Quarterly Report • Aug 2, 2022
Quarterly Report
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CAPGEMINI JUNE 30, 2022
| FINANCIAL HIGHLIGHTS 3 | |
|---|---|
| STATUTORY AUDITORS' REPORT ON THE 2022 HALF-YEARLY FINANCIAL INFORMATION 4 | |
| INTERIM FINANCIAL REVIEW 5 | |
| CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED JUNE 30, 2022 9 | |
| DECLARATION BY THE PERSON RESPONSIBLE FOR THE INTERIM FINANCIAL REPORT 26 |
| FINANCIAL HIGHLIGHTS | |||||
|---|---|---|---|---|---|
| Consolidated financial statements | |||||
| in millions of euros | First-half 2018 First-half 2019 ** | First-half 2020 *** | First-half 2021 | First-half 2022 | |
| Revenues | 6,467 | 7,007 | 7,581 | 8,711 | 10,688 |
| Operating expenses | (5,760) | (6,210) | (6,763) | (7,669) | (9,387) |
| Operating margin * | 707 | 797 | 818 | 1,042 | 1,301 |
| % of revenues | 10.9% | 11.4% | 10.8% | 12.0% | 12.2% |
| Operating profit | 521 | 658 | 577 | 812 | 1,068 |
| % of revenues | 8.0% | 9.4% | 7.6% | 9.3% | 10.0% |
| Profit for the period attributable to owners of the Company | 314 | 388 | 311 | 443 | 667 |
| % of revenues | 4.8% | 5.5% | 4.1% | 5.2% | 6.3% |
| Earnings per share | |||||
| Average number of shares outstanding during the period | 167,323,709 | 165,843,357 | 167,646,025 | 168,453,627 | 170,561,706 |
| Basic earnings per share (in euros) | 1.88 | 2.34 | 1.86 | 2.63 | 3.91 |
| Normalized earnings per share * (in euros) | 2.64 | 2.90 | 2.80 | 3.58 | 4.87 |
| GOODWILL AT JUNE 30 | 7,323 | 7,591 | 10,316 | 10,096 | 11,087 |
| EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY AT JUNE 30 | 6,992 | 7,466 | 5,922 | 6,681 | 8,938 |
| (NET DEBT) / NET CASH AND CASH EQUIVALENTS * AT JUNE 30 | (2,192) | (1,621) | (6,008) | (4,826) | (4,094) |
| ORGANIC FREE CASH FLOW * AT JUNE 30 | 11 | 90 | 106 | 429 | 193 |
| Average number of employees | 201,318 | 213,470 | 239,086 | 276,700 | 339,635 |
| Number of employees at June 30 | 205,574 | 216,801 | 265,073 | 289,501 | 352,148 |
| * Operating margin, normalized earnings per share, net debt / net cash and cash equivalents and organic free cash flow, alternative performance measures monitored by the Group, are defined in Note 3 - Alternative performance measures, to the condensed interim consolidated financial statements for the half-year ended |
|||||
| June 30, 2022. | |||||
| ** Data from First-half 2019 reflects the application of IFRS 16, Leases, using the modified retrospective method. |
(For the period from January 1, 2022 to June 30, 2022)
To the Shareholders CAPGEMINI SE 11 rue de Tilsitt 75017 Paris
In compliance with the assignment entrusted to us by Annual general meeting and in accordance with the requirements of article L. 451-1-2 III of the French Monetary and Financial Code ("Code monétaire et financier"), we hereby report to you on:
These condensed half-year consolidated financial statements are the responsibility of the Board of Directors. Our role is to express a conclusion on these financial statements based on our review.
We conducted our review in accordance with professional standards applicable in France.
A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with professional standards applicable in France and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed half-year consolidated financial statements are not prepared, in all material respects, in accordance with IAS 34- standard of the IFRSs as adopted by the European Union applicable to interim financial information.
We have also verified the information presented in the half-year management report on the condensed half-year consolidated financial statements subject to our review. We have no matters to report as to its fair presentation and consistency with the condensed half-year consolidated financial statements.
French original signed by
Neuilly-sur-Seine and Courbevoie, August 2, 2022
The Statutory Auditors
PricewaterhouseCoopers Audit Mazars
Itto El Hariri Romain Dumont Dominique Muller Anne-Laure Rousselou
Capgemini reported very strong H1 2022 results. Following record growth in Q1 2022, Capgemini accelerated further in the second quarter. This momentum was largely fueled by the Intelligent Industry and Customer First business areas, as well as activities driven by Cloud and Data. This illustrates the importance of digital transformation for Group customers and the structural increase in their investments in technology.
Given this strong growth momentum, the Group has raised its growth objective for 2022, while retaining its other financial objectives unchanged for the current year (see the "Outlook for fiscal year 2022" section below).
Capgemini continued to attract and develop its talent during the half-year - a real growth driver - exceeding 350,000 employees at June 30, 2022. In particular, the Group stepped up training measures in line with its objective to increase by 5% each year the average number of training hours received by each employee.
Capgemini generated revenues of €10,688 million in H1 2022, up +22.7% on a reported basis and +18.5% at constant exchange rates. Organic growth (i.e. excluding the impacts of currency fluctuations and changes in Group scope) is +17.2%.
Group growth accelerated in Q2 to reach +19.3% at constant exchange rates and +18.1% organically, confirming the strong momentum observed in the previous quarter.
Bookings totaled €11,607 million in the first half of 2022, up +22% year-on-year at constant exchange rates. The book-to-bill ratio is 1.09 for H1 and 1.11 for Q2, reflecting ongoing robust commercial momentum.
The operating margin is €1,301 million, or 12.2% of revenues, an increase of +25% or +0.2 points year-on-year. As expected, mix and pricing improvement offset the return of certain operating costs, such as travel expenses, and those of developing Group talent.
Other operating income and expenses represent a net expense of €233 million, virtually stable year-on-year. The decrease in restructuring costs was partially offset by amortization of intangible assets recognized in business combinations, as well as by the impact of the increase in the Capgemini share price until the end of 2021 on the long-term share-based compensation expense.
As a result, Capgemini's operating profit is up +32% to €1,068 million, or 10.0% of revenues.
The net financial expense is €71 million, down €14 million on H1 2021.
The income tax expense is €327 million and includes exceptional tax expenses of €29 million, compared with €56 million last year. These tax expenses relate to (i) the transitional impact of the 2017 US tax reform and (ii) in 2021, the consequence of a 2021 change in a local tax regulation on legal restructurings carried out in 2016. Adjusted for these expenses, the effective tax rate is 29.9%, compared with 31.0% in H1 2021 and 29.2% in FY 2021.
Net profit (Group share) is up +50% year-on-year at €667 million for the first six months of 2022. Basic earnings per share rose by +49% year-on-year to €3.91, while normalized earnings per share increased +36% to €4.87. Normalized earnings per share adjusted for exceptional tax expenses rose +29% to €5.03.
The Group generated organic free cash flow of €193 million, down as expected from €429 million in the same period of 2021.
Return to shareholders increased under the combined effect of a higher dividend (€2.40 per share or €409 million) and share buybacks during the period (totaling €517 million on a performed basis).
Furthermore, the Group disbursed a net amount of €34 million on external growth transactions during the half-year.
