INTERIM FINANCIAL REPORT C

June 30, 2016

INTERIM FINANCIAL REPORT CONSOLIDATED FINANCIAL STATEMENTS

CAPGEMINI

JUNE 30, 2016

1

CONTENTS

FINANCIAL HIGHLIGHTS ...........................................................................................................................................................3 STATUTORY AUDITORS’ REPORT ON THE 2016 INTERIM FINANCIAL INFORMATION ................................................................4 INTERIM FINANCIAL REVIEW ...................................................................................................................................................5 CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED JUNE 30, 2016 .........................9 DECLARATION BY THE PERSON RESPONSIBLE FOR THE INTERIM FINANCIAL REPORT ............................................................24

CAPGEMINI

JUNE 30, 2016

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FINANCIAL HIGHLIGHTS CONSOLIDATED FINANCIAL STATEMENTS

First-half 2012

First-half 2013

First-half 2014

First-half 2015

First-half 2016

5,150

5,033

5,104

5,608

6,257

Operating expenses

(4,800)

(4,666)

(4,702)

(5,122)

(5,619)

Operating margin *

350

367

402

486

638

6.8%

7.3%

7.9%

8.7%

10.2%

240

302

354

447

510

4.7%

6.0%

6.9%

8.0%

8.1%

134

176

240

290

366

2.6%

3.5%

4.7%

5.2%

5.8%

153,744,878

158,229,410

158,477,956

165,150,124

170,241,240

1.37

1.39

1.73

1.92

2.52

GOODWILL AT JUNE 30

3,762

3,673

3,642

3,925

6,959

EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY AT JUNE 30

4,058

4,442

4,433

6,017

6,350

27

272

205

1,464

(2,278)

(309)

(313)

(148)

(86)

31

Average number of employees

120,560

126,356

134,633

146,250

182,685

Number of employees at June 30

121,026

127,968

138,809

147,572

184,899

in millions of euros Revenues

% of revenues Operating profit % of revenues Profit for the period attributable to owners of the Company % of revenues Earnings per share Average number of shares outstanding during the period Normalized earnings per share * (in euros)

(NET DEBT) / NET CASH AND CASH EQUIVALENTS * AT JUNE 30 ORGANIC FREE CASH FLOW * AT JUNE 30

* The alternative performance measures monitored by the Group - operating margin, normalized earnings per share, net debt / net cash and cash equivalents and organic free cash flow - are defined in Note 3, Alternative performance measures.

CAPGEMINI

JUNE 30, 2016

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STATUTORY AUDITORS’ REPORT ON THE 2016 INTERIM FINANCIAL INFORMATION Period from 1st of January 2016 to 30th of June 2016

This is a free translation into English of the Statutory Auditors’ review report issued in French and is provided solely for the convenience of English speaking readers. This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France.

Cap Gemini S.A. 11 rue de Tilsitt 75017 Paris

To the Shareholders

In compliance with the assignment entrusted to us by the Shareholders 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:  the review of the accompanying condensed half-yearly consolidated financial statements of Cap Gemini S.A., for the period from 1st of January 2016 to 30th of June 2016,  the verification of the information presented in the half-yearly management report. These condensed half-yearly 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. I. Conclusion on the financial statements

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-yearly 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. II. Specific Verification

We have also verified the information presented in the half-yearly management report on the condensed half-yearly consolidated financial statements subject to our review. We have no matters to report as to its fair presentation and consistency with the condensed half-yearly consolidated financial statements. Paris La Défense, the 2nd of August 2016 KPMG Audit

Neuilly-sur-Seine, the 2nd of August 2016 PricewaterhouseCoopers Audit

Département de KPMG S.A.

Frédéric Quélin

Françoise Garnier

Richard Béjot

Partner

Partner

Partner

CAPGEMINI

JUNE 30, 2016

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INTERIM FINANCIAL REVIEW FIRST-HALF 2016 HIGHLIGHTS During the first six months of 2016, the economies of continental Europe continued to accelerate while those of North America and the United Kingdom slowed slightly. The volatility experienced at the beginning of the year ceased but the end of the rd period was marked by the United Kingdom vote in favor of Brexit on June 23 . Digital & Cloud investment continues to drive the IT services market, with strong acceleration in continental Europe. In this environment, Capgemini continued to successfully roll-out its strategy and based on its first-half results maintains its revenue growth and organic free cash flow guidance and raised its operating margin guidance for 2016. With regards to Group activities, revenues for the first-half 2016 totaled €6,257 million, up 11.6% on published figures and 14.4% at constant exchange rates on the first-half 2015. The impact of foreign currencies was negative during the period, as the euro strengthened against the pound sterling, Brazilian real and Canadian dollar. Organic growth (at constant exchange rates and Group scope) is 3.3%, with the difference between growth at constant exchange rates and organic growth mainly due to the acquisition of the US company IGATE in July 2015. Digital & Cloud revenues grew 32% at constant exchange rates and account for 28% of H1 revenues. New orders recorded during the first six months of 2016 totaled €6,341 million, an increase of 21% at constant exchange rates year-on-year. Since the beginning of the year, Capgemini has announced the launch of new services and partnerships illustrating the Group’s strategy:  Launch of a new Digital Manufacturing service offering targeting the manufacturing industry, to help companies improve efficiency and productivity by building smart connected plants and products;  Acquisition of the innovation strategy consulting firm, Fahrenheit 212 and oinio, a leading Salesforce partner in Europe;  Extension of the Group’s network of innovation centers with the opening of centers in San Francisco, Toronto and Mumbai. This network helps companies accelerate the integration of technological innovations;  Recognition of Capgemini as one of the world’s most ethical companies, for the fourth year in a row. On a commercial front, the Group also announced the following contracts:  Signature of a new contract with HMRC for application development and management services through to June 2020 in support of HMRC's ambition of being one of the world’s most digitally advanced tax authorities;  Launch of a cloud-based Digital Manufacturing platform featuring asset management and analytics technology in partnership with Siemens’ Building Technologies division;  Signature of a contract with Leoni, a global wiring system and cable technology international group based in Germany, to implement its human resources strategy in more than 30 countries;  One-year contract extension to provide the United Kingdom Ministry of Defence with secure managed services; Operating margin is up 31% year-on-year to €638 million, and represents 10.2% of revenues, up 150 basis points year-onyear, with an increase in all Group regions and businesses. This improvement in profitability reflects not only the positive impact of the integration of IGATE and the related synergies which are deployed faster than initially scheduled, but also demonstrates the value created by the ongoing industrialization of the Group operations and the increasing contribution from high value offerings in Digital & Cloud. Other operating income and expenses totaled €128 million. The increase is primarily due to the integration costs and the amortization expense on intangible assets recognized on acquisitions, while restructuring costs fell slightly to €31 million. In addition, in the first-half 2015, an exceptional income of €35 million in respect of pension obligations in the United Kingdom was recognized. Operating profit for the first-half 2016 increases to 8.1% of revenues or €510 million, up 14% year-on-year. Net financial expense is €62 million. This increase on the first-half 2015 (€41 million) is mainly due to the cost of the bonds issued in the summer of 2015 to finance the IGATE acquisition. The income tax expense is €87 million, down €40 million yearon-year notably due to the recognition of deferred tax income of €32 million. On this basis, profit for the period reached €361 million compared with €279 million for the first-half 2015 and profit for the period attributable to owners of the Company amounted €366 million, up 26% on the €290 million recorded the year before. Basic EPS (earnings per share) is €2.15 and normalized EPS increased 31% year-on-year to €2.52 for the first half of 2016. The Group generated an organic free cash flow of €31 million in the first six months of 2016, an improvement of €117 million on the same period of 2015 when organic free cash flow of €86 million was consumed. The seasonal nature of cash flow CAPGEMINI

