Capgemini Se · EURONEXT:CAP
Capgemini — FY2017 Earnings Presentation
41 slides from Capgemini's earnings presentation, Feb 15, 2018
Slide 1: 2017 Full Year Results
2017 Title of the presentation 2 lines Full Year Results Location, Date, Author Paris – February 15th, 2018
Slide 2: Disclaimer
Disclaimer This presentation may contain forward-looking statements, Such statements may include projections, estimates, assumptions, statements regarding plans, objectives, intentions and/or expectations with respect to future financial results, events, operations and services and product developme
Slide 3: Paul Hermelin
Paul HERMELIN 2017 Full Year Results | February 15th, 2018 © 2018 Capgemini. All rights reserved. © Capgemini 2017. All rights reserved | 3
Slide 4: We deliver on sustained top line performance with strong margin uplift
€12,792m revenues +4.0% constant currency growth Digital & Cloud close to €5b in FY2017, We deliver on sustained 38% of revenues, growing +24% top line performance with We deliver on our main challenge of the year, strong margin uplift bringing back North America to solid growth 11.7% Operating Marg
Slide 5: We are on track with our organic growth ambitions
We are on track with our organic growth ambitions North America Growth above expectation Price pressure in H1 2017 Large digital transformation deals Continental Europe Sustained clients demand across the board Competitive edge leveraging mix of digital & cloud offering and offshoring Ga
Slide 6: We leverage digital technologies to help our clients transform at scale
We leverage digital technologies to help our clients transform at scale Everything digital Cloud becomes the norm Successful C-level engagements Hybrid public/private clouds Great opportunities for application Increasingly larger and more ambitious migration to the cloud transformation engag
Slide 7: Our priorities for 2018
Our priorities for 2018 Passion for Clients Reinforce client intimacy and strategic relation by leveraging our sector expertise Strengthen our status as strategic partner with key clients Portfolio Agility Continue to rotate our portfolio Leverage automation and competitiveness throughout th
Slide 8: Our 2018 objectives
Constant currency Our 2018 objectives 6% to 7% revenue growth 12.0% to Operating margin 12.2% above Organic free cash flow €1b 2017 Full Year Results | February 15th, 2018 © Capgemini 2017. All rights reserved | 8
Slide 9: Thierry Delaporte
Thierry DELAPORTE 2017 Full Year Results | February 15th, 2018 © 2018 Capgemini. All rights reserved. © Capgemini 2017. All rights reserved | 9
Slide 10: LiquidHub is a major boost to our digital strategy
LiquidHub is a major boost to our digital strategy LiquidHub has established a leading position in the strategic field of digital customer engagement. A leading Digital Engagement firm in North America with close relationship with CxOs Core technology partner to large global leaders, helping them to
Slide 11: Rosemary Stark
Rosemary STARK 2017 Full Year Results | February 15th, 2018 © 2018 Capgemini. All rights reserved. © Capgemini 2017. All rights reserved | 11
Slide 12: Capgemini ended 2017 with strong sales momentum
Capgemini ended 2017 with strong sales momentum Bookings Evolution Main Highlights ▐ in EUR billion (at reported rates) Achieved bookings of €12.9B with 1% YoY growth at 3.9 constant currency 3.8 3.4 3.1 3.2 Digital and Cloud bookings increased by more than 20% 3.0 2.8 2.7 Our large accounts g
Slide 13: Q4 & FY 2017 Revenues by Sector
Q4 & FY 2017 Revenues by Sector Telecommunications, Q4 2017 FY 2017 Media & Others Entertainment Constant Currency Energy, 4% Utilities & 7% Financial Year-on-Year Year-on-Year Chemicals 27% Services 11% Financial Services +5.8% +6.4% Energy, Utilities & Chemicals +7.3% +2.6% Manufacturing +11.9% +1
Slide 14: Driving growth with client focus
Driving growth with client focus 50 New multi-year contracts Significant new wins in Digital and Cloud French 1 of world’s Largest bank corporate top 3 Banks in Northern investment American Europe Top US bank supercenter Bank Leading chain European based US global bank restaurant International busin
Slide 15: Aiman Ezzat
