UBS - French Equity Conference

Transcription

1 UBS - French Equity Conference Paul Hermelin, CEO Paris, 27 March 2006

2 In 2005, Capgemini got back into the race 1. Capgemini won market share 2. Capgemini has significantly improved operating performance Organic growth 2005/2004 Q % Q % Q % Q % FY % -1.5% Operating margin % % % 163 H H H H Capgemini returned to profit Operating margin +3,6 pt Net Income +675 ME 4. Capgemini achieved its major goals 1 Consolidate Project & Consulting European recovery 2 Accelerate the North American turnaround 3 Drive sustainable, profitable growth in outsourcing 4 Change gears in Rightshore TM

3 Strong growth & margin improvement M FY 2004 IFRS restated H H FY 2005 FY 2005 vs FY 2004 Operating Revenue Operating expenses Operating Margin (% Op. Revenue) Other operating Income Other operating expense Operating income % % % % %* +3.6 pt Financial Interest Income & Expenses, net Income tax expense Profit/(Loss) for the period Net cash and cash equivalents Number of employees (end of period) , , , , (*)+15% organic 2

4 In 2005, Capgemini won market share Due to our unique position...these clients trusted us in 2005 Versus European competitors Rightshore TM US presence Alliances Versus global Tech competitors Versus Indian Pure Play competitors From consulting to outsourcing & Business Process Outsourcing Transformation capability Front-office Versus other leaders In the sector Collaborative Business Experience decentralization and entrepreneurship Group Le chiffre revenues d affaire are du up groupe +15% progresse de +15% All Toutes our businesses nos activités are sont growing en croissance 3

5 Q4: Current & organic growth by geography Revenues Current Organic North America Q3 05 Q Sequential Year on Year Sequential Year on Year 1.3% 3.2% -1.7% 4.9% Europe & Asia of which : % 8.4% 9.6% 10.8% UK & Ireland 2.2% 17.5% 1.7% 15.6% France 13.7% 12.5% 13.9% 12.5% Benelux 13.7% 9.1% 13.7% 9.1% 259 Central Europe 0.3% -11.7% -0.3% 5.6% 114 Nordic 29.3% -3.9% 29.7% 5.0% 113 Iberia 15.0% 9.7% 15.0% 9.7% 57 Italy 14.0% -9.6% 14.0% -9.6% 23 Asia Pacific -6.4% -23.9% -0.1% -10.3% 17 TOTAL % 7.4% 7.3% 9.6% 4

6 Q4: Growth by discipline Outsourcing is still a growth provider for P&C CS/TS Revenues related to mega deals recorded in Outsourcing Q4 05 / Q3 05 Q4 05 / Q4 04 Consulting Services 13.1% 8.2% Technology Services 10.9% 10.5% Professional Services 11.3% 7.4% Project & Consulting 11.4% 9.2% Outsourcing Services 0.7% 10.4% TOTAL GROUP 7.3% 9.6% CS/TS Revenues related to mega deals reclassified in CS/TS Q4 05 / Q3 05 Q4 05 / Q4 04 Consulting Services 12.7% 7.4% Technology Services 11.4% 23.3% Professional Services 11.3% 7.4% Project & Consulting 11.7% 15.9% Outsourcing Services -1.8% -2.8% TOTAL GROUP 7.3% 9.6% 5

7 In 2005, Capgemini returned to profit Operating Margin 2004 H H Project & Consulting Europe 3.4% (e) 6.3% 8.7% TOTAL US -8.0% -6.6% 2.8% Incl. Consulting & Technology services US -11.9% (e) -8.2% -0.8% Outsourcing -2.0% -1.2% 1.5% Group Operating margin Net Income (M ) -0.4% 1.8% 4.7% European P&C levels of profitability are in line with our peers North America profitable in H Outsourcing on a strong improvement trend, accelerated by MAP

8 2005: Europe P&C close to industry standards even at the operating margin level, CS/TS NA close to breakeven in H2 North America Europe & Row M Consulting / Technology services Outsourcing Sogeti US TOTAL Project & Consulting Outsourcing TOTAL Project & Consulting Revenue H H Op. Margin % Revenue % -8.2% 9.0% -6.6% 6.3% 1.1% 4.5% 4.3% Op. Margin Outsourcing % % Group OPERATIONS % % Corporate TOTAL % % % % % 11.0% 2.8% 8.7% 0.7% 5.9% 7.7% 7