JUNE 30, 2016

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generation remains significant due to the seasonality of certain payments (particularly variable compensation), however this impact is reducing with the increasing weight of business outside continental Europe. Return to shareholder amounted to €394 million over the period through the payment of a dividend for €229 million (€1.35 per share) and the purchase of Cap Gemini S.A. shares on the market under the share buyback program in the amount of €165 million. Group net debt therefore increased during the period to €2,278 million at June 30, 2016 from €1,767 million at December 31, 2015. The Group headcount stood at 184,899 at June 30, 2016, up on December 31, 2015 (180,639). The attrition rate of 17.8% observed during the first-half is down 0.3 points on the first-half 2015. The proportion of employees located off-shore is now 55%, up 1.1 points over six months.

TRENDS BY GEOGRAPHIC AREA

Revenues

% of revenues H1 2016

Year-on-year growth

Published

At constant exchange rates

Operating margin rate

H1 2015

H1 2016

North America

30%

+35.1%

+36.2%

13.3%

15.1%

United Kingdom and Ireland

17%

+2.1%

+8.6%

12.7%

14.5%

France

20%

+4.8%

+4.8%

6.2%

6.6%

Rest of Europe

26%

+6.3%

+6.9%

7.8%

8.9%

7%

-3.7%

+10.3%

3.2%

3.8%

+11.6%

+14.4%

8.7%

10.2%

Asia Pacific and Latin America

TOTAL

100%

North America (30% of Group revenues) reported, including the integration of IGATE, revenue growth at constant exchange rates of 36.2% year-on-year, driven by the financial services, consumer goods and retail and manufacturing sectors. Excluding the Energy & Utilities sector where the slowdown accelerated in the second quarter, like-for-like growth was 5%. Operating margin increased 180 basis points to 15.1%. United Kingdom and Ireland (17% of Group revenues) reported revenue growth of 8.6% at constant exchange rates. Local momentum was boosted by contract wins in the private sector which now represents more than half of revenues and reported double-digit organic growth, while the public sector was down as anticipated. The operating margin improved 180 basis points year-on-year to 14.5%. In the first-half 2016, France (20% of Group revenues) reported a 4.8% increase in revenues, fueled by strong traction in application services. The financial services and consumer goods and retail sectors were the most dynamic during the period. Operating margin improved 40 basis points year-on-year to 6.6%. Rest of Europe region (which now includes Benelux and represents 26% of Group revenues) reported 6.9% growth in revenues at constant exchange rates, with all geographies and sectors contributing to this result. The operating margin increased 110 basis points to 8.9% for the half-year. The Asia-Pacific and Latin America region (7% of Group revenues) reported growth of 10.3% at constant exchange rates. Growth remains very dynamic in Asia-Pacific, driven by the financial services and consumer goods and retail sectors. The economic environment remains weak in Brazil but the negative impact on Group growth is reducing. The operating margin, traditionally low in the first half of the year in this region, increased 60 basis points to 3.8% of revenues.

TRENDS BY BUSINESS Revenues % of revenues H1 2016 Consulting Services Technology & Engineering Services Application Services Other Managed Services TOTAL

Year-on-year growth

Published

At constant exchange rates

Operating margin rate

H1 2015

H1 2016

4% 15% 60% 21%

+9.1% +13.2% +15.2% +2.0%

+8.1% +13.1% +17.2% +9.3%

8.1% 8.7% 10.0% 8.2%

10.4% 11.3% 11.4% 9.2%

100%

+11.6%

+14.4%

8.7%

10.2%

CAPGEMINI

JUNE 30, 2016

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Consulting Services (4% of Group revenues) reaping the benefits of its repositioning on Digital Transformation reported an increase in revenues of 8.1% at constant exchange rates with strong growth in the UK. Operating margin improved 230 basis points year-on-year to 10.4%. Technology & Engineering Services (15% of Group revenues, previously known as Local Professional Services) reported revenue growth of 13.1% at constant exchange rates in the first six months. Growth was driven, beyond the IGATE contribution, by North America and Rest of Europe regions. Operating margin increased 260 basis points year-on-year to 11.3% in the first half. Application Services (60% of Group revenue) reported an increase of 17.2% at constant exchange rates for the first-half. Beyond the contribution of IGATE, growth was mainly driven by an acceleration in Europe. Operating margin rose to 11.4% from 10.0% in 2015. Other Managed Services (21% of Group revenue) reported 9.3% growth in revenues at constant exchange rates thanks to the impact of IGATE and despite the anticipated marked drop in activity in the United Kingdom. Operating margin is 9.2%, up 100 basis points on the first-half 2015.

