Cap Gemini - Registration Document 2016

4

FINANCIAL INFORMATION

4.2 Consolidated financial statements

Consolidated income statement

Income and expenses are presented in the Consolidated down into the cost of services rendered (corresponding to Income Statement by function. Operating expenses are broken expenses, and general and administrative expenses. costs incurred for the execution of client projects), selling one of the main Group business performance indicators. which are deducted from revenues to obtain operating margin *, These three captions represent ordinary operating expenses Operating profit is obtained by deducting other operating income and expenses from operating margin. Other operating income and expenses include amortization of charge resulting from the deferred recognition of the fair value intangible assets recognized in business combinations, the contributions and employer contributions), and non-recurring of shares granted to employees (including social security negative goodwill, capital gains or losses on disposals of revenues and expenses, notably impairment of goodwill, incurred under a detailed formal plan approved by the Group’s consolidated companies or businesses, restructuring costs conditions of presence in companies acquired and the effects acquired by the Group, including earn-outs relating to management, the cost of acquiring and integrating companies

pension plans. of curtailments, settlements and transfers of defined benefit obtained by taking into account the following items: Profit for the year attributable to owners of the Company is then calculated using the effective interest rate, less income from net finance costs, including net interest on borrowings ◗ cash, cash equivalents and cash management assets; correspond to the impact of remeasuring financial instruments disposal gains and losses and the impairment of investments to fair value when these relate to items of a financial nature, other financial income and expense, which primarily ◗ benefit pension plans, exchange gains and losses on financial in non-consolidated companies, net interest costs on defined miscellaneous financial assets and liabilities calculated using items, and other financial income and expense on current and deferred income tax expense; share of profit of associates; ◗ share of non-controlling interests. ◗ Operating margin, an alternative performance measure monitored by the Group, is (*) defined in Note 3, Alternative performance measures. the effective interest rate; outsourcing contracts (transition and/or transformation costs) However, a portion of costs incurred in the initial phase of relate to future activity on the contract and/or will generate may be deferred when they are specific to a given contract, The related costs are recognized as they are incurred. allocated to work-in-progress and any reimbursement by the future economic benefits, and are recoverable. These costs are client is recorded as a deduction from the costs incurred. revenues, a loss to completion is recognized in the amount of When the projected cost of the contract exceeds contract the difference. Revenues receivable from these contracts are recognized in the and notes receivable” when invoiced to customers and Consolidated Statement of Financial Position under “Accounts from customers and billed in advance are included in current “Accrued income” when they are not yet invoiced. Advances

Revenues Note 6

the nature of the services rendered: The method for recognizing revenues and costs depends on Time and materials contracts a. Revenues and cost of services are recognized as services are rendered. Long-term fixed-price contracts b. contracts, are recognized using the “percentage-of-completion” Revenues, including systems development and integration method. Costs are recognized as they are incurred. Outsourcing contracts c. Revenues from outsourcing agreements are recognized over the term of the contract as the services are rendered.

liabilities.

Group scope and exchange rates and 7.9% at constant exchange rates. Group revenues total €12,539 million (€11,915 million in 2015), representing a year-on-year increase of 5.2%, based on the year-end

182

Registration Document 2016 — Capgemini