or acquire companies;
• disposals of shareholdings.
The Executive Committee meets regularly in plenary meetings
and ad hoc meetings are held when required.
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5.2.2 Compliance with the AFEP-MEDEF Code
Sodexo uses the AFEP-MEDEF Code as its Corporate Governance framework. The latest version of this Code, as revised in June 2018, is
available on the websites of the AFEP (www.afep.com) and the MEDEF (www.medef.com). The Company has opted not to apply certain
of the Code’s recommendations, for the reasons set out in the table below.
AFEP-MEDEF RECOMMENDATIONS
SODEXO PRACTICE
Independence criteria for Board members
(section 8.5.6 of the Code)
Among the criteria to be evaluated in
considering whether a Board member is
independent is that of not having been a
Board member for more than 12 years.
Proportion of independent members on
the Nominating Committee
(section 16.1 of the Code)
The Code recommends that the majority of
the members of the Nominating Committee
be independent directors.
Robert Baconnier’s terms of office as a director of Sodexo have exceeded 12 years since
February 9, 2017.
In its analysis of whether Robert Baconnier could still qualify as an independent director,
the Board of Directors took the following factors into account:
• his financial expertise;
• the objectivity he has always shown during the Board’s debates and discussions;
• his ability to convey his opinions and beliefs and make balanced judgments in all circumstances;
• his deep understanding of the Group’s challenges and goals, which facilitates the continuity
of discussion and provides perspective on decisions.
The Board of Directors considers that his personality, leadership qualities and underlying
commitment are all evidence of his independent mindset.
Taking all of these factors into consideration, the Board has decided not to apply the independence
criterion limiting Board members’ terms of office to 12 years and to continue to consider Robert
Baconnier an independent director.
Furthermore, Robert Baconnier chose to resign from the Audit Committee as of January 22,
2019 and his directorship was only renewed for one year at the Annual Shareholders Meeting of
January 22, 2019. Consequently, his final term of office will end on January 21, 2020.
Sodexo’s Nominating Committee comprises four members, 50% of whom are independent
directors. However, it is important to note that:
• its members do not include any executive corporate officer, as recommended by the Code;
• like the Board’s other Committees, it is chaired by an independent director.
ATTENDANCE OF SHAREHOLDERS AT THE ANNUAL
SHAREHOLDERS MEETING
INFORMATION THAT COULD HAVE AN IMPACT IN THE
EVENT OF A PUBLIC TENDER OFFER
Specific procedures pertaining to the participation of
shareholders at the Shareholders Meeting are indicated in
article 16 of Sodexo’s bylaws (see section 6.4.12 of this Universal
Registration Document).
The Company considers that its ownership structure and voting
rights, which are described in section 6.3.2 of this Universal
Registration Document, are the items that it is required to disclose
pursuant to article L.225-100-3 of the French Commercial Code,
which provides a list of items that require disclosure if they could
have an impact in the event of a public tender off er.
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5.3 OTHER INFORMATION
5.3.1 Other information concerning corporate officers and senior
management of the Company
Family relationships within the Board of Directors are as follows:
• Astrid Bellon, Nathalie Bellon-Szabo and François-Xavier
Bellon (directors) are the sisters and brother of Sophie Bellon,
Chairwoman of the Board of Directors;
• Nathalie Bellon-Szabo (director) is a member of Sodexo’s
Executive Committee.
No loans or guarantees have been made or given to either
members of the Board of Directors or senior management by
Sodexo or by any Group company.
No assets necessary for the Group’s operations are owned by
either members of the Board of Directors or senior management
or by their families.
There are no potential confl icts of interest between the duties
to Sodexo of members of the Board of Directors or senior
management and their private interests. In particular:
• Mr. and Mrs. Pierre Bellon and their four children control
72.6% of Bellon SA, which in turn holds 42.2% of the share
capital of Sodexo and 56.6% of the exercisable voting rights
as of August 31, 2019. Mr. and Mrs. Pierre Bellon and their
children entered into an agreement in June 2015 to prevent
direct descendants of Mr. and Mrs. Pierre Bellon from freely
disposing of their Bellon SA shares for 50 years. Bellon SA’s
only asset is its holding in Sodexo; Bellon SA has no intention
of selling this holding to a third party;
• other members of the Bellon family hold 7.8% of the shares
of Bellon SA.
As far as the Company is aware, no member of the Board of
Directors or of the senior management has during the past fi ve
years been:
• convicted of fraud;
• associated with a bankruptcy, receivership or liquidation;
• offi cially incriminated and/or subject to any offi cial public
sanction issued by a statutory or regulatory authority;
• prohibited by a court from acting as a Board member,
a Supervisory Board member, or a member of senior
management of an issuer, or from participating in the
management or business aff airs of an issuer.
Transactions in Sodexo shares carried out by corporate offi cers, Board
members, members of their family and related persons
As required under article 223-26 of the French securities regulator’s (Autorité des marchés financiers – AMF) General Regulation,
transactions in Company shares by corporate offi cers, directors and persons with personal ties to these offi cers and directors declared
to the AMF pursuant to article L.621-18-2 of the French Monetary and Financial Code were as follows during Fiscal 2019:
Soumitra Dutta (director)
Sale of 500 ADRs
September 24, 2018
U.S.$21.86
Person with close ties to Bernard Bellon (director)
Sale of 5,400 shares
November 20, 2018
€91.25
Person with close ties to Bernard Bellon (director)
Sale of 165 shares
November 29, 2018
€91.66
TRANSACTION TYPE
TRANSACTION DATE
AVERAGE PRICE
Measures to prevent abuse from controlling shareholder
Sodexo has put in place a series of measures in order to ensure
that the control over the Company is not exercised in an abusive
manner. Examples of these measures include:
(a) the presence of six independent directors among the twelve
members of the Board of Directors (including two directors
representing employees) as of August 31, 2019;
(b) the fact that the Company has put in place three specialized
Committees, which are all chaired by independent directors
and whose members include independent directors, as
recommended by the AFEP-MEDEF Code;
(c) the separation of the roles of Chairman of the Board and
Chief Executive Offi cer;
(d) the disclosures within this document of the relationship
between Sodexo and Bellon SA:
• these include the ownership interest of Bellon SA in
Sodexo (disclosed in section 6.3 of this document),
• the Sodexo shares are the only assets held by Bellon SA;
consequently, the interests of Sodexo’s shareholders are
aligned with those of Bellon SA’s shareholders and the
capital ties between the two companies do not generate
any confl ict of interest,
• since 1991, a service agreement between Bellon SA and
Sodexo has been in operation (described below in the
paragraph concerning related-party agreements). The fees
payable under this agreement and changes in these fees
are reviewed annually by the Audit Committee.
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5.3.2 Related-party agreements and commitments
Related-party agreements and
commitments submitted for approval
at the Annual Shareholders Meeting
of January 21, 2020
The Company did not enter into any related-party agreements
or commitments governed by articles L.225-38 or L.225-42-1 of
the French Commercial Code during Fiscal 2019.
After the close of Fiscal 2019, the Company entered into the
following commitment, governed by article L.225-42-1 of the
French Commercial Code, which was authorized by the Board of
Directors on November 6, 2019:
Regulated commitment benefi ting Denis Machuel
(pension plan)
In order to comply with the France’s Business Growth and
Transformation Act dated May 22, 2019 (the “PACTE Act”) as
well as with the Ordonnance of July 3, 2019 transposing the
pension portability directive, the Board of Directors decided to
close as of December 31, 2019 the defi ned benefi t pension plan
benefiting Denis Machuel and to implement another benefit
pension plan governed by article L.137-11-2 of the French Social
Security Code. This new plan which will benefi t Denis Machuel
will grant annual rights amounting to 0.5% of his fixed and
variable compensation for the fi rst fi ve years and to 1% beyond
those fi ve years, up to a total of 10% . The acquisition of rights
will remain subject to the same performance condition as the
one set for the previous plan, i.e. an achievement rate of his
annual variable compensation targets of at least 80%.
Related-party agreements and
commitments approved by
the shareholders in previous years
that remained in force during
Fiscal 2019
Service agreement between Bellon SA and Sodexo,
in which Sophie Bellon, Nathalie Bellon-Szabo,
Astrid Bellon and François-Xavier Bellon are
corporate offi cers in both companies and exercise
control as defi ned in article L.233-3 of the French
Commercial Code
The service agreement between Bellon SA and Sodexo, which falls
within the scope of article L.225-38 of the French Commercial
Code and was approved by shareholders in previous years,
remained in force during Fiscal 2019. This agreement was
subject to an annual review by the Board of Directors and the
Statutory Auditors were informed thereof.
Information on this service agreement is provided below as
well as in the Statutory Auditors’ Special Report set out in
section 4.4.2 of this Registration document.
A service agreement has been in place between the Company
and Bellon SA since 1991.
At its meetings on November 15, 2016 and July 10, 2017,
the Board of Directors, on the recommendation of the Audit
Committee, approved changes to this agreement that became
effective on November 17, 2016 and were approved at the
Shareholders Meeting of January 23, 2018.
Under the terms of this agreement, Sodexo benefi ts from the
professional experience and expertise of the three Bellon SA
managers.
Under the terms of the agreement, Bellon SA invoices Sodexo
for the compensation of the Chief Financial Offi cer, Chief People
Offi cer, and Chief Strategy Offi cer during the secondment period.
In compliance with the law, their compensation is fully rebilled,
including the fi xed and variable portions, as well as any related
payroll taxes.
The total fees billed under this agreement, and changes
compared with the prior year, are reviewed annually by the Audit
Committee. In addition, and in compliance with the law, the
agreement and the annual billed fees are reviewed every year by
the Board of Directors (with none of the directors from the Bellon
family taking part in either the vote or the related discussions).
In Fiscal 2019, the fees billed by Bellon SA under this agreement
amounted to 3,162,500 euro excluding taxes, relating to
the compensation (including payroll taxes) paid to the Chief
Financial Offi cer, Chief People Offi cer, and Chief Strategy Offi cer.
T his is down from 3,709,500 million euro in the previous year,
refl ecting lower bonus payout in Fiscal 2018.
Other agreements and commitments
The commitments made by the Company to Sophie Bellon,
Chairwoman of the Board of Directors (concerning her
supplemental health and benefit plans) and Denis Machuel,
Chief Executive Officer (concerning his supplemental health
and benefi t plans and supplemental pension plan), governed by
article L.225-42-1 of the French Commercial Code and approved
by shareholders in previous years, remained in force during
Fiscal 2019.
The commitment made by the Company to Denis Machuel,
Chief Executive Offi cer, relating to his non-compete obligation
(governed by article L.225-42-1 of the French Commercial Code)
also remained in force in Fiscal 2019 but was not executed.
These commitments were subject to an annual review by the
Board of Directors and the Statutory Auditors were informed
thereof. Information on these commitments is provided in the
Statutory Auditors’ Special Report set out in section 4.4.2 of this
document.
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Assessment procedure for related-party agreements and other agreements
On November 6, 2019, on the recommendation of the Audit
Committee, the Board of Directors adopted an internal charter
for the Group to be used for identifying those agreements that
need to undergo the procedure for related-party agreements,
and distinguishing them from other agreements entered into in
the ordinary course of business. This charter will help ensure
that Sodexo complies with new French legislation on these
agreements, which requires companies to regularly assess the
conditions under which such agreements are entered into and to
analyze their classifi cation.
In addition to describing the regulatory framework applicable
to the various types of agreements that may be entered into
by the Group, the charter provides for a regular assessment to
be carried out by the Audit Committee of the conditions under
which agreements are entered into in the ordinary course of
business, with any parties that have a direct or indirect interest
in an agreement being prohibited from taking part in the
corresponding assessment.
5.3.3 Ethics and compliance
Conducting business with integrity is critical to Sodexo’s success
and constitutes a fundamental pillar of the Group’s responsible
business conduct commitments. Sodexo’s management has a
zero tolerance policy for any form of unethical practice, such as
bribery, corruption, or breaches of human rights.
In line with this, Sodexo has chosen to appoint a Group Chief
Ethics Offi cer, who reports directly to the Chief Executive Offi cer
and is responsible for promoting ethical principles and relaying
the Group’s Responsible Business Conduct program.
5.3.3.1 Organizational structure
Since 2011, the Sodexo Ethics and Compliance Committee
ensures that business is conducted responsibly, by:
• deploying an ethics and compliance culture, and related
programs and policies across the Group;
• addressing a range of issues relating to anti-corruption, the
duty of vigilance, anti-money laundering, and preventing
confl icts of interests;
5.3.3.2 Ethics and Compliance
program
Sodexo has further strengthened its Ethics and Compliance
program, notably with a view to meeting the requirements
provided for under new French legislation (the “Sapin II” Act of
December 9, 2016 and the Duty of Vigilance Act of March 27,
2017). The program now includes the following:
•
•
Code of conduct: Sodexo’s Code of conduct – which sets
out the Group’s ethical principles – was updated in 2018.
It provides practical examples showing employees how to do
the right thing when faced with a dilemma and is available on
the Sodexo website;
Whistleblowing system: The Sodexo Speak Up Ethics Line,
available in over 30 languages, enables all Sodexo employees
and partners to report anything that they suspect to be
unethical, illegal or unsafe, through a dedicated website or
by phone. The Speak Up Line replaces the local alert systems
that previously existed;
• supporting all of the Group’s Ethics and Compliance
•
Committees worldwide;
• examining all specifi c issues brought to its attention.
This Committee is co-chaired by the Group General Counsel and
the Group Chief Ethics Officer and comprises representatives
from the Group’s various support functions: Legal, Internal
Control, Internal Audit, Human Resources, Supply Management,
and Corporate Responsibility, Communication as well as heads
of certain Group activities (some of these representatives are
also Group Executive Committee members). Two other Group
Executive Committee members take part in the work of the
Ethics and Compliance Committee (a region President and a
worldwide segment CEO). These two members change every
year so that all of the Group’s functions can be represented. The
Ethics and Compliance Committee makes a quarterly report on
its work to the Group Executive Committee.
A local network of Compliance Committees is also being
gradually set up across the Group. Local Ethics and Compliance
Committees that report to the regional Executive Committees
are being put in place in regions and/or countries that did not
have them before France’s “Sapin II” Act took eff ect.
Risk mapping: New risks specific to responsible business
conduct have been assessed for each country and aggregated
within the global risk map. These risks cover major issues
such as bribery, corruption, breaches of human rights, anti-
trust practices and environmental damage;
•
Third-party assessments: Sodexo introduced its Supplier
Code of conduct in 2008 and updates it every three years.
The Group’s suppliers are required to respect this Code, which
is included as an appendix to all sales contracts, and also to
pass on its terms and conditions to all of the players in their
own supply chains.
In addition, Sodexo is continuing the deployment of its online
registration tool in order to centralize information about its
suppliers. This tool incorporates all of Sodexo’s requirements
relating to capacity, certification, geographical coverage,
and regulation. It is also used to collect data on social
responsibility. Suppliers benefit from a simple interface,
which enables them to provide all the required information
easily. The advantage for Sodexo is that the tool provides a
“gateway” for the collection of information adapted to the
Group’s social responsibility requirements. Suppliers are
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invited to respond to various questions linked to the Group’s
social responsibility commitments and are required to
update them throughout their relationship with Sodexo. At
the end of August 2019, more than 16,500 suppliers were
registered in the tool;
•
•
•
Training: Specifi c training courses on responsible business
conduct are developed and delivered within the Group to the
staff categories with the highest level of exposure. E-learning
modules on anti-corruption and conflicts of interest have
been put in place for all of the Group’s managers, as well as
associated in-house communication campaigns;
Accounting control procedures: The internal control and risk
management procedures relating to the preparation and
processing of fi nancial and accounting information form an
integral part of the Group’s anti-corruption measures;
Internal control and audit procedures: Internal and external
audits are performed on a regular basis, notably covering
the following topics: anti-corruption, anti-money laundering,
environmental protection, respect of human rights and
fundamental labor rights, and occupational health and
safety.
5.3.3.3 Sodexo Group tax policy
The Sodexo Group has established a tax policy that has been
published on its website. This policy mainly states that
the Sodexo Group undertakes to respect local tax laws and
regulations that apply and pay its fair share of taxes in all
countries where it operates, in line with the substance of the
economic activity of the business locally. Sodexo is not using
intended tax structures for tax avoidance nor investing in tax
structures located in so-called “tax havens” in order to avoid
taxes. The tax policy complies with principles of Business
Integrity and the Code of Ethics of the Sodexo Group. Therefore,
the Group considers that it is complies with the requirements
of the new article L.225-102-1 of the French Commercial Code
combating tax fraud.
5.3.4 Vigilance Plan
Sodexo has been actively managing its risks for a long time. The
new legal requirements regarding the duty of vigilance therefore
refl ect the values and actions long championed by the Group and
its founder, Mr Pierre Bellon.
In accordance with France’s Duty of Vigilance Act, the Vigilance
Plan presents the measures put in place within the Group to
identify risks and prevent serious impacts in terms of (i) human
rights and fundamental freedoms, (ii) the health and safety
of persons, and (iii) environmental damage that may result
from the Group’s activities and those of its subcontractors and
suppliers.
As Sodexo operates in 67 countries in a variety of complex
economic and socio-cultural contexts, it adapts its approach
to the above issues in accordance with its diff erent businesses
and host countries. The Vigilance Plan covers Sodexo and its
subsidiaries’ activities and is perfectly in line with its Corporate
Responsibility roadmap.
In Fiscal 2019, Sodexo Group created a dedicated governance
relating to ethics and compliance issues (including those
that fall within the scope of the French Duty of Vigilance Act).
The organization of the Group Ethics and Compliance Committee
has been reviewed. This Committee now reports regularly to
the Group Executive Committee and local network of regional
Committees reporting to the regional and country executive
Committees is also being progressively put in place (see
section 5.3.3 above).
Issues that fall within the scope of the Duty of Vigilance cover
all businesses and involve numerous teams, including corporate
responsibility, supply management, legal affairs, internal
control, internal audit, human resources, ethics and operations.
The Group’s work on these issues also involves its customers,
suppliers and subcontractors.
The diagram below details the measures implemented by the
Group in accordance with the fi ve obligations concerning three
categories of issues (human rights and fundamental freedoms,
health and safety, environment). These measures are described
in more detail in chapter 2 of this Universal Registration
Document .
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THE MAIN MEASURES CONTAINED IN THE VIGILANCE PLAN ARE PRESENTED BELOW:
RISK MAPPING
REGULAR EVALUATION PROCEDURES
COMPANY-WIDE
APPROPRIATE ACTIONS TO MITIGATE
RISKS OR PREVENT SERIOUS HARM
• Risk map including human
rights risks , prepared by all
countries
• Taking into account the risk
of sexual harassment in the
social dialogue (employee
Sodexo)
• New Materiality Assessment
(see Materiality Assessment,
Chapter 1)
• Identification of three supply
chain risk categories and
specific monitoring:
• Textile: Uniforms
• Seafood: Tuna
• Agricultural products:
Beef
• Risk map including health &
safety risks , prepared by all
countries (see section 5.4
Risk Management)
• New materiality assessment
(see Materiality Assessment,
Chapter 1)
• Culture of « Zero harm »
HUMAN
RIGHTS
HEALTH
AND SAFETY
• Implementation of the
Responsible Business
Conduct program
• Supplier Code of conduct
• Matrix audit categories
textile (uniforms)
• Assessment* using the
Supplier Information
Management (SIM) system
• Specific clauses in customer
and employee contracts
• Sodexo Code of conduct
(statement of integrity)
• Supplier and Subcontractor
Contract Management
(Contract clauses, Right
Supplier, Right Terms)
• Implementation of the
Responsible Business
Conduct program
• Sodexo Safety Net
(evaluation and monitoring
of high risk sites)
• Supplier Code of conduct
• Assessment* using the
Supplier Information
Management (SIM) system
• Deployment of Global Health
Policies - Workplace Safety
• Culture o f « Zero harm »
• Specific clauses in customer
and employee contracts
• Sodexo Code of conduct
(statement of integrity)
• Supplier and Subcontractor
Contract Management
(Contract clauses, Right
Supplier, Right Terms)
• Risk map including
• Standard Operating
• Sales Academy
environmental risks ,
prepared by all countries
(see section 5.4 Risk
Management)
• New materiality Assessment
(see Materiality Assessment,
Chapter 1)
Procedures (SOPs) for Site
Managers
• Implementation of the
Responsible Business
Conduct program
• Supplier Code of conduct
• Assessment* using the
Supplier Information
Management (SIM) system
ENVIRONMENT
(Environment dedicated
session )
• Site Manager Academy
(Environment dedicated
session)
• Deployment of Group
Policies: Palm Oil, Seafood,
Eggs, Animal Welfare
• Customer and employee
contractual clauses
• Sodexo Code of conduct
(Integrity Principles)
• Supplier and Subcontractor
Contract Management
(Contract Clauses, Right
Supplier, Right Terms)
* Self-assessments
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ALERT AND REPORTING MECHANISM
FOLLOW-UP ON IMPLEMENTED
MEASURES AND EVALUATION OF
THEIR EFFECTIVENESS
INDICATORS AND EXAMPLES OF
EFFECTIVENESS
OPPORTUNITY CREATED
• “Speak up” alert system
accessible to people
impacted by Sodexo’s
activities
• Third-party independent
• 94.5% of Sodexo’s Senior
• Strengthening social
audit (KPMG)
• Biennial Engagement Survey
• Regular supplier review
process (external
certification, mitigation
and prevention)
Leaders received training on
sexual harassment
• 100% of Sodexo’s textile
suppliers are evaluated by
an independent organization
dialogue through global
framework agreement on
sexual harassment
• Strengthening the
relationship with suppliers
through the Seafood
Task Force and the Global
Sustainable Seafood
Initiative
• “Speak up” alert system
accessible to people
impacted by Sodexo’s
activities
• Health and safety reporting
tool (Salus)
• “Speak up” alert system
accessible to people
impacted by Sodexo’s
activities
• Third-party independent
audit (KPMG)
• Lost Time Injury Rate (LTIR):
0.86 (improved by 11.1%)
• Attraction and customer
loyalty
• Biennial Engagement Survey
• Regular supplier review
process (external
certification, mitigation and
prevention)
• External certifications and
compliance with standards
(e.g., OHSAS 18001)
• 88% of Group revenues
of countries having one
or more OHSAS 18001 or
ISO 45001 certifications
• Reduction of insurance costs
• Third-party independent
• 89,1% of On-site Services
• Sodexo has a reputation as
5
audit (KPMG)
• Biennial Engagement Survey
• Regular supplier review
process (external
certification, mitigation and
prevention)
an attractive employer
• Sodexo continues to
expand its ecosystem to
reduce greenhouse gas
emissions and meet growing
stakeholder expectations
revenues of countries having
the Sodexo Animal Welfare
Supplier charter available in
at least one official language
• 77,9% of sustainable
fish and seafood which is
sustainable as a % of total
seafood (in kg)
• 57,0% of cage free shell eggs
(of the total of shell eggs
purchased by Sodexo)
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5.3.5 Personal data protection
Respecting people’s private lives and protecting their personal
data are critical to Sodexo for it to maintain relationships
of trust with its employees, customers, consumers and
shareholders.
In view of this, in Fiscal 2017 Sodexo appointed a Group Data
Protection Offi cer who reports to the Group General Counsel.
2018 was the year of the implementation of the European General
Data Protection Regulation(1) (the “GDPR”), which entered into
force on May 25, 2018, as well as the adaptation of the French
Informatique et libertés law (Data Protection Act)(2). This new
legal framework for the protection of personal data, applicable
beyond the borders of the European Union, was an opportunity
for the Sodexo Group to roll out the required governance and a
comprehensive personal data protection program.
Protecting personal data is the responsibility of everyone at
Sodexo and is one of the pillars of the Group’s Responsible
Business Conduct program.
5.3.5.1 Organizational structure
Sodexo’s Group Data Protection Offi cer has a team of experts
at the Group level which has recently been further strengthened
with the addition of a project management specialist.
A network of data protection single points of contact now covers
all of the Group’s geographic regions and business segments.
This network is overseen by the Group Data Protection Offi cer
and her team at Group level in order to ensure that data
management best practices are harmonized and that data
protection policies and procedures are deployed consistently.
A reporting system has been set up and the reporting packages
submitted by the data protection correspondents are used as the
basis of the reports given on a quarterly basis by the Group Data
Protection Offi cer to the Chief Executive Offi cer.
In Fiscal 2019, a shared governance system for personal data
protection was set up at Group level with the teams responsible
for information systems security. This system is structured
around two Committees:
• a cyber-security and personal data protection review
Committee, comprising the Group Information Systems
Security Offi cer, the Group Data Protection Offi cer, the Group
General Counsel, the Chief Information Systems Offi cer, the
Group Internal Control Officer and seven members of the
Executive Committee.
The role of this Review Committee, which meets three
to four times a year, is to (i) approve the strategies and
programs drawn up by the information systems security
offi cers and the Group Data Protection Offi cer, and monitor
the implementation of their respective roadmaps, (ii) draw
lessons from major security incidents and data breaches
and adjust the corresponding programs where necessary,
(iii) review the reports of the internal and external auditors
and the responses to be put in place for any identified
weaknesses, and (iv) identify any major residual risks for the
Group and decide on the appropriate remedial actions;
• a Compliance Management Committee, comprising the
Group Information Systems Security Offi cer, the Group Data
Protection Offi cer, and members of their respective teams at
Group level.
This Committee meets on a regular basis and is assisted, when
required, by representatives of the Group’s business activities,
segments and support functions. Its role is to ensure that the
IT-related technical and organizational measures implemented
to guarantee security and confidentiality adequately cover
personal data protection risks.
A personal data protection governance system has also been set
up in some regions and its deployment for the remaining regions
is a priority for Fiscal 2020.
5.3.5.2 Program for comp liance with
GDPR and other personal
data protection laws
The Group has deployed a compliance program to ensure that
it fully respects the new requirements provided for in the GDPR
and other personal data protection laws. This program includes
the following:
Governance
The governance measures undertaken to structure the
organization of the overall personal data protection system are
described above.
Responsibility
In conjunction with the IT teams, in Fiscal 2018 an inventory
was performed of (i) the types of personal data processing,
by purpose, carried out by Sodexo entities operating in the
European Union and the European Economic Area, and (ii) the
associated IT applications in place. This work resulted in the
creation of registers, an overall data protection policy, and a
practical GDPR compliance guide aimed at providing a standard
set of procedures to be followed by the entities concerned when
deploying GDPR-compliance measures (for further details on t he
Group’s overall data protection policy, see section 5.4.1).
This inventory exercise was extended in Fiscal 2019 to the Asia
Pacifi c region, the United States and Brazil.
Sodexo has also decided to submit Binding Corporate Rules
to the French supervisory authority for data protection, the
National Commission for Information Technology and Civil
Liberties (“CNIL”), which Sodexo considers as its competent
lead supervisory authority. This is a legal framework proposed
in the GDPR, which allows multinational companies to submit
a binding Code of conduct for personal data protection. Once
approved by the CNIL, this Code will enable Sodexo to even more
eff ectively share common compliance management rules with all
Group entities and have a Group-wide data transfer framework.
1 Regulation (EU) 2016/679 of the European Parliament and of the Council of April 27, 2016 on the protection of natural persons with regard to the processing
of personal data and on the free movement of such data, and repealing Directive 95/46/EC.
2 French Act No. 78-17 of January 6, 1978 relating to information technology, data fi les, and civil liberties, as amended by Act No. 2018-493 of June 20, 2018.
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Data sharing
The Group Data Protection Offi cer has drawn up a best practice
code for sharing data as well as template clauses for supplier
agreements on processing personal data. These documents
have been relayed throughout the network of data protection
single points of contact so that all Group entities apply the same
practices where data processing operations are either fully or
partially outsourced.
Additionally, a map of the applicable personal data protection
laws has been drawn up with the aim of providing a clear overall
view of the formalities that need to be carried out in each of the
Sodexo entities and therefore to prepare for implementation of
the Binding Corporate Rules.
Risk management and control
To make certain that personal data is protected right from
its collection, the Group has tightened its existing procedures
by incorporating a review of risks related to privacy and
fundamental rights.
A systematic and automated review of these risks is carried out
on Group suppliers before any contracts are signed with them.
Following the inventory conducted in Fiscal 2018, internal
controls and a recent audit of risks and any residual non-
compliance issues was performed on all Sodexo entities
operating in the European Union and the European Economic
Area. A regular monitoring plan has been put in place for the
data protection single points of contact in order to assist them
with ongoing compliance management.
The next planned major project in this area will be to create a
register of risks and a list of control points to verify that the
Group’s data protection procedures and best practices are being
eff ectively implemented.
Response protocols and execution measures
To ensure that any security incidents resulting from personal
data breaches are properly managed, the Group Data Protection
Offi cer and the Group Information Systems Security Offi cer have
jointly draft ed a Group directive to be adapted locally by all of
the Sodexo entities. A dedicated system is also currently being
deployed so that any such security incidents can be even more
effi ciently dealt with.
Transparency, managing personal data rights, and
awareness raising
As well as providing information on data processing and the
Group’s confidentiality and cookie management policies to
people whose data may be collected by Sodexo entities, the
Group has put in place a policy and procedure for managing
these people’s rights so that any requests they make are
handled rapidly and effi ciently.
As an extension to the global GDPR training program set up
in Fiscal 2018 for all of Sodexo’s employees, the Group has
launched a new practical campaign, based on ten golden rules
and designed in a fun and engaging way, to step up Sodexo’s
drive to raise employee awareness about confidentiality and
data protection.
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5.4 RISK MANAGEMENT
5.4.1 Group Policies
Sodexo faces a number of internal and external risks and
uncertainties in the conduct of its business and in the
implementation of its strategy. To confront these risks and
uncertainties, the Group has established an organization and
policies intended to identify, evaluate, prevent and manage
these risks in order to limit any adverse impacts.
Internal control procedures are established by the Company
and implemented under its responsibility, and are intended to
ensure:
• compliance with laws and regulations and application of
Group policies;
• the effectiveness of the Company’s internal processes,
notably those concerning the safeguarding of its assets;
• the reliability and integrity of financial and non-financial
information.
Internal control procedures play a major role in the conduct of
the Group’s business, by contributing to the prevention and
management of risks.
Strategy, long-term objectives
and general policies of the Group
The Group’s strategy, long-term objectives and general policies,
as defined initially by Mr. Pierre Bellon and subsequently
adjusted over the years by the Board of Directors, the Chief
Executive Offi cer and the Executive Committee, are set out in
the fi rst chapter of this document and are presented each year
during the Shareholders Meeting.
The Group’s internal control procedures rely on these principles.
General policies of the Group
Group policies cover such areas as strategic planning, human
resources development, finance, procurement, consumer
and customer focus, food safety and hygiene, sustainable
development and internal audit. They comprise four parts: goals,
procedures, improvement metrics, and research and innovation.
The Group continues to develop its policies to make them easier
to understand and apply.
In light of the Group’s changing environment and its expanding
portfolio of services and solutions, these policies are regularly
updated and approved by the Board of Directors.
Strategic planning process
The Board of Directors and senior management work together to
constantly improve the strategic planning process and promote
buy-in at all levels of the organization.
The Group’s fundamental principles demonstrate how Sodexo
was able to start from scratch in 1966 and then become a major
international group with 470,000 employees, in 67 different
countries, and world leader in Quality of Life services. In a
profoundly changing world, Sodexo has defined priorities to
enable it to continue to grow its revenues and underlying
operating profi t in the future.
Periodically, and particularly during the September Board
meeting, the Group Chief Executive Officer, the heads of the
Group corporate functions and the Chief Executive Officers
of the main segments and activities present their strategic
plans. Through this process, directors and senior executives all
contribute to evolving the strategy and policies of the Group.
The process leads to the preparation of a consolidated annual
budget that is submitted to the Board of Directors for approval.
Human resources development policy
The Group’s three overriding human resources priorities are:
• to meet staffi ng requirements in terms of numbers, skills and
competencies;
• to promote the development of our people off ering training,
learning and by giving priority to internal promotions;
• to develop a performance-based culture based on shared
priorities and indicators.
The main human resources policies are focused on: the profi le of
a Sodexo leader and senior manager, Group organizational rules,
succession planning for senior managers, senior managers’
training and skills enhancement, employee engagement, senior
managers’ compensation, and innovation and research in the
area of human resources administration.
Finally, annual tracking of improvement metrics by the Executive
Committee and Board of Directors should serve to validate
action plans aimed at advancing these policies, including
engagement surveys, employee retention, internal promotion,
and the representation of women in senior management.
Sodexo is also making significant advances in the area of
diversity, particularly in relation to gender balance at all levels
of the organization and is establishing partnerships with
organizations for people with disabilities.
Financial policies
The Group’s fi nancial objectives are twofold, namely:
TO PRESERVE THE GROUP’S FINANCIAL INDEPENDENCE
Financial independence is a fundamental principle, because it
enables the Group to hold fi rm to its values, pursue a long-term
strategic vision, ensure management continuity and guarantee
the business’s lasting success.
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Sodexo’s financial independence is guaranteed by the family
shareholding. As of August 31, 2019, Sodexo’s holding company,
Bellon SA, held 42.2% of the shares and 56.6% of the exercisable
voting rights. It is based on three simple principles:
• choosing low capital-intensive activities;
• continuously maintaining sufficient liquidity to fund
growth, reimburse medium-term debt, and pay dividends to
shareholders;
• preserving a strong balance sheet and sound fi nancial ratios.
ENHANCING THE ATTRACTIVENESS OF SODEXO SHARES
TO LOYAL, LONG-TERM SHAREHOLDERS
Financial policies establish rules applicable to areas such as
investment approvals, and the management of working capital,
cash and debt.
Group fi nancial policies require all decisions involving external
financing to be made by the Group Chief Financial Officer,
the Chief Executive Offi cer or the Board of Directors, depending
on the amount and type of the transaction.
The Group Finance Department prepares a ten-year fi nancing
plan for the Group each year.
Group fi nancial policies are designed to prevent any speculative
positions being taken and to avoid risk in connection with
fi nancing and cash management activities.
Procurement policy
The objectives of the procurement function are documented
in the Group’s procurement policies and processes. The
performance of Sodexo’s procurement teams in the main
countries where it does business is measured through savings
metrics, which enable the Group to gauge the impacts of
procurement initiatives and demonstrate the savings achieved.