ANALYSIS OF THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED JUNE 30, 2016 Consolidated Income Statement Revenues for the first-half 2016 totaled €6,257 million, compared with €5,608 million for the first-half 2015, up 11.6% year-onyear and 14.4% at constant exchange rates. The operating margin for the first six months of 2016 was €638 million, compared with €486 million for the same period in 2015, representing a margin rate of 10.2% compared with 8.7%. Other operating income and expense (including amortization of intangible assets recognized in business combinations) represented a net expense of €128 million in the first-half 2016, compared with €39 million for the first-half 2015. This €89 million increase is mainly due to integration costs and amortization of intangible assets recognized in respect of the IGATE acquisition. Operating profit is therefore €510 million for the half-year ended June 30, 2016 (8.1% of revenues) compared with €447 million for the first-half 2015 (8.0% of revenues). The net financial expense totaled €62 million in the first-half 2016, up on the same period in 2015 (€41 million). This rise is mainly due to the increase in net finance costs following the bond issue performed to finance the IGATE acquisition. The income tax expense for the first-half 2016 is €87 million, compared with €127 million for the first-half 2015 and the effective tax rate for the first-half 2016 is 19.4%. This decrease is primarily due to the recognition of deferred tax income of €32 million in respect of a depreciable revaluation surplus in the context of a merger. Adjusted for this item, the effective tax rate is 26.5% (compared with 31.2% in the first-half 2015). Profit for the period attributable to owners of the Company is therefore €366 million for the half-year ended June 30, 2016, up 26% on the profit of €290 million for the first-half 2015. Normalized earnings per share are therefore €2.52 based on an average of 170,241,240 shares outstanding at June 30, 2016, compared with €1.92 based on an average of 165,150,124 shares outstanding at June 30, 2015.

Consolidated Statement of Financial Position Consolidated equity attributable to owners of the Company totaled €6,350 million at June 30, 2016, down €537 million compared with December 31, 2015. This decrease was mainly due to:  the recognition in equity of actuarial losses on provisions for pensions and other post-employment benefits of €349 million, net of deferred tax;  the payment to shareholders of dividends of €229 million;  the elimination of treasury shares in the amount of €167 million;  a €146 million decrease in foreign exchange translation reserves; partially offset by the recognition of profit for the period of €366 million. Non-current assets totaled €10,256 million at June 30, 2016, down €276 million on December 31, 2015, mainly due to a €96 million decrease due to the impact of foreign currency translation adjustments on goodwill denominated in foreign currencies and particularly the US dollar and pound sterling. Non-current liabilities excluding long-term borrowings amounted to €2,021 million at June 30, 2016, up on December 31, 2015 (€1,829 million) mainly due to a decrease in discount rates applied to provisions for pensions and other post-employment benefits.

CAPGEMINI

JUNE 30, 2016

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Operating receivables (accounts and notes receivable) totaled €3,107 million at June 30, 2016 compared with €3,149 million at June 30, 2015 and €3,055 million at December 31, 2015. Accounts and notes receivable excluding capitalized costs on projects and net of advances from clients and amounts billed in advance totaled €2,374 million at June 30, 2016, compared with €2,191 million one year earlier and €2,207 million at December 31, 2015. Accounts and notes payable mainly consist of trade payables and related accounts, personnel costs and accrued taxes other than income tax and totaled €2,424 million at June 30, 2016, compared with €2,357 million at June 30, 2015 and €2,724 million at December 31, 2015. Consolidated net debt totaled €2,278 million at June 30, 2016, compared with consolidated net cash and cash equivalents of €1,464 million at June 30, 2015 and consolidated net debt of €1,767 million at December 31, 2015. This €511 million increase in net debt on December 31, 2015 chiefly reflects:  the payment to shareholders of dividends of €229 million;  the repurchase of treasury shares in the amount of €167 million, partially offset by the strike price received on BSAAR redeemable share subscription or purchase warrants delivered during the half-year of €9 million;  the acquisition of Fahrenheit 212 and oinio; partially offset by organic free cash flow for the half-year, equal to cash flow from operations less acquisitions of property, plant, equipment and intangible assets (net of disposals) and adjusted for flows relating to the net interest cost, of €31 million.

RELATED PARTIES No material transactions with related parties took place in the first-half 2016.

MAIN RISKS AND UNCERTAINTIES FOR THE SECOND-HALF 2016 The nature and degree of risks to which the Group is exposed have not changed from those presented on pages 26 to 31 of the 2015 Registration Document. Among these risks, developments in the economic environment and particularly the resulting impact on prices is the main factor likely to influence business in the second half.

OUTLOOK FOR FISCAL YEAR 2016 For 2016, the Group upgrades its operating margin forecast to between 11.3% and 11.5% (compared with 11.1% to 11.3% previously). In addition, the Group confirms its guidance for 2016 of revenue growth at constant exchange rates of 7.5% to 9.5% and organic free cash flow generation in excess of €850 million. The Group estimates the negative impact of currency fluctuations on revenues at -2%, primarily due to the appreciation of the euro against the pound sterling and the Brazilian real.

