CONTENTS - Capgemini

CONTENTS 

02 Financial highlights 

03 The Capgemini Group 

37 Management report 

presented by the Board of Directors to 

the Shareholders’ Meeting of April 26, 2007 

(April 10, 2007 on first call) 

50 Report of the Chairman 

of the Board of Directors 

61 Group Consolidated Financial Statements 

116 Cap Gemini S.A. Summarized 

Financial Statements 

123 Text of the draft resolutions 

presented by the Board of Directors to 

the Shareholders’ Meeting of April 26, 2007 

(April 10, 2007 on first call) 

126 Specific information 

143 Cross-reference table 

The English language version of this report is a free 

translation from the original, which was prepared in French. 

All possible care has been taken to ensure that the translation 

is an accurate presentation of the original. 

However, in all matters of interpretation, views or opinions 

expressed in the original language version of the document 

in French take precedence over the translation. 

BOARD OF DIRECTORS 

Serge KAMPF 

CHAIRMAN 

Daniel BERNARD 

Yann DELABRIÈRE 

Jean-René FOURTOU 

Paul HERMELIN 

CHIEF EXECUTIVE OFFICER 

Michel JALABERT 

Phil LASKAWY 

Thierry de MONTBRIAL 

Ruud van OMMEREN 

Terry OZAN 

Bruno ROGER 

NON-VOTING DIRECTORS 

“CENSEURS” 

Pierre HESSLER 

Marcel ROULET 

Geoff UNWIN 

STATUTORY AUDITORS 

PRICEWATERHOUSECOOPERS AUDIT 

repesented by Bernard RASCLE 

KPMG S.A. 

represented by Frédéric QUÉLIN 

ANNUAL REPORT 2006 Capgemini 

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2 ANNUAL 

FINANCIAL HIGHLIGHTS 

in millions of euros 

REPORT 2006 Capgemini 

CONSOLIDATED FINANCIAL STATEMENTS 

2004 (1) 2005 2006 

REVENUES 6,235 6,954 7,700 

OPERATING EXPENSES 6,259 6,729 7,253 

OPERATING MARGIN 

Amount (24) 225 447 

% (0.4%) 3.2% 5.8% 

OPERATING PROFIT/(LOSS) 

Amount (281) 214 334 

% (4.5%) 3.1% 4.3% 

PROFIT/(LOSS) FOR THE YEAR (534) 141 293 

NET MARGIN (%) 

EARNINGS PER SHARE 

(8.6%) 2% 3.8% 

Weighted average number of ordinary shares 131,292,801 131,391,243 132,782,723 

Basic earnings/(loss) per share (in euros) (4.07) 1.07 2.21 

Number of shares at December 31 131,383,178 131,581,978 144,081,808 

Earnings/(loss) per share at December 31 (in euros) (4.07) 1.07 2.03 

Weighted average number of ordinary shares (diluted) 132,789,755 138,472,266 147,241,326 

Diluted earnings/(loss) per share (in euros) (4.02) 1.06 2.07 

NET CASH AND CASH EQUIVALENTS AT DECEMBER 31 285 904 1,632 

AVERAGE NUMBER OF EMPLOYEES 57,387 59,734 64,013 

TOTAL NUMBER OF EMPLOYEES AT DECEMBER 31 59,324 61,036 67,889 

(1) Restated in accordance with IFRS.

THE CAPGEMINI GROUP 

I – COMPANY HISTORY 

Founded by Serge Kampf in Grenoble in 1967, Capgemini has 

grown to become one of the world’s leading consulting and 

information technology service companies by driving a strategy of 

development and diversification that has combined both internal 

and external growth. 

The Group has progressively extended its activities in Europe, 

in particular with the acquisition of Programator in Scandinavia, 

Hoskyns in the United Kingdom (1990), and Volmac in the 

Netherlands (1992). 

At the same time, Capgemini has developed its management 

consulting activities with the acquisition of two American companies, 

United Research and Mac Group, in the early 90s, the 

German company, Gruber Titze & Partners, in 1993, followed 

by the French firm Bossard in 1997. 

More recently, the acquisition of Ernst & Young Consulting 

(2000) strengthened the Group’s global profile, significantly 

increasing its presence in North America and in a certain number 

of European countries. 

The years 2001, 2002, 2003 and 2004 proved to be particularly difficult 

for the IT service sector and it became necessary to rebalance Capgemini’s 

portfolio of activities in favor of two of its disciplines - local IT 

services and outsourcing – and around the Rightshore TM concept. 

The acquisition of Transiciel, at the end of 2003, enabled 

Capgemini to double the size of Sogeti, an entity formed in 

2001 in the local professional services domain, and which 

contributed 16% to Group revenues in 2005. In the area of 

outsourcing, from 2004/2005 onwards, the Group reaped the 

rewards from the efforts undertaken to establish its presence 

both in Europe and in North America by winning a number of 

major contracts (HMRC, TXU, Schneider Electric). 

In addition, Capgemini became the first European company to 

take the offshore route. Capgemini chose to set itself apart from 

its major rivals by proposing an “à la carte” system for the provision 

of its services. The system is modulated according to the 

requirements, the project envisaged and the specific culture of the 

particular client. This is the idea behind Rightshore TM . 

The Group’s profile has therefore changed significantly in a few 

years, demonstrating an ability to respond to the new challenges 

arising in the IT services and consulting industries. The 2005 

results evidenced this firm recovery. 2006 was a financial period 

of strong growth and increased profitability for the Group as 

shown by the dynamism of its disciplines, strengthened by its 

sector expertise. This year it posted net income of 293 million 

euros and revenues of 7.7 billion euros. Capgemini has regained 

its fighting spirit as demonstrated by the acquisitions of Kanbay, 

FuE and Indigo. In addition, due to the deep changes in 

the market, the Group has decided to launch an ambitious and 

demanding program of development and conquest. 

II – THE CAPGEMINI DISCIPLINES 

A - One mission, four disciplines 

The Capgemini mission: is to help its clients to transform in 

order to improve their performance. For this purpose, an integrated 

service offering, comprised of sector expertise and specific 

disciplines, is proposed to them accordingly. 

The four Capgemini disciplines are: 

Consulting Services (CS): helping our clients to identify, 

structure and execute their transformation projects, for a longlasting 

impact on their growth and competitive edge. 

Technology Services (TS or Integration): formulating, developing 

and implementing all kinds of technical projects, from 

the very smallest to the very largest. 

Outsourcing Services (OS): assisting our clients in complete 

or partial outsourcing of their information technology systems 

and other closely-related activities. 

Local Professional Services (Sogeti or LPS): offering a range 

of information technology services adapted to local needs in 

terms of infrastructure, applications and engineering. 

Present in thirty-two countries and with a workforce of 68,000, 

generating revenues of 7,7 billion euros in 2006, the Group offers 

a wide range of integrated services, organized around its four disciplines 

and sector expertise. Services range from strategy-making 

to the maintenance of IT systems. 

Each of the four business lines, comprising the Group’s service offering, 

exists as an autonomous unit with its own objectives, business 

models and recruitment processes. By combining the expertise of 

these units, integrated transformation services can be offered to our 

clients. Hence, the Group’s key strength lies in knowing how to 

interlink its multiple skills in order to respond to projects requiring 

a crosswise approach, thereby satisfying the needs of clients seeking 

commitment to the achievement of measurable, sustainable results. 

Capgemini is independent from any software publisher or 

hardware manufacturer. In an effort to provide our clients 

with the best products and know-how, the Group has formed 

a network of strategic alliances and partnerships. This enables 

us to freely and knowingly select and deliver reliable solutions, 

precisely tailored to each and every client’s needs. Capgemini 


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Capgemini 

is also able to deliver services in the location which best serves 

the interests of its clients – in terms of quality, cost and access to 

the best expertise. Dubbed Rightshore, this approach improves 

productivity and gives added value to services. Lastly, Capgemini 

relationships are built on solid foundations of collaboration. The 

Collaborative Business Experience (CBE) is the Group trademark. 

And the way in which results are achieved count just as much as 

the results themselves, because client satisfaction is the number 

one criteria in measuring success. 

Mission and vision of the Capgemini Group 

Our mission: Enabling Transformation 

Capgemini enables its clients to transform and perform through 

technologies. 

Our vision: Enabling Freedom 

Capgemini will lead by providing its clients with insights and 

capabilities that boost their freedom to achieve superior results. 

B - Consulting Services 

In 2006, growth and profitability were the order of the day for 

this discipline. Stimulated by economic globalization and the 

large merger-acquisition projects underway, demand should be 

sustained in 2007. 

Background to 2006. The globalization of economic activity 

pursued its course, drawing strong demand for strategy and 

management consulting in its wake. 2006 was marked by mergers 

& acquisitions in many business sectors, new banking and energy 

regulations, the emergence of strongly-expansionist Chinese and 

Indian industrial giants and the transformation of Western companies 

together with the reorganization of their business processes. 

There is growing recourse to outsourcing as companies require 

support to define their strategies, assimilate their acquisitions and 

transform their organizations on a worldwide scale. 

Taking stock of 2006. “2006 was a year of sustained growth and 

true profitability. And the relevancy of our strategy consulting and 

post-acquisition integration proposals meant that we carried off some 

significant contracts, like Air France and Limited Brands in the United 

States”, says Antonio Schnieder, in charge of Global Coordination 

Consulting. Faced with demands from key clients, Capgemini has 

taken the progressive step of adopting an internal cross-staffing 

process and capitalizing on its global expertise (systematic buildup 

of centers of excellence across the consulting organisation). 

This approach is essential because Consulting is the flagship Group 

activity at the interface with the Group’s global clients. Furthermore, 

a revolutionary program to drive the strategic agenda of 

our clients, called “Transformation Consulting 21” was launched. 

A key element is the systematic use of ASE combined with new 

techniques in order to step up internal mobilization and to include 

new technology in the thinking process, right from the start of 


the assignment. This initiative has the ambition to regain global 

leadership in the transformation market “We have defined a similar 

approach in Process Consulting by embedding business methodologies 

and other methods and tools”, adds Antonio Schnieder. 

Prospects for 2007. The Consulting market should maintain 

its positive trend throughout 2007. The most beneficial way 

ahead for Capgemini Consulting is to focus on specific sectors 

and to reinforce its fields of expertise. The idea is to promote 

the integration process by including other Group disciplines and 

to intensify the use of our new and innovative Transformation 

Consulting approach. 

C - Technology Services 

2006 was a year of sustained growth with, in particular, a number of 

major projects in a variety of sectors. The industrialization that accompanies 

innovation should enable the Group, in 2007, to meet the 

needs of an ever more global, ever more demanding client base. 

Background to 2006. Against the background of a more 

favorable economic climate, the Group’s clients have rediscovered 

their desire for innovation. They are now making 

long-term investments in major projects, while striving 

to bring their costs down. Whereas, in the past, they tended to choose 

between one or other of these two paths, corporate clients are now opting 

for innovation and development while making substantial savings by 

way of a globalization strategy for purchasing, recourse to offshore, reducing 

the number of service providers and creating shared service centers, 

all within the framework of their industrialization strategies. 

Thanks to the savings made, they are able to channel some 

of their resources into renewing their IT systems and developing new 

applications to support their enterprise strategy. 

Taking stock of 2006. “2006 has been a year of profitable growth 

and net recovery. We have even been able to observe an improvement 

in prices in certain high-demand sectors, such as software package 

deployment or systems architecture services,” says Philippe Donche- 

Gay, Director of Western Europe and TS Global Coordination. 

Increased sector-specific specialization has bolstered the 

skills base and helped us win contracts such as the overhaul of 

the MAAF insurance company’s IT system. In terms of innovation, 

Capgemini has adopted a proactive posture towards 

Open Source, which is used by the French public services. 

This has helped the Group to win one of the first maintenance 

contracts of this type with the Ministry of Finance. A specific 

Open Source offering called “OSS Partner” has been launched, 

and is expected to be rolled out worldwide. Lastly, the Group’s 

big outsourcing contracts continue to generate heavy demand for 

systems integration expertise, confirming once again the relevance 

of Capgemini’s interdisciplinary integration strategy.

Prospects for 2007. Demand should remain sustained with, in particular, 

a marked desire from clients for new architectures and for offshore. 

“The software development value chain is undergoing a transformation, and 

will offer far greater levels of productivity. We are mobilized to help get this 

new model up and running in 2007,” declares Philippe Donche-Gay. 

D - Outsourcing Services 

Strong growth and improved profitability characterize this activity 

in 2006. The production launch of major contracts, the extension 

of existing contracts and the continued rationalization drive, as 

part of the MAP plan, underly these fine results. 

Background to 2006. The outsourcing market, by its recurrent 

nature, its size and its prospects, particularly in new segments such 

as Business Process Outsourcing, attracts more and more service providers, 

generating ever stronger competition. 2006 was no exception 

to this trend, with the rise in influence of the Indian players. Globally, 

although the USA and the UK continue to corner three-quarters of 

the market, the Asia-Pacific zone is growing rapidly. Demand in the 

BPO segment remains high. 

Taking stock of 2006. According to Paul Spence, Director of the 

Group’s Outsourcing Services: “2006 has been a very important year. We 

have reached a level of 20,000 employees, received some 3 billion euros worth 

of orders and successfully implemented the first stage of our MAP plan for 

growth and profitability.” The priority has thus been to renegotiate certain 

contracts and to rationalize the Purchasing function, leading to a significant 

reduction in operating costs. Furthermore, within the context of a 

globalized economy and strong competition in the field of outsourcing, 

the Indian activity of Capgemini has doubled in size, now accounting for 

2,400 employees. To this total can be added 1,300 employees in Poland 

and 500 in China. 2006 was marked by the effective start-up of major 

contracts with General Motors and the London Metropolitan Police. Also, 

the position of trust we have held since 2003 with Her Majesty’s Revenue 

& Customs in Great Britain has led to the initial contract being extended 

to the tune of 1.1 billion euros. For its part, BPO activity, centered on 

corporate finance and administration functions, has grown by 43% in 

Europe, with new clients such as Unilever, SKF and Tetrapak. 

Prospects for 2007. Pursuing the MAP plan, intensifying Rightshore, 

rationalizing the global production mechanism, doubling the 

headcount in India, improving the targeting of markets and clients, 

creating new offers and building on our skills bases: this is the roadmap 

for the OS activity in 2007. “After concentrating our efforts on the 

cost structures and production mechanism, we shall be ready to sign new 

major contract,” concludes Paul Spence. 

E - Local Professional Services 

Sustained and profitable growth, a takeover in Germany 

and deployment in the UK, the launch of an offshore production 

program: Sogeti can look back with satisfaction on 2006. 

Background to 2006. The pronounced trend for mergers/takeovers 

and the globalization of the economy have done nothing to lessen the 

local significance of the markets and organizations on which Sogeti has 

been operating for nearly 40 years now. In this context, even though 

the subjects to be dealt with are increasingly complex and the cycles 

ever more rapid, they still in fact represent large, global programs 

transposed on to a local scale. The upshot of this is the continued 

growth of the market in local IT services. However, clients have 

become more and more selective and demanding. They implement 

referencing policies and seek to have partners who, while remaining 

local, have a global dimension. Sogeti, as it happens, perfectly satisfies 

these criteria, with a tried and tested business model, a loyal relationship 

stretching back 30 years with certain clients, an international 

stature and its affiliation to a global group of companies. 

Taking stock of 2006. “We enjoyed a highly successful year in 2006 from the 

point of view of both growth and profitability; this was true on all our markets,” 

declares Luc-François Salvador, Chairman & CEO of Sogeti, who goes 

on to say: “Despite a highly competitive environment, our US outlet now 

boasts profitability levels going into two figures. As far as services are concerned, 

application testing – on the back of its success in the Netherlands – has been 

rolled out worldwide and is making impressive inroads, particularly in France 

and in the USA.” In addition, Sogeti has, as predicted, consolidated its 

high tech consulting business with the acquisition of the German Group, 

FuE, which specializes in the aviation sector. This operation confers on 

the company the scale it requires to convince the big corporate clients. 

Last but not least, Sogeti has continued its expansion in Europe by setting 

up in the UK, Ireland and Denmark. 

Prospects for 2007. Sogeti intends to keep pace with and 

even outstrip the growth of the market. Besides pursuing its 

efforts on the segments mentioned above, and in countries 

such as Germany and the UK, innovation and offshore are 

also high on the agenda this year. Offshore is a new departure 

for Sogeti, used as it has been to selling and producing from 

one and the same location. “We are going to develop our service 

offerings, especially with regard to application testing but also in 

high tech consulting, by integrating the offshore aspect so as to offer 

our clients solutions at very competitive rates. Our ambition is to 

take on 500 employees in India in 2007”, Mr. Salvador concludes. 

III – THE CAPGEMINI SECTORS 

A - The Public Sector 

Increased market share, sustained demand for consulting and 

project management, US market breakthrough: these were the 

headlines for 2006, an extremely fertile year for this sector. 

Background to 2006. In seeking productivity gains, responses 

to citizens’ demands and new solutions for public security within 


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their administrations, the major Western countries have kept to 

the modernization path. These initiatives require the implementation 

of complex programs for the transformation of organizations 

and IT systems. In 2006, the already-buoyant investment 

in information technology was stepped up further: “For example, 

the prevention of tax fraud has now become top priority. Discussions 

are underway with Great Britain, the Netherlands, and Sweden for the 

modernization of their IT systems. The Group’s prowess in the SOA 

field, in France, has raised a lot of interest”, summarizes Stanislas 

Cozon, Director Public Sector of the Capgemini Group. 

Taking stock of 2006. 2006 was distinguished by a strong 

demand for consulting and project management from European 

administrations. In Italy, for example, the national printing works 

– a new client – engaged Capgemini for the new residence permit 

and the electronic passport project. In the Netherlands, the Group 

has rolled out a large logistics-related SAP project for the Ministry 

of Defense and the Dutch administration has completed two projects 

which were partly executed in India, proving that offshore is 

not necessarily taboo in the public sector these days. Furthermore, 

in the United Kingdom, the Group’s major outsourcing projects 

– Her Majesty’s Revenue & Customs and the Metropolitan Police 

– have generated sustained demand for consulting and project 

management. This demonstrates – once again – the perfect relevance 

of the Group’s strategy with its synergy of the disciplines. 

In addition, the Group has effectively developed close ties with 

its clients by encouraging contact between the public service 

managers from different countries. “This year, client demand has 

increased noticeably for this type of contact as managers are realizing 

that it helps in speeding up the dissemination of good ideas”, remarks 

Stanislas Cozon. 

Prospects for 2007. Today, Capgemini has become one of the 

two leading service providers to the public sector in Europe. 

Moreover, the Group intends to consolidate this position in 2007 

by focusing on the field of taxation in the Nordic countries and 

in the Netherlands. In the United States, Capgemini hopes to 

maintain its excellent progression in 2006. 

B - Energy & Utilities Sector 

Like the previous year, 2006 saw sustained liberalization of the 

Utilities market in Europe and transformation projects undertaken 

by the main players in the sector. 

Background to 2006. Oil and gas price tensions surfaced frequently 

in 2006, heightening concerns about the security of 

energy supplies. In Europe, the historic Utilities providers continue 

to face the challenge of further deregulation and, from July 

2007, will have to adapt to a market totally open to competition. 

The European Commission now intends to take a step further and 

to create a true European Electricity & Gas market, supported 


by free competition. It therefore wishes to separate completely 

the regulated distribution and transmission networks from the 

non-regulated activities such as production and retail, but has 

met with resistance from certain Member States. In 2006, a 

second wave of mergers-acquisitions was launched in Europe 

and some new pan-European companies could be formed in 

2007. In the USA, the main concerns of the Utilities companies 

revolve around the renewal of the generation systems and the 

modernization of the electrical infrastructures through new 

technology, such as smart meters. The goal is also to improve 

financial performance. In the petroleum sector, the large corporations 

are devoting increasing resources and attention to the 

exploration of new oil and gas fields and to operation excellence 

of the existing ones. 

Taking stock of 2006. “As a direct consequence of the liberalization of 

the Utilities markets in Europe, operators are rethinking their strategy, 

organization and IT systems in order to adapt them to a deregulated 

market model while maintaining ambitious targets in terms of productivity 

gains”, notes Colette Lewiner, Leader of the Energy & Utilities 

sector for Capgemini. Yet again, the new end client systems and 

consulting activity generated by the liberalization process have 

fired up the market. Capgemini provides consulting services for 

key European clients, and notably assists them in the unbundling 

process and the creation of new Distribution and Retail units. It 

also builds new, mostly SOA-based IT systems on their behalf. 

Furthermore, the Capgemini Group ranks Number Two in Utilities 

in Europe according to the Gartner Group statistics. 

Prospects for 2007. Due to the continued liberalization of the 

European markets, the consolidation of its players, the development 

of an innovative service offering with smart meters 

and networks, and our clients’ trust in us, the Group’s business 

prospects – as far as the Energy & Utilities market is concerned 

– are bright. 

C - Banking, Finance, Insurance Sector 

This is the world’s largest market in terms of IT investments as 

consolidation, globalization, regulatory developments and new 

technology continuously spawn new demand. 

Background to 2006. Sustained consolidation of the sector’s 

institutions in Europe, positioning of the Western players in Asia, 

establishment of the SEPA (Single Euro Payments Area which 

consists of a single set of payment instruments and processing 

infrastructures within the European Union, and upheavals in the 

technological field thus potentially reshaping the contenders’ 

business models. Such were the outstanding events of 2006 in the 

Banking, Finance, Insurance sector. Italy has now become the hub 

of consolidation in Europe, which should soon affect Germany 

too, with its piecemeal banking sector. The consolidation trend

is beginning to produce a European business model of its own: 

“Distribution of banking products is still local on the whole, but back 

office activity is developing on a European scale as payment, credit 

and leasing are centralized”, notes Bertrand Lavayssière, Director 

Banking, Finance, Insurance for Capgemini. 

Taking stock of 2006. The wave of giant merger & acquisition 

transactions - with the resulting transformation of organizations, 

reshaping of IT systems and creation of shared service centers – 

feeds into the Group consulting and project management activities. 

For example, Capgemini is working on a “Merger Management” 

project involving all at the Eastern European entities of a major 

European bank. The Group also works with an entity recently 

acquired by a French banking institution. As for SEPA, Bertrand 

Lavayssière estimates that the Payments Area has engendered a 

5-billion-euro market of consulting, project management and 

outsourcing engagements. Capgemini is currently performing 

consulting assignments, on behalf of 8 major European banks, 

looking into the actual impact of SEPA and the possible response 

strategies. The American banks, whose domestic expansion has 

been hindered somewhat by the regulatory measures, are now 

seeking new opportunities in Europe and Asia. They are also turning 

to offshore on a massive scale for their back-office functions 

(e.g. Citibank, employing 22,000 people in India). As witnessed 

by Capgemini’s announcement in October 2006, the acquisition 

of Kanbay, specialized in the development of IT projects for the 

Banking & Finance sector and employing 6,900 people (5,000 

in India), is a perfect demonstration of the company’s sharp flair 

in this respect. 

Prospects for 2007. This project has enabled the Group to 

raise its profile considerably in this vital sector in the United 

States. Globally, Capgemini is now ready to serve both the 

top Anglo-American clients, in the immediate future, and the 

European institutions – which are beginning to take a serious 

interest in offshore, – in the short term. 

D - Manufacturing, Retail & Distribution 

Sector 

Globalization and the growth of emerging markets are key 

issues impacting the world of manufacturing, retail and distribution 

today. 

Background to 2006. Globalization affects the industry in 

three key ways. Firstly, emerging countries such as India and 

China have become increasingly important sourcing markets 

for skills and production. Secondly, these regions are growing 

in significance as markets in their own right, with a burgeoning 

middle class that already has significant spending power 

for goods and services. This is leading giants such as General 

Motors and Wal-Mart, looking for new growth markets, to 

turn to areas such as India and China. Finally, major players 

in these markets are increasingly driving industry changes and 

consolidation. In the steel industry, for example, there have 

been several recent takeovers of Western players by companies 

like Tata Steel and Mittal. Meantime, the retail sector in Europe 

is growing again, after several years of stagnation. Retailers are 

investing in stores and store technology, as well as focusing on 

making the supply chain more responsive to actual demand and 

responding to new regulations such as food traceability. 

Taking stock of 2006. “We have already signed contracts for 

consulting services with local Indian retailers and are involved in 

discussions with other Indian companies, which, like their Chinese 

counterparts, are interested in the application of Western best practices 

to their businesses,” explains Bernard Helders, Global Head 

of Manufacturing, Retail & Distribution. In the distribution 

segment, Capgemini has been working with clients around 

the Logistics Service Providers (LSP) program, the Group’s 

joint initiative with SAP designed to provide integrated, flexible 

end-to-end solutions to help LSPs manage their business 

processes and reduce the complexity of their IT systems. On 

the strength of its expertise in consumer products and retail, 

Capgemini worked with the Global Commerce Initiative and 

Intel to publish an important study titled “2016: The Future 

Value Chain,” in partnership with the key players in the industry. 

This study defines a unique vision of the total consumer 

goods value chain from manufacture to consumption and 

addresses the changes and challenges the industry will face in 

the coming decade. 

Prospects for 2007. Against the background of globalization 

and efficiency enhancement, Capgemini’s Manufacturing, Retail 

and Distribution sector will continue to bring innovation to 

the industry, while helping clients with process improvement. 

The sector will also focus on increasing industrialization with 

greater domain specialization of our Indian operations. 

E - Telecommunications, Media & 

Entertainment Sector 

Service convergence is the focus of attention for all the players 

in the sector as a means of revitalizing market growth. Setting 

up in emergent countries such as India is also the order of 

the day. 

Background to 2006. The key trend in the sector is the marketing 

by the operators of so-called “convergence” applications. 

These applications combine voice, internet and TV or cinema 

content. They sometimes combine with 3G mobile services and 

are designated “triple” or “quadruple play”. “These services are 

available in most European countries and are already being sold 

by the traditional retail outlets,” says Didier Bonnet, Head of 


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TME at Capgemini. As well as the price war, the competition 

is also fighting tooth and nail over service quality, the key to 

obtaining customer loyalty and a prerequisite for selling yet 

more services. This trend is making for increased complexity 

in customer relations. Finally, as well as introducing these 

new services, operators are turning their attentions to emergent 

countries as an avenue for revitalizing their growth. Vodafone is 

an example of this, in India. 

Taking stock of 2006. Against this background, Capgemini, 

on the strength of its great knowledge of the sector and its 

technological expertise, is helping the operators to define their 

strategies with regard to the new services, to manage their launches 

and to find new business models that will guarantee the 

operators’ revenues and growth of their margins. The Group is 

also involved, via dedicated service centers, in the development 

and consolidation of customer billing systems. These centers 

make it possible to leverage the benefits of knowing the IT system 

inside-out while guaranteeing efficient integration between 

the system components, so that the operators will be able to 

measure and profit from all the aspects of convergence. “What 

is more, targeted outsourcing focused on specific applications or 

BPO is starting to make an appearance in Europe”, Didier Bonnet 

points out. It is also the case that new web service and mobile 

providers could end up outsourcing their billing and their customer 

management. 

Prospects for 2007. In light of the anticipated boom in convergence 

services, Capgemini will be looking to underpin its business 

and technological capacities in certain market segments. 

This will include, in particular, the creation of dedicated telecom 

centers in Morocco and India, using specialized structures in 

order to provide operators with the advantages of our Rightshore 

approach. Last but not least, the Group is also intending to play 

a key role as intermediary between the operators and the content 

producers – those who supply the content for the convergent 

services – via Digital Media Delivery, an entity of Capgemini 

dedicated to the management of digital content. 

IV - THE IT SERVICES MARKET 

AND COMPETITION 

A) Market size and forecasts by segment 

2006 – 2010 

Continued economic recovery and sustained expenditure 

outside of IT organizations enabled continued growth in IT 

expenditure in 2006. Investment in innovation is more widespread 

than in recent years although many businesses remain 

focussed on improving internal processes and reducing costs. 


Global delivery models meet both of these needs by enabling 

purchasers to draw effective benefits from labor arbitration, 

which stimulates some demand for services that would otherwise 

be unaffordable, while dampening spending growth for 

many services that now cost less. Basic outsourcing (process 

and IT management) is still the prime source of growth, as 

illustrated by the following histogram. 

Worldwide IT Services 

600 

500 

400 

300 

200 

100 

0 

54.9 

204.0 

163.9 

99.8 

62.6 

231.3 

189.2 

116.1 

Consulting (CS) 

Development & Integration (TS & LPS) 

IT Management (OS) 

Process Management (BPO) 

in billions of U.S. dollars 

700 

71.0 

2006 2008 2010 

259.3 

218.4 

137.2 

Source : Gartner – Forecast : IT Services, Worldwide, 2003 – 2010 (update), 

30/11/2006 

B) The competition 

1) Worldwide ranking 

Although this is not an exact science, as the taxonomy is not 

precisely standardized, worldwide classicification of the top ten 

IT services companies illustrates two particularities. 

First of all, the US - with seven companies - has been largely 

dominating this market for several years now. Only two Asian 

groups and one European group, namely Capgemini, have 

managed to hoist themselves among the Top 10 to date. In light 

of the market share held by each individual player, although 

large international groups are involved, it is noted that this 

IT service market has remained very piecemeal despite the 

successive waves of consolidation. The following table provides 

a classification of the top ten IT services companies worldwide

Professional IT Services Market Share 

(Source: Gartner Dataquest IT Services Market Metrics Worldwide Final Market Share, August 2006) 

(in millions of U.S. dollars) 

Vendor 

2005 Revenue 

% Market Share 

2005 

IBM 40,607 8.2% 

EDS 19,415 3.9% 

Accenture 15,705 3.2% 

Fujitsu 14,844 3.0% 

Computer Sciences Corporation (CSC) 14,520 2.9% 

Capgemini 8,637 1.8% 

Automatic Data Processing, Inc 8,187 1.7% 

Lockheed Martins 7,738 1.6% 

NTT Data 7,469 1.5% 

SAIC 7,310 1.5% 

2) Focus on the european market 

According to the study by Pierre Audoin Consultants, dated 

December 2006 and issued by Christophe Châlons Managing 

Director, the competitive environment Europe in the IT services 

sector is characterized by a market that has recovered solid 

growth trends. 

The companies, borne by a generally more favorable economic 

climate, have regained a solid appetite for innovation. They are 

now investing sustainably in large projects such as the renovation 

of their IT systems and the development of new applications in 

order to support their corporate strategies while continuing to 

implement cost reductions. The merger & acquisition trends in 

the banking and service industries are also encouraging senior 

management to call upon external service-providers in the field 

of consulting, a market that should grow in France alone by 5 

to 6% per year, according to the research firm Pierre Audoin 

Consultants (PAC). And this growth draws new players: Indian IT 

services companies are offering IT consulting, audit and law firms 

are entering the strategic consulting market and certain insurance 

companies are entering the foray via risk analysis. 

However, the new growth dynamics in the European IT market 

do not seem to benefit all of the major service-providers in the 

same way, observes PAC. Five American companies (IBM, HP, 

EDS, Accenture, CSC), five European companies (Capgemini, Atos 

Origin, T-Systems, SBS, LogicaCMG) and one Japanese company 

(Fujitsu Services) dominate the European market. 

LogicaCMG, Capgemini and Accenture formed the leading pack 

in growth terms in 2006 followed by EDS, IBM et T-Systems. HP 

and Atos Origin, which posted weak growth, whereas CSC and 

SBS were on a downward trend. 

Faced with the globalization of their clients’ business, new purchasing 

strategy (multi-sourcing of outsourcing contracts, listing 

policies, etc.) and competition from the Indian pure players, the 

traditional, large IT services players have to adapt their business 

models, standardize their offerings, globalize their consultant 

teams and their production, whether for outsourcing or for projects. 

By failing to include a credible offshore component in their commercial 

offers or by being too focused on the large or the very 

large outsourcing projects, heavy consequences in terms of profit 

margin and revenue may ensue. Flexibility, transformation, industrialization 

and globalization are the indispensable ingredients for 

a major service provider. 