T h e G r o u p ’ s p r i o r i t y i s t o e n s u r e t h a t s u p p l i e r s a n d
subcontractors that deliver Sodexo products and services have
the right skills, capabilities and potential to carry out the tasks
assigned to them. Our risk management guidelines set out
the procurement procedures that our teams are required to
follow in terms of working with and managing suppliers and
subcontractors. The level of initial evaluation process and type
of on-going management procedures for suppliers and sub-
contractors directly depend on the product supplied or service
rendered, and include verifying issues such as food safety and
traceability.
In line with the Group’s procurement policy, suppliers and
subcontractors must sign the Sodexo Supplier Code of conduct
which sets out Sodexo’s requirements for adopting responsible
best practices concerning ethical, social and environmental
issues.
Business Integrity Guide
The Business Integrity Guide sets forth the Group’s standards
f o r a c h i e v i n g b u s i n e s s i n t e g r i t y . A d h e r e n c e t o t h e s e
uncompromising standards is part of what it means to be an
employee of an industry-leading, best-in-class company. Sodexo
employees must never compromise adherence to this guide for
fi nancial or other business objectives or personal gain. Sodexo
does not tolerate any practice that is not born of honesty,
integrity and fairness, anywhere in the world where it does
business.
Corporate Responsibility
Since its creation in 1966, Sodexo’s vocation has been to
improve the Quality of Life for its employees and all whom it
serves and contribute to the economic, social and environmental
development of the communities, regions and countries in
which it operates . In 2009, the Group formalized its Corporate
Responsibility roadmap, the Better Tomorrow Plan. A revised
version of this roadmap, Better Tomorrow 2025 was released
in 2016.
The roadmap focuses on Sodexo’s role as an employer, as a
service provider and as a corporate citizen as well as on the
impacts that it has on individuals, on communities and on the
environment. It has 9 measurable commitments to action by
2025 with interim targets.
Sodexo’s commitment to the environment as a service
provider is to source responsibly and provide management
services that reduce carbon emissions. Since 2009, Sodexo has
implemented a low carbon strategy which is motivated by our
desire to improve Quality of Life. Our strategy takes into account
the business opportunities, risks and their fi nancial implications.
In particular, these commitments are demonstrated through the
following actions:
• renewal of the technical partnership agreement with World
Wildlife Fund (WWF) to work on carbon reduction throughout
Sodexo’s supply chain;
• membership of the Better Buying Lab initiative led by the
World Resources Institute (WRI) to promote the consumption
of more plant-based food;
• combined management focus on achievement of the 34%
carbon emissions reduction target, compared to 2011
baseline year.
In the area of nutrition for the health and wellness of
consumers, Sodexo is committed to food safety and the
promotion of a balanced diet for its consumers. Sodexo plays
a critical role in the fi ght against obesity and malnutrition and
provides solutions to make health and wellness a priority.
In the area of social, economic and environmental
development in the cities, regions or countries where
Sodexo is present, we focus on the following actions:
•
Sodexo has been supporting the fight against hunger and
malnutrition through Stop Hunger a global network created
20 years ago;
• working with local and small businesses and contributing to
local economies through the Partner Inclusion program which
allows thousands of local businesses s to integrate Sodexo’s
value chain;
• tackling waste by engaging with clients and supply partners
to provide innovative solutions on food waste through the
deployment of the program WasteWatch ;
• promoting gender balance with a target of having at least
40% woman among Sodexo’s senior leaders by 2025.
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Sodexo is committed to respecting human rights wherever
it does business. This commitment, with its core policies
and procedures are based on international texts such as the
Universal Declaration of Human Rights, the International Labour
Organization’s Declaration of Fundamental Principles and Rights
at Work, and by the principles set forth in the OECD Guidelines
for Multinational Enterprises and the UN Guiding Principles on
Business and Human Rights.
In September 2019, Sodexo, world leader in Quality of Life
services, was named Global Sustainability Industry Leader in its
sector for the 15th year in a row by the Dow Jones Sustainability
Index (DJSI).
Health, safety and environment policy
A world-class HSE performance is essential to our future
commercial success and our reputation as a responsible global
business. More importantly, at the heart of our HSE commitment
is our care for people, for our community of employees as well
as for all the tens of millions of consumers we serve every day.
Health and safety is the founding pillar on which we base our
mission to improve Quality of Life.
Sodexo’s global Health, Safety and Environment policy sets out
the Company’s commitments. In partnership with our clients,
consumers, suppliers and local communities, we work towards
a zero harm culture where we prevent injuries and ill-health and
protect the environment.
Information systems policies
The Group Information Systems and Technologies Department
(Global IS&T) has defi ned three core objectives:
•
improve the productivity of the Group’s teams and bring
them closer to their customers and consumers by leveraging
new information and communication technologies;
• resolutely focus on serving users and keep pace with their
changing needs and expectations;
• standardize information systems in order to continue
to support Sodexo’s growth, while also developing more
robust performance measurement systems and control
environments for our activities.
To meet these three core objectives, the Information Systems
and Technologies Department has deployed numerous
procedures, notably in the following areas:
• Group Information Systems Governance;
•
Information and Systems Security;
• Mobile Terminal Allocation and Security;
•
IS&T Capital Expenditure Programs;
• Third Party Security.
Data Protection policy
As Sodexo put individuals at the heart of the Quality of Life services,
it was essential for Sodexo to establish a foundation for privacy
and the protection of all personal data. The Sodexo’s Global Data
Protection Policy is aimed to describe how Sodexo entities collect,
use, store, share, delete or otherwise process personal data and
how data subjects can exercise their rights. This policy applies to
the global organization of Sodexo entities when the European data
protection law, namely, the General Data Protection Regulation
(or “GDPR”) is applicable. This policy applies to the processing of
personal data collected by Sodexo, directly or indirectly, from all
individuals including, but not limited to Sodexo’s job applicants,
our employees, clients, consumers, suppliers or subcontractors,
our shareholders or any third parties (for further details of the
compliance program relating to GDPR and other data protection
laws, please refer to section 5.3.5.2).
Internal audit policy
Internal audit activities include reviewing and assessing the
adequacy and eff ectiveness of governance, risk management
and internal control systems and processes. This includes
assessing:
• the reliability of fi nancial and non-fi nancial information;
• compliance with existing policies, procedures, laws and
regulations;
• the methods used to safeguard assets;
• the eff ectiveness of operations and the resources used.
The internal audit team is also responsible for alerting the
Chairwoman of the Board of Directors, the Audit Committee and
the Executive Committee to any material risks and informing
them of the causes of identifi ed weaknesses.
The internal audit team has defined several procedures,
primarily covering the identifi cation of internal audit priorities
for the coming fi scal year, the planning and execution of internal
audits, the draft ing of Internal Audit Reports and the follow up of
action plans to implement the team’s recommendations.
A series of internal audit performance indicators has been
developed, covering such issues as the percentage of internal
audit recommendations that have been implemented, the
average time required to issue Internal Audit Reports, the
annual audit plan completion rate, Internal Auditor training and
rotation rates, the satisfaction rate among audited units.
Delegations of authority
Principles and policies in this area are supplemented by job
descriptions, annual targets and, for senior executives, clearly
defi ned delegations, which are reviewed annually and formally
communicated to each executive by his or her superior.
The Chief Executive Offi cer delegates certain authority to the
members of the Group Executive Committee, who themselves
delegate to members of their executive teams.
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Delegations of authority cover business development, human
resources, procurement, investments and fi nance.
Delegations of authority must comply with the Group’s policies.
Improvement metrics
All progress can be measured. Accordingly, Sodexo has developed
improvement metrics allowing for progress to be measured
in five main areas: Business Development, Management,
Procurement, Human Resources and Corporate Responsibility.
The Group Finance Department coordinates the process and
monitors operational improvement metrics for activities and
entities using a Group scorecard.
Making progress in these areas is critical for future growth in
underlying operating profi t, operating cash fl ow and revenue.
The improvement metrics are presented each year to the Board
of Directors and the Group Executive Committee in order to track
progress in the areas concerned.
Development metrics:
• client retention rate;
• client and consumer satisfaction rates;
• comparable unit growth;
• new business development rate;
• return on investments in development (particularly non-
tangible investments).
Management metrics:
• contract profi tability;
• profi tability of the diff erent activities and client segments;
• gross operating margin and on-site costs;
• general and administrative expenses by subsidiary, by client
segment and by function.
Procurement metrics:
• percentage of purchases made from referenced suppliers;
• number of referenced products, reduction in the number of
deliveries on a site, etc.
Corporate Responsibility metrics
Employer metrics, including:
• employee engagement rate for which the Group has targeted
a level comparable to that of firms ranked as the best
employers worldwide. This indicator is measured every two
years by an engagement survey;
• employee retention for all personnel and for site managers;
•
internal promotion, which is measured by the number of
employees promoted to site manager, to a middle manager
or a senior management position;
• representation of women in senior management;
• percentage reduction in LTIR;
• percentage of workforce working in countries implementing
action plans to integrate people with disabilities into the
workplace.
Nutrition, health and wellness metrics, including:
• percentage of client sites implementing actions that
proactively address the Sodexo 10 Golden Rules of Nutrition,
Health and Wellness.
Economic, social and environmental development metrics,
including:
• percentage of spend with contracted suppliers having signed
the Sodexo Supplier Code of conduct;
• business value benefi ting SMEs (in euro).
Environmental protection metrics, including:
• measure of the consumption of products, identifi ed as having
an impact on the environment (for example palm oil);
• percentage of sustainable fi sh and seafood;
• percentage reduction in carbon emissions intensity
(compared to 2011 baseline).
Sodexo selected an independent fi rm to audit a representative
s e l e c t i o n o f s o c i a l , e n v i r o n m e n t a l a n d s o c i e t a l d a t a
demonstrating the progress made in the area of Corporate Social
Responsibility. The conclusions of this audit are presented in
section 3.2.9 of this document.
5
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5.4.2 Description of the risk management approach
5.4.2.1 Organization of the risk management and internal control model
The risk management and internal control process is built using the 3 Lines of Defense model, as shown below:
SODEXO’S RISK MANAGEMENT AND INTERNAL CONTROL MODEL
The Three Lines of Defense
BOARD / AUDIT COMMITTEE
EXECUTIVE COMMITTEE
Report
Report
Report
Inform
FIRST LINE OF DEFENSE
SECOND LINE OF DEFENSE
THIRD LINE OF DEFENSE
OPERATIONAL
MANAGEMENT
Segment Directors,
District Managers,
Site Managers…
SUPPORT/
TRANSVERSAL
FUNCTIONS
Service Operations
Finance
Human Resources
Health & Safety
IT Security
Risk Management and Internal Control,
Legal Affairs...
GROUP
INTERNAL
AUDIT
E
X
T
E
R
N
A
L
A
U
D
I
T
O
R
S
/
R
E
G
U
L
A
T
O
R
S
Identify and manage risks
•
within their activities
• Support our operators
in risk management
• Put controls into place
• Provide tools and processes
• Evaluates and makes
recommendations for the
improvement of risk management
The first line of defense mainly consists of our operational
managers who identify and manage risks within their activities.
They put controls and action plans in place for the risks
identifi ed.
The second line of defense is our support functions who are there
to support operators in their risk management. They define
the procedures and standards and provide standardized tools
and processes to enable operational staff to put in place the
appropriate controls.
The third line of defense is internal audit, which gives an
independent evaluation of the risk management and internal
control process to the Executive Committee and Board of
Directors. It makes recommendations to the fi rst and second
lines of defense for the improvement of risk management and
internal control, and carries out monitoring in relation to action
plans.
Sodexo has put in place a robust procedure for the identifi cation
and assessment of major risks, designed to ensure that risks
are evaluated and managed at the appropriate level within the
organization. Measures to manage risks are implemented either
at the site, country, regional or global level, depending on their
nature.
The Group’s internal control procedures rely on the fundamental
principles defi ned by the Board of Directors.
5.4.2.2 Approach to Risk Assessment
Sodexo uses a hybrid risk assessment approach, both “bottom-
up” from operators and “top-down” from senior management.
On an operational level, the leadership Committees of each of
Sodexo’s main entities carry out an annual risk assessment,
facilitated by risk and internal control managers. The results of
these assessments are recorded in a global risk management
tool. Risks thus identifi ed are owned and managed at the local
level.
Additionally, a series of interviews with Sodexo’s senior leaders
across the world is carried out by Group Internal Audit on an
annual basis to identify key risks impacting Sodexo’s business
and the achievement of its objectives.
The results of all the risk assessments and the senior leader
interviews are taken into account in the Group risk profi le that
consists of the principal risks that might impact Sodexo’s
Strategic Agenda. The profi le is shared with Sodexo’s Executive
Committee for comment, before being submitted to the Audit
Committee and the Board of Directors.
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5.4.2.3 Risk Assessment
Methodology
5.4.2.4 Link between internal control
and risk assessment
Sodexo assesses its risks in 3 stages using a standard global
methodology:
• risk Identification: the fi rst step is the identifi cation of risks
that may impact Sodexo’s ability to achieve its objectives,
whether it be at site, country, regional or global level. A
number of risk identification methods are used, including
surveys and risk registers, but the recommended and most
widely used method for both bottom-up and top down
assessments is by individual interview with key stakeholders;
• risk evaluation: risks identifi ed in the previous step are then
evaluated using three risk criteria:
•
•
•
impact – the eff ect or consequence the risk will have,
likelihood - the frequency or probability of the risk
occurring,
level of control - the level of control already in place to
reduce the risk;
• risk prioritization: following evaluation, risks are then
prioritized for further actions to treat them.
The main risk factors to which the Group is exposed are described
in section 5.4.3 of this Universal Registration Document.
As described above, risk assessment is used to identify,
evaluate and prioritize risks. Once they have been assessed,
risks are treated to reduce their effect. Ways of treating
risks include putting in place action plans and implementing
controls. Controls therefore form an important part of the range
of measures that can be used to mitigate risks, and Sodexo’s
internal control procedures are part of an ongoing process of
managing the Group’s risk exposure.
Sodexo’s risk management and internal control system is based
on the internal control reference framework recommended by
the French securities regulator (Autorité des marchés financiers –
AMF). The fi ve components of the reference framework are the
control environment (integrity, ethics, competencies, etc.),
evaluation of risks (identifi cation, analysis and management of
risks), control activities (methods and procedures), information
and communication (collection and sharing of information) and
monitoring (follow-up and eventual updating of processes).
5.4.3 Risk factors
5.4.3.1 Principal Risks & Risk Management Measures
Summary of Sodexo’s Principal Risk Factors
The summary table of Sodexo’s principal risks shows a
classifi cation of the risks by reference to the pillars of Sodexo’s
Strategic Agenda, as well as risks from the external environment.
As outlined in 5.4.2.3, each risk is assessed using impact and
probability to give an evaluation of the inherent risk, and then a
third criteria “level of control” is used to evaluate the overall net
risk. The table below shows the net risk assessment. The most
signifi cant risks are presented at the top of each category, and
the materiality of each risk shown is using a two -level rating
scale, as follows:
5
MEDIUM
HIGH
RISK MANAGEMENT AND MAIN RISKS
CLIENT &
CONSUMER CENTRIC
Client retention
Consumer expectations
Bidding risk
Competition
OPERATIONAL
EFFICIENCY
Client contract execution
Technology and information security
TALENT
Talent management and development
CORPORATE
RESPONSIBILITY
EXTERNAL
ENVIRONMENT
Labor shortage
Food, services & workplace safety
Environmental impact
Compliance with laws and regulations
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Description of Principal Risk Factors
The tables describing Sodexo’s principal risk factors (see below) give an estimate of their timeframe (short term, medium term or long
term), their possible impact and examples of measures implemented to reduce these risks.
The risk timeframe is shown as follows:
Short Term (less than a year)
Medium Term (1 to 3 years)
Long Term (over 3 years)
CLIENT RETENTION
Risk of not keeping and renewing contracts with Sodexo’s existing clients.
Risk Timeframe: Long Term
Category: Client & Consumer Centric
Impact
Growth is an essential ingredient in Sodexo’s business model, and the
most efficient way to grow is by retaining the clients it already has.
Sodexo’s FY19 retention rate is 93.3% compared to an objective of 95%.
Any lack of quality in services, lack of ability to provide certain
services or exaggeration in the cost of services or any changes in
client outsourcing strategy could mean that the client is not retained,
possibly leading to :
• less growth;
• decrease in profitability;
• loss of credibility in the market place.
Examples of Mitigating Activities
• On-site teams continually listening to the client and the consumer.
• Strengthening of the client relationship management process to
ensure alignment with client expectations on an on-going basis.
• Renewed client relationship management tool.
• Combined offer of On-site Services and Benefits and Rewards Services
widens the choice for clients.
• Continual refining of service offers to respond to client challenges
(e.g. healthy eating choices, development of energy management
services).
• Monitoring at global level of retention in the client portfolio.
CONSUMER EXPECTATIONS
Increasing consumer expectations around personalized and innovative services, healthy food choices and a comfortable
environment; increasing consumer expectations in relation to Company business conduct and environmental impact.
Risk Timeframe: Short/Medium Term
Category: Client & Consumer Centric
Impact
“Empowered consumers” is one of 11 megatrends that Sodexo has
identified in its markets. Consumers are increasingly voicing their
opinions and clients are taking their opinions into account. Consumers
expect more choice, more convenience, more healthy options and
socially responsible behavior from the companies from which they
receive service. Specific examples that Sodexo has had to take into
account include:
• increased use of digital platforms for delivery of meals;
• rise of demand from our consumers for plant-based food that is less
carbon intensive;
• reduction of single use plastics to reduce marine pollution.
If Sodexo cannot anticipate and interpret such consumer expectations
or cannot meet their expectations for innovation and in relation to
environmental impact or business conduct, its revenues, as well as its
reputation, could be affected.
Examples of Mitigating Activities
• Partnering with startups
• Sodexo is a partner of Vivatech, a digital fair that brings together
startups and large companies.
• Better Tomorrow Program: Sodexo’s corporate responsibility
roadmap, that sets out 9 commitments based on their impact on
individuals, communities and the environment.
• Roll-out of 10 Golden rules of nutrition, health and well-being.
• Sodexo employs more than 5,000 dieticians worldwide.
• Sodexo’s Code of conduct, the” Business Integrity Guide” sets out
Sodexo’s standards for business integrity.
• Global Ethics & Compliance Committee supports programs
throughout the Company.
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BIDDING RISK
Risks relating to the commercial and contractual model and the scope of services included in a client contract.
Risk Timeframe: Long Term
Category: Client & Consumer Centric
Impact
Some of Sodexo’s client contracts are long-term and may run between
five and ten years at a time. This is particularly relevant for the Business
& Administrations segment.
Inaccurate pricing assumptions, a lack of definition or detail in the
scope of services and inadequate contractual clauses during a bid
proposal can lead to low margins or even losses on the contract, either
in the startup phase or at a later date.
Examples of Mitigating Activities
• Benchmark exercises, site visits, full due diligence and the use
of technical expertise are all part of the process to establish unit
costs, seasonality of services and base-line estimates (monitoring
of cost and performance indicators to verify the relevance and
competitiveness of our offer).
• Identification of the main contractual risks (from the analysis) and
the deployment of measures to compensate these risks.
• System of review of projects by different stakeholders according to
their size, stake and scope.
• Strict execution of Sodexo’s key processes for contract design &
solution and mobilization.
COMPETITION
Sodexo faces both established competitors and new digital entrants at the local, national and international levels: risk of market
share loss and loss of growth momentum.
Risk Timeframe: Long Term
Category: Client & Consumer Centric
Impact
Losing ground to competitors reflects a lack of understanding of the
evolution of client needs and entails a lack of growth in revenues and
lower profitability.
As an example, the Healthcare & Seniors and the Education segments
in North America have lost market share in recent years, losing
momentum in growth and profitability.
Examples of Mitigating Activities
• Growing convergence between On-site Services and Benefits and
Rewards Services, with the digital content, widens the choice that
can be offered to consumers in both activities.
• Creation of new offers to better respond to consumer expectations.
• Strategic acquisitions to expand Sodexo’s offers.
• Roll-out of STEP: Sodexo’s performance management framework
designed to drive operational performance through common
operational indicators.
• Identification of savings to be redeployed in investment for growth.
• Strengthening of commercial teams on the ground.
CLIENT CONTRACT EXECUTION
5
Risks relating to the execution of a client contract: poor service delivery, non-fulfilment of contractual and performance obligations,
over delivery of additional services not defined in the contract, poor management of food and labor costs.
Risk Timeframe: Short/Medium Term
Category: Operational Efficiency
Impact
Poor service delivery to clients or non-fulfilment of contract obligations
could lead to client dissatisfaction, possible contractual penalties and
ultimately the loss of the client.
Over-delivery of additional services not defined in the contracts and
without related invoicing could lead to a shortfall in revenues and loss
of profitability on the contract.
Poor management of food and labor costs could result in reduced
profitability on the contract.
Examples of Mitigating Activities
• Strict execution of Sodexo key processes defined for contract
mobilization.
• « I Promise »: tools and techniques to help site managers manage
their contracts and improve the services they deliver.
• Definition of operational standards and best practices that are
shared to improve performance (e.g. Innovhub).
• Implementation of a tool such as the Site Management System to
ensure proper training of employees and the execution of quality
inspections.
• DRIVE: integrated food management process.
• STEP: Sodexo’s performance management framework.
• Strict monitoring of loss-making contracts.
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TECHNOLOGY & INFORMATION SECURITY
Risks around managing the confidentiality, availability and integrity of Sodexo’s information technology assets; managing
cloud systems and third-party suppliers, managing Sodexo and client data; risks from external cyber threats.
Risk Timeframe: Short/Medium Term
Category: Operational Efficiency
Impact
On a daily basis Sodexo IT systems across 67 countries process the
data of 470,000 Sodexo employees and 100 million consumers;
including patients in hospitals and children in Childcare.
In addition, the demand for new innovative and efficient services
creates a fast changing and highly interconnected architecture, while
the scale of operations also makes Sodexo a target for cyber criminals
who want to exploit its weaknesses and those of the thousands of
clients and suppliers, to whom Sodexo is connected.
Within this challenging environment, information security issues
such as poor data integrity, loss of data confidentiality and lack of
availability of key systems, or collaboration services, could result in
high cost and/or high-volume impacts such as:
• inaccurate financial reporting;
• contractual penalties;
• regulatory fines (e.g. GDPR, Brazilian data protection law LGPD, card
payment standard PCI-DSS);
• reputational damage with shareholders, clients, consumers,
suppliers and employees.
Examples of Mitigating Activities
• Group Information & Systems Security Policy aligned to ISO 27001
framework, with detailed security directives on key topics (e.g.
security by design, cloud services, incident management).
• Investment in security infrastructure, tools and services such
as multi-factor authentication, laptop encryption, security risk
assessments, security operations centre and email monitoring.
• Global Data Centre consolidation strategy focused on using trusted
hosting partners (e.g. Microsoft Azure) to provide secure and
efficient services.
• Company-wide collaboration on security and compliance topics
such as data privacy, cyber threats, new technologies and IT
internal controls facilitated by formal Governance Committees
and cross entity network groups.
TALENT MANAGEMENT AND DEVELOPMENT
Risk of not having the right people in the right place at the right time.
Risk Timeframe: Short/Medium Term
Category: Talent
Impact
Sodexo is a company of people serving people. With 410,000 consumer
and client-facing employees and 60,000 managers, Sodexo’s employees
are central to its long-term growth objectives.
Particular focus is on North America for talent identification (pipeline)
and strengthening performance-led culture. In developing markets like
APAC, the focus is on talent attraction and talent retention.
A lack of attention to employee performance management and
development could lead to:
• a decrease in service quality jeopardizing retention and therefore
long-term profitable growth;
• reactive vs. proactive talent management, leading to loss of top
talent.
Examples of Mitigating Activities
• Sodexo offers training and development programs to reskill and
upskill.
• Sodexo has designed a new performance and reward framework to
help retain, develop and motivate people.
• Annual talent reviews are run at management level.
• Global New Generation Leader program designed to strengthen
leadership bench.
• Succession planning is included in individual management
objectives.
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LABOR SHORTAGE
Shortage in skills due to significant pressure on labor markets and lack of industry experience.
Risk Timeframe: Short Term
Category: Talent
Impact
On a global scale, Sodexo’s ability to recruit enough employees is
influenced by:
• demographic issues;
• perceived attractiveness of the jobs available;
• availability of necessary skills (e.g. chefs).
Any inability to mobilize the skills needed in terms of quality and
volume could lead to client contracts not being served properly.
Examples of Mitigating Activities
• Sodexo develops local training centers to skill current and future
employees (e.g.; CEDEX in Latam, Food Services Apprenticeship
Training Center in France).
• Sodexo designs competency models, career paths to help people
grow and stay.
• Sodexo has started to develop and pilot Strategic Workforce
Planning in some segments (Energy & Resources) and regions
(China) to better anticipate labor needs.
FOOD SERVICES AND WORK PLACE SAFETY
Consumer illness or injury caused by technical services, consumer illness caused by food services, work-related Injury/illness
of Sodexo employee or contractor.
Risk Timeframe: Short/Medium Term
Category: Corporate Responsibility
Impact
Potential illness, injury or loss of life of consumers, clients or Sodexo
employees could mean:
• loss of client confidence in Sodexo;
• significant lost time due to injury and illness;
• fines and potential litigation;
• impact on Company reputation.
Examples of Mitigating Activities
• Sodexo Safety Nets – 7 measures for accident prevention.
• Employee training.
• Global HSE and food safety policy and standards.
• Leadership Safety Walks.
• Incident and accident reporting.
• Quick Share process to share lessons learned from investigations.
• Global HSE Committee that reviews incidents and the effectiveness
of processes on a quarterly basis.
ENVIRONMENTAL IMPACT
Adverse environmental impact from Sodexo’s activities: poor management of food waste, ineffective actions to mitigate climate
change.
Risk Timeframe: Long Term
Category: Corporate Responsibility
Impact
• Poor food waste management could result in a loss of client and
consumer confidence and a decreased ability to attract new
clients.
• Ineffective climate change actions could result in Sodexo’s carbon
emissions staying the same or even increasing.
5
Examples of Mitigating Activities
• WasteWatch global program to reduce food waste.
• Connecting financing costs of the Group to action on food waste
performance.
• Environmental awareness campaigns – WasteLess week.
• Participation in the International Food Waste Coalition.
• Local and responsible sourcing.
• Roll-out of plant-based recipes in units using ingredients selected
for their lower environmental impact and higher nutritional value.
• Measurement and tracking of carbon footprint of Sodexo’s food
purchases.
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COMPLIANCE WITH LAWS AND REGULATIONS
The nature of Sodexo’s business and its worldwide presence mean that it is subject to a wide variety of laws, including labor law,
anti-trust law, anti-corruption law, data protection and privacy, and health, safety and environmental law.
Risk Timeframe: Medium Term
Category: External Risk
Impact
The wide range of services that Sodexo proposes means that it is subject
to very specific laws and regulations for each activity at both the global
and local level. As examples:
• as a food operator, Sodexo has a legal requirement to provide
accurate allergen information about the food and drinks it serves;
• the emission of vouchers and cards in Benefits & Rewards services
requires compliance with anti-money-laundering laws in some
countries;
Examples of Mitigating Activities
• Legal teams deployed at the central and local levels, who provide
advice to operational staff.
• Legal teams specialized by area of expertise, having recourse to
external experts.
• Awareness training sessions for our employees.
• Global Ethics and Compliance Committee ensures coordination
and coherence of deployment of compliance programs amongst
countries.
• working with sensitive populations like children and seniors in
Personal & Home Services requires back-ground checks of our
employees.
• Sodexo Speak Up offers Sodexo employees and partners a confidential
way to report activities or behaviors contrary to the Code of conduct
or illegal.
Any non-compliance of Sodexo with laws and regulations or a lack of
knowledge and awareness of laws and regulations either at a country
level or a global level could mean:
• harm to employees, clients and consumers;
• damage to Sodexo’s reputation;
• potential financial penalties;
• criminal action being brought against the Company and its directors.
5.4.3.2 Risk coverage
5.4.3.2.1 Insurance coverage
Sodexo’s general policy is to transfer non-retained risks,
especially intensity risks, to the insurance market. Insurance
programs are contracted with reputable insurers.
The main insurance programs are as follows:
•
liability insurance, which covers against personal injury,
property damage or consequential loss caused to third
parties. This category notably includes operational, product,
after-delivery and professional liability insurance. Since
June 1, 2016, Sodexo has implemented a worldwide liability
insurance program benefiting all countries in which the
Group operates, including the USA and Canada;
• property insurance, which mainly covers the risk of fi re and
explosion, water damage, natural disasters, and (in some
countries) acts of terrorism. As a general rule, the sum
insured is equal to the value of the insured property; however,
some insurance contracts cap the amount paid out under the
policy;
• workers’ compensation. In countries with no government-
provided coverage (primarily the United States, Canada and
Australia), Sodexo has contracted workers’ compensation
programs;
• crime insurance dedicated to Benefi ts and Rewards Services,
to partially transfer to the insurance market the risks of
fraud, falsifi cation and theft ;
• marine cargo insurance for covering loss or theft of goods
during their shipment;
• employment practices liability which provides coverage for
wrongful termination, sexual harassment, discrimination and
workplace torts. This program was originally implemented in
the USA and Canada, but has been expanded globally from
June 1, 2017;
• cyber risk insurance, which responds to cyber events such
as intrusion, denial of service attacks, data breach. It covers
the forensics, privacy breach and data restoration costs as
well as any business interruption arising out of a cyber event.
In addition, Sodexo maintains compulsory insurance as legally
required in the countries where it operates.
5.4.3.2.2 Self-Insured Risks
Retained or self-insured risks correspond to the deductibles
specifi ed in the insurance programs contracted by Sodexo. They
consist for the most part of frequency risks (i.e., risks that recur
regularly) but from time to time may also include intensity risks
(i.e., risks representing substantial amounts). In some countries,
these retained risks correspond to deductibles under employer’s
liability, workers compensation, third-party automobile and
property insurance. In North America, deductibles range from
5,000 U.S. dollars to 5,000,000 U.S. dollars per occurrence.
Outside North America, deductibles generally range from
7,500 euro to 2,000,000 euro per occurrence. Sodexo also
self-insures frequency risks and low amplitude risks through
two captive insurance companies. The American company,
incorporated in the State of Hawaii, manages the deductibles of
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the Workers’ Compensation, Automobile Liability and General
Liability insurance programs. The Irish company, based in
Dublin, provides:
• direct insurance and re-insurance for motor own damage and
third party liability risks up to 500,000 euro per claim and
2,500,000 euro in aggregate per year;
• reinsurance on the property insurance program for up to
3,000,000 euro per claim and in aggregate per year.
5.4.3.2.3 Placing of risk and total cost
On the occasion of its most recent policy renewals, Sodexo
maintained the scope and level of its coverage, as regards
in particular, general liability insurance and professional
liability insurance, especially for risks associated with facilities
management activities.
The total cost of the main insurance programs and self-insured
risks (excluding workers’ compensation) of fully-consolidated
Group companies, represents around 0.25% of consolidated
revenue.
5.4.3.3 Description of internal
control process, including
controls relating to the
preparation and accounting
disclosure
The risk management and internal control approach applied
within the Group consists of:
• the identifi cation and assessment of risks;
• the description of the control environment, both at Group and
subsidiary levels;
• documentation and self-assessment of these control points,
both at local and Group level;
•
independent testing of the effectiveness of these control
points, by independent persons.
A very large number of Group entities representing almost 97%
of Sodexo’s revenues, prepare a detailed report (Company Level
Control Report) on their control environment based on the fi ve
components of the reference framework and which includes
an evaluation of the subsidiary’s principal risks, a description
of risk management measures and an assessment of their
eff ectiveness.
The most signifi cant Group entities together representing more
than 93% of Group revenues, go beyond this initial phase, and
evaluate the eff ectiveness of additional controls determined by
their own risk assessment (Process Level Controls). Some of
these controls are also subject to eff ectiveness tests performed
by independent persons (Group Internal Auditors).
An executive summary of the status of internal controls and
the progress achieved is submitted to the Audit Committee at
the end of the fiscal year. For Fiscal 2019, 650 controls were
independently tested by Group Internal Audit in different
entities. 27% of the recommendations made by Internal Audit
in Fiscal 2019 have already been satisfactorily implemented
and confi rm actual progress, while action plans are underway to
implement the other recommendations.
5.4.3.4 Description of internal
controls relating
to the preparation of
accounting and fi nancial
disclosure
The Group Finance Department is responsible for ensuring the
reliability of fi nancial and accounting information.
A process is in place to produce and analyze financial
information at both operational sites and in the Group and
entity Finance Departments.
The entity Finance Departments produce monthly a cumulative
income statement since the beginning of the fiscal year,
a balance sheet, and a statement of cash flows. They also
regularly produce projections for the full year. Financial
statements are consolidated on a monthly basis by the Group
Finance Department.
At the half-year, the external auditors conduct a limited review
of the interim fi nancial statements.
At the end of the fiscal year, the Chief Executive Officers and
Chief Financial Offi cers of the segments and regions certify the
reliability of their fi nancial statements, prepared in accordance
with the IFRS standards adopted by the European Union. The
external auditors of the main entities express a view on these
fi nancial statements in accordance with the mandate given to
them by Sodexo’s shareholders. The Group Finance Department
monitors changes to IFRS standards and interpretations and
ensures that the accounting treatments applied by all entities
are compliant with Group rules.
Twice a year, the Group Finance Department identifi es the events
that may have led to one or several assets being impaired,
notably goodwill and intangible assets (in accordance with IFRS).
Where appropriate, the carrying amount of the asset concerned
is written down in the fi nancial statements.
S e g m e n t C h i e f E x e c u t i v e O f f i c e r s a n d t h e i r E x e c u t i v e
Committees, as well as Regional Chairs and Regional Chief
Financial Officers review operational and financial reporting
(comprising improvement metrics for client retention, sales
development and comparable unit revenue growth) before
presenting it to the Group Executive Committee, and then
to the Chairwoman of the Board of Directors. In addition,
quarterly reviews with each of the Group’s activities, segments
and regions give the Group Chief Executive Offi cer and Group
Chief Financial Offi cer insight into performance trends for the
segments and regions based on the financial reporting and
operational information.
