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Capgemini — H1 2008 Earnings Presentation

45 slides from Capgemini's earnings presentation, Jul 31, 2008

  1. Slide 1: 2008 Half Year Financial Results

    Together. Free your energies 2008 Half Year Financial Results Paris, July 31, 2008

  2. Slide 2: A sustained growth momentum

    A sustained growth momentum Solid growth in H1… With an acceleration in Q2 (incl. days effect) H1 08 / H1 07 Consulting + 7.6 % by discipline Technology Services + 4.1 % Q2 08 / Q2 07 Sogeti + 11.4 % Consulting + 11.6 % Outsourcing + 3.2 % (*) Technology Services + 6.3 % Sogeti + 13.9 % GROUP TOTAL

  3. Slide 3: A new step in profitability improvement

    A new step in profitability improvement In every discipline H1 08/ H1 07 Consulting +5.2 pts + 23.4% 332 Technology Services +1.5 pts 269 Sogeti +1.9 pts + 37.5% 231 Outsourcing Services + 0.2 pt 168 GROUP TOTAL +1.5 pts In every geography H1 07 H1 08 H1 08/ H1 07 Operating Margin Net result North A

  4. Slide 4: Solid market demand so far

    Solid market demand so far + 10% Bookings M€ 2130 2159 1961 749 569 462 473 684 1454 1488 1530 1599 1697 1242 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 2008 Outsourcing Consulting / Technology / Local Professional Services Book to bill ratio Europe North America Group and rest of the world 1.26 1.12 1.15 New

  5. Slide 5: Good visibility on Q3

    Good visibility on Q3 Funnel ƒ H2 Qualified funnel evolution + 9.7% (July 08/ July 07) and offerings ƒ Hot offerings • Application services + 52% • Integration services + 20% ƒ Selling more recurring services (*) • H1 booking +14% • H1 qualified funnel +12% ƒ Improving our Government sector footprin

  6. Slide 6: Well managed headcount expansion to boost Group transformation

    Well managed headcount expansion to boost Group transformation 83 500 + 13.8% 86 500 ƒ Focus on the “One Team” model 67 900 +122% 20 000 22 750 implementation with integrated P&L 9 000 ƒ +1,800 headcounts in India in H1 with a strong inflexion in Q2: almost 40 +7.8% +/- 0% recruitments per working d

  7. Slide 7: Offshore penetration on track

    Offshore penetration on track 73% 67% 46% 43% 43% FY 08 35% objective 28% 27% 21% 12% 11% 6% 8% 2% 3% Average 2007 Financial North Outsourcing Central West Sogeti Group Services America Europe (excl. CS) Average H1 2008 Asia Speed of Indian penetration increase Top 5 offshore penetration in June 08

  8. Slide 8: BAS acquisition to strengthen our footprint in outsourcing in the Netherlands

    BAS acquisition to strengthen our footprint in outsourcing in the Netherlands Strong Strategic Fit High Synergies ƒ Strengthen Capgemini’s leadership in ƒ Significantly strengthen position and the Netherlands intimacy on the 20 major BAS clients, especially in Public sector ƒ Leverage Capgemini offs

  9. Slide 9: Still confident for 2008 objectives and getting ready for 09

    Still confident for 2008 objectives and getting ready for 2009 ƒ Boost resilient offers and sales ƒ Optimize utilization ƒ Monitor onshore recruitments ƒ Optimize leverage with onshore transformation ƒ Accelerate support function transformation • Organic Growth: range is narrowed to 4% to 5% • Opera

  10. Slide 10: Income statement: overview

    Income statement: overview H1 2008 H1 2007 H1 2008 vs M€ H1 2007 Revenues 4 397 4 374 -0.5% + 5.3% in Organic Operating expenses -4 128 -4 042 Operating Margin 269 332 (% Revenues) 6.1% 7.6% + 1.5 pts Other operating income & expense -40 -44 Operating profit 229 288 (% Revenues) 5.2% 6.6% + 1.4 pts

  11. Slide 11: Q2 growth by discipline

    Q2 growth by discipline Sequential Year-on-year Q2 08 / Q1 08 Q2 08 / Q2 07 Consulting Services 8.2% 11.6% Technology Services 1.8% 6.3% Local Professional Services 0.1% 13.9% CS / TS / LPS 2.1% 8.9% Outsourcing Services 1.2% 3.6% TOTAL GROUP 1.8% 7.0% At constant rates and perimeter | 2008 Half Yea