Any player that lacks any of these ingredients may find that its 

growth is curbed and become the target of takeover bids, either 

from competitors or – and this is a relatively recent phenomenon 

in the IT services and telecommunications industries – from 

players with a purely financial logic, with considerable resources 

at hand. 


9

10 ANNUAL 

THE GROUP 


V – GEOGRAPHIC ORGANIZATION AND MAIN GROUP SUBSIDIARIES 

The Group is established in some thirty countries, with a strong 

presence in the United Kingdom (accounting for 28% of revenues 

in 2006), in France (the Group’s historical market, generating 23% 

of revenues in 2006), North America (17%), and Benelux (14%). 

These areas together account for 80% of overall revenues. 

35 

30 

25 

20 

15 

10 

5 

0 

22% 

North America 

20% 

17% 

20% 

United Kingdom and 

Ireland 

25% 

28% 


6% 

6% 

Nordic Countries 

6% 

14% 

14% 

In addition to these operating subsidiaries, Cap Gemini S.A. also 

holds 100% of the capital of four other entities: 

two non-trading real estate companies, one of which owns the 

premises of the registered offices in the Place de l’Etoile in Paris, 

and the other, the office buildings located in Grenoble; 

a limited liability company providing the premises, via a real estate 

leasing contract, for the Group’s University, an international training 

center located in Gouvieux, 40 km (25 miles) north of Paris, which 

opened at the beginning of 2003; 

an intragroup service company named Capgemini Service S.A.S. 

Benelux 

14% 

The Group performs its business activities through 109 consolidated 

subsidiaries as listed in Note 29 (“List of consolidated 

companies by country”) to the consolidated financial statements 

at December 31, 2006. These subsidiaries are located in eight 

geographic areas, whose relative contributions to Group consolidated 

revenues in 2004, 2005 and 2006 are illustrated in the 

diagram set out below. 

8% 

6% 

7% 

Germany and 

Central Europe 

24% 

24% 

France 

23% 

5% 

4% 

Southern Europe 

4% 

1% 

Asia-Pacific 

1% 

2004 

2005 

2006 

1% 

The parent company, Cap Gemini S.A., defines the strategic objectives 

for the Group via its Board of Directors, and ensures their implementation. 

In its role as a shareholder, Cap Gemini S.A. contributes, in 

particular, to the financing of its subsidiaries, either in the form of 

equity or loans, or by providing security and guarantees. Finally, it 

allows its subsidiaries to use the trademarks and methodologies that 

it owns, notably “Deliver”, and receives royalties in this respect.

Simplified organization chart for the Group 

The Group is composed of five main operating units (Strategic Business Units, or SBUs) : 

3 geographical units : North America, Western Europe, Continental Europe & Asia-Pacific. 

2 units for specific disciplines : firstly, the Outsourcing SBU and secondly, the Local Professional Services unit. 

SBU 

North America 

SBU 

Western 

Europe 

SBU 

Continental 

Europe & 

Asia-Pacific 

Cap Gemini S.A. 

100% 

100% 

100% 

51% 

Capgemini North America Inc. 

CGS Holdings Ltd. (UK) 

Capgemini France S.A.S 

Capgemini Telecom & Media S.A.S 

Capgemini Espana S.L. 

Capgemini Portugal S.p.A. 

Capgemini N.V. 

Capgemini AB (Sweden) 

Capgemini Deutschland Holding GmbH 

Capgemini Suisse S.A. 

Capgemini Consulting Osterreich AG 

Capgemini Polska Sp z.o.o. 

Capgemini Italia S.p.A. 

Capgemini Asia Pacific Ltd. 

Capgemini Australia Pty Ltd. 

Capgemini Consulting India Pvt Ltd. 

Unilever Share Services Limited 

United States 

Canada 

Mexico 

United Kingdom 

Ireland 

Netherlands 

Belgium 

Luxembourg 

Sweden 

Denmark 

Norway 

Finland 

China 

Malaysia 

Singapore 

SBU 

Outsourcing 

(operating 

divisions) 

United States 

Canada 


France 

Netherlands 

Belgium 

Germany 

Switzerland 

Poland 

China 

Australia 

India 

India 

SBU 

Local 

Professionnal 

Services (operating 

subsidiaries) 

Sogeti 

United States 


Ireland 

France 

Spain 

Netherlands 

Belgium 

Luxembourg 

Sweden 

Denmark 

Germany 

Switzerland 

India 


11

12 ANNUAL 

THE GROUP 


VI – THE GROUP’S INVESTMENT 

POLICY 

In 2006, Capgemini’s vigorous organic growth underscored its 

ability to meet client expectations thanks to its technological and 

sector-based expertise, well-balanced core disciplines and cost 

competitiveness due to its strong offshore presence. 

The Group had previously announced its intention to take advantage 

of its renewed financial flexibility to move ahead, where 

appropriate, with external growth operations serving three objectives: 

accelerating the Rightshore TM strategy; 

expanding the Group’s territorial coverage, particularly in 

Europe; 

enhancing its ability to innovate and develop technological skills 

in high added-value fields. 

The acquisitions in 2006 are fully in line with these aims. The 

acquisitions of Kanbay (announced on October 26, 2006 and 

finalized on February 9, 2007) and Indigo added 6,000 employees 

to the Group’s workforce in India. The acquisitions of FuE and 

Plecto AG, although of modest size, helped to rebalance the 

Group’s presence in Germany and enrich the technological content 

of its offering. 

The above-mentioned objectives also led the Group to explore a 

variety of openings involving European players of varying size, 

which served to confirm the consistency of its strategy and the 

rigor of its financial discipline. 

In 2007, investments in fixed capital or external growth will 

underpin the rollout of the Group’s i 3 Transformation plan by 

improving its ability to innovate, its client intimacy and the industrialization 

of its production. Other investments in fixed capital 

may be added to make further gains in these areas. 

The Group’s aim of extending its geographic coverage will continue 

to guide its external growth policy in 2007 both at the European 

and global level. In terms of service offering, the Group may use 

further acquisitions to accelerate the organic growth of its Business 

Process Outsourcing business and sharpen its sector-based 

expertise in certain areas. 

These acquisitions will be made possible by the Group’s solid, 

flexible financial position – a position that they shouldn’t 

Jeopardize – and should also be in line with the Group’s profitability 

objectives. 

These profitability objectives may also justify targeted divestments. 


VII – CORPORATE RESPONSIBI- 

LITY, SUSTAINABILITY AND SOCIAL 

STEWARDSHIP 

The principles of corporate social responsibility, stewardship, 

and sustainability are reflected throughout Capgemini’s long-standing 

business practices. These principles, including our shared values 

and ethics, guide our relationships with our clients, our employees, 

our business partners and the communities in which we operate. 

Since 2003, the Group has formalized its Corporate Responsibility 

and Social Stewardship strategy under the responsibility of the Senior 

Management, coordinated by the Group’s General Secretary. 

7.1 Corporate responsibility 

7.1.1 Our Commitment and Vision 

Capgemini is committed to responsible and sustainable business 

practice which delivers added value to its stakeholders 

– clients, employees, shareholders, investors, business partners, 

suppliers, the community and environment. Our vision is to build 

and maintain a frame of reference of values and standards within 

our business, embracing: 

Our leadership, values & ethics: We say what we do and do 

what we say. Capgemini has a strong code of ethics underpinning 

all of its business practices. We embrace our core values of honesty, 

boldness, trust, freedom, solidarity, modesty and fun. 

Our employees and the workplace: We are committed to being 

a responsible employer whom people choose to work for. We 

strive to ensure that both the physical working environment and 

our business practices are safe and allow our people to develop 

and deliver their best. We have a culture where we respect and 

make best use of the diversity of our people as individuals. Underpinning 

our Rightshore approach is a strong commitment to 

our employees and their communities. 

Collaborating with our customers: We engage to understand 

their real business needs and deliver long-lasting value with 

tangible results. We take customer dialogue and feedback very 

seriously. 

Working with our business partners and suppliers: We are 

committed to sound and sustainable procurement procedures 

and increasingly understand the potential impacts and opportunities 

which our practices present so that they can be improved, 

as required. 

Protecting the ecosystem: As a major, global employer and 

a socially responsible company, we acknowledge our impact 

on the various ecosystems on which we operate. We work 

– at both national and international levels – not only with clients

ut also on local issues, in partnership with the local authorities 

or community projects. Capgemini encourages and stresses the 

commitments of its employees to the community. 

Our environmental footprint: We strive to reduce our environmental 

impact, particularly around energy use, travel and 

waste management. Long term sustainability is the key and we 

strive to increase employee awareness of the impact and how to 

contribute. We believe that, to achieve this, collaboration with 

our stakeholders is key. 

In 2004, as a natural step in the evolution of our focus on social 

responsibility and sustainability, we joined the UN Global Compact. 

The member companies of this program support and respect 

ten principles relating to human rights, the environment, labor 

rights, and anti-corruption. The Group respects local laws and 

customs while supporting the international laws and regulations 

- in particular the International Labor Organization fundamental 

conventions on labor standards. 

7.1.2 Our Values 

Capgemini’s culture and business practices are guided by its seven 

core values – Honesty, Boldness, Trust, Freedom, Team Spirit, 

Modesty and Fun. These values have existed as long as the group. 

They are second nature to us now, and remain at the heart of our 

approach to being a responsible business. 

The first is Honesty, meaning loyalty, integrity, uprightness, a 

complete refusal to use any underhanded method to help win 

business or gain any kind of advantage. Neither growth nor 

profit nor independence has any real worth unless won through 

complete honesty and probity. Everyone in the Group should 

know that any lack of openness and integrity in business dealings 

will be penalized immediately upon it being established. 

Boldness, which implies a flair for entrepreneurship and a desire 

to take considered risks and show commitment (naturally linked 

to a firm determination to uphold one’s commitments). This is 

the very soul of competitiveness: firmness in making decisions 

or in forcing their implementation, an acceptance to periodically 

challenge one’s orientations and the status quo. Boldness also 

needs to be combined with a certain level of prudence and a 

particular clear sightedness, without which a bold manager 

could become reckless. 

Trust, meaning the willingness to empower both individuals 

and teams; to have decisions made as close as possible to the 

point where they will be put into practice. Trust also means 

favoring open-mindedness as well as wide-spread idea and 

information sharing. 

Freedom, which means independence in thought, judgment and 

deeds, and entrepreneurial spirit and creativity. It also means 

tolerance, respect for others, for different cultures and customs: 

an essential quality in an international group. 

Solidarity/Team Spirit, meaning friendship, fidelity, generosity, 

fairness in sharing the benefits of collective work; accepting responsibilities 

and an instinctive willingness to support common 

efforts even when the storm is raging. 

Modesty, that is simplicity, the very opposite of affectation, 

pretension, pomposity, arrogance and boastfulness. Simplicity 

does not imply naivety; it is more about being discreet, showing 

natural modesty, common sense, being attentive to others and 

taking the trouble to be understood by them. It is about being 

frank in work relationships, loosening up, and having a sense 

of humor. 

Fun, finally, means feeling good about being part of the Group 

or one’s team, feeling proud of what one does, feeling a sense 

of accomplishment in the search for better quality and greater 

efficiency, feeling part of a challenging project. 

7.1.3 Group Fundamentals, Guidelines and Policies – 

the Blue Book 

In our largely decentralized and entrepreneurial organization, it 

is critical to have a set of common guidelines, procedures and 

policies which govern our fundamental operations as a Group. 

The Group “Blue Book” - originally created in 1989 as a managers’ 

rulebook - provides the overarching common framework for 

every employee and every part of the business to work effectively 

as one Group. 

The Blue Book contains: 

Group Fundamentals 

– Group Mission & Expertise, Fundamental Objectives, Values, 

Code of Ethics, and Guiding Behavior; 

Group governance and organization; 

Authorization procedures; 

Sales and delivery rules and guidelines; 

Business risk management, pricing, contracting and legal requirements; 

Finance, mergers, acquisitions, disposals and insurance rules 

and guidelines; 

Human resources policies; 

Communications, knowledge management and Group IT; 

Procurement policies; 

Environmental policies. 

All parts of the business in every country must embed these 

policies, procedures and guidelines as a reference in their local 

policies, procedures and guidelines while respecting local laws, 

regulations or statutory requirements. In 2006, the Group Blue 

Book was reviewed and updated to reflect our increased focus 

on Sustainability and Corporate Responsibility. The Blue Book 

is accessible online, to all Group employees, together with many 

other documents, including the code of ethics and the procurement 

policies. 


13

14 ANNUAL 

THE GROUP 


7.1.4 Our Code of Ethics 

Capgemini is committed to ethical conduct and to the principles 

embedded in our seven values. Our code of ethics, articulated 

within the Group’s Blue Book, guides all of our business 

practices: 

We respect human rights in all dealings with Capgemini stakeholders, 

including team members, clients, suppliers, shareholders, 

and local communities. 

We recognize that local customs, traditions and practices may 

differ and, as a global organization, we respect the local laws and 

customs while abiding by the international laws and regulations; 

in particular, we support the International Labor Organization 

core conventions on labor standards. 

We refuse the use of forced labor. 

We refuse the use of child labor and ensure that our processes 

reflect this commitment. 

We promote diversity and refuse unlawful discrimination of 

any kind. 

We develop flexible working conditions to promote a healthy 

balance between work and personal life. 

We promote the training and personal development of our 

employees. 

We respect freedom of association. 

We respect health and safety regulations in our working environment 

and in dealings with stakeholders. 

We require our team members to maintain confidentiality with 

regard to all information to which they have access, pursuant 

to the applicable laws. 

We refuse bribery and corruption in our business practices. 

We are sensitive to environmental impact and promote environmentally 

friendly policies. 

7.1.5 Our ethics in practice 

Our code of ethics extends far beyond a simple collection of 

abstract ideas. It is a formalization of Capgemini’s longstanding 

commitment to ethical behavior, and our ethics shape our business 

practices at every level of the company: 

Bribery and corruption: We have zero tolerance for any form 

of bribery and corruption in Capgemini. Hence, in the case of 

commercial activities, employees may not accept commission 

from - or pay commission to - third parties unless expressly 

agreed by the senior management; agreement is only granted 

in strictly limited cases. 

Conflict of interest: Each employee owes a duty to the Group 

to act with integrity and good faith. It is essential that the Group 

employees do nothing which conflicts with the Group’s interests 

- or anything which could be construed as possibly being in 

conflict with such interests. 

Funding of activities and organizations: All funding to activities 

and organizations outside of Capgemini is subject to the 

authorization of the Group Executive Committee so that we 


ensure that we support only activities and organizations whose 

ethical rules are aligned with our own. Capgemini does not 

finance political parties. 

Business gifts and entertainment: The Group employees 

may give and receive appropriate business gifts, in connection 

with their work with the Group’s clients, suppliers or business 

partners, provided that all such gifts are nominal in value and 

not given or received with the intent or prospect of influencing 

the recipient’s business decision-making, and that they comply 

with the laws and regulations in force. 

7.1.6 How we measure up 

Cap Gemini SA is included in the FTSE4Good Global and Europe 

Index, in the ASPI - Advanced Sustainable Performance Indices 

and in the ECPI - Ethical Index €uro Index. 

Capgemini (UK&I) took part in the 4 th Corporate Responsibility 

Index and was congratulated for its participation, 

which strengthens our commitments and our transparency 

whilst managing, measuring and reporting on our business 

practices. 

7.2 People 

7.2.1 Human Resources priorities 

In 2006, the H.R. priorities across the Group focused on 3 main areas: 

Recruitment and retention of employees. 

Career development: 

– Offering the right professional challenges, 

– Improving the competency model process & guidelines, 

– Increasing the linkages between the competency model and 

training curricula. 

Leadership development: 

– Implementing a Group common leadership framework, 

– Aligning leadership programs across the Group, 

– Increasing mobility within the leadership pool. 

7.2.2 Sustainable growth in employee headcount 

The evolution of the Group workforce over the last ten years is 

a reflection of the various economic cycles which have affected 

the Consulting and Technology sectors. The strong organic 

growth of the late 90s coupled with the take-over of Ernst & 

Young Consulting in 2000 meant that the Group headcount 

was multiplied by 2.5 in 5 years. This period was marked by 

sustained demand in Consulting and Technology services due 

to oncoming Y2000, the introduction of the Euro and the development 

of the Internet. 

During the 3 subsequent years, under the twofold effect of: 

– the general economic degradation due to new, major international 

crises, culminating in the 9/11 attacks and the war 

against Iraq, 

– the bursting of the Internet bubble,

the investment slowdown led to downsizing the workforce. 

2004 was characterized by a return to growth, mainly as a result of 

staff transfers (over 5,300 people were transferred upon signature 

of 2 large outsourcing contracts - TXU in the USA and Aspire in 

the UK). 2005 was a year of consolidation and renewed large- 

scale recruitment. In a flourishing market, 2006 was marked by 

a turnup in employment, with double-digit growth and ongoing 

recruitment. The Group had a record 67,889 employees by the 

end of the year, essentially through organic growth. 

Year Average headcount End of year headcount 

Number Evolution Number Evolution 

1996 23,934 25,950 

1997 28,059 17.2% 31,094 19.8% 

1998 34,606 23.3% 38,341 23.3% 

1999 39,210 13.3% 39,626 3.4% 

2000 50,249 28.2% 59,549 50.3% 

2001 59,906 19.2% 57,760 - 3.0% 

2002 54,882 - 8.4% 52,683 - 8.8% 

2003 49,805 - 9.3% 55,576* 5.5% 

2004 57,387 15.2% 59,324 6.7% 

2005 59,734 4.1% 61,036 2.9% 

2006 64,013 7.2% 67,889 11.2% 

*48,304 excluding the Transiciel contribution, which was only incorporated at 31 December. 

The impact of the staff transfer, and the resumption of recruitment over the last two years, have appreciably modified the geographical 

distribution of the Group personnel; its evolution is summarized in the table below: 

End of year 

headcount 2004 % 2005 % 2006 % 

North America 8,893 15.0% 6,351 10.4% 6,441 9,5% 

UK/Ireland 8,534 14.4% 8,826 14.5% 8,785 12,9% 

Nordic Countries 3,485 5.9% 3,429 5.6% 3,608 5,3% 

Benelux 8,306 14.0% 8,613 14.1% 9,014 13,3% 

Germany and 


3,390 5.7% 3,732 6.1% 5,137 7,6% 

France 18,664 31.5% 19,866 32.5% 20,438 30,1% 

Southern Europe 5,151 8.7% 5,591 9.2% 6,235 9,2% 

Asia-Pacific 2,901 4.9% 4,628 7.6% 8,231 12,1% 

Total 59,324 100% 61,036 100% 67,889 100% 


15

16 ANNUAL 

THE GROUP 


The above evolution reflects the following: 

The continuing adaptation of our production capacity to the 

Rightshore TM model, combining local resources (in the client’s 

area) with those situated in specialized production centers, the 

balance depending on the technology or offer concerned. This 

explains, in particular, the development of our headcount in 

the Asia-Pacific region - where 12% of Group resources are 

concentrated - and in Central Europe; 

The continuing development of the local professional services 

activity, with strong representation in France and in Benelux, 

and a growth trend in North America; 

The maintaining of a local production workforce in all our 

geographic zones. 

In 2006, recruitment was stepped up and 18,600 new employees 

came onboard, compared with 14,500 in 2005. This same trend 

was prevalent in all countries and in all areas, a trend which was 

particularly marked in India where the headcount rose by 77% 


and the total number of new recruits was higher than the total 

headcount at the beginning of the year. Sogeti and OS recorded 

high recruitment rates - 4,300 and 3,700 respectively. To support 

our 2006 priority on recruitment for growth, a new global 

recruitment campaign was launched. This campaign received the 

2006 Award for the best global press recruitment campaign. 

Staff turnover (i.e. percentage of voluntary departures) slightly 

increased - reaching 16.6% in 2006 (compared with 15.4% in 

2005 and 14.1% in 2004) i.e. almost 10,700 voluntary departures 

during the year - which reflects the standard phenomenon i.e. 

increased mobility in Consulting and Services when the market is 

flourishing. This rate is carefully monitored in order to maintain 

it at the customary level for the sector, which is achieved through 

specific action or programs (implemented in function of the disciplines 

and geographic areas involved). Turnover rates in India, 

which has had a booming IT market for several years now, stand at 

approximately 20% instead of the 30% recorded two years ago. 

The utilization rate of resources - which measures the share of hours (excluding legal holidays or leave) worked by productive 

salaried staff and directly allocated to invoiceable services - is globally progressing compared to 2005 in the case of Projects and 

Consulting. Breakdown is as follows: 

Quarterly utilization 2005 2006 

rate Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 

Consulting Services 62 67 66 66 66 69 66 69 

Technology Services 78 79 79 79 79 80 80 80 

Local Professional Services 85 86 86 86 85 85 86 86 

It should be noted that utilization rates are not monitored for outsourcing business, for which the indicator does not reflect the performance 

evolution. 

Since 2003, the Group measures and monitors the evolution of 

the indicators designed to provide pointers on the breakdown 

of its headcount. Average seniority, average age and male/female 

breakdown are recorded under these indicators. 

BREAKDOWN OF WORKFORCE BY SENIORITY: 

EVOLUTION 2004-2006 

Evolution of average seniority reflects the Group’s recruitment 

policy over the last few years and explains the low percentage 

of people with 3 and 4 years’ seniority within the Group. On 

the other hand, the recovery recorded - slow in taking off in 

2004, then becoming gradually stronger in 2005 and 2006 - 

explains the growing, albeit now-preponderant share of people 

with less than 2 years’ seniority. Furthermore, the development 

of outsourcing, with its historically more stable headcount, also 

explains (as a result of staff transfers such as TXU and Aspire, 

in particular) the relative stability of the proportion of staff with 

5 or more years’ seniority. 

40 

35 

30 

25 

20 

15 

10 

5 

0 

14,3 % 

22,1 % 

26,1% 

12,2 % 

15,2% 

21,3 % 

25,8% 

14,1 % 

7,6 % 

29,1 % 

30,8 % 

28,3 % 

Dec 04 

Dec 05 

Dec 06 

18,6 % 

17,8 % 

16,7 % 

BREAKDOWN OF WORKFORCE BY AGE: 


Evolution in average age has remained globally stable, even falling 

slightly again to 35.9. The regained momentum in recruitment 

of young graduates over the last few years, in addition to the 

strong growth of the workforce in India (where the average age is 

much younger), highlight the fact that the share of under 25s has 

increased sharply to 9.2% compared to only 3.2% in 2003. 

4,6% 

6,5% 

9,2% 

44,7% 

45,2% 

45,8% 

31,8% 

30,4% 

28,6% 

14,9% 

14,2% 

13,2% 

Dec 04 

Dec 05 

Dec 06 

4,0% 

3,7% 

3,2% 

BREAKDOWN OF WORKFORCE BY GENDER: 


After falling for several years, the percentage of women in the 

workforce rose again in 2006. The overall evolution can be explained 

by the fact that development was particularly marked in 

business lines (outsourcing and local professional services) or in 

certain countries where the percentage of working women is not 

so high (e.g. India). However, in many areas of the world, the 

percentage of women is rising globally (same scope of reference). 

Likewise, the development of BPO has enabled a large number of 

women to be taken onboard. 

80 

70 

60 

50 

40 

30 

20 

10 

0 

73,8 % 

74,9 % 

74,7 % 

26,2 % 

25,1 % 

25,3 % 

Male Female 

Dec 04 

Dec 05 

Dec 06 

7.3 Fundamental Principles of Human 

Resource Management 

Our Commitment to our People 

The success of our business is grounded in the diverse work and 

life experiences of our professionals, who enable us to both grow 

our business and deliver outstanding results to our clients. Key 

elements of our approach as an employer include: 

Fostering a culture of collaboration; 

Personal and professional development by focusing on a combination 

of experience, industry expertise, technical, business 

and interpersonal skills; 

Providing learning and development opportunities and the 

resources required; 

Providing an annual performance appraisal process with the 

opportunity to discuss its content in an individual interview; 

Entitlement to a personalized development plan, which includes 

recommendations on learning and personal development 

options; 

A performance management process that considers our professionals 

for what they do and how they do it; 

A team-focused environment where professionals can enhance 

their skills, share knowledge and enjoy a rewarding career on 

a daily basis; 

Access to a mentor, if they so wish, with whom they can discuss 

their career path; 

The ability to regularly voice their opinion through employee 

surveys on the general evolution of the Group, employment 

conditions, working conditions, professional development and 

their relationships with management and colleagues; 

To be regularly informed by their managers and able to engage 

in dialogue concerning their assignments and work environment; 

Respecting the Capgemini corporate social responsibility and sustainable 

development positions on diversity, social stewardship 

and ethical code of conduct. 

We believe that highly qualified teams of professionals are key to 

the success and sustainability of a company whose main purpose is 

to deliver an “intellectual” product. As a result, the company offers 

an environment where all can progress and develop their skills, 

collaborate with diverse professionals, contribute to the Group 

business goals through varied assignments, share knowledge, and 

thus enjoy a fulfilling and rewarding career. 

7.3.1 Personalized career management 

The competency model 

The professional development of each employee is supported 

by a competency model which forms the basis for performance 

appraisals and personal career advancement. The model, rooted in 

shared values, is tailored to take into account the specific needs of 

each of the Group’s business lines, such as particular knowledge 

or technical expertise. 

Personal development and appraisals 

One of the key challenges for a services company is to guarantee a 

transparent process of individual performance assessment, based 


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on clearly defined, fixed criteria. It is only with such a framework 

that it is possible to ensure the professional development and 

promotion of all employees, as skills assessment is the best way 

of respecting equal opportunities. 

To allow this, the Group has a performance appraisal system based 

on regular evaluations, generally conducted in relation to client 

projects and involving personal interviews with the employees. 

Mentoring systems have been set up to allow employees to benefit, 

throughout their career, from an outside view and career management 

advice from more experienced colleagues. 

Mobility 

Geographical mobility, whether within a country or internationally, 

is encouraged by the Group and often corresponds to 

employee requests. To facilitate mobility within each country, 

intranet sites publish available positions to give every opportunity 

for roles to be filled by existing employees prior to being advertised 

externally. Furthermore, for professionals involved in overseas 

assignments and who are considering an international career, 

useful information can be found on company intranets together 

with the relevant conditions and procedures. 

At the same time, in order to ensure the safety of its employees, 

travel to potentially high-risk countries is subject to strict rules 

and must be approved in advance. In order to limit the risks faced 

by its people as far as possible, if trouble breaks out in a country 

where the Group’s employees are present, Capgemini has set up 

a repatriation procedure with specific insurance cover. 

7.3.2 Learning and development 

General learning policy 

The value of a consulting and IT services company lies in the quality 

of its intellectual capital. In an industry characterized by rapid 

technological change and changing patterns of work, it is essential 

for employees to keep their knowledge and skills up-to-date in line 

with client and market needs. Group employees can thus leverage 

and build on their knowledge in order to gain rewarding professional 

experience. Personalized development plans are therefore designed at 

the time of the annual performance interview and reviewed at least 

once a year. Furthermore, operating units undertake a systematic and 

iterative review of both the capabilities required for their businesses 

and their portfolios of training offerings to keep apace with current 

and future market needs. 

The fundamental strategy of competency development draws 

upon various approaches: 

standard training programs; 

mentoring systems; 

e-learning; 


on-line books; 

on-the job training; 

easily accessible databases for knowledge sharing; 

management of professional interest communities; 

forums and team rooms where issue-specific or assignmentspecific 

knowledge can be exchanged. 

A culture of sharing and networks is vital in order to facilitate 

the relaying, use and sharing of knowledge, as well as innovation 

and collaboration. 

Increased focus on investment in training and competency 

development 

Resources are devoted to providing training both at Group level 

and locally. The Group’s on-line learning management system, 

called “MyLearning”, which is open to all employees, was used 

by over 26,000 employees in 2006. Moreover, overall usage of 

e-courses and online books saw a big jump, with employees using 

MyLearning for informal and just-in-time learning as well as for 

registering for more formal structured learning events. 

MyLearning contains all of the Group programs and, for many 

regions, local curricula. The underlying platform of MyLearning 

was refreshed in 2005 to give an enhanced learning experience 

and to improve available learning tools. The catalog of courses 

includes a range of training options to suit different learning styles, 

including over 2,000 e-learning courses, on-line assistance, testpreps, 

more than 13,000 books, online examinations, language 

courses, live virtual training and meeting sessions, and classroom 

teaching. Classroom instruction is provided either at local training 

centers or within the Group University. Globally, 63,500 people 

were trained in over 2 million hours in 2006. 

The Group University 

The Group University continues to play a major role both as a 

learning center and as a conduit for the group’s strategy and evolution. 

The University is the connection point for the business units, 

the disciplines, and the Group to deliver learning experiences that 

align our people to the Group’s strategy and to our client’s needs. 

It is also where the Group “Feeling and Spirit” comes to life for 

our people. Its mission is to: 

Develop professional competencies and capabilities; 

Drive top-quality learning content in order to guarantee consistent 

application, adapted to our business requirements; 

Design and master a global curriculum; 

Innovate and optimize efficiency when designing the programs; 

Only deliver top-quality, tailored program content and delivery; 

Facilitate and incubate networking within and across the disciplines 

and communities. 

In 2006, the Group’s University expanded its classroom activities 

by 40% and reached over 6,900 participants – 2,000 more than

in 2005. Overall satisfaction with the courses remains high with 

an average rate of 4.3 out of 5. 

Continuously innovating and alongside its normal program schedules, 

the University delivered five specially-focused Business 

Priority Weeks (BPW) in 2006, which reached over 1,500 participants, 

on the topics of Service Orientated Architecture (SOA) 

and Rightshore. BPW is a unique learning event where over 

300 individuals, attending specialized training programs, come 

together at certain points during the week to hear key messages 

from Group senior executives and clients on top priority topics 

and to discuss the implications for them and their communities on 

their daily practice, their disciplines and our business. These events 

enable them to be ambassadors and conduits of the key learning 

and messages when they return to their home business units. 

The main home of the Group University is Les Fontaines, a specialized 

Business Learning forum which organizes training and 

seminars. Les Fontaines was opened in 2003, after an investment 

of €96 million by the Group, thus testifying to the strategic importance 

of training within the Capgemini Group. While Les Fontaines 

remains the hub for the Group University, additional regional hubs 

were opened in the United States and in India during 2006. 

The University is structured into a number of schools aligned 

to the business disciplines The Leadership Development School 

and the Business Development School are transversal and open to 

participants from all disciplines. The Consulting, Technology and 

OS Schools are all aligned to their respective disciplines. 

The role of the Leadership Development School is to create 

our common leadership culture and to strengthen our leadership 

community. At the heart of this school are learning programs that 

help our up-and-coming and existing leadership drive change, 

results and passion. Through action-orientated sessions dispensed 

by specialists, with many opportunities to interact with top 

management and practitioners, participants come away with 

renewed understanding of the Group, and its priorities and individual 

actions to bring both short and long term business results. 

Collaborative Coaching, a program that was introduced two years 

ago, has increased in attendance and popularity as the focus on 

leadership and coaching has increased in the Group. 2006 has 

seen the introduction of a new program – Emerging Leadership 

– targeting the early career professionals with high potential. 

The Business Development School supports the development 

of our business development community and is a strong channel 

for animating our sales force. The school ensures a fast roll out of 

priority content training such as Rightshore or SOA. 

The Consulting School trains our newly hired consultants in the 

Group Consulting skills and methodologies. It provides training 

on the main consulting practices, such as Customer Relationship 

Management (CRM), Supply Chain, Finance and Employee Transformation 

(FET) and Transformation Consulting as well as topics 

such as Six Sigma. The Consulting School also provides sectorspecific 

training to support our key sectors. 

The Technology School equips our technology professionals with 

the technologies, skills, tools and processes necessary for delivery 

excellence. This school is the spearhead of our four in-house 

certification programs designed for Engagement Managers, Architects, 

Software Engineers and Networks Engineers. The programs 

have been designed to support these roles, from apprentice to 

master levels, and to allow our professionals to select their learning 

solutions in line with their current business priorities, their 

personal objectives and their career tracks. Participants have the 

opportunity to connect with colleagues from across the Group. 

Specialized learning programs have been designed, in partnership 

with each of these communities, to bring participants permanently 

up to standard through all phases of the certification process in 

line with current technology trends. 