Procedures are in place to identify off-balance sheet
commitments. This term covers all rights and obligations that
may have an immediate or future impact on Sodexo’s fi nancial
position but are not recognized (or are only partially recognized)
in the balance sheet or income statement. These include items
such as assets pledged as security; guarantees relating to
operating contracts (for example bid bonds or performance
bonds), to borrowings, or to claims and litigation; lease
obligations not recognized in the balance sheet; commitments
under call or put options, etc. Off -balance sheet commitments
are presented regularly to the Board of Directors.
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The Group Insurance Department works closely with the relevant
executives in the entities to:
•
implement global insurance programs, negotiated at the
Group level, available for all entities and supported by
insurance companies recognized within the Insurance
Industry for their fi nancial solidity;
• put in place insurance coverage to protect the interests of
employees, clients, shareholders and the Group;
•
identify and evaluate the key insurable risks faced by Sodexo,
with particular attention to the emergence of new risk factors
associated with changes in our activities, especially in
facilities management;
• reduce contractual risk, in particular by means of limitation
of liability clauses or hold-harmless agreements;
• achieve the appropriate balance between risk retention (self-
insurance) and the insurance market in covering the potential
fi nancial consequences of Sodexo’s risk exposure; and
• achieve optimization by fi nancing some of the Group’s risks
through the use of captive insurance companies.
The Sodexo legal function (comprised of a Group team and
regional and local teams) works pro-actively with business
development and operational teams to ensure legal compliance
and support contract negotiations, so that risks pertain solely
to contractual obligations for services and are limited in value
and duration.
L a s t l y , u s i n g t h e f i n a n c i a l i n f o r m a t i o n r e p o r t e d a n d
consolidated, the Chief Executive Officer, assisted by the
Group Finance Department, prepares the Group’s financial
communication. The Chief Executive Offi cer also relies on the
operating data required to prepare the Universal Registration
Document. The interim and annual results press releases are
submitted to the Board of Directors for approval.
To enable the Chief Executive Officer to provide reliable
information on the Group’s financial situation, a Disclosure
Committee comprising representatives from the Group’s
corporate functions reviews all financial information prior
to publication. Members represent the following functions:
Financial Control, Financial Communications, Legal, Human
Resources, Sustainable Development, Communications and
Board Secretary.
5.4.4 Group Internal Audit Department
The Senior Vice President Group Internal Audit Reports directly
to the Chairwoman of the Board, thus ensuring the independence
of the Group Internal Audit Department within the organization.
The Senior Vice President Group Internal Audit meets the
Chairwoman of the Board on a monthly basis and works closely
with the Chairwoman of the Audit Committee, holding informal
meetings (approximately four times per year).
Since 2015, Sodexo’s Group Internal Audit activities have been
certified by the French Internal Audit and Internal Control
Institute (IFACI). This internationally recognized certifi cation
attests to Sodexo’s compliance with and application of
30 general requirements of the Professional Internal Audit
Standards (independence, objectiveness, competence,
methodology, communication, supervision and continuous
assurance program).
IFACI certification is a high-level confirmation of quality and
performance that:
• powerfully conveys Sodexo’s rigorous approach to evaluating
its risk management and internal control processes;
• benchmarks Sodexo’s processes against best market
practices;
• enables the Group to sustainably strengthen its internal
audit practices;
• unites employees around a challenging project.
The Internal Audit Department performs internal audits of Group
entities based on an internal audit plan established annually.
The audit plan is based on a risk assessment performed by Group
Internal Audit, relying on the Group risk assessment process
and input from the Chairwoman of the Board of Directors, the
Chief Executive Offi cer, the Chief Financial Offi cer and other key
stakeholders from Sodexo. The Audit Committee reviews and
approves this annual audit plan.
The responsibilities of the Internal Audit Department include:
• ensuring, with the related functional teams, that employees
throughout the organization are aware of and diligently
apply Group policies;
• ensuring that delegations of authority and procedures have
been established and communicated to the appropriate
levels of management, and checking that they are properly
implemented;
• helping to assess entities’ internal controls, issuing action
plans designed to remedy identifi ed control weaknesses, and
monitoring implementation of these action plans.
The Internal Audit Department may also conduct special
assignments at the request of the Chairwoman of the Board, the
Audit Committee, the Chief Executive Offi cer or the Executive
Committee.
66% of the Group internal audit plan approved by the Audit
Committee at the start of Fiscal 2019 was completed during
the year. The Group Internal Audit Department, with an average
of 26 staff, conducted 51 audits in 27 countries. In addition,
a network of some 85 internal control coordinators (many of
whom report to the Finance Directors) is in place. This network
is coordinated by a central internal control team and enables
specifi c support to be given to internal audit engagements and
to rectifying weaknesses identifi ed by the internal audit team.
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The Internal Audit Department regularly tracks implementation
of post-audit action plans by Group entities. An overall progress
report is updated regularly and submitted on a semi-annual
basis to the Chief Executive Offi cer, the Group Chief Financial
Offi cer, the Chairwoman of the Board and the Audit Committee.
Further progress was achieved in following up recommendations
in Fiscal 2019. All audits are followed up within a maximum of
12 months.
Around 92% of recommendations made in years prior
to Fiscal 2019 have been implemented by the entities’
management. For Fiscal 2019, 27 % of the 650 recommendations
made by the Group Internal Audit Department have already been
implemented and the other recommendations are addressed
in action plans. In Fiscal 2019, the Internal Audit Department
carried out a survey of a sample of entities. The vast majority
(95%) of them considered that the quality of audits was
satisfactory. Every year, the Group Internal Audit Department
measures the savings achieved and the losses avoided
through its audits. In Fiscal 2019, investigations, assistance
engagements and process efficiency audits generated added
value of 2.4 million euro.
The Group Internal Audit Department also conducts an
independent evaluation of internal control.
Finally, the Internal Audit Department assesses the external
auditors’ independence and reviews the annual budgets for
external auditors’ fees (for both statutory audit work and other
engagements) prior to their approval by the Audit Committee.
Risk management and the reinforcement of
internal control are a permanent strategic
priority for the Group.
Internal controls cannot provide an absolute
guarantee that all risks have been eliminated. Sodexo
nevertheless endeavors to ensure that the most
eff ective internal control procedures feasible are in
place in each of its entities.
In the preparation of this report, and in compliance
with the recommendation issued by the French
securities regulator, the French securities regulator
(Autorité des marchés financiers – AMF), in July 2010,
this report is prepared on the basis notably of the
“Reference Framework” produced by the French
Market Advisory Group and published by the AMF.
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5.5 COMPENSATION
The disclosures provided in this section comply with the recommendations contained in the AFEP-MEDEF Code as revised in June 2018
and the recommendations of the French securities regulator (Autorité des marchés financiers – AMF) on Corporate Governance and
corporate offi cers’ compensation in listed companies.
5.5.1 Compensation policy applicable to corporate officers
The compensation policy applicable to corporate offi cers sets
out the principles and criteria used to determine, allocate and
award the fixed, variable and exceptional components of the
total compensation and benefits payable to the Company’s
corporate offi cers for the duties performed under the terms of
their corporate offi ce.
In accordance with article L.225-37-2 of the French Commercial
Code, at the Annual Shareholders Meeting to be held on
January 21, 2020, the shareholders will be asked to approve,
on the basis of the compensation policy described below, the
compensation principles set by the Board of Directors on the
recommendation of the Compensation Committee.
In all cases, these principles and criteria shall apply in
Fiscal 2020 to any person who holds a corporate officer ’s
position.
5.5.1.1 General principles for corporate offi cers’ compensation
The compensation policy applicable to corporate officers
is determined by the Board of Directors on the basis of
recommendations made by the Compensation Committee
and is reviewed annually. The Compensation Committee is
entirely comprised of independent directors, except for one
director representing employees in accordance with AFEP-
MEDEF recommendations. The Compensation Committee may
use the services of external advisors specialized in corporate
offi cers’ compensation. It also takes into account feedback from
institutional shareholders.
The Board of Directors ensures that the compensation policy is
adapted to the Company’s strategy and operating context and
that its purpose is to enhance Sodexo’s medium and long-term
performance and competitiveness. The policy is based on the
following principles:
COMPLIANCE
COMPETITIVENESS
The compensation policy for the Company’s corporate officers is determined in accordance with the
recommendations of the AFEP-MEDEF Code.
Research is regularly conducted – including with the assistance of external consulting firms – in order to
benchmark the Company’s compensation packages against panels of its peers (comparable companies in
terms of size and international scope), both in the French market (CAC 40 companies excluding banks and
insurance companies) and in international markets (main competitors).
COMPLETENESS – BALANCE
A comprehensive analysis of all of the components of corporate officers’ compensation and benefits is
conducted using a component-by-component approach. An overall consistency analysis is also performed
to ensure that the best balance is achieved between fixed and variable, individual and collective, and short-
and long-term compensation.
ALIGNMENT OF INTERESTS
Aligning interests means both ensuring that the Company has the ability to attract, motivate and retain
the talent that it needs, and at the same time, meeting the expectations of the Company’s shareholders
and other stakeholders, particularly in terms of social and environmental responsibility, transparency, and
associating compensation with performance.
PERFORMANCE
The performance conditions applicable to corporate officers’ compensation are rigorous and are based on
the key factors that contribute to the Company’s profitable and sustainable growth. They are also in line
with the Company’s published short , medium and long-term targets.
TRANSPARENCY
The corporate officers’ compensation policy is governed by clear, straightforward and transparent rules.
The Compensation Committee ensures that all of these principles are appropriately applied in the work it
performs and the recommendations it issues to the Board of Directors, both in terms of determining the
compensation policy and its implementation, when the actual amounts of the compensation packages
are determined.
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5.5.1.2 Compensation policy for the Chairwoman of the Board of Directors
(non-executive corporate offi cer)
Compensation package
Collective health and benefi t plans
The compensation package of the Chairwoman of the Board
of Directors comprises a fixed compensation payment and
collective health and benefi t plans.
As the Chairwoman is a non-executive director, in line with
market practices in France, she does not receive any short-
term annual variable compensation or any multi-year variable
compensation, or any long-term incentive plan.
Fixed compensation
The fixed compensation of the Chairwoman of the Board of
Directors is determined in line with benchmark studies and is
awarded as payment for duties and responsibilities inherent to
such position.
Accordingly, the following factors are taken into account:
• the duties specific to the role of chairing the Board of
Directors, as provided for by Law and the Board of Directors’
Internal Rules, which notably involve ensuring that the
Company is properly governed and that its governance
bodies (Board of Directors, specialized Committees of the
Board and Shareholders Meeting) function eff ectively;
• her role as ambassador of Sodexo’s reputation and image;
• the skills, experience, expertise and professional profi le of the
holder of the position;
The Chairwoman of the Board of Directors is a member of the
Company’s collective health and benefi t plans, subject to the
same terms and conditions as those applicable to the category
of employees to which she is deemed to belong for the purpose
of determining these benefi ts.
Accordingly, the Chairwoman of the Board of Directors is a
benefi ciary under the following plans, subject to the same terms
and conditions as all of the Sodexo French entities’ employees:
• an “incapacity, disability or death” benefi t plan, fi nanced in
part by Sodexo, which, in the event of an employee’s death,
provides for the payment of a death benefi t equal to 215% of
their fi xed compensation, up to a maximum amount of eight
times the French Social Security Code’s annual ceiling, and
which is increased for dependent children;
• an additional “incapacity, disability or death” benefi t plan,
fi nanced in full by Sodexo, which is reserved for employees
whose annual gross compensation is greater than eight
times the French Social Security Code’s annual ceiling and
which, in the event of an employee’s death, provides for the
payment of a death benefi t equal to 200% of the portion of
their fi xed compensation that is greater than eight times the
French Social Security Code’s annual ceiling;
• a supplemental health insurance plan, to which all Sodexo
employees are entitled, fi nanced in part by Sodexo.
• market analyses and benchmark studies on the compensation
awarded for comparable positions in peer companies.
Company car
The compensation policy may be modifi ed during the term of the
corporate offi ce and prior to its renewal if there is a signifi cant
evolution in the scope of responsibility, which may be related to
the Company’s evolution, or if there is a major disparity with the
market. In such specifi c situations, the nature of any adjustment
to the fixed compensation and the related motives would be
publicly disclosed.
The annual fixed compensation of the Chairwoman of the
Board of Directors has been maintained at 675,000 euro for
Fiscal 2019. This amount will remain unchanged in Fiscal 2020.
The Chairwoman of the Board of Directors has the use of a
company car. The insurance, maintenance and fuel costs (related
to her professional use) are covered by Sodexo.
Other components of compensation
The Chairwoman of the Board of Directors does not receive any
directors’ fees for attending Board or specialized Committee
meetings. In addition, she will not receive a termination benefi t
if her corporate offi ce is terminated.
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5.5.1.3 Compensation policy for the Chief Executive Offi cer (executive
corporate offi cer)
Compensation package
Based on the Compensation Committee’s recommendations,
each year the Board of Directors ensures that the Chief Executive
Offi cer’s variable compensation – which is governed by specifi c
performance criteria – constitutes a sufficiently significant
portion of his fi xed compensation.
The aim of the compensation policy for the Chief Executive
Officer is to achieve a balance between long and short-term
performance in order to promote the Group’s development for
the benefi t of all of its stakeholders.
To this end, and with a view to protecting stakeholders’ interests,
the Company strives to ensure consistency between the
Chief Executive Offi cer’s compensation package and Sodexo’s
performance trends.
FISCAL 2020 STRUCTURE OF CEO COMPENSATION
75%
SUBJECT
TO PERFORMANCE
CONDITIONS
25%
NOT SUBJECT
TO PERFORMANCE
CONDITIONS
PERFORMANCE CONDITIONS
PRESENCE DURING 3-YEARS VESTING PERIOD
25% ORGANIC GROWTH
25% INCREASE IN UOP MARGIN
30% TSR VS PEER PANEL
20% DIVERSITY AND INCLUSION,
PROPORTION OF WOMEN IN TOP
MANAGEMENT
E
EN TIV
C
M IN
R
E
T
-
G
N
O
L
:
D
E
S
A
B
-
50%
PERFORMANCE
SHARES
25%
FIXED
25%
ANNUAL
VARIABLE
E
R
A
H
S
%
0
5
N
O
I
T
A
S
N
E
P
M
O
C
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A
U
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A
:
H
S
A
5 0 % C
PERFORMANCE CONDITIONS
70% FINANCIAL:
20% organic revenue growth,
20% underlying operating margin,
10% growth in Group net income,
20% free cash flow.
30% NON FINANCIAL:
10% occupational health & safety
10% talent management,
10% DJSI ranking.
Fixed compensation
Annual variable compensation
The fi xed compensation of the Chief Executive Offi cer is awarded
as payment for the duties and responsibilities inherent to such
a position.
Consequently, the following factors are considered:
• the level and complexity of the roles and responsibilities
attributed to the Chief Executive Offi cer, who has the broadest
powers to act on behalf of the Company in all circumstances
and to represent the Company in its dealings with third parties;
• the skills, experience, expertise and professional profi le of the
holder of the position;
• market analyses and benchmark studies on the compensation
awarded for comparable positions in peer companies.
The Chief Executive Officer ’s annual fixed compensation is
used as the reference for determining his annual variable
compensation and long-term compensation. The amount of this
fi xed compensation is not systematically revised each year.
The Chief Executive Officer ’s annual fixed compensation is
900,000 euro, unchanged since he was first appointed on
January 23, 2018.
CALCULATION METHODS
The Chief Executive Officer ’s annual variable compensation
is intended to encourage the achievement of the annual
performance targets determined by the Board of Directors in line
with Sodexo’s strategy.
Provided that all the applicable targets are achieved, it amounts
to 100% of his annual fi xed compensation.
It is based mainly on fi nancial criteria, as follows:
• 70% is contingent upon targets based on the Group’s
fi nancial performance for the fi scal year, including organic
revenue growth, underlying operating profi t margin, Group
net income and free cash fl ow ;
• 30% is contingent upon non-financial targets, primarily
quantitative targets (including occupational health and
safety, talent management and Sodexo’s ranking in the Dow
Jones Sustainability Index).
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LONG-TERM COMPENSATION SYSTEM
Sodexo’s long-term compensation system currently consists
solely of performance share grants.
At its meeting on November 6, 2019, the Board decided to reduce
the vesting period of shares granted under future restricted
share plans from four years to three years in order to align the
vesting periods with the performance assessment periods and to
change the timing of when the plans are usually approved or put
in place. Until now, the plans were approved in the second half of
the fi scal year, sometime in May or June. From now on, the plans
will be approved at the beginning of each fi scal year, when the
fi nancial statements for the previous fi scal year are published.
Consequently, and in order to maintain a regular annual delivery
of performance shares, no performance shares will be granted to
the Chief Executive Offi cer in Fiscal 2020.
The Board of Directors has capped the value of the performance
shares granted to the Chief Executive Officer at 150% of his
total annual compensation (including fi xed compensation and
annual variable compensation at targets achieved ). In addition,
the performance shares granted to him may not represent more
than 5% of the total number of restricted shares granted by the
Board of Directors in any given fi scal year.
PERFORMANCE CONDITIONS
The proportion of the performance shares that will vest depends
on the achievement of both internal and external performance
conditions as measured over a three-year period. The
achievement levels shall be disclosed on a criterion-by-criterion
basis once the Board of Directors has assessed whether the
performance targets have been reached.
The aim of the criteria used is to measure the Group’s overall
performance, refl ecting a good balance between the Company’s
performance, investor confi dence in the Group and the Group’s
Corporate Responsibility performance:
• fi nancial performance: 50%;
• stock market performance: 30%;
• Corporate Responsibility performance: 20%.
CONTINUED PRESENCE CONDITION
For performance shares to vest, the Chief Executive Officer
must be present within the Group at the vesting date. However,
in accordance with article 24.5.1 of the AFEP-MEDEF Code and
the plan rules applicable to all beneficiaries of the Group’s
performance share plans, in exceptional circumstances, the
Board of Directors, on the recommendation of the Compensation
Committee, may authorize the Chief Executive Offi cer to retain
his rights to any non-vested shares at the date of his departure.
5
The annual variable compensation due to the Chief Executive
Offi cer is calculated and set by the Board of Directors following
the close of the fi scal year to which it applies.
In the first quarter of each year, based on the Compensation
Committee’s recommendations, the Board of Directors reviews the
various targets, their weightings, and the expected performance
levels. It then sets:
• the trigger threshold under which no variable compensation
is paid;
• the variable compensation target level, corresponding to the
amount due when each target is reached; and
• the quantitative performance measurement, which also
applies to non-fi nancial criteria.
Consequently:
• 100% of the annual variable compensation is paid if the
targets are achieved ;
• 150% of the annual variable compensation is paid if the
targets are exceeded.
The fi nancial performance targets that are based on fi nancial
indicators are determined in a specific manner by reference
to the budget pre-approved by the Board of Directors and are
subject to the above-mentioned performance thresholds.
The achievement levels will be disclosed on a criterion-by-
criterion basis once the Board of Directors has assessed whether
the performance targets have been reached.
PAYMENT CONDITION
In accordance with French law, payment of the annual variable
compensation is subject to shareholder approval during the
Annual Shareholders Meeting.
APPOINTMENT TO OR TERMINATION OF OFFICE
If a new Chief Executive Offi cer is appointed or the existing Chief
Executive Offi cer’s term of offi ce is terminated during the course
of a fiscal year, the same principles as above will apply, on a
proportional basis by reference to the period during which the
Chief Executive Offi cer concerned actually holds offi ce. However,
if a Chief Executive Offi cer is appointed during the second half
of the fi scal year, the performance appraisal will be carried out
on a discretionary basis by the Board of Directors, taking into
account the recommendations of the Compensation Committee.
Long-term compensation
OBJECTIVE
T h e B o a r d o f D i r e c t o r s c o n s i d e r s t h a t t h e l o n g - t e r m
compensation system – which also applies to other key positions
within the Company – is particularly suited to the position of
Chief Executive Officer in view of the direct contribution that
he is expected to make to Sodexo’s long-term performance.
It is based on (i) the Group achieving organic revenue growth
and underlying operating profit margins over a period of
several years, in line with market guidance (ii) Sodexo’s share
performance compared with a peer group, and (iii) Corporate
Social Responsibility criteria. The system therefore helps to
increase the Chief Executive Officer ’s motivation and loyalty
while aligning his interests with those of the Company’s
stakeholders.
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In such a case, the number of shares that vest would be
determined on a proportional basis by reference to the actual
time the Chief Executive Offi cer spent within the Group during
the vesting period. The original vesting period would continue
to run and the rules of the applicable plan – including the
performance conditions – would still apply.
LOCK-UP CONDITION
In accordance with article L.225-197-1 of the French Commercial
Code, the Chief Executive Offi cer is required to hold in registered
form, for the duration of his term of offi ce, a number of vested
shares whose value has been set by the Board of Directors as
equivalent to 30% of his annual fi xed compensation at the date
the shares are delivered.
Based on the recommendation of the Compensation Committee,
the Board reinforced this shareholding obligation by deciding
that the Chief Executive Offi cer must now maintain a portfolio of
shares with a value equivalent to 200% of the gross annual fi xed
compensation. This portfolio must be built up over a maximum
period of three years, as from September 1, 2019 for the current
Chief Executive Offi cer. Denis Machuel currently holds a portfolio
of shares with a total value exceeding the threshold set by the
Board.
In addition, as long as he remains in offi ce, the Chief Executive
Offi cer may not use hedging instruments on any performance
shares granted to him.
Multi-year compensation
The Board of Directors has decided not to create a multi-year
compensation system, preferring instead to apply a long-term
compensation system based on the use of equity instruments,
which it considers to be more closely aligned with the interests
of the Company’s shareholders.
However, the Board may envisage putting in place such a system
if any regulatory changes or other changes in circumstances
were to render it difficult or impossible to use equity
instruments. If a multi-year compensation plan were to be set
up, it would be based on the same principles and criteria as
those used for determining and allocating performance shares
and the same grant cap would apply. The system would be
structured based on very similar terms and conditions to those
applicable to performance share plans.
Indemnity in the event of termination of offi ce
If the Chief Executive Offi cer’s term of offi ce is terminated for
any reason (other than resignation, retirement or gross or
willful misconduct) then he may be entitled to an indemnity
representing up to twice the amount of his annual gross
compensation (fi xed and variable) received over the 12 months
preceding the termination.
This indemnity will only be paid if, at constant consolidation
scope and currency exchange rates, the annual increase in the
Sodexo Group’s consolidated underlying operating profi t is equal
to or higher than 5% for each of the three fiscal years ended
prior to the termination of the appointment.
Denis Machuel has expressly refused this indemnity and
therefore will not benefit from any payment in case of
termination of offi ce.
Non-compete agreement
If the Chief Executive Offi cer ’s term of offi ce is terminated he
is also subject to a non-compete obligation for a maximum
term of 24 months, which is intended to protect the Group by
restricting the Chief Executive Officer ’s freedom to carry out
certain activities following the end of his term. The activities
concerned include holding any position as an employee or
corporate officer, or carrying out any consulting work, either
directly or through another legal entity, for any of Sodexo’s
competitors. As consideration for these restrictions, the Chief
Executive Offi cer will be paid an indemnity representing up to
24 months of his fi xed compensation paid during the fi scal year
preceding the termination of his term of offi ce.
At its meeting on April 27, 2018, the Board decided to approve
the conclusion of a non-compete agreement with Denis Machuel
for a period of 24 months as from the date on which his duties
as Chief Executive Offi cer would cease.
However, the Board of Directors will have the possibility to
decide to waive the Company’s right to enforce this non-
compete agreement when the Chief Executive Offi cer leaves the
Group. In addition, the maximum aggregate amount paid to the
Chief Executive Offi cer for (i) his non-compete agreement, and/
or (ii) his indemnity on termination of office, will not exceed
24 months’ worth of his fi xed compensation.
This indemnity will not be paid if the Chief Executive Officer
retires, and in any event will not be paid once he reaches the
age of 65.
Supplemental pension plan
Until December 31, 2019, the Chief Executive Officer is a
beneficiary of a defined benefit pension plan governed by
article 39 of the French General Tax Code and article L. 137-11-1
of the French Social Security Code, and which has been set up
for the most senior executives employed by a French company
of the Group. Under this supplemental pension plan (subject to a
minimum of fi ve years of presence in the plan), as a member of
the plan for at least 15 years, the pension paid can represent up
to 15% of the average of his last three years’ fi xed compensation
preceding his retirement, to which are added the pensions due
to him under compulsory pension plans, provided that he is a
corporate offi cer of, the Company at the time of his retirement.
The Board of Directors has decided that the Chief Executive
Officer ’s entitlements under this plan will only accrue if the
achievement rate for his annual variable compensation targets
is at least 80%. If this rate is reached, a 1% contribution to
the defi ned benefi t plan will be accrued for the year concerned.
However, if the achievement rate is less than 80%, no defi ned
benefi t contribution will be accrued for that year.
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The entitlements under this plan are financed and provisioned
through annual charges, which are revalued each year depending on
new commitments and the balance of the account held by the insurer.
This plan has been closed to new members since February 28,
2018. In order to comply with new French law on Business
Growth and Transformation (Act 2019-486 dated May 22,
2019 – known as the “PACTE Act”) and with the Ordonnance
of July 3, 2019 transposing the pension portability directive,
rights acquired as at December 31, 2019, will be frozen at
such date. As from January 1, 2020, it is expected that a new
benefi t pension plan governed by article 137-11-2 of the French
Social Security Code be implemented, although a circular from
the French Social Security Department, which will specify the
funding mechanisms of such plans, has not yet been issued. A
minimum seniority of one year within the Sodexo Group will be
required to benefi t from this new plan. It was agreed that this
plan shall grant annual rights amounting to 0.5% of fi xed and
variable compensation for the fi rst 5 years and to 1% of fi xed
and variable compensation paid to him beyond fi ve years, up to
a total of 10% . The acquisition of rights shall remain subject to
the same performance condition as the one set for the previous
plan, i.e. an achievement rate of the Chief Executive Officer ’s
annual variable compensation targets of at least 80%. The
resulting pension will top up the pensions provided by the basic
mandatory schemes.
Company car
Unemployment insurance
As the Chief Executive Officer does not have an employment
contract, the Company has taken out a private unemployment
insurance policy with the French association of unemployment
insurance for corporate offi cers (Association pour la garantie
sociale des chefs et dirigeants d’entreprises – GSC). Under this
policy, if the Chief Executive Officer were to lose his office,
he would receive benefi ts for a maximum period of 24 months.
Exceptional compensation
The compensation policy does not permit the granting of an
exceptional compensation to the Chief Executive Offi cer.
Potential change of governance
If one or more Deputy Chief Executive Offi cers were appointed,
the principles and criteria for determining, allocating and
awarding the compensation components provided for in the
Chief Executive Officer ’s compensation policy would also
apply to the Deputy Chief Executive Offi cer(s). In such a case,
the Board of Directors, acting on the recommendation of the
Compensation Committee, would adapt the principles and
criteria to the person(s) concerned in order to determine the
applicable targets, performance levels, conditions, compensation
structures and maximum percentages of the fi xed compensation
that their variable compensation may represent (which may not
be higher than those set for the Chief Executive Offi cer).
The Chief Executive Officer has the use of a company car,
the insurance, maintenance and fuel costs (related to his
professional use) of which are covered by Sodexo.
In the case where the Chief Executive Offi cer is also a member of
the Board of Directors of the Company, he does not receive any
director fees.
Collective health and benefi t plans
Signing bonus
The Chief Executive Offi cer is a member of the collective health
and benefit plans set up within the Company, subject to the
same terms and conditions as those applicable to the category
of employees to which he is deemed to belong for the purpose of
determining these benefi ts.
Pursuant to article 24.4 of the AFEP-MEDEF Code, if a new Chief
Executive Offi cer is recruited from outside Sodexo, the Board of
Directors may decide to grant him or her an indemnity (in cash
and/or shares) in order to compensate for any loss of previous
remuneration or benefi ts (excluding pension benefi ts).
5
In accordance with article L.225-37-2 of the French Commercial
Code, the payment or implementation of any such compensation
would be subject to shareholder approval.
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5.5.2 Information on the components of compensation paid or
awarded to corporate officers
5.5.2.1 Compensation of Sophie Bellon, Chairwoman of the Board of Directors
The amounts paid in Fiscal 2019 for the various components of
Sophie Bellon’s compensation are presented in the tables below.
These amounts were determined in line with the compensation
policy for the Chairwoman of the Board of Directors approved
at the January 22, 2019 Annual Shareholders Meeting
(15th resolution).
Summary of compensation awarded to the Chairwoman of the Board of Directors
TABLE 2, BASED ON THE AFEP-MEDEF CODE TEMPLATE AND AMF RECOMMENDATION 2009-16
SOPHIE BELLON
CHAIRWOMAN OF THE BOARD OF DIRECTORS
(in euro)
Fixed compensation
Variable compensation
Exceptional compensation
Directors’ fees paid by Sodexo in her capacity as
Chairwoman of the Board of Directors
Fringe benefits*
TOTAL
The following amounts were paid by Bellon SA
to Sophie Bellon for her mandate as member of
the Management Board of Bellon SA:
• fixed compensation
• directors’ fees
* Sophie Bellon has the use of a company car.
FISCAL 2019
FISCAL 2018
GROSS AMOUNTS DUE
(BEFORE TAX)
GROSS AMOUNTS PAID
(BEFORE TAX)
GROSS AMOUNTS DUE
(BEFORE TAX)
GROSS AMOUNTS PAID
(BEFORE TAX)
675,000
675,000
625,347
625,347
-
-
-
-
-
-
-
-
-
-
-
-
1,739
1,739
1,730
1,730
676,739
676,739
627,077
627,077
185,000
185,000
180,000
180,000
-
-
-
-
Summary of benefi ts awarded to the Chairwoman of the Board of Directors
TABLE 11, BASED ON THE AFEP-MEDEF CODE TEMPLATE AND AMF RECOMMENDATION 2009-16
EMPLOYMENT CONTRACT
SUPPLEMENTAL
PENSION PLAN
COMPENSATION OR
ENTITLEMENTS DUE OR
LIKELY TO BECOME DUE AS A
RESULT OF TERMINATION OR
CHANGE OF POSITION
COMPENSATION RELATING
TO A NON-COMPETE CLAUSE
YES
NO
X
YES
NO
X
YES
NO
X
YES
NO
X
Sophie Bellon
Date appointed: January 26, 2016
Expiration of current term: 2021 Annual
Shareholders Meeting
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5.5.2.2 Compensation of Denis Machuel, Chief Executive Offi cer
The amounts paid in Fiscal 2019 for the various components
of Denis Machuel’s compensation, including measurement
of the value of performance shares granted, are presented in
the tables below. These amounts decided in conformity with
the compensation policy for the Chief Executive Officer were
approved at the January 22, 2019 Annual Shareholders Meeting
(16th resolution).
The figures for Fiscal 2018 reflect his appointment as of
January 23, 2018.
Summary of compensation awarded to the Chief Executive Offi cer
TABLE 2, BASED ON THE AFEP-MEDEF CODE TEMPLATE AND AMF RECOMMENDATION 2009-16
DENIS MACHUEL
CHIEF EXECUTIVE OFFICER
SINCE JANUARY 23, 2018
(in euro)
Fixed compensation
Variable compensation(1)
Exceptional compensation
Fringe benefits(2)
TOTAL(3)
FISCAL 2019
FISCAL 2018 (PROPORTIONAL)
GROSS AMOUNTS DUE
(BEFORE TAX)
GROSS AMOUNTS PAID
(BEFORE TAX)
GROSS AMOUNTS DUE
(BEFORE TAX)
GROSS AMOUNTS PAID
(BEFORE TAX)
900,000
892 ,800
N/A
14,930
900,000
245,596
N/A
14,930
545,768
245,596
N/A
7,531
545,768
N/A
7,531
1,807 ,730
1,160,526
798,895
553,299
(1) Denis Machuel’s variable compensation for the year, to be paid the following year (see tables below for details).
(2) Denis Machuel has the use of a company car and is the beneficiary of an unemployment insurance policy.
(3) The total gross amounts paid during Fiscal 2018 including the pre-appointment period amount to 1,138,359 euro.
Breakdown of variable compensation due for Fiscal 2019
Although organic growth has outperformed during Fiscal 2019 compared to the initial objective, the Board of Directors, at Denis
Machuel’s request, decided that, as the underlying operating profi t margin underperformed over the same period, payment of variable
compensation due in relation to the organic growth objective will be capped at 100%, both for himself and the Executive Committee
members.
70%
based on
financial targets
30%
based on
non-financial targets
Organic growth
Underlying operating profit margin
Growth in Group net income
Free cash flow
Total financial targets
Health and safety target
Talent management
Dow Jones Sustainability Index, industry
leader position
Total non-financial targets
TOTAL VARIABLE COMPENSATION FOR FISCAL 2019
WEIGHTING OF
TARGETS
MAXIMUM IN %
OF TARGET
ACHIEVEMENT
LEVEL
CORRESPONDING
AMOUNT
(in euro)
20%
20%
10%
20%
70%
10%
10%
10%
30%
100%
175%
175%
175%
175%
100%
180,000
86%
154,800
0%
0
175%
315,000
175%
103%
649,800
100%
100%
100%
100%
150%
100%
90,000
7 0%
63 ,000
100%
90,000
90 %
99 %
243 ,000
892 ,800
5
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Breakdown of variable compensation due and paid for Fiscal 2018
70%
based on
financial targets
30%
based on
non-financial targets
Organic growth
Growth in underlying operating profit
Growth in Group net income
Free cash flow
Total financial targets
Health and safety target
Employee engagement rate
Dow Jones Sustainability Index, industry
leader position
SUBTOTAL BEFORE HIGH-END OPERATING PROFIT GROWTH TARGET
ACHIEVEMENT OF OUTPERFORMANCE OPERATING PROFIT
GROWTH TARGET
WEIGHTING OF
TARGETS
MAXIMUM IN %
OF TARGET
ACHIEVEMENT
LEVEL
CORRESPONDING
AMOUNT
(in euro)
20%
20%
10%
20%
70%
10%
10%
10%
100%
175%
175%
175%
175%
175%
100%
100%
100%
150%
0%
0%
0%
0
0
0
175%
191,019
35%
191,019
0%
0%
0
0
100%
54,577
45%
245,596
50%
50%
0%
0
TOTAL VARIABLE COMPENSATION FISCAL 2018
150%
200%
45%
245,596
Performance shares granted to the Chief Executive Offi cer in Fiscal 2019
TABLE 6, BASED ON THE AFEP-MEDEF CODE TEMPLATE AND AMF RECOMMENDATION 2009-16
NUMBER OF
SHARES GRANTED
DURING THE
FISCAL YEAR
VALUE OF
SHARES(1)
(in euro)
DATE OF PLAN
VESTING DATE
END OF LOCK-UP
PERIOD
PERFORMANCE
CONDITION
Denis Machuel
06/19/2019
22,000(2)
1,836,252
06/19/2023
06/19/2023
Yes
(1) Performance shares are measured at the estimated fair value at the grant date, taking into account the terms and conditions of grant (see note 4.22.2 to the
consolidated financial statements). An accounting charge for the 4-year share grant is recognized over a period of four years.
