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Florence Lièvre
Tel.: +33 1 47 54 50 71
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Tel.: +33 1 47 54 50 87
vincent.biraud@capgemini.com

Building on excellent 2018 results, Capgemini starts 2019 with confidence

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Revenues of €13,197 million
FY revenue growth of 8.1% at constant exchange rates and 7.8% in Q4
Operating margin rate* of 12.1%, up 20 basis points
Net profit Group share of €730 million
Organic free cash flow* of €1,160 million
Proposed dividend of €1.70 per share

Paris, February 14, 2019 – The Board of Directors of Capgemini SE, chaired by Paul Hermelin, convened in
Paris on February 13, 2019 to review and authorize the issue of the accounts 1 of Capgemini Group for the year
ended December 31, 2018.
Paul Hermelin, Chairman and Chief Executive Officer of Capgemini Group, states: “In 2018, we demonstrated
once again our capacity to improve our profitability while delivering sustained growth. All regions contributed toour solid top-line momentum, which we maintained in the fourth quarter on top of a particularly demanding
comparison basis last year. We reached all the targets we had set for ourselves, including the sales outlook which
was raised during the year.
Today, the Group is well positioned to continue outperforming the market, in pursuit of our two strategic priorities.
First, a more dynamic management of our portfolio of services, which enabled Capgemini to be recognized as aworld leader in digital and cloud. These high-growth areas will soon account for half of our revenues.
And second, aligning our whole organization around the client, providing each of them with the full spectrum of
the Group’s services and working hand in hand to develop and implement their business and technology agendas.
We are confident that our key strengths and solid financial performances will support our success in 2019.”*
1

The terms and Alternative Performance Measures marked with an ( *) are defined and/or reconciled in the appendix to this press release.
Audit procedures on the consolidated financial statements have been completed. The auditors are in the process of issuing their report.

Capgemini Press Release1

2018 KEY FIGURES
2017(restated for
IFRS15)(In millions of euros)

2018

Change+5.4%

12,525

13,197+8.1% at constantexchange rates*

Operating margin*

1,493

1,597

+7%

as a % of revenues

11.9%

12.1%

+20 basis points

1,183

1,251

9.4%

9.5%

Revenues

Operating profit
as a % of revenues
Net profit (Group share)
Basic earnings per share (€)
Normalized earnings per share (€)

*

820

730

4.88

4.37

-10%

6.22

6.06

-3%

2

Organic Free Cash Flow*

1,080

1,160

+80M€

Net cash / (Net debt)(1,209)(1,184)+25M€

In 2018, Capgemini met or exceeded all financial targets set at the beginning of the year. The Group strengthened
its growth profile, while continuing to improve profitability and organic free cash flow* generation.
In 2018, the Group generated revenues of €13,197 million, up 5.4% compared with 2017. Growth is 8.1% atconstant exchange rates*, significantly above the 6% to 7% target communicated at the beginning of the year.
Organic growth* (i.e. excluding the impact of currency fluctuations and changes in Group scope) was 6.2%. Q4growth is 7.8% at constant exchange rates and 5.7% organic.
This momentum continues to be supported by Digital & Cloud activities, which grew over 20% at constantexchange rates and now account for around 45% of the Group.
Bookings totaled €13,393 million in 2018, a 9% increase at constant exchange rates year-on-year.
For 2018, operating margin* was €1,597 million, or 12.1% of revenues, an increase of 7% or 20 basis points
year-on-year, in line with annual objectives. This further improvement in margin illustrates the Group's ability to
combine investments in its talent and its portfolio of sector offerings with profitable growth. It also reflects astronger gross margin, particularly in the second-half of the year. Geographically, continental Europe and theAsia-Pacific and Latin America region are the main contributors to this performance.
Other operating income and expenses rose as expected, to represent a net expense of €346 million comparedwith €310 million in 2017. This comes notably from higher intangible asset amortization charges and themechanical increase in the share grant expense linked to Capgemini share price evolution over the past few
years. In contrast, restructuring costs are down in 2018 (from €131 million in 2017 to €122 million) and thisshould continue in 2019, settling at around €80 million.
Operating profit totaled €1,251 million, or 9.5% of revenues, compared with €1,183 million, or 9.4% ofrevenues, in 2017.
The net financial expense is €80 million, slightly up on €72 million last year. The income tax expense is up
from €303 million in 2017 to €447 million this year. The effective tax rate (ETR) increased primarily because, as
anticipated, since 2018 the Group does not recognize any new deferred tax assets in the U.S.3. In addition, theGroup recorded a €53 million expense related to the transitional impact of the U.S. tax reform. Adjusted for thisexpense, the ETR increased from 27.3% in 2017 to 33.7%.
Net profit (Group share) amounted to €730 million for 2018, down on €820 million for 2017, due to the higher
tax expense. Basic EPS (earnings per share) is €4.37. Normalized EPS* is €5.74, or €6.06 adjusted for thetransitional tax expense, a level close to that reported in 2017 (-3%).
Organic free cash flow* reached €1,160 million, exceeding the €1,000 million objective set at the beginning of
the year. In 2018, the Group benefited from a €65 million improvement in its working capital requirement thanks
to a 2-day decrease in DSO (Days Sales Outstanding).