CAPGEMINI

JUNE 30, 2016

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CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED JUNE 30, 2016

CONSOLIDATED INCOME STATEMENT

2015

First-half 2015

First-half 2016

Amount

%

Amount

%

Amount

%

11,915

100

5,608

100

6,257

100

(8,838)

(74.2)

(4,208)

(75.0)

(4,606)

(73.6)

Selling expenses

(955)

(8.0)

(466)

(8.3)

(524)

(8.4)

General and administrative expenses

(860)

(7.2)

(448)

(8.0)

(489)

(7.8)

(10,653)

(89.4)

(5,122)

(91.3)

(5,619)

(89.8)

1,262

10.6

486

8.7

638

10.2

(240)

(2.0)

(39)

(0.7)

(128)

(2.1)

in millions of euros Revenues

Notes 4–5

Cost of services rendered

Operating expenses

6

Operating margin * Other operating income and expense

7

Operating profit

1,022

8.6

447

8.0

510

8.1

Net finance costs

8

(55)

(0.5)

(6)

(0.1)

(43)

(0.7)

Other financial income and expense

8

(63)

(0.5)

(35)

(0.6)

(19)

(0.3)

(118)

(1.0)

(41)

(0.7)

(62)

(1.0)

Net financial expense Income tax income (expense)

(1)

203

1.7

(127)

(2.3)

(87)

(1.4)

PROFIT FOR THE PERIOD

1,107

9.3

279

5.0

361

5.8

Owners of the Company

1,124

9.4

290

5.2

366

5.8

Non-controlling interests

(17)

(0.1)

(11)

(0.2)

(5)

(0.1)

Attributable to:

EARNINGS PER SHARE Average number of shares outstanding during the period Basic earnings per share (in euros) Diluted average number of shares outstanding Diluted earnings per share (in euros) Average number of shares outstanding during the period Normalized earnings per share * (in euros)

168,452,917

165,150,124

170,241,240

6.67

1.76

2.15

178,581,519

175,753,055

180,184,197

6.33

1.67

2.05

168,452,917

165,150,124

170,241,240

4.84

1.92

2.52

(1) Including the remeasurement of deferred tax assets on US tax loss carry-forwards in the amount of €476 million. * The alternative performance measures monitored by the Group – operating margin and normalized earnings per share – are defined in Note 3, Alternative performance measures.

CAPGEMINI

JUNE 30, 2016

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STATEMENT OF INCOME AND EXPENSE RECOGNIZED IN EQUITY

2015

First-half 2015

First-half 2016

97

89

(349)

35

44

(24)

255

158

(142)

387

291

(515)

1,107

279

361

1,494

570

(154)

Owners of the Company

1,514

582

(153)

Non-controlling interests

(20)

(12)

(1)

in millions of euros Actuarial gains and losses on defined benefit pension plans, net of tax (1) Remeasurement of hedging derivatives, net of tax Translation adjustments

(2)

(2)

TOTAL INCOME AND EXPENSE RECOGNIZED IN EQUITY Profit for the period (reminder) If this income and expense recognized in equity had been recognized in profit or loss, profit for the period would have been as follows: Attributable to:

(1) Items that will not be reclassified subsequently to profit or loss, (2) Items that may be reclassified subsequently to profit or loss.

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

June 30, 2015

December 31, 2015

June 30, 2016

3,925

7,055

6,959

Intangible assets

149

848

803

Property, plant and equipment

514

763

733

1,049

1,412

1,358

429

454

403

6,066

10,532

10,256

3,149

3,055

3,107

in millions of euros

Notes

Goodwill

Deferred taxes Other non-current assets Total non-current assets Accounts and notes receivable

10

Current tax receivables

11

64

72

521

514

529

92

116

110

5,741

1,950

1,488

9,514

5,699

5,306

15,580

16,231

15,562

Other current assets Cash management assets Cash and cash equivalents

11 11

Total current assets TOTAL ASSETS

(1)

June 30, 2015

December 31, 2015

June 30, 2016

Share capital

1,377

1,377

1,377

Additional paid-in capital

3,498

3,499

3,499

Retained earnings and other reserves

852

887

1,108

Profit for the period

290

1,124

366

6,017

6,887

6,350

14

26

25

6,031

6,913

6,375

922

3,161

3,171

131

221

99

1,268

1,216

1,570

33

28

32

294

364

320

2,648

4,990

5,192

3,445

652

697

2,357

2,724

2,424


Notes

Equity (attributable to owners of the Company) Non-controlling interests Total equity Long-term borrowings

11

Deferred taxes Provisions for pensions and other post-employment benefits

12

Non-current provisions Other non-current liabilities

13

Total non-current liabilities Short-term borrowings and bank overdrafts

11

Accounts and notes payable Advances from customers and billed in advance

846

739

639

Current provisions

47

90

91

Current tax liabilities

60

61

68

146

62

76

6,901

4,328

3,995

15,580

16,231

15,562

Other current payables Total current liabilities TOTAL EQUITY AND LIABILITIES

10

13

(1) “Cash and cash equivalents” include the IGATE acquisition financing.

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11

CONSOLIDATED STATEMENT OF CASH FLOWS First-half 2015

First-half 2016

1,124

290

366

(17)

(11)

(5)

40

-

-

264

107

147

8

(19)

8

Losses on disposals of assets

17

3

4

Expenses relating to share grants

32

12

22

55

6

43

(203)

127

87

(19)

(3)

(4)

Cash flows from operations before net finance costs and income tax (A)

1,301

512

668

Income tax paid (B)

(137)

(39)

(94)

Change in accounts and notes receivable and advances from customers and amounts billed in advance

(22)

(165)

(186)

Change in capitalized costs on projects

(10)

(14)

11

Change in accounts and notes payable

(80)

(73)

(19)

Change in other receivables/payables

(48)

(261)

(267)

Change in operating working capital (C)

(160)

(513)

(461)

NET CASH FROM (USED lN) OPERATING ACTIVITIES (D=A+B+C)

1,004

(40)

113

Acquisitions of property, plant and equipment and intangible assets

(198)

(68)

(82)

19

10

8

(179)

(58)

(74)

(3,392)

(8)

(22)

(2)

(1)

6


Notes

Profit for the period attributable to owners of the Company Non-controlling interests Impairment of goodwill Depreciation, amortization and impairment of fixed assets Change in provisions

Net finance costs

8

Income tax expense (income) Unrealized (gains) on changes in fair value and other