(2) Representing 0.015% of the Company’s share capital as of August 31, 2019 and 2.71% of all restricted shares granted during the fiscal year by the Board of Directors
(within the limits defined in the 18th resolution of the January 22, 2019 Annual Shareholders Meeting). The grants have no dilutive impact as existing shares have
been allocated to the plan.
The applicable performance conditions under this plan are as
follows:
In line with the previous year, the shares will be allocated
depending on Sodexo’s ranking within the peer group:
• 25% of the shares are subject to a performance condition
based on average organic revenue growth;
• 25% of the shares are subject to a performance condition
based on growth in underlying operating profi t margin.
As the Group’s medium-term objectives are not publicly
disclosed, the organic growth revenue target and underlying
operating margin target will remain confi dential. However,
at the end of the plan, the Board will fully disclose both
the target and actual achievement levels related to these
performance conditions;
•
for the purpose of simplicity, the Board has decided to simplify
Total Shareholder Return (TSR) performance target to compare
with a peer group of competitors which accounts for 30% of the
vesting. Thirty percent of the shares are therefore subject to a
TSR performance condition. Sodexo’s TSR will be compared with
that of a peer group comprising 12 companies (ABM Industries,
Aramark, CBRE, Compass, Edenred, Elior, Elis/Berendsen, G4S,
ISS, Jones Lang LaSalle, Rentokil and Securitas), selected based
on their size, the similarity of their operations with those of
Sodexo and the fact that they all operate in the outsourcing and
shared services industry.
QUARTILE ACHIEVED BY SODEXO
IN RELATION TO THE PEER GROUP’S TSR
% OF THE SHARES SUBJECT TO
THE TSR VESTING CONDITION
THAT WILL VEST
Top quartile
Second quartile
Third quartile
Fourth quartile
100%
50%
15%
0%
• 20% of the shares are subject to a performance condition
based on a diversity and inclusion target set by Sodexo
with a view to encouraging the promotion of women to top
management positions.
For the purposes of this target, and based on the Group’s
current organizational structure, top management comprises
all of the executives who report directly to a member of the
Group Executive Committee.
Sodexo’s objective is for 37% of its top managers to be
women by August 31, 2022 and 40% by 2025.
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Summary of compensation and stock options and performance shares granted to the Chief Executive
Offi cer
TABLE 1, BASED ON THE AFEP-MEDEF CODE TEMPLATE AND AMF RECOMMENDATION 2009-16
DENIS MACHUEL
CHIEF EXECUTIVE OFFICER
(in euro)
Compensation due (gross, before tax)
Value of stock options granted
Value of performance shares granted
TOTAL
FISCAL 2019
FISCAL 2018 (PROPORTIONAL)
1,807 ,730
N/A
1,836,252
3,643 ,982
798,895
N/A
1,600,438
2,399,333
Summary of benefi ts awarded to the Chief Executive Offi cer
TABLE 11, BASED ON THE AFEP-MEDEF CODE TEMPLATE AND AMF RECOMMENDATION 2009-16
EMPLOYMENT CONTRACT
SUPPLEMENTAL
PENSION PLAN
COMPENSATION OR
ENTITLEMENTS DUE OR
LIKELY TO BECOME DUE AS
A RESULT OF TERMINATION
OR CHANGE OF POSITION
COMPENSATION
RELATING TO
A NON-COMPETE CLAUSE
YES
NO
YES
NO
YES
NO
YES
NO
X
X
X
X
Denis Machuel
Chief Executive Officer
Date appointed: January 23, 2018
No fixed term
5.5.2.3 Compensation and benefi ts paid or awarded for Fiscal 2019 – Say on
Pay (ex post vote at the Shareholders Meeting of January 21, 2020)
Compensation and benefi ts paid or awarded for Fiscal 2019 to Sophie Bellon, Chairwoman of the Board of
Directors
5
TYPE OF COMPENSATION OR BENEFITS
AMOUNT
COMMENTS
Fixed compensation
Fringe benefits
€675,000
€1,739
Pre-tax gross amount due
for the fiscal year.
Sophie Bellon has the use
of a company car.
Sophie Bellon does not receive any of the following types of compensation or benefi ts: directors’ fees, annual variable compensation,
multi-year variable compensation, exceptional compensation, stock options, performance shares, indemnity for loss of offi ce, or
supplemental pension benefi ts.
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Compensation and benefi ts paid or awarded for Fiscal 2019 to Denis Machuel, Chief Executive Offi cer
TYPE OF
COMPENSATION OR
BENEFITS
Fixed
compensation
Variable
compensation
AMOUNT
COMMENTS
€900,000
Pre-tax gross amount due for the fiscal year.
€892 ,800
Variable compensation due for Fiscal 2019 (which will be paid subject to the approval of the Shareholders
Meeting of January 21, 2020).
Stock options
and performance
shares
€1,836,252
Non-compete
indemnity
No amounts
paid
Supplemental
pension plan
No amounts
paid
On June 19, 2019, the Board of Directors used the authorization granted in the eighteenth resolution
of the January 22, 2019 Annual Shareholders Meeting to grant Denis Machuel 22,000 performance
shares (representing 2.71% of the total number of restricted shares and performance shares allocated
by the Board during the fiscal year).
These shares are subject to a four-year vesting period and their vesting will be contingent upon the
following:
• for 25% of the shares, average organic revenue growth based on the financial statements for
Fiscal 2019, 2020, 2021 and 2022;
• for 25% of the shares, average growth in underlying operating profit margin based on the financial
statements for Fiscal 2019, 2020, 2021 and 2022;
• for 30% of the shares, a TSR target, based on Sodexo’s TSR as measured against that of a peer
group comprising 12 companies (ABM Industries, Aramark, CBRE, Compass, Edenred, Elior, Elis/
Berendsen, G4S, ISS, Jones Lang Lasalle, Rentokil and Securitas);
• for 20% of the shares, a Corporate Responsibility target corresponding to 37% of the Group’s top
management posts to be held by women as of August 31, 2022.
These performance conditions are described in detail in section 5.5.2.2 of this Document.
No stock options were granted to Denis Machuel.
In the event of the termination of Denis Machuel’s duties as Chief Executive Officer, he is subject to a
non-compete obligation. This commitment from the Company, which was approved by the Shareholders
Meeting on January 22, 2019, has not been implemented during Fiscal 2019. The related conditions
and financial consideration are set out in section 5.5.1.3 (Compensation policy) and in section 4.4.2
(Statutory Auditors’ Report on related party agreements and commitments).
Since he was appointed a member of the Group’s Executive Committee in September 2014, Denis Machuel
has been a beneficiary of a defined benefit pension plan governed by article 39 of the French General Tax
Code and article 137-11-1 of the French Social Security Code, set up for the Group’s senior executives
who hold an employment contract with one of its French companies.
Following his appointment as Chief Executive Officer, at its meeting on April 27, 2018, the Board of
Directors decided to authorize Denis Machuel to continue to be a beneficiary of this plan.
Under this supplemental pension plan (subject to a minimum of five years of presence in the plan), as
a member of the plan for at least 15 years, the pension paid can represent up to 15% of the average
of his last three years’ fixed compensation preceding his retirement, to which are added the pensions
due to him under compulsory pension plans, provided that he is a corporate officer of the Company
at the time of his retirement.
Since the enactment of French law of August 6, 2015 known as the “Macron Act”, supplemental
pension benefits for corporate officers of listed companies must be subject to performance conditions.
Consequently, the Board decided that the Chief Executive Officer’s entitlements under this plan (1%
per year up to a maximum of 15%) will only accrue if the achievement rate for his annual variable
compensation targets is at least 80%. If this rate is reached then an additional 1% contribution to the
defined benefit plan will be accrued for the year concerned. However, if the achievement rate is less
than 80%, no defined benefit contribution will be accrued for that year.
The Chief Executive Officer did not acquire any rights in Fiscal 2018. Total commitments in favor of the
Chief Executive Officer represent, as at August 31, 2019, an amount of 1,554,905 euro.
Fringe benefits
€14,930
Denis Machuel has the use of a company car and is the beneficiary of an unemployment insurance
policy.
Denis Machuel does not receive any of the following types of compensation or benefi ts: multi-year variable compensation, exceptional
compensation or indemnity for loss of offi ce.
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5.5.2.4 Pay equity ratio: the ratio between the compensation paid to the
Company’s executive corporate offi cers and the average and median
compensation received by Sodexo employees
The information in the following table is disclosed in order
to immediately comply with France’s new law on Business
Growth and Transformation (known as the “PACTE Act”), which
introduces new requirements on executive pay disclosures.
The ratios set out below were calculated based on the fi xed and
variable compensation paid during the fiscal years indicated
as well as on the performance shares granted during the same
periods, measured at fair value. This information is based upon
the Social and Economic Unit (Unité Economique et Sociale)
made up of French holding companies of the Sodexo Group.
Chief Executive Officer
Ratio – average compensation
Ratio – median compensation
Chairwoman of the Board of Directors
Ratio – average compensation
Ratio – median compensation
FISCAL 2019
FISCAL 2018
FISCAL 2017
FISCAL 2016
FISCAL 2015
23
41
5
9
25
45
4
8
34
65
4
7
31
61
4
7
32
62
Elements explaining the variation of the ratios related to the
compensation of the Chief Executive Offi cer:
Elements explaining the variation of the ratios related to the
compensation of the Chair of the Board of Directors:
• Michel Landel was the Chief Executive Officer for the full
Fiscal 2015, 2016 and 2017;
• Denis Machuel was the Chief Executive Officer for the full
Fiscal 2019;
•
for the Fiscal 2018, the ratio was calculated based on
compensation paid both to Michel Landel and Denis Machuel
proportionally to their terms of offi ce.
• during Fiscal 2015, Mr Pierre Bellon did not receive any
compensation under his mandate of Chairman of the Board
of Directors;
•
for the purposes of calculating the ratio for Fiscal 2016,
Sophie Bellon’s compensation as Chairwoman of the Board
of Directors has been annualized.
5.5.3 Compensation of directors other than corporate officers
Except for the Chairwoman of the Board, who is a non-executive director, the members of the Board of Directors of Sodexo are not
classifi ed as corporate offi cers.
5.5.3.1 Compensation paid to non-corporate offi cers for their mandate as
Sodexo directors
The total annual amount of compensation available for payment to the directors of Sodexo was set at 900,000 euro at the Annual
Shareholders Meeting of January 23, 2018. The total amount actually paid to all directors (both executive and non-executive) for
Fiscal 2019 was 822,750 euro, compared to 879,900 euro for Fiscal 2018.
These directors’ fees were calculated in accordance with the Board of Directors’ Internal Rules, based on the following criteria
established for Fiscal 2019:
(in euro)
Board of Directors
Audit Committee
Nominating Committee
Compensation Committee
ANNUAL FIXED FEE
ADDITIONAL ANNUAL
FIXED FEE FOR CHAIRING A
COMMITTEE
VARIABLE FEE PER
ATTENDANCE AT EACH
MEETING
20,000
5,500
5,500
5,500
20,000
20,000
20,000
4,000
2,400
2,400
2,400
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A travel allowance of 1,250 euro per Board meeting attended is paid to directors travelling from the United States.
Compensation paid to directors other than corporate offi cers in offi ce as of August 31, 2019 for Fiscal 2019 and Fiscal 2018, based
on their attendance at Board and Committee meetings as indicated in section 5.2.1.7, was as follows:
TABLE 3, BASED ON THE AFEP-MEDEF CODE TEMPLATE AND AMF RECOMMENDATION 2009-16
DIRECTORS OTHER THAN CORPORATE OFFICERS
(in euro)
FISCAL 2019
FISCAL 2018
Emmanuel Babeau
Robert Baconnier
Patricia Bellinger
Astrid Bellon
Bernard Bellon(1)
François-Xavier Bellon
Nathalie Bellon-Szabo
Philippe Besson(2)
Françoise Brougher
Soumitra Dutta
Michel Landel
Cathy Martin
Sophie Stabile(3)
Cécile Tandeau de Marsac
81,600
63,100
-
36,000
38,000
63,500
63,100
65,500
98,600
67,750
-
61,500
80,500
105,600
100,600
65,500
58,950
44,000
50,000
65,500
63,100
63,100
106,950
74,250
22,000
65,500
4,250
98,200
(1) This total includes 2,000 euro paid by Bellon SA in Fiscal 2019 and Fiscal 2018 for his role as a member of Bellon SA’s Supervisory Board. Bernard Bellon completed
his term on January 22, 2019 and was not renewed.
(2) Upon Philippe Besson’s request, compensation due to him for his role as director representing employees is paid partially to the trade union which designated him
(Fiscal 2019: 21,429 euro were paid to him directly and 44,071 euro were paid to his trade union – Fiscal 2018: 21,429 euro were paid to him directly and 41,671 euro
were paid to his trade union).
(3) Sophie Stabile was appointed on July 1, 2018.
5.5.3.2 Other compensation paid to non-executive directors by Bellon SA
and Sodexo
No stock options or restricted shares have been granted to non-executive directors and they are not eligible for any supplemental
pension plan or compensation or benefi ts potentially resulting from the assumption, termination or change of position.
(in euro)
Astrid Bellon(1)
François-Xavier Bellon(2)
Nathalie Bellon-Szabo(3)
FISCAL 2019
FISCAL 2018
TOTAL ANNUAL COMPENSATION
TOTAL ANNUAL COMPENSATION
FIXED
VARIABLE
FRINGE BENEFITS
FIXED
VARIABLE
FRINGE BENEFITS
146,666
355,000
524,410
-
-
-
-
-
230,000
320,000
3,583
490,923
-
-
-
-
-
3,583
(1) Compensation paid for her role as a member of the Management Board of Bellon SA.
(2) Compensation paid for his role as Chairman of the Management Board of Bellon SA.
(3) Compensation paid for her role as a member of the Management Board of Bellon SA (275,000 euro in Fiscal 2019 and 270,000 euro in Fiscal 2018) and for her role
as Chief Executive Officer of Sodexo Sports et Loisirs France and Chief Operating Officer of Sodexo Sports and Leisure worldwide (On-site Services) (249,410 euro in
Fiscal 2019 and 220,923 euro in Fiscal 2018). Nathalie Bellon-Szabo has the use of a company car.
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5.5.4 Compensation policy for members of the Executive Committee
The compensation of the members of the Executive Committee
comprises a fi xed salary, a variable annual bonus, a long-term
incentive (restricted share) plan and a travel allowance, the
amount of which varies depending on the countries visited and
the length of stay.
The compensation policy applicable to members of the Executive
Committee was reviewed in 2019 by the Compensation
Committee and the Board of Directors.
The compensation of Executive Committee members is fully
aligned with that of the Chief Executive Offi cer. For Fiscal 2020 it
comprised the following:
• a fixed salary;
• an annual performance bonus.
Depending on the Executive Committee member, the annual
performance-based bonus represents between 50% and 80%
of their fi xed salary.
The bonus is calculated and paid following the close of the
fi scal year to which it applies and aft er the Board of Directors
has approved the fi nancial statements;
The applicable performance conditions and the proportion
of shares subject to each condition are equivalent to
those set for the Chief Executive Officer and described in
section 5.5.1.3.
In addition to this compensation, Executive Committee members
may receive fringe benefi ts (primarily a car) and pension plan
contributions are paid under the following plans:
• a defined contribution plan for holders of an employment
contract with one of the Group’s foreign companies;
• a defi ned benefi t plan for holders of a French employment
contract.
Total compensation paid during Fiscal 2019 by the Group to
members of the Executive Committee in offi ce as of August 31,
2019 (including the Chief Executive Officer, details of whose
compensation are provided in section 5.5.2.2 of this document),
amounted to 12,713,427 euro.
This amount comprises:
• a fi xed portion of 8,870,206 euro, including 570,448 euro of
contributions to the above-mentioned pension plans;
• a long-term incentive plan, consisting of restricted
share grants. All of the shares are subject to presence and
performance conditions.
• a variable portion of 3,843,221 euro (comprising the
Fiscal 2018 performance-based bonus and travel allowances
of 60,458 euro paid in Fiscal 2019).
5.5.5 Description of the long-term incentive plan for managers
The Group’s incentive compensation policy for managers has two objectives:
• aligning the fi nancial interests of managers with those of shareholders;
• attracting and retaining the intra-entrepreneurs needed to expand and strengthen Sodexo’s market leadership.
5.5.5.1 Stock option plans
Until Fiscal 2012, as part of this policy stock options were granted at regular intervals.
The number of unexercised stock options issued by the Company to managers in the Group as of August 31, 2018 was 45,765 (around
0.03% of the capital at that date), representing a total amount of 2,352,321 euro. As these options were exercised in Fiscal 2019 there
were no longer any stock options outstanding as of August 31, 2019.
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Stock options granted to Group managers
TABLE 8, BASED ON THE AFEP-MEDEF CODE TEMPLATE AND AMF RECOMMENDATION 2009-16
DATE OF SHAREHOLDERS
MEETING
DATE OF BOARD MEETING
GRANTING STOCK OPTION PLAN
TOTAL NUMBER OF
OPTIONS GRANTED(1)
TOTAL NUMBER OF
OPTIONS GRANTED TO
CORPORATE OFFICERS
START DATE OF
VESTING PERIOD
01/19/2009
12/13/2011 (A1a)
57,150
01/19/2009
12/13/2011 (A1b)
358,500
-
-
12/13/2012
70% of the options:
12/13/2012
30% of the options:
12/13/2014(3)
(1) Total number of options granted by the Board of Directors at grant date.
(2) Exercise price adjusted after capital transactions carried out since grant date.
(3) Subject to achieving an annual increase in Group net income of at least 6% over three years at constant currency exchange rates.
(4) Total number of options cancelled as a result of departure of beneficiaries.
Stock options granted to and exercised by the ten Group employees receiving the largest number
of options (other than corporate offi cers)
INFORMATION DISCLOSED IN ACCORDANCE WITH ARTICLE L.225-184 OF THE FRENCH COMMERCIAL CODE
Stock options granted during Fiscal 2019 to the ten Group employees receiving the largest
number of options (aggregate information)
-
-
Stock options exercised during Fiscal 2019 by the ten Group employees exercising the largest
number of options (aggregate information)
26,000
51.40
TOTAL NUMBER OF
OPTIONS
WEIGHTED AVERAGE
EXERCISE PRICE (in euro)
5.5.5.2 Restricted share grants
Since Fiscal 2013, long-term incentive plans have consisted
exclusively of restricted share plans.
The rules governing restricted share plans within the Group are
as follows:
• all restricted share grants are made in the same period of
the year;
• vesting of shares granted under the long-term incentive
program is contingent upon the benefi ciary’s employment
with the Group through the vesting date;
• performance conditions apply to the grant, in the
following proportions:
• 100% of the restricted shares granted to the Chief
Executive Officer, and the members of the Executive
Committee,
• tranches of the restricted shares granted to other
benefi ciaries, as explained below (for the shares granted
in April 2018 and June 2019):
NUMBER OF SHARES GRANTED PER BENEFICIARY
Up to 1,000 shares
More than 1,001 shares
% OF SHARES SUBJECT
TO PERFORMANCE
CONDITIONS
30%
50%
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EXPIRATION DATE
EXERCISE PRICE(2)
(in euro)
12/12/2018
51.40
12/12/2018
51.40
TERMS OF EXERCISE
25% at each
anniversary date
17.5% at each
anniversary date
30% at the 3rd
anniversary date(3)
CUMULATIVE NUMBER OF
SHARES PURCHASED AS
OF 08/31/2019
CUMULATIVE NUMBER OF
OPTIONS CANCELLED(4)
OPTIONS
OUTSTANDING AS
OF 08/31/2019
48,515
8,635
308,780
49,720
0
0
The performance conditions underlying these plans have changed
over the years. Following the introduction of a Total Shareholder
Return (TSR) target introduced in Fiscal 2015 and a comparative
TSR target in Fiscal 2016, the indicator for the financial
performance condition was changed from Group net income to
consolidated underlying operating profi t to bring this condition
in line with the market guidance issued in relation to the Group’s
medium-term targets. Moreover, in Fiscal 2016 the vesting period
was extended to four years in order to align it with the four-year
performance condition assessment period. This applies to all
restricted shares granted, irrespective of whether or not they are
subject to performance conditions. At the same time, the lock-up
period was removed for French benefi ciaries.
International restricted share plan rules dated April 27, 2015
provided for two performance conditions:
• a vesting condition based on Sodexo’s Total Shareholder
Return (TSR) of 20% over 3 years;
• a vesting condition based on an average growth in Group
share of net income of at least 6% per year over 3 years.
Performance conditions have been met as follows: a 54% TSR
and a 14% net income average growth per year.
Consequently, 458 ,225 shares were delivered to the benefi ciaries
concerned on April 27, 2019.
The restricted shares granted by the Board of Directors on
June 19, 2019 will be delivered on June 19, 2023, provided
that each benefi ciary concerned is still with the Group and any
applicable performance conditions have been met.
F u r t h e r d e t a i l s o f t h e p l a n s i n f o r c e a r e p r o v i d e d i n
section 5.5.2.2.
As stated in section 5.5.1.3 above, the Board decided to reduce
the vesting period for shares granted under future share plans
to three years and to change the timing of when the plans are
usually approved or put in place. Until now, the plans were
approved and the shares were granted at the end of the fi scal
year, with the most recent one being in June 2019. From now
on, in order to align the performance assessment period with
the vesting period, the plans will be approved at the beginning of
each fi scal year, when the fi nancial statements for the previous
fi scal year are published. This change in timing will not result in
a year without shares being delivered to the benefi ciaries.
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5 C o m p e n s a t i o n
Restricted shares granted to Group managers
TABLE 9, BASED ON THE AFEP-MEDEF CODE TEMPLATE AND AMF RECOMMENDATION 2009-16
Date of Annual
Shareholders Meeting
Date of grant by the
Board of Directors
Total number of shares
granted
Total number of
beneficiaries
2015 PLAN
2015-2 PLAN
2016 PLAN
2016-2 PLAN
2016-3 PLAN
2017 PLAN
2017-2 PLAN
2018 PLAN
2018-2 PLAN
2019 PLAN
01/21/2013 01/21/2013 01/26/2016 01/26/2016 01/26/2016 01/26/2016 01/26/2016 01/26/2016 01/26/2016 01/22/2019
04/27/2015 12/01/2015 04/27/2016 09/30/2016 11/30/2016 04/20/2017
09/14/2017 04/27/2018
09/13/2018 06/19/2019
849,875
15,100
866,075
11,950
10,000
884,895
14,000
917,880
34,100
810,990
1,299
8
1,264
16
2
1,357
5
1,671
20
2,144
% of share capital
0.54%
0.01%
0.56%
0.01%
0.01%
0.58%
0.01%
0.62%
0.02%
0.55%
Performance
conditions
Growth in Group net
income
Growth in operating
profit
Organic growth
TSR
RSE
(see description above)
FRENCH PLAN
Vesting date for shares
subject to the condition
of the beneficiary still
working with the Group
Vesting date for shares
subject to performance
conditions
X
X
X
X
04/27/2017
12/012017
04/27/2018
12/01/2018
End of lock-up period
04/27/2020 12/01/22020
Total number of shares
granted
276,140
6,750
Number of shares
granted to the
corporate officer
% of share capital
Cumulative number of
shares cancelled
Transferred shares
(beneficiaries
participating in the
international mobility
program)
40,000
0.03%
(24,458)
0
0
0
Vested shares
251,682
6,750
SITUATION OF
THE FRENCH PLAN
AT AUGUST 31, 2019
0
0
X
X
0
0
X
X
0
0
X
X
0
0
X
X
0
0
X
X
0
0
X
X
X
0
0
X
X
X
0
0
X
X
X
X
0
0
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2015 PLAN
2015-2 PLAN
2016 PLAN
2016-2 PLAN
2016-3 PLAN
2017 PLAN
2017-2 PLAN
2018 PLAN
2018-2 PLAN
2019 PLAN
INTERNATIONAL
PLANS
Vesting date
04/27/2019
12/01/2019 04/27/2020 09/30/2020 11/30/2020 04/20/2021 09/14/2021 04/27/2022 09/13/2022 06/19/2023
End of lock-up period/
date available
Total number of shares
granted
Number of shares
granted to the
corporate officer
% of share capital
Cumulative number of
shares cancelled
Transferred shares
(beneficiaries
participating in the
international mobility
program)
04/27/2019
12/01/2019 04/27/2020 09/30/2020 11/30/2020 04/20/2021 09/14/2021 04/27/2022 09/13/2022 06/19/2023
573,735
8,350
866,075
11,950
10,000
884,895
14,000
917,880
34,100
810,990
44,000
0.03%
44,000
25,000
22,000
0.03%
0.00%
0.02%
0.00%
0.01%
(115,510)
(6,000)
(149,470)
(350)
(92,166)
(1,000)
(62,860)
(2,830)
0
0
0
0
0
0
0
0
0
Vested Shares
458,225
Accelerated vesting
for Death and
Disability
SITUATION OF THE
INTERNATIONAL PLAN
AT AUGUST 31, 2019
TOTAL OF THE PLANS
AT AUGUST 31, 2019
0
0
1,250
350
500
2,350
715,355
11,600
10,000
792,379
13,000
854,520
34,100
808,160
2,350
715,355
11,600
10,000
792,379
13,000
854,520
34,100
808,160
As of August 31, 2019, a total of 6,114,720 restricted shares had been granted to Group managers since 2013 (cumulatively
representing approximately 4.14% of the capital since the adoption of the resolution at the January 2013 Annual Shareholders
Meeting) for an amount of 458,765,089 euro (based on estimated fair value at the grant date, taking into account the related terms
and conditions).
5
These grants concerned 1,123 benefi ciaries in 2013, 1,200 in 2014, 1,307 in 2015, 1,282 in 2016, 1,357 in 2017, 1,691 in 2018 and
2,144 in 2019.
Restricted shares granted to the ten Group employees (other than corporate offi cers) receiving the largest
number of restricted shares, and shares vested for those employees
INFORMATION DISCLOSED IN ACCORDANCE WITH ARTICLE L.225-197-4 OF THE FRENCH COMMERCIAL CODE
Shares granted during Fiscal 2019 to the ten Group employees receiving the largest number of
restricted shares (aggregate information)
93,000
June 19, 2019
Shares vested during Fiscal 2019 for the ten Group employees receiving the largest number of
restricted shares (aggregate information)
85,400
April 27, 2015
TOTAL NUMBER OF
SHARES
PLAN DATE
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6
SHAREHOLDERS
AND SHARE CAPITAL
Financial communications calendar
How to obtain information
6.1
Sodexo Share Performance
6.1.1 Stock market performance
6.1.2 Share and dividend performance
6.1.3 Benefi ts of being a registered
shareholder
6.1.4 ADR program
6.2
Financial Communications
Policy
6.2.1 Listening to our shareholders and the
fi nancial community
260
260
261
261
263
264
265
266
266
6.2.2 Universal Registration Document (URD) 267
6.2.3 Annual Shareholders Meeting
267
6.2.4 Regular meetings and ongoing dialogue 267
6.2.5 Launching of Shareholders Club
267
6.3
Shareholders
6.3.1 Evolution of the share capital in the
last three fi scal years
6.3.2 Changes in the breakdown of share
capital and voting rights over the last
three years
6.3.3 Shareholding held by Bellon SA
6.3.4 Crossing of legal and statutory
reporting thresholds in Fiscal 2019
6.3.5 Share buy-back program
268
268
269
269
270
270
6.3.6 Description of the share buy-back
program subject to the authorization
of the Annual Shareholders Meeting
to be held on January 21, 2020
6.3.7 Employee share ownership
6.3.8 Capital authorized but not issued
– Delegations and valid fi nancial
authorizations
6.3.9 Potential share capital
271
271
272
272
6.4
Additional general information
and the bylaws of the Company
273
6.4.1 Corporate name, registered offi ce,
website
6.4.2 Legal form
6.4.3 Date of incorporation and duration
6.4.4 Corporate purpose
6.4.5 Company registration and LEI
6.4.6 Material contracts
6.4.7 Fiscal year
6.4.8 Form of shares and transfer of shares
6.4.9 Statutory disclosure thresholds
6.4.10 Identifi cation of shareholders
6.4.11 Appropriation of earnings and
dividend premium
6.4.12 Shareholder Meetings
6.4.13 Double voting rights
6.4.14 Modifi cation of shareholders’ rights
6.4.15 Consultation of legal documents
273
273
273
273
274
274
274
274
274
274
275
275
275
276
276
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S H A R E H O L D E R S A N D S H A R E C A P I T A L
6
Financial communications calendar
Fiscal 2020 first quarter revenues
2020 Annual Shareholders Meeting
Ex-Dividend date
Dividend record date
Dividend payment date
Fiscal 2020 half-year results
Fiscal 2020 nine month revenues
Fiscal 2020 annual results
Fiscal 2020 Annual Shareholders Meeting
January 9, 2020
January 21, 2020
January 30, 2020
January 31, 2020
February 3, 2020
April 9, 2020
July 7, 2020
October 29, 2020
January 12, 2021
These dates are purely indicative and are subject to change without notice. Regular updates to the calendar are
available on our website www.sodexo.com.
How to obtain information
INVESTOR RELATIONS
By e-mail: financial.communication.group@sodexo.com
SHAREHOLDERS CLUB
By e-mail: clubactionnaires@sodexo.com
By phone: +33 (0)1 57 75 80 54
Address: Sodexo, Investor Relation /Shareholders Club – 255, quai de la Bataille de Stalingrad –
92866 Issy-les-Moulineaux Cedex 9 – France
Further information available on the Sodexo website
www.sodexo.com
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6.1 SODEXO SHARE PERFORMANCE
_ Sodexo shares are listed on Euronext Paris (Euroclear code: FR0000121220) and have been
included in the CAC 40 index since March 21, 2016. In addition, Sodexo off ers securities listed in U.S.
dollars, in the form of American Depositary Receipts (ADRs) that are traded on the over-the-counter
(OTC) market, ticker SDXAY, with fi ve ADRs representing one Sodexo share.
6.1.1 Stock market performance
ADJUSTED SODEXO SHARE PRICE TRENDS FROM INITIAL LISTING ON MARCH 2, 1983 THROUGH AUGUST 31, 2019 (in euro),
COMPARED TO THE CAC 40 INDEXED ON THE SODEXO SHARE PRICE
120
100
80
60
40
20
0
A u g u s t 3 1
1 0 3 . 1 0
A u g u s t 3 1
2 2 . 8 2
3
8
9
1
5
8
9
1
7
8
9
1
9
8
9
1
1
9
9
1
3
9
9
1
5
9
9
1
7
9
9
1
9
9
9
1
1
0
0
2
3
0
0
2
5
0
0
2
7
0
0
2
9
0
0
2
1
1
0
2
3
1
0
2
5
1
0
2
6
1
0
2
7
1
0
2
8
1
0
2
9
1
0
2
SODEXO
CAC 40 indexed
6
The initial listing was on March 2, 1983 at an adjusted price
of 1.55 euro. As of August 31, 2019 (the last trading day of
Fiscal 2019), the closing share price was 103.10 euro.
Since its first listing, the value of the Sodexo share has been
multiplied by 67, whereas the CAC 40 index has been multiplied
by only 14.7 over the same period, which means that Sodexo’s
shares have signifi cantly outperformed the CAC 40(1).
Since its listing on the stock exchange in 1983, Sodexo’s share
value has appreciated by an average of 12.5% per annum,
excluding dividends.
1 CAC 40 index reconstituted from 1983 to 1987.
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SODEXO SHARE PRICE FROM AUGUST 31, 2014 THROUGH TO AUGUST 31, 2019 (in euro),
COMPARED TO THE CAC 40 INDEXED ON THE SODEXO SHARE PRICE
130
120
110
100
90
80
70
60
50
A u g u s t 3 1
1 0 3 . 1 0
A u g u s t 3 1
9 3 . 7 8
August 2014
August 2015
August 2016
August 2017
August 2018
August 2019
SODEXO
CAC 40 indexed
Over the last fi ve fi scal years, Sodexo’s share price has increased by 38%, whereas the CAC 40 index has increased by 25% during
the same period.
SODEXO SHARE PRICE FROM AUGUST 31, 2018 THROUGH TO AUGUST 31, 2019 (in euro),
COMPARED TO THE CAC 40 INDEXED ON THE SODEXO SHARE PRICE
120
110
100
90
80
70
60
A u g u s t 3 1
1 0 3 . 1 0
A u g u s t 3 1
9 0 . 9 4
Sept. 2018
Nov. 2018
Jan. 2019
March 2019
May 2019
July 2019
August 2019
SODEXO
CAC40 indexed
During Fiscal 2019, the share price increased by 15% whereas
the CAC 40 index rose by 1%. Aft er underperforming the CAC 40
by almost 15% the previous year, linked to the downward
revision of forecasts during Fiscal 2018, investor confidence
gradually returned during Fiscal 2019 thanks to an improvement
in organic revenue growth and results, in line with expectations.
As of August 31, 2019, the market capitalization of Sodexo was
15.2 billion euro.
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6.1.2 Share and dividend performance
Dividend policy
The Group’s dividend policy is aimed at securing long-term shareholder loyalty by regularly increasing the dividend, a dividend payout
ratio of around 50% and a dividend premium for shareholders who have held their shares in registered form for an unbroken period
of at least four years.
DIVIDEND (in euro)
PAYOUT RATIO (in %)
52%
50%
51%
49%
46%
56%
56%
57%
57%
63%
64%
€2.90
€2.75
€2.75
48%
€2.20
€2.40
€1.27
€1.27
€1.35
€1.46
€1.59
€1.62
€1.80
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
70%
60%
50%
40%
30%
20%
10%
0%
Fiscal 2 0 0 8
Fiscal 2 0 0 9
Fiscal 2 0 1 0
Fiscal 2 0 1 1
Fiscal 2 0 1 2
Fiscal 2 0 1 3
Fiscal 2 0 1 4
Fiscal 2 0 1 5
Fiscal 2 0 1 6
Fiscal 2 0 1 7
Fiscal 2 0 1 8
Fiscal 2 0 1 9
At the Annual Shareholders Meeting on January 21, 2020,
the Board of Directors will propose that shareholders approve
the payment of a cash dividend of 2.90 euro per share for
Fiscal 2018, up +5.5% compared with Fiscal 2018.