9 All disciplines contribute to margins improvement FY 2004 H H FY 2005 Consulting Services 1.1% 1.8% 7.4% 4.5% Technology Services -2.0% 3.7% 6.5% 5.1% Professional Services 7.8% 8.0% 10.2% 9.1% Project & Consulting 1.1% 4.3% 7.6% 6.0% Outsourcing Services -2.0% -1.2% 1.5% 0.1% TOTAL GROUP -0.4% 1.8% 4.7% 3.2% CS/TS Revenues related to megadeals recorded in Outsourcing 8

10 In 2005, Capgemini achieved its major goals 1 Consolidate Project & Consulting European recovery 1 2 Top performers (Divisional Margin) Sd&M Sogeti Netherlands (%) Best operational swings FR CS+TS NL CS+TS UK CS+TS Norway Finland Denmark Italy Spain +3,7 +4,7 +7,2 +4,6 +5, ,1 +4,7 3 TME C France CS Portugal Sogeti Sweden France TS West Sogeti Belux Netherlands CS/TS Divisional margin 2005 Division margin These businesses have begun a new expansion cycle A few lead indicators point the way forward 9

11 In 2005, Capgemini achieved its major goals 2 Accelerate US turnaround Sales Performance P&C bookings H : + 5% vs. H % vs. H P&C bookings Q : + 10% vs. Q Lower Attrition Headcount : 3,200 in Dec. 05 vs. 2,900 in July 05 Stabilize onshore headcount Double offshore headcount Stabilize attrition rate at around 25% Return to profit US Operating margin : + 2.8% en H vs. - 8% in 2004 TS & CS Operating margin close to breakeven Operating Efficiency Pipeline P&C > $ 1Bn Overruns : - 50% vs % of revenues in Q Turnaround plan has delivered above forecast Turnaround will be confirmed during H

12 In 2005, these clients trust us in North America 11

13 In 2005, Capgemini achieved its major goals 3 Drive sustainable, profitable growth in outsourcing Mega Deals Business Process Outsourcing / Application Mgt / Infrastructure Mgt HMRC TXU Schneider significant additional work 2 millions (+40%) online assessment as of 31/01/06 18 months ahead of schedule 1,400 Rightshore seats Measured client satisfaction (99%) Successful transition (31countries) Global Core System production delayed by 6 months / one year BPO breakthrough in Finance & Administration Rebalanced portfolio (19 new deals between 10-50M) Growth of AM vs. IM Strong commercial drive : GM : 498M Metropolitan Police : 503M Swansea : 91 M Zurich : 41 M Over 15% of outsourcing work mobilizes skills from CS and TS businesses MAP launched to accelerate outsourcing profitability 12

14 In 2005, these clients trusted Capgemini for outsourcing > 250M M 10-50M 13

15 Strong growth & margin improvement M FY 2004 IFRS restated H H FY 2005 FY 2005 vs FY 2004 Operating Revenue Operating expenses Operating Margin (% Op. Revenue) Other operating Income Other operating expense Operating income % % % % %* +3.6 pt Financial Interest Income & Expenses, net Income tax expense Profit/(Loss) for the period Net cash and cash equivalents Number of employees (end of period) , , , , (*)+15% organic 14

16 Balance Sheet ASSETS Dec. 31, 2004 Dec. 31, 2005 LIABILITIES Dec. 31, 2004 Dec. 31, 2005 Intangible Assets Total equity Property plant & equipment Financial assets Deferred tax assets & long term receivables Total non-current assets Accounts & notes receivables Other receivables & assets held for sale Financial receivables & short-term investments Cash Long-term debt Provisions for pensions & other post employment benefits Other non current liabilities Total non-current liabilities Accounts & notes payable Other current liabilities Total Assets Total Liabilities

17 A strong focus on cash has delivered excellent results Net Cash as of IFRS 2005 Op. Margin 2005 Amortization & Provisions 2005 Bonuses part not paid 2005 CAPEX Payment of 2004 Bonuses Payment of prior years restructuring Payment of 2005 restructuring Payment of Income Tax Payment financial assets & expenses Improvement debtors days Increase of accounts payable/ Improvement creditors days Other Net cash before disposals as of Cash from disposals of activities Cash from disposals of Behoust Net cash as of

18 In 2005, Capgemini set out its future 1. Launch of the MAP initiative 2. Doubled Rightshore TM Capability Division Margin 2% % % Indian headcount Jan 2005 Feb Capgemini recruited and invested in training 14,500 new hires 1.7 M training hours 4. Capgemini has adapted to new demand in the market Service Oriented Architecture Rightshore TM Europe BPO Finance & Administration 3 rd Generation ERP 17

