Cap Gemini - Registration Document 2016

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FINANCIAL INFORMATION

4.1 Analysis on Capgemini 2016 Group consolidated results

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. 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 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. recorded solid growth while North America was affected by the contraction in demand in the Energy & Utilities sector. 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.

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.

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Registration Document 2016 — Capgemini