At June 30, 2022, the Group's total headcount stood at 352,100, up 22% year-on-year, with a 27% increase in employees in offshore centers to 207,900 (59% of the total headcount).
| Revenues | Year-on-year growth | Operating margin rate | |||
|---|---|---|---|---|---|
| H1 2022 (in millions of euros) |
Reported | At constant exchange rates |
H1 2021 | H1 2022 | |
| North America | 3,170 | +27.9% | +16.8% | 15.7% | 15.5% |
| United Kingdom and Ireland | 1,287 | +26.4% | +22.7% | 17.6% | 18.4% |
| France | 2,113 | +12.9% | +12.8% | 7.5% | 10.7% |
| Rest of Europe | 3,161 | +16.7% | +16.9% | 11.5% | 9.8% |
| Asia-Pacific and Latin America | 957 | +51.2% | +41.5% | 12.5% | 9.7% |
| TOTAL | 10,688 | +22.7% | +18.5% | 12.0% | 12.2% |
All Group regions posted strong double-digit constant currency growth rates in H1 2022, confirming the acceleration already observed in the first quarter. This growth was fueled by strong momentum in almost all the Group's sectors.
Revenues in North America (30% of Group revenues in H1 2022) grew by +16.8% at constant exchange rates, driven in particular by the Financial Services and Manufacturing sectors. The operating margin rate was 15.5% compared with 15.7% in the first half of 2021.
The United Kingdom and Ireland region (12% of Group revenues) reported remarkable growth of +22.7% at constant exchange rates, boosted by a strong Public sector but also by the Consumer Goods & Retail and Energy & Utilities sectors, which are very dynamic. The operating margin reached a record level of 18.4%, compared with 17.6% a year earlier.
France (20% of Group revenues) reported revenue growth of +12.8% at constant exchange rates, with a particularly strong performance in the Manufacturing and Consumer Goods & Retail sectors. The operating margin further improved to reach 10.7%, a marked 3.2 points year-on-year improvement.
The Rest of Europe region (29% of Group revenues) grew +16.9% at constant exchange rates, with the Manufacturing and Consumer Goods & Retail sectors as the top drivers. The operating margin recorded a decline at 9.8%, compared with 11.5% one year earlier.
Finally, revenues in the Asia-Pacific and Latin America region (9% of Group revenues) increased sharply by +41.5% at constant exchange rates. The contribution of Group acquisitions in 2021 combined with organic momentum which remains extremely robust in this region, notably in the Manufacturing and Financial Services sectors. The region reported an operating margin of 9.7%, from 12.5% in H1 2021.
When determining activity trends by business and in accordance with internal operating performance measures, growth at constant exchange rates is calculated based on total revenues, i.e. before elimination of inter-business billing. The Group considers this to be more representative of activity levels by business. As its businesses change, an increasing number of contracts require a range of business expertise for delivery, leading to a rise in inter-business flows.
| Total revenues | Year-on-year growth | |
|---|---|---|
| H1 2022 (% of Group revenues) |
At constant exchange rates in Total revenues of the business |
|
| Strategy & Transformation | 8% | +29.7% |
| Applications & Technology | 63% | +21.1% |
| Operations & Engineering | 29% | +13.4% |
All Group business lines also reported double-digit constant currency growth rates in H1 2022.
Strategy & Transformation services (8% of Group revenues in H1 2022) and Applications & Technology services (63% of Group revenues and Capgemini's core business) continue to benefit from broad-based demand for digital transformation, posting growth in total revenues at constant exchange rates of +29.7% and +21.1%, respectively.
Operations & Engineering services (29% of Group revenues) grew +13.4% at constant exchange rates, reflecting strong growth in Engineering services and Cloud infrastructure services.
Since the end of 2021, Capgemini has proactively taken measures to ensure the safety of its teams and their families in Ukraine and has implemented continuity plans for its clients. Capgemini continues to monitor events very closely in order to support its employees in this difficult context.
The war in Ukraine did not have any material impact on the Group's performance. Indeed, with well under 1% of Group revenues and less than 1% of its workforce, the Group's total exposure to Ukraine and Russia is very limited.
In Russia, the Group confirms its intention to discontinue its presence - which is very limited in size and relates to very few international brands present in the country - while respecting the rights of its employees and in full compliance with the applicable legislation.
Revenues for the first-half 2022 totaled €10,688 million, compared with €8,711 million for the first-half 2021, representing an increase of 22.7% on a reported basis and a 18.5% revenue increasing at constant exchange rates.
The operating margin for the first six months of 2022 was €1,301 million, compared with €1,042 million for the same period in 2021, representing a margin rate of 12.2% compared with 12.0%.
Operating profit is €1,068 million for the first-half 2022, compared with €812 million for the first-half 2021, after taking into account other operating income and expense representing a net expense of €233 million in the first-half 2022 compared with €230 million in the first-half 2021.
The net financial expense was €71 million in the first-half 2022, compared with €85 million for the same period in 2021.
The income tax expense for the first-half 2022 is €327 million, compared with €282 million for the first-half 2021. The effective tax rate is 29.9% for the first six months of 2022 compared with 31.0% in the first-half 2021, excluding the tax expense due to the transitional impact of the 2017 US tax reform and also for 2021, an income tax expense in application of a 2021 regulatory change on legal restructurings occurred in 2016.
Profit for the period attributable to owners of the Company is therefore €667 million for the first-half 2022, compared with €443 million for the first-half 2021. Normalized earnings per share are therefore €4.87 based on an average of 170,561,706 ordinary shares outstanding in the first-half 2022, compared with €3.58 based on an average of 168,453,627 ordinary shares outstanding in the first-half 2021.
Equity attributable to owners of the Company totaled €8,938 million at June 30, 2022, up €471 million on December 31, 2021. This increase was mainly due to:
partially offset by the payment to shareholders of dividends of €409 million and the elimination of treasury shares bought back during the period for €515 million.
Non-current assets totaled €15,505 million at June 30, 2022, up €471 million on December 31, 2021, mainly due to the impact of the appreciation of the US dollar on goodwill denominated in this currency.
Non-current liabilities totaled €8,944 million at June 30, 2022 down €93 million on December 31, 2021.
Trade receivables and contract assets totaled €5,213 million at June 30, 2022, compared with €4,606 million at December 31, 2021. Trade receivables and contract assets excluding contract costs and net of contract liabilities totaled €3,735 million at June 30, 2022, compared with €3,084 million at December 31, 2021.
Accounts and notes payable mainly consist of trade payables and related accounts, personnel costs and accrued taxes other than income tax and total €4,231 million at June 30, 2022, compared with €4,361 million at December 31, 2021.
Consolidated net debt totaled €4,094 million at June 30, 2022 compared with €3,224 million at December 31, 2021. This €870 million increase in net debt on December 31, 2021 chiefly reflects:
partially offset by organic free cash flow generation in the first-half 2022 of €193 million.
No material transactions with related parties took place in the first-half 2022.
The nature and degree of risks to which the Group is exposed have not changed from those presented on pages 110 to 127 of the 2021 Universal Registration Document.
Given the strong demand momentum, the Group is raising its growth objective for 2022 and is now aiming for:
Revenue growth of +14% to +15% at constant currency, instead of +8% to +10% previously. The inorganic contribution to this objective is virtually unchanged and should be around 1.5 points.