  12. Slide 12: Q2 growth by main geographies

    Q2 growth by main geographies Current Organic Year on Year on CURRENT Sequential year Sequential year Q2 08 / Q2 08 / Q2 08 / Q2 08 / M€ Q2 2007 Q1 2008 Q2 2008 Q1 08 Q2 07 Q1 08 Q2 07 North America 444 406 406 0.0% -8.7% 4.1% 4.7% France 486 528 528 -0.1% 8.7% -0.1% 8.8% UK & Ireland 576 506 482 -4

  13. Slide 13: H1 revenues by discipline

    H1 revenues by discipline Consulting Local Professional Services Services 8.4% 17.6% 38.7% Sequential Year on year 35.3% H1 08 / H1 08 / H2 07 H1 07 Technology Consulting Services 7.9% 7.6% Services Technology Services 4.2% 4.1% Outsourcing Local Professional Services 8.9% 11.4% Services CS / TS / L

  14. Slide 14: H1 revenues by main geographies

    H1 revenues by main geographies Rest of Europe North America & Asia 18.5% 20.3% France 24.2% 22.6% CURRENT ORGANIC 14.4% UK & Ireland Year on Year on CURRENT Sequential year Sequential year Benelux H1 08 / H1 08 / H1 08 / H1 08 / M€ H1 2007 H2 2007 H1 2008 H2 07 H1 07 H2 07 H1 07 North America 865 8

  15. Slide 15: H1 revenues by sector

    H1 revenues by sector H1 2007 Manufacturing, Retail & Energy & Utilities Distribution Financial H1 2008 12.6% Services 27.4% Manufacturing, Retail & Energy & Utilities 17.3% Distribution 12.8% 8.7% 7.2% Telecom, 28.1% Financial Media & 26.8% Other 17.6% Services Networks 9.6% 6.2% Other Telecom, Gov

  16. Slide 16: Book-to-bill CS / TS / LPS – H1 2008

    Book-to-bill CS / TS / LPS – H1 2008 Consulting / Technology / Local Professional Services M€ Bookings Revenues BBR North America 607 481 1.26 Rest of the world 2 690 2 394 1.12 TOTAL 3 297 2 875 1.15 At budget rates | 2008 Half Year Results Together. Free your energies Financial analysts © 2008 Cap

  17. Slide 17: H2 2008 revenue coverage

    H2 2008 revenue coverage (*) OS FS SOG CEA NA WE 0% 10% 20% 30% 40% 50% 60,% 70% 80% 90% 100% * % of total revenue covered by firm plus “named likely” revenues | 2008 Half Year Results Together. Free your energies Financial analysts © 2008 Capgemini. All rights reserved 17

  18. Slide 18: Headcount evolution

    Headcount evolution Headcount as of Dec. 31, 2007 83 508 Recruits (*) 11 308 43% Offshore Acquisitions / Big Deals (**) 823 (*) out of which : 2 573 in Sogeti (excl. India) 3 578 in India Disposals - 105 799 in Poland production centers 316 in Argentina Layoffs - 1 259 (**) out of which : 227 Maxeda

  19. Slide 19: Our transformation is moving…

    Our transformation is moving… Hit parade : Offshore staff increase in June 08 TOP 5 staff increase In % TOP 5 staff increase Nbr 1 Benelux OS 190% 1 BPO Europe 800 2 Sogeti 160% 2 North America wo OS 480 3 France TS 120% 3 Sogeti 390 4 Germany TS 115% 4 UK OS 360 5 France OS 100% 5 Benelux OS 270 Sp

  20. Slide 20: Onshore growth is more limited than planned

    Onshore growth is more limited than planned ƒ H1 08 – Net staff onshore increase / total net staff increase • TS : onshore decrease • OS : onshore decrease • PS : 80% • Group : 2% Units using integrated P&L models Units using internal rate cards • Telecom Media France : decrease • UK : decrease • NA

  21. Slide 21: Evolution of Group remuneration costs from H1 07 to H1 08

    Evolution of Group remuneration costs from H1 07 to H1 08 ƒ 2008 Average salary increase onshore : 3.9% ƒ Average remuneration decrease onshore: - 2.1% (incl. currency effects) ƒ 2008 Average salary increase offshore: 8.8% ƒ Average remuneration decrease offshore : - 6.4% (incl. currency effects) ƒ

  22. Slide 22: Utilization rates by discipline

    Utilization rates by discipline Consulting Services Technology Services Local Professional Services 90 84 84 85 85 83 83 80 81 81 81 80 79 80 70 70 69 67 68 67 67 60 50 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 2007 2008 2007 2008 2007 2008 At constant rates and perimeter | 2008 Half Yea

  23. Slide 23: Charge-out rate (at constant rates & perimeter)

    Charge-out rate (at constant rates & perimeter) Consulting Services 540 Technology Services 1200 520 1150 500 480 1100 460 440 1050 1 150 1 158 1 170 1 199 1 196 1 194 420 521 519 487 512 502 500 1000 400 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 2007 2008 2007 2008 480 Local Professional Services 460 440

