Capgemini Se · EURONEXT:CAP

Capgemini — FY2007 Earnings Presentation

58 slides from Capgemini's earnings presentation, Feb 14, 2008

  1. Slide 1: 2007 Full Year Financial Results

    Together. Free your energies 2007 Full Year Financial Results Paris, 14 February 2008

  2. Slide 2: 2007: A new step forward in the Group's performance

    2007: A new step forward in the Group’s performance Constant growth in revenues and …leading to a good margin over the past 4 years 2007 performance Revenue +40% +43% 640 (7.4%) 447 440 (5.8%) +50% (5.1%) 293 (3.8%) Revenue (in M€) Operating margin Operating Margin 8.6% 8.6% 2006 2007 Operating marg

  3. Slide 3: All geographies contribute to this success

    All geographies contribute to this success With significant and margins leveling up market share gains and out Group Benelux Germany and Central Europe Nordic North * America UK and Ireland Germany UK & France NA Benelux Iberia Italy Nordic Asia Central Ireland Pacific Europe Iberia Operational marg

  4. Slide 4: Our Rightshore strategy: on-track in 2007

    Our Rightshore strategy: on-track in 2007 Offshore X8 over the last 4 years 83 500 Total offshore 20 000 + 120% (+64% organic) 67 900 India 17 000 + 143% (+70% organic) 61 000 20 000 59 300 Poland 2 200 + 40% 9 000 2 600 4 700 + 120% Rest of the world * 800 + 70% 63 500 58 900 Total onshore 63 500 +

  5. Slide 5: One year after Kanbay's acquisition, the FS SBU is a success

    One year after Kanbay’s acquisition, the FS SBU is a success A globally integrated Good operating Promising perspectives operating model performance for 2008 ƒ Successful integration: over ƒ H2 revenues and profit ahead ƒ Good traction across sectors 8,000 people globally with an of expectations • B

  6. Slide 6: A new framework for the Schneider contract

    A new framework for the Schneider contract ƒ Final conditions of ERP system realization and billing ƒ Principle of adjustable prices for ERP system deployment A contractual ƒ Management of global network and IT services in Spain, Portugal model which and Eastern Europe transferred back to Schneider

  7. Slide 7: Other 2007 priorities on-track

    Other 2007 priorities on-track ƒ Excellent year with an increased momentum in H2, especially in Consulting Europe services • + 8.1% Y07/ Y06 • +9.3% H2 07/ H2 06, +6.5% H1 07/ H1 06 ƒ Consulting and Technology services recovered! ƒ Successfull year for Sogeti: +14.8% organic growth North ƒ Outsourci

  8. Slide 8: 2007 Annual Results

    Together. Free your energies 2007 Annual Results Paris, February 08, 14

  9. Slide 9: Income statement: Overview

    Income statement: Overview FY 2007 M€ FY 2006 H1 2007 H2 2007 FY 2007 vs FY 2006 Revenues 7 700 4 397 4 306 8 703 13.0% + 9% in Organic Operating expenses -7 253 -4 128 - 3 935 - 8 063 Operating Margin 447 269 371 640 (% Revenues) 5.8% 6.1% 8.6% 7.4% + 1.6 pts Other operating income & expense, net -

  10. Slide 10: Q4 Revenues by Geography

    Q4 Revenues by Geography Current Organic Year on Year on Current Sequential year Sequential year Q4 07 / Q4 07 / Q4 07 / Q4 07 / M€ Q4 2006 Q3 2007 Q4 2007 Q3 07 Q4 06 Q3 07 Q4 06 North America 343 436 420 -3.6% 22.5% 0.6% 5.2% Europe & Asia 1 692 1 652 1 798 8.8% 6.2% 10.3% 7.3% of which : France 4