A recent addition to the University Schools is the Outsourcing 

School to support our Outsourcing (OS) business. The initial 

programs are focused on the training and assessments required 

to support Service Delivery Management Certification. The OS 

School complements the existing offering and OS people attend 

additional programs within the other Schools depending upon 

the requirements of their roles. The OS School is set to grow in 

2007 to meet additional OS business needs. 

To support the focus on leadership development, in 2006 all 

countries increased their participation in both local and global 

programs. Some examples: 

In the Netherlands, a new program called Fast Forward was 

initiated, which focuses on accelerating leadership qualities in 

young talent; this is a three-year program combining working 

sessions, learning programs, stretch targets and coaching. 

In India, the New Horizons program is designed to develop 

four key leadership competencies: Business Acumen, Delivery 

Excellence, Cross Cultural Competence and People Leadership; 

at the end of the program, a select number of high performers are 

put through the Executive Mentoring and Shadowing Program 

with Global leaders. 

In the UK’s Aspire business unit, two new programs for graduate 

and junior management talent were added. This adds to the 

Leadership Academy for identified executives with VP potential, 

which was set up in 2005. 

In Sweden, in addition to existing leadership development 

programs, 6 leadership seminars were run around hot topics 

such as motivation, managing virtual teams, living our values. 


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THE GROUP 


In these seminars, our clients were invited as guest speakers 

and participated in workshops on these subjects. The seminars 

were very popular and gave good insights into the importance 

of good leadership skills. 

The BPO Center in Adelaide, Australia, partnered with a local 

training organization to conduct the Collaborative Leadership 

Program. All members of the senior leadership team participated 

in an eight-month program designed to enhance core leadership 

competencies. Throughout the year, several Leaders’ Lunch & 

Learn sessions were conducted, which were designed to develop 

the skills of the broader leadership team to enable them to 

manage better the performance of their team members. 

The certification process 

Internal certification 

This in-house peer review process gets employees to appraise the 

competencies of colleagues based on precise and clearly identified 

criteria: experience gained, knowledge sharing, use of in-house 

tools and methods, advice and leadership. 

The process has three objectives: 

to create strong and recognized professional-interest communities 

by sharing information, knowledge and skills in specific 

areas; 

to ensure a blended distribution and graduated progression of 

competencies, both for in-house needs and for client service; 

to create the win-win situation giving a competitive edge - to 

both Group and employee - as well as increasing each person’s 

“employability”. 

The Group has six main internal certifications for: Engagement 

Managers, Architects, Software Engineers, Networks Engineers, 

Enterprise Applications Specialists and team Managers. 

At the end of 2006, 4,139 people had received internal certification 

at Group level (some 6.1% of the Group’s global headcount) 

compared to 3,631 people in 2005. 

External certification 

The Group has a long-standing external certification policy, 

which it has enhanced through online learning programs offering 

the possibility to study for external affiliation, including test 

preps and online mentoring. Individuals can apply for external 

certifications such as Microsoft, IBM, Oracle, Sun Microsystems, 

Cisco, Linus Professional Institute, Project Management Institute 

(PMI) and ITIL. 

Some examples, which support our growth in India: 

140 people gained ITIL certification, 14 people moved up to 

the next level and gained ITSM Certification i.e. the highest 

proficiency level in the OS discipline; 


Six Sigma Training was rolled out to senior professionals from 

Capgemini India, who went through 3 weeks of Six Sigma 

Training to attain Green Belt certification; 

A special SAP Tech Edge Seminar saw participation from 110 individuals 

from the India business, all of whom gained certifications 

in different modules of SAP. 

Capgemini in-house center certification 

At least 56 Capgemini centers including the Accelerated Delivery, 

Application Management Services, Infrastructure Management 

Service, Business Process Outsourcing and Technical Excellence 

Centers all have some form of certification now, an increase of 

over 23 since last year. Centers in North America, France, United 

Kingdom, Belgium, Netherlands, Germany, Spain, Italy, the 

Nordic countries, China and India have ISO certifications, 

including ISO 9001 / ISO 9001-2000. Many centers are working 

on their CMM/CMMI® (Capability Maturity Model Integration) 

certification, which is specific to the applications development 

business. The Mumbai and Bangalore centers in India have 

obtained the highest CMM and CMMI® certification (Level 

5), and at least another 10 centers across France, Netherlands, 

Spain, Canada, the UK and USA have achieved CMM/CMMI® 

Level 3. 

7.3.3 Dialog and communication at the heart of 

our relationships 

With over 300 offices, in more than 30 countries, approximately 

68,000 people all over the world, speaking over 100 different 

languages and an extremely diverse client base, communications 

and dialog are essential to foster the spirit of collaboration and a 

sense of belonging. 

Capgemini believes effective communication is a precondition for 

an open and honest culture, and for the involvement and engagement 

of its employees. It is also essential for spreading knowledge, 

sharing successes and creating a sense of belonging both to local 

teams and to the Group in all its dimensions. 

In 2006, the Capgemini internal communications team continued 

to focus on improving and increasing communications across the 

Group through various initiatives, in particular: 

The Group’s intranet site, Talent, updated with real-time news 

and information, enjoys over 20,000 visitors each month. Talent 

is a “digest” of corporate information, best practices and tools 

concerning the Group, and contains links to local country 

intranet sites, training sites and communities. There are over 

5,000 subscribers to the News Alert, and a weekly e-mail edition 

is sent to all Capgemini employees every Friday. An audio 

news podcast is also released every week. The successful Talent 

experience was the origin of a new approach to intranet site 

management across the Group; now local intranet sites share the

same content management platform and this allows a continuous 

flow of information, from one to another. 

Talent also runs themed annual communications and awards 

programs, designed to recognize and reward people from all 

parts of the Group. In 2006, the theme was “Many Faces, One 

Group”: the campaign featured all countries where the Group 

is present. The campaign looked at the various markets, 

business opportunities and team efforts in the geographies. 

The coverage included articles, quizzes, photos and downloadable 

color brochures of each country. Employees were 

invited to share different traditions and working practices 

as well as challenges faced, which were often similar across 

the globe. The campaign succeeded in closing cultural gaps, 

shortening distances and jumping language barriers. It also 

enabled people to learn from their colleagues, to put their 

knowledge into practice, and to work towards a common 

goal. Many Faces One Group was a huge success with around 

10,000 accesses to the articles every month, over 3,000 

entries to the quizzes and several hundred photo uploads, 

including several team photos. 

Newspapers and rich-media, produced by Group Communications, 

support communications at special events such as 

Rencontres in Montreal, Group Kick Off meetings and Business 

Priority Weeks at the University. Known as Talent on the Spot, 

this capability enables real-time capture of key messages that 

can then be relayed and re-used within the Group. 

A dedicated channel helps foster community spirit and communication 

between the Group’s principal operational leaders. “The 

Executive” series comprises a monthly newsletter, a calendar of 

events, a Who’s Who and regular updates. 

Every quarter, after publication of the Group revenues , a 

communications pack is put together, providing an overview 

of the quarter in terms of financial performance, sales, delivery 

and human resources - at Group and SBU levels. This 

communications pack is then enriched with local information 

(corresponding to the same categories) before being shared with 

team leaders, to help them manage local team meetings and to 

ensure consistency of message across the Group. 

In 2006, Capgemini held its second all-staff Webchat, “Let’s 

Talk On-line” with some 5,000 connections. For 90 minutes, 

3 members of the top management team answered questions 

from employees worldwide, in five languages. For those unable 

to take part, questions could be sent in advance and a written 

response was given to each query. 

Important events such as the 21 st Rencontres - where Capgemini’s 

ambition was shared - also created a lot of communication and 

enthusiasm as all parts of the Group rallied together. 

Electronic community tools such as Community Home Spaces, Team 

Rooms and other platforms continue to evolve dynamically to allow 

internal communities to debate technical topics, to rapidly share 

best practice and to access Group tools and methodologies. 

The Group University consistently provides a vital platform for 

international communication and exchange. 

Whilst the wealth of global communications initiatives provides 

cohesion and understanding within the Group, local communications 

teams also play a vital role in supporting the company’s 

culture. Above all, communication is a daily management task, 

drawing on various local initiatives, developed through newsletters, 

Intranet sites, information meetings and formal or informal 

person-to-person exchanges. 

Communication at the heart of employee transfers 

Maintaining the involvement and satisfaction of existing employees 

constitutes a communications challenge priority but winning the 

hearts and minds of the many people who join the company 

each year, as part of an outsourcing deal or an acquisition, is as 

vital to the success of any deal. In 2006, over 600 people joined 

Capgemini in view of the various outsourcing projects in addition 

to the acquisitions in Germany and India. 

Two-way communication and employee involvement 

At the heart of Capgemini’s communications philosophy is 

a commitment to two-way communication. Whilst informal 

two-way dialogue is always encouraged between individuals, 

understanding the engagement and satisfaction levels of 

employees, as a whole, is also formally sought through the 

annual Group survey. The employee surveys have up to now 

been locally managed with a core of globally consistent questions, 

which are identical every year thereby enabling to track 

and monitor satisfaction levels with respect to the various 

initiatives. Employees are informed of the results of these 

satisfaction surveys. In 2006, a decision was made to roll out 

a fully consistent Global Employee Survey in 2007. A pilot was 

run at the end of 2006, covering over 16,000 employees across 

France, North America, Central Europe, Italy and China with 

a response rate higher than 65%. By moving to one consistent 

survey, the Group will be able to increase the focus on taking 

actions, tracking, and monitoring progress. 

Employee representation – a formal voice for employees 

Capgemini also demonstrates its commitment to two-way dialog 

through its approach to employee representation. The company 

upholds the laws of representation and recognizes the importance 

of constructive dialogue between employees and management 

in shaping key decisions affecting the running of the Group. In 

2001, the International Works Council (IWC) was set up as the 

official representative body in the Group. It enables employee 

representatives to bring employee interests directly to the attention 

of Group management and, in return, to be informed directly, 

by the management, of plans for the company and their impact 

on its employees. 


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THE GROUP 


Since 2004, Capgemini has gone beyond the European legislation 

on Works Councils and opened up the IWC meetings to members 

from non-European countries, including the United States and 

India, creating a truly globally representative body. The IWC 

meets twice a year for two-day working sessions. 

At a local level, the company also supports dialogue with unions 

or other employee representatives, within relevant bodies and 

through the processes provided for in local legislation, regulations 

and agreements. 

Following the October 2006 announcement of the acquisition 

of Kanbay, its workforce being mainly based in India, the IWC 

was invited to hold its meeting in India. The meeting was a great 

opportunity for the IWC to gain important first-hand experience 

of both the country and of our Indian colleagues. 

The accent was laid on cultural understanding, business culture, 

code of ethics and work practices in the IT sector in addition to 

the recruitment process, learning and personal development. IWC 

members were given the chance to speak to people working on 

various accounts. Our working conditions and salaries are in line 

with those of the large Indian IT companies. Offices are huge, 

open-plan spaces, divided into pods of two or four, which see a 

great deal of activity in the afternoons, when Europe has only just 

woken up. Our employees also have the chance to learn foreign 

languages, including French, German and Dutch. There was 

positive feedback from the IWC on the working conditions, the 

professionalism and the friendliness of our Indian colleagues. 

The IWC has a dedicated intranet site to give all Group employees 

open access to IWC information. In France, an Information Dissemination 

Agreement was signed, in 2002, to define the terms 

and conditions for information to be issued to employees by the 

unions, Health and Safety Committee and other employee representatives 

via the Group’s intranet. Similar practices also exist in 

other countries, such as Spain and the United Kingdom. 

7.3.4 Remuneration policy 

The Group’s remuneration policy is based on common principles, 

applied in a decentralized way and tailored to local job market 

conditions and regulations. The policy aims to: 

attract and retain top talent; 

reward performance with a remuneration model that is motivating 

yet flexible; 

be consistent with the Group’s financial and operational targets. 

When local rules permit, employees can select the components of 

their remuneration package from a predefined menu. This allows 

employees additional flexibility and enables them to reconcile their 

financial and personal situations in the best possible way. 


Profit-sharing is provided to employees, pursuant to the local 

regulations of the country concerned. 

The Vice Presidents’ and Senior Executives’ compensation schemes 

are overviewed and authorized at the Group level for both fixed 

salaries and variable compensation schemes. Non Vice President 

and Senior Executive compensation schemes are locally designed 

and managed but with Group approval on the principles. 

7.3.5 Stock options 

Stock options are granted on a regular basis in line with corporate 

governance recommendations. These grants are made 

selectively, with the aim of rewarding employee loyalty, namely 

for those who have made exceptional contributions to sales, 

production, innovation or management or who have been 

acknowledged for specific initiatives. Any employee in the 

Group may be selected to receive stock options. They are an 

exceptional reward and do not form part of the Group’s general 

remuneration policy. 

The Board of Directors granted a certain number of stock options 

to 6,193 beneficiaries under the fifth plan (launched in May 2000 

and closed in May 2005) and to 1,342 beneficiaries under the 

sixth plan (launched in May 2005 and closing in July 2008). The 

Management Report, presented at each shareholders’ Meeting of 

Cap Gemini S.A., provides a detailed yearly breakdown of these 

grants. Stock option grants to company directors formed only a 

tiny percentage (less than 1.5%) of the aggregate stock options 

allocated. 

Detailed information regarding the stock options granted by Cap 

Gemini S.A. to the first ten non-designated company employees 

having been granted the highest number of options and the 

number of options exercised by the ten non-designated company 

employees having subscribed the highest number of shares 

and, generally, any details regarding the plans are provided on 

pages 129 and 139 of this reference document. 

7.3.6 Diversity, equal opportunities and working conditions 

In all countries of operation, the Group strictly complies with the 

local labor legislation and international labor regulations. 

Capgemini guarantees equal opportunities to all employees and 

any form of discrimination is forbidden. The principles and 

values of the Group are applied so that they expressly promote 

diversity, integrity and work-life balance for its employees. The 

aim is to encourage a respectful attitude and to banish any form 

of harassment or exploitation from the workplace. 

The goal of the company is to welcome individuals from diverse 

backgrounds who are innovative, enthusiastic, open-minded and

committed to delivering a truly collaborative experience to our 

clients and top-quality service. Capgemini promotes the principles 

of diversity, in particular by: 

selecting employees according to objective, job-related criteria; 

continuously reviewing all internal policies and procedures in 

order to make improvements and to encourage diversity; 

identifying barriers or restrictions to diversity in order to take 

the action required to remove them; 

training and continuously educating the management; 

communicating the spirit of the diversity policy to everyone 

within the company; 

setting up ways to measure and monitor diversity. 

PROPORTION OF WOMEN IN TOP EXECUTIVE POSITIONS PER OPERATING UNIT 

25 

20 

15 

10 

5 

0 

North America 

17% 

19% 

United Kingdom and Ireland 

16% 

Nordic Countries 

6% 

Benelux 

Germany and 


Despite remaining stable from one year to the next, pronounced 

evolutions in the proportion of women in top executive positions 

have been recorded. The percentage of women promoted to top 

management roles has reached the 23% mark and this figure 

follows on the heels of the same statistics for society as a whole. 

Furthermore, growth is mainly centered on India, where the 

figures recorded for Capgemini are higher than those recorded 

in the local employment market, in spite of this rate being lower 

than our global average. 

Across the Group, the focus on improving the diversity of workforce 

has remained a priority. Some of the many diversity actions 

in 2006 were: 

10% 

22% 

France 

The Group makes every effort to adapt to the different needs of 

its staff and to provide a sound working environment for them, 

an environment which is best suited to their lifestyles. 

Group-level tracking is carried out, in compliance with the applicable 

legislation, to assess and understand better the situation of 

women within the Group such as the percentage of women in 

recruitments, departures, promotions. In a number of countries, 

and where allowed by the regulations, tracking is carried out of 

specific populations such as different cultural groups, age groups 

and people with disabilities. Diversity performance indicators 

are also included in the HR audit run each year. 

In terms of women’s representation at the highest levels of responsibility, 

the situation was as follows as at 31 December 2006: 

13% 

Southern Europe 

Asia-Pacific 

16% 

6% 

India 

Holding 

8% 

14.9% 

Total 2006 

In France, both Capgemini and Sogeti signed the Charte de la 

Diversité dans l’Entreprise (French corporate diversity charter) 

and actively participate in IMS Entreprendre pour la Cité, an 

organization responsible for promoting the French charter to 

help drive modern diversity in France. An agreement favoring 

the employment of disabled people was also signed in 2006. 

Capgemini and Sogeti also rolled out training programs, for the 

recruitment teams and managers, on the importance of diversity 

in recruitment. Working with Medef and Syntec, the Group 

was involved in Nos quartiers ont des talents, which generated 

an increase in the number of CVs received from young people 

from the Paris suburbs. This was combined with initiatives to 

bring greater awareness of opportunities in the IT business for 

14.9% 

Total 2005 

15.5% 

Total 2004 


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less privileged universities in the Ile-de-France region. Sogeti 

participated in the Trophée de la Femme Ingénieur awards for top 

women engineers in France. 

In the Netherlands, the Diversity Platform launched a new initiative 

called Connect in Circles where women connect with each 

other and with role models (male and female) to share experiences 

on profiling, networking and negotiating career choices. 

Each “Circle” is mentored by a Vice President. In March 2006, 

Capgemini, in the Netherlands, hosted 150 top female managers 

from many multinational firms to debate in a workshop on 

Corporate Social Responsability and sustainable development. 

Many of our female colleagues supported the initiative Spiegelbeeld 

(mirror image), which is an online database with female 

role models used by the national expertise office VHTO to help 

more girls become interested in science and IT. In recruitment, 

Capgemini undertook the biggest job market research project 

in the Netherlands, providing a wealth of information on the IT 

and management consultancy market. Capgemini, along with 

a number of other large companies, participated in a coaching 

project for highly-educated Moroccan students to help them in 

their personal development and career options, which has had a 

positive influence on employer perspectives on this group. This 

was combined with working together with Young Global People, 

a network organization for educated immigrant young people, 

thus giving Capgemini access to a wider range of talent. 

In North America, the Capgemini Women’s Council was set up 

to promote a more enriched and diverse work environment 

in order to reinforce Capgemini’s commitment to invest in 

its people and to serve as a key element of its strategy to be 

the employer of choice, in particular for women. The council 

focuses on four main areas: recruiting, retention, leadership 

and networking. A specific Leadership Development program, 

designed specifically for women, has established a digital forum 

to provide women with information (research, relevant articles, 

documentation, etc.). All these initiatives focus on deepening 

the talent pipeline and providing promotional opportunities for 

women throughout the organization. Local offices also support 

many diversity initiatives in their local communities. 

In Spain, we collaborate with FUNDOSA to train and recruit 

disabled people. We also provide special onboarding programs 

in English to respect the increased diversity in our Spanish 

workforce with employees from over 39 different nationalities. 

Spain has also joined the Alcobendas Equal Employer Network, 

the objectives being to increase equal-opportunities awareness 

and to promote work-life balance initiatives. An internal survey 

on flexibility showed that this is a main priority for employees 

and, currently, over 80% of employees consider they have the 

flexibility they need. 

The UK has established strong links with several external organizations 

such as Business in the Community’s Race for Opportunity, 

Opportunity Now, the Employers’ Forum on Disability and the 


Employers’ Forum on Age. In 2006, Capgemini was awarded 

a silver rating from Opportunity Now in respect of our progress 

on Diversity. Opportunity Now is a business-led campaign that 

works with employers so that they realize the contribution of 

women to the workforce. Capgemini has been recognized by 

The Times survey - Where Women Want To Work - as one of the 

Top 50 most progressive organizations in the UK. 

In Germany, we have put in place Supply Chain Agreements 

with institutions for disabled citizens and, wherever possible 

and sensible, order products and services with suppliers who 

have focused on employing and supporting the development 

of disabled citizens. 

Health and safety in the workplace 

Health and Safety in the workplace is an important feature of 

human resources and facilities management. Fortunately, the 

Group’s businesses do not involve high-risk activities. Health and 

Safety responsibilities are taken very seriously and the company 

has specific processes and measures in place. Capgemini often 

works in collaboration with clients regarding client buildings 

and locations where staff may be working. In addition, areas of 

concern are regularly reviewed and preventative measures put in 

place, as required. 

Our offices around the world have introduced initiatives to promote 

employee well-being including: work-life balance programs, 

stress management, improvement of employee-manager relationships 

and better working conditions within the company. 

Highlights of actions related to well being and work-life balance 

include: 

In Sweden, the focus has been on pro-active health care. A 

monthly e-magazine HälsoNytt includes articles, by well-known 

writers, on proactive health care issues. Subjects covered include 

stress management, life balance, sleep, exercise, diet, work 

environment especially ergonomics. A personalized e-trainer, 

on a dedicated web-site, enables employees to chat, to obtain 

exercise and weight tips, and even recipes. Over 50% of the 

Swedish staff use this facility. All employees were given a step 

counter and competitions were run, which were very popular: 

people got geared up and enthusiastic in competing together. 

The goal was 10,000 steps each day. A very good pro-active 

health care project! 

Germany has implemented thorough medical check-ups for all 

employees above 40, conducted by one of the leading doctors 

for preventive medicine in Germany. Capgemini bears all the 

costs for these specialized medical check-ups. Employees under 

40, their family members and life partners/companions can also 

use this service at reduced market rates. Early in 2006, a contract 

was negotiated to supply all German office locations with heart 

defibrillators (at least 1 per floor) in order to cope with the

urgent health crises, which an employee or a visitor may suffer 

as a result of malfunctioning heart rythms, and to manage the 

time-frame prior to the arrival of the paramedics. 

In Finland, one of the main projects in 2006 was the well-being 

program. This included setting up operational models with 

external suppliers, involving the line managers in planning preventive 

action, training all the managers (including the Project 

Managers) within the scope of the program - The Manager’s Role 

in Well-being - and providing training for employees on worklife 

balancing. The aim of this program is to raise awareness 

among our managers on how health and safety impacts business 

results and how they can contribute to improving working 

conditions, which aspect was particularly appreciated by the 

employees. HR has created a reporting model that helps us to 

manage the risk portfolio and, today, we have good visibility of 

health risks (early retirement, sustained sick leave, etc). Policies 

and procedures have been established on how to prevent or to 

handle these risks. 

In the Netherlands, Capgemini worked with the Institute for 

Work and Stress and developed the training program Working 

Together. In three workshop sessions, Capgemini employees 

and their working partners have learned how to combine and 

to create a better balance between their work and private lives. 

After a successful pilot, the training program was added to the 

standard training catalog. The training program was followed 

up by a pilot training for managers: Smart management from 

7 to 7, teaching managers about their own work-life balance 

and how to discuss these topics better with their employees. 

During 2006, a number of ergo-coaches were trained to help 

look for ways in which we can improve the working environments 

of our employees, on an ongoing basis. Towards the 

end of 2006, a workplace investigation was conducted with a 

software system called e-Monitor+. This looked at the physical 

workplace (chair, table, screen, light, climate, transport, stress, 

etc) and the potential problems and risks. One result of the 

investigation was to provide advice to employees, who have to 

travel a lot by car, on how to choose a car and how to sit and 

relax while driving. 

In the UK, the health, safety and well-being initiative - known 

as LifeStyles - increases year on year the options available. This 

initiative offers employees a wide range of events, advice, guidance, 

discounts and benefits. Advice and guidance is offered on 

a variety of issues such as cancer awareness, overcoming jetlag, 

healthy eating, time management and relaxation techniques. 

Discounts and benefits are available to all staff for a selection 

of goods and services, including gym membership, methods to 

give up smoking etc. 

In Spain, the accent has been placed on work-life balance with 

actions such as increased flexibility in working patterns and the 

provision ofchildcare vouchers, which both increases flexibility 

and helps working mothers. 

The BPO Centre in Adelaide, Australia, has introduced flexible 

working policy along with a number of initiatives concerning 

health, safety and well-being such as a fitness campaign. 

In India, employees using their cars outside regular working 

hours, due to the difference in time zones’ with Europe and the 

USA, have been supplied with GPRS equipment. The purpose 

is to ensure their safety and to provide assistance in the event 

of breakdown. In India, Capgemini, particularly emphasizes the 

Fun value. In order to allow employees to unwind and relax, 

activities are organized such as SocioZone - a quarterly event, 

including an external trek, cruise party or discotheque party, 

which has huge attendance. 500 people attended the last Sociozone 

in 2006. Fundoo Friday runs monthly with fun activities 

e.g. young talent show, music & dance competition, mimicry, 

orchestra, etc. In Sportz World, various sports-related activities 

- especially cricket - are promoted, which facilitates Capgemini 

India’s participation in external events. These events also aid 

employee retention and encourage team spirit. 

7.4 In the community 

Capgemini actively encourages employees at all levels to get 

involved in the communities in which they live and work and to 

donate time, energy and creativity to bearing a positive impact. 

Joining forces to help others strengthens team spirit, improves 

communication skills, and gives us a better understanding of those 

around us. Our community activities range from fundraising drives 

and direct financial contributions to a wide range of volunteer 

projects. Skills for the Future encourages Group employees, wishing 

to get involved in educational initiatives for the development of 

individual or group skills and capabilities, to share and disseminate 

their own expertise. 

Sogeti has been supporting PlaNet Finance, the world’s leading 

micro credit organization, for a number of years and hosted an 

event to celebrate the achievements of Dr. Mohammed Yunus, 

who was awarded the Nobel Peace Prize in 2006. Sogeti helps 

PlaNet Finance by providing IT systems support. It is currently 

working to restructure the system to make it more efficient, 

enabling the organization to help more people. Sogeti is also a 

part of Club XXI è siècle (21st Century Club), a French leadership 

group focused on business with a social conscience. 

In the UK in 2006, a challenging target to help 2,007 people by 

2007 was set and exceeded. The teams estimate that they have 

helped approximately 5,500 people. As a significant sponsor 

of the Prince’s Trust, our involvement includes a network of 

personal and business mentors, pro bono work directly for the 

Prince’s Trust. Capgemini is also committee member of the Technology 

Leaders Group, having achieved significant fundraising 

through sponsored challenges. Recently, a team of 40 people 

undertook a grueling challenge (crossing the Sahara and Costa 

Rica) and raised over £130,000 (approximately €200,000) for 


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26 ANNUAL 

THE GROUP 


the trust – which will help about 185 young people make a fresh 

start in life. The Teach First program gives top graduates both 

teaching and leadership experience. Capgemini takes on several 

teachers as interns, every year, giving them the opportunity to 

learn business skills. The Time to Read program continues to help 

children with learning difficulties, many Capgemini employees 

spending their lunch time helping children to read. Working 

Links is a public/private/voluntary partnership between The 

Shareholder Executive, Manpower, Capgemini and Mission Australia 

that helps people in some of Britain’s most disadvantaged 

communities to get back to work. Since its creation, Working 

Links has helped over 76,000 people find a job. Working with 

the charity organization Plan UK to rebuild a primary school in 

Banda Aceh (Indonesia) which was destroyed by the Tsunami 

of December 2004, Capgemini UK employees raised £117,000 

(approximately €175,000) and the school was re-opened in 

July 2006. For the last four and a half years, Capgemini has 

provided funding, business experience and time to support the 

Rotherham Rugby Club’s community program which focuses 

on sport, health and learning. Our support has helped them 

provide activities for almost 3,000 children a year. The activities 

are all free and include: rugby coaching for juniors, reading partnerships 

and additional help for innumeracy, healthy lifestyles 

and programs for children in care. 

Telford, in the Midlands, is home to Capgemini’s largest UK 

client work - the Aspire project. With over 2,500 employees in 

Telford, Capgemini is the largest private employer in the region. 

We have taken an active role in the local community, with an 

early sponsorship of the local football club - AFC Telford United 

- which had been facing financial difficulties. Since July 2004, 

we have helped turn around the fortunes of the football club, 

created opportunities for coaching for youngsters and been 

part of developing a new learning center which supports over 

8,000 school children and socially disadvantaged people every 

year. In 2006, we were awarded the Chamber of Commerce 

Shropshire Star Business Award for Best Business in the Community. 

The award recognizes our long term relationship with AFC 

Telford United as well as with the local council, local charities 

and the people who live around Telford. We have helped 

approximately 2,000 people in the area and our employees have 

raised over £20,000 for a local charity. 

In North America, the focus has been on supporting local community 

programs. A number of individuals took on personal 

challenges to raise money for causes such as aid to build schools 

in Ethiopia and support to cancer research. 

In the Netherlands, Capgemini is giving assistance to a school 

project for street kids in India: the Rainbow Home Project delivered 

10,416 weeks of education and accommodation in 2006, 

plus a commitment to 40 children who will be supported for 

the next 5 years. 

In China, in our BPO center in Guangzhou, the teams are 


working to support each other when faced with exceptional 

personal situations and to foster and build team spirit by building 

a fund to help individuals faced with personal hardship. 

In addition, the office collects old clothing, shoes, and books 

for children - aged 6 to 14 years - in a Tibetan orphanage. 

Charity donations for helping poor children is part of a continuous 

volunteer effort, directed at helping the poor in their 

local communities. 

India organizes blood donation camps and, in 2006, collected 

a total of 1,047 bottles of blood. Such drives not only help 

society but also our employees, in need of blood for their ailing 

relatives, who can avail themselves of the facility by contacting 

the Indian Blood Bank authorities.. 

7.4.1 Corporate Social Responsibility and talent development 

As part of the Aspire commitment to Learning and Development 

and to reflect the Capgemini Corporate Social Responsibility, 

five community projects have been developed. Teams of junior 

executives are working with local government and charitable 

organizations in order to help local school children and socially 

excluded people by raising money. 

Aspire’s Academy Programs are: 

Playing for Success – The UK Department for Education and 

Skills £1.5 million Playing for Success initiative is establishing 

out–of-school-hours study support centers at football clubs 

and other sports’ grounds. The centers use the environment 

and medium of football, rugby and other sports as motivational 

tools, and focus on raising literacy, numeracy and ICT standards 

amongst pupils. A Capgemini graduate team is involved in 

creating an IT/web solution with the local Council. 

Green Grads – Employees have been assigned the task of 

making Capgemini more environmentally friendly and reducing 

its ecological imprint. The target for this project is to make 

International House - the first Capgemini building in Telford 

- as “green” as possible. Developing and implementing green 

initiatives benefits the environment and reduces costs. 

H20 – Academy employees have been tasked with raising 

£10,000 by creating fun, employee fund-raising events for the 

Aspire 2006-nominated charity Help the Hospice. 

Goal Getters – Utilizing the Capgemini access to the AFC 

ground, a large scale event is to take place that will generate 

excitement and energy in the local community and hopefully 

give the community a lasting legacy. 

Capture – In celebration of the 250 th anniversary of the British 

engineer - Thomas Telford, we are working with the Telford 

College of Arts & Technology and the local theatre to run a 

mobile phone competition. Children from fourteen local schools 

have been invited to enter a photographic archive of “My 

Telford: Past, Present and Future” as part of an exhibition to 

be held in June.

7.5 The group and the environment 

Environmental policy 

Capgemini’s industry is recognized as having a moderate impact 

on the environment due to the nature of its operations. However, 

the Group is committed to ensuring that its services are delivered 

in a manner that is detrimental neither to the environment, nor to 

the health, safety and welfare of the Capgemini employees, clients, 

customers and partners, nor to the general public with whom 

the company comes into contact. Environmental protection is an 

ongoing process and the Group expects its employees, suppliers 

and contractors to ensure that the environmental impact of any 

activity, building or equipment is taken into consideration. 

At the end of each year the Group surveys its subsidiaries on 

the nature of environmental policies, programs and indicators 

in place in each region plus specific actions taken; staff training 

and awareness 

The key features of the current Group environmental policy are: 

compliance with local and international environmental legislation; 

taking the environmental impact into account in corporate 

social responsibility training programs and raising employee 

awareness of these issues; 

using, in Capgemini’s sphere of influence, the best practices 

available in this area; 

setting up indicators to monitor progress. 

The Group’s environmental focus is on three key areas: 

business premises / facilities, energy and equipment; 

waste management (reduction, reuse and recycling); 

business travel. 