Aiman EZZAT 2017 Full Year Results | February 15th, 2018 © 2018 Capgemini. All rights reserved. © Capgemini 2017. All rights reserved | 15
Slide 16: Financial Overview
Financial Overview ▐ in EUR millions FY 2016 FY 2017 Variation Revenues 12,539 12,792 +2.0% Operating expenses -11,099 -11,299 Operating margin 1,440 1,493 +4% (% Revenues) 11.5% 11.7% +0.2pt Constant currency growth +4.0% YoY Other operating income and expenses -292 -310 Operating profit 1,148 1,18
Slide 17: Organic Free Cash Flow Generation
Organic Free Cash Flow Generation ▐ in EUR millions Net debt (end 2017) 1,071 1,080 € 1,209m vs. €1,413m in 2016 (2) 815 668 (1) 496 455 359 164 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 1) Before the €235m exceptional contribution to a UK pension fund 2) After €76m outflow rec
Slide 18: Revenues Quarterly Evolution
Revenues Quarterly Evolution Constant currency growth Q4: +6.2% YoY FY: +4.0% YoY ▐ Revenues in EUR millions 3,334 Year-on-Year 3,263 3,241 3,092 3,165 3,171 3,019 3,046 Q4 2017 FY 2017 Organic + 5.6% + 3.6% Group scope +0.6pt +0.4pt Constant currency + 6.2% + 4.0% currencies -3.5pt -1.6pt Current +
Slide 19: Q4 and FY 2017 Revenues by Main Geography
Q4 and FY 2017 Revenues by Main Geography APAC & LATAM Q4 2017 FY 2016 FY 2017 FY 2017 YoY Revenues Year-on-Year 8% North America Constant Constant UK & Ireland (in €m) (in €m) Reported 13% Currency Currency 31% North America +12.3% 3,800 3,923 +3.2% +5.0% UK & Ireland -15.9% 1,993 1,681 -15.6% -9.6
Slide 20: Q4 and FY 2017 Revenues by Business
Q4 and FY 2017 Revenues by Business Consulting Services Q4 2017 FY 2016 FY 2017 FY 2017 Technology and Engineering YoY Revenues Year-on-Year Services 5% Constant Constant 15% (in €m) (in €m) Reported Currency Currency Consulting Services +19.1% 506 584 +15.4% +14.0% Technology & Engineering +7.8% 1,
Slide 21: Headcount Evolution
Headcount Evolution Headcount Evolution Attrition December 2016 to December 2017 FY 2017 vs. FY 2016 +5,400 +1,200 +3.4% Year-on-Year Attrition FY 2016 FY 2017 variation Consulting Services 19.4% 20.9% +1.5pt Technology and Engineering Services 17.7% 20.2% +2.5pt 193,100 199,700 Application Services
Slide 22: Operating Margin by Geography
Operating Margin by Geography FY 2016 FY 2017 Operating Operating Revenues Revenues Margin Margin (in €m) (in €m) (%) (in €m) (in €m) (%) North America 3,800 587 15.4% 3,923 529 13.5% UK & Ireland 1,993 290 14.6% 1,681 254 15.1% France 2,567 234 9.1% 2,700 267 9.9% Rest of Europe 3,214 339 10.5% 3,4
Slide 23: Operating Margin by Business
Operating Margin by Business FY 2016 FY 2017 Consulting Services 10.7% 11.2% Technology and Engineering Services 12.8% 13.6% Application Services 12.7% 12.9% Other Managed Services 10.0% 9.2% TOTAL 11.5% 11.7% 2017 Full Year Results | February 15th, 2018 © Capgemini 2017. All rights reserved | 23
Slide 24: Operating Margin by Destination
Operating Margin by Destination ▐ in EUR millions FY 2016 FY 2017 Revenues 12,539 12,792 Cost of services rendered -9,183 -9,408 % of revenues -73.3% -73.5% Gross margin 3,356 3,384 % of revenues 26.7% 26.5% Selling Expenses -1,032 -1,019 % of revenues -8.2% -8.0% General & Administrative Expenses -
Slide 25: Net Financial Expense and Income Tax
Net Financial Expense and Income Tax ▐ in EUR millions FY 2016 FY 2017 Interest on bonds -108 -55 Other interest income and expense 4 37 Net interest expense -104 -18 Other financial income & expenses -42 -54 Net financial expense -146 -72 ▐ in EUR millions FY 2016 FY 2017 (1) Income tax -94 -303 Ef
Slide 26: Net Profit Analysis
Net Profit Analysis ▐ in EUR millions FY 2016 FY 2017 Operating margin 1,440 1,493 Other operating income and expenses -292 -310 of which Restructuring costs -103 -131 Amortization of intangible assets acquired through business combinations -68 -65 Acquisition and integration costs -69 -38 Operating
Slide 27: Review of 2017 priorities
Review of 2017 priorities Ramping up on targeted bolt-on acquisitions Maintain discipline around acquisition and integration of targets Valuations within our target range and successful integration based on employee retention Focus on investments to support organic growth Growth above the FY t
Slide 28: 2018 priorities
