CONTENTS - Capgemini

€193 million in actuarial gains recognized on provisions for pensions
and other post-employment benefits, net of deferred taxes
(due to the application of the amendment to IAS 19 applicable
as of January 1, 2006).
Fixed assets totaled €2,346 million at December 31, 2006, down
€4 million compared with December 31, 2005, mainly due to the
following changes:
A €40 million increase in goodwill in connection with the acquisition
of German group FuE (€29 million) and Unilever Shared
Service Limited (€20 million), partially offset by a €3 million
write down on goodwill in the United Kingdom, and exchange
losses amounting to €13 million on goodwill denominated in
foreign currencies.
A €20 million reduction in intangible assets, attributable in part
to the retirement of software and other intangible assets in an
amount of €10 million, amortization charges for €35 million,
and acquisitions carried out during the year for €30 million.
A €24 million reduction in property, plant and equipment,
mainly relating to the sale of IT equipment. Both acquisitions
for the year and depreciation expense were each for an amount
of €131 million.
At year-end 2006, other non-current and deferred tax assets
stood €191 million higher, due to:
The Group’s November 21, 2006 acquisition of 14.7% of the
capital and voting rights of Kanbay International, Inc. (“Kanbay”).
At December 31, 2006, the Group’s interest in Kanbay
amounted to €132 million (including acquisition costs).
The €60 million increase in deferred tax assets resulting from
the recognition of deferred tax assets on temporary differences
and tax loss carry-forwards due to improved profitability over
the last two years as well as the positive growth outlook, notably
in the United Kingdom.
Trade accounts and notes receivable totaled €2,063 million at
December 31, 2006 compared to €1,798 million at December 31,
2005. At end-2006, trade receivables net of advances received
from customers (and excluding work-in-progress) amounted to
€1,281 million versus €1,162 million at December 31, 2005, representing
60 days’ revenues – unchanged on the previous year-end.
Accounts and notes payable, consisting mainly of trade payables,
amounts due to personnel and accrued taxes, stood at €2,019 million
at December 31, 2006, compared with €1,881 million at
December 31, 2005.
Provisions for pensions and other post-employment benefits
amounted to €591 million at end-2006, versus €696 million a year
earlier. The decrease stems from the recognition of €150 million
in actuarial gains in 2006 due to changes in actuarial assumptions,
especially in the United Kingdom (€125 million) where
the discount rate rose by 0.5 percentage point. A portion of this
effect was offset by €37 million in additions to provisions for the
year net of benefits and contributions paid.
Net consolidated cash and cash equivalents totaled €1,632 million
in 2006, compared with €904 million in 2005. This €728 million
increase is the result of:
€578 million in operating cash flows, boosted by €611 million
in cash flows from operations before net finance costs and
income tax;
€278 million in cash flows used in investing activities, relating
primarily to:
– €169 million in net payments concerning acquisitions of
investments in non-consolidated companies (essentially the
14.7% stake in Kanbay),
– net proceeds/payments relating to acquisitions/disposals of
fixed assets;
the issue of 11,397,310 new shares in connection with the
December 6, 2006 capital increase, generating net proceeds of
€498 million including the issuance premium;
the payment of a dividend to shareholders totaling €66 million;
various share capital increases upon exercise of options, for
€19 million.
The balance due on the acquisition of Kanbay shares, amounting
to approximately €850 million, was paid on February 9, 2007.
III – OUTLOOK FOR 2007
The Capgemini Group has set the following objectives for
2007:
to successfully integrate the Kanbay teams;
to strengthen sector expertise, with an emphasis on the development
of the Consulting business;
to continue the improvement in Outsourcing profitability, notably
by developing the Business Process Outsourcing activity;
to invest in innovation, industrialization and client relations
(through its i 3 program).
Having built a budget around a framework of hypotheses combining
sustained growth in demand, and taking into account the
Kanbay integration, the Group should post revenue growth of
8% in 2007 (at constant rates and perimeter), and continue the
improvement of its operating margin.
IV – COMMENTS ON THE CAP GEMINI
S.A. FINANCIAL STATEMENTS
4.1 Statement of income
The Company’s operating revenue for the year ended December
31, 2006 amounted to €183 million (including €182 million in
royalties received from subsidiaries) compared with €162 million
for 2005 (including €161 million in royalties). This increase was
attributable to the growth in Group revenues.
Operating income came in at €148 million compared to the yearearlier
figure of €133 million. The improved performance stems
chiefly from higher royalties, offset in part by a €6 million rise in
operating expenses that was mainly attributable to advertising.
Net interest income amounted to €21 million, compared to
€28 million in the previous year, reflecting:
€193 million in income corresponding mainly to dividends
received from subsidiaries (€23 million), interest income on cash
ANNUAL REPORT 2006 Capgemini
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