Proceeds from disposals of property, plant and equipment and intangible assets Acquisitions of property, plant and equipment and intangible assets, net of disposals Cash (outflows) on business combinations net of cash and cash equivalents acquired Cash inflows (outflows) in respect of cash management assets Other cash (outflows) inflows, net

2015

(13)

(4)

(6)

Cash outflows from other investing activities

(3,407)

(13)

(22)

NET CASH USED IN INVESTING ACTIVITIES (E)

(3,586)

(71)

(96)

564

563

-

5

-

-

(198)

(198)

(229)

(81)

(22)

(158)

Proceeds from borrowings

2,881

3,383

80

Repayments of borrowings

(797)

(73)

(97)

(38)

(5)

(21)

Proceeds from issues of share capital Proceeds from issues of share capital subscribed by non-controlling interests Dividends paid Net payments relating to transactions in Cap Gemini S.A. shares

Interest paid

8

Interest received

8

28

17

13

NET CASH FROM (USED IN) FINANCING ACTIVITIES (F)

2,364

3,665

(412)

NET (DECREASE) INCREASE lN CASH AND CASH EQUIVALENTS (G=D+E+F)

(218)

3,554

(395)

26

46

(66)

2,140

1,948

5,740

1,487

Effect of exchange rate movements on cash and cash equivalents (H) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD (I) CASH AND CASH EQUIVALENTS AT END OF PERIOD (G+H+I)

11 11

2,140 1,948

(1)

(1) Cash and cash equivalents include the IGATE acquisition financing.

CAPGEMINI

JUNE 30, 2016

12

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

in millions of euros At January 1, 2016

Number of shares

Share capital


Treasury shares

Consolidated retained earnings and other reserves

Total income and expense recognized in equity Translation adjustments

Other

Equity (attributable to owners of the Company)

Noncontrolling interests

Total equity

172,181,500

1,377

3,499

(75)

2,586

248

(748)

6,887

26

6,913

-

-

-

-

(229)

-

-

(229)

-

(229)

-

-

-

19

15

-

-

34

-

34

-

-

-

-

(22)

-

-

(22)

-

(22)

-

-

-

(167)

-

-

-

(167)

-

(167)

-

-

-

(148)

(236)

-

-

(384)

-

(384)

-

-

-

-

-

(146)

(373)

(519)

4

(515)

-

-

-

-

366

-

-

366

(5)

361

172,181,500

1,377

3,499

(223)

2,716

102

(1,121)

6,350

25

6,375

Total income and expense recognized in equity


Treasury shares

Consolidated retained earnings and other reserves

Equity (attributable to owners of the Company)

Noncontrolling interests

Dividends paid out for 2015 Incentive instruments and employee share ownership Tax impact of the derivative instrument on Cap Gemini S.A. shares Elimination of treasury shares Transactions with shareholders Income and expense recognized in equity Profit for the period At June 30, 2016

in millions of euros At January 1, 2015

Number of shares

Translation adjustments

Other

Total equity

163,592,949

1,309

3,010

(60)

1,688

(10)

(880)

5,057

26

5,083

-

-

-

-

(198)

-

-

(198)

-

(198)

Dividends paid out for 2015 Incentive instruments and employee share ownership

Share capital

(1)

1,862,472

15

48

90

(37)

-

-

116

-

116

Adjustments to the put option granted to minority shareholders

-

-

-

-

(14)

-

-

(14)

-

(14)

Tax impact of the derivative instrument on Cap Gemini S.A. shares

-

-

-

-

20

-

-

20

-

20

-

-

-

(47)

1

-

-

(46)

-

(46)

6,700,000

53

440

-

7

-

-

500

-

500

8,562,472

68

488

43

(221)

-

-

378

-

378

-

-

-

-

-

159

133

292

(1)

291

Elimination of treasury shares Issue of share capital Transactions with shareholders Income and expense recognized in equity Profit for the period At June 30, 2015

-

-

-

-

290

-

-

290

(11)

279

172,155,421

1,377

3,498

(17)

1,757

149

(747)

6,017

14

6,031

JUNE 30, 2016

13

(1) Including 1,862,466 shares issued following the exercise of BSAAR warrants in the first-half 2015.

CAPGEMINI

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALFYEAR ENDED JUNE 30, 2016 NOTE 1

ACCOUNTING BASIS

The condensed interim consolidated financial statements for the half-year ended June 30, 2016 and the notes thereto were drawn up under the responsibility of the Board of Directors and adopted by the Board of Directors’ meeting of July 26, 2016.

A) IFRS standards base The condensed interim consolidated financial statements for the half-year ended June 30, 2016 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. The Group also takes account of the positions adopted by Syntec Informatique – an organization representing major consulting and computer services companies in France - regarding the application of certain IFRS. These condensed interim consolidated financial statements for the half-year ended June 30, 2016 should be read in conjunction with the 2015 consolidated financial statements.

B) New standards and interpretations applicable in 2016 The accounting policies applied by the Capgemini Group are unchanged on those applied for the preparation of the 2015 consolidated financial statements. The standards, amendments, and interpretations which entered into mandatory effect on January 1, 2016 do not have a material effect on the Group financial statements. The Group did not elect to adopt early the standards, amendments, and interpretations published by the IASB but not yet endorsed by the European Union at June 30, 2016 or in effect at January 1, 2016.

NOTE 2

CHANGES IN CONSOLIDATION SCOPE

The Group acquired oinio in Germany in the first-half 2016, strengthening Capgemini’s digital transformation offering around the Salesforce solution and platform. The Group also acquired Fahrenheit 212, an innovation strategy and design firm, to develop new digital offerings in North America.