2
3

Excluding a €53 million expense recognized in 2018 due to the transitional impact of the tax reform in the U.S.
See details in appendix.

Capgemini Press Release2

In 2018, Capgemini spent a net amount of €461 million on acquisitions and paid €284 million in dividends. Finally,
the Group allocated €464 million to share buybacks, under the multi-year program and to neutralize the dilution
resulting from the 5th employee share ownership plan (which led to a net capital increase of €230 million).
The Board of Directors has decided to recommend at the next Shareholders’ Meeting on May 23, 2019, thepayment of a dividend of €1.70 per share, the same amount as the previous year. The corresponding payout
ratio is 36% of net profit2 (Group share), in line with the Group’s distribution policy.

OUTLOOK
The following outlook takes into account the impact of the application of IFRS 16 from January 1, 2019 on theoperating margin (around +5 basis points) and on the organic free cash flow definition (around -€50 million), as
detailed in the appendix to this press release.
For 2019, the Group targets revenue growth at constant exchange rates of 5.5% to 8.0%, improved profitability
with an operating margin of 12.3% to 12.6% and stronger organic free cash flow - on a comparable basis - ofover €1.1 billion.

OPERATIONS BY MAJOR REGION
North America (32% of Group revenues) was the most dynamic region of the Group in 2018 with a 14.4%
increase in revenue at constant exchange rates. This growth was spurred by investments and acquisitions in
Digital. It was mainly driven by the Consumer Goods & Retail, Financial Services and Manufacturing sectors while
only the Energy & Utilities sector remained lackluster. The operating margin is largely stable year-on-year (-0.05
point), at 13.6%.
Revenues were stable in the United Kingdom and Ireland (12% of Group revenues), increasing +0.1% atconstant exchange rates. The Group nonetheless enjoyed a return to growth in the second-half, in line with theplan set at the beginning of the year. Fueled by demand in the Financial Services and Energy & Utilities sectors,
the private sector reported positive growth while the public sector declined, despite a clear rebound at the endof the year. As expected with the change in business mix and the impact from currencies, the operating margin
contracted, from 16.1% a year earlier to 12.6%.
France (22% of Group revenues) grew 6.4%, with Digital and Cloud driving strong momentum in Application
Services. All major sectors contributed to this growth, which even reached double-digits in the Consumer Goods& Retail and Energy & Utilities sectors. The operating margin improved 110 basis points year-on-year to 11.1%
of revenues.
The Rest of Europe region (27% of Group revenues) reported revenue growth across all major countries,
increasing 6.9% overall at constant exchange rates. Germany and Scandinavia were the main drivers, withgrowth rates nearing double-digits. Momentum was strong in all sectors - except Telecoms, which declined acrossEurope – growing between 5% and 10%. Operating margin rose 80 basis points to 13.0% for the year.
The Asia-Pacific and Latin American region (7% of Group revenues) reported growth of 6.0% at constantexchange rates. Asia-Pacific benefited this year from an acceleration in the Manufacturing sector, while Latin
America delivered both a return to growth and profitability in 2018. Overall, the region’s operating margin
therefore improved significantly, from 10.1% in 2017 to 12.8% this year.