The Group's other objectives for 2022 are unchanged:
| CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE | |||||||
|---|---|---|---|---|---|---|---|
| HALF-YEAR ENDED JUNE 30, 2022 | |||||||
| CONSOLIDATED INCOME STATEMENT | |||||||
| in millions of euros | Notes | 2021 Amount |
% | First-half 2021 Amount |
% | First-half 2022 Amount |
% |
| Revenues | 4 - 5 | 18,160 | 100 | 8,711 | 100 | 10,688 | 100 |
| Cost of services rendered | (13,368) | (73.6) | (6,417) | (73.7) | (7,895) | (73.8) | |
| Selling expenses | (1,196) | (6.6) | (584) | (6.7) | (727) | (6.8) | |
| General and administrative expenses | (1,256) | (6.9) | (668) | (7.6) | (765) | (7.2) | |
| Operating expenses | 6 | (15,820) | (87.1) | (7,669) | (88.0) | (9,387) | (87.8) |
| Operating margin * | 2,340 | 12.9 | 1,042 | 12.0 | 1,301 | 12.2 | |
| Other operating income and expense | 7 | (501) | (2.8) | (230) | (2.7) | (233) | (2.2) |
| Operating profit | 1,839 | 10.1 | 812 | 9.3 | 1,068 | 10.0 | |
| Net finance costs | 8 | (117) | (0.6) | (59) | (0.7) | (46) | (0.4) |
| Other financial income and expense | 8 | (42) | (0.2) | (26) | (0.3) | (25) | (0.2) |
| Net financial expense | (159) | (0.8) | (85) | (1.0) | (71) | (0.6) | |
| Income tax expense | 9 | (526) | (2.9) | (282) | (3.1) | (327) | (3.1) |
| Share of profit of associates | 5 | - | (1) | - | (2) | - | |
| PROFIT FOR THE PERIOD | 1,159 | 6.4 | 444 | 5.2 | 668 | 6.3 | |
| Attributable to: | |||||||
| Owners of the Company | 1,157 | 6.4 | 443 | 5.2 | 667 | 6.3 | |
| Non-controlling interests | 2 | - | 1 | - | 1 | - | |
| EARNINGS PER SHARE | |||||||
| 168,574,058 | 168,453,627 | 170,561,706 | |||||
| Average number of shares outstanding during the period | 6.87 | 2.63 | 3.91 | ||||
| Basic earnings per share (in euros) | 173,899,033 | 173,684,216 | 176,218,421 | ||||
| Diluted average number of shares outstanding | |||||||
| Diluted earnings per share (in euros) | 6.66 | 2.55 | 3.78 |
| CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | |||
|---|---|---|---|
| in millions of euros | |||
| 2021 | First-half 2021 | First-half 2022 | |
| Actuarial gains and losses on defined benefit pension plans, net of tax (1) | 342 | 198 | 247 |
| Remeasurement of cash flow and net investment hedging instruments, net of tax (2) | 160 | 42 | (18) |
| Translation adjustments (2) | 524 | 210 | 423 |
| Other, net of tax (1) | 1 | - | - |
| OTHER ITEMS OF COMPREHENSIVE INCOME | 1,027 | 450 | 652 |
| Profit for the period | 1,159 | 444 | 668 |
| Total comprehensive income for the period | 2,186 | 894 | 1,320 |
| Attributable to: | |||
| Owners of the Company Non-controlling interests |
2,184 2 |
893 1 |
1,319 1 |
| CONSOLIDATED STATEMENT OF FINANCIAL POSITION | ||||
|---|---|---|---|---|
| in millions of euros | Notes | June 30, 2021 | December 31, 2021 | June 30, 2022 |
| Goodwill | 10 | 10,096 | 10,633 | 11,087 |
| Intangible assets | 1,042 | 1,003 | 969 | |
| Property, plant and equipment | 801 | 880 | 913 | |
| Lease right-of-use assets | 809 | 823 | 771 | |
| Deferred tax assets | 873 | 881 | 834 | |
| Other non-current assets | 14 | 602 | 814 | 931 |
| Total non-current assets | 14,223 | 15,034 | 15,505 | |
| Contract costs | 11 | 119 | 117 | 121 |
| Contract assets | 11 | 1,657 | 1,380 | 2,246 |
| Trade receivables | 11 | 2,449 | 3,109 | 2,846 |
| Current tax receivables | 264 | 141 | 285 | |
| Other current assets | 14 | 608 | 738 | 845 |
| Cash management assets | 12 | 322 | 385 | 415 |
| Cash and cash equivalents | 12 | 2,623 | 3,129 | 2,403 |
| Total current assets | 8,042 | 8,999 | 9,161 | |
| TOTAL ASSETS | 22,265 | 24,033 | 24,666 | |
| in millions of euros | Notes | June 30, 2021 | December 31, 2021 | June 30, 2022 |
| Share capital | 1,350 | 1,379 | 1,379 | |
| Additional paid-in capital | 3,050 | 3,609 | 3,609 | |
| Retained earnings and other reserves | 1,838 | 2,322 | 3,283 | |
| Profit for the period | 443 | 1,157 | 667 | |
| Equity (attributable to owners of the Company) | 6,681 | 8,467 | 8,938 | |
| Non-controlling interests | 11 | 12 | 15 | |
| Total equity | 6,692 | 8,479 | 8,953 | |
| Long-term borrowings | 12 | 6,639 | 6,654 | 6,649 |
| Share capital | 1,350 | 1,379 | 1,379 | |
|---|---|---|---|---|
| Additional paid-in capital | 3,050 | 3,609 | 3,609 | |
| Retained earnings and other reserves | 1,838 | 2,322 | 3,283 | |
| Profit for the period | 443 | 1,157 | 667 | |
| Equity (attributable to owners of the Company) | 6,681 | 8,467 | 8,938 | |
| Non-controlling interests | 11 | 12 | 15 | |
| Total equity | 6,692 | 8,479 | 8,953 | |
| Long-term borrowings | 12 | 6,639 | 6,654 | 6,649 |
| Deferred tax liabilities | 255 | 294 | 347 | |
| Provisions for pensions and other post-employment benefits | 13 | 744 | 655 | 513 |
| Non-current provisions | 372 | 341 | 338 | |
| Non-current lease liabilities | 609 | 627 | 577 | |
| Other non-current liabilities | 14 | 443 | 466 | 520 |
| Total non-current liabilities | 9,062 | 9,037 | 8,944 | |
| Short-term borrowings and bank overdrafts | 12 | 1,131 | 87 | 200 |
| Accounts and notes payable | 3,567 | 4,361 | 4,231 | |
| Contract liabilities | 11 | 1,040 | 1,405 | 1,357 |
| Current provisions | 129 | 140 | 123 | |
| Current tax liabilities | 228 | 75 | 310 | |
| Current lease liabilities | 280 | 274 | 265 | |
| Other current liabilities | 14 | 136 | 175 | 283 |
| 6,511 | 6,517 | 6,769 | ||
| Total current liabilities | 24,666 |
| CONSOLIDATED STATEMENT OF CASH FLOWS | ||||
|---|---|---|---|---|
| First-half | First-half | |||
| in millions of euros | Notes | 2021 | 2021 | 2022 |
| Profit for the period | 1,159 | 444 | 668 | |
| Depreciation, amortization and impairment of fixed assets and lease right-of-use assets | 672 | 328 | 356 | |
| Change in provisions | (146) | (93) | (18) | |
| Losses/(Gains) on disposals of assets and other | 33 | 8 | 13 | |
| Expenses relating to share grants | 125 | 58 | 80 | |
| Net finance costs | 8 | 117 | 59 | 46 |
| Unrealized (gains) losses on changes in fair value and other financial items | 6 | 15 | 28 | |
| Income tax expense/(income) | 9 | 526 | 282 | 327 |
| Cash flows from operations before net finance costs and income tax (A) | 2,492 | 1,101 | 1,500 | |
| Income tax paid (B) | (440) | (201) | (104) | |
| Change in trade receivables, contract assets net of liabilities and contract costs | (197) | (235) | (570) | |
| Change in accounts and notes payable | 351 | 116 | 62 | |
| Change in other receivables/payables | 375 | (16) | (319) | |
| Change in operating working capital (C) | 529 | (135) | (827) | |
| NET CASH FROM (USED IN) OPERATING ACTIVITIES (D=A+B+C) | 2,581 | 765 | 569 | |
| Acquisitions of property, plant and equipment and intangible assets | (266) | (85) | (146) | |
| Proceeds from disposals of property, plant and equipment and intangible assets | 4 | 2 | 1 | |
| Acquisitions of property, plant and equipment and intangible assets, net of disposals | (262) | (83) | (145) | |