Business premises 

To understand Capgemini’s environmental impact in terms of its 

premises, the company actively monitors power consumption, 

office space and type of equipment used with a view to streamlining 

these areas wherever practicable. 

According to the local legislation and property conditions, all 

parts of the business are increasingly expected to: 

streamline existing office space to the minimum required for 

headcount; 

monitor power consumption and, where possible, optimize/ 

reduce it (e.g. by effective servicing, appropriate temperature 

controls, water-saving devices, use of energy-saving monitors 

etc); 

adopt advanced energy-saving systems when opening new office 

buildings, wherever possible, by: 

– using advanced heating and air-conditioning systems to control 

the working environment, 

– using renewable energy, non-toxic materials and recyclable 

materials; 

– installing internal noise reduction devices, 

– utilizing low energy and low water consumption planning; 

ensure that all buildings comply with appropriate local/international 

health & safety regulations; 

ensure that no toxic or hazardous materials are introduced into 

the workplace without workplace controls being in place; 

provide appropriate training in environmental compliance for 

facilities managers. 

Equipment 

In terms of purchasing and management of equipment, wherever 

possible, and in accordance with local legislation, each subsidiary 

is expected to: 

take into account the environmental aspects of any new equipment 

to be purchased; 

use low energy equipment; 

regularly clean and maintain the equipment; 

ensure that equipment in the working environment does not 

gives rise to unreasonable noise, dust or fumes or create a 

hazard to employees; 

undertake appropriate testing of electrical equipment. 

Waste management 

Capgemini aims to recycle waste materials as far as possible, for 

example by: 

providing recycling facilities for paper, aluminum, printer 

toners, etc; 

disposing of or recycling IT and electronic equipment in an 

environmentally-friendly manner and in accordance with local 

laws; 

using appropriately certified / licensed organizations to remove 

special waste (e.g. defective monitors or neon light tubes). 

Business travel 

Group policy is to reduce the environmental impact of business 

travel as far as possible by traveling to face-to-face meetings only 

when essential. This policy is backed up by making available 

and improving: 

video/telephone conferencing and other collaborative working 

tools; 

virtual working; 

helping employees with effective diary management to minimize 

travel 

encouraging employees to consider different options when 

selecting their mode of travel, taking into account the life-work 

balance, cost and environmental aspects. 

Where possible, employees are expected to use public transport or 

the special company bus services in preference to private transport. 


27

28 ANNUAL 

THE GROUP 


In 2006, stress was laid on “take the train, not the plane”, especially 

for travel around Europe. 

Environmental indicators 

In 2004, the Group first defined a set of indicators to understand 

better the environmental impact caused by Capgemini’s power 

consumption, office space and use of equipment. 

At the end of 2006, Capgemini had 393 sites covering 867,000 

square meters. This represents an increase in total surface 

of approximately 8% while end of year employee numbers 

increased by 11%, thus equating to fewer square meters per 

person. The company therefore expects to make energy savings 

(air conditioning, heating, etc). The buildings are mostly rented, 

many having been recently renovated. The majority are 

air-conditioned. 

A survey on power consumption by the Capgemini sites shows 

that, for many locations, this information is included in the 

overall maintenance charges and is not provided separately by 

the owner, Calculations for kWh per square meter are therefore 

estimates only and, based on survey returns for 51% of 

the total surface area of facilities, average out at 279 kWh per 

square meter. 

Examples of specific actions in 2006 

In 2006, Capgemini participated for the first time in the Carbon 

Disclosure Project. The Carbon Disclosure Project (CDP) 

is the largest registry of corporate greenhouse gas emissions in 

the world. Responses from corporations can be downloaded 

without charge. More than 1,000 large corporations report on 

their emissions through their web sites. 

In countries where a company car is a competitive part of the 

employment offer, focus has been on getting employees to select 

hybrid or fuel efficient cars. 

In the UK, an IT asset reuse system has been put in place. 

This includes donating refurbished assets to well managed 

and structured community schemes, selling them, extending 

their usefulness or recycling them. Printing paper is recycled 

(80%). Where possible, we encourage our employees to avoid 

printing, print double-sided, or consider other options such 

as scanning and e-mailing documents instead of making 

and sending another hard copy. A new printing system has 

significantly reduced the number of devices used, reducing 

the amount of power and toner consumed. Where there is 

no future need for a printer, it is either redeployed or goes 

back to the provider for reuse where possible. Capgemini 

UK has switched its energy supply to Green Energy. Energy 

providers will procure energy generated under a “combined 

heat and power scheme”. This should improve electrical 

efficiency by 50%, while reducing air pollutants and carbon 


dioxide associated with climate change. The UK is working 

with the Carbon Trust and other specialists to reduce energy 

consumption and to seek alternatives. In addition, we are 

working with our technical architects to understand how 

technology can influence and help reduce the need for energy, 

both to power it and to cool it down. 

In Germany, we continue to encourage strongly all our 

employees to use rail instead of air travel arrangements. 

We have negotiated with our travel agency and offer all 

our employees a public transport-pass, which allows them 

to use German public transport everywhere they travel, in 

combination with a flight ticket booking. Capgemini pays 

70% of the monthly/annual ticket for employees who use 

public transport to get to work. In 2006, we reviewed our 

contracts for waste paper recycling and negotiated a countrywide 

agreement with a single supplier, in which we had the 

supplier guarantee 100% recycling of our entire paper waste. 

We encourage our contract cleaners to use bio-degradable 

cleaning products. 

In the Netherlands, to support Take the train and encourage 

the use of public transport during 2006, a pilot was undertaken 

whereby employees with a lease car could travel by 

train with an NS Business Card. Due to the very positive 

reactions of employees (approximately 3,400 NS cards were 

distributed as part of the pilot), Capgemini in the Netherlands 

has decided to make the NS Business Card an employee 

benefit in 2007. 

7.6. The group and its clients 

7.6.1 The OTACE client satisfaction policy 

The Group client relationship management process, known as 

OTACE reporting (On Time and Above Client Expectations) is 

a key factor underpinning its long term client relationships. 

Under OTACE reporting, clients are requested to specify their 

expectations from its services, based on a set of indicators relating 

to: 

Type of service required, 

Nature of the working relationship, 

Knowledge sharing. 

These indicators are documented and validated, with the clients, 

to produce ratings which are reviewed according to an agreed 

schedule. 

OTACE provides an indication of strengths and areas for improvements, 

as well as a deeper understanding of client satisfaction 

on individual projects. 

7.6.2 Systematically delivering sustainable value 

Capgemini is working to embed the corporate responsibility

principles into its offers and to review the sustainability impacts 

of projects carried out with clients by including social and environmental 

considerations in the project assessment processes, 

where appropriate. 

7.6.3 Consulting on Corporate Social Responsibility 

With our consulting on corporate social responsibility, we help 

our clients to tailor strategies and translate them into practice 

by: 

Designing a sustainable development strategy; 

Devising and deploying sustainable products; 

Identifying technological developments that may affect competitiveness; 

Positioning a medium-term investment policy; 

Assessing necessary changes based on existing regulations or 

forecasts; 

Building reporting tools to better grasp what is at stake and 

monitor progress; 

Tailoring risk-management policies; 

Raising awareness through diagnostics and training. 

In providing these services, Capgemini leverages: 

Strong industry knowledge; 

A holistic approach to sustainable development issues; 

A global network of experts. 

7.7 Supplier relations 

Capgemini’s business of providing intellectual services means that 

personnel costs account for almost two thirds of its expenses, 

while external purchases mainly comprise rent, IT and telecommunications 

costs as well as outside services (training, legal and 

auditing fees, recruitment or IT). 

Our commitment to ethical supplier relations is reflected in our 

comprehensive set of guidelines on the ethics of purchasing and 

the selection of suppliers. 

In addition, we apply the principles of the Chartered Institute for 

Purchasing & Supply (CIPS), or an equivalent body in other countries, 

and monitor our suppliers to ensure that they do likewise. 

7.7.1 Purchasing activities 

In its purchasing activities, the Group pays attention to: 

Social impacts and human rights, 

Environmental impacts, 

Anti-bribery and corruption. 

The 10 key principles of the United Nations Global Compact 

guide our activities throughout our business. This means that we 

are committed to ensuring that we work only with suppliers who 

respect appropriate ethical policies and human rights. 

7.7.2 Principles of ethical purchasing 

Group suppliers must comply, at least, with the following principles: 

No use of forced labor or child labor, 

No discriminatory practices, 

Freedom of association, 

Compliance with local laws in force, particularly relating to 

working conditions, health and safety. 

7.7.3 Procurement procedures 

Group procurement procedures involve: 

Treating suppliers fairly, 

Selecting vendors on a basis of value, performance and price, 

Providing a clear and justifiable selection process, 

Ensuring confidentiality of supplier information, 

Maintaining a clear, honest and professional relationship with 

suppliers, 

Not taking advantage of mistakes made by suppliers. 

Capgemini is collaborating with its clients and alliance partners 

to develop joint approaches to corporate responsibility all along 

the value chain. 

As far as possible, Capgemini also aims to undertake all procurement 

(property, equipment, business travel) in line with its 

environmental policies and guidelines. 

7.7.4 List of the top 10 suppliers 

In millions of euros Amount 

% 

Revenues 

FUTJITSU SERVICES 413 5.4% 

BRITISH TELECOM 81 1.1% 

ALEXANDER MANN 75 1.0% 

ACCENTURE 36 0.5% 

IBM CORPORATION 34 0.4% 

FRANCE TELECOM 34 0.4% 

SCHNEIDER ELECTRIC 30 0.4% 

SAP 25 0.3% 

UNISYS 24 0.3% 

HEWLETT-PACKARD 22 0.3% 

TOTAL 773 10.0% 


29

30 ANNUAL 

THE GROUP 


VIII – RISK ANALYSIS 

8.1 Identification of risks 

Group Senior Management has discussed, drafted, approved 

and distributed a set of rules and procedures known as the “Blue 

Book”. Compliance with the Blue Book is mandatory for all Group 

employees. The Blue Book restates and explains Capgemini’s seven 

core values, sketches out the overall security framework within 

which the Group’s activities must be conducted, and finally, 

describes the methods to be followed in order to exercise the 

necessary degree of control over the risks identified in each of 

the Group’s main functions. Individual business units supplement 

the Blue Book by drawing up detailed internal control procedures 

which comply with the relevant laws, regulations and customary 

practices in the country where they operate, in order to exercise 

control more effectively over risks specific to their local market 

and culture. These rules and procedures are updated regularly 

to reflect the development of the Group’s business activities and 

changes in its environment. 

The internal audit function independently assesses the effectiveness 

of these internal control procedures given that, irrespective 

of how well they are drafted and how rigorously they are applied, 

these procedures can only provide reasonable assurance – and not 

an absolute guarantee – against all risks. 

8.2 Financial risks 

8.2.1 Equity risk 

The Group does not hold any shares for financial investment 

purposes, and does not have significant interests in listed 

companies. However, it holds treasury shares in connection 

with: 

the implementation of the liquidity contract under its share buyback 

program (the associated liquidity line amounts to €10 million), 

representing 80,280 shares at December 31, 2006; 

the employee-retention scheme set up in the context of the 

acquisition of Ernst & Young’s consulting business in May 

2000, under which the shares are designated to be reallocated 

to Group employees (see Note 10.A). 

The Group’s resulting exposure to equity risk is negligible. 

8.2.2 Counterparty risk 

The financial assets which could potentially give rise to counterparty 

risk essentially consist of financial investments. These 

investments mainly comprise money market securities managed 

by leading financial institutions and, to a lesser degree, negotiable 

debt instruments issued by companies or financial institutions 

with a high credit rating from a recognized rating agency. There 

is therefore no significant counterparty risk for the Group on these 

short-term investments. 


Moreover, in line with its policy for managing currency and interest 

rate risks (see below), Capgemini enters into hedging agreements 

with leading financial institutions; counterparty risk can therefore 

be deemed negligible. 

8.2.3 Liquidity risk 

The principal financial liabilities whose early repayment 

could expose the Group to liquidity risk are the two convertible 

bonds (OCEANE 2003 and OCEANE 2005) and the 

€500 million multi-currency syndicated line of credit. The 

OCEANE documentation contains the usual provisions relating 

to early repayment at the initiative of bondholders should 

pre-defined events occur. In addition to the early repayment 

clauses commonly found in these types of agreements, the 

documentation for the syndicated line of credit requires 

Capgemini to comply with certain financial ratios (covenants). 

As of December 31, 2006, the Group complied with all such 

ratios (see Note 17.II.D). 

Any change in Capgemini’s credit rating, as assigned by Standard 

& Poor’s would not affect the availability of these sources of 

financing and would therefore not expose the Group to liquidity 

risk. However, the cost of funding the syndicated line of credit 

could be increased or decreased (see Note 17.II.D). 

8.2.4 Interest rate risk 

Capgemini’s exposure to interest rate risk should be analyzed in 

light of (i) its cash position: at December 31, 2006 the Group 

had €2,859 million in cash and cash equivalents invested at 

market rates, compared to gross debt of €1,224 million; and (ii) 

the Group’s conservative policy with respect to management of 

interest rate risk: the uncapped variable-rate portion of gross 

debt was limited to 6% (capped and uncapped variable-rate 

debt combined accounted for 41% of the total – see Note 

17.III). Consequently, based on the balance sheet at end 2006 

a 1% increase in interest rates would have a positive €20 million 

impact on Capgemini’s net finance costs. Conversely, a 

low interest rate environment (below 2%) would expose the 

Group to an increase in its net finance costs (see Note 17. 

III). The main exposure to interest rate risk is at the level of 

Cap Gemini S.A., which represented around 80% of Group 

financing and 66% of Group cash and cash equivalents at 

December 31, 2006. 

8.2.5 Currency risk 

Capgemini’s exposure to currency risk is low due to the fact that 

the bulk of its revenue is generated in countries where operating 

expenses are also incurred. However, the growing use of offshore 

production centers in Poland, India and China exposes Capgemini 

to currency risk with respect to a portion of its production costs. 

Currently, the amounts involved are not material but given that

this trend is set to increase in the future, Capgemini has already 

defined and implemented an overall policy to minimize exposure 

to exchange rates and manage the resulting risk, particularly 

through regular hedging of intercompany flows. These hedges 

mainly take the form of forward purchases and sales of currencies 

(see Note 18.B). 

8.2.6 Financial instruments 

Financial instruments are used to hedge in particular interest rate 

and currency risks. All hedging positions relate to existing assets 

or liabilities and/or operating or financial transactions. Gains and 

losses on financial instruments designated as hedges are recognized 

on a symmetrical basis with the loss or gain on the hedged items. 

The fair value of financial instruments is estimated based on market 

prices or data supplied by bank counterparties. 

8.2.7 Employee-related liabilities 

The present value of pension obligations under funded defined 

benefit plans (see Note 19.I), calculated on the basis of actuarial 

assumptions, is subject to a risk of volatility. A 0.5% change 

in the discount rate used will trigger a corresponding change 

in the present value of the liability of approximately 10%. If 

trends concerning longer life expectancy at retirement – which 

are gradually being reflected in actuarial mortality tables – are 

confirmed in the future, the Group’s post-employment benefit 

liability may increase. 

8.3 Legal risks 

The Group’s activities are not regulated and consequently do not 

require any specific legal, administrative or regulatory authorization. 

In the case of some services, such as outsourcing or specific projects 

carried out for clients who are subject to specific conditions 

or regulations, the Group itself may be required to comply with 

contractual obligations related to such regulations. 

The sheer diversity of local legislation and regulations exposes 

the Group to a risk of infringement of such legislation and 

regulations by under-informed employees, especially those 

working in countries that have a different culture to their own. 

Legal precautions taken by the Group, particularly those of a 

contractual nature, can never provide an absolute guarantee 

against such risks. 

The Group is not aware of any litigation that is liable to have, or 

has recently had, a material impact on its operations, financial 

position or future prospects, other than those recognized in 

the consolidated financial statements or disclosed in the notes 

thereto (see Note 20 – “Current and non-current provisions” and 

Note 28 – “Subsequent events”). There are no governmental, 

court, or arbitration proceedings, including any proceeding of 

which we have knowledge, pending or threatened, that might 

have, or has had any material effect on the financial condition 

or profitability of the Company and/or the Group during the 

last twelve months. 

8.4 Risks related to operations 

Capgemini is a service provider, and as such, the main risks to 

which the Group is exposed are (i) failure to deliver the services 

to which it has committed, or (ii) failure to deliver services within 

the contractual time-frame and to the required level of quality. 

Risks concerning project execution 

Contracts are subject to a formal approval procedure prior to signature, 

involving a legal review and an assessment of the risks relating 

to the project and to the terms of execution. The authority level at 

which the contract is approved depends on the size, complexity 

and risk profile of the project. The Group Review Board examines 

the projects with the most substantial commercial opportunities or 

specific risk exposures, as well as proposals for strategic alliances. 

Capgemini has developed a unified set of methods known as the 

“Deliver” methodology to ensure that all client projects are executed 

to the highest standards. Project managers are given specific 

training to develop their skills and acquire the appropriate level of 

certification for the complexity of projects under their charge. The 

Group also has a pro-active policy of seeking external certification 

(CMM, ISO, etc.) for its production sites. 

Contract execution is monitored using Group-defined management 

and control procedures, and complex projects are subject to dedicated 

control processes. The internal audit function checks that project 

management and control procedures are being properly applied. 

Expert teams may also intervene at the request of the Group’s Production 

and Quality department to investigate projects that have a 

high risk profile or that are experiencing difficulties. 

In spite of the formal approval procedure for all client project 

commitments undertaken by the Group, in some cases, difficulties 

with respect to project execution or project costs may have been 

underestimated at the outset. This may result in cost overruns not 

covered by additional revenues, especially in the case of fixedprice 

contracts, or reduced revenues without any corresponding 

reduction in expense in the case of certain outsourcing contracts 

where there is a commitment to provide a certain level of service. 

The Group may provide a performance and/or a financial guarantee 

for certain large contracts (see Note 25.C). 

In spite of the rigorous control procedures that the Group applies 

in the project execution phase, it is impossible to guarantee that 

all risks have been contained and eliminated. In particular, human 

error, omissions, and infringement of internal or external regulations 

or legislation that is not or could not be identified in time, 

may cause damage for which the Company is held liable and/or 

may tarnish its reputation. 


31

32 ANNUAL 

THE GROUP 


The provisions set aside to cover risks relating to project execution 

are analyzed in Note 20 – “Current and non-current provisions”. 

Employees 

Capgemini’s production capacity is mainly driven by the people it 

employs, and the Group attaches great importance to developing 

and maintaining its human capital. The inability to recruit, train 

or retain employees with the technical skills required to execute 

its client project commitments could impact the Group’s financial 

results. 

The Group pays close attention to internal communication, 

diversity, equality of opportunity and good working conditions. 

Group Senior Management has published a code of ethics and 

oversees its application. Nevertheless, in the event of an industrial 

dispute or non-compliance with local regulations and/or 

ethical standards, the Group’s reputation and results could be 

adversely affected. 

Information system 

Capgemini’s operations have little dependency on its own information 

systems, which are managed via a predominantly decentralized 

structure. The systems used to publish the Group’s consolidated 

financial statements comprise a specific risk in view of the strict 

filing deadlines. The Group is sensitized to the security of internal 

communication networks, and protects them via security rules and 

firewalls. It also has an established IT security policy. For some 

projects or clients, enhanced systems and network protection is 

provided on a contractually-agreed basis. 

Offshoring 

Capgemini’s evolving production model, Rightshore TM , involves 

transferring a portion of the Group’s production of services to 

sites in countries other than those in which the services are 

used or in which the Group’s clients are located, particularly 

in India, Poland and China. The development of this model 

has made the Group more dependent on telecommunications 

networks, which may increase the risk of business interruption 

at a given production site due to an incident or a natural 

disaster, in so far as several operational units could be affected 

simultaneously. The use of a greater number of production 

sites provides the Group with a wider range of options in the 

event of a contingency. 

Environment 

As an intellectual service provider, Capgemini’s activities have a 

moderate impact on the environment. Nevertheless, the Group 

strives to limit the environmental impact of its activities, as described 

in Chapter 7.5 – “The Group and the environment”. The 

risks in this respect are not deemed material. 


Clients 

Capgemini serves a large client base, in a wide variety of sectors 

and countries. The Group’s biggest clients are multinationals and 

public bodies. The Group’s largest client, a public body, contributes 

15% of Group revenues, while the second-largest client 

accounts for just 3%. The top 10 clients collectively account for 

31% of Group revenues, and the top 30 a little under 44%. The 

creditworthiness of these major clients and the diversity of the 

others help limit credit risk. 

Suppliers and sub-contractors 

Capgemini is dependent upon certain suppliers, especially in its 

Technology Services businesses. While alternative solutions exist for 

most software and networks, certain projects may be adversely affected 

by the failure of a supplier with specific technologies or skills. 

Country risk 

Capgemini has permanent operations in approximately 30 countries. 

The bulk of its revenues are generated in Europe and North 

America, which are economically and politically stable. 

The recent acquisition of Kanbay has greatly boosted the Group’s 

Indian operations, which now rank second only behind France 

in terms of headcount. Consequently, Capgemini is now more 

exposed to the risk of natural disasters in South East Asia, political 

instability in certain regions of India and adjoining countries, and 

even terrorist attack. From an economic standpoint, the Group 

is also exposed to risk stemming from the negative effects of 

uncontrolled growth (wage inflation, particularly in the IT sector, 

inadequate domestic infrastructure and higher taxes). 

Strict approval criteria must be met before employees are sent to 

work in countries where there are no existing Group operations, 

and even stricter criteria apply in the event that employees are 

sent to countries considered “at risk”. 

External growth 

External growth operations, one of the cornerstones of Group 

development strategy, also contain a large element of risk. Integrating 

a newly-acquired company, particularly in the service sector, 

may prove to be a longer and more difficult process than predicted. 

The success of an external growth operation largely depends on 

the extent to which the Group is able to retain key managers and 

employees, maintain the client base intact, coordinate development 

strategy effectively, especially from an operating and commercial 

perspective, and dovetail and/or integrate information systems and 

internal procedures. Unforeseen problems can generate higher 

additional integration costs and/or lower savings or synergies than 

initially forecast. If a material, unidentified liability subsequently 

comes to light, the value of the assets acquired may turn out to 

be lower than their acquisition cost.

Economic conditions 

The Group’s growth and financial results may be adversely affected 

by a general downturn in the IT service sector or in one of the 

business segments in which Capgemini has significant exposure. A 

shake-up resulting in a change of ownership at one of Capgemini’s 

clients or a decision not to renew a long-term contract may have 

a negative effect on revenue streams and require cost cutting or 

headcount reduction measures in the operational units affected. 

8.5 Insurance 

The Group Insurance Manager, who reports to the Chief Financial 

Officer, is responsible for all non-life insurance issues. Life 

insurance issues, which are closely related to employee compensation 

packages, are managed by the human resources function 

in each country. 

Group policy is to adjust insurance coverage to the replacement 

value of insured assets, or in the case of liability insurance, to an 

estimate of specific, reasonably foreseeable risks in the sector in 

which it operates. Deducticles are set so as to encourage operational 

unit managers to commit to risk prevention and out-of-court 

settlement of claims, without exposing the Group as a whole to 

significant financial risk. 

Commercial general liability and professionnal indemnity 

This type of coverage, which is very important to clients, is taken out 

and managed centrally at Group level. Cap Gemini S.A. and all subsidiaries 

over which it exercises direct or indirect control of more than 

50% are insured against the financial consequences of commercial 

general liability or professional indemnity arising from their activities, 

under an integrated global program involving a range of lines 

contracted with a number of highly reputable, solvent insurers. The 

terms and conditions of this program, including limits of coverage, 

are periodically reviewed and adjusted to reflect trends in revenues 

and changes in the Group’s activities and risk exposures. 

The primary layer of this program, totaling €30 million, is reinsured 

through a consolidated reinsurance captive company and has been 

in operation for several years. 

Property damage and business interruption 

Capgemini operates from premises located in many countries and, 

within most of these countries, operates at a number of sites. There 

are approximately 400 of these sites in total with an average floorspace 

of slightly less than 2,200 m 2 . Some of the Group’s consultants work 

off-site at client premises. This geographical dispersion limits risk, in 

particular the risk of loss due to business interruption, arising from 

an incident at a site. The biggest outsourcing site, which has disaster 

recovery plans in place to ensure continuity of service, represents 

less than 4% of Group revenues. The Group’s largest site, which 

is located in India, employs 4,000 people in a number of different 

buildings. No building at any of the Group’s sites houses more than 

1,800 employees. 

This dispersion means that insurance policies covering property 

damage and consequential business interruption are contracted and 

managed locally. 

Other risks 

Directors’ and Officers’ liability insurance, travel assistance and 

repatriation coverage for employees working away, and crime and 

fidelity coverage (especially for information systems) are managed 

centrally at Group level via global insurance policies. All other risks 

– including motor, transport and employer liability – are insured 

locally using policies that reflect local regulations. 

The Group has decided not to insure against employment practices 

liability risks, given its preventive approach in this area. Pollution 

risks are low in an intellectual services business, and Capgemini does 

not insure against these risks in all countries in which it operates. 

The Group has also decided that, unless coverage is compulsory and 

readily available, it is not worth systematically insuring against terrorism-related 

risks. Certain risks are excluded from coverage under 

the general conditions imposed by the insurance market. 


33

34 ANNUAL 

THE GROUP 


IX – CAP GEMINI S.A. AND THE 

STOCK MARKET 

At December 31, 2006, the capital of Cap Gemini S.A. was made 

up of 144,081,808 shares (ISIN code: FR0000125338). Cap 

Gemini shares are listed on the Eurolist market (compartment A) 

and are eligible for the SRD deferred settlement system of the 

Paris Stock Exchange. 

The number of issued and outstanding shares of Cap Gemini S.A 

increased year-on-year by 12,499,830 as a result of: 

the issue of 11,397,310 new shares in connection with the capital 

increase at the end of the year; 

the issue of 790,393 new shares upon the exercise of stock 

options by Group employees; 

Cap Gemini S.A. ownership structure at December 31, 2006 

(on the basis of a shareholder survey) 

Non-French 

Institutional 

Investors 


French 

Institutional 

Investors 

the issue of 312,127 new shares upon the exercise of the share 

warrants issued as part of the second tranche of the alternative 

public exchange offer for Transiciel shares launched by the 

Company on October 20, 2003. 

Cap Gemini shares are included in the CAC40 index, on the 

Euronext 100 index and on the Dow Jones STOXX and Dow Jones 

Euro STOXX European indexes. Between January 1 and December 

31, 2006, the Cap Gemini share price on Eurolist increased from 

€34.12 to €47.55. 

In 2006, the average daily trading volume in relation to Cap 

Gemini shares was around 1.24% of the total volume of shares 

traded on the Paris market. 

Individual 

Shareholders 

S. Kampf 

68 % 21% 

7 % 4 % 

Cap Gemini S.A. 

Operating entities 

Capgemini Sogeti 

- Consulting Services 

- Technology Services 

- Outsourcing Services 

Local Professional Services

STOCK MARKET CAPITALIZATION 

From January 2005 to March 2007 

In billions of euros 

source: Euronext 

SHARE PERFORMANCE 

From December 31, 2004 to March 31, 2007 

In euro 

source: Reuters 

NUMBER OF TRADES PER MONTH 

From January 2005 to March 2007 

In millions of shares 

source: Euronext 

8 

7 

60 

55 

50 

45 

40 

35 

30 

25 

20 

2005 2006 2007 

FRANCE CAC 40 - PRICE INDEX DJ STOXX - PRICE INDEX 

31/12/2004 30/06/2005 31/12/2005 30/06/2006 31/12/2006 

2005 2006 2007 


35

36 ANNUAL 

THE GROUP 


SHARE PRICE AND TRADING VOLUME 

The following table presents an analysis of trading in the company’s shares over the last 24 months: 

Month 

Number 

Share Prices 

Trading volume 

of 

in euros 

Number of shares Value 

trading days 

high average low total average 

(daily) 

(millions of euros) 

April 05 21 27.37 25.31 23.11 44,743,799 2,130,657 1 122.8 

May 05 22 26.53 25.59 23.90 31,636,386 1,438,018 803.6 

June 05 22 27.28 26.49 25.80 32,958,407 1,498,109 871.2 

July 05 21 29.50 27.78 25.67 42,437,888 2,020,852 1 181.3 

August 05 23 28.14 27.20 26.31 20,904,698 908,900 570.9 

September 05 22 32.75 29.56 26.42 47,188,345 2,144,925 1 406.1 

October 05 21 33.55 31.17 29.25 39,399,725 1,876,177 1 232.0 

November 05 22 34.20 32.31 30.25 24,787,634 1,126,711 799.5 

December 05 21 35.34 34.48 33.67 24,092,654 1,147,269 821.6 

January 06 22 38.97 36.76 33.71 30,799,276 1,399,967 1 137.4 

February 06 20 43.22 38.41 35.82 28,173,136 1,408,657 1 106.8 

March 06 23 45.16 43.05 40.31 30,925,749 1,344,598 1 299.4 

April 06 18 45.07 43.55 41.72 18,099,564 1,005,531 782.0 

May 06 22 47.90 43.87 40.10 36,974,403 1,680,655 1 634.7 

June 06 22 44.99 42.03 37.48 33,942,942 1,542,861 1 413;0 

July 06 21 45.24 41.11 36.28 37,412,079 1,781,528 1 503.1 

August 06 23 43.70 40.90 38.29 31,359,803 1,363,470 1 276.1 

September 06 21 44.20 42.65 40.90 35,711,309 1,700,539 1 497.3 

October 06 22 46.20 44.05 41.50 36,510,043 1,659,547 1 607.0 

November 06 22 48.50 46.44 43.72 22,817,533 1,037,161 1 058.6 

December 06 19 47.74 45.91 44.42 29,569,922 1,556,312 1 341.9 

January 07 22 51.10 49.39 47.49 27,222,020 1,237,365 1 343.7 

February 07 20 56.59 51.74 48.01 31,972,862 1,598,643 1 672.6 

March 07 

Source: Euronext 

22 57.65 54.33 50.45 40,940,541 1,860,934 2 175.7 

DIVIDENDS PAID BY CAP GEMINI 

Year ended 

December 31 


Distribution of dividends Number 

of shares 

Dividend 

per share 

Tax 

credit 

Total 

revenue 

In millions In % of net income 

2001 €50* 33% 125,244,256 €0.40 (a) €0.20 (b) €0.60 

2002 No dividend paid 



2005 €66* 47% 131,581,978 €0.50 

2006 €101* 34% 144,081,809 €0.70* 

(*) Recommended dividend submitted to the Annual Shareholders’ Meeting of April 26, 2007 

(a) and (b) : the avoir fiscal tax credit represents 50% of the amounts distributed in relation to tax credits used by an individual or a company benefiting 

from the parent-subsidiary regime provided for under article 145 of the French Tax Code, or 10% for other entities using their avoir fiscal tax credit 

as from January 1, 2003. The 2004 Finance Act abolished the avoir fiscal tax credit with effect from January 1, 2005.

MANAGEMENT REPORT 

PRESENTED BY THE BOARD OF DIRECTORS TO THE ORDINARY AND 

EXTRAORDINARY SHAREHOLDERS’ MEETING OF APRIL 26, 2007 (APRIL 10, 2007 ON FIRST CALL) 

I – GENERAL COMMENTS ON 

THE GROUP’S ACTIVITY OVER 

THE PAST YEAR 

Demand for consulting and IT services strengthened significantly 

in 2006 following last year’s modest performance. After several 

years during which their main (and sometimes only) aim was to 

scale back IT expenditure, in 2006 our clients not only sought 

to upgrade their IT systems, but also expressed a genuine interest 

in the competitive advantages offered by new technologies 

– especially Service Oriented Architecture. This groundswell was 

apparent in all of the countries in which the Group has operations, 

and particularly in those activities with a higher degree of 

sensitivity to economic cycles and/or technological innovation, 

such as Consulting and Technology Services, as well as the Local 

Professional Services business. 