  11. Slide 11: Q4 Revenues by Discipline

    Q4 Revenues by Discipline Q4 07 / Q3 07 Q4 07 / Q4 06 Consulting Services 15.7% 11.4% Technology Services 8.8% 6.4% CS / TS 10.1% 7.3% Local Professional Services 11.7% 10.4% CS / TS / LPS 10.5% 8.1% Outsourcing Services 4.5% 4.7% TOTAL GROUP 8.3% 6.9% At constant rates and perimeter | 2007 Full Yea

  12. Slide 12: 2007 Revenues by Geography

    2007 Revenues by Geography Asia Pacific Iberia Italy 1.5% North America 1.2% France 19.8% 3.3% 22.6% Current Organic Year on Year on Current 6.4% 25.6% year year M€ FY 06 FY 07 FY 07 / FY 06 FY 07 / FY 06 Germany & Central 13.4% North America 1 341 1 721 28.3% 9.4% Europe UK 6.2% & Ireland Europe &

  13. Slide 13: 2007 Revenues by Discipline

    2007 Revenues by Discipline FY 2007 Consulting Local Professional Services Services 8.7% 16.2% 38,5% FY 07 / FY 06 36.6% Consulting Services 4,5% Outsourcing Technology Services 11,0% Services Technology Services CS / TS 9,7% Local Professional Services 9,5% CS / TS / LPS 9.7% Outsourcing Services 7

  14. Slide 14: Revenues by Sector

    Revenues by Sector FY 2006 excl. Kanbay Manufacturing, Retail Energy & Utilities & Distribution Financial FY 2007 incl. Kanbay 12,9% Services 29.1% Manufacturing, Retail Energy & Utilities 14,1% & Distribution 6,5% 13,1% 9.5% 27,8% Financial Other 16,9% Services Telecom, 27.9% Media & Networks 9,3%

  15. Slide 15: Headcount Evolution

    Headcount Evolution Headcount as of Dec. 31, 2006 67 889 Recruits (*) 24 814 (*) out of which : 4941 in Sogeti 8134 in India 1305 in Poland Acquisitions / Big Deals (**) 7 569 354 in China 95 in Morocco 19 in Argentina Disposals - 115 (**) out of which : 6833 in Kanbay Layoffs - 1 774 555 SARK Leave

  16. Slide 16: ARVE – Quarterly Evolution by Discipline

    ARVE – Quarterly Evolution by Discipline Consulting Services Technology Services Local Professional Services 90 85 86 86 84 85 84 85 85 80 81 81 80 80 80 80 80 78 70 69 69 70 68 67 67 66 67 60 50 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2006 2007 2006 2007 2006 2007 At

  17. Slide 17: Charge-Out Rate – Quarterly Evolution

    Charge-Out Rate – Quarterly Evolution 1480 Consulting Services 1380 1280 1222 1193 1215 1186 1202 1181 1188 1189 1180 700 1080 Technology Services 980 600 538 529 2006 2007 514 498 500 550 Local Professional Services 400 469 466 2007 446 453 462 450 436 440 424 350 2006 2007 At constant rates and pe

  18. Slide 18: Operating Margin by Discipline

    Operating Margin by Discipline FY 2006 H1 2007 H2 2007 FY 2007 Consulting Services 10.1% 8.1% 13.0% 10.5% Technology Services 7.5% 7.7% 10.2% 8.9% Local Professional Services 9.8% 9.6% 14.3% 12.0% CS / TS / LPS 8.6% 8.2% 10.7% 9.9% Outsourcing Services 3.1% 4.5% 4.9% 4.7% Total Operations (1) 6.4% 6

  19. Slide 19: Operating Margin by Geography

    Operating Margin by Geography FY 2006 H1 2007 H2 2007 FY 2007 Op. Op. Op. Op. M€ Revenues Margin % Revenues Margin % Revenues Margin % Revenues Margin % North America 1 341 72 5.4% 865 47 5.4% 855 65 7.6% 1 721 111 6.5% UK & Ireland 2 126 164 7.7% 1 174 78 6.7% 1 056 74 6.9% 2 230 152 6.8% France 1

