Cap Gemini - Registration Document 2016

PRESENTATION OF THE GROUP AND ITS ACTIVITIES

1.7 Risk analysis

Financial risks 1.7.5

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Risk management systems

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 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. 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 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). 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 Equity risk Risk management systems 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 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 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). Counterparty and credit risk Risk factors

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 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 The financial liabilities whose early repayment could expose the Group to liquidity risk correspond mainly to the bonds issued respectively in July 2015 and November 2016, and to some risks related to employee liabilities. 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). Liquidity risk

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Registration Document 2016 — Capgemini