2018 priorities Solidify mid term growth ambition while accelerating inorganic growth Confirm trajectory to mid term margin ambition Continue to deliver in excess of 1bn Euros of organic free cash flow Maintain balance between return to shareholders and M&A 2017 Full Year Results | February 15th, 20
Slide 29: Appendix
Appendix 2017 Full Year Results | February 15th, 2018 © Capgemini 2017. All rights reserved | 29
Slide 30: Non-GAAP measures
Non-GAAP measures ▐ Organic growth, or like-for-like growth, in revenues is the growth rate calculated at constant Group scope and exchange rates. The Group scope and exchange rates used are those for the published fiscal year. Exchange rates for the published fiscal year are also used to calculate
Slide 31: Net Cash Evolution
Net Cash Evolution Dividend Amortization Other Net Capex, & Debt Operating & working Interest net of Own share FX variation margin Provisions Tax Paid capital paid disposals Others transactions rate diff. & others ▐ in EUR millions - 139 +246 -108 -24 0 - - - -227 -161 -473 -1,209 -1,413 +1,493 -91
Slide 32: Bookings Evolution
Bookings Evolution ▐ Bookings (in EUR million) 3,879 3,801 3,388 3,228 3,128 FY 2017 3,001 Published: -1.1% 2,792 Constant currency: +0.6% 2,700 Book to bill: 1.01 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 ▐ Constant currency growth YOY (in %) +17.6% +24.8% +14.1% +5.4% -3.2% +
Slide 33: Q4 2017 Revenues by Main Geography
Q4 2017 Revenues by Main Geography APAC & LATAM Q4 2016 Q3 2017 Q4 2017 Q4 2017 Sequential Year-on-Year 8% Revenues UK North America (in €m) Constant Constant & 12% Reported Reported Ireland 30% currency currency North America 970 962 1,006 +4.6% +4.9% +3.6% +12.3% UK & Ireland 482 391 396 +1.3% +0.
Slide 34: Q4 2017 Revenues Business
Q4 2017 Revenues Business Consulting Services Technology and Q4 2017 Engineering Services 5% Constant Currency 15% Sequential Year-on-Year Consulting Services +15.8% +19.1% Technology and Engineering Services +13.0% +7.8% 17% Application Services +10.5% +8.9% 63% Other Managed Services +2.9% -6.4% O
Slide 35: H2 2017 Revenues by Main Geography
H2 2017 Revenues by Main Geography APAC & LATAM H2 2016 H1 2017 H2 2017 H2 2017 Sequential Year-on-Year 8% Revenues UK North America (in €m) Constant Constant & Reported Reported Ireland 12% 31% currency currency North America 1,910 1,956 1,967 +0.6% +8.4% +3.0% +9.6% UK & Ireland 945 894 787 -12.1%
Slide 36: Operating Margin Analysis
Operating Margin Analysis ▐ in EUR millions FY 2016 FY 2017 Revenues 12,539 12,792 Personnel costs -7,611 -8,002 % of Revenues -60.7% -62.6% Purchases and subcontracting expenses -2,254 -2,105 % of Revenues -18.0% -16.4% Travel expenses -521 -516 % of Revenues -4.2% -4.0% Rent, facilities and local
Slide 37: Offshore Leverage from 2007 to 2017
Offshore Leverage from 2007 to 2017 56% 57% 54% 47% 44% 40% 37% 35% 31% 28% 24% 13% Dec. 06 Dec. 07 Dec. 08 Dec. 09 Dec. 10 Dec. 11 Dec. 12 Dec. 13 Dec. 14 Dec. 15 Dec. 16 Dec. 17 2017 Full Year Results | February 15th, 2018 © Capgemini 2017. All rights reserved | 37
Slide 38: Utilization Rates
Utilization Rates Technology & Engineering Consulting Services Application Services Services 81% 81% 82% 81% 81% 82% 83% 82% 83% 83% 83% 82% 84% 85% 84% 81% 71% 70% 71% 72% 72% 70% 68% 69% Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
Slide 39: Net Cash Evolution
Net Cash Evolution ▐ in EUR millions FY 2016 FY 2017 Profit for the period 908 808 Goodwill impairment 0 0 Depreciation, amortization and impairment of fixed assets 299 301 Change in provisions -5 -9 Losses on disposals of assets 6 15 Net finance costs 104 18 Income tax expense / (income) 94 303 Oth
Slide 40: Balance Sheet
Balance Sheet ASSETS EQUITY & LIABILITIES ▐ in EUR millions Dec 31, 2016 Dec 31, 2017 ▐ in EUR millions Dec 31, 2016 Dec 31, 2017 Equity(1) 7,272 6,956 Non-controlling interests 13 4 Total equity 7,285 6,960 Goodwill 7,176 6,830 Long-term borrowings 3,287 2,783 Intangible assets 813 681 Deferred tax
Slide 41: About Capgemini
About Capgemini Biraud, Vincent Schmitt, Marine A global leader in consulting, technology services and digital transformation, Head of Investor Relations Senior Investor Relations Manager Capgemini is at the forefront of innovation to address the entire breadth of clients’ vincent.biraud@capgemini.c