| Cash (outflows) inflows on business combinations net of cash and cash equivalents acquired | 2 | (369) | (70) | (34) |
| Cash (outflows) inflows in respect of cash management assets | (25) | 21 | (24) | |
| Other cash (outflows) inflows, net | (22) | (16) | (78) | |
| Cash outflows from investing activities | (416) | (65) | (136) | |
| NET CASH FROM (USED IN) INVESTING ACTIVITIES (E) | (678) | (148) | (281) | |
| Proceeds from issues of share capital | 587 | - | - | |
| Dividends paid | (329) | (329) | (409) | |
| Net payments relating to transactions in Capgemini SE shares | (197) | 2 | (515) | |
| Proceeds from borrowings | 137 | 84 | 266 | |
| Repayments of borrowings | (1,498) | (390) | (170) | |
| Repayments of lease liabilities | (320) | (161) | (157) | |
| Interest paid | (153) | (105) | (92) | |
| Interest received | 27 | 13 | 18 | |
| NET CASH FROM (USED IN) FINANCING ACTIVITIES (F) | (1,746) | (886) | (1,059) | |
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (G=D+E+F) | 157 | (269) | (771) | |
| Effect of exchange rate movements on cash and cash equivalents (H) | 134 | 48 | 25 | |
| 12 | 2,828 | 2,828 | 3,119 | |
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD (I) |
| CONSOLIDATED STATEMENT OF CHANGES IN EQUITY | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Income and expense | Equity | |||||||||
| Consolidated retained | recognized in equity | Non- | ||||||||
| Number of shares | Share capital | Additional paid-in | Treasury shares | earnings and other reserves | Translation adjustments | (attributable to owners of | controlling | |||
| in millions of euros | capital | Other | the Company) | interests | Total equity | |||||
| At December 31, 2021 | 172,391,524 | 1,379 | 3,609 | (79) | 4,233 | (120) | (555) | 8,467 | 12 | 8,479 |
| Impact of the first-time application of the IFRS Interpretation Committee (IFRIC) decision published in April 2021 on SaaS type contracts |
- | - | - | - | (2) | - | - | (2) | - | (2) |
| At January 1, 2022 | 172,391,524 | 1,379 | 3,609 | (79) | 4,231 | (120) | (555) | 8,465 | 12 | 8,477 |
| Dividends paid out for 2021 | - | - | - | - | (409) | - | - | (409) | - | (409) |
| Incentive instruments and employee share ownership | - | - | - | - | 80 | - | - | 80 | - | 80 |
| Elimination of treasury shares | - | - | - | (516) | 1 | - | - | (515) | - | (515) |
| Transactions with non-controlling interests and others | - | - | - | - | (2) | - | - | (2) | 2 | - |
| Transactions with shareholders and others | - | - | - | (516) | (330) | - | - | (846) | 2 | (844) |
| Income and expense recognized in equity | - | - | - | - | - | 423 | 229 | 652 | - | 652 |
| Profit for the period | - | - | - | - | 667 | - | - | 667 | ||
| 1 | 668 | |||||||||
| At June 30, 2022 | 172,391,524 | 1,379 | 3,609 | (595) | 4,568 | 303 | (326) | 8,938 | 15 | 8,953 |
| Income and expense | Equity | |||||||||
| Additional paid-in | Consolidated retained | recognized in equity | (attributable to owners of | Non- controlling |
||||||
| in millions of euros | Number of shares | Share capital | capital | Treasury shares | earnings and other reserves | Translation adjustments | Other | the Company) | interests | Total equity |
| At December 31, 2020 | 168,784,837 | 1,350 | 3,050 | (39) | 3,444 | (644) | (1,058) | 6,103 | 12 | 6,115 |
| Dividends paid out for 2020 | - | - | - | - | (329) | - | - | (329) | - | (329) |
| Incentive instruments and employee share ownership | - | - | - | - | 58 | - | - | 58 | - | 58 |
| Elimination of treasury shares | - | - | - | 1 | 1 | - | - | 2 | - | 2 |
| Finalization of the allocation of the Altran Technologies | - | - | - | (46) | - | - | (46) | (2) | (48) | |
| purchase price Transactions with shareholders and others |
- | - - |
- | 1 | (316) | - | - | (315) | (2) | (317) |
| Income and expense recognized in equity | - | - | - | - | - | 210 | 240 | 450 | - | 450 |
| Profit for the period | - | - | - | - | 443 | - | - | 443 | 1 | 444 |
| At June 30, 2021 | 168,784,837 | 1,350 | 3,050 | (38) | 3,571 | (434) | (818) | 6,681 | 11 | 6,692 |
| capital | Treasury shares | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Impact of the first-time application of the IFRS Interpretation Committee (IFRIC) decision published in |
||||||||||
| in millions of euros | Number of shares | Share capital | Additional paid-in capital |
Treasury shares | Consolidated retained earnings and other reserves |
Income and expense recognized in equity |
Equity (attributable to owners of the Company) |
Non- controlling interests |
Total equity | |
| 3,444 | (1,058) | 6,115 | ||||||||
| At December 31, 2020 | 168,784,837 | 1,350 | 3,050 | (39) | (644) | 6,103 | 12 | |||
| Dividends paid out for 2020 | - | - | - | - | (329) | - | - | (329) | - | (329) |
| Incentive instruments and employee share ownership | - | - | - | - | 58 | - | - | 58 | - | 58 |
| Elimination of treasury shares | - | - | - | 1 | 1 | - | - | 2 | - | 2 |
| Finalization of the allocation of the Altran Technologies purchase price |
- - |
- | - | (46) | - | - | (46) | (2) | (48) | |
| Transactions with shareholders and others | - | - | - | 1 | (316) | - | - | (315) | (2) | (317) |
| Income and expense recognized in equity | - | - | - | - | - | 210 | 240 | 450 | - | 450 |
| Profit for the period | - | - | - | - | 443 | - | - | 443 | 1 | 444 |
The condensed interim consolidated financial statements for the half-year ended June 30, 2022 and the notes thereto were drawn up under the responsibility of the Board of Directors and reviewed by the Board of Directors' meeting of July 28, 2022.
The condensed interim consolidated financial statements for the first-half 2022 have been prepared in accordance with lAS 34, Interim Financial Reporting, as issued by the International Accounting Standards Board (IASB), and endorsed by the European Union. They therefore do not include all the information required under IFRS for full financial statements. These condensed interim consolidated financial statements nonetheless present a selection of notes explaining the major events and transactions of the period in order to understand the changes in the Group's financial position and performance since the last annual consolidated financial statements.
These condensed interim consolidated financial statements for the half-year ended June 30, 2022 should be read in conjunction with the Group's annual consolidated financial statements for the year ended December 31, 2021.
The Group also takes account of the positions adopted by Numeum (merger of Syntec Numérique and TECH IN France), an organization representing major consulting and computer services companies in France, regarding the application of certain IFRS.
The accounting policies applied by the Capgemini Group are unchanged on those applied for the preparation of the December 31, 2021 consolidated financial statements.
The standards, amendments, and interpretations which entered into mandatory effect on January 1, 2022 did not have a material impact on the Group financial statements.