1.1 Operations by region 

Against this positive backdrop, Capgemini Group’s growth outperformed 

the market thanks to a strong presence in Consulting, 

Technology and Local Professional Services, coupled with a number 

of major contract wins in the Outsourcing Services segment 

which continued to spearhead growth. The year-on-year growth 

in revenues for 2006 is 10.7% on a published basis and 12.1% 

like-for-like (factoring out the effect of currency fluctuations and 

changes in scope). Underlying growth in the second-half jumped 

13.7% compared to the prior-year period. 

In the United Kingdom and Ireland the geographical breakdown 

of this performance shows underlying growth of 23.7%, or 22.3% 

based on published figures, with the appreciation in sterling 

offsetting the impact of the sale of a portion of the Group’s interest 

in Working Links. In 2006 this area bolstered its position as 

the Group’s top-performing region in terms of revenues – which 

pushed past the €2 billion mark – and accounted for 27.6% of the 

Group total. This primarily reflects a sharp increase in the contribution 

of the Outsourcing Services activity due to the startup of 

several major contracts (including the contract with the London 

Metropolitan Police), as well as higher volumes on the contract 

signed at the end of 2004 with the United Kingdom tax authority, 

Her Majesty’s Revenue and Customs (HMRC). This contract 

was extended in second-quarter 2006 to cover Customs & Excise 

following its incorporation into HMRC, and a number of add-on 

application developments were also carried out for this client 

during the year. Consulting and Technology Services businesses 

also contributed to the Group’s robust performance in this region, 

delivering growth in excess of 8% despite allocating considerable 

resources to assist Outsourcing Services in developing applications 

for HMRC (in accordance with Group policy, the corresponding 

revenues were recorded by the Outsourcing Services segment). 

Lastly, Sogeti deepened its European footprint by expanding its 

business into the United Kingdom & Ireland, although this had 

no material impact in 2006. 

France’s contribution to consolidated revenues remains practically 

unchanged at 23.6%, with overall growth of 9.1% resulting from 

contrasting developments. Consulting and Technology Services, 

which account for almost one-half of the Group’s activity in France, 

posted double-digit growth. The greater Paris region reported a 

particularly vigorous performance, on the back of an increase in 

headcount and improved utilization rates. Local Professional Services 

also contributed to the region’s overall growth, even though 

the focus on profitability meant that certain contracts taken on 

in prior years were not renewed. Finally, Outsourcing Services 

revenues expanded by a modest 6%, with the sharp increase in 

services delivered under the Schneider Electric contract partially 

offset by the termination of certain contracts and the disposal of 

a portion of the maintenance business. 

North America, which in 2006 accounts for 17.4% of total 

Group revenues, posted like-for-like growth of 3.8%. Based on 

published figures, the Group’s North American activity contracted 

by 0.9% due to the combined effect of the sale of the Healthcare 

business in July 2005 and the slight depreciation of the US dollar. 

Outsourcing Services in this region reported moderate growth, 

with expanded business under the TXU contract and the rampup 

of new contracts (including with General Motors) dampened 

by the termination of two Outsourcing contracts related to the 

former Healthcare business. Sogeti posted double-digit growth 

thanks mainly to a sharp rise in headcount that helped scale 

back the businesses’ sub-contracting costs. The region’s biggest 

success story in 2006 was the recovery of the Consulting and 

Technology Services business, where better staff utilization rates 

and increased use of the Group’s India-based assets outweighed 

the impact of employee cutbacks. In the Technology Services business, 

the Group’s Indian employees dedicated to North American 

operations now represent more than one-half of the headcount 

physically present in this region. 

Benelux delivered a 9.4% year-on-year rise in revenues in 2006 

and represents 13.6% of the total Group figure. Growth was mainly 

driven by the Netherlands, in particular the Technology Services 

segment, which increased both headcount and sales prices amid 

a favorable trading environment. Sogeti also contributed strongly 

to growth in the region by posting a remarkable 20% surge in 

revenues. In contrast, the termination of a major contract led to 

a significant fall in Outsourcing revenues. 

Revenues in the Central Europe region (Germany, Switzerland, 

Austria and the Eastern European countries) surged 16% on the 


37

38 ANNUAL 



previous year (14.2% based on published figures, which include 

the impact of the acquisitions of Ad-hoc Management in Switzerland 

and FuE in Germany). The region accounts for 6.7% of 

Group revenues in 2006. Growth was particularly buoyant in the 

Technology Services segment in Germany – as a result of both 

increased headcount and sales prices – as well as among the 

Eastern European countries. As the Group’s policy is to recognize 

revenues for the region ordering the services, the strong growth 

momentum reported by the Business Process Outsourcing activity 

– for which Poland is the main production platform – is not 

reflected in the geographical breakdown. 

Revenues in the Nordic region advanced 6.2% and now account 

for 5.7% of the Group total. This performance was spurred by 

sharp growth in Finland and Denmark and came despite stagnating 

Consulting and Technology Services revenues in Sweden and 

Norway. Sogeti scored strong growth gains in Sweden, however, 

buoyed by favorable conditions that allowed the Group to improve 

staff utilization rates and increase headcount. 

Southern Europe (Italy, Spain, Portugal) accounts for just 4.4% 

of consolidated revenues in 2006. The region delivered a 9.4% 

increase in revenues thanks to sustained business in Spain and 

Portugal, offset in part by a fall-off in Italian business. 

The Asia-Pacific region posted 6.1% growth for the year. 

After adjusting for the currency effect and the disposal of the 

Japanese Consulting Services business in 2005, regional growth 

comes in at 20.6% – due in particular to a strong showing by 

Australian operations. China, on the other hand, overcame a 

tough start to the year to recover strongly in the second half. 

Lastly, although it did not have an impact on revenues for the 

region (which are recorded by the ordering region), the Group’s 

production staff numbers in India continued on an upward 

trend, surging from 3,550 to 6,979 at end-2006 (including 

719 transfers as a result of the acquisition of Indigo from the 

Unilever group). 

1.2 Operations by business segment 

Outsourcing Services was once again the Group’s main growth 

driver in 2006, delivering a 16.1% increase in revenues on a 

like-for-like basis. The impact of the ramp-up of major contracts 

concluded in recent years (Schneider Electric in France, HMRC 

and the London Metropolitan Police in the United Kingdom, and 

General Motors in the United States) more than compensated 

for the decision to terminate a number of contracts, notably in 

France and in the Netherlands. Revenue growth for the Group’s 

other activities was not as strong (8.8% for Consulting Services, 

9.5% for Technology Services and 10.4% for Local Professional 

Services), but each captured additional market share. The specific 

skill sets of the Consulting and Technology Services businesses 


are frequently leveraged for major Outsourcing Services contracts. 

Accordingly, once the revenues earned on the Group’s three largest 

Outsourcing contracts are broken down into the specific type 

of work carried out, revenue growth for Outsourcing Services 

proper slips to 12.6% from 16.1%, while growth in revenues 

for other segments is no longer single-digit but close to 12%. 

On this basis, all four Group disciplines delivered double-digit 

growth in 2006. 

1.3 Headcount 

At December 31, 2006, Group headcount had risen 11.2% yearon-year, 

to 67,889 from 61,036 at end-2005. This 6,853 increase 

in numbers reflects: 

* 20,087 additions consisting of: 

– 18,592 new hires; 

– 1,495 transfers in connection with Group acquisitions 

or Outsourcing Services contracts signed with certain 

clients. 

* and 13,234 departures (just over 20% of the average headcount 

for the year), breaking down as: 

– 10,650 resignations (16.5% of the average headcount); 

– 856 transfers outside the Group further to the sale of 

certain business operations; 

– 1,728 layoffs. 

Among the 18,592 new hires in 2006: 

5,238 employees were recruited by the Group’s three offshore 

platforms: India (3,897), China and Poland. 

4,282 employees were recruited by Sogeti for its Local Professional 

Services activity where the nature of the work often 

requires local hires. However, headcount in Consulting services 

and the onshore segments of Technology services and 

Outsourcing services grew by just 3.0%, which is a clear reflection 

of the deep-seated changes our businesses are undergoing. 

1.4 Order book 

In 2006, the Group took €8,198 million in orders, up more than 

20% on the prior-year figure (€6,831 million). New orders for the 

Outsourcing Services activity alone accounted for €3,164 million 

(38.6% of the total), boosted by the extension to the 2003 Inland 

Revenue contract following the Inland Revenue’s merger with 

Customs & Excise to form Her Majesty’s Revenue and Customs 

(HMRC). Another major contract was entered into with General 

Motors, which has retained Capgemini as a strategic partner in 

the comprehensive overhaul of its IT system. There were also a 

couple of notable successes for the Business Process Outsourcing 

activity, including contracts signed with Zurich Financial Services, 

Tetra Pak and SKF. 

Excluding Outsourcing Services, new orders climbed more than 

10% year on year, to €5,034 million.

1.5 Profitability 

Operating margin grew sharply in 2006 for the second consecutive 

year. Operating margin is calculated by deducting 

operating expenses – comprising the cost of services rendered 

(expenses incurred during project delivery), selling expenses 

and general and administrative expenses – from revenues. 

Operating margin for 2006 was almost double the year-earlier 

figure (€447 million versus €225 million) and represents 

5.8% of revenues. 

The breakdown by geographic area shows that this performance 

was driven by North America, which posted a €72 million operating 

profit for 2006 versus a €26 million operating loss in 2005. 

The upturn in profitability in the North America region is first and 

foremost the reward for aggressive efforts to revive the Consulting 

and Technology Services businesses which, having incurred 

heavy losses in 2005, ended 2006 with an operating margin of 

above 6%. Outsourcing Services also made a major contribution 

to this performance, recovering from the negative impact of major 

outlays required to ramp up the TXU contract in 2005 to deliver 

a positive operating margin in 2006. 

The United Kingdom & Ireland region reported an operating 

margin of 7.7% for the year, and its contribution to the overall 

improvement in Group operating margin is comparable to that 

of North America in absolute terms. While Outsourcing Services 

had the biggest impact in value terms, chiefly as a result of the 

extensive added-value services provided under the HMRC contract, 

the Consulting and Technology Services businesses registered 

the most significant improvement in their margins. Overall, the 

United Kingdom & Ireland region generated more than one-third 

of the Group’s overall operating margin. 

Profitability in France, however, narrowed significantly: year-onyear 

improvements in operating margin recorded by the Consulting, 

Technology and Local Professional Services activities 

were more than offset by a slump in the operating margin of the 

Outsourcing Services business. Delays in completing the Global 

Core Systems project for Schneider Electric, coupled with underestimations 

of the complexity and ongoing management costs 

associated with that company’s IT infrastructures, severely dented 

the performance of this business. 

An analysis of operating margin by business shows that each segment 

contributed to the Group’s overall improvement in margins. 

The jump of more than five percentage points in the operating 

margin of Consulting Services reflects an increase in headcount 

and an attendant shift in the age pyramid following the extensive 

recruitment of young consultants. The Netherlands and 

the United States turned in the best performance, delivering 

improved contribution rates on the back of lower selling, general 

and administrative expenses. 

The Technology Services activity saw a jump of more than two 

percentage points in its operating margin to 7.5%, thanks in particular 

to improved staff utilization rates and fewer project overruns, 

as well as a tight rein on selling, general and administrative 

expenses, which remained steady year on year. 

The Local Professional Services segment scored further profitability 

gains, lifting its already-robust 9.1% profitability showing in 2005 

to 9.8% in 2006. This performance reflects a sharp increase in 

average sales prices, as well as a slight fallback in staff utilization 

rates as a consequence of the recruitment drive. 

Finally, the Outsourcing Services activity added three percentage 

points to its operating margin, outperforming its end-2005 Margin 

Acceleration Program (MAP) targets while absorbing the extra 

costs incurred on the Schneider Electric contract. 

1.6 Significant events 

On February 8, 2007, Kanbay’s Annual Shareholders’ Meeting 

voted 99% in favor of the company’s acquisition by Capgemini 

in accordance with the terms and conditions as announced on 

October 26, 2006. The total cost of the acquisition amounted to 

USD 1.25 billion and was settled in cash. Established in 1989, this 

Chicago-based company has a worldwide headcount of around 

6,900 and supplies a range of highly integrated services focused 

on the financial services, consumer products and telecommunications 

sectors. Fitting seamlessly into the Group’s investment 

strategy, this acquisition: 

significantly deepens the Group’s footprint in India, from 6,000 

to 12,000 employees, 

expands the Group’s range of services in North America, 

propels the Group into a leading position in the financial services 

sector. 

This acquisition laid the foundations for the Group’s latest development 

plan aimed at accelerating the improvement in profitability, 

increasing resistance to downturns and outperforming market 

growth. This plan has been baptized i 3 (I Cubed) – referring to its 

three key levers: industrialization, innovation and intimacy. 

II – COMMENTS ON CAPGEMINI 

GROUP’S CONSOLIDATED FINANCIAL 

STATEMENTS 

2.1 Consolidated statement of income 

Consolidated revenues amounted to €7,700 million for the year 

ended December 31, 2006, a rise of 10.7% based on published 

figures and 12.1% like-for-like. 

Operating expenses advanced 7.8% to €7,253 million, compared 

to €6,729 million in 2005. 

An analysis of costs by type reveals: 

Personnel costs amounting to €4,676 million, up by €192 million 

or 4.3% – representing a lower rate of increase than recorded 

for revenues (see above) and average headcount (7.2%). This 

was attributable to the fact that the bulk of the year’s hires (i) 

were recruited in India, where salaries are lower, or (ii) targeted 

young – and therefore less expensive – consultants. 

Personnel costs represent 60.7% of consolidated revenues in 

2006 compared to 64.5% in 2005, despite a higher proportion 

of variable compensation paid. 

In 2006, travel expenses increased in line with revenues and 

represent 4.4% of the consolidated figure. 

A 14.4% rise in purchases and sub-contracting expenses to 

€2,068 million, which now represent 26.9% of revenues compared 

to 26% in 2005. This stems partly from the occasional 

need to use sub-contractors to meet customer demand, and also 


39

40 ANNUAL 



from certain major Outsourcing Services contracts for which the 

Group calls on partners to ensure a more comprehensive and 

efficient range of services. 

A notable 11.7% increase in rent and local tax expenditure to 

€268 million in 2006, fueled in part by the return of French 

business tax (taxe professionnelle) to normal levels. 

The analytical breakdown of expenses confirms that – as in 

2005 – the improvement in operating margin is linked primarily 

to the tight rein on selling, general and administrative expenses. 

In 2006, these costs represent just 17.3% of revenues, compared 

to 19.5% in 2005. This trend is even more striking in absolute 

terms, for while revenues pushed forward by 10.7%, selling, general 

and administrative costs actually dipped marginally. The cost 

of services rendered – corresponding to the costs incurred during 

the execution by the Group of client projects – improved slightly 

to end the year at 76.9% of revenues compared with 77.3% in 

2005. However, the extra cost involved in bringing in external 

service providers to assist with new Outsourcing Services business 

– notably on the HMRC contract – dented the progress achieved 

in scaling back the costs incurred by the Group itself. 

Operating margin yielded €447 million, compared with €225 million 

in 2005, which represents 5.8% of revenues versus 3.2% in 2005. 

Operating margin advanced in all geographic areas except France, 

where profitability gains reported by the Consulting Services and 

Technology Services businesses failed to counter the impact of 

difficulties on the Schneider Electric contract. 

Net other operating expense came in at €113 million in 2006, 

compared with €11 million in 2005. The change in this item 

reflects the absence of significant gains on the sale of consolidated 

companies and businesses, which in 2005 amounted to €166 million, 

and the €70 million reduction in restructuring costs from 

€164 million in 2005 to €94 million in 2006. 

In 2006, the bulk of these restructuring costs were incurred within 

the scope of the Margin Acceleration Program (MAP) aimed at 

streamlining the Group’s Outsourcing activities, breaking down 

as (i) €67 million in costs directly related to workforce reduction 

measures, mainly in Europe; (ii) €16 million relating to measures 

undertaken to streamline the Group’s real estate assets, chiefly in 

the United Kingdom; and (iii) €11 million in industrialization 

costs and migration costs in connection with the offshoring of 

Group activities. 

Operating profit came in at €334 million in 2006, versus 

€214 million the previous year. 

Net finance expense for 2006 amounted to €28 million compared 

with €38 million in 2005. This improvement is essentially attrib- 


utable to a €14 million decline in gross finance costs, with the 

€24 million increase in income from investment of cash and cash 

equivalents comfortably offsetting the €10 million rise in interest 

expense incurred chiefly on the OCEANE convertible/exchangeable 

bond issue of June 16, 2005 (OCEANE 2005). 

Around one-third of the increase in income from investment of 

cash and cash equivalents stems from the reinvestment of the 

proceeds from the OCEANE 2005 bond issue, with the balance 

attributable to the compound effect of a rise in net cash from 

operating activities and higher interest rates. 

Net other financial expense increased by €4 million, mainly as a 

result of the marking to market of the OCEANE 2003 bond issue 

interest rate swap. This generated €5 million in financial expense 

in 2006, compared to financial income of €1 million in 2005. 

Income tax expense was only €13 million in 2006, broken down 

as follows: 

€49 million in current income taxes. 

€36 million in net deferred tax income, the €94 million income 

resulting from the recognition of deferred tax assets in various 

countries, including France for €40 million, having been partially 

offset by the utilization of tax loss carry-forwards previously 

recognized in assets (€58 million including €43 million 

in France). 

Attributable profit for the year came in at €293 million in 2006, 

versus €141 million in 2005, and represents 3.8% of revenues. 

In 2006, basic earnings per share are €2.21 compared to €1.07 a 

year earlier. Diluted earnings per share, determined on the basis 

of the average weighted number of ordinary shares outstanding 

in the year, came in at €2.07 for a total of 147,241,326 shares, 

versus €1.06 in 2005 for a total of 138,472,266 shares. 

2.2 Consolidated balance sheet 

Consolidated shareholders’ equity at year-end 2006 stood 

at €3,697 million, an increase of €947 million compared with 

December 31, 2005, as a result of: 

dividends paid to shareholders for an amount of €66 million, 

or €0.50 per share; 

profit for the year (€293 million); 

the issue of 11,397,310 new shares in connection with the 

December 6, 2006 capital increase (€498 million including the 

issuance premium and net of issue costs); 

a €17 million expense relating to the allocation of stock options 

and share grants; 

a €17 million decrease in translation adjustments; 

a €19 million increase (including the issuance premium) relating 

to various capital increases carried out in connection with the 

exercise of stock options; and

€193 million in actuarial gains recognized on provisions for pensions 

and other post-employment benefits, net of deferred taxes 

(due to the application of the amendment to IAS 19 applicable 

as of January 1, 2006). 

Fixed assets totaled €2,346 million at December 31, 2006, down 

€4 million compared with December 31, 2005, mainly due to the 

following changes: 

A €40 million increase in goodwill in connection with the acquisition 

of German group FuE (€29 million) and Unilever Shared 

Service Limited (€20 million), partially offset by a €3 million 

write down on goodwill in the United Kingdom, and exchange 

losses amounting to €13 million on goodwill denominated in 

foreign currencies. 

A €20 million reduction in intangible assets, attributable in part 

to the retirement of software and other intangible assets in an 

amount of €10 million, amortization charges for €35 million, 

and acquisitions carried out during the year for €30 million. 

A €24 million reduction in property, plant and equipment, 

mainly relating to the sale of IT equipment. Both acquisitions 

for the year and depreciation expense were each for an amount 

of €131 million. 

At year-end 2006, other non-current and deferred tax assets 

stood €191 million higher, due to: 

The Group’s November 21, 2006 acquisition of 14.7% of the 

capital and voting rights of Kanbay International, Inc. (“Kanbay”). 

At December 31, 2006, the Group’s interest in Kanbay 

amounted to €132 million (including acquisition costs). 

The €60 million increase in deferred tax assets resulting from 

the recognition of deferred tax assets on temporary differences 

and tax loss carry-forwards due to improved profitability over 

the last two years as well as the positive growth outlook, notably 

in the United Kingdom. 

Trade accounts and notes receivable totaled €2,063 million at 

December 31, 2006 compared to €1,798 million at December 31, 

2005. At end-2006, trade receivables net of advances received 

from customers (and excluding work-in-progress) amounted to 

€1,281 million versus €1,162 million at December 31, 2005, representing 

60 days’ revenues – unchanged on the previous year-end. 

Accounts and notes payable, consisting mainly of trade payables, 

amounts due to personnel and accrued taxes, stood at €2,019 million 

at December 31, 2006, compared with €1,881 million at 


Provisions for pensions and other post-employment benefits 

amounted to €591 million at end-2006, versus €696 million a year 

earlier. The decrease stems from the recognition of €150 million 

in actuarial gains in 2006 due to changes in actuarial assumptions, 

especially in the United Kingdom (€125 million) where 

the discount rate rose by 0.5 percentage point. A portion of this 

effect was offset by €37 million in additions to provisions for the 

year net of benefits and contributions paid. 

Net consolidated cash and cash equivalents totaled €1,632 million 

in 2006, compared with €904 million in 2005. This €728 million 

increase is the result of: 

€578 million in operating cash flows, boosted by €611 million 

in cash flows from operations before net finance costs and 

income tax; 

€278 million in cash flows used in investing activities, relating 

primarily to: 

– €169 million in net payments concerning acquisitions of 

investments in non-consolidated companies (essentially the 

14.7% stake in Kanbay), 

– net proceeds/payments relating to acquisitions/disposals of 

fixed assets; 

the issue of 11,397,310 new shares in connection with the 

December 6, 2006 capital increase, generating net proceeds of 

€498 million including the issuance premium; 

the payment of a dividend to shareholders totaling €66 million; 

various share capital increases upon exercise of options, for 

€19 million. 

The balance due on the acquisition of Kanbay shares, amounting 

to approximately €850 million, was paid on February 9, 2007. 

III – OUTLOOK FOR 2007 

The Capgemini Group has set the following objectives for 

2007: 

to successfully integrate the Kanbay teams; 

to strengthen sector expertise, with an emphasis on the development 

of the Consulting business; 

to continue the improvement in Outsourcing profitability, notably 

by developing the Business Process Outsourcing activity; 

to invest in innovation, industrialization and client relations 

(through its i 3 program). 

Having built a budget around a framework of hypotheses combining 

sustained growth in demand, and taking into account the 

Kanbay integration, the Group should post revenue growth of 

8% in 2007 (at constant rates and perimeter), and continue the 

improvement of its operating margin. 

IV – COMMENTS ON THE CAP GEMINI 

S.A. FINANCIAL STATEMENTS 

4.1 Statement of income 

The Company’s operating revenue for the year ended December 

31, 2006 amounted to €183 million (including €182 million in 

royalties received from subsidiaries) compared with €162 million 

for 2005 (including €161 million in royalties). This increase was 

attributable to the growth in Group revenues. 

Operating income came in at €148 million compared to the yearearlier 

figure of €133 million. The improved performance stems 

chiefly from higher royalties, offset in part by a €6 million rise in 

operating expenses that was mainly attributable to advertising. 

Net interest income amounted to €21 million, compared to 

€28 million in the previous year, reflecting: 

€193 million in income corresponding mainly to dividends 

received from subsidiaries (€23 million), interest income on cash 


41

42 ANNUAL 



and cash equivalents (€41 million), and releases of provisions 

on investments in subsidiaries in the United Kingdom, Spain, 

Germany and Italy (€100 million). 

€172 million in expenses corresponding chiefly to a total of 

€123 million of additions to provisions on investments in 

certain subsidiaries (in Germany, Italy, Poland, Ireland, France 

and Asia-Pacific) and to interest expense on the OCEANE 2003 

and 2005 bonds. 

Net other income came to €3 million (against net other expense 

of €9 million in 2005), mainly attributable to net proceeds on the 

sale of treasury shares acquired within the scope of the liquidity 

contract and treasury shares returned to Cap Gemini S.A. under 

the terms of the agreements entered into with Ernst & Young at 

the time of the acquisition of its consulting business. 

After accounting for a tax benefit of €23 million, the Company 

posted a profit of €195 million in 2006, compared with a €173 million 

profit in 2005. 

4.2 Balance sheet 

Net investments rose from €6,009 million at December 31, 2005 

to €6,530 million at the 2006 year-end. This €521 million increase 

is mainly attributable to: 

various increases in share capital in an amount of €399 million, 

essentially relating to French, German, Italian and Spanish subsidiaries, 

including €186 million for Capgemini France S.A.S. 

and €130 million for Sogeti France S.A.S.; 

the Transiciel earn-out payment in an amount of €11 million, 

following the exercise of share warrants granted in connection 

with the public exchange offer launched by Cap Gemini S.A. 

in October 2003; 

the acquisition of a 51% interest in Unilever Shared Service 

Limited, a subsidiary of Hindustan Lever Limited (Unilever 

group), in an amount of €9 million; 

a net increase in loans granted to certain subsidiaries amounting 

to €108 million, including a €129 million advance granted 

to Capgemini North America Inc. to fund its acquisition of a 

14.7% stake in Kanbay in November 2006; 

a net release of provisions on investments in certain subsidiaries 

for a total of €10 million; 

the sale of treasury shares held by Cap Gemini S.A. under the 

terms of the agreements entered into with Ernst & Young at 

the time of the acquisition of its consulting business, as well as 

shares held under the liquidity contract for €4 million. 

Shareholders’ equity stood at €7,268 million, reflecting an increase 

of €657 million compared to the previous year-end, as a result 

of: 

the payment of a dividend on May 16, 2006 amounting to 

€0.50 per share on the 131,581,978 shares comprising the 


Company’s share capital at December 31, 2005, for a total 

amount of €66 million; 

the issue in August 2006 of 312,127 shares following the exercise 

of Transiciel share warrants, for an amount of €11 million; 

the issue in December 2006 of 11,397,310 new Cap Gemini 

shares in connection with the cash capital increase, with no 

pre-emptive subscription rights or priority subscription period 

for existing shareholders, for an amount of €498 million net 

of issue costs; 

the exercise by Group employees of 790,393 stock options for 

an amount of €19 million; 

net income for the year of €195 million. 

Debt advanced €124 million to €1,272 million, reflecting an 

increase in accrued debts with respect to investments in subsidiaries 

and affiliates of €151 million, a decrease in cash at bank 

and commercial paper of €34 million, and an increase in accrued 

interest on the OCEANE bonds of €7 million. 

Net cash and cash equivalents at December 31, 2006 came to 

€621 million, versus €271 million one year earlier. 

4.3 Results appropriation 

At the Annual Shareholders’ Meeting of May 11, 2006, the Board 

of Directors recommended, as a sign of Cap Gemini’s return 

to profitability and the Board’s confidence in the future of the 

Group, a departure from the traditional practice of distributing 

to shareholders one-third of consolidated profit for the year and 

to distribute instead one-half. Following the approval of the 

shareholders, the Company paid a €0.50 dividend on each of 

the 131,581,978 shares making up the share capital at December 

31, 2005. 

This year, the Board of Directors recommends a return to the 

policy of distributing one-third of consolidated profit for the year, 

despite the sharp 9.5% year-on-year rise in the number of shares 

resulting primarily from the issue of shares in connection with 

the December 2006 cash capital increase (11,397,310 shares). 

Based on consolidated profit of €293 million in 2006, this recommendation 

– if accepted – would result in the payment of 

a €0.70 dividend on each of the 144,081,809 shares carrying 

dividend rights at January 1, 2006, representing a total amount 

of €100,857,266.30 or 34% of consolidated profit. 

As profit distributable by the parent company amounts to 

€194,560,397.44, the balance would be allocated to (i) the legal 

reserve in the amount of €9,999,864.00, bringing the total legal 

reserve to €115,265,446.40 and thereby entirely funded; and (ii) 

retained earnings for the remaining amount (€83,703,267.14). 

The Board of Directors recommends setting the first date for payment 

of the dividend at Monday April 30, 2007. This dividend will 

be eligible for the 40% tax rebate referred to in sub-paragraph 2,

paragraph 3 of article 158 of the French Tax Code for individuals 

subject to personal income tax in France. 

Pursuant to article 243 bis of the French Tax Code, the Shareholders’ 

Meeting is also reminded that a €0.50 dividend per share 

was distributed for the 2005 financial year (fully eligible for the 

40% tax rebate), but that no dividend was distributed for 2004 

and 2003. 

4.4 Regulated agreements 

Shareholders are asked to approve two resolutions concerning 

regulated agreements: 

The third resolution relates to the underwriting agreement 

entered into with parties including Lazard Frères Banque S.A., 

IXIS Corporate & Investment Bank and Morgan Stanley & Co. 

International Limited. The contract provides for the placement 

of shares to be issued in connection with the capital increase 

decided on December 5 and 6, 2006. As Bruno Roger is a corporate 

officer with both Lazard Frères S.A.S. (Chairman) and Cap 

Gemini S.A. (Director), the contract is classified as a regulated 

agreement for legal purposes. 

The fourth resolution relates to the confirmation of the registration 

of two corporate officers (Serge Kampf, Chairman of the 

Board of Directors and Paul Hermelin, Chief Executive Officer) 

on the list of beneficiaries of a supplementary collective pension 

scheme implemented by the Company in favor of senior 

executives regarded as having made a lasting contribution to 

the Group’s development. 

4.5 Share capital and ownership structure 

The Company’s share capital was increased by €100 million in the 

course of 2006 (moving from €1,052,655,824 to €1,152,654,464) 

following: 

the issue of 790,393 shares upon the exercise of stock options 

granted in prior years to Group employees; 

the issue of 312,127 shares upon the exercise of the share warrants 

issued at the time of the public exchange offer launched by 

the Company in October 2003 on the shares of Transiciel; 

the issue of 11,397,310 shares subscribed in connection with 

the December 2006 cash capital increase. 

Pursuant to article L.233-13 of the French Commercial Code (Code 

de Commerce), the Board of Directors informs shareholders that 

based on notifications received (on September 8 and September 

12, 2006, respectively) and in the absence of other subsequent 

disclosures, Goldman Sachs Asset Management LP and Barclays 

Plc each directly or indirectly held at the balance sheet date more 

than 5% of the Company’s share capital and voting rights. 

Furthermore, during the year: 

Société Générale directly and indirectly increased its interest 

to above, and reduced its interest to below, the legal disclosure 

threshold of 5% of the Company’s share capital and voting 

rights; 

Goldman Sachs Asset Management LP increased its interest to 

above the 5% legal disclosure threshold as a result of operations 

carried out on behalf of its asset management clients; 

Barclays Plc indirectly increased its interest to above the 5% 

legal disclosure threshold as a result of operations carried out 

on behalf of its subsidiaries. 

4.6 Stock options 

The Extraordinary Shareholders’ Meeting of May 12, 2005 authorized 

the Board of Directors to grant stock options to certain 

employees of the Company and its French and foreign subsidiaries. 

The authorization was given for a period of 38 months 

commencing May 12, 2005 and the number of shares to be subscribed 

on exercise of the options was limited to six million. The 

Board of Directors used this authorization, which set up the Sixth 

Stock Option plan, and on October 1, 2006 granted options on 

2,067,000 shares to 692 Group employees. The option exercise 

price was set at €43 per share, representing the average of the 

prices quoted for the Company’s shares over the 20 trading days 

preceding the date of grant. 

In the event of a notice of authorization of a tender offer or public 

exchange offer for the Company’s shares published by Euronext, 

option holders would be entitled to exercise all of their remaining 

unexercised options immediately without waiting for the end of 

the vesting period specified at the time of grant. 

During 2006, 773,838 shares were subscribed on exercise of 

options granted under the Fifth Plan and 16,555 shares were 

subscribed on exercise of options granted under the Sixth Plan, 

representing a total of 790,393 shares (equal to 0.55% of the 

share capital at December 31, 2006). No further shares could be 

subscribed under the First, Second and Third and Fourth Plans, for 

which the exercise periods expired on November 1, 1995, April 1, 

1999, April 1, 2002, and December 1, 2006 respectively. 

4.7 Employee shareholdings 

Pursuant to article L.225-102 of the French Commercial Code, 

the Board of Directors informs the shareholders that as of December 

31, 2006, the Transiciel investment fund held 0.06% of the 

Company’s share capital following the contribution of all of its 

shares to the public exchange offer launched by Cap Gemini on 

Transicel’s shares in December 2003. 