OPERATIONS BY BUSINESS
Consulting Services (6% of Group revenues) reported growth of 37.4% at constant exchange rates. This
reflects not only the key contribution of acquisitions in the reference period, but also strong activity in the main
regions. Digital transformation demand was particularly buoyant in the Financial Services, Manufacturing andRetail sectors. The Group now benefits from the launch of “Capgemini Invent”, which combines its recognizedexpertise in the fields of strategy, technology, data science and creative design to support decision-makers intheir transformation and digital innovation projects. The operating margin stands at 12.9% of revenues, up
160 basis points year-on-year.

Capgemini Press Release3

Technology & Engineering Services (15% of Group revenues) grew 5.0% at constant exchange rates.
Momentum was strong across all Group regions and particularly North America and the United Kingdom. The
operating margin is 13.2%, slightly down from 13.8% in 2017.
Application Services (64% of Group revenues) posted revenue growth of 10.1% at constant exchange rates,
fueled by customer demand for Digital and Cloud. This reflects the strong alignment between the Group’s offerings
and the new needs of clients. France, North America and the Rest of Europe reported the strongest momentum
in 2018. The operating margin rate is 13.6%, up 50 basis points.
Other Managed Services (15% of Group revenues) declined 4.2% at constant exchange rates, mainly impacted
by a slowdown in Business Process Outsourcing. In Infrastructure Services, the first-half of the year was marked
by a contraction in the UK public sector. In the second half of the year, strong growth in cloud integration andorchestration services contained to a large extent the decline in Infrastructure services. Operating margin for
Other Managed Services is 8.7% compared with 9.7% in 2017.

Q4 TRENDS
Group momentum remained strong in Q4. Revenues grew 7.8% year-on-year at constant exchanges rates and5.7% at constant scope and exchange rates, to €3,502 million for the period.
All Group regions contributed to this growth, which neared or exceeded 10% in North America (+11.2% atconstant exchange rates), Asia-Pacific and Latin America (+9.6%) and the United Kingdom & Ireland (+9.0%).
The Rest of Europe region slowed slightly (+4.2%) due to a more demanding comparison basis, while France
maintained a steady pace, reporting revenue growth of 6.5%.
The businesses’ Q3 momentum generally continued in the final quarter, with Application Services growing 9.3%
at constant exchange rates and Consulting Services growing 35.2%. Finally, Other Managed Services continued
to contract (-2.1%), while Technology & Engineering Services were up 3.8%.
Q4 bookings totaled €3,929 million, bringing the book-to-bill ratio to 112% for the quarter.

HEADCOUNTAt December 31, 2018, the Group’s total headcount stood at 211,300, up 5.8% year-on-year, with 122,000
employees in offshore centers (58% of the total headcount). Attrition was up to 22% in 2018.

BALANCE SHEET
Overall, the balance sheet structure remained broadly unchanged in 2018. At December 31, 2018, the Grouphad €2,004 million in cash and cash equivalents, compared with €1,988 million a year earlier. After accounting
for borrowings of €3,357 million, cash management assets and derivative instruments, Group net debt* is€1,184 million at the end of 2018, comparable to the previous year end (€1,209 million).
Moreover, in April 2018, the Group performed a partial repurchase of the bond issue maturing in 2020 and issued
new bonds maturing in 2024 and 2028, extending the average maturity of its bond debt with no significant impact
on its future cash coupon. In July, the Group also repaid at maturity a €500 million bond issued in 2015.