  20. Slide 20: Operating Margin Analysis

    Operating Margin Analysis Selling G&A At current rates and perimeter Operating Margin 5.8% 6.6% 10.7% M€ FY H1 H2 FY 2006 2007 2007 2007 Revenues 7 700 4 397 4 306 8 703 Cost of services 76.9% Personnel costs -4 336 -2 498 -2 408 -4 906 rendered % of Revenues 56.3% 56.8% 55.9% 56.4% Purchase and sub

  21. Slide 21: 2007 Evolution of Group Remuneration Costs

    2007 Evolution of Group Remuneration Costs ƒ Average salary increase onshore: 3.8% (4% in 06) ƒ Average remuneration increase onshore : -0.6% ƒ Average salary increase offshore: 16% (14% in 06) ƒ Average remuneration increase offshore : +6.4% ƒ Group average remuneration cost evolution: -3.8% In spi

  22. Slide 22: Net Income Analysis

    Net Income Analysis M€ 2006 2007 Operating Margin 447 640 Other operating income & expense, net (113) (147) o.w. Restructuring costs (94) (90) Integration costs - (27) Stock options (17) (22) Finance expense (net) (28) (7) Income tax expense (13) (48) Share in profit of equity-accounted companies -

  23. Slide 23: Balance Sheet

    Balance Sheet Dec. 31, Dec. 31, Dec. 31, Dec. 31, ASSETS 2006 2007 EQUITY & LIABILITIES 2006 2007 Goodwill 1 849 2 577 Total equity 3 697 3 851 Intangible assets 122 171 Long-term financial debt 1 160 1 059 Property, plant & equipment 375 442 Deferred taxes 118 138 Provisions for pensions and other

  24. Slide 24: Net Cash Evolution

    Net Cash Evolution 165 -310 326 -203 -101 -141 640 -152 889 665 Cash net of 2007 2007 Amorti- Payment CAPEX Payment Working Other Cash Net debt 31.12.06 Operating Accrual zation and bonus of Capital operational of Debt (€ 1 632M margin bonus provisions 2006 restruc- evolution cash flow 31.12.2007 re

  25. Slide 25: Capgemini in 2008

    Together. Free your energies Capgemini in 2008 Paris, 14 February 2008

  26. Slide 26: To date, market remains well oriented

    To date, market remains well oriented Strong momentum entering 2008 Bookings (in M€) Book to bill ratio Hot offerings 3740 in CS/TS/LPS (Sogeti) OS CS/TS/Sogeti Infrastructure management 3054 Network +178% 2242 North America 1.09 Integration Services 2071 2004 1779 1972 2151 Infrastruture management

  27. Slide 27: A solid foundation in the Public sector

    A solid foundation in the Public sector With promising Public sector Revenue growth in billion perspectives euros 28.9% 2.5 ƒ Focus on repeatable solutions 2.1 2 2 ƒ Ready for accompanying a growing Rightshore trend from 1.6 our European clients 1.5 20% 1 ƒ Competitive advantages 1 • Solid foundatio

  28. Slide 28: A growing share of revenues in Outsourcing

    A growing share of revenues in Outsourcing Outsourcing services revenues With a strong in billion Euros development strategy 3.5 36,6% ƒ Ensure 2007 momentum on 3 3.2 small and medium deals 3.0 • + 50% growth in 2007 2.5 2.6 30% 2 ƒ Deliver over 15% growth from 2.1 BPO 1.5 1.7 1 ƒ Increase offshore

  29. Slide 29: Close to 2/3 of Group revenues is repeatable business

    Close to 2/3 of Group revenues is repeatable* business GROUP 59% Consulting Services 25% Technology Services 49% 52% Italy 33% Eastern Europe 35% North America 35% Norway 38% Sweden 38% UK 40% Belgium 43% Australia 45% The Netherlands 48% Iberia 60% France 60% Germany 64% Finland 66% Financial Servi