CAPGEMINI

JUNE 30, 2016

14

NOTE 3

ALTERNATIVE PERFORMANCE MEASURES

The alternative performance measures monitored by the Group are defined as follows: ► Operating margin is equal to revenues less operating expenses. It is calculated before “Other operating income and expenses” which include amortization of intangible assets recognized in business combinations, the charge resulting from the deferred recognition of the fair value of shares granted to employees (including social security contributions and employer contributions), and non-recurring revenues and expenses, notably impairment of goodwill, negative goodwill, capital gains or losses on disposals of consolidated companies or businesses, restructuring costs incurred under a detailed formal plan approved by the Group’s management, the cost of acquiring and integrating companies acquired by the Group, and the effects of curtailments, settlements and transfers of defined benefit pension plans;

► Normalized earnings per share are calculated by dividing normalized profit or loss attributable to owners of the Company by the weighted average number of ordinary shares outstanding during the period, excluding treasury shares. Normalized net profit or loss is equal to profit for the period attributable to owners of the Company corrected for the impact of items recognized in other operating income and expense (see Note 7, Other operating income and expense), net of tax calculated using the effective tax rate; First-half 2016

in millions of euros Profit for the period attributable to owners of the Company

366

Recognition of deferred tax income on a depreciable revaluation surplus in the context of a merger Profit for the period attributable to owners of the Company – adjusted for recognition of deferred tax income on a depreciable revaluation surplus in the context of a merger

(32) 334

Other operating income and expenses, calculated at the effective tax rate

95

Normalized profit for the year attributable to owners of the Company

429

Weighted average number of ordinary shares outstanding

170,241,240

NORMALIZED EARNINGS PER SHARE (in euros)

2.52

► Net debt (or net cash and cash equivalents) comprises (i) cash and cash equivalents, as presented in the Consolidated Statement of Cash Flows and consisting of short-term investments and cash at bank less bank overdrafts, and also including the fair value of hedging instruments relating to these items and (ii) cash management assets (assets presented separately in the Consolidated Statement of Financial Position due to their characteristics), less 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 adjusted for flows relating to the net interest cost. First-half 2016

in millions of euros Cash flow from operations

113

Acquisitions of property, plant and equipment and intangible assets

(82)

Proceeds from disposals of property, plant and equipment and intangible assets

8

Acquisitions of property, plant, equipment and intangible assets (net of disposals)

(74)

Interest paid

(21)

Interest received

13

Net interest cost

(8)

ORGANIC FREE CASH FLOW

31

CAPGEMINI

JUNE 30, 2016

15

NOTE 4

OPERATING SEGMENTS

The Group now communicates segment information for five geographic areas: North America, France, United Kingdom and Ireland, the Rest of Europe and Asia-Pacific and Latin America. The Rest of Europe area groups together countries presenting comparable economic characteristics. Segment reporting is complemented by information on revenues and operating margin for each of the Group’s four businesses. ANALYSIS OF THE INCOME STATEMENT BY GEOGRAPHIC AREA Half-year ended June 30, 2016 in millions of euros

North America

France


Rest of Europe

AsiaPacific and Latin America

HQ expenses

Eliminations

Total

Revenues - external - inter-geographic area TOTAL REVENUES OPERATING MARGIN * % of revenues OPERATING PROFIT

Half-year ended June 30, 2015 in millions of euros

1,891 70 1,961 285 15.1 237

North America

1,273 100 1,373 85 6.6 53

France

1,048 76 1,124 152 14.5 140


1,590 121 1,711 141 8.9 123

Rest of Europe

455 595 1,050 17 3.8 (1)


(42) (42)

HQ expenses

(962) (962) -

Eliminations

6,257 6,257 638 10.2 510

Total

REVENUES - external - inter-geographic area TOTAL REVENUES OPERATING MARGIN * % of revenues OPERATING PROFIT

Year ended December 31, 2015 in millions of euros

1,400 66 1,466 185 13.3 177

North America

1,215 95 1,310 76 6.2 58

France

1,026 82 1,108 130 12.7 154


1,495 111 1,606 117 7.8 92

Rest of Europe

472 440 912 16 3.2 4


(38) (38)

HQ expenses

(794) (794) -

Eliminations

5,608 5,608 486 8.7 447

Total

REVENUES - external - inter-geographic area TOTAL REVENUES OPERATING MARGIN * % of revenues OPERATING PROFIT

3,325 151 3,476 494 14.9 408

2,444 185 2,629 199 8.1 152

2,150 162 2,312 289 13.4 291

3,066 239 3,305 313 10.2 255

930 1,051 1,981 39 4.2 (24)

(72) (60)

(1,788) (1,788) -

11,915 11,915 1,262 10.6 1,022

* Operating margin, an alternative performance measure monitored by the Group, is defined in Note 3, Alternative performance measures.

CAPGEMINI

JUNE 30, 2016

16

BREAKDOWN OF REVENUES BY BUSINESS

2015

First-half 2015

Amount

in millions of euros Consulting Services

%

Amount

First-half 2016 %

Amount

%

480

4

244

4

266

4

Technology & Engineering Services

1,744

15

832

15

942

15

Application Services

6,997

59

3,234

58

3,725

60

Other Managed Services

2,694

22

1,298

23

1,324

21

11,915

100

5,608

100

6,257

100

REVENUES

BREAKDOWN OF OPERATING MARGIN* BY BUSINESS 2015

First-half 2015

Amount

in millions of euros Consulting Services

%

Amount

First-half 2016 %

Amount

%

44

9.1

20

8.1

28

10.4

Technology & Engineering Services

202

11.6

73

8.7

106

11.3

Application Services

830

11.9

324

10.0

424

11.4

Other Managed Services

258

9.6

107

8.2

122

9.2

Headquarter expenses

(72)

-

(38)

-

(42)

-

1,262

10.6

486

8.7

638

10.2

OPERATING MARGIN *

* Operating margin, an alternative performance measure monitored by the Group, is defined in Note 3, Alternative performance measures.

NOTE 5

REVENUES

Compared with the first-half 2015, revenues increased 11.6% in the first-half 2016 based on period-end consolidation scope and exchange rates and 14.4% at constant exchange rates.

