Third Quarter 2006 Revenues Paris, November 9, 2006
Third Quarter 2006 RevenuesParis, November 9, 2006
1
2006 Third Quarter Revenues
Revenue evolution by quarter
Q1 2005 Q2 2005 H1 2005 Q3 2005 Q4 2005 H2 2005 FY 2005 Q1 2006 Q2 2006 H1 2006 Q3 2006
1 915 3 784
8.7%
9.0%
1 881
- 1.8%
- 1.9%
12.4%
2.5%
3.3%
8.6%
11.0% 13.5%
Amount in M€ (Published) 1 708 1 764 3 472 1 674 1 808 3 482 6 954 1 869
3.3%
4.3%
9.4%
10.0%
0.3%8.0%
7.4%
- 5,1%
- 4.0%
3.3%
2.3%
Sequential Current Growth
Sequential Organic Growth
Year-on-Year Current Growth
Year-on-Year Organic Growth
Revenue quarterly evolution in M€
1708
1764
1674
1808
18691915 1881
1400
1600
1800
2000
Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06
At constant rates and perimeter
2
2006 Third Quarter Revenues
Q3 06 / Q2 06 Q3 06 / Q3 05Consulting Services - 6.9%
- 4.8%CS / TS - 5.3% 9.9%
- 3.1%- 4.8%
2.6%- 1.9%
5.3%Technology Services 11.4%
Professional Services 8.4%Project & Consulting 9.4%
Outsourcing Services 20.0%TOTAL GROUP 13.5%
Revenue CS/TS related to mega deals recorded in Outsourcing
Discipline view
Q3 06 / Q2 06 Q3 06 / Q3 05Consulting Services - 5.9%
- 1.6%CS / TS - 2.5% 15.0%
- 3.1%- 2.7%- 0.2%- 1.9%
7.3%Technology Services 17.3%
Professional Services 8.4%Project & Consulting 13.3%
Outsourcing Services 13.8%TOTAL GROUP 13.5%At constant rates and perimeter
Revenue CS/TS related to mega deals recorded in CS/TS
3
2006 Third Quarter Revenues
Revenue by disciplineQ3 2005
ConsultingServices11.3%
TechnologyServices33.8%
OutsourcingServices39.0%
ProfessionalServices15.9%
Q3 2006
ConsultingServices10.4%
TechnologyServices33.2%
OutsourcingServices41.2%
ProfessionalServices15.2%
At constant rates and perimeter
4
2006 Third Quarter Revenues
Current OrganicYear on Year Year on YearCurrent Sequential Sequential
Q3 2005 Q2 2006 Q3 2006 Q3 06 / Q2 06 Q3 06 / Q3 05 Q3 06 / Q2 06 Q3 06 / Q3 05
North America 332 334
1 581
U.K. & Ireland 432 556 553 - 0.4% 28.0% - 1.6% 29.2%France 392 434 424 - 2.5% 7.9% - 2.5% 7.9%
Benelux 228 258 250 - 3.1% 9.6% - 3.1% 9.6%Central Europe 113 122 126 3.5% 11.3% 3.7% 10.8%
Nordic 87 108 92 - 15.4% 5.0% - 15.3% 4.5%Iberia 50 65 56 - 13.1% 12.6% - 13.1% 12.6%
Italy 20 22 21 - 5.2% 3.8% - 5.2% 3.8%Asia Pacific 18 16 21 28.6% 14.0% 28.7% 27.9%
TOTAL 1 674 1 915 1 881 - 1.8% 12.4% - 1.9% 13.5%
338 1.3% 1.8% 2.7% 5.4%Europe & Asiaof which
1 342 1 543 - 2.4% 15.0% - 2.8% 15.4%
M€
Revenue evolution – Current & organic growth by geography
5
2006 Third Quarter Revenues
Revenue by geographyQ3 2005
Uk &Ireland25.8%
NorthAmerica19.3%
NordicCountries
5.3%
Central Europe6.9%
France23.7%
South Europe4.2%
AsiaPacific1.0%
Benelux13.8%
Q3 2006
UK & Ireland29.4%
NorthAmerica18.0%
NordicCountries
4.9%
Central Europe6.7%
France22.5%
South Europe4.1%
AsiaPacific1.1%
Benelux13.3%At constant rates and perimeter
6
2006 Third Quarter Revenues
Booking evolution including mega deals
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
4 500
Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06
OutsourcingProject & Consulting
M€
484
2 860
284
1 943
277490
320
1 1171 760
1 078 1 178 929 1 255 1 119 1 226 953 1 274 1 230
329
1 376
At constant rates and perimeter
406
1 117
1 562
4 038
1 213
3 198
1 3961 716
1 273
2 391
2 990
1 7051 523
7
2006 Third Quarter Revenues
Project & Consulting : Bookings in key countries
Q3 2006 Year on YearNORTH AMERICAConsulting Services / Technology Services 177 9.5%
Consulting Services / Technology Services 185 19.5%
Local Professional Services 35 24.0%UK & IRELANDConsulting Services / Technology Services 109 15.4%NETHERLANDSConsulting Services / Technology Services 125 13.0%Local Professional Services 58 22.8%FRANCE
Local Professional Services 151 13.7%
At constant rates and perimeter
8
2006 Third Quarter Revenues
Book to bill ratios Project & Consulting – Q3
Q3 2006 Bookings Revenue BBR
North America 212
905
1 117
180 1.18
Rest of the World 930 0.97
TOTAL 1 110 1.01