In the condensed interim consolidated financial statements for the first-half 2022, the Group finalized and applied the IFRS Interpretation Committee (IFRIC) decision published in April 2021, Configuration or Customisation Costs in a Cloud Computing Arrangement, relating to IAS 38, Intangible Assets, on the recognition of configuration or customization costs for software used internally and made available in the Cloud in a Software as a Service (SaaS) arrangement. The Group therefore recognized an amount net of deferred tax of €2 million in equity at January 1, 2022, in respect of the retrospective adjustment relating to this new interpretation. As the impact on the Group's financial indicators is not material, comparable periods were not adjusted retrospectively.
The Group did not adopt early any new standards not yet in effect at January 1, 2022.
The preparation of consolidated financial statements involves the use of estimates and assumptions which may have an impact on the reported values of assets and liabilities at the period end or on certain items of either net profit or the income and expenses recognized directly in equity for the year. Estimates are based on economic data and assumptions which are likely to vary over time and interpretations of local regulation when necessary. They have notably been made in an ongoing uncertain economic, geopolitical and health context. These estimates are subject to a degree of uncertainty and mainly concern revenue recognition on a percentage-of-completion basis, provisions, measurement of the amount of intangible assets and deferred tax assets, provisions for pensions and other post-employment benefits, the fair value of derivatives and the calculation of the tax expense.
On May 16, 2022, the Group announced it had finalized an agreement to acquire Chappuis Halder & Cie, a strategy and management consulting group specializing in the financial services industry.
On June 7, 2022, the Group announced the acquisition of Rufus Leonard, a London based brand design and experience agency. The contribution of these transactions to Group financial indicators in the first-half 2022 is not material. The purchase price allocations are provisional at June 30, 2022 and will be finalized during the 12 months following the take over.
The alternative performance measures monitored by the Group are defined as follows:
| in millions of euros First-half 2021 |
First-half 2022 |
|---|---|
| Profit for the period attributable to owners of the Company 443 |
667 |
| Other operating income and expenses, net of tax calculated at the effective tax rate (1) 159 |
163 |
| 602 Normalized profit for the period attributable to owners of the Company |
830 |
| Weighted average number of ordinary shares outstanding 168.453.627 |
170.561.706 |
| NORMALIZED EARNINGS PER SHARE (in euros) 3.58 |
4.87 |
(1) See Note 9 - Income Tax.
| The normalized earnings per share would have been €5.03 in the first-half 2022 compared with €3.91 in the first-half 2021, | |
|---|---|
| ► the tax charge of the transitional impact of the 2017 US tax reform and also, |
|
| ► for 2021, in application of a 2021 regulatory change, an income tax expense on the write-off of deferred tax assets |
|
| on amortizable goodwill, recognized in 2016 on legal restructurings. | |
| in millions of euros First-half 2021 |
First-half 2022 |
| NORMALIZED EARNINGS PER SHARE (in euros) 3.58 |
4.87 |
| Tax expense due to the transitional impact of the 2017 US tax reform | 17 29 |
| Tax expense, in application of regulatory change, from the write-off of deferred tax assets on amortizable goodwill, recognized in 2016 on legal restructurings |
39 |
| Weighted average number of ordinary shares outstanding 168,453,627 |
170,561,706 |
| Impact of the tax expense due to the transitional impact of the 2017 US tax reform 0.10 |
0.16 |
| Impact of the tax expense, in application of regulatory change, from the write-off of deferred tax assets on amortizable | |
| goodwill, recognized in 2016 on legal restructurings 0.23 |
|
| NORMALIZED EARNINGS PER SHARE - excl. the tax expense due to the transitional impact of the 2017 US tax reform and, in application of regulatory change, the write-off of deferred tax assets on amortizable goodwill, 3.91 |
5.03 |
| recognized In 2016 on legal restructurings | |
| ► Net debt (or net cash and cash equivalents) comprises (i) cash and cash equivalents, as presented in the Consolidated | |
| Statement of Cash Flows (consisting of short-term investments and cash at bank) less bank overdrafts, (ii) cash management | |
| assets (assets presented separately in the Consolidated Statement of Financial Position due to their characteristics), less (iii) | |
| short- and long-term borrowings. Account is also taken of the impact of hedging instruments when these relate to borrowings | |
| and own shares. | |
| ► Organic free cash flow calculated based on items in the Statement of Cash Flows is equal to cash flow from operations less | |
| acquisitions of property, plant, equipment and intangible assets (net of disposals) and repayments of lease liabilities and | |
| adjusted for flows relating to the net interest cost. | |
| in millions of euros First-half 2021 |
First-half 2022 |
| Net cash from operating activities | 765 569 |
| Acquisitions of property, plant and equipment and intangible assets | (85) (146) |
| Proceeds from disposals of property, plant and equipment and intangible assets | 2 1 |
| Acquisitions of property, plant and equipment and intangible assets (net of disposals) | (83) (145) |
| Interest paid (105) |
(92) |
| Tax expense, in application of regulatory change, from the write-off of deferred tax assets on amortizable goodwill, | ||
|---|---|---|
| Impact of the tax expense due to the transitional impact of the 2017 US tax reform | 0.10 | 0.16 |
| Impact of the tax expense, in application of regulatory change, from the write-off of deferred tax assets on amortizable | ||
| reform and, in application of regulatory change, the write-off of deferred tax assets on amortizable goodwill, recognized In 2016 on legal restructurings |
||
| ► Net debt (or net cash and cash equivalents) comprises (i) cash and cash equivalents, as presented in the Consolidated Statement of Cash Flows (consisting of short-term investments and cash at bank) less bank overdrafts, (ii) cash management assets (assets presented separately in the Consolidated Statement of Financial Position due to their characteristics), less (iii) |
||
| short- and long-term borrowings. Account is also taken of the impact of hedging instruments when these relate to borrowings and own shares. |
||
| ► Organic free cash flow calculated based on items in the Statement of Cash Flows is equal to cash flow from operations less acquisitions of property, plant, equipment and intangible assets (net of disposals) and repayments of lease liabilities and adjusted for flows relating to the net interest cost. |
||
| in millions of euros | First-half 2021 | First-half 2022 |
| Net cash from operating activities | 765 | 569 |
| Acquisitions of property, plant and equipment and intangible assets | (85) | (146) |
| Proceeds from disposals of property, plant and equipment and intangible assets | 2 | 1 |
| Acquisitions of property, plant and equipment and intangible assets (net of disposals) | (83) | (145) |
| Interest paid | (105) | |
| Interest received | 13 | |
| Net interest cost | (92) | (92) 18 (74) |
| Repayments of lease liabilities | (161) | (157) |
Group Management analyzes and measures activity performance in the geographic areas where the Group is present. The geographic analysis enables management to monitor the performance:
Accordingly, the Group presents segment reporting for the geographic areas where it is located.