  30. Slide 30: A Good H1/H2 Coverage

    A Good H1/ H2 Coverage* H1 OS (in %) Sogeti WE CEA H2 NA OS FS Sogeti 0% 20% 40% 60% 80% 100% WE CEA NA FS 0% 20% 40% 60% 80% 100% * % of budget covered by firm plus « named likely » revenues | 2007 Full Year Results Together. Free your energies Financial analysts © 2008 Capgemini. All rights reserv

  31. Slide 31: 2008 Management « cockpit »

    2008 Management « cockpit » ƒ We track on a weekly basis utilization at level 1 of the P&L organization of Capgemini (skill centers, branches), and slippage of key opportunities in the funnel ƒ We track on a monthly basis : ƒ utilization of the top of our pyramids ƒ order book at 6 months by skill g

  32. Slide 32: 2008 to boost our agility levers and resilience

    2008 to boost our agility levers and resilience ƒ Implement seamless models ƒ Increase offshore leverage ƒ Develop sales support from India and offshore business development costs Indus- ƒ Accelerate Land and Expand trialization ƒ Reshape pyramids and leverage attrition ƒ Accompany onshore capabilit

  33. Slide 33: Into a flexible and leveraged delivery model

    Into a flexible and leveraged delivery model All Group units moving to leverage further offshore in 2008 74% Penetration : 80% 67% offshore headcount / 60% total headcount 43% 48% 42% 40% 35% 28% X2 21% X2 20% 11%15% 12% 6% 2% 4% 0% A t rth s ti P ica s 2007 2008 Se cial es Sving ce ge CE ice OU No

  34. Slide 34: Our transformation is moving fast

    Our transformation is moving fast Hit parade: Offshore staff increase in 2008 Top 5 staff increase In % Top 5 staff increase 1 France TS 200% 1 BPO Europe 850 2 France OS 150% 2 North America wo OS 600 3 Netherlands TS 130% 3 North America OS 500 4 Benelux OS 100% 4 UK OS 460 5 Sogeti USA 90% 5 Fran

  35. Slide 35: A significant move towards our targeted seamless model

    A significant move towards our targeted seamless model In 2008, almost half of Group revenues will be managed through integrated models FS Other TS TS in North America BPO Sogeti and UK FS 5% OS BPO and IT Outsourcing 51% 49% Integrated P&L 95% Internal Rate Cards At current perimeter 2007 2008 and

  36. Slide 36: Onshore growth will be limited in 2008

    Onshore growth will be limited in 2008 Net staff onshore increase / total net staff increase ƒ Technology Services 18% ƒ Outsourcing Services Onshore decrease ƒ Sogeti 78% Units using integrated P&L models Units using internal rate cards Zoom on ƒ Telecom media France decrease Technology ƒ UK flat 4

  37. Slide 37: The whole Group is transforming…

    The whole Group is transforming… 200% 180% 180% - Billable offshore headcount increase in 2008 - 160% 140% 120% 100% Billable 100% 80% Today : 50 % of deals above € 1M 80% have an offshore component headcounts 60% 40% (excluding public sector) 35% 38% 40% 23% 20% 0% tal ng l Group es t en e eti o rt

  38. Slide 38: The Group invests in restructuring to accelerate its transformation

    The Group invests in restructuring to accelerate its transformation M€ People Sites TOTAL OS (MAP 2008) 34 4 38 CS/TS/LPS (SOGETI) 42 7 49 Acceleration of I³ 9 4 13 2009 actions in NA TOTAL 85 15 100 • Payback: 13 months • Cash Out in 2008: around 50M€ • An additional 25M€ envelope will be spent on

  39. Slide 39: Likely 2008 Scenario

    Likely 2008 Scenario ~ 30 ~ 35 ~ 95 ~ 35 ~ 80 ~ 35 ~ 95 Operating Operating Margin Margin 2007 2008 Staff India staff Increase & Salaries & increase restated at Other pyramid Price Productivity Utilization Bonus and 2008 rates Costs leverage increase pyramid onshore leverage | 2007 Full Year Results