In addition, shares held in registered form for the past four years
or more (i.e., since at least August 31, 2015) and which are
still held in such form when the dividend becomes payable on
February 3, 2020 will be entitled to a 10% dividend premium,
representing an additional 0.290 euro per share. The number of
shares eligible for this dividend premium may not exceed 0.5%
of the share capital for any single shareholder.
The distribution of dividends and the 10% dividend premium
represent a payout ratio of 64 %.
The dividend and dividend premium (for eligible shares) will
become payable on February 3, 2020, with a Euronext Paris
ex-dividend date of January 30, 2020. The record date – i.e.,
the date before which an investor must own shares in order to
receive the dividend – will be January 31, 2020.
Dividends not claimed within fi ve years of the date on which they
were payable to shareholders are forfeited.
6
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FISCAL 2019
FISCAL 2018
FISCAL 2017
FISCAL 2016
FISCAL 2015
SHARE PRICE (in euro)
Opening price as of August, 31
89.74
98.26
104.75
77.71
Closing price as of August, 31
103.10
89.72
98.03
103.85
Market capitalization as of August 31 (in billions of euro)
15.2
13.2
14.8
84.20
78.10
96.02
108.65
114.05
123.60
75.03
78.43
12.3
69.49
95.76
16.0
70.45
106.7
12-month low
12-month high
DAILY AVERAGE VOLUME OF SHARE TRADING
In number of shares
In value (in thousands of euro)
DIVIDEND AND SHARE PERFORMANCE
253,895
361,046
241,150
275,923
232,550
26,839
34,221
25,607
24,551
19,800
Total payout(2) (in millions of euro)
430 (1)
403
411
371
335
Payout ratio including dividend premium
(Total payout/Group net profit)
64.7%
62.6%
57.0%
58.2%
47.9%
Dividend per share (DPS) (in euro)
2.90 (1)
2.75
2.75
10% dividend premium (in euro)
0.290 (1)
0.275
0.275
Earnings per share (EPS)(3) (in euro)
Payout ratio (DPS/EPS)
4.56
4.40
63.6 %
62.5%
4.85
57%
2.40
0.24
4.21
57%
2.20
0.22
4.60
47.8%
TOTAL SHAREHOLDER RETURN (TSR)(4)
+18 .0%
-5.9%
-4.1%
36.5%
6.9%
(1) Subject to approval at the Annual Shareholders Meeting on January 21, 2020.
(2) Theoretical payout for current fiscal year and actual figures for previous years. Includes dividend premium.
(3) Based on an average number of shares (quarterly average).
(4) Calculation of the Total Shareholder Return over a given period and calculated as follows: (market price at the end of the period – market price at the beginning of the
period + dividends paid over the period, excluding the dividend premium)/market price at the beginning of the period.
6.1.3 Benefits of being a registered shareholder
Registered Sodexo shareholders are entitled to:
• an exemption from administration costs (for directly-
• double voting rights for registered shares held for at least
four years;
registered shares only).
Sodexo share codes
• a dividend premium of 10%(1) for registered shares held for
at least four years (the number of shares eligible for this
dividend premium may not exceed 0.5% of the share capital
for any single shareholder);
• automatic invitation to Shareholders Meetings and
personalized information on all financial transactions
(capital increases, bond issues, etc.);
Sodexo bearer shares are traded under the code FR0000121220.
The code for registered shares already eligible for the dividend
premium is FR0011532431.
Diff erent share codes have been introduced for registered shares
in order to refl ect the period in which the shares were acquired
and to determine eligibility for the dividend premium.
1 The dividend premium payment will be made on February 3 , 2020 for the fi scal year ended August 31, 2019 for shareholders holding registered shares (directly
or indirectly) since August 31, 2015 and up until the payment of the dividend.
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The use of diff erent codes does not aff ect the tradability of the shares. When selling shares, it is advisable to sell the most recently
acquired fi rst in order to maintain the dividend premium rights on the highest number of remaining shares.
REFERENCE DATE FOR REGISTRATION OF SHARES TO QUALIFY FOR THE DIVIDEND PREMIUM
RIGHT TO DIVIDEND PREMIUM
FOR FISCAL
ISIN CODES FOR
REGISTERED SHARES
Before August 31, 2015
August 31, 2016
August 31, 2017
August 31, 2018
August 31, 2019
August 31, 2020
2019
2020
2021
2022
2023
2024
FR0011532431*
FR0013193125
FR0013270261
FR0013353075
FR0013436029
FR0013447026
* On September 1, 2019, Euroclear merged the shares held under the code SODEXO ACTIONS PRIME DE FIDÉLITÉ 2019 – FR0012891414 into the code
FR0011532431 (which will be eligible for the 10% dividend premium for the February 2020 dividend payment).
Contacts for registered shareholders
Directly-registered shareholder accounts are managed by Société Générale, which also acts as transfer agent for all Sodexo shares.
For further information call:
Société Générale Nantes (France): +33 (0)2 51 85 67 89
or visit the Société Générale website: www.sharinbox.societegenerale.com
6.1.4 ADR program
Since Sodexo’s voluntary delisting from the New York Stock
Exchange in 2007, Sodexo American Depositary Receipts (ADRs)
are traded on the over-the-counter (OTC) market, ticker SDXAY,
with fi ve ADRs representing one Sodexo share.
Advantages for U.S. investors:
• U.S. brokers purchase, sell and settle the ADRs in the same
way as they would for the shares of a U.S. company;
• the prices of the ADRs are quoted in U.S. dollars and the
dividends are paid in U.S. dollars;
• ADRs are a straightforward and eff ective way of enabling U.S.
investors to invest in international companies.
KEY INFORMATION ON THE SODEXO ADRS:
ADR ticker symbol
Platform
CUSIP
DR ISIN
ISIN code
SEDOL
SDXAY
OTC
833792104
US8337921048
FR0000121220
7062713
6
Custodian bank
Citibank Europe Plc (Dublin)
ADR ratio
5 ADRs for 1 ordinary share
CONTACTS AT CITIBANK FOR ANY QUESTIONS CONCERNING
THE ADRS:
New York
Michael O’Leary
London
Michael Woods
michael.oleary@citi.com
michael.woods@citi.com
Tel.: +1 212 723 4483
Tel.: +44 20 7500 2030
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6 F i n a n c i a l C o m m u n i c a t i o n s P o l i c y
6.2 FINANCIAL COMMUNICATIONS POLICY
_ To respond more eff ectively to the expectations of its shareholders, Sodexo continuously works
to improve its investor relations program by developing new information channels and in the quality
of its interactions during the diff erent meetings with the fi nancial community.
6.2.1 Listening to our shareholders and the financial community
I n o r d e r t o c o m p l y w i t h a l l a p p l i c a b l e r e g u l a t i o n s i n
connection with its listing on Euronext Paris (the French stock
exchange), Sodexo and all those involved in preparing fi nancial
communications have committed to a set of transparency
principles designed to ensure equal treatment of all shareholders.
Sodexo’s investor relations policy is based on four core
principles:
• equal treatment when disclosing quarterly financial
information: all financial press releases are issued
simultaneously in real time to all our stakeholders, both in
French and English. These press releases are published on the
Group’s website (www.sodexo.com) and relayed through the
press, e-mail and via an authorized provider;
• regular reporting: the financial community is informed
of the fi nancial publication schedule a year in advance, and
updates are always available on the Group’s website. In
a process of acceleration of the publication of the Group’s
accounts, the announcement of the Fiscal 2020 results and
the Shareholders meeting to approve those accounts are
advanced by one week;
• ease of access to financial meetings: Annual Shareholder
Meetings and revenue and results presentations are
broadcast via a live webcast and subsequently available on
the Sodexo website. In addition, all fi nancial communication
is available and archived on the website;
• transparency: all information on the Group, including the
bylaws, Universal Registration Document (formerly called
the Registration document ), Interim Report, press releases,
presentations and share price trends, is also available on the
website: www.sodexo.com.
6.2.1.1 Group spokesperson
Only the Chairwoman, the Chief Executive Offi cer and members
of the Executive Committee are authorized to provide fi nancial
communications. The Chief Executive Officer appoints the
Director of Financial Communication to act as spokesperson for
the Group, within specifi c delegated powers.
6.2.1.2 Preparation and publication
of fi nancial communications
All financial communication is reviewed prior to publication
by a Group Disclosure Committee comprising representatives
from Group Finance, Legal, Communications, Corporate
Responsibility, Board secretary and Human Resources.
Barring exceptional circumstances, all information with the
potential to influence the share price is published before
Euronext Paris opens for trading.
Aft er approval of this information by the Chief Executive Offi cer,
the Chief Financial Offi cer or the Board of Directors (depending
on its nature), it is communicated to the markets via a press
release issued simultaneously to the entire fi nancial community
and to the stock market authorities.
S o d e x o d o e s n o t c o m m u n i c a t e f i n a n c i a l
information during the following periods:
• 30 calendar days preceding the Board of Directors’
meeting to approve the annual and half-year fi nancial
statements up to the release of its consolidated annual
and interim results;
• 15 calendar days before the release of its fi rst and
third quarter consolidated revenue fi gures up to the
release of these quarterly publications.
6.2.1.3 Code of conduct for senior
managers
To ensure Sodexo’s commitment to transparency and regulatory
compliance, the Board of Directors adopted a Code of conduct
for senior managers in 2003. Since that date, the Group’s
Executive Committee members and key fi nance executives must
systematically and formally sign up to this Code and abide by
its principles.
This Code of conduct sets out a core set of behaviors:
• to avoid actual or apparent confl icts of interest;
• to comply with all laws, rules and regulations;
• to protect the Group’s confi dential information;
• to conduct all business fairly;
• to hold managers accountable for their behavior and create
an environment of trust where concerns can be reported
without fear of retaliation or retribution.
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F i n a n c i a l C o m m u n i c a t i o n s P o l i c y
The Group’s ethical principle of transparency means effi cient
communication with the Group’s shareholders, so that they
are provided with full and accurate information on the Group’s
financial condition and profits. The Group is committed to
timely communication and to complete, accurate, reliable and
clear reporting.
6.2.2 Universal Registration Document (URD)
A Registration D ocument is filed each year with the French
securities regulator (Autorité des marchés financiers – AMF) in
accordance with its General Regulation. The French-language
document can be consulted on the AMF website (www.amf-
france.org). It is also available, along with the English version,
at www.sodexo.com (“Finance” section, “Presentations
and publications” tab). According to the new Regulation
(EU) 2017/1129 and its Delegated Regulation 2019/980,
in force since July 21, 2019, Sodexo publishes a Universal
Registration Document this year. Apart from its new name, this
Universal Registration Document aims to enhance shareholder
and investor understanding of the risk factors, overall strategy
and extra-fi nancial aspects.
An interactive and accessible version of the Universal Registration
Document in French and English is also available on the Group’s
website to facilitate reading, particularly for those that are
visually impaired.
6.2.3 Annual Shareholders Meeting
The Annual Shareholders Meeting is announced in offi cial notices
published in the press, in the BALO (Bulletin des annonces
légales obligatoires) in France and on the Group’s website, at
www.sodexo.com.
The Notice of meeting is available in French and English at
least 21 days before the meeting. It is sent to all registered
shareholders, and to other shareholders upon request. It is also
available at www.sodexo.com.
A live webcast of the Sodexo Annual Shareholders Meeting is
broadcast on our website, enabling shareholders who cannot
attend in person to ask questions and follow the voting on
resolutions. The webcast of the last Annual Shareholders
Meeting has been archived and is available on the Sodexo
website: www. Sodexo.com.
6.2.4 Regular meetings and ongoing dialogue
Sodexo is committed to genuine dialogue with its shareholders
and with the broader fi nancial community.
Lastly, the Financial Communications Department is always
available to answer questions from analysts and investors.
In order to ensure that the fi gures it releases each quarter are
fully understood, the Group organizes conference calls led by the
Chief Executive Offi cer and Chief Financial Offi cer. In addition,
a program of regular meetings with investors and analysts is
put in place each year, with the Chief Executive Offi cer and Chief
Financial Officer holding sessions in Europe (in particular in
Paris, London and Frankfurt) and also in the United States and
Canada. These events create opportunities for more informal
dialogue.
Themed briefi ngs are also held periodically to give investors and
analysts insight into front-line operations.
Sodexo also regularly participates in industry presentations and
conferences organized by brokerage fi rms in France and abroad.
On September 6, 2018, the Group organized its first Capital
Markets Day in nine years. The event was held at the Yachts
de Paris, on the banks of the Seine, with presentations on the
strategy of the Group and its various activities including a
presentation by Sophie Bellon of her vision on the Group. All
the members of the Executive Committee, some representatives
from other departments and the Chairwoman of the Board were
present throughout the day. More than 90 investors, analysts,
bankers and fi nancial journalists attended the event. All plenary
presentations, recordings and transcripts are available on the
website: www.sodexo.com .
6
6.2.5 Launching of the Shareholders Club
To respond to shareholder requests during the General Meeting
of January 22, 2019, Sodexo launched its Shareholders Club on
October 3, 2019.
In addition to the existing double voting rights and the dividend
premium aft er four years of ownership in registered form, this
Club aims to strengthen the personal link between the Company
and its shareholders, provide a direct flow of information
on Sodexo and its services and provide a dedicated forum
for discussion. To become a member, simply fi ll out the form
available on www.sodexo.com, in the shareholders section.
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6 S h a r e h o l d e r s
6.3 SHAREHOLDERS
SHAREHOLDER BREAKDOWN AS OF AUGUST 31, 2019
VOTING RIGHTS BREAKDOWN AS OF AUGUST 31, 2019
55.7%
PUBLIC
40.6%
NON-FRENCH
INSTITUTIONS
11.0%
FRENCH
INSTITUTIONS
Source: Nasdaq.
42.2%
BELLON SA
42.3%
PUBLIC
56.6%
BELLON SA
1.1%
EMPLOYEES
1%
TREASURY
SHARES
1.1%
EMPLOYEES
4.1%
INDIVIDUAL
SHAREHOLDERS
6.3.1 Evolution of the share capital in the last three fiscal years
As at August 31, 2019, the share capital of the Company was
an aggregate nominal value of 589,819,548 euro divided into
147,454,887 shares of a nominal value of 4 euro each.
As no new shares were created, for any purpose, and no shares
were cancelled during Fiscal 2019, the Company’s share capital
as at August 31, 2019 still stood at 589,819,548 euro, divided
into 147,454,887 shares with a nominal value of 4 euro each.
There were no changes in the Company’s share capital between
August 31, 2019 and the date of publication of this document.
The table below provides the evolution of the share capital over the last three fi scal years:
Position as at September 1, 2016
DATE OF
THE TRANSACTION
NATURE OF
THE OPERATION
NUMBER OF SHARES
CANCELLED
NUMBER OF SHARES
COMPRISING THE SHARE
CAPITAL FOLLOWING
THE OPERATION
SHARE CAPITAL
FOLLOWING
THE OPERATION
153,741,139
€614,964,556
14 June 2017
Share cancellation(1)
2,910,690
150,830,449
€603,321,796
Position as at September 1, 2017
150,830,449
€603,321,796
29 August 2018
Share cancellation(2)
3,375,562
147,454,887
€589,819,548
Position as at September 1, 2018
Position as at September 1, 2019
147,454,887
€589,819,548
147,454,887
€589,819,548
(1) Following the utilization by the Board of the authorization approved by the General Meeting of January 24, 2017.
(2) Following the utilization by the Board of the authorization approved by the General Meeting of January 23, 2018.
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6.3.2 Changes in the breakdown of share capital and voting rights
over the last three years
AUGUST 31, 2019
AUGUST 31, 2018
AUGUST 31, 2017
SHAREHOLDERS
NUMBER
OF SHARES
% OF
CAPITAL
% OF
THEORETICAL
VOTING
RIGHTS(1)
% OF
EXERCISABLE
VOTING
RIGHTS(1)
NUMBER
OF SHARES
% OF
CAPITAL
% OF
THEORETICAL
VOING RIGHTS
% OF
EXERCISABLE
VOTING
RIGHTS
NUMBER
OF SHARES
% OF
CAPITAL
% OF
THEORETICAL
VOTING
RIGHTS
% OF
EXERCISABLE
VOTING
RIGHTS
Bellon SA
62,250,485
42.2
56.2
56.6
62,250,485
42.2
56.7
57.2
60,900,485
40.4
55.2
55.8
BlackR ock Inc.
6,586,640
4.5
3.0
3.1
-
-
-
-
-
-
-
-
First Eagle
Investment
Management(2)
Artisan
Partners(2)
6,478,143
4.4
3.0
3.0
6,913,289
4.7
3.1
3.1
4,218,962
2.8
1.9
1.9
6,311,718
4.3
2.9
2.9
8,019,726
5.4
3.7
3.8
International
Value Advisers(2)
1,968,257
Employees(3)
1,602,197
Treasury shares
1,448,566
1.3
1.1
1.0
1.1
1.1
0.7
1.1
1.1
3,821,370
1,721,960
0
1,869,352
2.6
1.2
1.3
1.8
1.1
0.9
-
-
1,599,407
1.8
1.2
0
2,205,010
-
-
1.1
1.5
-
-
1.1
1.0
-
-
1.1
0
Public
60,808,881
41.2
32.0
32.2
62,858,705
42.6
32.6
32.9
81,906,585
54.2
40.8
41.2
TOTAL
147,454,887 100%
100%
100% 147,454,887 100%
100%
100% 150,830,449 100%
100%
100%
(1) As at August 31, 2019, the 147,454,887 shares making up the Company’s share capital carried 216,206,855 theoretical voting rights and 214,758,289 voting rights
exercisable at General Meetings. Only treasury shares do not carry any voting rights, in accordance with article L.225-210 of the French Commercial Code.
(2) Acting on behalf of its managed funds.
(3) This figure includes the shares held by employees in an account with Société Générale as a result of restricted share awards, in accordance with French Act no. 2015-
990 of August 6, 2015 on growth, business and equal economic opportunities.
As at August 31, 2019 the members of the Board of Directors together directly held less than 0.5% of the Company’s share capital.
6.3.3 Shareholding held by Bellon SA
During the Fiscal year 2019, the shareholding held by Bellon SA
in Sodexo remained stable, at 62,250,485 shares representing
42.2% of the Company’s share capital.
It should be noted that during the Fiscal year 2018, Bellon SA
purchased 1,350,000 Sodexo shares on June 1, 2018, increasing
its equity stake in the Company to 41.27% of the share capital
(compared to 40.38% as at August 31, 2017). As a result of
the acquisition followed by the cancellation by Sodexo on
August 29, 2018 of 3,375,562 shares, representing 2.2% of the
Company’s share capital, Bellon SA increased its equity stake in
the Company to 42.2%, i.e. by more than 1% over a 12-month
period. Prior to this transaction, the French stock market regulator
(Autorité des marchés financiers – AMF) had granted Bellon SA on
June 26, 2018, on the basis of article 234-9 paragraph 6 of the
General Regulations of the AMF, an exemption from the obligation
to fi le a public exchange off er on the Sodexo shares, considering
that Bellon SA already held the majority of Sodexo’s voting rights
before the transaction (D&I 2018C1176 and D&I218C1545).
Mr & Mrs Pierre Bellon and their four children who control 72.6%
of Bellon SA, signed 50-year agreements in June 2015 which
prevent their direct descendants from selling their Bellon SA
shares to a third-party. The only asset of Bellon SA is its stake
in Sodexo and Bellon SA has no intention of selling its stake to
a third-party.
6
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6 S h a r e h o l d e r s
6.3.4 Crossing of legal and statutory reporting thresholds
in Fiscal 2019
In accordance with article L.233-7, I of the French Commercial
Code, the following legal thresholds have been reported to the
Company during the Fiscal year 2019:
(D&I 218C1911). The threshold was breached following
the sale of shares on the market as well as a redemption
of Sodexo shares held as collateral;
• BlackRock Inc., acting on behalf of its managed clients and
funds, reported:
• o n O c t o b e r 1 8 , 2 0 1 8 t h a t i t h a d e x c e e d e d o n
October 16, 2018 the legal threshold of 5% of the
Company’s share capital holding 7,410,257 shares,
representing 5.03% of the share capital of the Company
and 3.46% of voting rights (D&I 218C1689). The threshold
was exceeded following the acquisition of shares on the
market as well as the receipt of Sodexo shares held as
collareral,
• o n N o v e m b e r 1 5 , 2 0 1 8 t h a t i t h a d c r o s s e d o n
November 13, 2018 the legal threshold of 5% of the
Company’s share capital in the downward direction,
holding 7,360,951 shares, representing 4.99% of the
share capital of the Company and 3.44% of voting rights
(D&I 218C1840). The threshold was crossed following the
sale of shares on the market,
• o n N o v e m b e r 2 8 , 2 0 1 8 t h a t i t h a d e x c e e d e d o n
November 26, 2018 the legal threshold of 5% of the
Company’s share capital , holding 7,395,655 shares,
representing 5.02% of the share capital of the Company
and 3.45% of voting rights (D&I 218C1899). The threshold
was exceeded following the acquisition of shares off-
market as well as the receipt of Sodexo shares held as
collateral,
• o n N o v e m b e r 2 9 , 2 0 1 8 t h a t i t h a d c r o s s e d o n
November 27, 2018 the legal threshold of 5% of the
Company’s share capital in the downward direction,
holding 7,260,601 shares, representing 4.92% of the
share capital of the Company and 3.39% of voting rights
• Artisan Partners Limited Partnership, acting on behalf of its
managed funds, reported on November 21, 2018 that it had
crossed on November 16, 2018 the legal threshold of 5%
of the Company’s share capital in the downward direction,
holding 7,196,640 shares, representing 4.88% of the share
capital of the Company and 3.36% of voting rights (D&I 218C
1862). The threshold was crossed following the sale of shares
on the market.
In accordance with article 9.4 of the bylaws of the Company, the
following statutory threshold has been reported to the Company
during Fiscal year 2019:
• on January 2, 2019 International Value Advisers, LLC, acting
on behalf of its managed funds, reported that it had crossed
on December 27, 2018 the statutory threshold of 2.5% of the
Company’s share capital in the downward direction, holding
3,593,907 shares, representing 2.44% of the share capital of
the Company and 1.68% of voting rights.
As of the date of this Fiscal 2019 Universal Registration
Document, to the best of Sodexo’s knowledge:
• since August 31, 2019 no statutory or legal threshold
crossings have been notifi ed ;
• only Bellon SA, Artisan Partners Limited Partnership,
BlackR ock Inc. and First Eagle Investment Management hold
2.5% or more of the share capital or voting rights of Sodexo,
directly or indirectly, individually, or in concert;
• there are no shareholder agreements in place and no
agreements that, if implemented, could result in a change of
control of Sodexo.
6.3.5 Share buy-back program
By way of reminder:
• the Combined Annual Shareholders Meeting of January 23,
2018 authorized the Board of Directors, in its 17th resolution,
to purchase or arrange for the purchase of Company
shares within the limit of 5% of the total number of shares
comprising the share capital as of January 23, 2018 (i.e.,
a total of 7,541,522 shares), for a period of 18 months.
The maximum purchase price of shares pursuant to the
authorization may not exceed 150 euro per share and the
total amount allocated to the authorized share buy-back
program may not exceed 1.15 billion euro;
• t h e C o m b i n e d A n n u a l S h a r e h o l d e r s M e e t i n g o f
January 22, 2019, after having terminated the previous
authorization, has again authorized the Board of Directors, in
its 17th resolution, to purchase or arrange for the purchase of
Company shares within the limit of 5% of the total number of
shares comprising the share capital as of January 22, 2019
(i.e., a total of 7,372,744 shares), for another period of
18 months. The maximum purchase price of shares pursuant
to the authorization may not exceed 120 euro per share and
the total amount allocated to the authorized share buy-back
program may not exceed 885 million euro.
The above authorizations have been granted in order to cover
stock option and restricted share plans, cancel the treasury
shares by reducing the share capital and/or facilitate the Sodexo
liquidity contract. For more information about the objectives
targeted by the two authorizations mentioned above, please
refer to section 8 of the Fiscal 2017 Registration d ocument and/
or section 7 of the Fiscal 2018 Registration d ocument.
During the Fiscal year 2019, the Board of Directors implemented
the said authorizations as follows:
• Sodexo repurchased 197,535 shares (representing 0.13% of
the share capital) at an average price of 99.73 euro per share
plus trading fees of 66.981 euro excluding taxes;
• Sodexo transferred 506,935 shares on the exercise of stock
options and for delivery under restricted share plans;
• under the liquidity contract concluded between Sodexo and
Kepler-Cheuvreux on October 1, 2016, in accordance with AMF
decision n°2018-01 on the introduction of liquidity agreements
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on equity securities under accepted market practice in force on
January 1, 2019, Sodexo carried out the following transactions:
• the total carrying amount of the treasury shares portfolio
was 145 million euro as at August 31, 2019;
• purchase of 1,233,920 shares for a total amount of
• the Sodexo liquidity account was composed of 73,314 shares.
117,830,841.88 euro (average price of 95.49 euro),
• s a l e o f 1 , 3 4 5 , 3 0 6 s h a r e s f o r a n a g g r e g a t e
129,515,902.82 euro (average price of 96.27 euro).
As at August 31, 2019:
• S o d e x o d i r e c t l y h e l d 1 , 4 4 8 , 5 6 6 o f i t s o w n s h a r e s
(representing 0.98% of the share capital) intended to hedge
various restricted share plans set up for Group employees
(for more information about restricted share plans, please
refer to section 5.5 of this document);
Since August 31, 2019, the Company has purchased Sodexo
shares other than through its liquidity contract. Detailed
information on these transactions may be found on the Sodexo
website in “Regulated information” section.
6.3.6 Description of the share buy-back program subject to
the authorization of the Annual Shareholders Meeting
to be held on January 21, 2020
The Board of Directors proposes that the Combined Annual
Shareholders Meeting to be held on January 21, 2020, in its
13 th resolution, renews the authorization granted to the Board to
repurchase Sodexo shares pursuant to articles L.225-209 et seq.
of the French Commercial Code and the European rules under
European regulation no. 596/2014 of April 16, 2014.
The principal aims of the new share buy-back program, in line
with previous years, without this list being exhaustive, would
be to honor the restricted allocation of Company shares to the
employees and/or corporate officers of the Sodexo Group, to
reduce the Company’s share capital through the cancellation
of shares and to trade in the shares within the context of the
existing liquidity contract.
The maximum number of shares that may be purchased under
this new share buy-back program would be set at 5% of the
total number of shares comprising the Company’s capital as
of the date of the Combined Annual Shareholders Meeting on
January 21, 2020, i.e., a maximum number of 7,372,744 shares.
The maximum share purchase price under this share buy-back
program may not exceed 120 euro per share and the total
amount allocated to the program may not exceed 885 million
euro.
This authorization would be valid for a period of 18 months,
replacing the authorization given for the same purpose by the
Combined Annual Shareholders Meeting on January 22, 2019,
in its 17th resolution.
For further information about this authorization submitted
to a vote at the Combined Annual Shareholders Meeting on
January 21, 2020, please refer to the draft resolutions presented
in chapter 7 of this Fiscal 2019 Universal Registration Document.
6.3.7 Employee share ownership
As at August 31, 2019, Group employees held 1.1% of the
Company’s share capital, representing 1,602,197 shares, 53.5%
of which was held in an employees’ mutual fund (FCPE).
As at August 31, 2019, the number of Group employee
shareholders was estimated at 29,840.
6
The various profi t-sharing agreements in force allow employees
of the Group’s French subsidiaries to pay the amounts they
receive in respect of these profit-sharing agreements into an
employees’ mutual fund invested in Sodexo shares, or into
a restricted savings account. To qualify for favorable tax and
social security treatment, amounts due to employees are
subject to a fi ve-year lock-up period.
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6.3.8 Capital authorized but not issued – Delegations and
valid financial authorizations
As at the date of this Fiscal 2019 Universal Registration Document, the Board of Directors of the Company had the following
delegations and fi nancial authorizations conferred to it by the decisions of the Annual General Meetings.
CURRENTLY VALID AUTHORIZATIONS
Authorizations with preferential rights
MAXIMUM
AGGREGATE
NOMINAL VALUE
OF CAPITAL
INCREASE(S)*
(in millions
of euro)
MAXIMUM
AMOUNT
OF CAPITAL
INCREASE(S)*
(% of share
capital)
DATE OF AUTHORIZATION
DATE OF
EXPIRATION
USAGE
• Issuance of ordinary shares and/or any other securities
January 23, 2018
carrying rights to Sodexo shares
100
17%
(19th) March 22, 2020
Unused
• Issuance of debt securities carrying rights to Sodexo shares
1,000
N/A
(19th) March 22, 2020
Unused
January 23, 2018
Authorizations to issue shares to employees and managers
• Issuance of ordinary shares and/or any other securities
January 23, 2018
reserved for members of Employee Savings Plans
About 9
1.5%
(21st) March 22, 2020
Unused
• Grant of restricted shares and performance shares
About 15
2.5%
(18th) March 21, 2022
January 22, 2019
See
section 5.5
Issuance of shares by capitalizing profit, reserves
or premiums
100
17%
(20th) March 22, 2020
Unused
January 23, 2018
Share capital reduction through cancellation of shares
* Adjusted amounts of share capital as at August 31, 2019.
5% of
number of
shares
January 23, 2018
(18th) March 22, 2020
See
section 6.3.2
As most of the above authorisations are due to expire shortly,
shareholders are invited to renew them under similar conditions
at the Annual General Meeting on January 21, 2020. More
information on the resolutions to be submitted to the Annual
General Meeting is presented in Chapter 7 of this present
d ocument.
6.3.9 Potential share capital
As of the date of this document, there are no securities
outstanding, other than existing equity securities and the
restricted shares allocated to Group employees and corporate
offi cers, as described in section 5.5 of the present document,
which carry immediate or future rights to the Company’s share
capital.
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6.4 ADDITIONAL GENERAL INFORMATION
AND THE BYLAW S OF THE COMPANY
6.4.1 Corporate name, registered office, website
Corporate name: Sodexo.
Registered offi ce: 255 quai de la Bataille de Stalingrad, 92130 Issy-les-Moulineaux (Hauts-de-Seine), France.
Telephone: +33 (0)1 30 85 75 00.
Website: www.sodexo.com
Information that can be found on the Company’s website is not an integral part of this document, except if incorporated by reference
into said document.
6.4.2 Legal form
Sodexo is a French public limited company (société anonyme), subject to all laws and regulations governing commercial corporations
in France, and in particular to the provisions of the French Commercial Code.
6.4.3 Date of incorporation and duration
The Company has a life of 99 years from December 31, 1974, save earlier termination or winding up.
The date of expiration of the Company is December 30, 2073.
6.4.4 Corporate purpose
The objectives of the Company shall be, in France, the French
overseas departments and territories or abroad, directly or
indirectly, on behalf of third parties or on its own account or in
association with third parties, as follows:
• the development and provision of all services related to the
organization of foodservices and other essential services for
corporations and public bodies;
• the operation of all restaurants, bars, hotels and more
generally all establishments connected with foodservices,
the hotel industry, tourism, leisure and other services, and
the ownership and fi nancing thereof;
• the provision of some or all of the services required for the
operation, maintenance and management of establishments
or buildings used for offi ce, commercial, industrial, leisure,
healthcare or educational purposes, and for the operation
and maintenance of some or all of the equipment installed
therein;
6
• the execution of all installation, repair, refurbishment and
replacement works on installed equipment;
• the provision of advice and of economic, financial and
technical surveys relating to all projects and to all services
associated with the development, organization and operation
of the establishments defi ned above, and in particular all acts
in furtherance of the construction of such establishments
and all related consultations and assistance;
• the formation of all new companies and the acquisition
by whatever means of equity interests in all companies
irrespective of their corporate purposes;
• and more generally all civil, commercial, industrial and
fi nancial transactions, and transactions involving movable
property or real estate, that are directly or indirectly
associated with the aforementioned purposes or with all
similar or related purposes.
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6.4.5 Company registration
6.4.9 Statutory disclosure
and LEI
thresholds
Sodexo is registered in the Trade and Companies Register of
Nanterre under no. 301 940 219.
Business identifi er code (APE code): 5629B
LEI code: 969500LCBOG12HXPYM84.
6.4.6 Material contracts
During the last two years, the Company has not entered into any
material contract, other than those signed in the ordinary course
of business, that create a material obligation or commitment for
the entire Group.
6.4.7 Fiscal year
The fiscal year commences on September 1 of each year and
ends on August 31 of the following year.
In accordance with article 9 of the bylaws of the Company,
any shareholder whose direct or indirect shareholding reaches
2.50% of the Company’s issued capital or any multiple thereof
is required to inform the Company by registered letter with
acknowledgment of receipt within fi ft een days.
Failure to make such disclosure may result in the shares
exceeding the threshold being stripped of voting rights on the
terms stipulated by law. This disclosure requirement applies
equally when a shareholding passes below any of the disclosure
thresholds.
If a shareholder fails to comply with the above disclosure rules,
the shares not disclosed may be stripped of voting rights at
General Meetings.
The Board of Directors proposes that the Combined Annual
Shareholders Meeting to be held on January 21, 2020 lowers the
statutory disclosure threshold which is currently fi xed at 2.50%
of the Company’s share capital to be reported within a 15-day
period, to 1 % of the voting rights to be declared within 5 trading
days.
It would also be expected that from now on th e disclosure
requirements apply to registered intermediaries on behalf
of shareholders who are not domiciled in France. As for legal
disclosure threshold requirements, these obligations apply also
to derivative agreements which might be settled through the
issuance of shares.
6.4.8 Form of shares and
transfer of shares
The Company’s shares may be held in either registered or bearer
form. They are freely negotiable.
Transfer of shares occurs by transfer from one account to another
in accordance with the conditions laid down by law and regulations.
6.4.10 Identification of
shareholders
The Company may make use of the legal framework available for
identifying the holders of shares which have, either immediately
or in the future, voting rights at General Shareholders Meetings.