4.8 Authorization to buy back the Company’s 

shares 

The shareholders are reminded that the 2005 Ordinary Shareholders’ 

Meeting renewed the authorization granted to the Company to buy 

back its shares under certain conditions. This authorization was used 

in 2006 in connection with the ongoing liquidity contract set up with 

Crédit Agricole Cheuvreux on September 30, 2005 with a view to 

improving the liquidity of the Cap Gemini share and the regularity 

of its quotation. In 2006, CA Cheuvreux acquired 1,803,492 Cap 

Gemini shares on behalf of Cap Gemini S.A., at an average price of 

€41.44 per share. These shares represented 1.25% of Cap Gemini 

S.A.’s capital at December 31, 2006. During the same period, CA 

Cheuvreux also sold 1,808,212 Cap Gemini shares at an average 

price of €42.14 per share. Negotiation fees relating to the acquisition 

and sale of Cap Gemini shares over the period amounted to 

€147,819, excluding fees paid to CA Cheuvreux. At December 31, 

2006, the position of the liquidity contract showed 80,280 treasury 

shares, representing 0.06% of Cap Gemini’s capital at that date and 

€9 million of cash available (out of a total liquidity line of €10 million 

allocated to the contract). These shares were worth €3,640,188 on 

the basis of their acquisition price and €3,817,314 on the basis of 

the closing price for Cap Gemini shares on December 29, 2006. 


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44 ANNUAL 



As this authorization is only valid for 18 months, we are asking 

shareholders to replace the 2005 authorization with a similar 

authorization to allow the Company (in descending order of 

priority): 

to provide liquidity for the Cap Gemini share within the scope 

of a liquidity contract; 

to remit the shares thus purchased to holders of securities 

convertible, redeemable, exchangeable or otherwise exercisable 

for Cap Gemini S.A. shares upon exercise of the rights attached 

thereto in accordance with the applicable regulations (including 

the possibility of exercising the call options acquired on June 

27, 2005); 

to purchase shares to be retained with a view to remitting them 

in future in exchange or payment for potential external growth 

transactions; 

to award shares to employees and corporate officers (on the terms 

and by the methods provided for by law), in particular in connection 

with stock option plans or company savings plans; 

to cancel the shares thus purchased subject to adoption of the 

eighth resolution of the Extraordinary Shareholders’ Meeting 

included in the agenda of the Shareholders’ Meeting of April 26, 

2007 (April 10, 2007 on first call). 

To this end, the Board of Directors is seeking a maximum 

18-month authorization for the Company to buy back shares 

representing up to 10% of its capital, at a maximum price of 


€70 per share, these purchases taking place within the scope 

of: 

articles L.225-209 et seq. of the French Commercial Code which 

also allow an authorization to be granted to the Board of Directors 

to cancel some or all of the shares purchased, up to 10% 

of its capital by 24-month period; 

European Regulation No. 2273 of December 22, 2003 that came 

into effect on October 13, 2004. 

4.9 Returned Shares 

In the agreements entered into on May 23, 2000 with Ernst & 

Young in connection with the sale to Cap Gemini of its consulting 

business, it was provided that if any of its former partners 

who had become Group employees decided to leave the Group 

before a specified period had elapsed, they would be required to 

return some or all of the shares they had received at the time of 

the sale, the number of shares to be returned depending both on 

the reason for and the timing of the individual’s departure. Pursuant 

to these agreements, a total of 80,621 Cap Gemini shares 

were returned to the Company between February 23, 2006 and 

December 31, 2006 (no other shares have been returned since 

said date). At December 31, 2006, Cap Gemini no longer held 

any such shares following the sale of all of the shares in this portfolio 

in December 2006, representing 85,663 shares (including 

5,042 shares returned to the Company between February 23, 

2005 and February 22, 2006). 

4.10 Compensation of directors 

Compensation of managing directors 

The total gross compensation (fixed and variable) paid to the two managing directors in 2006 breaks down as follows: 

(in euros) 

Serge KAMPF 

Amount paid in 2006 

and 2007 for 2006 

Amount paid in 2006 

(2006 fi xed and 2005 variable) 

Fixed 720,000 720,000 

Variable 562,000 467,712 

Total 1,282,000 1,187,712 

Paul HERMELIN 

Fixed 1,050,000 1,050,000 

Variable 830,500 738,000 

Total 1,880,500 1,788,000

As is the case for all the Group’s managers and in accordance 

with a formula that has been applied in Cap Gemini for more 

than 30 years, the variable portion of the two managing directors’ 

compensation consists of two equal halves, V1 based on the 

Group’s consolidated results and V2 based on the attainment of 

several personal objectives that have been set for them for the 

fiscal year in question. 

For 2006 (variable part paid in March 2007) 

1) for Serge Kampf, each of these two portions (V1 and V2) 

were for €240,000 in the event that the objectives set were fully 

attained. 

for the V1 portion, the calculation of the percentage of attainment 

of the Group’s main consolidated financial objectives (revenues, 

gross operating margin, costs of shared services) resulted in a 

combined total of 124%, representing a V1 portion for Serge 

Kampf of €240,000 x 1.24 = €298,000; 

for the V2 portion, the calculation of the degree of attainment 

of each of the six personal objectives that had been set for him 

for the fiscal year resulted in a total of 110/100, corresponding 

to a V2 portion of €240,000 x 1.10 = €264,000. 

His total actual variable compensation was therefore €562,000, 

representing 117% of his theoretical variable compensation 

(€480,000), and his total compensation was €1,282,000, or 

106.8% of his theoretical total compensation. 

2) for Paul Hermelin, each of these portions (V1 and V2) were for 

€350,000 in the event that the objectives set were fully attained. 

for the V1 portion, the calculation of the percentage of attainment 

of the Group’s main consolidated financial objectives (revenues, 

gross operating margin, costs of shared services) resulted in a 

Directors’ fees for 2005 paid to directors in 2006: 

(in euros) Amount paid in 2006 

for 2005 

combined total of 124%, representing a V1 portion for Paul 

Hermelin of €350,000 x 1.24 = €435,000; 

for the V2 portion, the calculation of the degree of attainment of 

each of the seven personal objectives that had been set for him 

for the fiscal year resulted in a total of 113/100, corresponding 

to a V2 portion of €350,000 x 1.13 = €395,000 

His total actual variable compensation was therefore €830,500, 

representing 118.6% of his theoretical variable compensation 

(€700,000), and his total compensation was €1,880,500, or 

107.5% of his theoretical total compensation. 

It should also be noted that: 

as in previous years, Serge Kampf and Paul Hermelin’s performance 

appraisals for 2006 were discussed at the Selection 

and Compensation Committee, which submitted its recommendations 

to the Board of Directors where they were debated, 

approved and adopted; 

Serge Kampf and Paul Hermelin did not receive any fringe 

benefits (medical assistance, housing, company car, cell phone, 

products or services free of charge, etc.) during the 2006 fiscal 

year, as was already the case in previous fiscal years, nor did 

they benefit from any specific retirement plan, or any provision 

related to indemnities for termination for any reason whatsoever 

(removal from office, retirement, etc.); 

for the 18th consecutive year, Serge Kampf decided not to ask 

the Company to reimburse the expenses he incurred in the 

performance of his duties (business travel, entertainment, etc.) 

with the exception of high-speed TGV train travel between 

Paris and Grenoble, the historical headquarters of Cap Gemini, 

where he has kept his main office and where a part of corporate 

functions is still located. 

2005 amount 

Serge KAMPF 49,500 56,500 

Ernest-Antoine SEILLIERE 47,500 52,500 

Daniel BERNARD 16,833 - 

Christian BLANC 28,000 27,500 

Yann DELABRIERE 29,000 29,000 

Jean-René FOURTOU 34,500 39,000 

Paul HERMELIN 31,500 31,500 

Michel JALABERT 34,500 34,500 

Phil LASKAWY* 39,500 42,000 

Thierry de MONTBRIAL 20,333 - 

Ruud van OMMEREN* 37,000 44,500 

Terry OZAN* 28,000 34,500 

Bruno ROGER 23,500 29,000 

TOTAL 419,667 420,500 

* as required by law, the Company deducted withholding tax on the amounts paid to these three non-resident beneficiaries. 


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Directors’ fees for 2005 paid to non-voting directors in 2006: 

(in euros) Amount paid in 2006 2005 amount 

Pierre HESSLER 26,500 32,000 

Marcel ROULET 22,333 - 

Geoff UNWIN* 29,000 33,000 

TOTAL 77,833 65,000 

* as required by law, the Company deducted withholding tax on the amounts paid to this non-resident beneficiary. 

The total amount of directors’ fees for 2005 paid to directors and non-voting directors in 2006 represents €419,667 + €77,833 

= €497,500 (€464,124 after deduction of withholding tax for non resident beneficiaries). 

Stock options 

Pursuant to a decision by the Board of Directors, Paul Hermelin 

was granted 25,000 stock options on October 1, 2006, that may 

be exercised within five years at a price of €43. Paul Hermelin was 

also granted a further 25,000 options exercisable at the same price 

and within the same timeframe, under the following provisions: 

all of the shares issued on exercise of these options are held by 

Mr. Hermelin in registered form until the termination of his duties 

as managing director of Cap Gemini S.A., in accordance with the 

employee profit-sharing and share ownership law (which provides 

that the Board of Directors chooses either to prohibit corporate 

officers from exercising their options prior to termination of their 

duties, or to set the quantity of shares resulting from exercise of the 

options that must be held in registered form until the termination 

of their duties) which was adopted by the French parliament on 

December 14, 2006. The Board of Directors decided to apply the 

provisions of this law before its definitive adoption, and despite 

the fact that it is not strictly applicable to stock options granted 

prior to December 14, 2006. 

None of the options previously granted to directors were exercised 

in 2006, and on no occasion has Serge Kampf either requested or 

been granted any stock options. 

4.11 Directorships and other functions held by 

directors 

The Board of Directors draws shareholders’ attention to the fact 

that the “Registration Document” attached to the Annual Report 

given to each shareholder upon entering the meeting specifies 

the list of directorships and other functions held by each of the 

directors in other companies. 

4.12 Transactions carried out by directors 

involving the Company’s securities 

The table below presents a summary of transactions carried out 


by directors involving the Company’s securities, based on AMF 

disclosures and on article 223-26 of the AMF’s General Regulations: 

Number of shares 

Purchased Sold 

Members of the Board 

of Directors 

(including non-voting directors) ----- 209,470 

4.13 Renewal of the term of office of a 

non-voting director 

The Board of Directors is asking you to renew for a two-year 

period the term of office of the non-voting director Marcel Roulet, 

who was appointed by the General Shareholders’ Meeting of 

May 12, 2005 and whose term of office expires at the close of 

this Meeting. 

You are reminded that in 2006 shareholders decided to reduce 

the term of office of non-voting directors from six to two years, 

this decision being immediately applicable to Marcel Roulet’s 

remaining term of office. 

V – ENVIRONMENTAL AND SOCIAL 

IMPACT OF THE GROUP’S 

OPERATIONS 

A specific section of the Registration Document (see pages 12 and 

seq.), entitled “Corporate Social Responsibility, Sustainability and 

Social Stewardship”, explains the Group’s policy with regard to 

human resources (changes in headcount, career development, role 

of the Capgemini University), the environment, and its relations 

with external business partners, namely customers, suppliers and 

the general public at large.

VI – FINANCING POLICY AND MARKET 

RISKS 

Detailed information relating to (i) Capgemini’s cash and cash 

equivalents and debt; and (ii) the Group’s use of derivatives to 

manage its interest and currency risks is respectively provided in 

Notes 17 and 18 to Capgemini’s consolidated financial statements 

for the year ended December 31, 2006. 

6.1. Financing policy 

Cap Gemini’s financing policy is intended to provide the Group 

with adequate financial flexibility and is based on the following 

main criteria: 

A moderate use of debt leveraging: over the last ten years Cap 

Gemini has strived to maintain a limited level of net debt (and 

even a positive net cash position), including with respect to 

financing external growth. By paying for the bulk of its acquisitions 

in shares, Cap Gemini S.A. has pursued the dual aim of 

(i) maintaining a solid financial structure, and (ii) implicating 

as far as possible the employees transferred to the Group as a 

result of these acquisitions in their success. 

A high degree of financial flexibility: Capgemini aims to ensure 

a good level of liquidity as well as durable financial resources, 

which means maintaining: 

– a high level of available funds (€2,859 million at December 

31, 2006, including the proceeds from the €507 million capital 

increase carried out in December 2006), which could be 

expanded further by a €500 million undrawn multi-currency 

syndicated line of credit (expiring on November 14, 2011) 

and a €550 million commercial paper program; 

– durable financial resources: at December 31, 2006, 85% of the 

Group’s debt falls due beyond two years (see Note 17.III). 

Diversified financing sources adapted to the Group’s financial 

profile: Capgemini seeks to maintain a balance between bank 

financing (including the above-mentioned syndicated credit line, 

use of leasing to finance property and IT equipment in particular) 

and market financing (issue of OCEANE bonds convertible 

and/or exchangeable for new or existing shares for €460 million 

in June 2003 and €437 million in June 2005 (see Note 17.II). 

Lastly, the appropriate balance between the cash cost of financing 

and the return on cash investments, including the corresponding 

tax treatment, as well as the potential dilutive impact for Cap 

Gemini shareholders, are determining factors for the Group in 

its choice of financing sources. In this regard, with the issue of 

the OCEANE 2005 bonds Cap Gemini decided to neutralize the 

potential dilutive impact of the OCEANE bonds issued in June 

2003 via the purchase of call options on 9,019,607 of its own 

shares (see section 4.8 above). 

6.2. Market risks 

Equity risk: the Group does not hold any shares for financial 

investment purposes, and does not have significant interests 

in listed companies. However, it holds treasury shares in connection 

with: 

– the implementation of the liquidity contract under its share 

buyback program (the associated liquidity line amounts to €10 

million), representing 80,280 shares at December 31, 2006; 

– the employee-retention scheme set up in the context of the 

acquisition of Ernst & Young’s consulting business in May 

2000, under which the shares are designated to be reallocated 

to Group employees (see Note 10.A). 

The Group’s resulting exposure to equity risk is negligible. 

Counterparty risk: the financial assets which could potentially 

give rise to counterparty risk essentially consist of financial 

investments. These investments mainly comprise money market 

securities managed by leading financial institutions and, to a 

lesser degree, negotiable debt instruments issued by companies 

or financial institutions with a high credit rating from a recognized 

rating agency. There is therefore no significant counterparty 

risk for the Group on these short-term investments. 

Moreover, in line with its policy for managing currency and 

interest rate risks (see below), Cap Gemini enters into hedging 

agreements with leading financial institutions; counterparty risk 

can therefore be deemed negligible. 

Liquidity risk: the principal financial liabilities whose early 

repayment could expose the Group to liquidity risk are the 

two convertible bonds mentioned above (OCEANE 2003 and 

OCEANE 2005) and the €500 million multi-currency syndicated 

line of credit. The OCEANE documentation contains the 

usual provisions relating to early repayment at the initiative of 

bondholders should pre-defined events occur. In addition to 

the early repayment clauses commonly found in these types of 

agreements, the documentation for the syndicated line of credit 

requires Cap Gemini to comply with certain financial ratios 

(covenants). As of December 31, 2006, the Group complied 

with all such ratios (see Note 17.II.D). 

It is also stated that a change in the credit rating attributed by 

Standard & Poor’s to Cap Gemini would not affect the availability 

of these sources of financing and would therefore not 

expose the Group to liquidity risk. However, the cost of funding 

the syndicated line of credit could be increased or decreased 

(see Note 17.II.D). 

Interest rate risk: Capgemini’s exposure to interest rate risk 

should be analyzed in light of (i) its cash position: at December 

31, 2006 the Group had €2,859 million in cash and cash 

equivalents invested at market rates compared to gross debt of 

€1,224 million; and (ii) the Group’s conservative policy with 

respect to management of interest rate risk: the uncapped variable-rate 

portion of gross debt was limited to 6% (capped and 

uncapped variable-rate debt combined accounted for 41% of 

the total – see Note 17.III). Consequently, based on the balance 

sheet at end-2006 a 1% increase in interest rates would 

have a positive €20 million impact on Capgemini’s net finance 

costs. Conversely, a low interest rate environment (below 2%) 

would expose the Group to an increase in its net finance costs 

(see Note 17.III). The main exposure to interest rate risk is at 

the level of Cap Gemini S.A., which represented around 80% of 

Group financing and 66% of Group cash and cash equivalents 

at December 31, 2006. 

Currency risk: Capgemini’s exposure to currency risk is low 

due to the fact that the bulk of its revenue is generated in 

countries where operating expenses are also incurred. However, 

the growing use of offshore production centers in Poland, India 

and China exposes Capgemini to currency risk with respect to a 

portion of its production costs. Currently, the amounts involved 

are not material but given that this trend is set to increase in 

the future, Cap Gemini has already defined and implemented 

an overall policy to minimize exposure to exchange rates and 


47

48 ANNUAL 



manage the resulting risk, particularly through regular hedging 

of intercompany flows. These hedges mainly take the form of 

forward purchases and sales of currencies (see Note 18.B). 

Financial instruments: financial instruments are used to hedge 

in particular interest rate and currency risks. All hedging positions 

relate to existing assets or liabilities and/or operating or 

financial transactions. Gains and losses on financial instruments 

designated as hedges are recognized on a symmetrical basis with 

the loss or gain on the hedged items. The fair value of financial 

instruments is estimated based on market prices or data supplied 

by bank counterparties. 

VII – FINANCIAL AUTHORIZATIONS 

Pursuant to the delegations of authority given to the Board of 

Directors by the Extraordinary Shareholders’ Meeting of May 11, 

2006, the Board was granted a 26-month authorization to: 

increase the share capital by capitalizing reserves; 

issue new shares and/or securities convertible, redeemable, 

exchangeable or otherwise exercisable for new shares of the 

Company or granting a right to allocation of debt instruments, 

with or without pre-emptive subscription rights; 

increase the amount of the issues if the requests for shares exceed 

the number of shares on offer, up to 15% of the initial issue 

at the same price as for the initial issue (“Greenshoe” options); 

issue shares and/or securities convertible, redeemable, exchangeable 

or otherwise exercisable for new shares of the Company, or 

granting a right to allocation of debt instruments, as payment for 

shares tendered to a public exchange offer made by the Company 

or contributions in kind to the Company of shares and/or 

securities convertible, redeemable, exchangeable or otherwise 

exercisable for new shares of the Company. 

The overall limits on the amounts of the issues that could be 

decided pursuant to the delegations of authority granted to the 

Board were set at: 

a maximum nominal amount of €1.5 billion for capital increases 

paid up by capitalizing reserves; 

a maximum nominal amount of €450 million for capital increases 

with pre-emptive subscription rights, enabling the share capital 

to be increased to a maximum nominal amount of approximately 

€1.5 billion, and a maximum of €3 billion in total issuance 

amounts; 

a maximum nominal amount of €200 million for capital increases 

without pre-emptive subscription rights, enabling the share capital 

to be increased to a maximum nominal amount of approximately 

€1.25 billion, and a maximum of €1.5 billion in total 

issuance amounts; 

a maximum aggregate nominal amount of €450 million and aggregate 

issuance amount of €3 billion for securities convertible, redeem- 


able, exchangeable or otherwise exercisable for new shares of the 

Company, or granting a right to allocation of debt instruments. 

On November 29, 2006, the Board decided to issue shares for cash 

without pre-emptive subscription rights or priority subscription 

period for existing shareholders, further to a delegation of authority 

without pre-emptive subscription rights. The total amount 

of the issue was €507 million, represented by 11,397,310 new 

shares with a nominal value of €8 each (i.e., a total nominal issue 

amount of €91 million). 

The additional report required by law on the final terms and 

conditions applicable to this capital increase was drawn up on 

December 6, 2006 by Paul Hermelin, Chief Executive Officer, and 

is available to shareholders at this Meeting. 

Accordingly, the Board of Directors has used almost half of the 

maximum nominal amount of €200 million set for capital increases 

in the event of elimination of pre-emptive subscription rights. 

Taking into consideration the fact that the current delegations of 

authority are valid up until July 11, 2008, the Board of Directors 

has decided not to submit their renewal to your approval at this 

Meeting. 

A table summarizing the delegations of authority and powers 

granted by the Shareholders’ Meeting to the Board of Directors 

with regard to share issues is provided on page 128 and 129 of 

the Registration Document. 

VIII – COMMENTS REGARDING THE 

EXTRAORDINARY SHAREHOLDERS’ 

MEETING 

8.1 Authorization to cancel shares acquired 

under the buyback program 

As stated above, the Board of Directors is seeking shareholders’ 

authorization to cancel some or all of the shares purchased pursuant 

to articles L.225-209 et seq. of the French Commercial Code 

(the authorization to buy back shares is described in section 4.8 

of this report), for up to 10% of its capital by 24-month period. 

8.2 Allocation of shares free of consideration 

Pursuant to article 83 of the 2005 Finance Act (amended by the 

French law of December 14, 2006 on employee profit-sharing 

and share ownership), the Group has set up a scheme under 

which it may allocate existing shares or shares to be issued free 

of consideration to its employees. In accordance with this Act, 

the allocation of such shares to their beneficiaries shall only be 

definitive at the end of a minimum vesting period of two years, 

with the minimum period for retention set at two years. 

This scheme is not generally intended to supplement stock option 

awards but to replace such awards whenever the tax legislation

of the countries in which beneficiaries are based is considered 

unfavorable for the employee and/or the Company (mainly the 

Netherlands and the Nordic countries). The Board is therefore 

asking shareholders to grant it authorization to allocate, free of 

consideration, existing shares or shares to be issued to employees 

of the Group, up to a maximum of 0.5% of the Company’s capital 

(720,000 shares). Shareholders are asked to grant the Board full 

powers to determine the beneficiaries of the share awards, the 

terms and conditions for the issue and, where necessary, the 

criteria for allocating the shares. The allocation of the shares to 

their beneficiaries shall only be definitive at the end of a minimum 

vesting period of two years as from the date of allocation 

by the Board of Directors, with the minimum period of retention 

of the shares by the beneficiaries also set at two years as from 

their definitive allocation. The Board may, in accordance with the 

law, extend the minimum retention period for corporate officers, 

either by deciding that the shares granted free of consideration 

may not be transferred before the termination of their duties, or 

by setting the quantity of shares that said officers will be required 

to hold in registered form until the termination of their duties. 

This authorization is given for a period of 38 months. 

8.3 Updating of the bylaws further to decree 

no. 2006-1566 of December 11, 2006 

The Board of Directors is asking for authorization to bring article 

19 of the bylaws (“General Shareholders’ Meetings”) into line with 

the provisions of decree no. 2006-1566 of December 11, 2006 

amending the March 23, 1967 decree on commercial companies, 

particularly as regards evidence of shareholder identity and ownership. 

The procedure whereby shares are temporarily blocked 

prior to such Meetings will be replaced by a “record date” system, 

whereby ownership of the shares is evidenced by a snapshot of 

the company’s share register taken at the closest possible time to 

the Meeting (as of 12:00 a.m. Paris time on the third working day 

preceding the Meeting). 


49

50 ANNUAL 

REPORT OF THE CHAIRMAN 

OF THE BOARD OF DIRECTORS 

- ON THE PREPARATION AND ORGANIZATION OF THE WORK OF THE BOARD 

- ON THE LIMITATIONS PLACED BY THE BOARD ON THE POWERS OF THE CHIEF 

EXECUTIVE OFFICER 

- AND ON INTERNAL CONTROL PROCEDURES IMPLEMENTED BY THE COMPANY 

I – PREPARATION AND 

ORGANIZATION OF THE WORK 

OF THE BOARD 

Cap Gemini is a French joint-stock company (société anonyme), 

whose Board of Directors decided on July 24, 2002, based on a 

recommendation put forward on the initiative of the then Chairman 

and Chief Executive Officer, Serge Kampf, to separate the 

functions of Chairman and Chief Executive Officer further to the 

authorization granted to the Board by the General Shareholders’ 

Meeting of April 25, 2002 and within the scope of the “New 

Economic Regulations” law (NRE). 

1.1 The Board of Directors 

The Board of Directors currently comprises 11 members: 

Two were elected at the General Shareholders’ Meeting of 

May 12, 2005. The directors in question are: 

MM. - Daniel Bernard 

- Thierry de Montbrial. 

Nine were reelected at the General Shareholders’ Meeting of 

May 11, 2006. The directors in question are: 

MM. - Yann Delabrière 

- Jean-René Fourtou 

- Paul Hermelin 

- Michel Jalabert 

- Serge Kampf 

- Phil Laskawy 

- Ruud van Ommeren 

- Terry Ozan 

- Bruno Roger 

At the General Shareholders’ Meeting of May 11, 2006, shareholders 

adopted the Board of Directors’ proposal to shorten directors’ 

terms of office from six to four years, with immediate effect on 

ongoing terms of office. The terms of office of the two directors 

appointed in 2005 will expire at the General Shareholders’ Meeting 

called to approve the 2008 financial statements, and the terms 

of office of the nine directors appointed last year will expire at 

the General Shareholders’ Meeting called to approve the 2009 

financial statements. 

The principal role of the Board of Directors is to determine the 

key strategies of the Company and the Group, and to ensure that 

these strategies are implemented. Particular emphasis is placed 

on the management of human resources, especially at managerial 

level, reflecting Capgemini’s business as a service provider. The 


Board meets at least six times a year. Meetings are convened by 

the Chairman in accordance with a timetable agreed by the Board 

at the end of the previous year. However, this timetable may be 

amended during the year in response to unforeseen circumstances 

or at the request of more than one director. During 2006, the 

Board met eight times: twice when it numbered 13 directors (the 

11 directors above, as well as Christian Blanc and Ernest-Antoine 

Seillière, who decided not to seek reelection to the Board); and 

six times when it numbered 11 directors. This represents a total 

of 92 theoretical attendances for all directors combined; there 

were only 12 absences, giving an overall attendance rate of 

87%. 

Within a reasonable period before these meetings, each Director 

is sent: 

a detailed agenda which has been approved by the Chairman 

in consultation with those directors who have submitted items 

for inclusion on the agenda and the members of Group Management 

responsible for preparing documentation concerning 

the items to be discussed; 

and, if the agenda includes items requiring specific analysis or 

prior consideration, supporting documentation prepared by 

members of Group Management, supplying detailed, relevant 

information to the directors in order that they may prepare their 

deliberations, provided that the sending of such documentation 

carries no risk that sensitive information, or any information 

that should remain confidential prior to the Board meeting, is 

disclosed to anyone but the Board members; 

a summary report comparing the performance of Cap Gemini 

shares to that of various general and sector indexes and that of 

its main competitors; 

and a table giving a breakdown of the last known consensus. 

For a number of years already, the Company’s Board of Directors 

has applied the main corporate governance rules now recommended 

as best practice. The Board has: 

prepared, adopted, amended and applied highly detailed internal 

rules of operation (see section 1.3); 

set up four specialized Board committees – the Audit Committee, 

the Selection & Compensation Committee, the Ethics & Governance 

Committee and the Strategy & Investments Committee, 

each with a clearly defined role (see section 1.4); 

indexed all director compensation (in the form of attendance 

fees) to attendance at Board and committee meetings (see section 

1.5). 

reviewed on three separate occasions the personal situations of 

each director in light of the definition of independence provided

under French corporate governance guidelines (“a director is 

independent when he/she has no relationship of any sort with 

the Company, the Group or its Management, that is likely to 

impair his/her judgment”) and the numerous criteria applied 

in the different countries in which the Group operates. Based 

on the aforementioned reviews, 7 out of the 11 Board directors 

(64%) qualify as “independent” under French corporate governance 

guidelines: Daniel Bernard, Yann Delabrière, Jean-René 

Fourtou, Michel Jalabert, Phil Laskawy, Thierry de Montbrial 

and Ruud van Ommeren. 

The Board has also implemented a self-assessment procedure. 

This involved commissioning one of the three non-voting directors 

to prepare and send a detailed questionnaire to each director, 

about the composition, operation and efficiency of the Board and 

its committees. The completed questionnaires were then collated 

and analyzed and a summary presentation was submitted to the 

Board of Directors for discussion. The questionnaire was divided 

into the following three main sections: 

Overall assessment of the directors themselves: competence, 

contribution to deliberations, complementarity, assiduity, solidarity, 

independence, prestige, availability, etc. 

Meetings and their effectiveness: number, length and period 

of notice of meetings, pertinence of the agenda, quality 

of information, dialogue with management, discussions 

between directors, decisions made and strategic options 

chosen, as well as the quality of the minutes taken; and an 

assessment of the level of influence that the Board has – or 

should have – on the decisions taken by Management as 

well as the impact of committee recommendations on Board 

decisions, etc. 

Finally, a certain number of other issues relating, for example, 

to the conditions for possible changes in the composition of the 

Board and/or its committees. 

A summary of the responses to this questionnaire was discussed 

at length during one of the Boards’ meetings and proposed improvements 

have been implemented. At its meeting of July 26, 2006, 

the Board of Directors reviewed the composition of the specialized 

committees to ensure that the proportion of “independent” 

directors, whose number varies according to the committee, 

complies as closely as possible with the guidelines pertaining to 

good corporate governance. 

1.2 Non-voting directors 

The Board of Directors is assisted by three non-voting directors: 

two of these non-voting directors are former directors who 

were appointed as non-voting directors on July 24, 2002. The 

non-voting directors in question are: Pierre Hessler, who 

replaced Phil Laskawy, Mr. Laskawy was appointed a director; 

and Geoff Unwin, replacing Chris van Breugel, who resigned 

as a non-voting director. 

The terms of office of these two non-voting directors were 

renewed at the General Shareholders’ Meeting of May 11, 

2006; 

The third non-voting director, Marcel Roulet, was appointed 

as a non-voting director by the General Shareholders’ Meeting 

of May 12, 2005. 

At the General Shareholders’ Meeting of May 11, 2006, shareholders 

adopted the Board of Directors’ proposal to shorten 

non-voting directors’ terms of office from six to two years, with 

immediate effect on ongoing terms of office. This has the following 

impact: 

Marcel Roulet’s term of office expires at the General Shareholders’ 

Meeting to be held on April 26, 2007; 

The terms of office of Pierre Hessler and Geoff Unwin will expire 

at the General Shareholders’ Meeting called in the spring of 2008 

to approve the 2007 financial statements. 

1.3 Internal rules of operation 

As provided for in article 16 of the Company’s bylaws, internal 

rules of operation were drafted, discussed and adopted by the 

Board of Directors on July 24, 2002. This decision followed the 

resolution approved at the General Shareholders’ Meeting of 

April 25, 2002, which authorized the separation of the functions 

of Chairman and Chief Executive Officer. On July 26, 2006, the 

Board made certain modifications and additions to the internal 

rules of operation, notably: 

the possibility of holding Board of Directors meetings using video 

conference or telecommunications facilities, as adopted by the 

General Shareholders’ Meeting of May 11, 2006; 

the requirement for directors and non-voting directors to 

inform the French stock market authority (Autorité des marchés 

financiers), and the Company itself, of any transactions they may 

have carried out personally involving the Company’s shares 

within five trading days of the execution of such operations; 

an update to the rules governing share trading: notwithstanding 

the legal and regulatory provisions concerning insider trading, 

directors and non-voting directors must abstain from any direct, 

indirect or derivative transaction involving the Company’s shares 

for a period of 15 trading days prior to the announcement of 

the Company’s interim and full-year results, and for one trading 

day following such announcements; 

and a number of additional specifications to the general code 

of ethics. 

These amended internal rules of operation: 

set out or provide additional details concerning the bases for 

exercising the various powers entrusted to: 

- the Board of Directors, 

- the four specialized committees created within the Board, 

- the Chairman, 

- the Chief Executive Officer. 

determine how roles and responsibilities are allocated between 

these individuals and bodies and stress in particular that the 

prior approval of the Board of Directors is required for any decision 

which is of major strategic importance or which is liable to 

have a material impact on the financial position or commitments 

of the Company or one of its principal subsidiaries; 

list the main obligations of the code of ethics which directors and 

non-voting directors of Cap Gemini S.A. undertake to comply 

with throughout their term of office concerning, inter alia, the 

rules governing securities transactions. 