  40. Slide 40: 2008 Capgemini Priorities

    2008 Capgemini Priorities Boost agility with i3 Remain resilient to adapt to market conditions Implement seamless Ensure tight monitoring models Reallocate sales force and increase intimacy Reduce costs linked with strategic accounts to non utilization Bring to market Operate cost structure emerging

  41. Slide 41: Back up

    Back up FY 2007 | 2007 Full Year Results Together. Free your energies Financial analysts © 2008 Capgemini. All rights reserved 41

  42. Slide 42: 2007 Revenues evolution

    2007 Revenues evolution Revenues quarterly evolution in M€ 2400 2214 2218 2183 2200 2088 2035 2000 1915 1869 1881 1800 1600 1400 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 2006 Q2 2006 H1 2006 Q3 2006 Q4 2006 H2 2006 FY 2006 Q1 2007 Q2 2007 H1 2007 Q3 2007 Q4 2007 H2 2007 FY 2007 M€ (Publish

  43. Slide 43: Q4 Revenues by geography

    Q4 Revenues by geography Q4 2006 Asia Pacific Italy Iberia North America 1.3% 1.2% France 3.3% 19,2% Q4 2007 Asia Pacific 23.5% Italy Iberia North America 1.4% 24.7% 1.3% France 6.9% UK 3.6% 18.9% & Ireland 23.9% Germany & 13.6% Central 6.3% Europe 23.4% 6.4% UK Benelux Nordic Countries & Ireland Ge

  44. Slide 44: Q4 Revenues by discipline

    Q4 Revenues by discipline Local Professional Consulting Services Services Q4 2006 16.4% 8.6% Technology Services 38.9% 36.0% Q4 2007 Outsourcing Services Local Consulting Professional Services Services 16,9% 9.0% 38.8% 35.3% Outsourcing Services Technology Services At constant rates and perimeter |

  45. Slide 45: H2 Revenues by geography

    H2 Revenues by geography Current Organic Year on Year on Current Sequential Sequential year year H2 07 / H1 H2 07 / H2 H2 07 / H1 H2 07 / H2 M€ H2 2006 H1 2007 H2 2007 07 06 07 06 North America 681 865 855 -1.1% 25.6% 2.2% 6.5% Europe & Asia 3 235 3 532 3 451 -2.3% 6.7% -1.3% 6.6% of which : UK & Ir

  46. Slide 46: H2 Revenues by geography

    H2 Revenues by geography H2 2006 Asia Pacific Italy Iberia North America 1.4% 1.1% France 3.1% 19.9% H2 2007 Asia Pacific 22.5% Italy Iberia North America 1.5% 26.5% 1.2% 6.9% UK France 3.3% 19.9% & Ireland 13.2% Germany & 5.5% 22.8% Central Europe 6.5% 24.5% UK Benelux Nordic Countries & Ireland 13

  47. Slide 47: H2 Revenues by discipline

    H2 Revenues by discipline Consulting Local Professional Services H2 07 / H1 H2 07 / H2 07 06 Services H2 2006 Consulting Services -0.3% 9.6% 16.0% 8.4% Technology Services -0.4% 7.8% CS / TS -0.4% 8.1% Local Professional 38.1% 2.3% 10.6% Services Outsourcing 37.4% CS / TS / LPS -2.3% 8.7% Services O

  48. Slide 48: Full year revenues by geography

    Full year revenues by geography FY 2006 Asia Pacific Italy Iberia North America 1.2% 1.1% France 3.2% 19.7% FY 2007 Asia Pacific 22.7% Italy Iberia North America 1.5% 26.7% 1.2% 6.7% France UK 3.3% 19.8% & Ireland Germany & 13.1% 22.6% 5.5% Central Europe 25.6% 6.4% UK Benelux Nordic Countries & Ire