NOTE 6

OPERATING EXPENSES BY NATURE 2015


Amount

% of revenues

First-half 2015 % of Amount revenues

First-half 2016 % of Amount revenues

Personnel costs

7,260

60.9%

3,519

62.7%

3,889

62.2%

Travel expenses

499

4.2%

223

4.0%

258

4.1%

7,759

65.1%

3,742

66.7%

4,147

66.3%

2,207

18.5%

1,053

18.8%

1,115

17.8%

Rent and local taxes

372

3.1%

190

3.4%

197

3.1%

Other charges to depreciation, amortization and provisions and proceeds from asset disposals

315

2.7%

137

2.4%

160

2.6%

10,653

89.4%

5,122

91.3%

5,619

89.8%

Purchases and sub-contracting expenses

OPERATING EXPENSES

CAPGEMINI

JUNE 30, 2016

17

NOTE 7

OTHER OPERATING INCOME AND EXPENSE 2015

First-half 2015

Amortization of intangible assets recognized in business combinations

(45)

(9)

Impairment of goodwill

(40)

-

-

Expenses relating to share grants

(42)

(14)

(23)

Restructuring costs

(81)

(35)


First-half 2016 (1)

(35)

(31) (2)

Integration costs for purchased companies

(39)

(5)

Acquisition costs

(16)

(4)

(1)

Other operating expenses

(29)

(7)

(2)

Total operating expenses

(292)

(74)

(129)

Other operating income

52

35

1

Total operating income

52

35

1

(240)

(39)

(128)

OTHER OPERATING INCOME AND EXPENSE

(37)

(1) The increase in this heading is primarily attributable to the amortization of intangible assets recognized on the acquisition of the IGATE group. (2) Including earn-outs associated with conditions of presence relating to acquisitions.

NOTE 8

NET FINANCIAL EXPENSE 2015

First-half 2015

First-half 2016

28

17

12

Net interest on borrowings

(71)

(18)

(48)

Net finance costs at the nominal interest rate

(43)

(1)

(36)

Impact of amortized cost on borrowings

(12)

(5)

(7)

Net finance costs at the effective interest rate

(55)

(6)

(43)

Net interest cost on defined benefit pension plans

(45)

(22)

(19)

Exchange gains (Iosses) on financial transactions

21

2

(17)

Gains (losses) on derivative instruments

(20)

1

17

Other

(19)

(16)

-

Other financial income and expense

(63)

(35)

(19)

in millions of euros Income from cash and cash equivalents and cash management assets

o/w financial income

143

93

104

o/w financial expense

(206)

(128)

(123)

NET FINANCIAL EXPENSE

(118)

(41)

(62)

Interest on borrowings (€48 million) and the impact of amortized cost on borrowings (€7 million) total €55 million and mainly comprise: ► coupons on the 2011 bond issue of €13 million (stable on 2015), plus an amortized cost accounting impact of €1 million; ► an amortized cost accounting impact of €5 million on the “ORNANE 2013” bonds redeemable in cash and/or in new and/or existing shares issued in October 2013 (zero-coupon bonds), stable on 2015; ► coupons on the bond issues maturing in July 2018, July 2020 and July 2023 of €25 million, plus an amortized cost accounting impact of €1 million; ► the net impact of EUR/USD fix-to-fix cross currency swaps of €8 million. Note that fair value gains and losses on the conversion option embedded in the “ORNANE 2013” bonds and the call option on own shares purchased in October 2013 are included in the “Derivative instruments” line (see Note 11, Net debt / Net cash and cash equivalents). Given the “matching” nature of the main characteristics of these two derivative instruments, their respective fair value gains and losses fully offset each other, resulting in a nil impact on the Group net financial expense.

CAPGEMINI

JUNE 30, 2016

18

NOTE 9

GOODWILL

The €96 million decrease in goodwill over the period is chiefly attributable to negative translation adjustments recognized on goodwill primarily denominated in US dollars and pound sterling, offset by the provisional allocation of the acquisition price of the two companies acquired in first-half 2016.

NOTE 10

ACCOUNTS AND NOTES RECEIVABLE June 30, 2015

December 31, 2015

June 30, 2016

1,711

1,924

1,757

(10)

(15)

(18)

Accrued income

1,336

1,037

1,274

Accounts and notes receivable, excluding capitalized costs on projects

3,037

2,946

3,013

in millions of euros Accounts receivable Provisions for doubtful accounts

Capitalized costs on projects ACCOUNTS AND NOTES RECEIVABLE

112

109

94

3,149

3,055

3,107

Total accounts receivable and accrued income, net of advances from customers and billed in advance, can be analyzed as follows in number of days’ period revenue: June 30, 2015

December 31, 2015

June 30, 2016

Accounts and notes receivable, excluding capitalized costs on projects

3,037

2,946

3,013

Advances from customers and billed in advance TOTAL ACCOUNTS RECEIVABLE NET OF ADVANCES FROM CUSTOMERS AND BILLED IN ADVANCE

(846)

(739)

(639)

2,191

2,207

2,374


ln number of days’ period revenue

70

(1)

64

68

(1) This ratio is restated for entries into the consolidation scope.

In the first-half 2016, receivables totaling €47 million were assigned to a financial institution with transfer of risk as defined by IAS 39 (compared with €50 million at June 30, 2015) and were therefore derecognized in the Statement of Financial Position at June 30, 2016.