CONFERENCE CALLPaul Hermelin, Chairman and Chief Executive Officer, and Thierry Delaporte and Aiman Ezzat, Chief Operating
Officers, Carole Ferrand, Chief Financial Officer, and Rosemary Stark, Chief Sales Officer, will present this press
release during a conference call in English to be held today at 8.00 a.m. Paris time (CET). You can follow thisconference 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 athttps://investors.capgemini.com/results.

Capgemini Press Release4

CALENDAR
April 25, 2019
May 23, 2019
July 30, 2019

Publication of Q1 2019 revenues
Shareholders’ Meeting
Publication of H1 2019 results

The following dividend payment schedule will be presented to the Shareholders’ Meeting for approval:
June 5, 2019
Ex-dividend date on Euronext Paris
June 7, 2019
Payment of the dividend
DISCLAIMER
This press release may contain forward-looking statements. Such statements may include projections, estimates,
assumptions, statements regarding plans, objectives, intentions and/or expectations with respect to futurefinancial results, events, operations and services and product development, as well as statements, regarding
future performance or events. Forward-looking statements are generally identified by the words “expects”,“anticipates”, “believes”, “intends”, “estimates”, “plans”, “projects”, “may”, “would” “should” or the negatives ofthese terms and similar expressions. Although Capgemini’s management currently believes that the expectations
reflected in such forward-looking statements are reasonable, investors are cautioned that forward-looking
statements are subject to various risks and uncertainties (including, without limitation, risks identified inCapgemini’s Registration Document available on Capgemini’s website), because they relate to future events anddepend on future circumstances that may or may not occur and may be different from those anticipated, manyof which are difficult to predict and generally beyond the control of Capgemini. Actual results and developments
may differ materially from those expressed in, implied by or projected by forward-looking statements. Forwardlooking statements are not intended to and do not give any assurances or comfort as to future events or results.
Other than as required by applicable law, Capgemini does not undertake any obligation to update or revise any
forward-looking statement.
This press release does not contain or constitute an offer of securities for sale or an invitation or inducement toinvest in securities in France, the United States or any other jurisdiction.
About Capgemini
A global leader in consulting, technology services and digital transformation, Capgemini is at the forefront ofinnovation to address the entire breadth of clients’ opportunities in the evolving world of cloud, digital andplatforms. Building on its strong 50-year heritage and deep industry-specific expertise, Capgemini enables
organizations to realize their business ambitions through an array of services from strategy to operations.
Capgemini is driven by the conviction that the business value of technology comes from and through people. It
is a multicultural company of over 200,000 team members in more than 40 countries. The Group reported 2018global revenues of EUR 13.2 billion.
Visit us at www.capgemini.com. People matter, results count.

***

Capgemini Press Release

5

APPENDIX4

DEFINITIONS
Organic growth, or like-for-like growth, in revenues is the growth rate calculated at constant Group scopeand exchange rates. The Group scope and exchange rates used are those for the reported period. Exchange
rates for the reported period are also used to calculate growth at constant exchange rates.
Q4
2018

Year
2018

Organic growth

+5.7%

+6.2%

Changes in Group scope+2.1pt+1.9ptGrowth at constant exchange rates

+7.8%

+8.1%

Reconciliation of growth rates

Exchange rate fluctuations-0.0pt-2.7ptReported growth

+7.8%

+5.4%

Currency impacts on FY revenue are linked to the appreciation of the euro against most other Group invoicing
currencies and primarily the U.S. dollar. This impact is nonetheless negligible at the year end, due to the reversalof U.S. dollar trends in Q4 (5% appreciation against the euro).
Operating margin is one of the Group’s key performance measures. It is defined as the difference between
revenues and operating costs. It is calculated before “Other operating income and expenses” which include
amortization of intangible assets recognized in business combinations, the charge resulting from the deferred
recognition of the fair value of shares granted to employees (including social security contributions and employer
contributions), 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 undera 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, and the effects of curtailments,
settlements and transfers of defined benefit pension plans.
Normalized net profit is equal to profit for the year (Group share) adjusted for the impact of items recognized in“Other operating income and expense”, net of tax calculated using the effective tax rate. Normalized 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 the net interest cost.

