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PRESENTATION OF THE GROUP AND ITS ACTIVITIES
1.7 Risk analysis
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Registration Document 2016 — Capgemini
Financial risks
1.7.5
monitoring and supervision of financial risks and is present in each
country and each business unit.
The Group Finance Department is responsible for the control,
Group to a number of financial risks, described below, which,
depending on their materiality, can have a significant impact on
the results and reputation of the Group.
The variety of its activities and geographic locations exposes the
Equity risk
Risk factors
For the Group, equity risk would consist of unfavorable
movements in the stock market value of listed companies in which
the Group holds investments.
purchase, hold, sell or transfer its own shares or enter into
derivatives on its own shares (see Note 12 to Capgemini’s
consolidated financial statements).
However, the Group does not hold any shares for financial
investment purposes, and does not have any interests in listed
companies. However, under its share buyback program, it may
Risk management systems
prohibits all equity investments. The proper application of this
policy is regularly controlled by internal auditors.
The Cash surplus investment policy defined by the Group Finance
Department and documented in the internal manual (TransForm),
With a few exceptions, the Group holds the entire share capital of
its subsidiaries and does not hold any listed equity investments.
Gemini share price do not impact its results.
Shareholders’ Meeting. In this context, the Board of Directors
decides (with the power of sub-delegation) the implementation of
the share buyback program. The value of these own shares is
deducted directly from Group equity and fluctuations in the Cap
Cap Gemini has a share buyback program authorized by its
Counterparty and credit risk
Risk factors
consolidated financial statements).
Capgemini Group is exposed to credit and counterparty risk in
respect of its asset financial instruments, which depends
particularly on the debtor’s ability to fulfill all or part of its
commitments (see Note 19 and Note 21 to Capgemini’s
financial institutions pursuant to its policy for managing currency
and interest rate risks also expose the Group to credit and
counterparty risk (see Note 23 to Capgemini’s consolidated
financial statements).
Financial assets which could expose the Group to credit or
counterparty risk mainly relate to financial investments and
accounts receivable. The hedging agreements entered into with
Risk management systems
and other types of investment (in particular, negotiable debt
securities, term deposits, capitalization contracts) immediately
available or with investment periods, potentially renewable, not
exceeding 3 months, issued by companies or financial institutions
with a good local credit rating (minimum A2/P2 or equivalent).
The Group also applies maximum concentration per counterparty
rules.
in money market mutual funds (FCP and SICAV) satisfying the
“monetary” classification criteria defined by the
Autorité des
m
archés financiers (
AMF, the French Financial market authority)
The investment policy authorizes the investment of cash surpluses
diversification rules when selecting counterparties for foreign
currency and interest rate management hedging contracts.
The Group abides by similar risk quality/minimum rating and
Liquidity risk
Risk factors
Liquidity risk for the Group could correspond to a temporary or
permanent inability to fulfill all or part of its commitments in respect
of its financial liabilities (including in particular borrowings and
development.
accounts and notes payable) and the inability to find new sources
of financing in order to maintain the balance between revenue and
expenditure. Such a risk would also limit the Group’s ability to
finance its activities and the investment necessary for its
respectively in July 2015 and November 2016, and to some risks
related to employee liabilities.
The financial liabilities whose early repayment could expose the
Group to liquidity risk correspond mainly to the bonds issued
Risk management systems
The majority of Group financing is borne by the parent company
and, as such, implementation of the financial policy is largely
centralized. The Group adopts a prudent financial policy based
primarily on:
contractual provisions that could trigger the early repayment of
borrowings;
prudent use of debt leverage, combined with limiting the grant of
◗
the maintenance of an adequate level of liquidity at all times;
◗
the active management of financial liability maturities, aimed at
limiting the concentration of borrowing maturities;
the diversification of financing sources, to limit reliance on certain
◗
categories of lenders.
In this context, the Company undertook a specific review of its
liquidity risk and considers it is able to meet future scheduled
payments (see Note 21 to Capgemini’s consolidated financial
statements).