CAPGEMINI

JUNE 30, 2016

19

NOTE 11

NET DEBT / NET CASH AND CASH EQUIVALENTS

in millions of euros Short-term investments

June 30, 2015 (1)

Cash at bank Bank overdrafts Cash and cash equivalents Cash management assets Bonds Obligations under finance leases Long-term borrowings Bonds Obligations under finance leases

December 31, 2015

June 30, 2016

4,916

1,107

930

825

843

558

(1)

(2)

(1)

5,740

1,948

1,487

92

116

110 (2)

(863)

(3,107)

(59)

(54)

(3,113) (58)

(922)

(3,161)

(3,171)

(15)

(526)

(563)

(46)

(43)

(50)

(3,383)

(81)

(83)

Short-term borrowings

(3,444)

(650)

(696)

Borrowings

(4,366)

(3,811)

(3,867)

(2)

(20)

(8)

1,464

(1,767)

(2,278)

Draw-downs on bank and similar facilities and other borrowings

Derivative instruments (3) (NET DEBT) / NET CASH AND CASH EQUIVALENTS *

(1)

(1) At June 30, 2015, Short-term investments primarily include the IGATE acquisition financing. Draw-downs on bank and similar facilities and other borrowings mainly consist of the bridge loan secured to finance this acquisition, (2) Including the debt component of the “ORNANE 2013” bonds. From January 1, 2017 (inclusive), bondholders may exercise their share conversion rights at any time up to the eighteenth trading day (exclusive) preceding January 1, 2019. In the event of exercise, Cap Gemini may present, at its initiative, either (i) a cash amount up to the nominal value of the bonds and new and/or existing shares thereafter, where applicable, or (ii) only new and/or existing shares. As exercise will not necessarily result in the presentation of cash, the debt component of this bond remains classified in long-term borrowings. (3) Including the fair value of the conversion option embedded in the “ORNANE 2013” bonds and the call option on own shares purchased by Cap Gemini on October 18, 2013. * Net debt / net cash and cash equivalents, an alternative performance measure monitored by the Group, is defined in Note 3, Alternative performance measures.

The €511 million increase in net debt during the first six months of 2016 on December 31, 2015 chiefly reflects: ► the payment to shareholders of dividends of €229 million; ► the repurchase of treasury shares in the amount of €167 million, partially offset by the strike price received on BSAAR redeemable share subscription or purchase warrants delivered during the half-year of €9 million; ► the acquisition of Fahrenheit 212 and oinio; partially offset by organic free cash flow for the half-year, equal to cash flow from operations less acquisitions of property, plant, equipment and intangible assets (net of disposals) and adjusted for flows relating to the net interest cost, of €31 million.

CAPGEMINI

JUNE 30, 2016

20

NOTE 12

PROVISIONS FOR PENSIONS AND OTHER POST-EMPLOYMENT BENEFITS


First-half 2015

2015

First-half 2016

1,294

1,294

1,216

25

84

49 30

NET OBLIGATION AT BEGINNING OF PERIOD Expense for the period recognized in the Income Statement Service cost Curtailments, settlements and plan transfers Interest cost Impact on income and expense recognized in equity Other Benefits and contributions Translation adjustments Other movements NET OBLIGATION AT END OF PERIOD

38

71

(35)

(32)

-

22

45

19

(77)

(94)

437

26

(68)

(132)

(51)

(110)

(48)

77

40

(86)

-

2

2

1,268

1,216

1,570

The increase in the net obligation in the first-half 2016 is mainly due to: ► expenses of €437 million recognized in equity comprising actuarial losses of €760 million on retirement obligations primarily resulting from the decrease in discount rates in the United Kingdom (from 3.75% at December 31, 2015 to 2.75% at June 30, 2016) and Canada (from 4.00% at December 31, 2015 to 3.40% at June 30, 2016), partially offset by the return on plan assets of €323 million. ► translation adjustments of negative €86 million primarily in respect of the pound sterling.

NOTE 13

OTHER NON-CURRENT AND CURRENT LIABILITIES

At June 30, 2016, other non-current and current liabilities include primarily liabilities related to acquisitions of consolidated companies of €134 million (comprising €128 million in other non-current liabilities and €6 million in other current liabilities).

CAPGEMINI

JUNE 30, 2016

21

Note 14

NUMBER OF EMPLOYEES

AVERAGE NUMBER OF EMPLOYEES BY GEOGRAPHIC AREA

2015 Employees

First-half 2015 %

Employees

First-half 2016

%

Employees

%

North America

12,627

8

10,084

7

16,840

9

France

23,558

15

23,482

16

23,754

13

8,759

5

8,702

6

9,029

5

Rest of Europe

30,669

19

30,539

21

31,286

17

Asia-Pacific and Latin America

85,495

53

73,284

50

101,613

56

160

-

159

-

163

-

161,268

100

146,250

100

182,685

100


Not allocated AVERAGE NUMBER OF EMPLOYEES

NUMBER OF EMPLOYEES AT THE PERIOD END BY GEOGRAPHIC AREA

June 30, 2015 Employees

December 31, 2015 %

Employees

June 30, 2016

%

Employees

%

North America

10,334

7

16,034

9

16,885

9

France

23,375

16

23,832

13

23,715

13

8,614

6

8,656

5

9,077

5

Rest of Europe

30,348

21

30,981

17

31,569

17

Asia-Pacific and Latin America

74,740

50

100,977

56

103,494

56

161

-

159

-

159

-

147,572

100

180,639

100

184,899

100


Not allocated NUMBER OF EMPLOYEES AT THE PERIOD END

CAPGEMINI

JUNE 30, 2016

22

Note 15

OFF-BALANCE SHEET COMMITMENTS

COMMITMENTS GIVEN


June 30, 2015

December 31, 2015

June 30, 2016

On client contracts

1,719

1,773

1,766

On non-cancelable leases

787

827

795

Other commitments given

37

29

38

2,543

2,629

2,599


June 30, 2015

December 31, 2015

June 30, 2016

On client contracts

50

94

107

Other commitments received

18

18

17

COMMITMENTS RECEIVED

68

112

124

COMMITMENTS GIVEN

COMMITMENTS RECEIVED

NOTE 16

SUBSEQUENT EVENTS

There were no material events after the balance sheet date.

CAPGEMINI

JUNE 30, 2016

23

DECLARATION BY THE PERSON RESPONSIBLE FOR THE INTERIM FINANCIAL REPORT

"I hereby declare that, to the best of my knowledge, the condensed interim consolidated financial statements for the half-year ended June 30, 2016 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 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"

Paul Hermelin Chairman and Chief Executive Officer

CAPGEMINI

JUNE 30, 2016

24

INTERIM FINANCIAL REPORT C

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