19 In 2005, Capgemini launched the MAP initiative Project : Governance structure in place Full time team of 14 people (OS+CS) Revenues Levers Business Mix Re-negotiation Impact on Op. Margin TBD 0.5% Rationalization New organization in Service Line (Europe, US, BPO) Sale of hardware maintenance business France to Unisys Production costs General Expenses Purchasing Rightshore Rationalization Support Function 1 1.5% 1.5 2% 1 1.5% 1 1.5% Purchasing Good start to the Cap 30 program Rightshore : Growth led in 2006 by GM and Eli Lilly Re-negotiation 3 contracts currently under re-negotiation in Q Support Functions: Closure of site in UK and Netherlands BPO of F&A functions MAP in implementation phase since Dec Goal: divisional operating margin of 4% in

20 In 2005 Capgemini increased Rightshore TM capability Country Headcount 04 Headcount 05 Type India China 2, , % Offshore TS/OS/BPO Offshore BPO Poland Nearshore BPO/OS Spain Nearshore OS France Local TS/OS Outlook 2006 Open Calcutta site (with BPO) Create a second site in Krakow (Poland) Oviedo gets stronger (Spain ) Opening of Capgemini University in India Accelerate on-campus recruitment at Indian universities 50% of offshore staff works for Europe Capgemini is the leading European company in offshore Target is to have 10,000 people in India by

21 In 2005, Capgemini recruited and invested in training Recruitment 14,500 new hires 700 new colleagues integrated through outsourcing Training 1,7 M training hours delivered in 2005 (+15%) 4,000 people had access to training leading to qualification : Project management Architecture Consulting and transformation Program engineer Country France Europe (excl. FR) NA India APAC Hires 4,000 6,200 1,550 2, Skills Management Control retention : Attrition stable at 15 % Improved management of fast track talent/high performers 20

22 In 2005, Capgemini adapted to new market demands Growth Client needs Capgemini Innovation Business value Transformation Dynamic management of offerings / SOA Stronger sectors Develop business consultancy & transformational outsourcing Cost Control Global delivery 3 rd Generation OS BPO and Application Outsourcing Rightshore TM Focus Business Mix 21

23 2006 Priorities 1 Focus on adding value to clients Invest in innovation (SOA, 3 rd generation ERP Business Intelligence ) and competencies Develop sector approach and improve portfolio management Grow Rightshore TM capability 2 Confirm North American turnaround 3 Implement MAP initiative Develop BPO and Application Management Target divisional margin of 4% in

24 UBS - French Equity Conference Paul Hermelin, CEO Paris, 27 March 2006

25 UBS - French Equity Conference Back-up slides Paris, 27 March 2006

26 Sustained growth throughout the year Revenue quarterly evolution in M Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 H Q Q H FY 2004 Q Q H Q Q H FY 2005 M (Published) Sequential Current Growth 6.5% 6.1% 10.3% 1.5% 3.3% 6.2% -5.1% 8.0% 0.3% 11.5% Sequential Organic Growth 11.6% 9.0% 7.3% 0.7% 15.0% Year-on-Year Current Growth 15.8% 18.3% 17.1% 5.5% 7.4% 6.5% 11.5% Year-on-Year Organic Growth 21.6% 9.6% 9.7% 15.0% 2004 restated for IFRS impact 25

27 2005: Current & organic growth by geography Revenues M North America % Europe & Asia of which % UK & Ireland % France % Benelux % Central Europe % Year on Year FY 04 FY 05 Current Organic 5.2% 17.6% 36.1% 12.6% 11.5% 9.2% Nordic % Iberia % Italy % Asia Pacific % TOTAL % 15.7% 5.5% -0.9% -13.1% 15.0% 26

28 2005: Growth by discipline CS/TS Revenues related to mega deals recorded in Outsourcing FY 05 / FY 04 Consulting Services 2.1% Technology Services 7.4% Professional Services 7.9% Project & Consulting 6.4% Outsourcing Services 32.9% TOTAL GROUP 15.0% CS/TS Revenues related to mega deals reclassified in CS/TS FY 05 / FY 04 Consulting Services 2.6% Technology Services 20.8% Professional Services 7.9% Project & Consulting 13.6% Outsourcing Services 18.0% TOTAL GROUP 15.0% 27

