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•1 SOMMAIRE OK 4/05/06 15:08 Page 1 CONTENTS BOARD OF DIRECTORS Serge KAMPF CHAIRMAN Ernest-Antoine SEILLIÈRE VICE-CHAIRMAN Daniel BERNARD 02 Financial highlights Christian BLANC 03 The Capgemini Group Yann DELABRIÈRE 37 Management report Jean-René FOURTOU Paul HERMELIN 52 Report of the Chairman CHIEF EXECUTIVE OFFICER of the Board of Directors Michel JALABERT 63 Group Consolidated Financial Statements Phil LASKAWY 130 Cap Gemini S.A. Summarized Thierry de MONTBRIAL Financial Statements Ruud van OMMEREN 137 Text of the draft resolutions Terry OZAN Bruno ROGER 144 Other information 160 Cross-reference table NON-VOTING DIRECTORS “CENSEURS” Pierre HESSLER Marcel ROULET Geoff UNWIN STATUTORY AUDITORS The English language version of this report is a free PricewaterhouseCoopers AUDIT translation from the original, which was prepared in French. represented by Bernard RASCLE All possible care has been taken to ensure that the translation is an accurate presentation of the original. KPMG S.A. However, in all matters of interpretation, views or opinions expressed in the original language version of the document represented by Jean-Luc DECORNOY in French take precedence over the translation. and Frédéric QUÉLIN ANNUAL REPORT 2005 Capgemini 1 •1 SOMMAIRE OK 4/05/06 19:08 Page 2 FINANCIAL HIGHLIGHTS in millions of euros CONSOLIDATED FINANCIAL STATEMENTS 2004 2005 REVENUES 6,235 6,954 OPERATING EXPENSES 6,259 6,729 OPERATING MARGIN Amount (24) 225 % (0.4%) 3.2% OPERATING PROFIT/(LOSS) Amount (281) 214 % (4.5%) 3.1% PROFIT/(LOSS) FOR THE PERIOD (534) 141 NET MARGIN (%) (8.6%) 2% EARNINGS/(LOSS) PER SHARE Number of shares at December 31 131,383,178 131,581,978 Weighted average number of ordinary shares (diluted) 132,789,755 138,472,266 Diluted earnings/(loss) per share (in euros) (4.02) 1.06 NET CASH AND CASH EQUIVALENTS AT DECEMBER 31 285 904 AVERAGE NUMBER OF EMPLOYEES 57,387 59,734 TOTAL NUMBER OF EMPLOYEES AT DECEMBER 31 59,324 61,036 2 ANNUAL REPORT 2005 Capgemini •2 GROUPE OK 4/05/06 15:08 Page 3 THE CAPGEMINI GROUP I – HISTORY profit of €141 million, an operating margin of 3.2% of revenues which, at almost €7 billion, grew by 15% compa- Founded by Serge Kampf in Grenoble in 1967, Capgemini red to 2004 (the exchange rate and scope remaining constant). has grown to become one of the world’s leading consulting and information service companies by following a strategy of development and diversification that has combined II – THE CAPGEMINI DISCIPLINES both internal and external growth. Four Disciplines, One Mission Hence, the Group has progressively extended its activities Capgemini’s mission is to support its clients as they trans- in Europe, in particular with the acquisition of Programa- form their businesses in order to improve performance. Pre- tor in Scandinavia, Hoskyns in the United Kingdom (1990), sent in some thirty countries, employing 61,000 people, the and Volmac in the Netherlands (1992). Group, which generated nearly €7 billion in revenues in 2005, offers a range of services harmoniously coordinated At the same time, Capgemini has developed its management around its four disciplines and its sector expertise. These consulting activities due to the acquisition of two Ameri- services extend from the drawing up of strategies to the can companies - United Research and Mac Group - in the maintenance of information systems. early 1990s, in addition to a German company - Gruber Titze & Partners - in 1993, and then Bossard, a French firm, The Group’s offering consists of four major disciplines. Each in 1997. of these acts as a specialist in its area. In addition, by com- bining their expertise, they are able to produce for clients, More recently, the acquisition of Ernst & Young Consul- an integrated offering of transformation services. This is one ting (2000) strengthened the Group’s international profile, of the Group’s key strengths: knowing how to bring toge- significantly increasing its presence in North America and ther multiple skills in order to address projects that call for in a certain number of European countries. a crosswise approach, thereby satisfying the needs of clients who are looking for a commitment to achieve real, The years 2001, 2002, 2003 and 2004 proved particularly measurable, sustainable results. difficult for the IT service sector and it became necessary to rebalance Capgemini’s portfolio of activities in favor of These four core areas of activity are organized into autono- two of its disciplines – local IT services and outsourcing – mous units, each with its own objectives, business models and around the RightshoreTM concept. and recruitment processes. Capgemini’s fundamental disci- plines include: The acquisition of Transiciel, at the end of 2003, enabled • Consulting