  24. Slide 24: Operating margin by discipline

    Operating margin by discipline H1 2007 H2 2007 FY 2007 H1 2008 Consulting Services 8.1% 13.0% 10.5% 13.3% Technology Services 7.7% 10.2% 8.9% 9.2% Local Professional Services 9.6% 14.3% 12.0% 11.5% CS / TS / LPS 8.2% 10.7% 9.9% 9.2% Outsourcing Services 4.5% 4.9% 4.7% 4.7% Total Operations (1) 6.8%

  25. Slide 25: Operating margin by main geographies

    Operating margin by main geographies H1 2007 H2 2007 H1 2008 Op. Op. Op. M€ Revenues Margin % Revenues Margin % Revenues Margin % North America 865 47 5.4% 856 64 7.6% 811 47 5.8% France 988 25 2.5% 983 61 6.2% 1 057 53 5.0% UK & Ireland 1 174 78 6.7% 1 056 74 6.9% 988 81 8.2% Benelux 571 82 14.3% 5

  26. Slide 26: Operating margin analysis

    Operating margin analysis Selling G&A At current rates and perimeter Operating Margin 6.1% 6.8% 11.3% M€ H1 2007 H2 2007 H1 2008 Revenues 4 397 4 306 4 374 Cost of services 75.8% Personnel costs -2 498 -2 408 -2 539 rendered % of Revenues 56.8% 55.9% 58.1% Purchase and subcontracting expenses -1 182

  27. Slide 27: Other operating income and expense

    Other operating income and expense M€ H1 2007 H2 2007 FY 2007 H1 2008 Restructuring costs (22) (68) (90) (28) People (8) (56) (64) (20) Transition to Offshore (4) (9) (13) (1) Buildings (10) (3) (13) (7) Integration costs (8) (19) (27) (2) Expenses related to stock options and share grants (10) (12)

  28. Slide 28: Net cash evolution

    Net cash evolution 89 190 -325 -73 332 -64 -24 -255 -116 129 -213 -26 889 643 533 Other working Exchange Payment capital rate Cash Net 2008 2008 Amorti- Payment UK Financial Dividends Cash Net of evolution differences of Debt Operating Bonus zation and Bonus CAPEX Pension debt & treasury Other of De

  29. Slide 29: Finance expense

    Finance expense M€ H1 2007 H1 2008 Interest on convertible bonds (22) (23) Other interest expense (13) (11) Income from cash and cash equivalents 30 35 Finance costs, net (5) 1 Other financial income & expense 2 (16) Finance expense, net (3) (15) | 2008 Half Year Results Together. Free your energies

  30. Slide 30: Income tax

    Income tax M€ H1 2007 H1 2008 Current income taxes Taxes payable on profit (29) (35) Taxes not based on taxable income (6) (7) Deferred income taxes Tax loss carry forwards • France Utilization of deferred tax assets on tax loss carry-forwards (30) (29) Reassessment of deferred tax assets on tax los

  31. Slide 31: Balance sheet

    Balance sheet Dec. 31, June 30, Dec. 31, June 30, ASSETS 2007 2008 EQUITY & LIABILITIES 2007 2008 Goodwill 2 577 2 503 Total equity 3 851 3 850 Intangible assets 171 159 Long-term financial debt 1 059 1 051 Property, plant & equipment 442 432 Deferred taxes 138 138 Provisions for pensions and other

  32. Slide 32: Back up

    Back up H1 2008 | 2008 Half Year Results Together. Free your energies Financial analysts © 2008 Capgemini. All rights reserved 32

  33. Slide 33: 2007-2008 revenues quarterly evolution

    2007-2008 revenues quarterly evolution in M€ 2400 2214 2183 2218 2185 2189 2200 2088 2000 1800 1600 1400 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q1 2007 Q2 2007 H1 2007 Q3 2007 Q4 2007 H2 2007 FY 2007 Q1 2008 Q2 2008 H1 2008 M€ (Published) 2 214 2 183 4 397 2 088 2 218 4 306 8 703 2 185 2 189 4 374 Sequ

  34. Slide 34: Q2 / H1 revenues by discipline

    Q2 / H1 revenues by discipline Local Professional Q2 2008 Services Consulting Services Q2 2007 Local Professional Consulting Services 8.3% Services 16.6% 8.7% 17.6% Technology 36.1% 39.0% Services 34.9% 38.8% Outsourcing Services Technology Services Outsourcing H1 2007 Consulting Services Services H