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6.4.11 Appropriation of earnings and dividend premium
Each share entitles its holder to a proportion of the Company’s
profits and net assets equal to the proportion of capital
represented by the share.
The fi rst appropriation of net income, net of any accumulated
losses from prior periods, must be an amount of at least 5% of
net income to establish the reserve fund required by law. This
appropriation ceases to be compulsory once this reserve fund
is equal to one-tenth of the issued capital but must be resumed
if for any reason the reserve falls below one-tenth of the issued
capital.
Distributable earnings comprise net income for the fi scal year,
minus any accumulated losses brought forward and any transfer
to the legal reserve, plus any retained earnings brought forward.
Distributable earnings are appropriated in the following order
(i) any sum that the Ordinary Shareholders Meeting, on the
proposal of the Board of Directors, decides to carry forward
as retained earnings or to appropriate to the creation of an
extraordinary reserve fund, contingency fund or other fund,
whether or not created for a specifi c purpose and (ii) the surplus
is distributed among all of the shareholders, each share entitling
its holder to an equal share of the profi t.
However, shareholders able to show that they have been a
registered shareholder for at least four years as of the end of
a given fiscal year, and who remain registered at the dividend
payment date related to the said fiscal year, are entitled to a
dividend premium on the shares so registered, equal to 10% of the
dividend paid on the other shares, the resulting dividend premium
being rounded down to the nearest euro cent where appropriate.
Similarly, shareholders able to show that they have been
a registered shareholder for at least four years as of the end
of a given fiscal year, and who remain registered at the date
of a capital increase by capitalization of reserves, income or
share premiums, by distribution of bonus shares, are entitled
to supplementary bonus shares equal to 10% of those to be
distributed. In the case of odd lots, the number of supplementary
shares will be rounded down to the nearest unit. The resulting
new shares will qualify for the same treatment as the old shares
from which they are derived for the purposes of calculating
rights to the dividend premium and to receive supplementary
bonus shares.
The number of shares upon which a single shareholder shall be
eligible for these dividend premiums or supplementary bonus
shares may not exceed 0.5% of the share capital.
The above-mentioned right to a dividend premium has been
applicable since the payment of the dividend for the fi scal year
ended August 31, 2013.
6.4.12 Shareholders Meetings
General Shareholder s Meetings are called and deliberate on the
terms stipulated by the law. They are held at the registered
offi ce or at any other place specifi ed in the N otice of M eeting.
For the purposes of calculating quorum and majority at General
Shareholder s Meetings, shareholders taking part in said
meetings via video-conferencing or electronic links allowing
them to be identified in accordance with the definitions and
conditions relating to such links as stipulated in the relevant
laws or regulations are deemed to have attended the meeting.
General Shareholder s Meetings are made up of all shareholders
whose shares are paid up to the extent called and whose right to
participate in the Shareholders Meeting is evidenced by an entry
recorded, by the date and according to the procedure required by
applicable laws and regulations, in a share register or securities
account in the name of the shareholder or, for shareholders who
are not resident in France, the shareholder’s accredited fi nancial
intermediary, showing the number of shares held.
Shares must be registered within the above-stipulated deadline
either in share accounts in the shareholder’s name held by the
Company or via the approved intermediary, or in bearer share
accounts held by the approved intermediary.
Members are entitled to attend General Shareholders Meetings
upon simple proof of identity and entitlement. The Board of
Directors may, at its discretion, issue personal admission cards
to shareholders in their names and demand presentation thereof.
All shareholders may vote remotely as provided by applicable
laws and regulations.
Equally, all shareholders may take part in discussions when
meetings are in session and vote via electronic data.
General Shareholders Meetings are chaired by the Chairman of
the Board of Directors, or in his absence by the Vice Chairman
if one has been appointed or failing that by the longest-serving
director present. If there is no director present, the meeting
elects its own Chairman.
6
6.4.13 Double voting rights
No shareholder holds any special voting rights and all shares in
the Company carry one voting right, except for registered shares
carrying double voting rights.
The Annual Shareholders Meeting held on February 23, 1999
introduced double voting rights conferred on all fully paid-up
shares registered in the name of the same shareholder for at
least four years as well as on registered shares allotted free
of charge to a shareholder for the existing shares held by that
shareholder that carry double voting rights, in the event of a
bonus share issue carried out by capitalizing profi t, reserves or
premiums.
As at August 31, 2019, the 147,454,887 shares making up
the Company’s capital carried 216,206,855 theoretical voting
rights and 214,758,289 voting rights exercisable at General
Meetings. Only treasury shares do not carry any voting rights,
in accordance with article L.225-210 of the French Commercial
Code (which accounts for differences between the theoretical
number of voting rights and the number of exercisable voting
rights).
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6.4.14 Modification of shareholders’ rights
All modifi cations to share capital or voting rights attached to the
shares therein are subject to legal requirements, as the bylaws
do not contain specifi c provisions.
A full version of the Company’s bylaws is available in the Group’s
website at www.sodexo.com.
6.4.15 Consultation of legal documents
Documents relating to the Company which are required to
be made available to the public (bylaws, reports and other
documents, historical individual company and consolidated
fi nancial information for at least each of the two fi scal years
preceding the date of this Fiscal 2019 Universal Registration
D o c u m e n t ) a r e a v a i l a b l e o n t h e C o m p a n y ’ s w e b s i t e
(www.sodexo.com) and may also be consulted at its registered
offi ce at 255, quai de la Bataille de Stalingrad – 92130 Issy-les-
Moulineaux, France, preferably by appointment.
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COMBINED ANNUAL
SHAREHOLDERS MEETING,
JANUARY 21, 2020
7.1
Agenda
Ordinary business
Extraordinary business
Ordinary business
7.2
Resolutions submitted to
the Combined Annual Shareholders
Meeting of January 21, 2020
Ordinary resolutions
Extraordinary resolutions
Ordinary resolution
278
278
278
278
279
279
286
293
7.3
Statutory Auditors’ Report
294
7.3.1 Statutory Auditors’ Report on the
issuance of ordinary shares and/or
any other securities with preferential
subscription rights
7.3.2 Statutory Auditors’ Report on the
issuance of ordinary shares and/
or other securities of the Company
reserved for members of an employee
share purchase plan
7.3.3 Statutory Auditors’ Report on the
capital reduction
294
295
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7 A g e n d a
7.1 AGENDA
Ordinary business
1. Adoption of the individual company fi nancial statements
for Fiscal 2019.
2. Adoption of the consolidated financial statements for
Fiscal 2019.
3. Appropriation of net income for Fiscal 2019; determination
of the dividend amount and payment date.
4. Appointment of Véronique Laury as a director for a three-
year term.
5. Appointment of Luc Messier as a director for a three-year
term.
6. Reappointment of Sophie Stabile as a director for a three-
year term.
7. Reappointment of Cécile Tandeau de Marsac as a director
for a three-year term.
8. Approval of the components of compensation paid or
awarded for Fiscal 2019 to Sophie Bellon, Chairwoman of
the Board of Directors.
Extraordinary business
14. Deletion of article 6 of the bylaws relating to contributions.
15. Amendment to article 9-4 of the bylaws relating to
disclosure thresholds for ownership interests.
16. Amendment to article 11-4 of the bylaws in order to
comply with the new legal requirements concerning the
appointment of directors representing employees.
17. Amendment to article 12 of the bylaws in order to enable
the Board of Directors to take decisions by way of written
consultation as permitted by the applicable laws and
regulations.
18. Amendment to article 15 of the bylaws in order to remove
the obligation to appoint a deputy Statutory Auditor,
pursuant to article L.823-1 of the French Commercial Code.
19. Amendment to article 18 of the bylaws relating to the
appropriation and distribution of net income in order
to remove the transitional provisions concerning the
introduction in 2011 of a dividend premium.
Ordinary business
24. Powers to carry out formalities.
9. Approval of the components of compensation paid or
awarded for Fiscal 2019 to Denis Machuel, Chief Executive
Offi cer.
10. Approval of the principles and criteria used to determine,
allocate and award the components of the compensation
and benefits payable to the Chairwoman of the Board of
Directors.
11. Approval of the principles and criteria used to determine,
allocate and award the components of the compensation
and benefi ts payable to the Chief Executive Offi cer.
12. Approval of a regulated commitment made in favour of
Denis Machuel.
13. Authorization for the Board of Directors to purchase shares
of the Company.
20. Delegation of powers to the Board of Directors to increase
the Company’s share capital by issuing ordinary shares
and/or other securities carrying immediate or deferred
rights to the Company’s capital, with preferential
subscription rights for shareholders.
21. Delegation of powers to the Board of Directors to increase
the Company’s share capital by capitalizing premiums,
reserves or profi t.
22. Delegation of powers to the Board of Directors to increase
the Company’s share capital by issuing ordinary shares
and/or other securities carrying immediate or deferred
rights to the Company’s capital, with such issue(s) reserved
for members of employee share purchase plans, without
preferential rights for existing shareholders.
23. Authorization to the Board of Directors to reduce the
Company’s share capital by canceling treasury shares.
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7.2 RESOLUTIONS SUBMITTED TO
THE COMBINED ANNUAL SHAREHOLDERS
MEETING OF JANUARY 21, 2020
Ordinary resolutions
First and second resolutions: Adoption of the individual company
and consolidated fi nancial statements for Fiscal 2019
Purpose
In the fi rst and second resolutions, shareholders are invited to adopt the individual company fi nancial statements of Sodexo for
Fiscal 2019, showing net income of 597,146,224 euro, and the consolidated fi nancial statements of the Group, showing profi t
attributable to equity holders of the parent amounting to 665 million euro.
The individual company fi nancial statements have been prepared in accordance with French legal and regulatory provisions and
the consolidated fi nancial statements in accordance with the applicable regulations in force, including International Financial
Reporting Standards (IFRS) as endorsed by the European Union.
In compliance with article 223 quater of the French General Tax Code (Code général des impôts), no expenses falling within the
scope of said Code were incurred during Fiscal 2019.
First resolution
(ADOPTION OF THE INDIVIDUAL COMPANY FINANCIAL
STATEMENTS FOR FISCAL 2019)
Second resolution
(ADOPTION OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR
FISCAL 2019)
Having considered the Board of Directors’ Report and the
Statutory Auditors’ Report on the individual company fi nancial
statements for Fiscal 2019, the Shareholders Meeting, acting
under the rules of quorum and majority applicable to Ordinary
Shareholders Meetings, adopts the individual company fi nancial
statements for the fiscal year ended August 31, 2019 as
presented, which show net income of 597,146,224 euro.
The Shareholders Meeting also approves the transactions
refl ected in these fi nancial statements and/or described in these
reports.
In application of article 223 quater of the French General Tax
Code, the Shareholders Meeting notes that no expenses falling
within the scope of article 39-4 of said Code were incurred in
Fiscal 2019.
Having considered the Board of Directors’ Report and the
Statutory Auditors’ Report on the consolidated financial
statements for Fiscal 2019, the Shareholders Meeting, acting
under the rules of quorum and majority applicable to Ordinary
Shareholders Meetings, adopts the consolidated financial
statements for the fiscal year ended August 31, 2019 as
presented, which show profi t attributable to equity holders of
the parent of 665 million euro.
The Shareholders Meeting also approves the transactions
refl ected in these fi nancial statements and/or described in these
reports.
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Third resolution: Appropriation of net income; determination of the dividend
amount and payment date
Purpose
In the third resolution, shareholders are invited to approve the Board’s recommended appropriation of net income and the
payment of a dividend of 2.90 euro per share for Fiscal 2019, increasing 5.5% from Fiscal 2018.
In accordance with the Company’s bylaws, shares held in registered form for at least four (4) years, i.e., since at least August 31,
2015, and which are still held in such form when the Fiscal 2019 dividend is paid, will automatically be entitled to a 10% dividend
premium, representing an additional 0.29 euro per share. Where necessary, the amount of the dividend plus the premium will
be rounded down to the nearest euro cent. The number of shares eligible for the dividend premium may not represent over 0.5%
of the share capital for any single shareholder (corresponding to a maximum of 737,274 shares per shareholder based on the
Company’s share capital as of August 31, 2019).
The payment of the dividend and the 10% dividend premium, as described above, represents a payout ratio of 64%, which is fully
in line with Sodexo’s policy of providing shareholders a return on their investment over the long term.
The dividend payment schedule is as follows:
January 30, 2020: Ex-dividend date, i.e., date on which the shares are traded without rights to the Fiscal 2019 dividend.
January 31, 2020:
Record date, i.e., date on which shareholders’ positions must be on record (upon closing of stock market
trading day) in order to be entitled to receive the Fiscal 2019 dividend payment.
February 3, 2020: Payment date of dividend and, as applicable, the dividend premium.
Third resolution
(APPROPRIATION OF NET INCOME FOR FISCAL 2019; DETERMINATION OF THE DIVIDEND AMOUNT AND PAYMENT DATE)
In accordance with the proposal made by the Board of Directors, the Shareholders Meeting, acting under the rules of quorum and
majority applicable to Ordinary Shareholders Meetings, resolves:
to allocate net income for Fiscal 2019 of
plus retained earnings as of the close of Fiscal 2019 of
Making a total available for distribution of
In the following manner:
€597,146,224
€1,298,556,584
€1,895,702,808
• dividend (on the basis of 147,454,887 shares comprising the share capital as of August 31, 2019)
€427,619,172
• a 10% dividend premium (on the basis of 9,336,529 shares held in registered form as of August 31, 2019 that
are eligible for the dividend premium after application of the limit of 0.5% of capital per shareholder)
€2,707,593
• retained earnings
TOTAL
€1,465,376,043
€1,895,702,808
Accordingly, the Shareholders Meeting resolves that a dividend
of 2.90 euro will be paid for Fiscal 2019 on each share eligible
for the dividend.
In accordance with article 18 of the Company’s bylaws, shares
held in registered form since at least August 31, 2015 and which
are still held in such form when the Fiscal 2019 dividend is
paid, will automatically be entitled to a 10% dividend premium,
representing an additional 0.29 euro per share. The number of
shares eligible for this dividend premium may not represent
over 0.5% of Sodexo’s share capital for any single shareholder
(corresponding to a maximum of 737,274 shares per shareholder
based on the Company’s share capital as of August 31, 2019).
The dividend and dividend premium (for eligible shares) will be
paid on February 3, 2020, with a Euronext Paris ex-dividend date
of January 30, 2020. The record date will be January 31, 2020.
In the event that the Company holds any of its own shares on
the payment date, the dividend due on these shares will not be
paid and will be transferred to retained earnings.
Similarly, if any of the 9,336,529 shares held in registered form
that are eligible for the dividend premium as of August 31, 2019
cease to be recorded in registered form between September 1, 2019
and February 3, 2020 (the dividend payment date), the amount
of the dividend premium due on such shares will not be paid and
instead will be transferred to retained earnings.
When the dividend is paid to individuals who are tax resident
in France, the dividend income (including the premium) is
subject, at the shareholder’s option, to either (i) a 12.8% fl at
tax (prélèvement forfaitaire unique – PFU) (article 200 A of the
French General Tax Code) or (ii) personal income tax based on
a sliding scale, aft er applying a 40% allowance (articles 200 A,
2. and 158 3.2° of the French General Tax Code). The option
for dividend income to be taxed based on the sliding personal
income tax scale must be exercised in the shareholder ’s tax
return, prior to the deadline for submitting personal income tax
returns. In addition to taxation, dividend income is subject to
social security charges at a rate of 17.2%.
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In accordance with article 243 bis of the French General Tax Code, the Shareholders Meeting notes that dividends paid for the last
three fi scal years were as follows:
Dividend per share*
Total payout
FISCAL 2018 (PAID IN 2019)
FISCAL 2017 (PAID IN 2018)
FISCAL 2016 (PAID IN 2017)
€2.75
€2.75
€2.40
€402,512,000
€410,658,908
€359,265,450
* Dividend fully eligible for the 40% allowance applicable to individuals who are tax resident in France, as provided for in article 158-3 2° of the French General Tax
Code.
Fourth to seventh resolutions: Composition of the Board of Directors
The Board of Directors currently has twelve members, including two directors representing employees, six independent directors
and seven women.
Appointment of two new independent directors
Purpose
Robert Baconnier, who has been a director of Sodexo since February 8, 2005 and whose term of offi ce expires at the close of the
January 21, 2020 Annual Shareholders Meeting, has stated that he does not wish to stand for reappointment. Sophie Bellon
would like to thank Robert Baconnier, both personally and on behalf of the Board of Directors and all of the shareholders, for his
invaluable contribution to the work of the Board and the Audit Committee.
Astrid Bellon, who has been on the Board of Directors since July 26, 1989, has stated that she wishes to resign from her position
as a director of Sodexo as from January 21, 2020 in order to devote herself fully to her role as a member of the Steering
Committee of the Bellon SA Foundation and to her personal projects. Sophie Bellon would like to thank Astrid Bellon, both
personally and on behalf of the Board of Directors and all of the shareholders, for her contribution to the Board since 1989.
Consequently, in the fourth and fifth resolutions, shareholders are invited to appoint two new independent directors –
Véronique Laury and Luc Messier – for three-year terms expiring at the close of the Annual Shareholders Meeting to be held to
adopt the fi nancial statements for the fi scal year ending August 31, 2022.
Véronique Laury was Chief Executive Offi cer of the Kingfi sher Group from 2014 to September 2019, based in London. Kingfi sher,
which is publicly traded in the United Kingdom, is the p arent company of Bricorama and B&Q. She has built up solid expertise
in consumer culture through her experience in the retail sector and the various posts she has held in sales and marketing.
Her experience will enhance the skills of the Board of Directors in these areas.
Luc Messier, who has dual Canadian/American nationality, will bring to the Group his international operational experience, gained
notably in the energy industry, where he held executive positions in several large French and American multinationals. He has
lived and worked in Canada, Asia, Africa, Europe, and more recently, the United States where he currently resides.
Reappointment of two directors
Purpose
The purpose of the sixth and seventh resolutions is to reappoint Sophie Stabile and Cécile Tandeau de Marsac, whose terms as
directors expire at the close of the January 21, 2020 Annual Shareholders Meeting. Shareholders are invited to reappoint Sophie
Stabile and Cécile Tandeau de Marsac for three-year terms expiring in 2023. These reappointments will enable the Company to
continue to benefi t from:
• Sophie Stabile’s operational and fi nancial expertise in the services and hospitality sector, as well as her experience in major
international mergers and acquisitions, innovation and digital transformation; and
• Cécile Tandeau de Marsac’s international experience and competencies in the areas of human resources management,
in particular in-depth transformation processes following major acquisitions, and sales and marketing.
Sophie Stabile will continue to chair the Audit Committee and serve as a member of the Compensation Committee.
Cécile Tandeau de Marsac will continue to chair the Nominating Committee and the Compensation Committee.
If all of the above resolutions are adopted, at the close of the January 21, 2020 Annual Shareholders Meeting the Board of
Directors will comprise a total of twelve members, including seven independent directors and seven women, as follows.
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COMPOSITION OF THE BOARD OF DIRECTORS AFTER THE SHAREHOLDERS MEETING OF JANUARY 21, 2020
NUMBER OF
DIRECTOR/
OFFICER
POSITIONS
HELD IN
OTHER
LISTED
COMPANIES
FIRST
APPOINTMENT
TO THE BOARD
TERM EXPIRES
(AT THE ANNUAL
SHAREHOLDERS
MEETING CALLED
TO APPROVE
THE FINANCIAL
STATEMENTS
FOR THE YEAR
INDICATED)
BOARD COMMITTEES
SENIOR–
ITY
(YEARS)
NUMBER
OF SODEXO
SHARES
HELD
INDEPENDENT
DIRECTOR(1)
MEMBER OF
THE AUDIT
COMMITTEE
MEMBER
OF THE
NOMINATING
COMMITTEE
MEMBER
OF THE
COMPENSA–
TION
COMMITTEE
NAME
DATE OF BIRTH
NATION–
ALITY
e
h
t
f
o
n
a
m
o
w
r
i
a
h
C
s
r
o
t
c
e
r
i
D
f
o
d
r
a
o
B
s
r
o
t
c
e
r
i
d
t
n
e
d
n
e
p
e
d
n
I
r
o
t
c
e
r
i
D
r
o
t
c
e
r
i
D
g
n
i
t
n
e
s
e
r
p
e
r
s
e
e
y
o
p
m
e
l
Sophie Bellon
08/19/1961
1
07/26/1989
Fiscal 2020
30
7,964
Emmanuel
Babeau
Françoise
Brougher
02/13/1967
2
01/26/2016
Fiscal 2021
09/02/1965
1
01/23/2012
Fiscal 2020
Soumitra Dutta 08/27/1963
1
01/19/2015
Fiscal 2020
Véronique Laury 06/29/1965
0
01/21/2020
Fiscal 2022
Luc Messier
04/21/1964
1
01/21/2020
Fiscal 2022
Sophie Stabile(2 ) 03/19/1970
3
07/01/2018
Fiscal 2019
4
8
5
0
0
1
400
400
400
0
0
100
Cécile Tandeau
de Marsac(2 )
04/17/1963
François-Xavier
Bellon
09/10/1965
01/24/2017
Fiscal 2019
3
400
07/26/1989
Fiscal 2021
30
36,383
Nathalie
Bellon-Szabo
01/26/1964
07/26/1989
Fiscal 2020
30
1,147
X
X
X
X
X
X
X
Philippe Besson 09/21/1956
06/18/2014
Fiscal 2019(3 )
Cathy Martin
06/05/1972
09/10/2015
Fiscal 2020
5
4
- )
- )
N/A(4 )
N/A(4 )
Chair
Chair
Chair
(1) Independent director based on the criteria set out in the AFEP-MEDEF Code.
(2 ) At the Annual Shareholders Meeting to be held on January 21, 2020, the Board of Directors will recommend that shareholders reappoint Sophie Stabile and
Cécile Tandeau de Marsac as directors for a three-year term, expiring in 2023.
(3 ) Philippe Besson was originally appointed as a director representing employees in 2014 by the most representative trade union in the Group’s French entities,
as defined in the applicable legislation. He was reappointed in 2017 by that same trade union, and his current term of office expires at the close of the Annual
Shareholders Meeting to be held on January 21, 2020.
(4 ) In accordance with French law and the AFEP-MEDEF Code, directors representing employees are not included in the calculation of the representation of men and
women on the Board or the percentage of independent directors.
Independent directors
(excluding directors representing
employees)
70%
Average age
of directors
55
Female directors
(excluding directors representing
employees)
60%
Biographical information on these directors is provided in section 5.2.1 of the Fiscal 2019 Universal Registration Document.
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Fourth resolution
(APPOINTMENT OF VÉRONIQUE LAURY AS A DIRECTOR FOR
A THREE-YEAR TERM)
Sixth resolution
(REAPPOINTMENT OF SOPHIE STABILE AS A DIRECTOR FOR
A THREE-YEAR TERM)
Having considered the Board of Directors’ Report, the
Shareholder Meeting, acting under the rules of quorum and
majority applicable to Ordinary Shareholders Meetings, resolves
to appoint Véronique Laury as a director for a three-year term
expiring at the close of the Annual Shareholders Meeting to be
held to adopt the fi nancial statements for the fi scal year ending
August 31, 2022.
Fift h resolution
(APPOINTMENT OF LUC MESSIER AS A DIRECTOR FOR
A THREE-YEAR TERM)
Having considered the Board of Directors’ Report, the
Shareholders Meeting, acting under the rules of quorum and
majority applicable to Ordinary Shareholders Meetings, resolves
to appoint Luc Messier as a director for a three-year term
expiring at the close of the Annual Shareholders Meeting to be
held to adopt the fi nancial statements for the fi scal year ending
August 31, 2022.
Having considered the Board of Directors’ Report, and noting
that Sophie Stabile’s term of offi ce expires at the close of this
meeting, the Shareholders Meeting, acting under the rules of
quorum and majority applicable to Ordinary Shareholders
Meetings, resolves to reappoint her as a director for a three-year
term expiring at the close of the Annual Shareholders Meeting
to be held to adopt the fi nancial statements for the fi scal year
ending August 31, 2022.
Seventh resolution
(REAPPOINTMENT OF CÉCILE TANDEAU DE MARSAC AS
A DIRECTOR FOR A THREE-YEAR TERM)
Having considered the Board of Directors’ Report, and noting
that Cécile Tandeau de Marsac’s term of offi ce expires at the end
of this meeting, the Shareholders Meeting, acting under the rules
of quorum and majority applicable to Ordinary Shareholders
Meetings, resolves to reappoint her as director for a three-year
term expiring at the close of the Annual Shareholders Meeting
to be held to adopt the fi nancial statements for the fi scal year
ending August 31, 2022.
Eighth and ninth resolutions: Approval of the components of compensation
paid or awarded to corporate offi cers for Fiscal 2019
Purpose
In the eighth and ninth resolutions, shareholders are invited to approve the components of compensation paid or awarded to
corporate offi cers for Fiscal 2019 (generally referred to as “ex post say-on-pay votes”).
In accordance with article L.225-100 of the French Commercial Code, shareholders are asked to approve the fi xed and variable
components of the total compensation and benefi ts paid or awarded for Fiscal 2019 to Sophie Bellon, Chairwoman of the Board
of Directors, and Denis Machuel, Chief Executive Offi cer.
All of the components of these corporate offi cers’ compensation were set by the Board of Directors based on the recommendations
of the Compensation Committee as detailed in the Board of Directors’ Corporate Governance Report provided in chapter 5,
section 5.5.2 of the Fiscal 2019 Universal Registration Document.
Eighth resolution
(APPROVAL OF THE COMPONENTS OF COMPENSATION PAID OR
AWARDED FOR FISCAL 2019 TO SOPHIE BELLON, CHAIRWOMAN
OF THE BOARD OF DIRECTORS)
Ninth resolution
(APPROVAL OF THE COMPONENTS OF COMPENSATION PAID
OR AWARDED FOR FISCAL 2019 TO DENIS MACHUEL, CHIEF
EXECUTIVE OFFICER)
Having considered the Board of Directors’ Report, the
Shareholders Meeting, acting under the rules of quorum and
majority applicable to Ordinary Shareholders Meetings and in
accordance with article L.225-100 of the French Commercial
Code, approves the components of the total compensation and
benefi ts paid or awarded to Sophie Bellon, Chairwoman of the
Board of Directors, for the fi scal year ended August 31, 2019,
as described in the Corporate Governance Report drawn up in
compliance with article L.225-37 of the French Commercial
Code and provided in chapter 5, section 5.5.2 of the Company’s
Fiscal 2019 Universal Registration Document.
Having considered the Board of Directors’ Report, the
Shareholders Meeting, acting under the rules of quorum and
majority applicable to Ordinary Shareholders Meetings and in
accordance with article L.225-100 of the French Commercial
Code, approves the components of the total compensation
and benefi ts paid or awarded to Denis Machuel, Chief Executive
Offi cer, for the fi scal year ended August 31, 2019, as described
in the Corporate Governance Report drawn up in compliance with
article L.225-37 of the French Commercial Code and provided in
chapter 5, section 5.5.2 of the Company’s Fiscal 2019 Universal
Registration Document.
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Tenth and eleventh resolutions: Approval of the compensation policy
applicable to corporate offi cers for Fiscal 2020
Purpose
In the tenth and eleventh resolutions, shareholders are invited to approve the compensation policy applicable to corporate offi cers
(generally referred to as “ex ante say-on-pay votes”).
In accordance with article L.225-37-2 of the French Commercial Code, shareholders are asked to approve the principles and
criteria used to determine, allocate and award the fi xed, variable and any exceptional components of the compensation and
benefi ts (as defi ned in article R.225-29-1 of said Code) payable to the Chairwoman of the Board of Directors and the Chief
Executive Offi cer. These principles and criteria will apply from Fiscal 2020 until the approval of a new compensation policy by
the Shareholders Meeting.
The main proposed evolutions to the compensation policy approved by the Shareholders Meeting of January 22, 2019 are the
following:
• the possibility to grant exceptional compensation to the Chief Executive Offi cer has been discarded ;
• the authorization which may be given to the Chief Executive Offi cer by the Board to retain non-vested shares in case of
departure will only be possible in exceptional circumstances and the number of shares will be determined on a pro rata basis
by reference to the time spent within the Group during the vesting period;
• the vesting period of shares granted under future performance share plans was aligned with the performance assessment
period of 3 years. From now on, the plans shall be approved at the beginning of each fi scal year, aft er the fi nancial statements
for the previous fiscal year have been published. Consequently, and in order to maintain a regular annual delivery of
performance shares, no performance shares will be granted to the Chief Executive Offi cer in Fiscal 2020.
The compensation policies submitted for shareholder approval were approved by the Board of Directors based on the
recommendations of the Compensation Committee and are presented in the Board of Directors’ Corporate Governance Report
provided in chapter 5, section 5.5.1 of the Fiscal 2019 Universal Registration Document.
Tenth resolution
(APPROVAL OF THE PRINCIPLES AND CRITERIA USED TO
DETERMINE, ALLOCATE AND AWARD THE COMPONENTS
OF THE COMPENSATION AND BENEFITS PAYABLE TO
THE CHAIRWOMAN OF THE BOARD OF DIRECTORS)
Eleventh resolution
(APPROVAL OF THE PRINCIPLES AND CRITERIA USED TO
DETERMINE, ALLOCATE AND AWARD THE COMPONENTS OF
THE COMPENSATION AND BENEFITS PAYABLE TO THE CHIEF
EXECUTIVE OFFICER)
Having considered the Board of Directors’ Report, the
Shareholders Meeting, acting under the rules of quorum and
majority applicable to Ordinary Shareholders Meetings and in
accordance with article L.225-37-2 of the French Commercial
Code, approves the principles and criteria used to determine,
allocate and award the fixed, variable and exceptional
components of the compensation and benefits (as defined in
article R.225-29-1 of said Code) payable to the Chairwoman
of the Board of Directors for Fiscal 2020, as set by the
Company’s Board of Directors based on the recommendations
of the Compensation Committee and as described in the
Corporate Governance Report drawn up in compliance with
article L.225-37 of the French Commercial Code and provided in
chapter 5, section 5.5.1 of the Fiscal 2019 Universal Registration
Document.
Having considered the Board of Directors’ Report, the
Shareholders Meeting, acting under the rules of quorum and
majority applicable to Ordinary Shareholders Meetings and in
accordance with article L.225-37-2 of the French Commercial
Code, approves the principles and criteria used to determine,
allocate and award the fixed, variable and exceptional
components of the compensation and benefits payable to
the Chief Executive Officer for Fiscal 2020, as set by the
Company’s Board of Directors based on the recommendations
of the Compensation Committee and as described in the
Corporate Governance Report drawn up in compliance with
article L.225-37 of the French Commercial Code and provided in
chapter 5, section 5.5.1 of the Fiscal 2019 Universal Registration
Document.
Twelfth resolution: Approval of a r egulated commitment benefi ting
Denis Machuel
Purpose
In order to comply with the France’s Business Growth and Transformation Act dated May 22, 2019 (the “PACTE Act”) as well as
with the Ordonnance of July 3, 2019 transposing the pension portability directive, the Board of Directors, on November 6, 2019,
decided to close as of December 31, 2019 the defi ned benefi t pension plan benefi ting Denis Machuel, his rights under this plan
being frozen at such date. The Board also decided to implement another benefi t pension plan governed by article L.137-11-2
of the French Social Security Code. This new plan which will benefi t Denis Machuel will give rise to annual rights amounting to
0.5% of his fi xed and variable compensation for the fi rst fi ve years and to 1% beyond those fi ve years, up to a total of 10% .
The acquisition of rights will remain subject to the same performance condition as the one set for the previous plan, i.e. an
achievement rate of his annual variable compensation targets of at least 80%. In the twelft h resolution, shareholders are invited
to approve the decision taken by the Board of November 6, 2019 which constitutes, in accordance with the current provisions of
article L.225-42-1 of the French Commercial Code, a regulated commitment benefi ting Denis Machuel.
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C O M B I N E D A N N U A L S H A R E H O L D E R S M E E T I N G , J A N U A R Y 2 1 , 2 0 2 0
Twelft h resolution
(APPROVAL OF A REGULATED COMMITMENT BENEFITING DENIS MACHUEL)
Having considered the Board of Directors’ Report and the
Special Report of the auditors about the agreements and
commitments subject to the provisions of articles L.225-38 and
L.225-42-1 of the Commercial Code, the Shareholders Meeting,
acting under the rules of quorum and majority applicable to
Ordinary Shareholders Meetings, approves the commitment
benefi ting Denis Machuel and made by the Board of Directors
on November 6, 2019 that is described therein concerning the
implementation of a defi ned benefi t pension plan.
Thirteenth resolution: Authorization for the Company to purchase
its own shares
Purpose
As of August 31, 2019, the Company held 1,448,566 treasury shares, corresponding to 0.98% of its share capital, mainly
allocated to cover commitments to benefi ciaries under restricted share plans and employee share purchase plans.
In the thirteenth resolution, shareholders are invited to renew the 18-month authorization granted to the Board of Directors to
enable the Company to purchase its own shares at any time other than when a public tender off er for the Company’s shares is
in progress.
Although French law authorizes share buybacks of up to 10% of a company’s share capital, it is proposed that they be limited to
5% of the share capital as of the date of the Annual Shareholders Meeting on January 21, 2020.
The maximum price of the shares that may be purchased under this share buyback program would be 120 euro per share and the
total amount invested in the program may not exceed 885 million euro.
The shares purchased pursuant to this resolution would be used, inter alia, to (i) cover restricted share plans, (ii) reduce the
Company’s share capital by canceling shares, and (iii) provide liquidity in Sodexo shares under the liquidity contract entered into
between Sodexo and Kepler-Cheuvreux.
For information on the implementation of the previous share buyback authorization, see chapter 6, section 6.3.1 of the
Fiscal 2019 Universal Registration Document.