29 Revenues by regions: UK & Ireland is now the group s first region France Central Europe 25% 7% FY 2004 South Europe Benelux 5% 14% Asia Pacific 1% 21% 6% 21% North America Nordic Countries UK & Ireland France Central Europe At constant rates and perimeter 2004 restated for IFRS impact 24% 6% Benelux South Europe 14% FY % Asia Pacific 1% 6% 19% North America 26% Nordic Countries UK & Ireland 28

30 Revenues by sector: a balanced portfolio Manufacturing, Retail & Distribution FY 2004 Energy & Utilities At constant rates and perimeter excluding Sogeti FY 2005 Telecom, Media & Networks 19% 28% 12% 13% 8% 20% Government Financial Services Other Manufacturing, Retail & Distribution Telecom, Media & Networks 28% 11% 27% 15% Energy & Utilities 12% 7% Financial Services Other Government 29

31 Revenues by discipline: The Group s rebalancing is mostly over FY 2004 Professional Services 17% 15% Consulting Services 32% 36% Technology Services FY 2005 Outsourcing Services Professional Services Consulting Services 16% 13% At constant rates and perimeter 2004 restated for IFRS impact 38% 33% Outsourcing Services Technology Services 30

32 M Bookings evolution (incl. megadeals) A solid close to Outsourcing Projet & Consulting Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Restated for perimeter changes (North American Healthcare & Japan) 31

33 Quarterly charge-out rate since 2004: prices are stable or even improving 1500 Consulting Services Technology Services Professional Services Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q Restated for perimeter changes (North American Healthcare & Japan) Technology Services onshore COR is improving 32

34 Quarterly utilization rates since 2004: stabilized at good levels 90 Consulting Services Technology Services Professional Services Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q Restated for perimeter changes (North American Healthcare & Japan) 33

35 Operating margins by regions All regions profitable in H FY 2004 H H FY 2005 M Revenue Op. Op. Op. % Revenue % Revenue % Revenue Op. Margin Margin Margin Margin % North America UK & Ireland Nordic Benelux Central Europe France Iberia Italy Asia Pacific Corporate % 0.6% 0.3% 5.4% 3.1% 3.6% 0.0% -10.8% 3.3% n/a % 3.2% 5.5% 8.8% 5.9% 3.5% 3.5% -1.8% 0.9% n/a % 4.4% 6.0% 12.3% 10.1% 1.9% 3.7% 4.7% 24.3% n/a % 3.8% 5.8% 10.6% 8.1% 2.6% 3.7% 1.1% 12.1% n/a TOTAL % % % % 34

36 Cost structure by destination: SG&A significantly lower in a growth year M FY 2004 H H FY 2005 Revenue Cost of services rendered % 77.9% 76.7% 77.3% Gross Margin % of Revenue Business Development Costs % of Revenue Support Function Costs % of Revenue Operating Margin % of Revenue % % % % % % % % % % % % % % % % 35

37 Cost structure by nature: megadeals drive purchases but costs are under control M FY 2004 H H FY 2005 Revenue Salarial and social charges % of Revenue 64.2% 61.8% 58.2% 60.0% Purchases and other charges % of Revenue 23.0% 25.4% 26.6% 26.0% Travel expenses % of Revenue 5.0% 4.6% 4.3% 4.5% Office rents and related charges % of Revenue 4.5% 3.6% 3.3% 3.5% Depreciation and Amortization % of Revenue 3.7% 2.8% 2.9% 2.8% Total operating expenses % of Revenue 100.4% 98.2% 95.3% 96.8% Operating Margin % of Revenue -0.4% 1.8% 4.7% 3.2% 36

38 Cash position in M FY 2004 H H FY 2005 Net income (534) Depreciation & Amortization Provisions Gain on disposal of assets (14) (138) (28) Income tax (21) Other Cash-Flow from operations before income tax (34) Tax paid 4 (10) (26) Change in restructuring debt 53 (27) (5) Changes in working capital Operating cash flow Capital expenditure (net) (101) (43) (49) Net investments Translation. perimeter changes & other (141) 17 (24) Change in net cash and cash equivalent Opening net cash and cash equivalent Closing net cash and cash equivalent (166) (36) (32) (92) 176 (7)

39 Headcount evolution Headcount as of Jan. 1, Recruits Acquisitions / Big Deals 712 Disposals Layoffs Leavers Headcount as of Dec. 31,

40 Headcount by discipline FY 2004 FY 2005 Consulting Services Technology Services Outsourcing Services Professional Services Enabling TOTAL