CAPGEMINI_REGISTRATION_DOCUMENT_2017

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FINANCIAL INFORMATION

4.1 Analysis of Capgemini Group 2017 consolidated results

Analysis of Capgemini Group 2017 consolidated 4.1 results

General comments on the Group’s activity over{the past year 4.1.1 Capgemini’s{2017 performance reflects the Group’s ability to create value for its customers and capture - in particular - the demand fueled by their Digital transformation agendas, while pursuing its profitable growth journey.

(net) of €180{million in respect of goodwill arising from legal reorganizations. Adjusted for this non-recurring non-cash item, the effective tax rate was also 27.3% in{2016. Net profit (Group share) amounted to €820{million for{2017, compared with €921{million for{2016. Basic earnings per share for fiscal year{2017 are{€4.88{and diluted earnings per share are{€4.76. The Group defines Normalized earnings per share as basic earnings per share adjusted for the items recognized in “Other operating income and expense”, net of tax calculated using the effective tax rate. Normalized earnings per share are €6.22 in{2017, representing a 11% increase on{2016 normalized earnings per share adjusted for the one-off tax profit. Group cash flow from operations improved in{2017: after income tax payments of €139{million (compared with €167{million in{2016) and cash consumed by the change in operating working capital of €63{million (compared with cash generated of €37{million in{2016), net cash from operating activities increased €11{million year-on-year to €1,330{million. Capital expenditures, net of disposals, increased €50{million to €226{million, representing 1.9% of revenues. Net interest paid and received resulted in a cash outflow of €24{million, compared with €72{million in 2016. Organic free cash flow generated by the Group therefore is up year-on-year to €1,080{million, exceeding the €950{million objective set at the beginning of the year. In{2017, Capgemini paid a dividend of €262{million, devoted €176{million to the multi-year share buyback program and spent €238{million, net, on acquisitions. In addition, in the context of the 4 th {employee share ownership plan, the Group spent €360{million under the share buyback agreement to neutralize dilution and received €322{million from the corresponding share capital increase. Overall, the balance sheet structure remained broadly unchanged in{2017. At December{31, 2017 the Group had €1,988{million in cash and cash equivalents (net of bank overdrafts), compared with €1,870{million a year earlier. After accounting for borrowings of €3,372{million, cash management assets and derivative instruments, Group net debt is €1,209{million at the end of{2017, down on €1,413{million at December{31, 2016. Deferred tax assets total €1,283{million at the end of the year. They include €554{million of US tax loss carry-forwards, after taking into account the following changes which had a non-significant net impact on the 2017{tax expense: the impact of the change in the US tax rate, which led to a X decrease in deferred tax assets of €295{million;

The Group generated revenues of €12,792{million in{2017, up 2.0% compared with{2016. Excluding the Brazilian equipment resale business being discontinued, growth is 4.0% at constant exchange rates, above the{3%{target set at the beginning of the year. Organic growth, which also exclude the impact of change in Group scope, stands at{3.6%. The Group continued to transition its business portfolio towards Digital and Cloud offerings at a rapid pace. Business generated by those new client needs grew 24% at constant exchange rates to €4.9{billion and account for 38% of Capgemini’s revenues. Digital and Cloud market has matured and clients are now seeking more extensive roll-out of these innovations, increasing the size of contracts. The global strategic partnership contract signed with McDonald’s, notably to digitalize the customer experience, is a good example. The operating margin is €1,493{million, or 11.7% of revenues, an increase of 4% or 20{basis points year-on-year, in line with annual objectives. Profitability continues to improve, reflecting the Group’s ability to pursue industrialization (rightshore model, standardization of operations, increased automation) while rapidly expanding its innovation businesses. Geographically, this improvement is driven primarily by higher profitability in Europe, combining remarkable Digital and Cloud growth and strong offshoring demand. Other operating income and expenses total €310{million, compared with €292{million in{2016. Higher restructuring costs of €131{million are offset by lower acquisition and integration costs of €38{million. Operating profit totaled €1,183{million, or 9.2% of revenues, compared with €1,148{million in{2016. Financial expenses represent a net charge of €72{million, down from €146{million in 2016. This follows a reduction in interest charge on borrowings following the early redemption of the ORNANE bonds at the end of{2016 and the early unwinding of USD debt hedging instruments in{2017. The Group recorded a tax expense of €303{million in{2017, representing an effective tax rate of 27.3%. This amount includes the net impact of changes in deferred tax assets in the United States, notably resulting from the changes to tax rates under the US tax reform. In{2016, the tax expense was €94{million, following the recognition of non-cash tax income

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REGISTRATION DOCUMENT 2017 — CAPGEMINI