1.4 Board committees 

Seven years ago, on May 23, 2000, the Board of Directors approved 

the recommendation of its Chairman to set up three specialized 


51

52 ANNUAL 

REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS 


committees (an Audit Committee, a Selection & Compensation 

Committee and a Strategy & Investments Committee). Each 

committee was tasked with reviewing and preparing Board discussions 

in its sphere of competence, making proposals to the 

Board, and providing advice and recommendations to the Board 

on decisions to be taken. 

The initial appointment of directors and non-voting directors to 

these committees was decided by the Board of Directors at its 

meeting of September 13, 2000. Each committee elected its own 

Chairman, and has specific internal rules of operation defining 

the nature and extent of its roles and responsibilities. 

Following the appointment on May 12, 2005 of two new directors 

(Daniel Bernard and Thierry de Montbrial) and a new nonvoting 

director (Marcel Roulet), on July 27, 2005 the Board of 

Directors decided, again on the initiative of the Chairman, to 

appoint a non-voting director and four directors to each of the 

three committees. The Chairman of the Board of Directors did 

not wish to be appointed to any of the three committees and 

allowed each committee Chairman to invite him to attend the 

various meetings of their committees at their own discretion. At 

its meeting of July 26, 2006, the Board also decided to create a 

fourth committee called the Ethics & Governance Committee, 

whose terms of reference include Group corporate governance 

– previously the responsibility of the Selection & Compensation 

Committee. Acting on the proposal of the Selection & Compensation 

Committee, the Board of Directors decided to appoint Serge 

Kampf as Chairman of the Ethics & Governance Committee. The 

Board consequently adopted the new composition of the four 

committees as presented below. 

Lastly, at its meeting of February 14, 2007, the Board of Directors 

approved the internal rules of operation for each of the four specialized 

committees formed on July 26, 2006. This consisted of an 

update to the rules already in place for the existing committees, 

as well as a new set of internal rules of operation for the Ethics 

& Governance Committee. 

1.4.1 Audit Committee 

This committee assesses the appropriateness and the consistency of 

the accounting policies and methods used in the preparation of the 

full-year and interim financial statements, and checks the internal 

reporting and control procedures used to ensure the accuracy of 

financial information. The committee also assesses the various 

engagements conducted by the Statutory Auditors and gives an 

opinion as to whether they should be reappointed. 

The composition of this committee is currently as follows: 

Chairman: Yann Delabrière 

Other directors: Michel Jalabert and Phil Laskawy 

Non-voting director: Marcel Roulet 

This committee met six times in 2006, with an attendance rate of 

89% (25/28). At the beginning of 2006, it reviewed the financial 

statements of the Group and the parent company for the year 

ended December 31, 2005 as well as the accounting treatment of 

significant events that took place during that year. In the middle of 

the year, the committee reviewed the Group’s financial statements 

at June 30, 2006 as well as the International Financial Reporting 


Interpretations Committee’s conclusions on the application of IFRS 

to outsourcing contracts (IFRIC 4). The committee also examined 

the consequences of the application of the new method of recognizing 

actuarial gains and losses (IAS 19 as amended) relating 

to pension obligations and the financial implications of the UK 

pension plan, as well as the provisions booked on certain major 

Group contracts. It also heard reports from (i) Philippe Christelle, 

the Internal Audit Director, on working methods and terms of 

reference, especially as regards the financial aspects of internal 

reporting, the main improvements made in the period 2003/2004 

through 2005/2006, and potential further improvements; (ii) 

Gilles Taldu, the Production and Quality Director; and (iii) Lucia 

Sinapi-Thomas, the Corporate Finance and Risk Management 

Director. At year-end it reviewed the significant pre-closing issues. 

Finally, the committee examined various proposals to recapitalize 

certain subsidiaries and gave its opinion concerning the appropriateness 

and methods of implementing such proposals. 

1.4.2 Selection & Compensation Committee 

This committee is tasked with monitoring the human resources 

policy applied by Group companies to executive managerial posts 

(executive selection, career and succession planning, changes in 

theoretical and actual compensation policy, the setting of objectives 

that determine the variable portion of compensation, criteria 

applied for the granting of stock options, etc.) and making sure 

that this policy is both consistent – while complying with local 

particularities – and closely in line with individual and collective 

performances in the Business Unit to which each manager belongs. 

It is consulted prior to any decisions concerning the appointment 

or replacement of Executive Committee members and strategic 

Business Unit managers. The committee drafts and presents recommendations 

to the Board concerning the proposals made by the 

Chief Executive Officer in relation to the fixed and variable compensation 

of these executive managers, the Chairman’s proposals 

on the compensation and performance assessment of the Chief 

Executive Officer, and its own proposals on the compensation 

and performance assessment of the Chairman. 

The composition of this committee is currently as follows: 

Chairman: Ruud van Ommeren 

Other directors: Michel Jalabert, Thierry de Montbrial and 

Terry Ozan 

Non-voting director: Pierre Hessler 

This committee met six times in 2006, with an attendance rate of 

86% (25/29). 

Besides matters relating to the general compensation policy applied 

by the Group in 2006, the committee reviewed compensation paid 

in 2005 (setting the variable portion) and 2006 (revising the fixed 

portion and setting individual objectives, used at year-end to calculate 

the variable portion) of the Chairman of the Board of Directors, 

the Chief Executive Officer and the Group’s key senior executives, 

for whom half of the variable portion of executive compensation

is based on the percentage of attainment of quantified objectives 

set out in the Group budgets (consolidated revenues, operating 

income, cost of corporate functions, etc.), and the other half on 

the degree to which a certain number of personal objectives have 

been achieved. 

The committee reviewed, and occasionally modified or completed, 

and submitted for final approval by the Board of Directors, the 

list of the beneficiaries of the 2,067,000 stock options granted on 

October 1, 2006 to 692 Group employees. 

The committee’s proposal to modify the formula for allocating 

directors’ attendance fees was accepted by the Board of Directors 

(see section 1.5). 

The committee recommended the creation of a fourth specialized 

committee with responsibility for corporate governance matters, 

and proposed that it be chaired by Serge Kampf. 

It also heard reports from the directors of the Group’s strategic 

Business Units, who presented the key members of their management 

teams, their three-year business plans, as well as an overview 

of succession plan options. 

Lastly, throughout the year the committee oversaw the review 

launched last year with the help of Towers Perrin aimed at setting 

up a Group-wide defined benefit pension scheme – of the like that 

exists within substantially all companies in the CAC 40 – for senior 

executives meeting a certain number of an objective criteria and 

who have made a major and lasting contribution to the Group’s 

development. The committee’s conclusions on this review were 

presented to the Board of Directors, which subsequently decided 

to authorize Group Management to set up such a plan with effect 

from January 1, 2007. 

1.4.3 Ethics & Governance Committee 

This committee is tasked with verifying that in all of its activities 

and in all subsidiaries under its control, in all internal and external 

communications – including advertising – and in all other acts 

undertaken in its name, the Group’s seven core values are correctly 

applied and adhered to, defended and promoted by the Group’s corporate 

officers, senior management and employees. It is also briefed 

with overseeing the application of good corporate governance rules 

within Cap Gemini S.A., validating succession plans put forward 

for (and often by) the Group’s senior management – including the 

Chairman and the Chief Executive Officer, proposing to the Board 

of Directors any changes it considers relevant to its functioning and 

composition (co-opting new directors, limiting their number, etc.) as 

well as any legal or operational changes to the corporate governance 

rules currently in force within the Group (for example, switching 

to or from a legal form that separates or combines the functions of 

Chairman and Chief Executive Officer, etc.). 

The composition of this Committee is currently as follows: 

- Chairman: Serge Kampf 

- Other directors: Daniel Bernard, Paul Hermelin, Phil Laskawy 

and Bruno Roger 

- Non-voting director: none 

The decision to set this committee up was only taken in the second 

half of 2006, and it is scheduled to hold formal meetings on two 

or three occasions during 2007. 

1.4.4 Strategy & Investments Committee 

This committee reviews and arbitrates between the various strategic 

options that the Group may adopt to ensure its continued growth, 

profitability and independence, calibrates the investment required to 

implement each of these possible strategies, oversees the subsequent 

implementation by management of the strategy decided by the Board 

of Directors, assesses potential or strategically necessary alliances or 

acquitions, and more generally, deliberates on any issue considered 

relevant to the Group’s future and to guaranteeing operating and 

financial stability. The composition of this committee is currently 

as follows: 

- Chairman: Jean-René Fourtou 

- Other directors: Daniel Bernard, Paul Hermelin, Thierry 

de Montbrial and Bruno Roger 

- Non-voting director: Geoff Unwin 

This committee met four times in 2006, with an attendance rate 

of 78% (18/23). 

In 2006, it devoted the bulk of its time to monitoring the global 

strategic plan approved in the previous year, aimed chiefly at 

enabling the Group to improve profitability and growth within 

each of its four disciplines: Consulting Services, Technology 

Services, Local Professional Services and Outsourcing Services. It 

reviewed the conclusions of an analysis of three major business 

and performance indicators (the Group’s current situation, market 

developments and breakthrough technologies), and played 

an active part in the preparation of the transformation program 

baptized “I cubed” and based on three main avenues for development: 

innovation (choosing profitable segments and strengthening 

the Group’s leadership position); industrialization (lowering costs 

and increasing productivity, notably on long-term contracts), 

and intimacy, promoting close client relationships – one of the 

Group’s key differentiation factors. The committee put forward 

a number of useful suggestions for presenting the themes to be 

debated at the 21st Rencontres held in Montreal, which brought 

together approximately 500 Group executives from September 27 

through September 30, 2006. 

1.5 Compensation of directors 

By way of compensation – albeit only partial – for their responsibilities, 

and for time spent preparing for and participating in Board 

and committee meetings, the Company was authorized by the 

General Shareholders’ Meeting of May 11, 2006 to pay attendance 

fees to directors within an overall ceiling of €700,000 per year. 

Further to the Selection & Compensation Committee’s proposal, 

the Board of Directors decided on July 26, 2006 to implement a 

new formula for allocating directors’ attendance fees, based on 

the following principles: 

the elimination of the fixed portion that was attributed based 

on position: director, non-voting director or committee member 

(except for the chairmen of the specialized committees and the 

Chairman of the Board of Directors, who each receive a fixed fee 

of €20,000 per annum in view of their special responsibilities 

and the heavy workload required to discharge their duties); 

payment of a uniform amount of €3,000 per attendance at 

official meetings of the Board or one of the four specialized 

committees. This fixed fee may be readjusted in the event that 

an exceptional number of meetings leads aggregate attendance 

fees to exceed the annual ceiling of €700,000 set by the General 

Shareholders’ Meeting of May 11, 2006; 

the payment of directors’ attendance fees twice yearly on June 

30 and December 31, as opposed to once per annum as was 

previously the case. 


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In accordance with these principles, the total amount of attendance 

fees paid to directors and non-voting directors in respect of 2006 

amounted to €609,000 (€272,000 for the first half of the year, 

and €337,000 for the second half), i.e., 87% of the maximum 

authorized ceiling. 

II – LIMITATIONS PLACED BY 

THE BOARD ON THE POWERS OF 

THE CHIEF EXECUTIVE OFFICER 

On the recommendation of Serge Kampf, then Chairman and Chief 

Executive Officer of the Company, the Board of Directors decided 

at its meeting of July 24, 2002 that the functions of Chairman and 

those of Chief Executive Officer should be separated from then 

on. Paul Hermelin was appointed as Chief Executive Officer. As 

mentioned above, the Board’s internal rules of operation, adopted 

on the same day, detailed the functions and characteristics of the 

Board, its Chairman and Chief Executive Officer, established the 

modus operandi for the specialized committees, and organized the 

allocation of responsibilities between these different bodies. 

As regards the role and powers of the Chief Executive Officer, the 

internal rules of operation stipulate that he must seek and obtain 

prior approval from the Board of Directors – or from its Chairman 

acting under delegated powers – for any decision which is of major 

strategic importance or which is liable to have a material effect 

on the financial position or commitments of the Company or on 

one of its principal subsidiaries. 

This applies in particular to: 

the approval and updating of the three-year plan based on the 

strategy approved by the Board; 

the contracting of strategic alliances; 

significant changes to the structure of the Group or its range 

of business activities; 

significant internal restructuring operations; 

financial transactions with a material impact on the financial 

statements of the Company or the Group (in particular the 

issuance of shares or share equivalents); 

acquisitions or disposals of assets individually worth more than 

€50 million; 

increases or reductions in the capital of a major subsidiary; 

specific authorizations concerning the granting of pledges, 

security and guarantees. 

III – INTERNAL CONTROL 

PROCEDURES IMPLEMENTED BY 

THE COMPANY 

In 2006, the Group pressed ahead with the implementation 

of its transformation program for the internal finance function 


(known internally as the “Green Project”), and internal control 

procedures were adapted and modified accordingly. Key actions 

include: 

Updating the Group’s accounting principles and methods contained 

in the “TransFORM” manual, as well as the main obligations with 

regard to internal control. In 2006, this update mainly concerned 

the management of currency risk for projects drawing on production 

resources located in countries exposed to significant inflation 

risk, and the rules relating to the recognition of transition and transformation 

costs on outsourcing contracts. In order to ensure the 

uniform interpretation of Group accounting rules, comprehensive 

training sessions are held regularly and backed up by a questionand-answer 

style intranet forum to assist participating employees 

in developing their understanding of specific issues. 

As regards organization, 2006 was marked by the transfer of part 

of the Dutch subsidiary’s accounting services to a shared service 

center located in Poland, as well as the transfer to India of the 

UK accounting services. Lastly, as regards the new legal and 

regulatory financial reporting obligations, the program aimed at 

shortening closing deadlines launched at the end of 2005 was 

successfully implemented for the 2006 accounts closing, and 

work is well underway to meet an ambitious closing target for 

the first semester of 2007. 

In terms of IT systems, during 2006 a new single integrated management 

system was deployed in the Group’s Belgian, Dutch, US 

and Polish subsidiaries, as well as in the French subsidiary, Sogeti. 

This system comprises key functional components – including 

a procurement management application – and was enhanced in 

2006 by the progressive rollout of an electronic invoicing component 

designed to streamline internal billing processes. 

These changes aim to further improve the various internal control 

procedures set up over the past ten years within the Capgemini 

Group, and their objectives are set out below. 

3.1 Objectives of internal control procedures 

The Group’s internal control procedures are applicable to all of its 

businesses, and comprise a set of rules, guidelines and working 

practices designed to create a general internal control environment 

that is tailored to the Group’s specificities. 

The internal control procedures are designed to ensure: 

compliance with relevant laws and regulations; 

the correct application of instructions and guidelines set out by 

Group Management; 

the smooth functioning of the Group’s internal control processes; 

the reliability of the Group’s financial information; and 

respect for the Group’s core values. 

Irrespective of their quality and the success of their application,

internal control procedures cannot provide an absolute guarantee 

against risk, any more than they can guarantee that the Group’s 

performance objectives are met. 

Internal control procedures mainly concern two levels of the 

Group’s organization: 

Group Management has prepared, drafted, approved and distributed 

a set of rules and procedures known as the Blue Book. A 

copy of the Blue Book is issued to each employee of Cap Gemini 

S.A. and its subsidiaries, and compliance is mandatory irrespective 

of function, position or Business Unit. It outlines the overall 

security framework within which the Group’s activities must be 

conducted, and describes the tools and methods to be deployed 

in order to exercise the necessary degree of control and reduce 

the risks identified in each of the Group’s main functions. 

Individual Business Units supplement the Blue Book with specific 

instructions designed to bring Group internal control procedures 

into line with the relevant laws, regulations and customary 

practices in their country of operation, and to provide more 

effective control over specific local risks. 

The Group’s multidisciplinary Internal Audit function, composed 

of 18 auditors, reports directly to both the Group’s Chairman and 

its Chief Executive Officer. It is tasked with reviewing the internal 

control procedures set up within the Business Units, to ensure 

that they comply with the principles and rules laid down by the 

Group, and with monitoring their application. It independently 

assesses the effectiveness of these internal control procedures 

given that, irrespective of how well they are drafted and how 

rigorously they are applied, they can only provide reasonable 

assurance – and not an absolute guarantee – against all risks. 

Each Business Unit is audited in line with a bi-annual program 

that both the Chairman and the Chief Executive Officer have the 

power to modify in the event of a contingency or delay or major 

divergence from budgetary commitments. In 2006, the Internal 

Audit team fulfilled 38 engagements – i.e., 1,500 days of field 

audits – throughout the Group’s various Business Units. 

The Internal Audit Director reports annually on the team’s activities 

to the Audit Committee as regards the preparation and 

processing of the Group’s accounting and financial information. 

However, the Internal Audit Director may at any moment draw 

up a special report for the Chairman or the Chief Executive 

Officer on any matter that he considers should be brought to 

their attention. 

3.2 General organization of internal control 

procedures 

The Group’s internal control procedures are based on a close-knit 

executive management structure, clear lines of organization at 

operational level and clearly defined processes and methods. 

3.2.1 Close-knit executive management structure 

A close-knit executive management structure has been set up to 

model, explain, foster adherence to, apply and control implementation 

of the decisions and strategy defined by the Board of 

Directors. This structure is built around three main bodies: 

The Executive Committee composed of 9 members: the Chief 

Executive Officer, the Deputy Chief Executive Officer in charge 

of finance, IT and procurement, the General Secretary, the 

Communications Director, the Strategy Director, and four directors 

from the Group’s main Business Units (Western Europe, 

Continental Europe and Asia-Pacific, Outsourcing Services and 

Local Professional Services). The members of this committee are 

tasked with assisting the Chief Executive Officer in the day-today 

management of the Group. It meets formally every other 

Monday, and by conference call in the intervening week. The 

Executive Committee implements the broad strategies decided 

by the Board of Directors, approves budgetary targets and 

oversees their implementation (annual and rolling three-year 

budgets), and if necessary, takes immediate corrective action 

to remedy any failures to deliver those objectives. In addition, 

it monitors the adequacy of the Group’s organization in light 

of changes in the business environment. 

The Group Management Board composed of the nine members 

of the Executive Committee plus a variable number of other 

senior managers – currently six: the directors of the other main 

Business Units (North America and Financial Services), the Production 

Director, the Sales Director, the Director in charge of the 

global coordination of the Consulting Services businesses, and 

the Director in charge of the coordination of Capgemini-Kanbay 

operations in India. The Group Management Board usually meets 

on a monthly basis to discuss the agenda prepared and decided by 

the Chief Executive Officer. Its main brief is to contribute to the 

deliberations of the Executive Committee on any matter of general 

interest that is submitted to it, and to assist in the implementation 

of decisions taken. The Group Management Board also acts as 

the Steering Committee for the Group’s Transformation Program 

launched in September 2006 and baptized “I cubed” – and whose 

project manager also attends all of the meetings. 

The Group Finance Department, currently headed up by the 

Deputy Chief Executive Officer, which is mainly tasked with: 

- preparing budgets and monitoring performance; 

- business control; 

- operational reporting; 

- consolidation; 

- accounting processes and standards; 

- treasury management; 

- taxation; 

- mergers and acquisitions; and 

- financial communications. 

The Group Finance Department also handles procurement, internal 

information systems and risk management during the upstream 

phase of commercial propositions. 

These three management bodies are complemented by a number 

of central functions that report directly to the Chief Executive 

Officer, and are organized into five central departments: 

The General Secretariat, which has particular responsibility for: 

- Legal affairs, whose brief is divided between two directors: 

one dealing with problems encountered in international operations 

and all legal matters related to the Group’s operating 

activities; and the other concerned with the functioning of the 

Group’s governing bodies (the Board, specialized committees, 

Shareholders’ Meetings) and any changes made to the Group’s 

legal structure. 

- The Human Resources Department, which is tasked with coor- 


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dinating policies in this sphere throughout the Group and 

monitoring the performance of managers with high potential. 

- Capgemini University, which provides Group and staff managers 

with the additional training they require (in new technologies, 

assuming commercial functions, enhancing ability to 

handle large-scale projects, personal leadership development, 

etc.) and also forms a natural and convivial “meeting point”. 

The Strategy Department which is also in charge of the Group’s 

Transformation Program, and whose main role is to provide 

input and documentation for the deliberations on strategic 

issues by Group Management and by the Board’s Strategy Committee. 

The Communications Department, which is responsible for 

defining the guiding principles of the Group’s communications 

strategy and ensuring they are applied by the operating 

subsidiaries. 

The Sales and Alliances Department, which is in charge of 

coordinating the Groups’ sales policy, monitoring the management 

of major accounts and facilitating contacts with the 

Group’s partners. 

The Production and Quality Department, which is tasked with 

designing and disseminating proprietary production methodologies 

for internal use, providing certification for certain categories 

of staff (project leaders, architects, etc.), overseeing the 

smooth functioning and development of the Group’s delocalized 

production centers and performing audits of risk-sensitive projects, 

conducted by specialized teams known as “flying squads” 

(93 audits of this type were carried out in 2006). 

These bodies are supplemented by two ad hoc committees composed 

of the Chief Executive Officer, the Chief Financial Officer 

and the General Secretary. Their task is to review – within the 

scope of the restrictions placed on the powers of the Chief Executive 

Officer: 

with the Director of Risk Management and the Director of International 

Legal Affairs: major business proposals to be prepared 

or discussed, offers of strategic alliances and master contracts 

with clients or suppliers that meet a certain number of specific 

criteria (Group Review Board). 

with the Strategy Director and the M&A Director: plans for 

acquisitions or divestments up for discussion, selection or 

negotiation (M&A Committee). 

3.2.2 Clear lines of organization at operational level 

The Group’s operations are based on a decentralized model, 

consisting of five Strategic Business Units (SBUs), with substantial 

autonomy in their management. Two of these units are each 

responsible for the worldwide management of one of the Group’s 

four disciplines: one for Outsourcing Services and the other for 

Local Professional Services (*). The Group’s other two disciplines 

(Consulting Services and Technology Services) are organized into 


three major geographic zones: North America, Western Europe 

(the UK, France, Spain and Portugal) and Continental Europe 

(the Nordic countries, Benelux, Germany, Switzerland, Austria, 

Italy and the other central and eastern European countries) within 

which Asia-Pacific has been provisionally classified. 

Within each of these SBUs, the basic operating entity is the Business 

Unit (BU). These units are deliberately kept small enough to 

allow their managers to form strong relationships with their staff, 

and each one operates in a manner similar to a small business, 

complete with management and performance measurement tools 

that allow the manager to remain in close contact with staff and 

clients and to participate fully in the Group’s results and development. 

BU managers are fully responsible for meeting quantifiable 

targets relating to financial performance (growth, profitability, 

etc.), business development, the quality of management and the 

level of satisfaction among their clients. 

(*) A sixth SBU is in the process of being set up, and will have worldwide responsibility 

for Financial Services. 

3.2.3 Clearly defined processes and methods 

The proper functioning of the Group’s executive management 

structure and its Business Units is rooted in compliance with 

processes and methods that ensure efficient and traceable decision-making. 

3.2.3.1 Formal process for delegating powers and authorizing 

decisions 

The decision-making process applied within the Group is based 

on rules for the delegation of powers. These rules are regularly 

updated, comply with the principle of subsidiarity and define 

three levels of decision-making depending on the issues involved, 

corresponding to the three levels of Capgemini’s organization: 

the BU, for everything within its area of responsibility; 

the SBU, for everything that concerns the BUs under its authority; 

finally, the Group (Group Management, Executive Committee, 

etc.), for everything outside the scope of responsibility of a single 

SBU, for decisions which, by their nature, must be taken at Group 

level (acquisitions, disposals, etc.) or for other major operations 

whose impacts exceed well-defined materiality thresholds. 

This process has been formalized in an “authorization matrix” 

which requires both prior consultation and the provision of 

sufficient information to the parties involved. Recommendations 

submitted to the final decision-maker must include the views 

of all interested parties as well as a balanced assessment of the 

advantages and drawbacks of each of the possible solutions. 

3.2.3.2 A framework of general policies and procedures 

The Blue Book sets out the main principles and basic guidelines 

underpinning the Group’s internal control procedures, and covers

specific issues relating to the following areas: 

the internal organizational structure; 

human resources management; 

finance function organization and procedures; 

procurement organization and controls; 

the Group’s information and communication systems; 

business knowledge management and protection sharing; 

production of services in a multinational context; 

project management (sales, technical and financial aspects). 

3.2.3.3 A project risk control process 

The Group has developed a formal process designed to identify 

and control risks associated with the delivery of information 

systems projects ordered by clients, from pre-sale to acceptance 

and payment by the client of the last invoice for the project. This 

process differentiates between: 

pre-sale controls; 

technical controls during the project execution phase; and 

business control. 

a) Pre-sale controls 

Projects are becoming ever more complex, both in terms of size 

and technical specifications, especially in outsourcing (long-term 

commitments, sometimes involving transfers of assets, staff and 

the related obligations). As a result, identifying and measuring 

the risks involved is essential at all stages of the selling process, 

not only for new contracts but also for extensions or renewals of 

existing contracts. This risk analysis is based in particular on: 

a reporting tool consolidating all commercial opportunities at 

Group level. Data concerning commercial opportunities are 

entered as and when identified, and are kept up to date throughout 

the sale process; 

the validation, at the various organizational levels of the Group’s 

operational structure and at the different stages of the selling 

process (from qualification of an opportunity as investmentworthy 

from a Group perspective to the contract signing, via the 

submission of service proposals, often in several stages), of the 

main characteristics of the opportunity, in particular as regards 

technical, financial and contractual matters. As described in 

section 3.1, the decision to commit the Group to commercial 

opportunities meeting a number of pre-defined criteria including 

size and level of complexity, is the sole prerogative of the 

Group Review Board. 

b) Production and quality control 

The Group has approved policies for monitoring contract performance 

that are applied throughout the life of the project to ensure 

that it runs smoothly. Key features include: 

clear definition of the roles and responsibilities of each person 

regarding execution and supervision throughout the entire production 

process, in particular as regards the choice of project leader, 

client relationship management, billing, estimation of costs to 

completion, joint oversight arrangements with the client, etc.; 

use of proprietary production methodologies in all of the Business 

Units; 

global access to the expertise available through Capgemini’s 

Applications Development Centers; 

the monthly Group-wide identification of all risk-sensitive projects 

in the execution phase, and the implementation of action 

plans aimed at containing such risks; 

commissioning of “quality audits” carried out independently of 

the teams in charge of a given project to identify the risks arising 

during the project execution phase, where performance appears to 

diverge from forecasts or from the commitments undertaken; 

measurement of client satisfaction via OTACE (On Time Above 

Client Expectations) surveys. 

c) Business control 

Depending on its size, each Business Unit has one or more business 

controllers, whose tasks include: 

financial oversight for each project, and primarily monitoring 

the correlation of project production costs with the initially 

approved budget. Progress reports and management indicators 

are built into the monitoring process, which relies mainly on 

the periodic analysis of the estimated costs to completion and 

their accounting impact; 

ongoing control over compliance with contractual commitments 

– particularly billing and payment milestones. 

3.3 Procedures for the preparation and 

processing of financial and accounting 

information 

These procedures are used to ensure the application of and compliance 

with Group accounting rules relating to the preparation of 

budgets and forecasts, financial reporting, consolidation, control 

and financial communications. 

3.3.1 Financial and accounting structure 

The operational control aspects of the Group’s financial functions 

are decentralized, with a structure that parallels that of 

its Business Units. However, in order to safeguard the impartiality 

required in determining accounting results, the financial 

controllers of the Strategic Business Units (SBUs) report to the 

Deputy Chief Executive Officer in charge of finance. They are 

responsible for ensuring that high-quality financial and accounting 

information for the SBU is reported to the parent company 

in good time. 

Each Business Unit has one dedicated financial controller, who in 

turn reports to the corresponding SBU’s financial controller who is 

responsible for ensuring that the results of the BU’s activities are 

accurately reported in the accounts in accordance and compliance 

with Group accounting rules and methods. To this effect, he also 

checks profit estimates for ongoing projects and assesses their 

accounting impact, makes sure that services are billed and paid 

for, as well as testifies to the quality of the information contained 

in the financial reports and accounting packages used as the basis 

for preparing the consolidated financial statements. 

All financial controllers apply the Group’s accounting procedures and 

policies contained in the TransFORM manual, which sets out: 

the key basic rules of internal control; 

what information must be reported, when, and how often; 

management rules and procedures; 

applicable accounting rules; 

performance indicators. 

3.3.2 Financial processes 

In order to exercise effective control over their operations, the 


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Group requires Business Units to submit weekly, monthly, quarterly, 

half-yearly and annual reports of all budget, forecast, operational 

and accounting information required for the general management 

of the Group: 

Budget and forecasting process: the budget is the fundamental 

management control tool and is drawn up by both the Company 

and its managers based upon past performance, the Group’s 

chosen strategic priorities and expected market trends. It sets 

quantified targets for the SBUs and their component BUs. The 

process for preparing this budget is a key point in the relationship 

between the different levels of the Group’s management and makes 

it possible to create a substantial link between the variable portion 

of the compensation paid to BU managers and the attainment of 

the budget targets that have been set for that BU and the corresponding 

SBU. Finally, a forecast income statement (for a rolling 

7-month period, i.e., for the current month and following six 

months, and for the entire year) is prepared monthly. Variances 

from the budget are analyzed, so that any corrective action plans 

that may be needed can be drawn up as quickly as possible. 

Operational reporting and accounting consolidation process: 

reporting of information is organized per Business Unit forming 

an SBU and by business line. It therefore allows revenues and 

costs to be split either by type or function, and performance 

indicators to be measured against budget, the latest forecasts 

and the same figures for the prior year. Balance sheet items are 

analyzed on a quarterly basis. Reconciliations are performed 

systematically to ensure that financial information derived from 

the operational reporting system is perfectly consistent with 

the consolidated financial information provided by the legal 

entities in the Group. 

At each yearly or half-yearly closing, the scope of consolidation 

is redefined at Group level by the Finance Department and validated 

by the Legal Affairs Department. Written instructions are 

issued providing the schedule for period-end tasks (in particular, 

the reconciliation of intragroup transaction balances), highlighting 

current accounting issues requiring specific attention, 

and describing the control procedures applied to prepare the 

consolidated financial statements. 

The financial consolidation process is based on accounting packages, 

which must be signed off by the person responsible for 

preparing them. Income statements, balance sheets and other 

key management indicators required for subsequent analysis are 

stored in a single database maintained at Group level. Access to 

this information system is strictly controlled. A monthly management 

report is prepared for each SBU jointly by the manager 

and financial controller. This report is designed to give an 

explanation of performance figures, forecasts for the following 

six months and actions taken in the event of material variances 

with budget, and is sent to Group Management. 

Financial information controls: the interim and annual financial 

statements are subject to specific controls regarding financial 


information and its presentation. These include: 

- a systematic review carried out with the assistance of the Legal 

Affairs Department of all material operations and transactions 

occurring during the period; 

- a procedure to identify, collate and report off-balance sheet 

commitments and any other information liable to have significant 

repercussions on the financial position of the Group or 

one of its subsidiaries at the period-end; 

- a review of the tax position of each of the Group’s legal entities; 

- a review of the value of intangible assets; 

- a detailed analysis of the statement of cash flows. 

The controls described above carried out by the Group Finance 

Department are supplemented by the work of two independent 

bodies tasked with carrying out checks on the internal control 

environment and verifying the quality of the financial statements: 

the Internal Audit function and the Statutory Auditors. 

- Internal Audit: based on its program covering the Group’s 

Business Units drawn up in agreement with the Chairman 

and its Chief Executive Officer (as it reports to both directly), 

the Internal Audit function is responsible for carrying out 

controls to ensure that procedures relating to the safeguarding 

of assets, the valuation of work in-progress, the actual amount 

of trade accounts receivable, and the proper recognition of 

liabilities, are applied in each Business Unit in accordance 

with the rules and methods established by the Group. In particular, 

the Internal Audit function is required to pay special 

attention to revenue recognition methods and to controlling 

the percentage-of-completion of projects, so as to ensure that 

projects are accounted for on the basis of rigorous, up-to-date 

technical assessments. The Internal Audit brief also includes a 

review of the procedures and controls in place within the BU 

concerned to ensure the security and validity of transactions 

and accounting entries. 