Services (CS): helping our clients to identify, Capgemini to double the size of Sogeti, an entity formed in structure and implement transformation projects that will 2001 in the local professional services domain and which have a lasting impact on their growth and competitive contributed 16% of Group revenues in 2005. In the area of edge; outsourcing, as of 2004 and 2005, the Group reaped the • Technology Services (TS): systems integration and appli- rewards from the efforts undertaken to establish its presence cation development – formulating, developing and imple- both in Europe and in North America due to a number of menting all kinds of technical projects, from the very major contracts (HMRC, TXU, Schneider Electric). smallest to the very largest; • Outsourcing Services (OS): assisting our clients in the In addition, Capgemini became the first European company complete or partial outsourcing of their IT systems and to take the offshore route. Capgemini chose to set itself apart other suitable activities; from its major rivals by proposing an “à la carte” system for • Local Professional Services (LPS): offering a range of IT the production of its service, which is based on the follo- services adapted to local requirements in terms of infra- wing: the customer’s needs, the intended project itself and structures, applications and engineering. the client’s culture as well. This is the RightshoreTM concept. Capgemini is independent from any software publishing The Group’s profile has therefore changed significantly in a houses or hardware manufacturers. In an effort to provide few years, demonstrating its ability to face up to the new its clients with truly the best products and know-how, the challenges that the IT services and consulting industries pre- Group has formed a network of strategic alliances and sent. The 2005 results evidence a confirmed recovery: net partnerships. This enables it to remain objective yet fully ANNUAL REPORT 2005 Capgemini 3 •2 GROUPE OK 4/05/06 15:08 Page 4 THE GROUP Capgemini aware of all the facts in order to freely and knowingly improve the management of their businesses and streng- select and deliver reliable solutions, precisely tailored to each then their control; client’s unique requirements. • HR Performance & Transformation: focusing on accom- panying change; Present in some thirty countries, Capgemini is also syste- • Marketing & Sales: assisting management and their teams matically capable of delivering services in the location which in defining, designing and implementing new corporate best serves the interests of the client – in terms of quality, strategies and innovative marketing strategies while maxi- cost and access to the best expertise. Dubbed Right- mizing the performance of their sales networks and mar- shore™, this approach revolutionizes the cost structure and keting channels; added value of our services. • Supply Chain Management: striving towards sustainable improvement as regards the competitiveness of operations, But Capgemini is also about doing business in a certain style, increasing the efficiency of the purchasing functions and based on collaboration, which we call the Collaborative Busi- accelerating the renewal of the service offering. ness Experience (CBE). This is our trademark, which sets us apart from the others, as a true partner for whom the way What distinguishes CS in the marketplace is, above all, its in which results are achieved counts just as much as the global reach, the vast spectrum of services offered to results themselves. Hence, maximizing customer satisfac- clients and the experience gained in designing and mana- tion is the number one criterion in determining our success. ging complex transformation projects. The integration of Consulting Services into the Group’s other specializations also has major advantages, greatly appreciated by clients 2.1 The Consulting Services (CS) discipline: when – and this is the most frequent case - technology proves accelerating company transformation to be the pivotal point of the transformation to be under- Positioned on the consultancy market for strategy, mana- taken, or when transformation calls for an outsourcing gement and information systems consultancy, and also boas- approach to be adopted. But beyond these differences and ting sector and functional expertise, Capgemini Consulting compared to its competitors, CS can claim to have a dis- sets itself the goal of supporting its clients in identifying, tinctive approach to its work, firmly rooted in the uniquely structuring and implementing transformation projects that collaborative relationship that Capgemini establishes with have a lasting impact on their productivity, growth and com- its clients. petitive edge. In 2005, the CS discipline returned to growth and redisco-