The Group segments are defined as geographic areas (e.g. France) or groups of geographic areas (Rest of Europe). Geographic areas are grouped together based on an analysis of the nature of contracts, the typology of customer portfolios and the uniformity of operating margins*.
| Costs relating to operations and incurred by Group holding companies on behalf of geographic areas are allocated to the relevant segments either directly or on the basis of an allocation key. Items not allocated correspond to headquarter expenses. Inter-segment transactions are carried out on an arm's length basis. |
||||||||
|---|---|---|---|---|---|---|---|---|
| The performance of operating segments is measured based on the operating margin*. This indicator enables the measurement and comparison of the operating performance of operating segments, irrespective of whether their business results from internal or external growth. |
||||||||
| The operating margin* realized by the main offshore delivery centers (India and Poland) is reallocated to the geographic areas managing the contracts to enable a better understanding of the performance of these areas. |
||||||||
| * Operating margin, an alternative performance measure monitored by the Group, is defined in Note 3 - Alternative performance measures. | ||||||||
| The Group communicates segment information for the following geographic areas: North America, France, United Kingdom and Ireland, the Rest of Europe, Asia-Pacific and Latin America. First-half 2022 (in millions of euros) |
North America | France | United Kingdom and Ireland |
Rest of Europe |
Asia-Pacific and Latin America (1) |
Headquarter expenses |
Eliminations | Total |
| Revenues | ||||||||
| ► external | 3,170 | 2,113 | 1,287 | 3,161 | 957 | - | - | 10,688 |
| ► inter-geographic area | 115 | 231 | 139 | 280 | 1,250 | - | (2,015) | - |
| TOTAL REVENUES | 3,285 | 2,344 | 1,426 | 3,441 | 2,207 | - | (2,015) | 10,688 |
| OPERATING MARGIN (2) | 490 | 226 | 237 | 311 | 93 | (56) | - | 1,301 |
| % of revenues | 15.5 | 10.7 | 18.4 | 9.8 | 9.7 | - | - | 12.2 |
| OPERATING PROFIT | 430 | 179 | 219 | 250 | 46 | (56) | - | 1,068 |
| (1) (2) First-half 2021 |
The Asia-Pacific and Latin America area includes the following countries in particular: India, other Asian countries, Australia, Brazil and Mexico. Operating margin, an alternative performance measure monitored by the Group, is defined in Note 3 - Alternative performance measures. |
United Kingdom and |
Rest of | Asia-Pacific and Latin |
Headquarter | |||
| (in millions of euros) | North America | France | Ireland | Europe | America (1) | expenses | Eliminations | Total |
| Revenues | 2,478 | 1,872 | 1,018 | 2,710 | 633 | - | - | 8,711 |
| ► external | 120 | 201 | 883 | - | (1,474) | - | ||
| ► inter-geographic area | 88 | 182 | ||||||
| TOTAL REVENUES | 2,566 | 2,054 | 1,138 | 2,911 | 1,516 | - | (1,474) | 8,711 |
| OPERATING MARGIN (2) | 389 | 141 | 179 | 312 | 78 | (57) | - | 1,042 |
| % of revenues | 15.7 | 7.5 | 17.6 | 11.5 | 12.5 | - | - | 12.0 |
| First-half 2021 (in millions of euros) |
North America | France | United Kingdom and Ireland |
Rest of Europe |
Asia-Pacific and Latin America (1) |
Headquarter | |
|---|---|---|---|---|---|---|---|
| Revenues | |||||||
| United | Asia-Pacific | |||||||
|---|---|---|---|---|---|---|---|---|
| 2021 (in millions of euros) |
North America | France | Kingdom and Ireland |
Rest of Europe |
and Latin America (1) |
Headquarter expenses |
Eliminations | Total |
| Revenues | ||||||||
| ► external | 5,251 | 3,799 | 2,127 | 5,563 | 1,420 | - | - | 18,160 |
| ► inter-geographic area | 181 | 366 | 256 | 480 | 1,986 | - | (3,269) | - |
| TOTAL REVENUES | 5,432 | 4,165 | 2,383 | 6,043 | 3,406 | - | (3,269) | 18,160 |
| OPERATING MARGIN (2) | 835 | 389 | 383 | 684 | 164 | (115) | - | 2,340 |
| % of revenues | 15.9 | 10.2 | 18.0 | 12.3 | 11.5 | - | - | 12.9 |
| OPERATING PROFIT | 701 | 247 | 341 | 578 | 87 | (115) | - | 1,839 |
| (1) | The Asia-Pacific and Latin America area includes the following countries in particular: India, other Asian countries, Australia, Brazil and Mexico. | |||||||
| (2) | Operating margin, an alternative performance measure monitored by the Group, is defined in Note 3 - Alternative performance measures. | |||||||
| NOTE 5 | REVENUES | |||||||
| In the first-half 2022, revenues increased by 22.7% on a reported basis. Revenues increased by 18.5% at constant exchange | ||||||||
| rates, while organic growth was 17.2%. | ||||||||
| Change | ||||||||
| At constant | ||||||||
| in millions of euros | First-half 2021 | Reported | exchange rates (*) | First-half 2022 | ||||
| North America | 2,478 | 27.9% | 16.8% | 3,170 | ||||
| France | 1,872 | 12.9% | 12.8% | |||||
| United Kingdom and Ireland | 1,018 | 26.4% | 22.7% | |||||
| Rest of Europe Asia-Pacific and Latin America |
2,710 633 |
16.7% 51.2% |
16.9% 41.5% |
2,113 1,287 3,161 957 |
| 2021 | Kingdom and | Rest of | and Latin | Headquarter | ||||
|---|---|---|---|---|---|---|---|---|
| (in millions of euros) | North America | France | Ireland | Europe | America (1) | |||
| Revenues | ||||||||
| (1) The Asia-Pacific and Latin America area includes the following countries in particular: India, other Asian countries, Australia, Brazil and Mexico. (2) Operating margin, an alternative performance measure monitored by the Group, is defined in Note 3 - Alternative performance measures. |
||||||||
| NOTE 5 REVENUES |
||||||||
| In the first-half 2022, revenues increased by 22.7% on a reported basis. Revenues increased by 18.5% at constant exchange rates, while organic growth was 17.2%. |
Change | |||||||
| in millions of euros | First-half 2021 | Reported | exchange rates (*) | At constant | First-half 2022 | |||
| North America | 2,478 | 27.9% | 16.8% | 3,170 | ||||
| France | 1,872 | 12.9% | 12.8% | 2,113 | ||||
| United Kingdom and Ireland | 1,018 | 26.4% | 22.7% | 1,287 | ||||
| Rest of Europe | 2,710 | 16.7% | 16.9% | 3,161 | ||||
| Asia-Pacific and Latin America TOTAL |
633 8,711 |
51.2% 22.7% |
41.5% 18.5% |
957 10,688 |
||||
| * Organic growth and growth at constant exchange rates, alternative performance measures monitored by the Group, are defined in Note 3 – Alternative performance measures. NOTE 6 |
OPERATING EXPENSES BY NATURE | |||||||
| 2021 | First-half 2021 | First-half 2022 | ||||||
| in millions of euros | Amount | % of revenues | Amount | % of revenues | Amount | % of revenues | ||
| Personnel expenses | 12,192 | 67.1% | 6,034 | 69.3% | 7,420 | 69.4% | ||
| Travel expenses | 123 | 0.7% | 47 | 0.5% | 109 | 1.0% | ||
| Purchases and sub-contracting expenses | 2,718 | 15.0% | 1,187 | 13.6% | 1,444 | 13.5% | ||
| Rent and local taxes | 154 | 0.8% | 85 | 1.0% | 98 | 0.9% | ||
| Charges to depreciation, amortization, impairment and provisions and proceeds from asset disposals |
633 | 3.5% | 316 | 3.6% | 316 | 3.0% |
| At constant | |||||
|---|---|---|---|---|---|
| measures. | |||||
| NOTE 6 OPERATING EXPENSES BY NATURE |
|||||
| 2021 | First-half 2021 | First-half 2022 | |||
| in millions of euros | Amount | % of revenues | Amount | % of revenues | Amount % of revenues |
| Personnel expenses | 12,192 | 67.1% | 6,034 | 69.3% | 7,420 69.4% |
| Travel expenses | 123 | 0.7% | 47 | 0.5% | 109 1.0% |
| Purchases and sub-contracting expenses | 2,718 | 15.0% | 1,187 | 13.6% | 1,444 13.5% |
| Rent and local taxes | 154 | 0.8% | 85 | 1.0% | 98 0.9% |
| Charges to depreciation, amortization, impairment and provisions and proceeds from asset disposals |
633 | 3.5% | 316 | 3.6% | 316 3.0% |
| NOTE 7 OTHER OPERATING INCOME AND EXPENSE |
|||
|---|---|---|---|
| in millions of euros | 2021 | First-half 2021 | First-half 2022 |
| Amortization of intangible assets recognized in business combinations | (122) | (59) | (68) |
| Expenses relating to share grants | (163) | (73) | (86) |
| Restructuring costs | (101) | (40) | (24) |
| Integration costs for companies acquired | (105) | (57) | (38) |
| Acquisition costs | (15) | (7) | (5) |
| Other operating expenses | (31) | (10) | (24) |
| Total operating expenses | (537) | (246) | (245) |
| Other operating income | 36 | 16 | 12 |
| Total operating income OTHER OPERATING INCOME AND EXPENSE |
36 (501) |
16 (230) |
12 (233) |
Integration costs for companies acquired mainly concern the integration of Altran.