  35. Slide 35: Q2 revenues by geography

    Q2 revenues by geography Current Organic Year on Year on CURRENT Sequential year Sequential year Q2 08 / Q2 08 / Q2 08 / Q2 08 / M€ Q2 2007 Q1 2008 Q2 2008 Q1 08 Q2 07 Q1 08 Q2 07 North America 444 406 406 0.0% -8.7% 4.1% 4.7% Europe & Asia 1 739 1 779 1 783 0.3% 2.6% 1.3% 7.5% of which : France 486

  36. Slide 36: H1 revenues by geography

    H1 revenues by geography Current Organic Year on Year on Current Sequential Sequential year year H1 08 / H1 08 / H1 08 / H1 08 / M€ H1 2007 H2 2007 H1 2008 H2 07 H1 07 H2 07 H1 07 North America 865 856 811 -5.2% -6.2% 3.3% 5.4% Europe & Asia 3 532 3 450 3 563 3.2% 0.9% 6.4% 5.3% of which : France 98

  37. Slide 37: Q2 / H1 revenues by geography

    Q2 / H1 revenues by geography Q2 2007 Q2 2008 North America Rest of Europe Rest of Europe North America & Asia & Asia 19.5% 20.8% 18.5% 18.9% 23.7% 24.3% UK 22.0% 24.1% & Ireland UK France 14.6% & Ireland 13.6% France Benelux Benelux H1 2007 H1 2008 Rest of Europe North America & Asia North America

  38. Slide 38: Group headcount by discipline

    Group headcount by discipline Jun 08 / Jun 08 / Jun 07 Dec 07 Jun 08 M€ Dec 07 Jun 07 Consulting Services 4 292 4 490 4 458 -0.7% 3.9% Technology Services 34 837 36 231 37 533 3.6% 7.7% Outsourcing Services 22 598 23 594 24 500 3.8% 8.4% Local Professional Services 17 996 18 932 19 737 4.3% 9.7% TOT

  39. Slide 39: Headcount by geography

    Headcount by geography NORTH AMERICA : TOTAL GROUP: NORDIC : • Opening: 8,857 Opening: 83,508 Closing: 86,487 Δ in P: +2,979 Δ in %: + 3,6 % • Opening: 3,942 • Closing: 8,609 • Closing: 4,069 • Change in Person: -248 • Change in Person: +127 • Change in %: -2,8% • Change in %: +3,2% CENTRAL EUROPE :

  40. Slide 40: Operating margin by geography

    Operating margin by geography H1 2007 H2 2007 H1 2008 Op. Op. Op. M€ Revenues Margin % Revenues Margin % Revenues Margin % North America 865 47 5.4% 856 64 7.6% 811 47 5.8% France 988 25 2.5% 983 61 6.2% 1 057 53 5.0% UK & Ireland 1 174 78 6.7% 1 056 74 6.9% 988 81 8.2% Benelux 571 82 14.3% 597 94 1

  41. Slide 41: Cost structure by destination

    Cost structure by destination M€ H1 2007 H2 2007 H1 2008 Revenues 4 397 4 306 4 374 Cost of services rendered - 3 334 -3 184 -3 271 % of Revenues 75.8% 73.9% 74.8% Gross Margin 1 063 1 122 1 103 % of Revenues 24.2% 26.1% 25.2% Selling Expenses - 299 -308 -322 % of Revenues 6.8% 7.2% 7.4% General & a

  42. Slide 42: Evolution of tangible and intangible assets

    Evolution of tangible and intangible assets H1 2008 Other Tangible M€ Intangible Assets Total H1 2007 Assets December 31, n-1 171 442 613 497 • Acquisitions 19 71 90 123 • Disposals (1) (8) (9) (7) • Depreciation for the period (25) (62) (87) (96) • Perimeter changes & translation adjustments (5) (1

  43. Slide 43: Cash situation

    Cash situation In M€ H1 2007 H2 2007 FY 2007 H1 2008 Profit for the period 168 272 440 231 Depreciation, amortization and write downs of fixed assets 96 96 192 87 Net additions to provisions (excl current assets) 17 -44 -27 -22 Gains and losses on disposal of assets 3 2 5 0 Income tax expense 59 -11

  44. Slide 44: Shareholders’ equity

    Shareholders’ equity M€ Total equity as of January 01, 2008 3 851 Dividends paid out for 2007 -143 Valuation of stock options and share grants 11 Treasury shares held under the share buyback program -70 Increase in share capital upon exercice of options 6 Income and expense recognised directly in eq

  45. Slide 45: Together. Free your energies

    Together. Free your energies www.capgemini.com

Capgemini — H1 2008 Earnings Presentation on 6ix