Capgemini Se · EURONEXT:CAP
Capgemini — H1 2006 Earnings Presentation
29 slides from Capgemini's earnings presentation, Sep 7, 2006
Slide 1: First Half 2006 results
First Half 2006 results Paris, 7 September 2006
Slide 2: Paul Hermelin
Paul HERMELIN SS SA NTN A od wa COLLABORATIVE BUSINESS EXPERIENCE BUSINESS
Slide 3: H1 highlights: Strong growth and tripled operating margin
H1 highlights: Strong growth and tripled operating margin H1 05 H1 06 Revenues Revenues 3,472 +9% 3,784 Gain Gain market market share share Gross Gross Margin Margin 22.1% +0.9 pt 23% Add Add value value (% (% of of revenues) revenues) Selling Selling expenses expenses 7.9% -0.9 pt 7% Sales Sales ef
Slide 4: How do we perform in a volatile market?
How do we perform in a volatile market? Bookings performance against ’05 achievement by Sector and SBU Bookings Growth Bookings Growth MEuro Perspective MEuro Perspective H1 ‘06 ’06 vs ‘05 H1 ‘06 ’06 vs ‘05 MRD 1,374 +58% NA 377 +25% GOV 1,414 +203% NEA 796 +12% FS 421 +3% CSE 363 +7% TMN 378 +33% F
Slide 5: 2006 priorities on track
2006 priorities on track 1 Confirm North America turnaround 2 Implement MAP initiative • Develop BPO and Application Management • Target divisional margin of 4% in 2006 3 Focus on adding value to clients • Invest in innovation (SOA, 3rd generation ERP, Business Intelligence) and competencies •
Slide 6: North America turnaround confirmed
North America turnaround confirmed 8,0% 6,0% 6,7% 2,8% 4,3% Operating margin 4,0% 2,0% Operating margin 0,0% H1 05 H2 05 H1 06 NA -2,0% -0,8% NA CS+TS -4,0% -6,6% -6,0% -8,0% -8,2% -10,0% Semester Book to bill NA CS+TS : 1,33 and more than 250 active clients Gross Margin increase thanks to growt
Slide 7: 2006 guidance well on track
OS 2006 guidance given for end of year is well on track Objectives Restructuring Delivery cost •• 4% 4% Divisional Divisional Margin Margin •• €70m €70m •• Rationalisation Rationalisation for for full full year year •• 15 15 month month payback payback •• Rightshore Rightshore 06 k •• 5% 5% Division
Slide 8: Continuing to deliver against balanced size
Continuing to deliver against balanced size 2005 2006 H1 H2 H1 HMRC - AM Met Police - IM HMRC – IM Large GM - AM Q1 Q2 Q3 Q4 Q1 Q2 Steelcase - ITO Bombardier - BPO Swansea - ITO Astellas - ITO Medium Q1 Q2 Q3 Q4 Q1 Q2 Capita – ITO HMRC – AM HP – AM Zurich – AM Eli Lilly – DDS MDS – DCS Small Trainli
Slide 9: Adding value through innovation and Rightshore
Adding value through innovation and Rightshore Consulting Technology H1 05/H1 06 services services Revenue / head + 5% + 1% Contribution / head + 8% + 4% Training / head + 18% + 12% Innovation Offshore •• Architecture Architecture and and technology technology expertise expertise on on •• 41% 41% of
Slide 10: BPO platform acquisition in India: INDIGO
BPO platform acquisition in India : INDIGO 4000 BPO Seats 3500 Malmo Krakow 1 & 2 Katowice Romania China 2 Toronto e China 1 & bon ack Hong Kong ”b nTM Ope “ BP ne c kbo M” ba nT Dallas Ope “ BP Latin America Adelaide Mumbai X Hub Bangalore X Satellite Asturias Lyon Kolkata X In development INDIGO
Slide 11: Nicolas Dufourcq
Nicolas DUFOURCQ BUSINESS
Slide 12: Strong growth and a three points operating margin improvement
Strong growth and a three points operating margin improvement M€ H1 2005 H2 2005 H1 2006 Revenues 3 472 3 482 3 784 Operating expenses - 3 410 - 3 319 - 3 603 Operating Margin 62 163 181 (% Revenues) 1,8% 4,7% 4,8% Other operating income and expense, net 61 - 72 - 42 Operating Profit 123 91 139 (% R
Slide 13: Strong growth across the board
Strong growth across the board Revenue CS/TS related to mega deals recorded in Outsourcing H1 06 / H2 05 H1 06 / H1 05 Consulting Services 3.1% 4.4% Technology Services 11.2% 11.3% Professional Services 9.2% 10.6% Project & Consulting 9.0% 9.7% Outsourcing Services 10.7% 11.6% TOTAL GROUP 9.7% 10.4%
Slide 14: Operating margin: Outsourcing on track to full year target
Operating margin: Outsourcing on track to full year target H1 05 H2 05 H1 06 Consulting Services 1.8% 7.4% 8.9% Technology Services 3.7% 6.5% 6.4% Professional Services 8.0% 10.2% 8.4% Outsourcing Services - 1.2% 1.5% 2.0% Total Operations (1) 2.3% 5.3% 5.4% Group 1.8% 4.7% 4.8% (1) before headquart
Slide 15: H1 Revenues by geography
H1 Revenues by geography Current Organic Current Sequential Year on Year Sequential Year on Year M€ H1 2005 H2 2005 H1 2006 H1 06 / H2 05 H1 06 / H1 05 H1 06 / H2 05 H1 06 / H1 05 North America 685 668 660 - 1.3% - 3.6% 0.4% - 0.1% Europe & Asia 2 787 2 814 3 124 11.0% 12.1% 11.8% 12.9% of which U.K