APPLICATION OF IFRS 16 AND ADAPTATION OF PERFORMANCE MEASURESWith the entry into effect of the new lease standard, IFRS 16, on January 1, 2019, the Group must apply a new
accounting treatment to all its leases (primarily real estate leases), similar in substance to that currently
applied to finance leases. Essentially, the Group will have to:▪
▪
▪

in its balance sheet: recognize, at January 1, 2019, all lease obligations as a debt in liabilities and thecorresponding right-of-use in assets. This will represent between €750 and €850 million (including the €80
million already recognized in respect of finance leases);in its income statement: recognize, instead of a lease expense, the depreciation of the right-of-use asset
over the lease term in operating expenses and the corresponding interest in finance costs;
in cash flows: recognize the cash outflows as repayments of the lease debt rather than a rental payment.

The Group does not believe this new accounting treatment modifies the operating nature of the majority of its
leases. Accordingly, to ensure the Group's performance measures continue to best reflect its operating
performance, as the distinction between different lease types disappears with the introduction of IFRS 16, theGroup will consider all repayments of lease debt as operating items going forward. Accordingly:▪
▪

organic free cash flow will include repayments of the lease debt (including for finance leases, previously
excluded as recognized in repayments of borrowings, of approximately €50 million in 2018);
Group net debt will exclude all lease debt (including that relating to finance leases of approximately €80
million at the end of 2018).

Elsewhere, the impact of application of IFRS 16 on the 2019 income statement should be generally neutral forthe main performance measures, whose definitions remain unchanged (estimates based on the 2018 accounts):

▪
▪
▪
4

operating margin: slightly positive impact, in the range of 5 basis points;
net profit (Group share): slightly negative impact, in the range of €5 million; andnormalized earnings per share: slightly negative impact, in the range of €0.03 per share.

Note that in the appendix, certain totals may not equal the sum of amounts due to rounding adjustments.

Capgemini Press Release

6

APPLICATION OF IFRS 15
In this press release, the 2017 accounts have been restated for the impact of IFRS 15, applicable from January 1,
2018, to ensure comparability.
The retrospective application of IFRS 15 in 2017 results in a decrease in revenues recognized of €267 million(2.1% of revenues), with no change in euros to the operating margin, net profit, earnings per share or organic
free cash flow.

TAXATIONAs announced on the publication of the 2017 annual accounts (on February 15, 2018), the Group expected a
substantial increase in its effective tax rate from 2018, with no significant cash impact. Until the end of 2017,
the Group was led to recognize non-cash tax income corresponding to the recognition of deferred tax assets in
the United States. Tax loss carry-forwards in the United States were, however, fully recognized in the Group
consolidated financial statements at December 31, 2017. As a result, the Group now no longer recognizes suchtax income as a deduction from its income tax expenses, generating an increase in the Group's reported effective
tax rate.

RESULTS BY REGION
Revenues

Year-on-year growth

2018(In millions ofeuros)

Reported

North America

4,230

+9.2%

United Kingdom and Ireland

1,565

-0.9%

France2,848

Rest of Europe
Asia Pacific and Latin America
TOTAL

Operating margin rate

At constantexchange rates

2017

2018

+14.4%

13.7%

13.6%

+0.1%

16.1%

12.6%

+6.4%

+6.4%

10.0%

11.1%

3,605

+5.6%

+6.9%

12.2%

13.0%

949

-3.3%

+6.0%

10.1%

12.8%

13,197

+5.4%

+8.1%

11.9%

12.1%

RESULTS BY BUSINESSRevenues

Year-on-year growth

Operating margin rate

2018
(In millions ofeuros)