At budget rates
9
2006 Third Quarter Revenues
September 2006 Results – Group headcount by geographyNORTH AMERICA GEO:• Opening: 6,351• Closing: 6,275• Change in Person: -76• Change in %: -1,2%
UK & IRELAND GEO:• Opening: 8,826• Closing: 9,023• Change in Person: +197• Change in %: +2.2%
ITALY GEO:• Opening: 1,277• Closing: 1,271• Change in Person: -6• Change in %: -0.5%
IBERIA GEO:• Opening: 4,314• Closing: 4,893• Change in Person: +579• Change in %: +13.4%
FRANCE GEO:• Opening: 19,866• Closing: 20,210• Change in Person: +344• Change in %: +1.7%
BENELUX GEO:• Opening: 8,613• Closing: 8,856• Change in Person: +243• Change in %: +2.8%
ASIA PACIFIC GEO:• Opening: 4,628• Closing: 6,842• Change in Person: +2,214• Change in %: +47.8%
CENTRAL EUROPE GEO:• Opening: 3,732• Closing: 4,538• Change in Person: +806• Change in %: +21.6%
NORDIC GEO:• Opening: 3,429• Closing: 3,530• Change in Person: +101• Change in %: +2.9%
TOTAL GROUP:Opening: 61,036 Closing: 65,438 Δ in P: +4,402 Δ in %: +7.2%
10
2006 Third Quarter Revenues
KPIs by Discipline – ARVE evolution by quarter
50
60
70
80
90
62
67 6665
66
69
66
Q1 Q2 Q3 Q4 Q1 Q2 Q3
807978 79 7979
80
Q1 Q2 Q3 Q4 Q1 Q2 Q3
86 86 85 8685
8685
Q1 Q2 Q3 Q4 Q1 Q2 Q3
Consulting Services Technology Services Professional Services
2005 2006
At constant rates and perimeter – with India
2005 2006 2005 2006
11
2006 Third Quarter Revenues
KPIs by discipline – COR evolution by quarter
300
600
900
1200
1500
1200 118812221257
1201 12051255
Q1 Q2 Q3 Q4 Q1 Q2 Q3
636 622 623 631 615 621 616
Q1 Q2 Q3 Q4 Q1 Q2 Q3
410 415 418 419 422 435 439
Q1 Q2 Q3 Q4 Q1 Q2 Q3
Consulting Services Technology Services Professional Services
At constant rates and perimeter – with India
2005 2006 2005 2006 2005 2006
12
2006 Third Quarter Revenues
KPIs by discipline – COR evolution by quarter
300
600
900
1200
1500
1200 118812221257
1201 12051255
Q1 Q2 Q3 Q4 Q1 Q2 Q3
661 652 662 673 663 677 682
Q1 Q2 Q3 Q4 Q1 Q2 Q3
410 415 418 419 422 435 439
Q1 Q2 Q3 Q4 Q1 Q2 Q3
Consulting Services Technology Services Professional Services
At constant rates and perimeter – without India
2005 2006 2005 2006 2005 2006
Global Outsourcing MAP Update
14
2006 Third Quarter Revenues
Agenda
1. MAP Program – A Reminder
2. 2006 Progress Against Plan
3. Roadmap to the Future
15
2006 Third Quarter Revenues
Significant Growth of OS, as % Capgemini RevenuesFrom 22% in 2001 to 38% in 2005
“Margin Acceleration Program - MAP”
MAP was announced as a top Group priority in Nov ’05
Actions
Rebalance portfolio managementOptimize service lines worldwideRationalize industrial footprintGlobalize shared serviceAlign governance & KPI’s with ambition
Ambition
Drive OS Divisional Margin to 8% (circa 6.5% Operating Margin)Increase proportion of BPO and AM in business mixImprove productivity and cost efficiency
Business Return to be ImprovedOS Operating Margin at -1.2% in H1’05
Imbalanced Business MixPortfolio heavy in lower margin IM; sales growth fuelled by mega-deals
16
2006 Third Quarter Revenues
The levers identified will help OS achieve 8% Divisional Margin
Objective: 8% Divisional Margin, c. 6.5% Operating Margin
Objective: 8% Divisional Margin, c. 6.5% Operating Margin
RevenuesRevenues
ProductionCosts
ProductionCosts
General ExpensesGeneral
Expenses Support FunctionSupport Function 1 – 1.5%1 – 1.5%
Rightshore™Rightshore™
IndustrializationIndustrialization
ProcurementProcurement
RenegotiationRenegotiation
Business MixBusiness Mix
1.5 – 2.0%1.5 – 2.0%
1 – 1.5%1 – 1.5%
1 – 1.5%1 – 1.5%
0.5%0.5%
TBDTBD
LeversLeversMid-termDivisional
Margin Impact
Mid-termDivisional
Margin Impact
Business MixValue-added offerings with industry focusIncreased proportion of high-margin servicesOptimal mix of deal size
RenegotiationRestructured agreements or solutions with select clients, partners and suppliers
ProcurementStrategically sourced procurementLimited number of contractors