The "Other operating income" recorded gains in respect of the reduction in the pension and post-employment benefit obligation following the transfer of employees dedicated to client contracts.
| NOTE 8 NET FINANCIAL EXPENSE |
|||
|---|---|---|---|
| First-half | First-half | ||
| in millions of euros | 2021 | 2021 | 2022 |
| Income from cash, cash equivalents and cash management assets | 24 | 11 | 18 |
| Net interest on borrowings | (126) | (63) | (58) |
| Net finance costs at the nominal interest rate | (102) | (52) | (40) |
| Impact of amortized cost on borrowings | (15) | (7) | (6) |
| Net finance costs at the effective interest rate | (117) | (59) | (46) |
| Net interest cost on defined benefit pension plans | (18) | (10) | (5) |
| Interest on lease liabilities | (19) | (11) | (7) |
| Exchange gains (losses) on financial transactions | (5) | 1 | 67 |
| (Losses) gains on derivative instruments | 3 | (1) | (76) |
| Other | (3) | (5) | (4) |
| Other financial income and expense NET FINANCIAL EXPENSE |
(42) (159) |
(26) (85) |
(25) (71) |
Exchange gains on financial transactions and losses on derivative instruments primarily concern inter-company loans denominated in foreign currencies and the impacts of the related hedging arrangements.
The effective tax rate for the half-year is calculated by applying the estimated effective tax rate for the fiscal year to pre-tax net profits for the half-year to June 30.
The effective income tax rate for the first-half 2022 is 32.8% based on pre-tax net profit of €997 million, compared with 31.3% at December 31, 2021 and 38.7% at June 30, 2021.
The effective income tax rate used to calculate normalized earnings per share at June 30, 2022 is 29.9%, compared to 31.0% at June 30, 2021. It is adjusted for a tax expense of €29 million due to the transitional impact of the 2017 US tax reform.
| NOTE 10 | GOODWILL | |||
|---|---|---|---|---|
| The Group has not identified any indications of impairment calling into question the recoverable amount of the Cash Generating | ||||
| Units (CGU) at June 30, 2022. | ||||
| NOTE 11 | TRADE RECEIVABLES, CONTRACT ASSETS AND CONTRACT COSTS | |||
| in millions of euros | June 30, 2021 | December 31, 2021 | June 30, 2022 | |
| Trade receivables | 2,479 | 3,133 | 2,868 | |
| Provisions for doubtful accounts | (30) | (24) | (22) | |
| Contract assets | 1,657 | 1,380 | 2,246 | |
| Trade receivables and contract assets, excluding contract costs | 4,106 | 4,489 | 5,092 | |
| Contract costs | 119 | 117 | 121 | |
| TRADE RECEIVABLES, CONTRACT ASSETS AND CONTRACT COSTS | 4,225 | 4,606 | 5,213 | |
| Total trade receivables and contract assets net of contract liabilities can be analyzed as follows in number of days' annual | ||||
| revenue: | ||||
| in millions of euros | June 30, 2021 | December 31, 2021 | June 30, 2022 | |
| Trade receivables and contract assets, excluding contract costs | 4,106 | 4,489 | 5,092 | |
| Contract liabilities | (1,040) | (1,405) | (1,357) | |
| ln number of days' annual revenue | TRADE RECEIVABLES AND CONTRACT ASSETS NET OF CONTRACT LIABILITIES | 3,066 63 |
3,084 61 |
3,735 63 |
| in millions of euros | June 30, 2021 | December 31, 2021 | June 30, 2022 |
|---|---|---|---|
| Trade receivables and contract assets, excluding contract costs | 4.106 | 4.489 | 5.092 |
| Contract liabilities | (1,040) | (1,405) | (1, 357) |
| TRADE RECEIVABLES AND CONTRACT ASSETS NET OF CONTRACT LIABILITIES | 3.066 | 3.084 | 3.735 |
| In number of days' annual revenue | 63 | 61 | 63 |
| Total trade receivables and contract assets net of contract liabilities can be analyzed as follows in number of days' annual revenue: |
|||
|---|---|---|---|
| derecognized in the Statement of Financial Position at June 30, 2022. | |||
| NOTE 12 NET DEBT / NET CASH AND CASH EQUIVALENTS |
|||
| in millions of euros | June 30, 2021 | December 31, 2021 | June 30, 2022 |
| Short-term investments | 1,313 | 1,651 | 1,263 |
| Cash at bank | 1,310 | 1,478 | 1,140 |
| Bank overdrafts | (16) | (10) | (30) |
| Cash and cash equivalents | 2,607 | 3,119 | 2,373 |
| Cash management assets | 322 | 385 | 415 |
| Bonds Drawdowns on bank and similar facilities and other borrowings |
(6,627) (12) |
(6,637) (17) |
(6,643) (6) |
| Long-term borrowings Bonds |
(6,639) (1,049) |
(6,654) (71) |
(6,649) (44) |
| Drawdowns on bank and similar facilities and other borrowings | (66) | (6) | (126) |
| Short-term borrowings | (1,115) | (77) | (170) |
| Borrowings | (7,754) | (6,731) | (6,819) |
| Derivative instruments | (1) | 3 | (63) |
| NET DEBT * | (4,826) | (3,224) | (4,094) |
cash outflows on business combinations, net of cash and cash equivalents acquired, of €34 million,
partially offset by organic free cash flow* generation in the first-half 2022 of €193 million.
Financial asset and liability fair value measurement methods and classifications are unchanged from December 31, 2021.
