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FINANCIAL INFORMATION
4.1 Analysis on Capgemini 2016 Group consolidated results
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Registration Document 2016 — Capgemini
Analysis on Capgemini 2016 Group consolidated
4.1
results
General comments on the Group’s activity over the past year
4.1.1
substantial increase in operating margin and organic free cash
flow which exceeds for the first time the billion euros.
In 2016, Capgemini made further tangible progress in its
operational efficiency and significantly improved its financial
performance. The Group’s strategy, which has been in place for
several years, is based on investment in innovation and
industrialization of its operations, this year again allows for a
On an operating level, the integration of IGATE has been
successfully completed: direct and operational cost synergies are
deployed ahead of initial targets, while strong growth recorded in
IGATE’s major historical customers validates customer value
created through this acquisition. The year 2016 also saw the
acceleration of investments in innovative offerings and automation
initiatives, primarily in the areas of Business Process Outsourcing
(BPO), infrastructure services and application test and
maintenance.
recorded solid growth while North America was affected by the
contraction in demand in the Energy & Utilities sector.
The Group’s portfolio continues to transition toward Digital and
Cloud at a solid pace. Revenues driven by Digital and Cloud
increased by 29% at constant exchange rates in 2016 to
represent 30% of revenues. Geographically, continental Europe
from changes in Group scope mainly arises from the consolidation
of 12-month IGATE revenues in 2016 compared with 6 months in
2015, as IGATE was acquired in July 2015.
The Group generated revenues of €12,539 million in 2016, up
5.2% compared with 2015. Excluding the impact of fluctuations in
Group currencies against the euro growth is 7.9%, in line with the
2016 guidance. Organic growth,
i.e.
excluding the impact of
currencies and changes in Group scope, is 2.6%. The impact
Operating margin amounted to €1,440 million, or 11.5% of
revenues, up 14% year-on-year. This 0.9 point improvement in
profitability reflects the improvement in gross margin generated by
the investments made in the innovation and industrialization of
Group’s operations. The 2016 operating margin is at the top end
of the target range raised during the publication of the half-year
results in July 2016.
increase compared to the €240 million recorded in 2015 is mainly
due to expenses related to the acquisition of IGATE (notably the
Other operating income and expenses total €292 million. The
amortization of intangible assets recognized as part of this
acquisition and the integration costs). Restructuring costs of
€103 million are in line with the envelope set for the year.
The operating profit for 2016 increased to €1,148 million and
9.2% of revenues. Operating margin rate is up 0.6 point
compared with that of 2015.
July 2015 in connection with the financing of the acquisition of
The financial expense is €146 million, up from €118 million
recorded the previous year. This increase is mainly due to the
recognition this year of 12 months of interest on the debt raised in
IGATE.
In respect of income tax for the year 2016, the Group recorded a
tax expense of €94 million compared to a €203 million income in
2015. These amounts include a tax income of €476 million in
2015 following the reassessment of deferred tax assets on tax
loss carry-forwards in the United States and a tax income (net) of
€180 million in 2016 related to goodwill arising from legal
reorganizations. Adjusted for these non-recurring non-cash items,
the effective tax rate is 27.3% in 2016 and 30.1% in 2015.
On this basis, net profit attributable to owners of the Company is
€921 million in 2016, compared with €1,124 million in 2015 and
basic earnings per share for the year ended December 31, 2016 is
€5.44. The Group defines Normalized net profit as the Group
share in net profit for the year adjusted for the impact of items
recognized in “Other operating income and expense”, net of tax
calculated using the effective tax rate. Prior to the recognition of
the one-off tax profits, 2016 normalized net profit is up 14%
year-on-year to €953 million and Normalized earnings per share is
up 16% year-on-year to €5.62.
Organic free cash flow (cash flow from operations less acquisitions
of property, plant, equipment and intangible assets, net of
disposals, and adjusted for flows relating to the net interest cost)
is €1,071 million up 31% compared to 2015. In 2016, Capgemini
paid a dividend of €229 million and devoted €340 million to the
share buyback program.