Reported

At constantexchange rates

2017

2018

785

+34.6%+37.4%

11.3%

12.9%

Technology & Engineering Services

1,974

+3.6%

+5.0%

13.8%

13.2%

Application Services

8,393

+7.2%

+10.1%

13.1%

13.6%

Other Managed Services

2,045

-7.4%

-4.2%

9.7%

8.7%

13,197

+5.4%

+8.1%

11.9%

12.1%

Consulting Services

TOTAL

SUMMARY INCOME STATEMENT AND OPERATING MARGIN(In millions of euros)
Revenues
Operating expenses

2017

2018

Change12,525

13,197+5.4%(11,032)(11,600)

Operating margin

1,493

1,597

+7%

as a % of revenues

11.9%

12.1%

+20bp

(310)

(346)

Operating profit

Other operating income and expense

1,183

1,251

+6%

as a % of revenues

9.4%

9.5%

+10bp

Net financial expense

(72)

(80)

Income tax income/(expense)

(303)

(447)

12

6

820

730

(-) Non-controlling interests
Profit for the year, Group share

Capgemini Press Release

-11%

7

NORMALIZED AND DILUTED EARNINGS PER SHARE(In millions of euros)
Average number of shares outstanding
Basic earnings per share (in euros)
Diluted average number of shares outstanding
Diluted earnings per share (in euros)(In millions of euros)
Profit for the year, Group share
Effective tax rate, excluding the transitional tax expense(-) Other operating income and expenses, net of tax
Normalized profit for the year
Average number of shares outstanding
Normalized earnings per share (in euros)

2017

2018

168,057,561

167,088,363

Change4.88

4.37

172,082,122

171,697,335

4.76

4.25

-11%

2017

2018

Change

820

730

27.3%

33.7%

-10%

226

229

1,046

959

168,057,561

167,088,363

6.22

5.74

-8%

The Group recognized an income tax expense of €53 million in 2018 in respect of the transitional impact of the
tax reform in the U.S. This reduced basic EPS and normalized EPS by €0.32 and diluted EPS by €0.31.
Adjusted for this tax expense, normalized EPS for 2018 is €6.06:(In millions of euros)
Normalized earnings per share (in euros)
Transitional tax expense

2017

2018

6.22

5.74

-

Average number of shares outstanding
Impact of the transitional tax expense (in euros)
Normalized earnings per share – excluding the transitional tax expense(in euros)

Change53

168,057,561

167,088,363

-

0.32

6.22

6.06

-3%

CHANGE IN CASH AND CASH EQUIVALENTS AND ORGANIC FREE CASH FLOW
(In millions of euros)
Cash flow from operations
Acquisitions of property, plant and equipment and intangible assets, net of
disposals
Net interest cost
ORGANIC FREE CASH FLOW
Other cash flows from (used in) investing and financing activities
Increase (decrease) in cash and cash equivalents

2017

2018

1,330

1,396

(226)

(229)

(24)

(7)

1,080

1,160

(871)

(1,103)

209

57

(91)

(41)

Opening cash and cash equivalents, net of bank overdraft

1,870

1,988

Closing cash and cash equivalents, net of bank overdraft

1,988

2,004

12/31/17

12/31/18

1,988

2,006

Effect of exchange rate fluctuations

NET DEBT(In millions of euros)
Cash and cash equivalents
Bank overdrafts
Cash and cash equivalents, net of bank overdraft
Cash management assets
Long-term borrowings
Short-term borrowings and bank overdrafts(-) Bank overdrafts
Borrowings, excluding bank overdrafts
Derivative instruments
NET CASH AND CASH EQUIVALENTS / (NET DEBT)

Capgemini Press Release

-

(2)

1,988

2,004

168

183

(2,783)(3,274)

(589)

(83)

-

2

(3,372)(3,355)7(16)(1,209)(1,184)8