Thirteenth resolution
(AUTHORIZATION FOR THE BOARD OF DIRECTORS TO PURCHASE
SHARES OF THE COMPANY)
Having considered the Board of Directors’ Report, the
Shareholders Meeting, acting under the rules of quorum and
majority applicable to Ordinary Shareholders Meetings and
in accordance with articles L.225-209 et seq. of the French
Commercial Code, articles 241-1 et seq. of the General
Regulations of the French securities regulator (Autorité des
m archés f inanciers – AMF) and the European regulatory
framework applicable to market abuse (based on Regulation
(EU) no. 596/2014 of April 16, 2014), authorizes the Board of
Directors – or a duly authorized representative of the Board –
to purchase or arrange for the purchase of Sodexo shares to be
used, inter alia, for the following purposes:
• to implement a stock option plan enabling benefi ciaries to
acquire – for consideration and by all authorized means –
shares of the Company in accordance with articles L.225-
177 et seq. of the French Commercial Code or any similar
plan, with the benefi ciaries notably including (i) employees
and/or corporate offi cers of the Company or of companies
or groupings affiliated to it under the conditions provided
for in article L.225-180 of said Code, and/or (ii) any other
benefi ciary authorized by law to receive such stock options;
or
• to grant restricted shares of the Company in accordance with
articles L.225-197-1 et seq. of the French Commercial Code,
notably to (i) employees of the Company or of companies or
groupings affi liated to it under the conditions provided for in
article L.225-197-2 of said Code, and/or (ii) corporate offi cers
of the Company or of companies or groupings affi liated to it
under the conditions provided for in article L.225-197-1 II of
said Code, and/or (iii) any other benefi ciary authorized by
law to receive such share grants; or
• to allocate or sell shares to employees in connection with an
employee profi t sharing plan or a company or group share
purchase plan (or equivalent plan) under the conditions
provided for by law, including articles L.3332-1 et seq. of the
French Labor Code; or
• to transfer shares upon exercise of rights attached to
securities issued by the Company or, as authorized by law, by
entities affi liated to it, which give access to Company shares
through reimbursement, conversion, exchange, presentation
of a warrant or any other method; or
• to reduce the Company’s share capital by cancelling shares
within the limits provided for by law and subject to the
adoption of the twenty-third resolution of this meeting
or any future resolution with the same effect that may
be adopted during the period in which this authorization
remains valid; or
• to transfer shares as a means of exchange, payment or
otherwise in connection with mergers and acquisitions; or
• to carry out market-making in Sodexo shares under a
liquidity contract with an investment services provider, in
accordance with the market practices accepted by the AMF
by way of decision 2018-01 dated July 2, 2018; or
• generally, to fulfill the obligations related to stock option
plans or other share grants to employees or corporate
offi cers of the Company or an affi liated company.
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The program is also intended to permit the implementation of
any market practices that may be authorized at a future date by
the AMF and, generally, the execution of any other transaction
that complies with the applicable regulations. In this case,
shareholders will be notifi ed by means of a press release.
The transactions provided for pursuant to this resolution may
be made by any method, in particular on the stock market or
over-the-counter, including through the use of any financial
instruments, options or derivatives and by means of block
purchases or sales or in any other way. The transactions
may take place at any time, subject to the limits authorized
by the applicable laws and regulations, other than during a
public tender offer for the Company’s shares. In the event of
such a public tender offer, unless prior consent is given by a
Shareholders Meeting, the Board of Directors may not use this
authorization and the Company may not implement any share
buyback program from the time when the third party concerned
submits the off er until the end of the off er period.
The Shareholders Meeting resolves that the maximum number
of shares acquired pursuant to this resolution may not exceed
5% of the Company’s share capital as of the date of this meeting
(i.e., as an indication, as of August 31, 2019, a maximum of
7,372,744 shares), it being stipulated that if this authorization
is used, the existing number of treasury shares must be taken
into account such that the Company does not at any time hold
more treasury shares than the legally permitted maximum of
10% of its share capital.
The Shareholders Meeting resolves that the maximum price
paid for shares purchased under this resolution may not
exceed 120 euro per share. However, the Shareholders Meeting
authorizes the Board of Directors to adjust this maximum
purchase price in the event of a change in the nominal value
of the Company’s shares, a capital increase carried out by
capitalizing reserves, a free allocation of shares , a stock split
or reverse stock split, the distribution of reserves or any other
assets, a redemption of capital, or any other transaction
aff ecting the Company’s capital or equity, in order to take into
account the impact of the transaction on the share price.
The Shareholders Meeting resolves that the total amount
allocated to the share buyback program may not exceed
885 million euro.
The Shareholders Meeting acknowledges that this authorization
is granted for a period of eighteen (18) months as from the
date of this meeting and cancels, with eff ect from this day, any
unused portion of any prior authorization granted to the Board
of Directors for the same purpose.
Full powers are given to the Board of Directors – or any duly
authorized representative of the Board – to decide on and act
on the present authorization, to clarify its terms if necessary
and determine its specifi c details, to carry out share purchases
and to place stock market orders and enter into agreements, in
particular for the keeping of share purchase and sale registers, to
allocate or reallocate purchased shares to the desired objectives
in accordance with applicable laws and regulations, to establish
the procedures necessary to safeguard, should the need arise,
the rights of holders of securities or options, in accordance with
applicable laws, regulations or contracts, and to make fi lings
and carry out other formalities, and generally do all that is
necessary.
Extraordinary resolutions
Fourteenth to nineteenth resolutions: Amendments to
the Company’s bylaws
The fourteenth to nineteenth resolutions concern various amendments to the Company’s bylaws.
Deletion of the article relating to capital contributions
Purpose
Article 6 (Contributions) of the bylaws, which was included when the Company was fi rst created in order to state the various
capital contributions made at the time of and subsequent to its formation, is now redundant and unnecessarily complicates
the wording of the bylaws. Consequently, the purpose of the fourteenth resolution is to delete article 6 of the bylaws relating to
capital contributions and to renumber the subsequent articles accordingly.
Disclosure thresholds for ownership interests
Purpose
Article 9.4 of the Company’s bylaws currently provides that any shareholder whose ownership interest reaches or falls below
a number of shares representing 2.5% of the capital must inform the Company within fi ft een days. The aim of the fi ft eenth
resolution is to amend this disclosure threshold to 1% of the Company’s voting rights and any multiple thereof and to change
the disclosure deadline to fi ve trading days. The newly worded article 9.4 would also state that these disclosure requirements
likewise apply (i) to registered intermediaries acting for shareholders that are not domiciled in France, and (ii) in the same way
as for statutory disclosure thresholds, to equity-settled arrangements and derivative instruments.
In a rapidly changing market environment, stock market prices are more volatile and the Company considers that more in-depth
knowledge of its shareholding structure, whether in shares or in derivative instruments, is essential in order to engage more
effi ciently with shareholders.
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Appointment of directors representing employees
Purpose
The PACTE Act lowered the number of Board directors from 12 to 8 for a second director representing employees to be appointed.
Consequently, in the sixteenth resolution, shareholders are asked to amend article 11-4 of the Company’s bylaws relating to this
requirement so that the article refers to the applicable legal provisions rather than a given number of directors. The Company is
already compliant with this requirement as two directors representing employees are members of Sodexo’s Board of Directors.
Written consultation of directors for certain Board decisions
Purpose
France’s new law on the simplifi cation, clarifi cation and modernization of French business law dated July 19, 2019 introduced
the option for French joint stock companies (sociétés anonymes) to provide in their bylaws that certain Board decisions may be
made through written consultation of the directors.
The purpose of the seventeenth resolution, therefore, is to amend article 12 of the Company’s bylaws in order to provide for this
possibility for certain types of decisions. The decisions concerned are detailed in full in the legislation and correspond to the
appointment of directors in the event that a seat becomes vacant due to a director’s death or resignation; authorizations for
granting security interests, endorsements and guarantees; amendments to the bylaws to ensure compliance with applicable laws
and regulations (subject to ratifi cation at an Extraordinary Shareholders Meeting); and calling the Annual Shareholders Meeting.
Removal of the obligation to appoint a deputy Statutory Auditor
Purpose
The purpose of the eighteenth resolution is to render the Company’s bylaws compliant with the French Act of December 9, 2016
relating to transparency, anti-corruption and economic modernization (the “Sapin II Act”), with respect to the amendment to
article L.823-1, paragraph 2, of the French Commercial Code. This new law removes the obligation for companies to appoint a
deputy Statutory Auditor when the principal Statutory Auditor is not an individual or a one-person fi rm. The shareholders are
therefore invited to amend article 15 of the Company’s bylaws to refl ect this change.
Removal of the transitional provisions relating to the introduction of the dividend premium in 2011
Purpose
Lastly, the fi nal paragraph of article 18-3 of the Company’s bylaws relating to the appropriation and distribution of net income,
and in particular the right to a dividend premium for shares held in registered form for at least four years, corresponds to
transitional provisions that have been applicable since 2014, aft er the dividend premium was fi rst introduced in 2011. As this
paragraph is now redundant, shareholders are invited to remove these transitional provisions.
Fourteenth resolution
(DELETION OF ARTICLE 6 OF THE BYLAWS RELATING TO CAPITAL
CONTRIBUTIONS)
Having considered the Board of Directors’ Report, the
Shareholders Meeting, acting under the rules of quorum and
majority applicable to Extraordinary Shareholders Meetings,
resolves to delete in its entirety article 6 of the Company’s
bylaws, entitled “Contributions”, and therefore to renumber the
subsequent articles from 6 to 19.
Fift eenth resolution
(AMENDMENT TO ARTICLE 9-4 OF THE BYLAWS RELATING TO
DISCLOSURE THRESHOLDS FOR OWNERSHIP INTERESTS)
Having considered the Board of Directors’ Report, the
Shareholders Meeting, acting under the rules of quorum and
majority applicable to Extraordinary Shareholders Meetings,
resolves to (i) lower the threshold set in the bylaws at which
a shareholder must disclose the percentage of voting rights it
holds in the Company, (ii) state the forms of ownership to which
the requirements also apply, and (iii) reduce the disclosure
timeframe when such thresholds are crossed. Article 9-4 of
the Company’s bylaws has therefore been amended to read as
follows:
“Article 9-4:
Any shareholder whose interest in the Company – held in any
form, taking into account the forms of ownership provided for in
the legislation applicable to statutory disclosure requirements –
reaches or falls below one percent (1%) of the Company’s
voting rights or any multiple thereof, including percentages
that are higher than the disclosure thresholds provided for in
the applicable laws and regulations, must inform the Company
within five trading days of the threshold being crossed. Such
notifi cation must be sent to the Company’s registered offi ce by
registered mail with return receipt requested and must state the
total number of the Company’s shares (and/or securities carrying
rights to the Company’s shares) and the number of voting rights
held by that shareholder, either directly or indirectly, alone or in
concert. When a disclosure threshold is crossed due to a purchase
or sale of shares on the open market, the above-mentioned fi ve
trading-day timeframe will begin on the trade date of the shares
rather than their delivery date.
The above disclosure requirements will also apply, in accordance
with the conditions and subject to the penalties provided for in
the applicable laws and regulations, to intermediaries that are
registered with the Company or its share registrar as acting
on behalf of shareholders who are not domiciled in France (as
defi ned in the French Civil Code).
If these disclosure requirements are not respected, at the request
of one or more shareholders that together hold at least 5% of the
Company’s voting rights, the interests in excess of the relevant
threshold will be stripped of voting rights at Shareholders
Meetings. If the omission is remedied, the voting rights concerned
will only be exercisable aft er the expiration of a period of two
years following such remedy.”
The wording of articles 9-1 to 9-3 remains unchanged.
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Sixteenth resolution
(AMENDMENT TO ARTICLE 11-4 OF THE BYLAWS IN ORDER TO
COMPLY WITH THE NEW LEGAL REQUIREMENTS CONCERNING
THE APPOINTMENT OF DIRECTORS REPRESENTING EMPLOYEES)
Having considered the Board of Directors’ Report and having
noted that the provisions of the French PACTE Act (Act 2019-486
dated May 22, 2019) have amended the applicable conditions
for the appointment of directors representing employees, the
Shareholders Meeting, acting under the rules of quorum and
majority applicable to Extraordinary Shareholders Meetings,
resolves to amend the Company’s bylaws in order to comply
with these new provisions. Consequently, article 11-4 of the
bylaws now reads as follows:
“Article 11-4:
The Board of Directors shall also include one or more director(s)
representing employees, whose number and terms and
conditions of appointment shall be set as provided for by law
and these bylaws.
If only one director representing employees needs to be
appointed, he or she shall be appointed by the trade union that
has the highest level of representation (within the meaning of
the applicable law) in the Company and its direct and indirect
subsidiaries whose registered offi ces are located in France.
When two directors representing employees need to be
appointed, the second director shall be appointed by the Group’s
European Works Council.
Directors representing employees are appointed for three-
year terms and take up offi ce when the duties of the outgoing
director(s) representing employees cease. Their duties cease at
the close of the Annual Shareholders Meeting called to approve
the fi nancial statements for the previous fi scal year and held in
the year in which their term expires.
The term of office of a director representing employees shall
automatically end (i) if their employment contract is terminated,
(ii) if they are removed from offi ce, or (iii) in the event of a case
of incompatibility, in accordance with the applicable laws and
regulations.
Subject to the provisions of the applicable law and article 11-2
above, directors representing employees shall have the same
status, powers and responsibilities as the Company’s other
directors.
The provisions of article 11-2 above requiring directors to own
a minimum number of the Company’s shares for the duration
of their term of offi ce shall not apply to directors representing
employees.
If the seat of a director representing employees on the Board
falls vacant as a result of death, resignation, removal from
office, termination of their employment contract or for any
other reason, the vacant seat shall be fi lled in accordance with
the applicable laws and regulations. Meetings held by the Board
of Directors until the director or directors concerned is or are
replaced shall be deemed to be validly constituted.
The provisions of this article 11-4 of the bylaws shall cease to
apply if, at the end of a particular fi scal year, the Company no
longer meets the criteria triggering the legal requirement to
appoint a director or directors representing employees. In such a
case, the terms of offi ce of any directors representing employees
appointed in accordance with this article shall terminate on their
scheduled expiration dates.”
The wording of articles 11-1 to 11-3 remains unchanged.
Seventeenth resolution
(AMENDMENT TO ARTICLE 12 OF THE BYLAWS IN ORDER TO
ENABLE THE BOARD OF DIRECTORS TO TAKE DECISIONS BY WAY
OF WRITTEN CONSULTATION AS PERMITTED BY THE APPLICABLE
LAWS AND REGULATIONS)
Having considered the Board of Directors’ Report, the
Shareholders Meeting, acting under the rules of quorum and
majority applicable to Extraordinary Shareholders Meetings,
resolves to use the option provided for in article 15 of the French
Act dated July 19, 2019 on the simplification, clarification
and modernization of French business law and accordingly
authorize the Board of Directors to make decisions through
written consultation as permitted by the applicable laws and
regulations. Consequently, the following paragraph has been
added to the end of article 12 of the bylaws:
“The Board of Directors may make decisions through written
consultation of the directors as permitted in the applicable laws
and regulations.”
The wording of the rest of article 12 remains unchanged.
Eighteenth resolution
(AMENDMENT TO ARTICLE 15 OF THE BYLAWS IN ORDER TO
REMOVE THE OBLIGATION TO APPOINT A DEPUTY STATUTORY
AUDITOR, PURSUANT TO ARTICLE L.823-1 OF THE FRENCH
COMMERCIAL CODE)
Having considered the Board of Directors’ Report, the
Shareholders Meeting, acting under the rules of quorum and
majority applicable to Extraordinary Shareholders Meetings,
resolves to render the Company’s bylaws compliant with
article L.823-1, paragraph 2, of the French Commercial Code,
as amended by Act 2016-1691 dated December 9, 2016,
which provides that it is only compulsory to appoint a deputy
Statutory Auditor if the principal Statutory Auditor is an
individual or a one-person firm. Article 14 of the bylaws has
therefore been amended to read as follows:
“Article 15 – Auditors
The Ordinary Shareholders Meeting appoints one or more
principal Statutory Auditors, for the duration, under the
conditions and with the mission set by the applicable laws. If
the Statutory Auditor thus appointed is an individual or a
one-person fi rm, one or more deputy Statutory Auditors shall be
appointed under the same conditions, whose role is to replace the
principal Statutory Auditor in the event of that auditor’s death,
resignation, or refusal to accept an audit engagement.”
Nineteenth resolution
(AMENDMENT TO ARTICLE 18 OF THE BYLAWS RELATING TO
THE APPROPRIATION AND DISTRIBUTION OF NET INCOME IN
ORDER TO REMOVE THE TRANSITIONAL PROVISIONS CONCERNING
THE INTRODUCTION IN 2011 OF A DIVIDEND PREMIUM)
Having considered the Board of Directors’ Report, the
Shareholders Meeting, acting under the rules of quorum and
majority applicable to Extraordinary Shareholders Meetings,
resolves to remove the final paragraph of article 18-3 of the
Company’s bylaws in order to delete the transitional provisions
relating to the introduction, in 2011, of a dividend premium as
from Fiscal 2013, as these provisions are now redundant.
The wording of the rest of article 18 remains unchanged.
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Twentieth to twenty-third resolutions: Financial resolutions
Increase in the Company’s share capital with preferential subscription rights, and global ceiling for
capital increases
Purpose
In order to ensure the fi nancing of the investments required for the Group’s growth, in the twentieth resolution shareholders are
invited to renew, for a 26-month period, the delegation of powers granted to the Board of Directors to issue – at any time other
than when a public tender off er for the Company’s shares is in progress – shares and/or other securities carrying rights to the
Company’s shares or to the allocation of debt securities, with preferential subscription rights for existing shareholders.
Pursuant to this resolution, if an issue is not taken up in full by shareholders exercising their preferential subscription rights, the
Board of Directors would be able to off er all or some of the unsubscribed shares or other securities on the open market.
The subscription price of the shares and/or other securities that may be issued under this authorization would be set by the
Board of Directors, in accordance with the applicable laws and regulations and standard market practices.
The maximum nominal amount(1) of the capital increases that could be carried out pursuant to this resolution would be set at
85 million euro (representing approximately 14% of the Company’s share capital) and the maximum nominal amount of any debt
securities issued would be 1 billion euro. The 85 million euro ceiling would include the amounts of any capital increases carried
out pursuant to the twenty-fi rst and twenty-second resolutions below by capitalizing premiums, reserves or profi t or by issuing
shares and/or other securities to members of an employee share purchase plan.
The previous authorization granted at the Annual Shareholders Meeting of January 23, 2018 for the same purpose was not used
by the Board.
Increase in the Company’s share capital by capitalizing premiums, reserves or profi t
Purpose
The purpose of the twenty-fi rst resolution is to renew, for a 26-month period, the delegation of powers granted to the Board of
Directors to carry out – at any time other than when a public tender off er for the Company’s shares is in progress – one or more
capital increases by capitalizing eligible amounts as provided for in the applicable laws and the Company’s bylaws (premiums,
reserves or profi t). The amount of the capital increases that may be carried out pursuant to this resolution would be included in
the 85 million euro ceiling set in the twentieth resolution.
The Board of Directors would have full powers to use this delegation of powers, and in particular to set the amount and nature of
the amounts to be capitalized and the number of new shares to be issued.
The previous authorization granted at the Annual Shareholders Meeting of January 23, 2018 for the same purpose was not used
by the Board.
Capital increase(s) reserved for members of employee share purchase plans
Purpose
As the extraordinary resolution approved at the January 23, 2018 Annual Shareholders Meeting authorizing capital increases
reserved for members of employee share purchase plans is due to expire, in the twenty-second resolution the Board of Directors is
seeking a 26-month renewal of the corresponding authorization, in accordance with the applicable legal requirements. Employee
share ownership could be used by Sodexo to align employees’ interests with those of its shareholders. The total number of shares
that may be issued may not represent more than 1.5% of the share capital , t he aggregate amount of any capital increases
carried out pursuant to this delegation of powers would be included in the 85 million euro ceiling set in the twentieth resolution.
Previous authorizations granted at the Annual Shareholders Meeting of January 23, 2018 and before for the same purpose have
not been used by the Board.
Reduction of the Company’s share capital through the cancellation of treasury shares
7
Purpose
Lastly, in the twenty-third resolution, shareholders are invited to renew, for a 26-month period, the authorization for the Board
of Directors to reduce the Company’s share capital by canceling treasury shares. The capital reductions carried out pursuant to
this authorization in any 24-month period would be subject to the same ceiling as that provided for in the thirteenth resolution,
i.e. 5% of the Company’s share capital.
The previous delegation of powers granted at the Annual Shareholders Meeting of January 23, 2018 for the same purpose
was used on August 29, 2018, date on which the share capital of the Company was reduced through the cancellation of
3,375,562 shares (i.e. about 2.2% of its share capital).
1 The nominal value of the Sodexo share is €4.0.
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Twentieth resolution
(DELEGATION OF POWERS TO THE BOARD OF DIRECTORS TO
INCREASE THE COMPANY’S SHARE CAPITAL BY ISSUING ORDINARY
SHARES AND/OR OTHER SECURITIES CARRYING IMMEDIATE
OR DEFERRED RIGHTS TO THE COMPANY’S CAPITAL, WITH
PREFERENTIAL SUBSCRIPTION RIGHTS FOR SHAREHOLDERS)
Having considered the Board of Directors’ Report and the
Statutory Auditors’ Special Report and having noted that the
Company’s share capital is fully paid up, the Shareholders
Meeting, acting under the rules of quorum and majority
applicable to Extraordinary Shareholders Meetings and in
accordance with articles L.225-129 et seq. of the French
Commercial Code – notably articles L.225-129, L.225-129-2,
L.225-132 to L.225-134 and L.228-91 to L.228-93:
1. delegates to the Board of Directors – or any duly authorized
representative of the Board – the power to increase
the Company’s capital on one or more occasions, with
preferential subscription rights for existing shareholders,
by issuing, in France or elsewhere and in the amounts and
on the dates it deems fi t, in euro or in any other currency
or monetary unit established by reference to a basket of
currencies, ordinary shares (therefore excluding preferred
shares) and/or any other securities carrying immediate or
deferred rights to ordinary shares of the Company, payable,
fully or partly, in cash or by off setting debts or capitalizing
reserves, profi t or premiums;
2.
sets the duration of the validity of this delegation of powers
at twenty-six (26) months, specifying, however, that it may
not be used by the Board of Directors when a public tender
off er for the Company’s shares is in progress;
3.
resolves that if the Board of Directors uses this delegation:
• the maximum total nominal amount of capital increases
that may be carried out pursuant to (i) this delegation
and (ii) the twenty-fi rst and twenty-second resolutions
(provided said resolutions are adopted) is 85 million euro
(or the equivalent of this amount in any other currency
or monetary unit established by reference to a basket of
currencies). This ceiling will not include any additional
amount representing shares to be issued in order to
safeguard the rights of holders of securities carrying
rights to the Company’s capital, as required by the laws
and regulations in force and/or any applicable contractual
provisions,
• the total nominal amount of debt securities carrying
immediate or deferred rights to the Company’s capital
that may be issued may not exceed 1 billion euro or
the equivalent of this amount in any other currency or
monetary unit established by reference to a basket of
currencies,
• the issue will be reserved in priority for the shareholders
who may make irreductible subscriptions in proportion
to the number of shares owned by them at the time, the
Board of Directors having the option of instituting pro-
rated subscription rights to subscribe for any shares and/
or other securities not taken up by other shareholders. If
the issue is oversubscribed, such additional preferential
rights will also be exercisable prorata to the existing
interests in the Company’s capital of the shareholders
concerned,
•
i f i r r e d u c t i b l e s u b s c r i p t i o n s a n d a n y p r o - r a t e d
subscriptions do not absorb the entire issue, the Board of
Directors may take one or more of the courses of action
provided for in article L.225-134 of the French Commercial
Code, in the order it deems fi t,
• any decision to issue securities carrying rights to the
Company’s capital will entail the explicit waiver by
shareholders, in favor of holders of the securities issued,
of their preferential rights to the equity instruments to
which the securities issued will entitle them;
4. acknowledges that this delegation of powers gives the
Board of Directors or its duly authorized representative
full powers to implement this resolution and in particular,
at its sole discretion, to set the terms of issue, the nature,
number and characteristics of securities carrying rights to
the Company’s capital (including the dividend eligibility
date of the issued securities, which may be retroactive),
the procedures for allocating the equity instruments to
which these securities entitle their holders, and the dates
on which allocation rights may be exercised, to charge
the costs related to the capital increase(s) against the
premiums pertaining thereto and transfer from this
amount the necessary sums to the legal reserve, make any
and all adjustments required in order to take into account
the impact of any transactions affecting the Company’s
capital or equity and to determine any other procedures
necessary to safeguard the rights of holders of securities
carrying rights to the Company’s capital (including
through cash adjustments), record the completion of
capital increases and amend the bylaws accordingly, carry
out the necessary formalities, enter into all agreements –
notably in order to complete the planned issues – take
all appropriate measures and carry out all formalities
necessary for the issue, listing and service of the securities
issued in accordance with this delegation of powers and for
the exercise of all related rights, and generally do all that is
necessary;
5. acknowledges that this delegation of powers cancels, with
eff ect from this day, the delegation granted for the same
purpose in the nineteenth resolution of the Combined
Annual Shareholders Meeting of January 23, 2018;
6. acknowledges that if the Board of Directors uses the powers
given to it herein, it will report on this utilization to the
next Ordinary Shareholders Meeting, as required under the
applicable laws and regulations.
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Twenty-fi rst resolution
(DELEGATION OF POWERS TO THE BOARD OF DIRECTORS TO
INCREASE THE COMPANY’S SHARE CAPITAL BY CAPITALIZING
PREMIUMS, RESERVES OR PROFIT)
Having considered the Board of Directors’ Report, the Shareholders
Meeting, acting under the rules of quorum and majority applicable
to Ordinary Shareholders Meetings and in accordance with
articles L.225-129 to L.225-129-2 and L.225-130 of the French
Commercial Code:
1. delegates to the Board of Directors – or any duly authorized
representative of the Board – the power to increase the
Company’s capital on one or more occasions, in the
amounts and on the dates it deems fit, by capitalizing
all or part of the premiums, reserves or profit whose
capitalization is permitted by law and the Company’s
bylaws, in the form of allocating new bonus shares or by
increasing the nominal value of existing shares, or by a
combination of the two procedures;
2.
3.
sets the duration of the validity of this delegation of powers
at twenty-six (26) months, specifying, however, that it may
not be used by the Board of Directors when a public tender
off er for the Company’s shares is in progress;
resolves that if the Board of Directors uses this delegation of
powers, the maximum nominal amount of capital increases
that may be carried out pursuant to this delegation is 85 million
euro (or the equivalent of this amount in any other currency
or monetary unit established by reference to a basket of
currencies). This ceiling (i) will be included in the global ceiling
of 85 million euro set in the twentieth resolution (provided said
resolution is adopted) or any other global ceiling set in a future
resolution adopted while this delegation of powers remains in
force, and (ii) will not include any additional amount representing
shares to be issued in order to safeguard the rights of holders of
securities carrying rights to the Company’s capital, as required
by the laws and regulations in force and/or any applicable
contractual provisions;
4. acknowledges that this delegation of powers gives the
Board of Directors or its duly authorized representative full
powers to implement this resolution and in particular to:
• determine the amount and nature of the sums to be
capitalized; set the number of new shares to be issued
and/or the amount by which the nominal value of existing
shares is to be increased; set the date (which may be
retroactive) from which the new shares will carry rights
and the date on which the increase in the nominal value
of existing shares will take eff ect,
•
if new shares are issued, decide that (i) rights attached
to fractional shares will not be tradable, and that the
corresponding shares will be sold and the proceeds of
sale allocated to the holders of said rights as required by
the applicable laws and regulations, and (ii) any bonus
shares allocated pursuant to this delegation on the basis
of existing shares that carry double voting rights and/or
the right to a dividend premium will also be eligible for
these rights as from their issue date,
• make any and all adjustments required in order to take
into account the impact of any transactions aff ecting the
Company’s capital or equity and to determine any other
procedures required in order to safeguard the rights of
holders of securities carrying rights to the Company’s
capital,
• record the completion of each capital increase and amend
the bylaws accordingly,
• generally enter into all agreements, take all appropriate
measures and carry out all formalities necessary for
the issue, listing and service of the securities issued in
accordance with this delegation of powers and for the
exercise of all related rights;
5. acknowledges that this delegation of powers cancels, with
eff ect from this day, the delegation granted for the same
purpose in the twentieth resolution of the Combined Annual
Shareholders Meeting of January 23, 2018.
Twenty-second resolution
(DELEGATION OF POWERS TO THE BOARD OF DIRECTORS
TO INCREASE THE COMPANY’S SHARE CAPITAL BY ISSUING
ORDINARY SHARES AND/OR SECURITIES CARRYING IMMEDIATE
OR DEFERRED RIGHTS TO THE COMPANY’S CAPITAL, WITH
SUCH ISSUE(S) RESERVED FOR MEMBERS OF EMPLOYEE SHARE
PURCHASE PLANS, WITHOUT PREFERENTIAL RIGHTS FOR
EXISTING SHAREHOLDERS)
Having considered the Board of Directors’ Report and the
Statutory Auditors’ Special Report, the Shareholders Meeting,
acting under the rules of quorum and majority applicable to
Extraordinary Shareholders Meeting and in accordance with
articles L.225-129 et seq. and L.225-138-1 of the French
Commercial Code and articles L.3332-18 to L.3332-24 of the
French Labor Code:
1. delegates to the Board of Directors – or any duly authorized
representative of the Board – the power to increase the
Company’s capital, on one or more occasions, by issuing
ordinary shares and/or securities carrying immediate
or deferred rights to the Company’s capital to members
of one or more employee share purchase plans (or any
other plan permitted under articles L.3332-1 et seq.
of the French Labor Code or any other similar laws or
regulations providing for employee rights issues) set up
by the Group (comprising the Company and the French or
foreign companies included in the Company’s consolidated
or combined financial statements), in accordance with
article L.3344-1 of the French Labor Code. Such issue(s)
may be carried out in France or elsewhere and in the
amounts and on the dates the Board deems fit, in euro
or in any other currency or monetary unit established by
reference to a basket of currencies;
2.
sets the duration of the validity of this delegation of
powers at twenty-six (26) months from the date of
this meeting and resolves to cancel, with effect from
this day, the delegation granted for the same purpose
in the twenty-first resolution of the Combined Annual
Shareholders Meeting of January 23, 2018.
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3.
4.
5.
6.
resolves that the total number of new shares that may be
issued pursuant to this delegation may not represent more
than 1.5% of the share capital as of the date of the decision
made by the Board of Directors. This ceiling (i) will be included
in the global ceiling set in the twentieth resolution (provided
said resolution is adopted), i.e., a maximum total nominal
amount of 85 million euro, or any other global ceiling set in
a future resolution adopted while this delegation of powers
remains in force, and (ii) will not include any additional
amount representing shares to be issued in order to safeguard
the rights of holders of securities carrying rights to the
Company’s capital, as required by the laws and regulations in
force and/or any applicable contractual provisions;
resolves that the issue price of the new shares or securities
carrying rights to the Company’s capital that may be
issued pursuant to this delegation will be determined under
the conditions set forth in articles L.3332-19 et seq. of the
French Labor Code and will be equal to at least 80% of the
average of the opening prices of the Company’s shares on
Euronext Paris over the twenty trading days preceding the
day on which the decision is made setting the opening date
for subscription by the members of an employee share
purchase plan (or similar plan). The Board of Directors
may, at its discretion, reduce or cancel the aforementioned
discount, within the limits set by the applicable laws and
regulations, in order to allow, inter alia, for compliance with
local legal, accounting and tax regimes and labor laws;
resolves that in addition to the shares and/or other
securities offered for purchase in cash, the Board of
Directors may replace all or part of any discount and/or
employer contribution by granting to the above-mentioned
benefi ciaries, free of consideration, existing or newly issued
shares and/or securities carrying rights to the Company’s
capital. However, the benefi t resulting from this grant may
not exceed the legal or regulatory limits applicable under
articles L.3332-10 et seq. of the French Labor Code;
resolves to waive, in favor of the above-mentioned
beneficiaries, the preferential rights of shareholders to
subscribe for (i) the shares or other securities carrying
rights to the Company’s capital issued under this
delegation of powers, and (ii) the shares to which the
holders of securities carrying rights to the Company’s
capital will be entitled on exercise of those rights;
7. authorizes the Board of Directors, under the conditions
set out in this delegation, to sell shares to the above-
mentioned benefi ciaries as provided for in article L.3332-
24 of the French Labor Code, it being stipulated that the
nominal value of shares sold at a discount to members
of one or several employee share purchase plans referred
to above will be deducted from the ceilings referred to in
paragraph 3 above;
benefit from any shares or other securities granted free
of consideration, to set the terms and conditions of the
transactions, and to determine the dates and procedures
for the issues to be carried out under this delegation, to
determine the opening and closing dates for subscriptions,
the cum-rights dates (which may be retroactive) and the
procedures for the payment of shares, to grant extensions
to the period for payment of shares, to apply to list the
shares thus created on the stock exchanges of its choice,
to record the completion of the capital increases based on
the value of the shares actually purchased, to complete,
directly or through its appointed agents, all transactions
and formalities pertaining to the capital increases,
including subsequent amendments to the bylaws, and, at
its sole discretion, if it deems fi t, to charge the costs arising
on the capital increases against the related premiums, and
to transfer from this amount the requisite sums to increase
the legal reserve to one-tenth of the new capital resulting
from the capital increases;
9. acknowledges that if the Board of Directors uses the powers
given to it herein, it will report on this utilization to the
next Ordinary Shareholders Meeting, as required under the
applicable laws and regulations.
Twenty-third resolution
(AUTHORIZATION FOR THE BOARD OF DIRECTORS TO
REDUCE THE COMPANY’S SHARE CAPITAL BY CANCELING
TREASURY SHARES)
Having considered the Board of Directors’ Report and the
Statutory Auditors’ Special Report, the Shareholders Meeting,
acting under the rules of quorum and majority applicable
to Extraordinary Shareholders Meetings and in accordance
with article L.225-209 et seq. of the French Commercial Code,
authorizes the Board of Directors to cancel, on one or more
occasions, some or all of the shares purchased by the Company
under the shareholder-approved share buyback program and
to reduce the share capital accordingly. The canceled shares
may not represent more than 5% of the total number of shares
making up the Company’s share capital as of the date of this
Shareholders Meeting (i.e., a maximum of 7,372,744 shares) in
any period of twenty-four (24) months.
The Shareholders Meeting gives full powers to the Board of
Directors – or any duly authorized representative of the Board –
to perform such transactions relating to the cancellation
and reduction of capital as may be required pursuant to this
authorization, and in particular to charge the diff erence between
the purchase price of the canceled shares and their nominal
value against the related premiums or available reserves,
including the legal reserve up to the equivalent of 5% of the
canceled capital, to amend the bylaws accordingly, to make all
fi lings and carry out other formalities, and generally do all that
is necessary.
