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First Half 2017: Capgemini confirms its momentum

27 Jul 2017

Paris – The Board of Directors of Capgemini SE chaired by Paul Hermelin, convened in Paris on July 26, 2017 to review and authorise the issue of the accounts2 of Capgemini Group for the 1st half of 2017.

For Paul Hermelin, Chairman and Chief Executive Officer of Capgemini Group: “After starting the year on a solid footing, the momentum accelerated in the second quarter. First-half results are robust, confirming our ability to support our clients’ digital transformation and process industrialisation. Our portfolio’s transition towards Digital and Cloud continues and these activities account for 37% of Q2 revenues. Our automation offerings are also expanding, with 4,000 experts in Robotic Process Automation, cognitive technologies and artificial intelligence.

These results reflect the good alignment between our innovative offerings and growing client demand across all sectors and geographies. Continental Europe is particularly dynamic with double-digit growth in Germany and Italy and solid momentum in France. Growth in North America is recovering as planned and should strengthen by the end of the year.

The acceleration of our growth combined with our operating margin expansion confirms the relevance of our strategy. Following these strong first-half results, we confirm our targets for revenue growth, operating margin and free cash flow for 2017, the year of Capgemini’s 50th anniversary.”


(in millions of euros)H1 2016H1 2017Change
Operating margin*638672+5%
as a % of revenues10.2%10.5%+30bp
Operating profit510538+6%
as a % of revenues8.1%8.4%+30bp
Net profit (Group share)366375+3%
Basic earnings per share (€)2.152.23+4%
Normalised earnings per share * (€)2.52a2.81+12%
Organic free cash flow *3164+33
Net cash and cash equivalents / (Net debt)(2,278)(1,929)
a Excluding exceptional tax income of €32 million

The Group generated revenues of €6,412 million in H1 2017, up 2.5% on H1 2016 reported revenues and 3.0% at constant exchange rates*. Organic growth (i.e. excluding the impact of currency fluctuations and changes in Group scope) was 2.7%. Digital & Cloud revenues grew 23% at constant exchange rates and account for 35% of H1 revenues.

In Q2, Group growth accelerated slightly to reach 3.3% year-on-year at constant exchange rates and 2.9% on an organic basis. Digital & Cloud accounted for 37% of revenues up from 32% in Q1.

Bookings totaled €6,389 million in the first six months of 2017, compared with €6,341 million reported for H1 2016, which benefited from the renewal of a major multi-year contract in the UK public sector.

The operating margin* is €672 million, up 5% on H1 2016. It represents 10.5% of revenues, an increase of 30 basis points year-on-year.

Other operating income and expenses total €134 million, compared with €128 million in H1 2016. Restructuring costs increased to €50 million, while acquisition and integration costs fell to €17 million.

H1 2017 operating profit increased to 8.4% of revenues or €538 million, up 6% year-on-year.

The net financial expense is €28 million, down €34 million year-on-year, following a reduction in Group debt and the gain realised on the early unwinding of currency swaps set up in connection with IGATE acquisition financing.

The income tax expense is €140 million. The €53 million year-on-year increase is mainly due to the recognition of deferred tax income of €32 million in H1 2016.

Net profit (Group share) is €375 million for the first half, up 3% year-on-year. Basic EPS (earnings per share) is €2.23. Normalised EPS* is €2.81, representing a 12% year-on-year increase on H1 2016 EPS adjusted for the one-off tax income.

The Group generated organic free cash flow* of €64 million in H1 2017, an improvement of €33 million on H1 2016. Return to shareholder amounted to €338 million over the period, comprising a dividend payment of €262 million and share buybacks totaling €76 million.

*The terms and non-GAAP measures marked with an (*) are defined and/or reconciled in the appendix to this press release.


For 2017, the Group forecasts revenue growth at constant exchange rates of 3.0%, an operating margin of 11.7% to 11.9% and organic free cash flow generation in excess of €950 million.

In addition:

  • The impact of currency movements on revenues on a full-year basis is now expected to be negative by slightly more than 1 point (compared with a positive but negligible impact expected at the start of the year), following the strengthening of the Euro against the Group’s main currencies;
  • As announced in February 2017, the Group has decided to discontinue its equipment resale activity in Brazil, which represented approximately €60 million in 2016; to ensure comparable analysis of quarterly trends, organic growth and growth at constant exchange rates are presented after removing this activity from 2016 and 2017 revenues;
  • The impact of acquisitions on revenue growth is estimated at this stage to be a few tens of basis points.


Consulting Services (4% of Group revenues) grew 10.7% at constant exchange rates, with strong growth in Continental Europe. The operating margin increased 20 basis points year-on-year to 10.6% of revenues.

Technology & Engineering Services (15% of Group revenues) grew 3.5% in H1, bolstered by strong growth in France and Scandinavia. The operating margin increased 90 basis points year-on-year to 12.2% for the half-year.

Application Services (62% of Group revenues) fully benefit from new demand driven by Digital and Cloud, recording revenue growth of 5.6% at constant exchange rates in the first-half. Growth is approaching or exceeding 10% in many European countries (France, Germany, Sweden, Italy) but also in Asia. The operating margin increased 50 basis points to 11.9%.