* Organic free cash flow, an alternative performance measure monitored by the Group, is defined in Note 3 - Alternative performance measures.
| NOTE 13 PROVISIONS FOR PENSIONS AND OTHER POST-EMPLOYMENT BENEFITS |
||||
|---|---|---|---|---|
| in millions of euros | June 30, 2021 | December 31, 2021 | June 30, 2022 | |
| NET OBLIGATION AT BEGINNING OF PERIOD | 1,072 | 1,072 | 550 | |
| Expense for the period recognized in the Income Statement | 44 | 84 | 32 | |
| Cost of services rendered | 48 | 83 | 36 | |
| Plan curtailments and settlements | (14) | (17) | (9) | |
| Interest cost | 10 | 18 | 5 | |
| Impact on income and expense recognized in equity | (263) | (438) | (320) | |
| Benefits and contributions | (132) | (199) | (26) | |
| Translation adjustments | 25 | 36 | 15 | |
| Other movements | (2) | (5) | 1 | |
| NET OBLIGATION AT END OF PERIOD | 744 | 550 | 252 | |
| o/w Provisions | 744 | 655 | 513 | |
| o/w Other non-current assets | - | 105 | 261 | |
| The decrease in the net obligation for pensions and other post-employment benefits is mainly due to the increase in discount rates, particularly in the United Kingdom, Canada and France in the first-half 2022, in a context of higher long-term risk free rates in these countries. |
||||
| NOTE 14 OTHER NON-CURRENT AND CURRENT ASSETS AND LIABILITIES |
||||
| "Other non-current assets", "Other current assets", "Other non-current liabilities" and "Other current liabilities" presented in the Consolidated Statement of Financial Position break down as follows: |
||||
| OTHER NON-CURRENT AND CURRENT ASSETS | ||||
| (in millions of euros) | June 30, 2021 | December 31, 2021 | June 30, 2022 | |
| Derivative instruments | 66 | 177 | 251 | |
| Shares in associates | 107 | 117 | 115 | |
| Social security and tax-related receivables, other than income tax | 183 | 312 | 282 | |
| Prepaid expenses | 308 | 257 | 346 | |
| Long-term deposits, receivables and other investments | 165 | 161 | 167 | |
| Non-current tax receivables | 248 | 259 | 210 |
| The decrease in the net obligation for pensions and other post-employment benefits is mainly due to the increase in discount rates, particularly in the United Kingdom, Canada and France in the first-half 2022, in a context of higher long-term risk free rates in these countries. |
|||
|---|---|---|---|
| NOTE 14 OTHER NON-CURRENT AND CURRENT ASSETS AND LIABILITIES |
|||
| "Other non-current assets", "Other current assets", "Other non-current liabilities" and "Other current liabilities" presented in the Consolidated Statement of Financial Position break down as follows: |
|||
| OTHER NON-CURRENT AND CURRENT ASSETS | |||
| (in millions of euros) | June 30, 2021 | December 31, 2021 | June 30, 2022 |
| Derivative instruments | 66 | 177 | 251 |
| Shares in associates | 107 | 117 | 115 |
| Social security and tax-related receivables, other than income tax | 183 | 312 | 282 |
| Prepaid expenses Long-term deposits, receivables and other investments |
308 165 |
257 161 |
346 167 |
| Non-current tax receivables | 248 | 259 | 210 |
| Non-consolidated securities | 28 | 43 | 47 |
| Defined benefit pension plan surplus | - | 105 | 261 |
| Other | 105 | 121 | 97 |
| OTHER NON-CURRENT AND CURRENT LIABILITIES | |||
|---|---|---|---|
| (in millions of euros) | June 30, 2021 | December 31, 2021 | June 30, 2022 |
| Special employee profit-sharing reserve | 43 | 46 | 44 |
| Derivative instruments | 30 | 85 | 279 |
| Liabilities related to acquisitions of consolidated companies | 125 | 124 | 103 |
| Non-current tax payables | 258 | 262 | 269 |
| Other | 123 | 124 | 108 |
| OTHER NON-CURRENT AND CURRENT LIABILITIES | 579 | 641 | 803 |
| NOTE 15 NUMBER OF EMPLOYEES |
||||||
|---|---|---|---|---|---|---|
| AVERAGE NUMBER OF EMPLOYEES BY GEOGRAPHIC AREA | ||||||
| First-half 2021 | 2021 | First-half 2022 | ||||
| Number of employees |
% | Number of employees |
% | Number of employees |
% | |
| North America | 18,243 | 7% | 18,627 | 6% | 20,379 | 6% |
| France | 36,075 | 13% | 36,332 | 13% | 38,357 | 11% |
| United Kingdom and Ireland | 10,772 | 4% | 11,242 | 4% | 12,721 | 4% |
| Rest of Europe | 57,796 | 21% | 59,188 | 20% | 64,957 | 19% |
| Africa and Middle East | 4,039 | 1% | 4,229 | 1% | 5,018 | 1% |
| Asia-Pacific and Latin America | 149,775 | 54% | 163,072 | 56% | 198,203 | 59% |
| AVERAGE NUMBER OF EMPLOYEES | 276,700 | 100% | 292,690 | 100% | 339,635 | 100% |
| NUMBER OF EMPLOYEES AT JUNE 30 BY GEOGRAPHIC AREA | ||||||
| Number of | First-half 2021 | 2021 Number of |
Number of | First-half 2022 | ||
| employees | % | employees | % | employees | % | |
| North America | 18,278 | 6% | 19,588 | 6% | 20,767 | 6% |
| France | 36,118 | 12% | 37,283 | 12% | 38,425 | 11% |
| United Kingdom and Ireland | 11,061 | 4% | 12,172 | 4% | 13,139 | 4% |
| Rest of Europe | 58,824 | 21% | 62,593 | 19% | 67,311 | 19% |
| Africa and Middle East | 4,239 | 1% | 4,640 | 1% | 5,412 | 1% |
| Asia-Pacific and Latin America | 160,981 | 56% | 188,408 | 58% | 207,094 | 59% |
| Number of | Number of | Number of | ||||
|---|---|---|---|---|---|---|
| NUMBER OF EMPLOYEES AT JUNE 30 BY GEOGRAPHIC AREA | ||||||
| First-half 2021 | 2021 | First-half 2022 | ||||
| Number of employees |
% | Number of employees |
% | Number of employees |
% | |
| North America | 18,278 | 6% | 19,588 | 6% | 20,767 | 6% |
| France | 36,118 | 12% | 37,283 | 12% | 38,425 | 11% |
| United Kingdom and Ireland | 11,061 | 4% | 12,172 | 4% | 13,139 | 4% |
| Rest of Europe | 58,824 | 21% | 62,593 | 19% | 67,311 | 19% |
| Africa and Middle East | 4,239 | 1% | 4,640 | 1% | 5,412 | 1% |
| Asia-Pacific and Latin America | 160,981 | 56% | 188,408 | 58% | 207,094 | 59% |
| June 30, 2022 |
|---|
| 2,006 |
| 141 |
| 84 |
| 2,231 |
| 49 |
| June 30, 2022 - 49 |
| in millions of euros | June 30, 2021 | December 31, 2021 | June 30, 2022 |
|---|---|---|---|
| On client contracts | |||
| Other commitments received | 18 | 30 | 49 |
| COMMITMENTS RECEIVED | 19 | 30 | 49 |
In the normal course of their activities, certain Group companies underwent tax audits, leading in some cases to revised assessments in the first-half 2022 and in previous fiscal years.
Proposed adjustments were challenged and litigation and pre-litigation proceedings were in progress at June 30, 2022. This is particularly the case in India, where Group subsidiaries have received several revised assessments or proposed revised assessments for income tax in recent years, particularly concerning transfer pricing issues.
Most often, no amounts have been booked for these disputes in the consolidated financial statements in so far as the Group considers it can justify its positions and that the likelihood of winning is high.
None.
"I hereby declare that, to the best of my knowledge, the condensed interim consolidated financial statements for the half-year ended June 30, 2022 have been prepared in accordance with applicable accounting standards and give a true and fair view of the assets, liabilities, financial position and results of the Company and all the other companies included in the scope of consolidation and that the interim financial review on page 5 gives a fair description of the material events that occurred in the first six months of the fiscal year and their impact on the financial statements, the main related party transactions, as well as a description of the main risks and uncertainties for the remaining six months of the year".
Aiman Ezzat
Chief Executive Officer
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