The Board of Directors of Cap Gemini S.A. (Paris:CAP) was
convened on July 29, 2009 under the Chairmanship of Serge Kampf to
approve the consolidated financial statements of the Capgemini
Group for the first half of 2009. The Group's key figures for the
period are as follows:
(in millions of euros) First-half First-half
2008 2009
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Revenues 4,374 4,376
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Operating margin(1) 332 287
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as a % of revenues 7.6% 6.6%
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Operating profit(2) 288 167
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Profit for the period 231 78
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Net cash and cash equivalents at June 30 533 576
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The Group reported consolidated revenues of EUR4,376 million for
first-half 2009, virtually identical to first-half 2008. On a
like-for-like basis (constant Group structure and exchange rates),
revenues suffered a modest 2.2% decline in line with forecasts.
Thanks to strong sales momentum and a diverse business portfolio,
the Group proved its resilience in a challenging economic
environment.
Bookings in the first six months of the year represented an
amount of EUR4,433 million, once again mirroring the Group's
first-half 2008 figures (EUR4,497 million). Bookings surged 35% in
Outsourcing, but were down 12% on average in the Group's three
other businesses (Consulting Services, Technology Services and
Local Professional Services), which are more sensitive to changes
in the economic climate. However, the book-to-bill ratio for these
businesses was 1.07.
Operating margin came in at 6.6% of revenues, down one
percentage point on the same year-ago period. The fall in operating
profit was steeper, down to EUR167 million as a result of
restructuring costs incurred in adapting the Group to the changed
economic landscape.
The sharp drop in short-term interest rates narrowed the return
on cash investments. Finance expense, net, came in at EUR39
million, up 160% on first-half 2008 (EUR15 million), while income
tax expense for the period also rose a sharp 19% on the same
year-ago period, to EUR50 million. This weighed heavily on profit
for the period,which slumped to EUR78 million.
In contrast, net cash and cash equivalents came in higher
year-on-year by EUR43 million (EUR576 million versus EUR533 million
at June 30, 2008). Net cash and cash equivalents totaled EUR774
million at December 31, 2008, but naturally declined following the
payment of a EUR1 per share dividend (representing a total dividend
of EUR143 million) approved by the April 30 Shareholders' Meeting.
The Group's financial strength has been reinforced by a new issue
of convertible/exchangeable bonds ("OCEANE"), an early refinancing
of the OCEANE bonds maturing on January 1, 2010 that thereby
extends the maturity of the Group's debt.
Operations by region
-- North America: revenues for the region advanced 3.1% on a
reported basis but shed almost 8% stripping out fluctuations in
the
dollar. Operating margin came in at 5.1% of revenues (5.8%
in
first-half 2008).
-- Europe and Rest of the World: France remains the Group's
largest region. Revenues retreated 4.6%, although it should be
noted
that Technology Services reported revenue growth. The United
Kingdom
and Ireland region, where Outsourcing dominates, delivered
strong
12.7% like-for-like growth. Benelux, where the crisis has
been
particularly severe, saw revenues fall 6.5%, while other
regions
reported a decline of 4.0% on average. Italy and Asia Pacific
turned
in upbeat performances, but elsewhere the gloomy economic mood
weighed
on results. With the exception of Benelux, which nonetheless
posted
respectable profitability levels (7.5% of revenues), all
regions
focused on stemming the decline in their operating margin. In
France
for example, operating margin came in at 4.8% for the period,
down
only 0.2 percentage point on first-half 2008.
Operations by business segment
-- Outsourcing Services delivered 2.6% revenue growth on a
like-for-like basis (constant Group structure and exchange
rates),
fulfilling its role as a stabilizing force among the Group's
businesses. Operating margin performed remarkably well, edging
up
nearly 2 percentage points to 6.5% of revenues.
-- Technology Services saw revenues slip just 2.6% while
profitability was 6.1%.
-- Sogeti, especially sensitive to changes in the economic cycle,
managed to stem the decline in its revenues, which retreated
5.4% on
the back of a sharp industry downturn. Its operating margin was
9.1%.
-- Consulting Services, also vulnerable to changes in the economic
mood, saw revenues slip 13.4%. In contrast, operating margin
remained
in double figures at 10.5% of revenues, thanks to a tight rein
on
operating performance indicators.
Headcount
At June 30, 2009, the Group had 89,453 employees, up 3.4% on
June 30, 2008 but down 2.4% on December 31, 2008. Based mainly in
India, as well as Poland, China, Morocco and Latin America, 28% of
the workforce (25,027 employees) was based offshore, versus 26% one
year earlier. In the second half of 2009, Capgemini's Rightshore®
solutions will be rolled out to Vietnam, with the integration of a
development and maintenance platform staffed by around 100
professionals serving French clients in the insurance sector.
Outlook
During the period, the first signs emerged of a relative
stabilization of activity in some regions. In a few cases, there
were even indications of an upcoming upturn in demand. Out of
prudence, however, the Group expects that Outsourcing will be the
only business to enjoy a relative degree of stability in the six
months to December 31. Its other business should continue to report
a decline in year-on-year revenues, accentuated by the revenue
growth recorded in the year-earlier comparative period. Overall,
the Group's revenues should decline by between 4% and 6% in the
second half on a like-for-like basis (constant Group structure and
exchange rates), resulting in a contraction of 3% to 4% for the
year as a whole. Tighter cost control should however permit the
Group to achieve operating margin of around 7% of revenues.
1 Operating margin, one of the Group's key performance
indicators, is defined as the difference between revenues and
operating expenses. Operating expenses are the sum of the total
cost of services rendered (costs incurred for the execution of
client projects), selling expenses, and general and administrative
expenses.
2 Operating profit includes expenses relating to shares and
stock options granted to certain employees, and non-recurring
income and expenses, notably goodwill impairment, capital gains and
losses on disposals, restructuring costs, the costs of integrating
companies recently acquired by the Group, and the effect of
curtailments and settlements relating to defined benefit pension
plans.