Other Managed Services (19% of Group revenues) reported a 6.6% decrease in revenues. This was mainly attributable to Infrastructure Services and reflects notably the anticipated decline in the UK public sector. The operating margin is 7.7% compared with 9.2% in H1 2016.


In H1, as planned, North America (30% of Group revenues) began to restore its growth momentum, reporting a slight increase of 0.4% at constant exchange rates. In this region, the Energy & Utilities sector confirmed its recovery, with a fourth quarter of sequential revenue stability, while the Financial Services and Manufacturing sectors were the most dynamic. The operating margin fell 190 basis points to 13.2%, impacted by strong price pressure on large contract renewals and investments to boost growth in the region.

The United Kingdom and Ireland (14% of Group revenues) reported revenues down 5.9%, reflecting a decline in the public sector in line with our forecast and a healthy private sector (62% of region revenues), particularly in Financial Services and Energy & Utilities. The operating margin increased 60 basis points year-on-year to 15.1%.

France (21% of Group revenues) grew 4.7%, driven by Application Services and Technology & Engineering Services. The Financial Services, Manufacturing and Retail & Consumer Goods sectors were the most dynamic over the period. The operating margin improved 50 basis points year-on-year to 7.1%.

The Rest of Europe (27% of Group revenues) reported revenue growth of 7.9% at constant exchange rates, with all geographies and sectors contributing. The Group reported double-digit growth in Germany and Italy and in the Retail & Consumer Goods and Manufacturing sectors. The operating margin increased 220 basis points to 11.1% for the half-year.

Asia-Pacific and Latin America (8% of Group revenue) grew 11.1% at constant exchange rates. In Asia-Pacific, which now accounts for three-quarters of activity in this region, growth momentum continues to be buoyant, fueled by the Financial Services and Retail & Consumer Goods sectors. Activity in Latin America continues to decline with a challenging economic environment in Brazil. The operating margin increased 220 basis points to 6.0%.

Year-on-year revenue growth accelerated in Q2 to reach 3.3% at constant exchange rates, 50 basis points above Q1. Q2 year-on-year organic growth was 2.9%.

As anticipated, North America returned to growth in Q2 (+1.0% year-on-year at constant exchange rates), while France slowed slightly (+4.1%) with some unfavorable calendar effects. The United Kingdom & Ireland reported slightly improved momentum ( 4.2%), while Brazil slowed further penalising the Asia-Pacific & Latin America region (+9.0%). Finally, the Rest of Europe continued its sustained growth (+8.1%).


At June 30, 2017, the Group’s total headcount exceeded 196,000, an increase of 6% year-on-year, with nearly 112,000 employees in offshore centers (57% of the total headcount compared with 55% at June 30, 2016).


The Group had €1,315 million in cash and cash equivalents (net of bank overdrafts) at June 30, 2017. After including borrowings of €3,472 million, mainly comprising IGATE acquisition financing secured in 2015, cash management assets and derivative instruments, Group net debt* totals €1,929 million at the end of H1 2017, compared with €1,413 million at the end of 2016. The increase in net debt in the first-half is mainly attributable to the dividend payment and the share buyback program.


IFRS 15 on revenue recognition becomes effective on January 1, 2018. The Group has been working with international sector peers and within Syntec Numérique in France on its implementation terms.

The Group can resell hardware, software and services purchased from third-party suppliers to its clients. The new standard amends the principles and indicators determining whether the Group should present these transactions on a gross or net basis (i.e. revenues invoiced to clients are presented net of amounts invoiced by suppliers). Based on preliminary analyses, the Group expects more transactions to be presented on a net revenue basis, resulting in a decrease in revenues estimated to date at around 2%.

The Group will further specify the application impact of this standard when it publishes its 2017 financial statements.


Paul Hermelin, Chairman and Chief Executive Officer, Aiman Ezzat, Chief Financial Officer and Rosemary Stark, Global Sales Officer, will present this press release during a conference call in English to be held today at 8 a.m. Paris time (CET). You can follow this conference call live via webcast at the following link. A replay will also be available for a period of one year.

All documents relating to this publication will be placed online on the Capgemini investor website at


October 25, 2017           Publication of 2017 Q3 revenues

February 15, 2018         Publication of 2017 annual results


Organic growth, or like-for-like growth, in revenues is the growth rate calculated at constant Group scope and exchange rates. The Group scope and exchange rates used are those for the published fiscal year. Exchange rates for the published fiscal year are also used to calculate growth at constant exchange rates.

As announced on the publication of the outlook for 2017, organic growth and growth at constant exchange rates are presented after removing the Brazilian equipment resale activity from 2016 and 2017 revenues, to enable comparable presentation of quarterly trends:

Reconciliation of growth ratesQ2 2017H1 2017
Organic growth+2.9%+2.7%
Changes in Group scope+0.4pt+0.3pt
Growth at constant exchange rates+3.3%+3.0%
Exchange rates fluctuations-0.6pt-0.2pt
Current growth+2.7%+2.8%
Activities being discontinued-0.3pt-0.3pt
Reported growth+2.4%+2.5%

H1 currency impacts primarily concern the depreciation of the pound sterling and the appreciation of the U.S., Canadian and Australian dollars and the Brazilian real. The impact of discontinued operations reflects changes in the Brazilian equipment resale business, which generated revenues of €36 million in H1 2016.