IndustrializationConcentrated resources in strategic sitesStreamlined tools, methods and processesIncreased service line productivity
Rightshore™Increased Rightshore™ in new and existing contracts
Support CostsLeveraged regional synergies Simplified operations across geographies
17
2006 Third Quarter Revenues
Guidance for 2006 was clear
Objectives
4% Divisional Margin for full year (c. 2.6% OM)
5% Divisional Margin for second half (c. 3.4% OM)
Restructuring
€70m
90 / 95% Cash
15 month payback
18
2006 Third Quarter Revenues
Agenda
1. MAP Program – A Reminder
2. 2006 Progress Against Plan
3. Roadmap to the Future
19
2006 Third Quarter Revenues
Zoom on OS profitability
H1 05 H2 05 H1 06 FY 06
Excluding Schneider 0.6%
-0.2%
6.0%5.6%
2.7% 3.3%
≤ 7.0%
Including Schneider ≃ 4.0%
Strong margin improvement excluding Schneider
Schneider still a significant drag on profitability
(at divisional margin level)
20
2006 Third Quarter Revenues
Restructuring
€70m On track
90 / 95% Cash 75 / 80% Cash
15 month payback 15 to 16
21
2006 Third Quarter Revenues
2006 MAP initiatives have succeeded in getting us over half of the way in our three year journey to 8% Divisional Margin
Creation of IM remote management center in Poland with 264 seats900 additional positions created in India since beginning ‘06
Mainframe and hardware rationalization in multiple regionsSoftware renegotiation within France and UKContractor price reductions in various countries and large accounts
Successful renegotiation of four service contractsEnding or already exited five service contractsBusiness extension or expansion within to improve overall account margin19/20 of 2005 bottom quartile accounts improved; nine fully profitable
Migration of internal F&A in UK to Rightshore™ location
People restructuring in select countriesClosure of sites in UK and Benelux regions
Objective: 8% Divisional MarginObjective: 8% Divisional Margin
Support FunctionSupport Function 1 – 1.5%1 – 1.5%
Rightshore™Rightshore™ 1.5 – 2%1.5 – 2%
IndustrializationIndustrialization 1 – 1.5%1 – 1.5%
ProcurementProcurement 1 – 1.5%1 – 1.5%
RenegotiationRenegotiation 0.5%0.5%
Business MixBusiness Mix TBDTBD
On TrackOn
Track
Achieved2006
Achieved2006
Achieved2006
Achieved2006
Visibility2007
Visibility2007
Visibility2007
Visibility2007
Acquisition of majority stake in Indigo, Unilever’s F&A platform in IndiaNIS outsourced to BTSold French Break/Fix business
LeversLeversMid-termDivisional
Margin Impact
Mid-termDivisional
Margin Impact
22
2006 Third Quarter Revenues
62% Rightshore growth. Onshore to Offshore ratio from 5.0 to 3.2: 1
10000
12000
14000
16000
18000
January 06 December 06 est.
Onshore India Poland China/Spain/Aus.
+3%
+72%
+66%
+24%
2 626 FTE’s
4 262 FTE’s
23
2006 Third Quarter Revenues
Agenda
1. MAP Program – A Reminder
2. 2006 Progress Against Plan
3. Roadmap to the Future
24
2006 Third Quarter Revenues
We successfully completed year one of a three year plan to industrialize our operations
Siterationalization
Deployment of productivity measures
(OAE)
Tool rationalization
RightshoreTM
deployment
Some sites already closed
Strategic sites identifiedConvergence plan
OAE calibration Deployment on pilot sites
Global deployment
Automated measuresBest Practice Deployment
Best PracticeRefinement
Continuous & Incrementalimprovement
Strategic tools identified
RightshoreTM actions already launchedNew targets set
2006 2007 2008 2009Organized convergence & Tactical adjustments
(strategic sites & tactical sites)
Deployment of actions & Tactical adjustments
10 centreclosures
5 centreclosures
2x India33% Others
Full closure of site variance
Strategic 191 to 134Tactical 105 to 54Sunset 47 to 113
25
2006 Third Quarter Revenues
Guidance for 2007
Objectives> 7.5% full year Divisional Margin (approximately 5.5% Operating Margin) excluding Schneider5 - 5.5% full year Divisional Margin including Schneider
Restructuring
€ 35 m
90%-95% Cash
20 month payback
Third Quarter 2006 RevenuesParis, November 9, 2006