8.
resolves that the Board of Directors – or its duly appointed
representative – will have full powers to implement this
resolution, and in particular to establish, in accordance
with legal requirements, the list of companies in which the
above-mentioned beneficiaries will be able to subscribe
for the shares and/or other securities issued and to
The Shareholders Meeting acknowledges that this authorization
is granted for a period of twenty-six (26) months from the
date of this meeting and cancels, with effect from this day,
any unused portion of the authorization given for the same
purpose in the eighteenth resolution of the Combined Annual
Shareholders Meeting of January 23, 2018.
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Ordinary resolution
Twenty-fourth resolution: Powers
The twenty-fourth resolution is a standard resolution conferring powers to complete all legal formalities and fi lings relating to
the resolutions approved at the Annual Shareholders Meeting.
Twenty-fourth resolution
(POWERS TO CARRY OUT FORMALITIES)
The Shareholders Meeting confers full powers on the bearer of an original, copy or extract of the minutes of this Shareholders Meeting
to carry out all fi ling and publication formalities required by law.
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7.3 STATUTORY AUDITORS’ REPORT
This is a free translation into English of the Statutory Auditors’ reports issued in French and is provided solely for the convenience
of English speaking readers. This report should be read in conjunction with, and construed in accordance with, French law and
professional auditing standards applicable in France.
7.3.1 Statutory Auditors’ Report on the issuance of ordinary
shares and/or any other securities with preferential
subscription rights
(Combined Shareholders’ Meeting of January 21, 2020 – 20th resolution)
SODEXO
255, quai de la Bataille de Stalingrad
92866 Issy-les-Moulineaux Cedex 9
To the Shareholders,
In our capacity as Statutory Auditors of Sodexo, and in compliance with article L. 228-92 of the French Commercial Code (Code de
commerce), we hereby report to you on the proposed delegation of powers to the Board of Directors to carry out one or more issues of
ordinary shares (excluding preferred shares) and/or of any other securities carrying immediate or deferred rights to ordinary shares
of the Company, which is submitted to you for approval.
The maximum nominal amount of capital increases that may be carried out, immediately or in the future, pursuant to this delegation
may not exceed 85 million euro or the equivalent of this amount in any other currency or monetary unit established by reference to
a basket of currencies. The capital increases that may be carried out under the 21st and 22nd resolutions will be deducted from this
amount.
The maximum nominal amount of debt securities carrying rights to the Company’s capital that may be issued may not exceed
1 billion euro or the equivalent of this amount in any other currency or monetary unit established by reference to a basket of
currencies.
On the basis of its report, shareholders are asked to grant the Board of Directors full powers, with the right to sub-delegate, for a period
of 26 months, to carry out an issuance of shares. The Board of Directors cannot use this delegation during a public tender off er. The
Board of Directors will set, if necessary, the fi nal terms and conditions of the issue.
It is the Board of Directors’ responsibility to prepare a report in accordance with articles R. 225-113 et seq. of the French Commercial
Code. It is our responsibility to express an opinion on the fairness of the information taken from the fi nancial statements and on the
proposed issue, as well as certain other information relating to the issue provided in the report.
We performed the procedures we deemed necessary in accordance with professional standards applicable in France to such
engagements. These procedures consisted in verifying the information provided in the Board of Directors’ report relating to this
transaction and the methods used to set the issue price of the shares to be issued.
We inform you that the Board of Directors’ report does not include the terms and conditions for setting the issue price provided for
by regulation.
In addition, we do not express an opinion on the fi nal terms and conditions of the issue, as they have not yet been set.
In accordance with article R. 225-116 of the French Commercial Code, we will prepare an additional report in the event that the Board
of Directors uses this delegation of powers.
Neuilly-sur-Seine and Paris-La Défense, November 19, 2019
The Statutory Auditors
PricewaterhouseCoopers Audit
Jean-Christophe Georghiou
KPMG Audit
Département de KPMG SA
Caroline Bruno Diaz
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7.3.2 Statutory Auditors’ Report on the issuance of ordinary
shares and/or other securities of the Company reserved for
members of an employee share purchase plan
(Combined Shareholders’ Meeting of January 21, 2020 – 22nd resolution)
SODEXO
255, quai de la Bataille de Stalingrad
92866 Issy-les-Moulineaux Cedex 9
To the Shareholders,
In our capacity as Statutory Auditors of Sodexo, and in compliance with articles L. 228-92 and L. 225- 135 et seq. of the French
Commercial Code (Code de commerce), we hereby report to you on the proposed delegation of powers to the Board of Directors to
increase the capital by issuing ordinary shares and/or securities carrying immediate or deferred rights to the Company’s capital,
with waiver of preferential subscription rights, reserved for members of one or more employee share purchase plans set up within
the Group formed by the Company and the French or international companies included in the scope of consolidation or combined
fi nancial statements of the Company as defi ned in article L. 3344-1 of the French Labor Code (Code du travail), which is submitted
to you for approval.
The maximum total number of new shares that could be issued may not exceed 1.5% of the issued capital as of the date of the Board
of Directors’ decision. This ceiling will be deducted from the global ceiling of a maximum total nominal amount of 85 million euro set
forth in the 20th resolution of this Shareholders’ Meeting.
This transaction is submitted to the shareholders for approval in accordance with the provisions of article L. 225-129-6 of the French
Commercial Code and article L. 3332-18 et seq. of the French Labor Code.
On the basis of its report, shareholders are asked to grant the Board of Directors full powers, for a period of 26 months as of the date of
this Shareholders’ Meeting and with the right to sub-delegate, to issue shares and cancel their preferential subscription rights for the
ordinary shares and/or securities to be issued. The Board of Directors will set, if necessary, the fi nal terms and conditions of the issue.
It is the Board of Directors’ responsibility to prepare a report in accordance with articles R. 225-113 et seq. of the French Commercial
Code. It is our responsibility to express an opinion on the fairness of the information taken from the fi nancial statements, on the
proposed cancellation of the shareholders’ preferential subscription rights, and on certain other information relating to the issue
provided in the report.
We performed the procedures we deemed necessary in accordance with professional standards applicable in France to such
engagements. These procedures consisted in verifying the information provided in the Board of Directors’ report relating to this
transaction and the methods used to set the issue price of the shares to be issued.
Subject to a subsequent examination of the terms and conditions of the proposed issue once it has been decided, we have no matters
to report as regards the methods used to set the issue price as provided in the Board of Directors’ report.
We do not express an opinion on the fi nal terms and conditions of the issue, as they have not been set, or consequently on the
proposed cancellation of the shareholders’ preferential subscription rights.
In accordance with article R. 225-116 of the French Commercial Code, we will prepare an additional report in the event that the Board
of Directors uses this delegation of power.
Neuilly-sur-Seine and Paris-La Défense, November 19, 2019
The Statutory Auditors
7
PricewaterhouseCoopers Audit
Jean-Christophe Georghiou
KPMG Audit
Département de KPMG SA
Caroline Bruno Diaz
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7.3.3 Statutory Auditors’ Report on the capital reduction
(Combined Shareholders’ Meeting of January 21, 2020 – 23rd resolution)
SODEXO
255, quai de la Bataille de Stalingrad
92866 Issy-les-Moulineaux Cedex 9
To the Shareholders,
In our capacity as Statutory Auditors of Sodexo, and in accordance with article L. 225-209 of the French Commercial Code (Code de
commerce), in the event of a capital reduction by canceling shares, we hereby report to you on our assessment of the reasons for and
the terms and conditions pertaining to the proposed capital reduction.
Shareholders are asked to grant the Board of Directors full powers, with the right to sub-delegate, for a period of 26 months as of the
date of this Shareholders’ Meeting, to cancel the shares purchased under the Company’s share repurchase program, pursuant to an
authorization granted within the framework of the abovementioned article, up to a maximum of 5% of the share capital, as of the date
of this Shareholder’s Meeting, by 24-month period.
We performed the procedures we deemed necessary in accordance with professional standards applicable in France to such
engagements. These procedures consisted in verifying that the reasons for and terms and conditions of the proposed capital reduction,
which is not considered to aff ect shareholder equality, comply with the applicable legal provisions.
We have no matters to report on the reasons for and terms and conditions of the proposed capital reduction.
Neuilly-sur-Seine and Paris-La Défense, November 19, 2019
The Statutory Auditors
PricewaterhouseCoopers Audit
Jean-Christophe Georghiou
KPMG Audit
Département de KPMG SA
Caroline Bruno Diaz
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8
APPENDICES
8.1
Glossary
298
8.3
Reconciliation Tables
8.2
Responsibility for the Universal
Registration Document
and the Audit of the Financial
Statements
8.2.1 Responsibility for the Universal
Registration Document
8.2.2 Responsibility for the audit of the
fi nancial statements
301
301
302
8.3.1 Universal Registration Document
8.3.2 Annual Financial Report
8.3.3 Management Report
8.3.4 Governance Report
8.3.5 Extra-Financial Performance
Declaration (DPEF)
303
303
305
306
307
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A P P E N D I C E S
8 G l o s s a r y
8.1 GLOSSARY
ADR (American Depositary Receipts)
Comparable site growth rate
An ADR is a registered certificate issued by a U.S. bank to
represent ownership of a share or bond issued by a publicly-
traded non-U.S. company. ADRs are quoted in U.S. dollars,
but the underlying shares or bonds are denominated in their
original currency and are held in deposit by a bank, known as
the custodian, in the country of issue. ADRs enable a non-U.S.
company, subject to certain conditions, to be quoted in the
United States. One Sodexo share is represented by fi ve Sodexo
ADR. Dividends and voting rights belong to the ADR holder.
The comparable site growth rate is the increase in revenues
from sites that have contributed to consolidated revenue over
two complete consecutive fi scal years (sites with activity from
September 1, 2016 to August 31, 2018).
Corporate offi cers
Corporate Officer is the term used in English for the French
mandataire social and refers to Sodexo’s Chief Executive Officer,
Chairwoman of the Board and the Members of the Board of Directors.
Bearer shares
Shares held in a share account maintained by the shareholder’s
bank or broker. Sodexo is not informed of the shareholder ’s
identity. The share purchase and administration of the shares
are handled by the shareholder’s bank or broker.
Development rate
The development rate is the annualized estimated revenue for
new contracts signed during the fi scal year, divided by prior year
revenues.
Benefi ts & Rewards Services
Dividend premium
Sodexo’s Benefits & Rewards Services – which are provided
through vouchers, cards or digitally – cover five service
categories: Employee Benefits, Incentive and Recognition
Programs, Employee mobility and Expense Management Public
Benefi ts .
Any shareholder that has held registered shares for at least
four years as of the end of the fi scal year including as of the dividend
payment date will be eligible for a 10% dividend premium on those
shares. The number of shares eligible for the dividend premium
cannot exceed 0.5% of Sodexo’s share capital per shareholder.
Client retention rate
Earnings per share (EPS)
The client retention rate corresponds to the total amount of
revenue generated from business with existing clients in the
prior fi scal year compared with total revenue for that year.
It is expressed as a percentage and is calculated in a
comprehensive way by deducting the revenue generated in
the prior fi scal year that corresponds to (i) contracts lost to a
competitor or self-operation, (ii) contracts terminated by Sodexo
and (iii) site closures. Other companies may calculate their
retention rates on a diff erent basis.
Group net income divided by the weighted average number of
shares outstanding.
Employee engagement rate
Engagement is defi ned as a level of commitment in a group or
business, and refers to employees’ commitment to the success
of the business, their loyalty and their pride in being part of the
organization. As such the engagement rate is the percentage of
employees having responded to the six engagement questions
with an average rating of 4.5 or higher on an increasing scale of
from 1 to 6 (methodology developed by Aon Hewitt).
Additional information is available in section 3.2.2 of this
document.
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A P P E N D I C E S
G l o s s a r y
Employee retention rate
Issue volume
The employee retention rate corresponds to the proportion of
employees who remain with the Group during the year out of the
overall average number of employees for the year.
Note that for purposes of this calculation employees leaving the
Group do not include departures related to legal requirements or
regulations concerning lost contracts, transfers between Group
subsidiaries or the expiration of fi xed-term contracts.
GRI
The Global Reporting Initiative (GRI) was created in 1997 by the
Coalition for Environmentally Responsible Economies (CERES) in
partnership with the United Nations Environment Programme
(UNEP). The GRI’s vocation is to lift sustainable development
methods to a level equivalent to those of fi nancial reporting, in
the interests of comparability, credibility, rigor, frequency and
verifi ability of the communicated information.
Group net income
Group net income corresponds to the line “Profi t attributable
to equity holders of the parent” in the consolidated income
statement. It is the Group’s total consolidated net income (i.e.,
the net income generated by all Group companies) less the
portion of net income attributable to interests held by third
party shareholders in subsidiaries not wholly owned by Sodexo.
Intensity risk
Risks whose frequency and severity require transfer to the
insurance market.
ISO
ISO (International Organization for Standardization) is the
world’s largest developer of voluntary International Standards.
International Standards give state of the art specifi cations for
products, services and good practice, helping to make industry
more effi cient and eff ective. They include ISO 9001 for Quality
management, ISO 14001 for Environmental management,
ISO 22000 for Food Safety management, ISO 27000 (security IT
standard) and ISO 55000 for asset management.
Issue volume corresponds to the total face value of service
vouchers, cards and digitally-delivered services issued by the
Group (Benefi ts & Rewards Services activity) for benefi ciaries on
behalf of clients.
Net debt
Net debt corresponds to the Group’s borrowings at the balance
sheet date less operating cash. More details in section 3.5.1
Financial Ratios.
OHSAS 18001
A standard developed in the United Kingdom (Occupational
Health and Safety Assessment Series) used as a model for
occupational health and safety management systems. Its
objective is to provide companies with assessment and
certifi cation of their health and safety management systems,
consistent with international management system standards.
On-site Services
Sodexo On-site Services respond to the needs of Sodexo’s client
segments.
Performance shares
Sodexo shares granted free of consideration by the Board of
Directors to the Chief Executive Officer and Group managers
in order to reward individual performance and whose vesting
is subject to the beneficiary still forming part of the Group
at the end of the vesting period as well as the achievement
of performance conditions (for grants representing over
250 shares). The proportion of performance shares within the
overall number of shares granted can vary between 0% and
100% depending on the number of shares making granted and
the responsibilities of the benefi ciaries concerned.
Personal & Home Services
Sodexo Services provided in three main areas: childcare,
concierge services and in-home care for dependent persons.
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8 G l o s s a r y
Registered shares
Registered shares are shares that are registered in the holder’s
name in Sodexo’s share register (unlike bearer shares). They
may be directly or indirectly registered. Registered Sodexo
shareholders are entitled to:
• double voting rights for registered shares held for at least
four years;
• a dividend premium of 10% for registered shares held for at
least four years, limited to 0.5% of Sodexo’s issued capital
per shareholder;
1. Directly registered shares (French nominatif pur)
The shares are recorded in the holder’s name in a share account
kept by the Company’s registrar, Société Générale, allowing
direct communications between the shareholder and Sodexo.
2. I n d i r e c t l y r e g i s t e r e d s h a r e s ( F r e n c h n om i n a t i f
administré)
In this case, the shares are registered in the holder’s name in
a share account managed by his or her bank or broker, which
is responsible for the related custodial and administration
services. The shares are administered in the same way as for
bearer shares.
• automatic invitation to Shareholders Meetings and
personalized information on all financial transactions
(capital increases, bond issues, etc.);
TSR
• reduced administration costs (for directly registered shares
only).
Total Shareholder Return (TSR) is a measure of the performance
of a company’s shares over time. The total return to the
shareholder combines share price appreciation and dividends
paid.
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R e s p o n s i b i l i t y f o r t h e U n i v e r s a l R e g i s t r a t i o n D o c u m e n t a n d t h e A u d i t o f t h e F i n a n c i a l S t a t e m e n t s
A P P E N D I C E S
8.2 RESPONSIBILITY FOR THE UNIVERSAL
REGISTRATION DOCUMENT
AND THE AUDIT OF THE FINANCIAL
STATEMENTS
8.2.1 Responsibility for the Universal Registration Document
Person responsible for the information included in the “Document
d’enregistrement universel” (French-language equivalent of the
Universal Registration Document):
Denis Machuel, Chief Executive Offi cer
Having taken all reasonable precautions, I hereby declare that
the information contained in the Document d’enregistrement
universel is to the best of my knowledge in accordance with
reality and that nothing has been omitted that would alter its
impact.
I declare that to the best of my knowledge the financial
statements comply with the applicable accounting standards
and present a true statement of the net worth, the financial
position, and of the income of the Company, and of the
consolidated entities.
T h e M a n a g e m e n t R e p o r t i n c l u d e d i n t h e D o c u m e n t
d’enregistrement universel presents a true picture of the
evolution of the business, of the results and the financial
position of the Company and of the consolidated entities, as well
as a description of the principal risks for the Group.
I have obtained from our Statutory Auditors an engagement
completion letter in which they declare that they verifi ed the
information relating to the fi nancial position and the fi nancial
statements which are presented in this document and that they
have read this document in its entirety.
Denis Machuel
Chief Executive Offi cer
November 20 , 2019
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8 R e s p o n s i b i l i t y f o r t h e U n i v e r s a l R e g i s t r a t i o n D o c u m e n t a n d t h e A u d i t o f t h e F i n a n c i a l S t a t e m e n t s
8.2.2 Responsibility for the audit of the financial statements
AUDITORS
STATUTORY AUDITORS
PricewaterhouseCoopers Audit
Member of the Compagnie Régionale des Commissaires
aux Comptes de Versailles
63, rue de Villiers
92208 Neuilly-sur-Seine, France
Registered no. RCS Nanterre 672 006 483
Represented by Jean-Christophe Georghiou
KPMG Audit
Département de KPMG SA
Member of the Compagnie Régionale des Commissaires
aux Comptes de Versailles
Tour Eqho – 2 avenue Gambetta
92066 Paris La Défense Cedex, France
Represented by Caroline Bruno-Diaz
DEPUTY STATUTORY AUDITORS
M. Jean-Baptiste Deschryver
Member of the Compagnie Régionale des Commissaires
aux Comptes de Versailles
63, rue de Villiers
92208 Neuilly-sur-Seine, France
Salustro Reydel
Member of the Compagnie Régionale des Commissaires
aux Comptes de Versailles
Tour Eqho – 2, avenue Gambetta
92066 Paris La Défense Cedex, France
FIRST APPOINTED
TERM OF OFFICE
TERM OF OFFICE EXPIRES
February 22, 1994
6 fiscal years
February 4, 2003
6 fiscal years
January 21, 2017
6 fiscal years
January 19, 2015
6 fiscal years
Shareholders Meeting to be
held in 2023 to adopt the
financial statements for
Fiscal 2022
Shareholders Meeting to be
held in 2021 to adopt the
financial statements for
Fiscal 2020
Shareholders Meeting to be
held in 2023 to adopt the
financial statements for
Fiscal 2022
Shareholders Meeting to be
held in 2021 to adopt the
financial statements for
Fiscal 2020
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A P P E N D I C E S
R e c o n c i l i a t i o n T a b l e s
8.3 RECONCILIATION TABLES
To facilitate the reading of this document, the reconciliation
tables below identify:
• the main headings required by Annex 1 & Annex 2 of the
Commission Delegated Regulation (EU) 2019/980 of
March 14, 2019 supplementing Regulation (EU) 2017/1129
of June 14, 2017;
• the information that constitutes the Annual Financial Report
provided for under articles L.451-1-2 of the Monetary and
Financial Code and 222-3 of the General Regulation of the French
securities regulator (Autorité des marchés financiers – AMF);
• the information that constitutes the Management Report of the
Board of Directors as defi ned by the French Commercial Code;
• the information that constitutes the extra-fi nancial performance
declaration as defi ned by the French Commercial Code.
8.3.1 Universal Registration Document
RECONCILIATION TABLE FOR THE UNIVERSAL REGISTRATION DOCUMENT – ANNEX 1 & ANNEX 2 OF THE COMMISSION DELEGATED
REGULATION (EU) 2019/980 OF MARCH 14, 2019 SUPPLEMENTING REGULATION (EU) 2017/1129 OF JUNE 14, 2017
1. Persons responsible, information from a third party, from expert reports and approval from
competent authority
2. Statutory Auditors
3. Risk factors
4. Information about Sodexo
5. Business overview
5.1. Main activities
5.2. Main markets
5.3. Important events in the development of the business
PAGES
1, 303
304
231- 236
273, 274
29- 35
60- 63
57, 58
5.4. Strategy and objectives
6, 7, 14, 15, 57, 67
5.5. Risk of dependency on patents or licences, industrial, commercial of financial contracts or new
manufacturing processes
5.6. Competitive position
5.7. Investments
6. Organizational structure
6.1. Brief description of the Group
6.2. Significant subsidiaries
7. Operating and financial review
7.1. Financial condition
7.2. Operating results
8. Capital resources
8.1. General information on the capital resources
8.2. Sources and amounts of cash flows
8.3. Information on borrowing requirements and funding structure
8.4. Restrictions on the use of capital resources having materially affected or potentially
materially affecting the operations of the Group
8.5. Anticipated sources of funds
N/A
28, 35
66
189
154
56
86
91, 166
66, 90
67, 119- 123
115, 116
N/A
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8 R e c o n c i l i a t i o n T a b l e s
RECONCILIATION TABLE FOR THE UNIVERSAL REGISTRATION DOCUMENT – ANNEX 1 & ANNEX 2 OF THE COMMISSION DELEGATED
REGULATION (EU) 2019/980 OF MARCH 14, 2019 SUPPLEMENTING REGULATION (EU) 2017/1129 OF JUNE 14, 2017
9. Regulatory environment
10. Information on trends
11. Profit forecasts or estimates
12. Administrative Management and Senior Management
PAGES
N/A
67
67
12.1. Information concerning members of the Board of Directors and Senior management (CEO)
191- 203, 215, 218
12.2. Administrative management and Senior management conflicts of interests
13. Compensation and benefits
13.1. Amount of compensation and benefits of corporate officers
13.2. Total amounts set aside or accrued to provide for pension, retirement or other benefits
14. Board practices
14.1. Date of expiration of current terms of office
14.2. Board members’ and Senior management’s service contracts with the Group providing for
benefits upon termination of such contract
14.3. Information concerning the Audit Committee, the Nominating Committee
and the Compensation Committee
14.4. Statement of compliance with a Corporate Governance regime
14.5. Potential material changes on the Corporate Governance
15. Employees
15.1. Number of employees and breakdown by category and location
15.2. Share ownership of Administrative management and Senior management and any option over
such shares
15.3. Employee shareholding in the share capital of the Company
16. Major shareholders
16.1. Shareholders holding more than 5% of the share capital or voting rights
16.2. Existence of different voting rights
16.3. Control of Sodexo
16.4. Arrangements, known to Sodexo, the operation of which may at a subsequent date result in
a change of control
17. Related party transactions
18. Financial information concerning assets, financial position and profits and losses
18.1. Historical financial information
18.2. Interim and other financial information
18.3. Auditing of historical annual financial information
18.4. Pro forma financial information
18.5. Dividend policy
18.6. Legal and arbitration proceedings
18.7. Significant change in Sodexo’s financial position
218
246- 252
137, 250
191
244, 245
211- 213
217
204- 206
38
191, 215, 244
253- 257, 271
269
275
218
N/A
136, 137, 169, 219
20, 21, 36, 37
N/A
144- 149, 179, 182
N/A
263
138
138, 172
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RECONCILIATION TABLE FOR THE UNIVERSAL REGISTRATION DOCUMENT – ANNEX 1 & ANNEX 2 OF THE COMMISSION DELEGATED
REGULATION (EU) 2019/980 OF MARCH 14, 2019 SUPPLEMENTING REGULATION (EU) 2017/1129 OF JUNE 14, 2017
19. Additional information
19.1. Share capital
19.2. Memorandum and Articles of Association
20. Material contracts
21. Documents available
A P P E N D I C E S
R e c o n c i l i a t i o n T a b l e s
PAGES
268- 272
273- 276
274
273, 276
Information incorporated by reference:
Pursuant to article 19 of Regulation (UE) 2017/1129 of the European Parliament and of the Council of June 14, 2017, the following information is incorporated by
reference into this Universal Registration Document:
− for Fiscal 2018: Group consolidated financial statements and Statutory Auditors’ Report on the consolidated financial statements for the year ended August 31,
2018, individual Company financial statements and Statutory Auditors’ Report on the individual Company financial statements for the year ended August 31, 2018,
as well as the financial information included in Management Report, as presented in the Registration document filed with the Autorité des marchés financiers (French
financial markets authority) on November 22, 2018, under number D.18-0937;
− for Fiscal 2017: Group consolidated financial statements and Statutory Auditors’ Report on the consolidated financial statements for the year ended August 31,
2017, individual Company financial statements and Statutory Auditors’ Report on the individual Company financial statements for the year ended August 31, 2017,
as well as the financial information included in Management Report, as presented in the Registration document filed with the Autorité des marchés financiers (French
financial markets authority) on November 20, 2017, under number D.17-1057.
Parts of the Registration documents D.18-0937 and D.17-1057 which are not referred to above are either not relevant for the investor, or are included elsewhere in this
Universal Registration Document.
8.3.2 Annual Financial Report
INFORMATION CONCERNING THE ANNUAL FINANCIAL REPORT – ARTICLES L.451-1-2 OF THE MONETARY AND FINANCIAL CODE AND 222-3 OF THE GENERAL
REGULATION OF THE FRENCH SECURITIES REGULATOR (AUTORITÉ DES MARCHÉS FINANCIERS, AMF)
Individual Company Financial Statements (Fiscal 2019)
Auditors’ Report on the individual Company Financial Statements (Fiscal 2019)
Consolidated Financial Statements (Fiscal 2019)
Auditors’ Report on the consolidated Financial Statements (Fiscal 2019)
Statutory Auditors’ fees
Management Report including Governance Report
Auditors’ Report on the Governance Report
Company’s repurchase of its own shares
Responsibility for the Annual Financial Report
PAGES
156- 178
179
86- 142
144
143
See reconciliation
table below
180
270
303
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A P P E N D I C E S
8 R e c o n c i l i a t i o n T a b l e s
8.3.3 Management Report
RECONCILIATION TABLE FOR THE MANAGEMENT REPORT PURSUANT TO ARTICLES L.225-100 ET SEQ. OF THE FRENCH COMMERCIAL CODE
PAGES
Activity of the Company
Situation and business activity of the Company and of the Group during the past fiscal year
Results of the business activity of the Company and of the Group
Progress achieved or difficulties encountered
Research and development activities
Foreseeable evolution of the situation of the Company and the Group and future prospects
Important events occurred since the end of the fiscal year
Objective and exhaustive analysis of the evolution of business, results and financial situation of the Company
and of the Group
Key indicators of financial and extra-financial performance
Key risks and uncertainties
Objectives, policy of coverage and exposure of the Company to risks
Injunctions or monetary penalties for anti-competitive practices
Social and environmental impact of the business activity
Description and management of environmental and climatic risks
Internal control and risk management procedures established by the Company
Vigilance Plan
Subsidiaries and holdings
List of subsidiaries and holdings
Significant participation or control in companies headquartered in France
Information on share capital
Structure and evolution of the share capital
State of employee participation in the share capital
Crossing of legal thresholds declared to the Company
Redemption and transfer by the Company of its own shares
Transactions carried out on the securities of the Company by executives, their relatives and assimilated persons
Other information
Amount of dividends distributed over the last three years
Information on terms of payment for suppliers and customers
Table showing the Company’s results in each of the last five fiscal years
56- 67
56- 67
56- 67
N/A
67
138, 172
56- 67
36- 39
226, 238
139
N/A
235, 236
236, 237
221
173
135
268
271
270
270
218
263
177
176
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8.3.4 Governance Report
RECONCILIATION TABLE FOR THE GOVERNANCE REPORT PURSUANT TO ARTICLES L.225-37-4 ET SEQ. OF THE FRENCH COMMERCIAL CODE
PAGES
Choice of method of exercise of the General Management
190, 214- 216
Reference to a corporate governance Code and application of the “comply or explain” principle
Composition of the Board of Directors, gender equality
Diversity policy applied to directors
List of all mandates and functions exercised in any company by each director during the last fiscal year
Conditions of preparation and organization of the work of the Board of Directors
Limitations on the authority of the Chief Executive Officer
Agreements between a significant shareholder and a subsidiary, related party agreements
Procedure established by the Company to assess the conditions under which agreements are entered into
Compensation policy applicable to corporate officers
Remuneration and benefits of any kind paid during the past fiscal year to each corporate executive officer
Ration between compensation paid to the executive corporate officers and the average compensation received by
Sodexo employees
Conditions governing shareholder’s attendance at Shareholders Meetings
Information that may have an impact in the event of a public offering
Summary table of currently valid delegations concerning share capital increases
Auditors’ Report on the Governance Report
8.3.5 Extra-Financial Performance Declaration (DPEF)
RECONCILIATION TABLE FOR THE EXTRA-FINANCIAL PERFORMANCE DECLARATION PURSUANT TO ARTICLES L.225-102-1 AND R.225-105
OF THE FRENCH COMMERCIAL CODE
I. Value creation Business Model
II. Risk management
1. A description of the main risks related to the company's activity
2. A description of the policies put in place to mitigate and prevent the occurrence of these risks
3. The results of these policies, including key performance indicators
III. Declaration of relevant information related to the main risks/measures mentioned in II
1. Workforce-related data:
a
Employment:
i
total workforce and distribution of employees by gender, age group and
geographical area
ii
new employee hires and dismissals
iii
remuneration and any related changes
b Work organisation:
c
Labour/Management relations:
i
ii
i
working-time organisation
absenteeism
organisation of social dialogue including information procedures,
consultation and negotiation with employees
ii
summary of collective bargaining agreements
217
191- 209
206- 208
193- 203
209- 214
214
219
220
240- 245
246- 252
251
217, 275
217, 269
272
180
PAGES
12, 13
226-239
231-237
231-237
231-237
69, 70
70, 71
18, 19
73
38, 73
73, 74
73, 74
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RECONCILIATION TABLE FOR THE EXTRA-FINANCIAL PERFORMANCE DECLARATION PURSUANT TO ARTICLES L.225-102-1 AND R.225-105
OF THE FRENCH COMMERCIAL CODE
d
Health and safety:
e
Training and education:
i
ii
iii
i
ii
occupational health and safety conditions
summary of collective bargaining agreements signed with trade unions
or workers’ representatives on occupational health and safety
occupational accidents, including accident frequency and severity rates,
and occupational diseases
policies implemented regarding training and education
total number of hours of training
f
Diversity and equal opportunity:
i measures implemented to promote gender equality
ii measures implemented to promote the employment and integration of
disabled people
iii
policy against discrimination
PAGES
46, 73
73, 74
73
50, 72
72
70, 78
74
74
g
Promotion of and compliance with
the core Conventions of the ILO
relative to:
i
ii
freedom of association and the right to collective bargaining
73, 74
non-discrimination in respect of employment and occupation
iii
the elimination of all forms of forced or compulsory labour
iv
the effective abolition of child labour
2. Environmental data:
a
General environmental policy:
i
ii
iii
iv
the Company’s organisational strategy to factor in environmental
issues and, if appropriate, the approaches to auditing/obtaining
certification for environment-related performance
information and training measures for employees regarding
environmental protection
resources allocated to the prevention of environmental risks and
pollution
amount of provisions and guarantees for environmental risks, unless
such information is likely to cause serious harm to the Company in the
event of ongoing litigation
b
Pollution:
i measures of prevention, reduction or repair of discharges into the air,
water and ground, impacting severely the environment
ii
consideration of noise and any other activity-specific pollution
c
Circular economy:
i) Waste prevention and
management:
ii) Sustainable use of resources:
i
ii
i
ii
measures of prevention, recycling, reuse, other forms of recovery and
disposal of waste
actions against food waste
water consumption and water supply adapted to local constraints
consumption of raw materials and measures implemented to improve
efficiency in their use
d
Climate change:
iii
energy consumption and measures implemented to improve energy
efficiency and renewable energy use
iv
land usage
i
significant greenhouse gas emissions items generated as a result of
the Group’s activity, particularly by the use of goods and services they
provide
ii
adaptation to consequences of climate change
e
Protection of biodiversity:
i
measures implemented to protect or develop biodiversity
74
74
74
22-25
50, 72
22, 23
N/A
N/A
N/A
78
52, 78
N/A
76
53, 77
N/A
53 , 77
52, 53, 76, 77,
78
52, 53, 76, 77,
78
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PAGES
26
30
24
RECONCILIATION TABLE FOR THE EXTRA-FINANCIAL PERFORMANCE DECLARATION PURSUANT TO ARTICLES L.225-102-1 AND R.225-105
OF THE FRENCH COMMERCIAL CODE
3. Social data:
a
b
Territorial, economic and social
impact of the Company’s activity:
Relations with stakeholders,
including associations for the
promotion of social integration,
educational institutes,
environmental protection
associations, consumer
associations and local residents:
c
Subcontractors and suppliers:
d
Fair business practices:
i
ii
i
ii
i
ii
i
ii
regarding regional employment and development
on local residents/communities
conditions surrounding dialogue with stakeholders
partnership or sponsorship actions
24, 27, 28
inclusion of social and environmental issues in the Company’s
procurement policy
extent of subcontracting and the importance placed on social and
environmental responsibility in relations with subcontractors and
suppliers
anti-corruption policies and procedures
information on the fight against tax evasion: the actions to prevent tax
evasion
221-223
221-223
74 , 220
221
e
Other actions
i
actions implemented to promote human rights
5, 23, 74, 235
iii measures taken for the health and safety of consumers (food safety)
27, 75, 235
ii
fight for the respect of animal welfare
76
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Published by Sodexo
Photo credits:
Adobe Stock / Yaruniv-Studio, David Levenson, Stephan Julliard, Christian Sprogoe, iStockphoto, Sodexo Media Library.
Photos of the Board of Directors and the Executive Committee:
William Beaucardet, Philippe Castano, A. Peduzzi, J. David, L. Crespi
This document is printed in France by an Imprim’Vert certifi ed printer on PEFC
certifi ed paper produced from sustainably managed forest.
Sodexo
Group Financial Department
255, quai de la Bataille de Stalingrad
92866 Issy-les-Moulineaux Cedex 9
France
Tel.: +33 (0)1 30 85 75 00