Operating margin is one of the Group’s key performance indicators. It is defined as the difference between revenues and operating expenses. It is calculated before “Other operating income and expenses” which include amortisation of intangible assets recognised in business combinations, the charge resulting from the deferred recognition of the fair value of shares granted to employees, and non-recurring revenues and expenses, notably impairment of goodwill, negative goodwill, capital gains or losses on disposals of consolidated companies or businesses, restructuring costs incurred under a detailed formal plan approved by the Group’s management, the cost of acquiring and integrating companies acquired by the Group, including earn-outs comprising conditions of presence in companies acquired, and the effects of curtailments, settlements and transfers of defined benefit pension plans.

Normalised net profit is equal to profit for the year (Group share) adjusted for the impact of items recognised in “Other operating income and expense”, net of tax calculated using the effective tax rate. Normalised earnings per share is computed like basic earnings per share, i.e. excluding dilution.

Organic free cash flow is equal to cash flow from operations less acquisitions of property, plant, equipment and intangible assets (net of disposals) and adjusted for cash out relating to net interest cost.


RevenuesYear-on-year growthOperating margin rate
H1 2017 (in millions of euros)ReportedAt constant exchange ratesH1 2016H1 2017
North America1,956+3.5%+0.4%15.1%13.2%
United Kingdom and Ireland894-14.7%-5.9%14.5%15.1%
Rest of Europe1,712+7.6%+7.9%8.9%11.1%
Asia Pacific and Latin America518+13.9%+11.1%3.8%6.0%


RevenuesYear-on-year growthOperating margin rate
H1 2017 (in millions of ’euros)ReportedAt constant exchange ratesH1 2016H1 2017
Consulting Services295+11.1%+10.7%10.4%10.6%
Technology & Engineering Services971+3.1%+3.5%11.3%12.2%
Application Services3,944+5.9%+5.6%11.4%11.9%
Other Managed Services1,202-9.2%-6.6%9.2%7.7%


(in millions of euros)H1 2016H1 2017Change
Operating expenses(5,619)(5,740)
Operating margin638672+5%
as a % of revenues10.2%10.5%+30bp
Other operating income and expense(128)(134)
Operating profit510538+6%
as a % of revenues8.1%8.4%+30bp
Net financial expense(62)(28)
Income tax income (expense)(87)(140)
(-) Non-controlling interests55
Profit for the period, Group share366375+3%


(in millions of euros)H1 2016H1 2017
Profit for the year, Group share366375
Weighted average number of shares outstanding170,241,240168,548,476
Basic earnings per share (in euros)2.152.23
Diluted average number of shares outstanding180,184,197172,942,376
Diluted earnings per share (in euros)2.052.17
(in millions of euros)H1 2016H1 2017
Profit for the year, Group share366375
Effective tax rate26.5%27.4%
(-) Other operating income and expenses, net of tax a9597
Normalised profit for the year461472
Weighted average number of shares outstanding170,241,240168,548,476
Normalised earnings per share (in euros)2.712.81
a calculated at the effective tax rate

In H1 2016, the Group recognised exceptional deferred tax income of €32 million, increasing basic earnings per share and normalised earnings per share for the period by €0.19 and diluted earnings per share by €0.18.

Adjusted for this exceptional tax income, Normalised earnings per share for the half year would be 2.52 euros:

(in millions of euros)H1 2016H1 2017
Normalised earnings per share (in euros)2.712.81
(-) Exceptional tax income(32)
Weighted average number of shares outstanding170,241,240168,548,476
(-) impact of exceptional tax income (in euros)(0.19)
Normalised earnings per share (in euros) – excl. exceptional tax income2.522.81


(in millions of euros)H1 2016H1 2017
Cash flow from operations113164
Acquisitions of property, plant, equipment and intangible assets (net of disposals)(74)(113)
Net interest cost(8)13
Organic free cash flow3164
Other cash flows from (used in) investing and financing activities(426)(540)
Increase (decrease) in cash and cash equivalents(395)(476)
Effect of exchange rate fluctuations(66)(79)
Opening cash and cash equivalents, net of bank overdraft1,9481,870
Closing cash and cash equivalents, net of bank overdraft1,4871,315



(in millions of euros)06/30/201612/31/201606/30/2017
Cash and cash equivalents1,4881,8791,319
Bank overdrafts(1)(9)(4)
Cash and cash equivalents, net of bank overdraft1,4871,8701,315
Cash management assets110157207
Long-term borrowings(3,171)(3,287)(3,284)
Short-term borrowings and bank overdrafts(697)(125)(192)
(-) Bank overdrafts194
Borrowings, excluding bank overdrafts(3,867)(3,403)(3,472)
Derivative instruments(8)(37)21