Slide 16: North America, UK and Benelux contribute the most to margin improvement
North America, UK and Benelux contribute the most to margin improvement H1 2005 H2 2005 H1 2006 Op. Op. Op. M€ Revenues Margin % Revenues Margin % Revenues Margin % North America 685 -45 -6.6% 668 19 2.8% 660 28 4.3% UK & Ireland 864 28 3.2% 874 39 4.4% 1 040 61 5.9% France 826 28 3.5% 840 16 1.9% 9
Slide 17: North America: CS/TS delivering above expectations
North America: CS/TS delivering above expectations H1 2005 H1 2006 Operating Margin % Operating Margin % Consulting/Technology Svs - 8.2% 6.7% Sogeti US 9.0% 11.8% Outsourcing Services - 8.2% 0.1% Total North America - 6.6% 4.3% First half 2006 Results 16
Slide 18: France: high dilution from Outsourcing
France: high dilution from Outsourcing H1 2005 H1 2006 Op. Margin % Op. Margin % Consulting / Technology Services 7.2% 7.9% Outsourcing Services - 12.9% -33.3% Local Professional Services 5.1% 4.5% FRANCE TOTAL 3.5% 0.7% First half 2006 Results 17
Slide 19: Costs structure by destination: improving on gross margin and SG&A
Costs structure by destination: improving on gross margin and SG&A M€ H1 2005 H2 2005 H1 2006 Revenues 3 472 3 482 3 784 Cost of services rendered - 2 705 - 2 672 - 2 915 % of Revenues 77.9% 76.7% 77.0% Gross Margin 767 810 869 % of Revenues 22.1% 23.3% 23.0% Selling Expenses - 274 - 250 - 265 % of
Slide 20: Operating expenses by nature: stable cost structure
Operating expenses by nature: stable cost structure H1 2005 H2 2005 H1 2006 Revenues 3 472 3 482 3 784 Personnel costs - 2 147 - 2 028 - 2 223 % of Revenues 61.8% 58.2% 58.7% Purchases and subcontracting expenses -883 - 925 - 987 % of Revenues 25.4% 26.6% 26.1% Travel expenses -160 - 149 - 167 % of
Slide 21: Other operating income & expense: restructuring costs continue to trend down
Other operating income & expense: restructuring costs continue to trend down (M€) H1 2005 H2 2005 FY 2005 H1 2006 Restructuring costs -77 - 87 - 164 - 33 People -26 -57 -83 - 30 Buildings & other -51 -30 - 81 -3 Impairment of goodwill -1 -5 -6 -1 Expenses related to stock options and share grants -4
Slide 22: Net cash evolution
Net cash evolution 1000 2005 2006 900 904 789 800 707 695 663 700 600 532 498 500 438 400 300 285 209 172 200 176 100 54 129 0 Dec Jan Feb Mar Apr May Jun 05 06 Dividends paid in May 2006: 66 M€ First half 2006 Results 21
Slide 23: Very limited cash consumption in H1
Very limited cash consumption in H1 105 -62 -66 -258 161 -66 -33 181 -77 904 789 Net Cash Prior Year Prior Year Working H1 2006 H1 2006 H1 2006 Other Net Cash Dividends as of Bonus Restructuring CAPEX Capital Operating Bonus Depreciation Operational as of paid 1.1.2006 payments payments evolution Ma
Slide 24: Finance expense (net)
Finance expense (net) M€ H1 2005 H1 2006 Interest on convertible bonds -9 - 22 Other interest expenses - 13 - 12 Income from cash and cash equivalents 11 25 Finance costs, net - 11 -9 Other financial income & expense, net 2 - 11 Finance expense, net -9 - 20 First half 2006 Results 23
Slide 25: Income tax expense
Income tax expense M€ H1 2005 H1 2006 France : utilization of tax losses carried forward - 22 - 21 Other re-assessments of deferred tax assets and liabilities -16 -5 Taxes payable on profit - 12 - 17 Taxes not based on taxable income (in H1 2006 mainly USA, Italy) -6 -5 Total income tax expense - 56
Slide 26: Balance sheet
Balance sheet Dec 31, Jun 30, Dec 31, Jun 30, ASSETS 2005 (1) 2006 LIABILITIES 2005 (1) 2006 Goodwill 1 809 1 787 Total equity 2 750 2 916 Other intangible assets 142 132 Long-term financial debt 1 145 1 158 Property, plant & equipment 399 371 Deferred tax 121 124 Deferred tax 828 786 Provisions for
Slide 27: Capital expenditure
Capital expenditure M€ H1 05 H2 05 H1 06 • Intangible fixed assets investments -12 -6 - 9 • Tangible fixed assets investments - 41 - 47 - 26 • Proceeds from disposals of tangible and intangible fixed assets 10 4 2 TOTAL - 43 - 49 - 33 First half 2006 Results 26
Slide 28: Shareholder's equity
Shareholder’s equity M€ Amounts Total equity as of January 1, 2006 2 750 Increase in share capital upon exercise of options 4 Valuation of stock options 6 Dividends paid out for 2005 - 66 Income and expense recognised directly in equity 149 Profit for the period 71 Other changes 2 Total equity as of
Slide 29: First Half 2006 results
First Half 2006 results Paris, 7 September 2006