  49. Slide 49: Full year revenues by discipline

    Full year revenues by discipline Local Professional Consulting Services Services FY 2006 16.2% 9.0% Technology Services 37.0% 37.8% FY 2007 Local Consulting Outsourcing Professional Services Services Services 16.2% 8.7% 38.5% 36.6% Outsourcing Services Technology Services At constant rates and perim

  50. Slide 50: Headcount by discipline

    Headcount by discipline Dec 07/ Dec 06 Jun 07 Sept 07 Dec 07 Dec 06 M€ Consulting Services 4 709 4 822 4 859 4 958 5.3% Technology Services 25 585 34 890 36 056 36 600 43.1%* *+ Kanbay 14% excl. Outsourcing Services 20 585 22 265 22 800 23 307 13.2% Local Professional Services 16 759 17 744 17 985 1

  51. Slide 51: Headcount by Geography

    Headcount by Geography NORTH AMERICA : TOTAL GROUP: NORDIC : • Opening: 6,441 Opening: 67,889 Closing: 83,508 Δ in P: +15,619 Δ in %: + 23,0 % • Opening: 3,608 • Closing: 8,857 • Closing: 3,942 • Change in Person: +2416 • Change in Person: +334 • Change in %: + 37,5 % • Change in %: +9,2% CENTRAL EU

  52. Slide 52: Income Statement by destination

    Income Statement by destination M€ FY 2006 H1 2007 H2 2007 FY 2007 Revenues 7 700 4 397 4 306 8 703 Cost of services rendered -5 920 -3 334 -3 184 -6 518 % of Revenues 76.9% 75.8% 73.9% 74.9% Gross margin 1 780 1 063 1 122 2 185 % of Revenues 23.1% 24.2% 26.1% 25.1% Selling expenses -508 -299 -308 -

  53. Slide 53: Other Operating Income and Expense

    Other Operating Income and Expense M€ FY 2006 H1 2007 H2 2007 FY 2007 Restructuring costs (94) (22) (68) (90) People (67) (8) (56) (64) Transition to Offshore (11) (4) (9) (13) Buildings (16) (10) (3) (13) Integration costs (8) (19) (27) Expenses related to stock options and share grants (17) (10) (

  54. Slide 54: Finance expense

    Finance expense M€ FY 2006 FY 2007 Interest on convertible bonds (43) (44) Other interest expense (24) (26) Income from cash and cash equivalents 57 66 Finance costs, net (10) (4) Other financial income & expense, net (18) (3) Finance expense, net (28) (7) | 2007 Full Year Results Together. Free you

  55. Slide 55: Income tax

    Income tax M€ FY 2006 FY 2007 Current income taxes Taxes payable on profit (39) (68) Taxes not based on taxable income (10) (10) Deferred income taxes Tax loss carry forwards • France Utilization of deferred tax assets on tax loss carry-forwards (43) (58) Reassessment of deferred tax assets on tax l

  56. Slide 56: Capex

    Capex FY 2007 Other Tangible FY 2006 M€ intangible assets Total assets December 31, n-1 122 375 497 541 Acquisitions 39 169 208 161 Disposals (2) (9) (11) (33) Depreciation for the (54) (138) (192) (166) period Perimeter changes & 64 45 109 (4) translation adjustments Other movements 2 2 (2) Decembe

  57. Slide 57: Shareholder's equity

    Shareholder’s equity M€ Total equity as of January 01, 2007 3 697 Dividends paid out for 2006 (101) Valuation of stock options and share grants 22 Increase in share capital upon exercice of options 34 Income and expense recognised directly in equity (240) Of which actuarial gains & losses (84) Of wh

  58. Slide 58: Together. Free your energies www.capgemini.com

    Together. Free your energies www.capgemini.com

Capgemini — FY2007 Earnings Presentation on 6ix