- The Statutory Auditors, whose main role consists in performing 

an ongoing review of internal control procedures with 

an impact on the preparation and quality of the financial 

statements. 

Communication of financial information: this is subject to 

rigorous internal control, with a particular focus on three key 

media used to report financial information: 

- the Annual Report (and the attached Registration Document); 

- financial press releases; 

- documents prepared for meetings with analysts and investors. 

For the past 32 years, the Annual Report has been the cornerstone 

in the Group’s financial communications strategy (the first edition 

contained the 1975 financial statements). The preparation of the 

report, its content, illustrations, production and distribution are 

therefore subject to particular attention on the part of Group

Management and, above all, the Chairman. All the sections of 

the Group’s Annual Report are written internally by staff and 

managers of the Group: in their own specific area of competence, 

they are each responsible for designing and setting out a chapter 

of the Annual Report within the general framework proposed 

by the Communications Department. Inserted into the Annual 

Report, the Registration Document combines all the information 

that must be provided pursuant to legal and regulatory requirements 

and is drawn up under the responsibility of the Finance 

Department. 

Financial press releases are only published further to the formal 

approval of the Board of Directors or the Chairman, and they 

must therefore be submitted sufficiently in advance to allow 

such approval. Financial press releases are published outside the 

trading hours of the Paris stock exchange, except in exceptional 

circumstances. 

The documents prepared for meetings with analysts and investors 

are subject to specific preparation, and their content is presented 

to the Board of Directors or the Chairman prior to the meetings. 

This preparatory work is then used as a framework for comments 

and explanations provided by the Chief Executive Officer and/or 

the Chief Financial Officer during the meetings 

3.3.3 Rules governing share trading 

The Group instructs all employees to refrain from carrying out 

any transactions involving the Company’s shares during certain 

periods of the year. Employees are reminded of these prohibitions 

in writing before the start of each such period. 


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STATUTORY AUDITORS’ REPORT, PREPARED IN ACCORDANCE WITH 

ARTICLE L.225-235 OF THE FRENCH COMMERCIAL CODE, ON THE REPORT 

PREPARED BY THE PRESIDENT OF THE BOARD OF CAP GEMINI S.A., ON 

THE INTERNAL CONTROL PROCEDURES RELATING TO THE PREPARATION 

AND PROCESSING OF FINANCIAL AND ACCOUNTING INFORMATION 

This is a free translation into English of the statutory auditors’ report issued in the French language 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. 

To the shareholders, 

In our capacity as statutory auditors of Cap Gemini S.A., and in 

accordance with article L.225 235 of the French Commercial Code 

(Code de commerce), we report to you on the report prepared by the 

President of your company in accordance with article L.225-37 of 

the French Commercial code (Code de commerce) for the year ended 


It is for the President to give an account, in his report, notably of the 

conditions in which the duties of the board of directors are prepared 

and organized and the internal control procedures in place within 

the company. 

It is our responsibility to report to you our observations on the 

information set out in the President’s report on the internal control 

procedures relating to the preparation and processing of financial 

and accounting information. 

We performed our procedures in accordance with professional guide- 

The Statutory Auditors 

lines applicable in France. These require us to perform procedures to 

assess the fairness of the information set out in the President’s report 

on the internal control procedures relating to the preparation and 

processing of financial and accounting information. These procedures 

notably consisted of: 

obtaining an understanding of the objectives and general organization 

of internal control, as well as the internal control procedures 

relating to the preparation and processing of financial and 

accounting information, as set out in the President’s report; 

obtaining an understanding of the work performed to support 

the information given in the report. 

On the basis of these procedures, we have no matters to report in 

connection with the information given on the internal control procedures 

relating to the preparation and processing of financial and 

accounting information, contained in the President of the board’s 

report, prepared in accordance with article L.225-37 of the French 

Commercial Code (Code de commerce). 

Neuilly-sur-Seine, February 15, 2007 Paris La Défense, February 15, 2007 

PricewaterhouseCoopers Audit KPMG Audit 

Division of KPMG S.A. 


Bernard RASCLE Frédéric QUÉLIN 

Partner

GROUP CONSOLIDATED 

FINANCIAL STATEMENTS 

STATUTORY AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS .................................................................... 62 

CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2004, 2005 AND 2006 .............................. 63 

CONSOLIDATED BALANCE SHEETS AT DECEMBER 31, 2004, 2005 AND 2006 ................................................................................... 64 

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2004, 2005 AND 2006 ...................... 65 

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2004, 2005 AND 2006 ........ 66 

CONSOLIDATED STATEMENTS OF RECOGNIZED INCOME AND EXPENSE 

FOR THE YEARS ENDED DECEMBER 31, 2004, 2005 AND 2006 ............................................................................................................ 67 

NOTES TO THE GROUP CONSOLIDATED FINANCIAL STATEMENTS ................................................................................................... 68 

Note 1 – Accounting policies .......................................................................................................................................................................... 68 

Note 2 – Change in accounting method ......................................................................................................................................................... 74 

Note 3 – Changes in Group structure............................................................................................................................................................. 75 

Note 4 – Revenues .......................................................................................................................................................................................... 75 

Note 5 – Operating expenses by nature ......................................................................................................................................................... 76 

Note 6 – Other operating income and expense, net ....................................................................................................................................... 76 

Note 7 – Finance costs, net ............................................................................................................................................................................. 77 

Note 8 – Other financial income and expense, net ........................................................................................................................................ 78 

Note 9 – Income tax expense ......................................................................................................................................................................... 78 

Note 10 – Shareholders’ equity ....................................................................................................................................................................... 80 

Note 11 – Goodwill and intangible assets ...................................................................................................................................................... 84 

Note 12 – Property, plant and equipment ...................................................................................................................................................... 86 

Note 13 – Deferred taxes ................................................................................................................................................................................ 87 

Note 14 – Other non-current assets ............................................................................................................................................................... 90 

Note 15 – Accounts and notes receivable ....................................................................................................................................................... 90 

Note 16 – Other receivables and income taxes .............................................................................................................................................. 91 

Note 17 – Net cash and cash equivalents ....................................................................................................................................................... 91 

Note 18 – Derivative instruments ................................................................................................................................................................... 96 

Note 19 – Provisions for pensions and other post-employment benefits....................................................................................................... 98 

Note 20 – Current and non-current provisions .............................................................................................................................................. 103 

Note 21 – Other non-current liabilities .......................................................................................................................................................... 103 

Note 22 – Accounts and notes payable .......................................................................................................................................................... 103 

Note 23 – Other payables and income taxes .................................................................................................................................................. 103 

Note 24 – Group management compensation................................................................................................................................................ 104 

Note 25 – Off balance sheet commitments..................................................................................................................................................... 104 

Note 26 – Segment Information ..................................................................................................................................................................... 105 

Note 27 – Number of employees .................................................................................................................................................................... 111 

Note 28 – Subsequent events ......................................................................................................................................................................... 111 

Note 29 – List of consolidated companies by country ................................................................................................................................... 113 


61

62 ANNUAL 

STATUTORY AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS 

YEAR ENDED DECEMBER 31, 2006 

This is a free translation into English of the Statutory Auditors’ report issued in French and is provided solely for the convenience of English 

speaking users. The Statutory Auditors’ report includes information specifically required by French law in such reports, whether modified or not. This 

information is presented below the opinion on the consolidated financial statements and includes an explanatory paragraph discussing the auditors’ 

assessments of certain significant accounting and auditing matters. These assessments were considered for the purpose of issuing an audit opinion 

on the consolidated financial statements taken as a whole and not to provide separate assurance on individual account captions or on information 

taken outside of the consolidated financial statements. 

This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France. 

To the Shareholders, 

Following our appointment as statutory auditors by your Annual General 

Meeting, we have audited the accompanying consolidated financial statements 

of CAP GEMINI S.A. for the year ended December 31, 2006. 

The consolidated financial statements have been approved by the Board 

of Directors. Our role is to express an opinion on these financial statements 

based on our audit. 

I - Opinion on the consolidated financial statements 

We conducted our audit in accordance with professional standards 

applicable in France. Those standards require that we plan and 

perform the audit to obtain reasonable assurance about whether the 

consolidated financial statements are free of material misstatement. 

An audit includes examining, on a test basis, evidence supporting 

the amounts and disclosures in the financial statements. An audit 

also includes assessing the accounting principles used and significant 

estimates made by management, as well as evaluating the overall 

presentation of the financial statements. We believe that our audit 

provides a reasonable basis for our opinion. 

In our opinion, the consolidated financial statements give a true 

and fair view of the assets and liabilities and of the financial position 

of the Group as at December 31, 2006 and of the results of 

its operations for the year then ended in accordance with IFRSs as 

adopted by the EU. 

II - Justification of our assessments 

In accordance with the requirements of article L.823-9 of the French 

Commercial Code (Code de commerce) relating to the justification of 

our assessments, we bring to your attention the following matters: 

Note 2 to the consolidated financial statements describes the change 

in accounting methods that took place during the year following 

the application of the amendment to IAS 19 - “Employee Benefits: 

Actuarial Gains and Losses, Group Plans and Disclosures”, concerning 

the recognition in consolidated equity of actuarial gains 

and losses relating to defined benefit plans. In accordance with 

IAS 8, comparative information for 2005 and 2004 presented in 

the consolidated financial statements was restated to retrospectively 

take account of the application of this revised standard. Therefore, 

the comparative information differs from the consolidated financial 

statements published in 2005. 

As part of our assessments of the accounting principles adopted by 

the Group, we verified that the financial statements for 2005 and 

2004 were correctly restated, and the information provided in this 

respect in Note 2 to the consolidated financial statements. 

Note 1.F to the consolidated financial statements sets out the 

methods used to account for revenues and costs related to longterm 

contracts. 

As part of our assessment of the accounting rules and principles 

adopted by the Group, we verified that the above-mentioned 

accounting methods and the related information provided in the 

note above were appropriate, and ensured they were properly 

applied. We also obtained assurance that the estimates used were 

reasonable. 

Deferred tax assets amounting to €888 million are recorded in the 

consolidated balance sheet. Note 13 to the consolidated financial 

statements describes the methods used to calculate these assets. 

As part of our assessments, we verified the overall consistency of 

the information and assumptions used to calculate these assets. 

Net intangible assets carried in the consolidated balance sheet 

include €1,849 million in unamortized goodwill. The accounting 

principles used and the methods applied to determine the value 

in use of these assets are described in notes 1.I and 11 to the 


As part of our assessments, we verified whether the approach 

applied was correct and that the assumptions used and resulting 

valuations were consistent overall. 

The assessments were made in the context of our audit of the consolidated 

financial statements taken as a whole, and therefore contributed 

to the opinion we formed which is expressed in the first 

part of this report. 

III - Specific verification 

In accordance with professional standards applicable in France, we 

have also verified the information given in the Group’s management 

report. We have no matters to report as to its fair presentation and 

its consistency with the consolidated financial statements. 







Partner

CONSOLIDATED STATEMENTS OF INCOME 

FOR THE YEARS ENDED DECEMBER 31, 2004, 2005 AND 2006 


Notes 2004 (1) 2005 2006 

Amount % Amount % Amount % 

Revenues 4 6,235 100 6,954 100 7,700 100 

Cost of services rendered 5 4,712 75.6 5,377 77.3 5,920 76.9 

Selling expenses 5 611 9.8 524 7.6 508 6.6 

General and administrative expenses 5 936 15.0 828 11.9 825 10.7 

Operating margin (24) (0.4) 225 3.2 447 5.8 

Other operating income and expense, net 6 (257) (4.1) (11) (0.1) (113) (1.5) 

Operating profit/(loss) (281) (4.5) 214 3.1 334 4.3 

Finance costs, net 7 (28) (0.5) (24) (0.4) (10) (0.1) 

Other financial income and expense, net 8 1 - (14) (0.2) (18) (0.2) 

Finance expense, net (27) (0.5) (38) (0.6) (28) (0.3) 

Income tax expense 9 (226) (3.6) (35) (0.5) (13) (0.2) 

Profit/(loss) for the year (534) (8.6) 141 2.0 293 3.8 

Attributable to: 

Equity holders of the parent (534) (8.6) 141 2.0 293 3.8 

Minority interests - - - - - - 

Note 2004 (1) 2005 2006 


Basic earnings/(loss) per share (in euros) 10 (4.07) 1.07 2.21 


Diluted earnings/(loss) per share (in euros) 10 (4.02) 1.06 2.07 

(1) Restated in accordance with IFRS. 


63

64 ANNUAL 

CONSOLIDATED BALANCE SHEETS 

AT DECEMBER 31, 2004, 2005 AND 2006 

December 31, 

2004 (1) 

December 31, 

2005 

December 31, 

2006 


ASSETS 

Notes 

Goodwill 11 1,774 1,809 1,849 

Intangible assets 11 189 142 122 

Property, plant and equipment 12 449 399 375 

Total fixed assets (3) 2,412 2,350 2,346 

Deferred taxes (2) 13 778 828 888 

Other non-current assets (2) (3) 14 185 164 295 

TOTAL NON-CURRENT ASSETS 3,375 3,342 3,529 

Accounts and notes receivable (3) 15 1,773 1,798 2,063 

Other receivables and income taxes (3) 16 219 250 214 

Assets held for sale 17 - - 

Short-term investments 17-18 1,001 1,805 2,460 

Cash 17 251 416 442 

TOTAL CURRENT ASSETS 3,261 4,269 5,179 

TOTAL ASSETS 6,636 7,611 8,708 

December 31, 

2004 (1) 

December 31, 

2005 

December 31, 

2006 


EQUITY AND LIABILITIES 

Notes 

Share capital 1,051 1,053 1,153 

Additional paid-in capital 2,226 2,229 2,659 

Retained earnings and other reserves (2) 13 (673) (408) 

Profit/(loss) for the year 

Capital and reserves attributable to equity holders 

(534) 141 293 

of the parent 2,756 2,750 3,697 

Minority interests - - - 

TOTAL EQUITY 2,756 2,750 3,697 

Long-term financial debt 17-18 768 1,145 1,160 

Deferred taxes 13 95 121 118 

Provisions for pensions and other post-employment benefits (2) 19 458 696 591 

Non-current provisions 20 19 14 74 

Other non-current liabilities 21 145 138 122 

TOTAL NON-CURRENT LIABILITIES 1,485 2,114 2,065 

Short-term financial debt and bank overdrafts 17-18 200 171 107 

Accounts and notes payable (3) 22 1,544 1,881 2,019 

Advances received from customers (3) 15 538 609 683 

Current provisions 20 20 20 24 

Other payables and income taxes 23 93 66 113 

TOTAL CURRENT LIABILITIES 2,395 2,747 2,946 

TOTAL EQUITY AND LIABILITIES 6,636 7,611 8,708 


(2) The balance sheets at December 31, 2004 and 2005 have been restated in line with the amendment to IAS 19 (see Note 2 – “Change in accounting 

method”). 

(3) Certain reclassifications have been made in relation to the amounts originally reported in the 2005 annual report in order to provide more accurate 

information (see Note 1 – “Accounting policies”). 

REPORT 2006 Capgemini

CONSOLIDATED STATEMENTS OF CASH FLOWS 


in millions of euros Notes 2004 (1) 2005 2006 

Profit/(loss) for the year (534) 141 293 

Impairment of goodwill 6 19 6 3 

Depreciation, amortization and write-downs of fixed assets 

Additions to provisions and other non cash items, net 

11-12 213 200 167 

(excluding current assets) 24 28 97 

Gains and losses on disposals of assets (14) (166) 6 

Expense relating to stock options and share grants 6 4 12 17 

Finance costs, net 7 28 24 10 

Income tax expense 9 226 35 13 

Unrealized gains and losses on remeasurement at fair value 18 - - 5 

Cash flows from operations before finance costs, 

net and income tax (A) (34) 280 611 

Income tax paid (B) 

Change in accounts and notes receivable and advances received from 

4 (36) (31) 

customers (2) 134 17 (181) 

Changes in accounts and notes payable (2) 132 188 59 

Change in tax and other receivables/payables 82 93 120 

Change in operating working capital (C) 348 298 (2) 

NET CASH FROM OPERATING ACTIVITIES (D=A+B+C) 318 542 578 

Acquisitions of property, plant and equipment and intangible assets 11-12 (125) (106) (101) 

Proceeds from disposals of property, plant and equipment and intangible assets 24 14 27 

(101) (92) (74) 

Acquisitions of consolidated companies (55) (3) (33) 

Proceeds from disposals of businesses and consolidated companies 6 18 194 - 

Net proceeds/payments from disposals/acquisitions of non-consolidated 

companies 70 5 (136) 

Payments related to derivative instruments - (16) - 

Net proceeds/payments relating to other investing activities (10) (2) 19 

23 178 (150) 

Effect of changes in Group structure (5) (6) 6 

NET CASH FROM/(USED IN) INVESTING ACTIVITIES (E) (83) 80 (218) 

Increase in share capital - 5 517 

Dividends paid - - (66) 

Net proceeds/payments relating to treasury stock transactions (3) - (2) 2 

Increase in financial debt 17 43 474 45 

Repayments of financial debt 17 (199) (183) (108) 

Finance costs, net 7 (28) (24) (10) 

NET CASH FROM/(USED IN) FINANCING ACTIVITIES (F) (184) 270 380 

NET CHANGE IN CASH AND CASH EQUIVALENTS (G=D+E+F) 51 892 740 

Effect of exchange rate movements on cash and cash equivalents (H) (9) 12 (17) 

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR (I) 17 1,190 1,232 2,136 

CASH AND CASH EQUIVALENTS AT END OF YEAR (G+H+I) 17 1,232 2,136 2,859 


(2) In 2004 and 2005, advances received from customers have been reclassified within “change in accounts and notes receivables”. 

(3) In 2004 and 2005, net proceeds/payments relating to treasury stock transactions have been reclassified under net cash from/(used in) financing 

activities. 


65

66 ANNUAL 

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY 



Number of 

shares 

Share 

capital 

Additional 

paid-in 

capital 

Treasury 

stock 

(2) 

Consolidated 

retained 

earnings 

and other 

reserves 

Translation 

adjustments 

Total equity 

(3) 

AT JANUARY 1, 2004 (1) 131,165,349 1,049 2,220 (5) 43 - 3,307 

Increase in share capital upon exercise of options (4) 6,700 - - - - - - 

Net increase in share capital for the acquisition of 

Transiciel 211,129 2 5 - - - 7 

Transiciel earn-out payment (6) - - - - 9 - 9 

Disposal of 209,477 treasury shares returned to the 

Company in 2003 - - 1 5 - - 6 

Valuation of stock options (4) - - - - 4 - 4 

Income and expense recognized directly in equity - - - - (33) (10) (43) 

Loss for the year - - - - (534) - (534) 

AT DECEMBER 31, 2004 (1) 131,383,178 1,051 2,226 - (511) (10) 2,756 

Increase in share capital upon exercise of options (4) 198,800 2 3 - - - 5 

Transiciel earn-out payment (6) - - - - 2 - 2 

Elimination of 85,000 treasury shares purchased 

under the share buyback program (8) - - - (2) - - (2) 

Consolidation and elimination of 576,438 shares 

attributed or attributable to employees of the 

Capgemini Group (4) - - - (16) 19 - 3 


Income and expense recognized directly in equity - - - - (192) 26 (166) 

Profit for the year - - - - 141 - 141 

AT DECEMBER 31, 2005 131,581,978 1,053 2,229 (18) (530) 16 2,750 

Increase in share capital upon exercise of options (4) 790,393 7 12 - - - 19 

Dividends paid out for 2005 (5) - - - - (66) - (66) 

Issue of 312,127 treasury shares in connection 

with the Transiciel earn-out mechanism (6) 

Reversal of provision for the Transiciel earn-out 

312,127 2 9 - - - 11 

mechanism (6) - - - - (11) - (11) 

Issue of 11,397,310 new shares in connection 

with the increase in share capital of December 6, 

2006 (7) 11,397,310 91 407 - - - 498 

Disposal of 84,779 treasury shares returned to the 

Company - - 2 - 1 - 3 

Elimination of 4,720 shares in connection with the 

share buyback program (8) 

Remeasurement and elimination of shares 

attributed or attributable to employees of the 

- - - (1) 2 - 1 

Capgemini Group (4) - - - 6 (3) - 3 


Income and expense recognized directly in equity - - - - 198 (17) 181 

Profit for the year - - - - 293 - 293 

AT DECEMBER 31, 2006 144,081,808 1,153 2,659 (13) (101) (1) 3 ,697 



(2) See Note 1.K. – “Treasury stock”. 

(3) There were no minority interests at December 31, 2006 (see Note 3.B. – “Changes in Group structure: 2006”). 

(4) The method for measuring and recognizing stock options and share grants is described in Note 10.A. – “Stock option plans and share grants”. 

(5) Dividends paid to shareholders for 2005 totaled €66 million (€0.50 per share). 

(6) The second tranche of the alternative public exchange offer for Transiciel shares launched by Cap Gemini S.A. on October 20, 2003, contained an 

earn-out mechanism. At December 31, 2005, this additional purchase consideration was estimated at €11 million. 

In accordance with section 1.4.13.6 of the prospectus approved on October 29, 2003 by the Commission des Opérations de Bourse under reference 

number 03-935, the third-party mediator authorized, on June 27, 2006, a maximum number of 315,332 Cap Gemini shares to be allocated on exercise 

of 8,137,600 equity warrants. At the close of the exercise period for these equity warrants (June 30, 2006 to July 31, 2006), 8,055,558 warrants had 

been exercised, giving rise to the issue of 312,127 new shares during the second half of 2006 totaling €11 million. 

The provisions set aside in 2004 and 2005 in connection with the earn-out mechanism have been reversed (€9 million and €2 million, respectively). 

(7) In connection with the increase in share capital of December 6, 2006, the Company issued 11,397,310 new Cap Gemini shares (after exercise of 

the greenshoe option relating to 1,036,119 shares) with no preferential subscription rights or priority timing for existing shareholders, at a price of 

€44.50 per share. Gross proceeds from this share issue including the issue premium amounted to €507 million. Issue costs totaled €9 million. 

(8) See Note 10.B. – “Share buyback program”. 

CONSOLIDATED STATEMENTS OF RECOGNIZED INCOME AND EXPENSE 


in millions of euros 2004 (1) 2005 2006 

Profit/(loss) for the year (534) 141 293 

Purchase of a call option on Cap Gemini shares to neutralize the dilutive 

impacts of the “OCEANE 2003” convertible/exchangeable bonds issued on 

June 24, 2003 (2) - (16) - 

Equity component of the June 16, 2005 bond issue (“OCEANE 2005”) (3) - 40 - 

Actuarial gains and losses related to provisions for pensions and other 

post-employment benefits (4) (36) (220) 150 

Deferred taxes recognized in equity (5) 3 5 43 

Translation adjustements (10) 26 (17) 

Other - (1) 5 

Income and expense recognized directly in equity (43) (166) 181 

TOTAL RECOGNIZED INCOME AND EXPENSE (577) (25) 474 


(2) Simultaneously to the “OCEANE 2005” bond issue, the Group decided to neutralize in full the potential dilutive impact of the “OCEANE 2003” 

convertible/exchangeable bonds issued on June 24, 2003 for a nominal amount of €460 million and due on January 1, 2010 via the purchase of a call 

option for €16 million (before tax) on approximately 9 million Cap Gemini shares, representing the total number of shares underlying the “OCEANE 

2003” convertible/exchangeable bond issue. 

(3) On June 16, 2005, the Group issued bonds convertible/exchangeable into new or existing Cap Gemini shares (“OCEANE 2005”) for a nominal amount 

of €437 million. These bonds mature on January 1, 2012 (see Note 17 – “Net cash and cash equivalents”). 

(4) See Note 2 – “Change in accounting method” for 2004 and 2005 and Note 19 – “Provisions for pensions and other post-employment benefits” for 

2006. Actuarial gains and losses related to provisions for pensions and other post-employment benefits in the table above are based on the average 

exchange rate for each corresponding accounting period. 

(5) In 2004, 2005 and 2006, deferred taxes mainly relate to the actuarial gains and losses for the period recognized in equity. In 2005, this item also 

includes deferred tax liabilities relating to the equity component of the bonds issued on June 16, 2005 for an amount of €14 million (see (3) above) 

and deferred tax assets of €6 million relating to the call option on Cap Gemini shares (see (2) above). Deferred tax assets for 2006 include particularly 

the recognition in the United Kingdom of tax assets in an amount of €52 million. This amount concerns items recognized directly in equity between 

2004 and 2006 and related to provisions for pensions and other post-employment benefits. 


67

68 ANNUAL 

NOTES TO THE GROUP CONSOLIDATED FINANCIAL STATEMENTS 

NOTE 1 – ACCOUNTING POLICIES 

Pursuant to European Commission Regulation No. 1606/2002 of 

July 19, 2002, the 2006 consolidated financial statements have been prepared 

in accordance with the International Accounting Standards (IAS) 

and International Financial Reporting Standards (IFRS) issued by the 

International Accounting Standards Board (IASB), as well as the related 

interpretations endorsed by the European Union at December 31, 

2006 and published in the Official Journal of 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 IFRSs. 

The Group has elected to apply from January 1, 2004, IAS 32 – “Financial 

Instruments: Disclosure and Presentation”, IAS 39 – “Financial 

Instruments: Recognition and Measurement”, and the amendment to 

IAS 39 entitled “Cash Flow Hedge Accounting of Forecast Intragroup 

Transactions”. 

The Group has not opted for early application of certain standards 

and interpretations issued by the IASB or the International Financial 

Reporting Interpretations Committee (IFRIC) and endorsed by 

the European Union at December 31, 2006. This essentially concerns: 

IFRS 7 – “Financial Instruments: Disclosures”. 

Amendment to IAS 1 – “Presentation of Financial Statements: 

Capital Disclosures”. 

The Group has not opted for early application of standards and 

interpretations issued by the IASB or IFRIC but not yet endorsed 

by the European Union at December 31, 2006. This essentially 

concerns IFRIC 10 – “Interim Financial Reporting and Impairment”, 

whose early adoption would not have had any impact on the 2006 


Certain reclassifications have been made in relation to the amounts 

originally reported in the 2005 annual report in order to provide 

more accurate information: 

“Financial assets” were reclassified to “Other non-current assets”. 

“Receivables from social security bodies” were reclassified within 

“Other receivables and income taxes”. 

The 2006 consolidated financial statements and related notes 

were approved by the Board of Directors on February 14, 2007. 

The principal accounting policies applied in 

the preparation of the consolidated financial 

statements are described hereafter: 

A) Consolidation methods 

The accounts of companies directly or indirectly controlled by Cap 

Gemini S.A. are fully consolidated. Cap Gemini S.A. is deemed to 

exercise control over an entity when it has the power to govern the 


financial and operating policies of the entity so as to obtain benefits 

from its activities. 

Investments in companies which Cap Gemini S.A. directly or indirectly 

controls jointly with a limited number of other shareholders 

are accounted for by the method of proportional consolidation. This 

method consists of consolidating the income and expenses, assets 

and liabilities of jointly-controlled companies, on a line-by-line basis, 

based on the Group’s percentage interest in their capital. 

Investments in associated companies over whose management 

Cap Gemini S.A. exercises significant influence, without however 

exercising full or joint control, are accounted for by the equity method. 

This method consists of replacing the cost of the shares with an amount 

corresponding to the Group’s equity in the underlying net assets and 

of recording in the income statement the Group’s equity in net 

income. 

Details of the scope of consolidation are provided in Note 29 – “List 

of consolidated companies by country”. 

All consolidated companies prepared their accounts at December 31, 

2006 in accordance with the accounting policies and methods applied 

by the Group. 

Intragroup transactions are eliminated on consolidation, as well as 

intercompany profits. 

The Group does not control any special purpose entities that have 

not been consolidated. 

B) Use of estimates 

The preparation of financial statements involves the use of estimates 

and assumptions which may have an impact on the reported values 

of assets and liabilities at the balance sheet date or on certain items 

of income and expense for the year. Estimates are based on economic 

data and assumptions which are likely to vary over time and are 

subject to a degree of uncertainty. They mainly concern revenue 

recognition on contracts, the recognition of deferred tax assets, asset 

impairment tests, and current and non-current provisions. 

C) Foreign currency translation 

The consolidated financial statements presented in this report have 

been prepared in euros. 

The balance sheets of foreign subsidiaries are translated into euros 

at year-end rates of exchange with the exception of equity accounts, 

which are carried at their historical values. Income statements of 

foreign subsidiaries are translated into euros at the average rates 

of exchange for the year. However, for certain material transactions, 

it may be relevant to use a specific rate of exchange. Differences 

arising from the translation at different rates are recognized 

directly in equity under “Translation adjustments” and have 

no impact on profit.

Exchange differences arising on monetary items which form an 

integral part of the net investment in foreign subsidiaries are 

recognized in equity under “Translation adjustments”, for their netof-tax 

amount. 

Exchange differences on receivables and payables denominated in 

a foreign currency are recorded as operating income or expense or 

financial income or expense, depending on the type of transaction 

concerned. 

The exchange rates used to translate the financial statements of the Group’s main subsidiaries into euros are as follows: 

Average exchange rates Rates at December 31 

2004 2005 2006 2004 2005 2006 

US dollar 0.80512 0.80461 0.79710 0.73416 0.84767 0.75930 

Pound sterling 1.47413 1.46235 1.46681 1.41834 1.45921 1.48920 

Canadian dollar 0.61874 0.66459 0.70258 0.60916 0.72860 0.65441 

Swedish krona 0.10960 0.10779 0.10808 0.11086 0.10651 0.11061 

Australian dollar 0.59241 0.61292 0.60016 0.57277 0.62077 0.59913 

Norwegian krona 0.11950 0.12485 0.12434 0.12141 0.12523 0.12139 

Indian rupee 0.01777 0.01823 0.01760 0.01684 0.01867 0.01716 

Polish zloty 0.22119 0.24873 0.25682 0.24483 0.25907 0.26103 

D) Statement of income 

Income and expenses are analyzed in the consolidated statement of 

income by function, reflecting the specific nature of the Group’s business, 

as follows: cost of services rendered (corresponding to the costs 

incurred for the execution of client projects), selling expenses, and 

general and administrative expenses. These elements do not include 

the charge resulting from the deferral of the fair value of shares and 

stock options granted to employees. 

These three captions together represent ordinary operating expenses 

which are deducted from revenues to obtain operating margin, one 

of the main Group business performance indicator. 

Operating profit is obtained by deducting other operating income 

and expense, net, from operating margin. Other operating income 

and expense, net, include the charge resulting from the deferral 

of the fair value of shares and stock options granted to employees, 

and non-recurring revenues or expenses such as provisions 

for impairment of goodwill, capital gains or losses on disposals 

of consolidated companies or businesses, and restructuring 

costs incurred under a detailed formal plan approved by the 

Board of Directors, the main features of which have been 

announced. 

Profit for the year is subsequently obtained by taking into account 

the following items: 

Finance costs, net, which include interest on borrowings calculated 

based on the effective interest rate, less income from cash and cash 

equivalents. 

Other financial income and expense, net, which primarily corresponds 

to the impact of measuring financial instruments at 

fair value, disposal gains and losses and impairment of investments 

in non-consolidated companies, net interest costs on 

defined benefit plans, exchange gains and losses on financial 

items, and other financial income and expense on miscellaneous 

financial assets and liabilities calculated using the effective 

interest method. 

Current and deferred income tax expense. 

E) Earnings per share 

Earnings per share are measured as follows: 

Basic earnings per share are calculated by dividing profit or 

loss attributable to ordinary equity holders of the parent by the 

weighted average number of ordinary shares outstanding during 

the period, excluding treasury stock. The weighted average 

number of ordinary shares outstanding is adjusted by the number 

of ordinary shares bought back or issued during the period and 

is calculated by reference to the date of redemption or issue of 

shares during the year. 

Diluted earnings per share are calculated by dividing profit or 

loss attributable to equity holders of the parent as used to calculate 

basic earnings per share by the weighted average number 

of ordinary shares outstanding, excluding treasury stock, both 

items being adjusted, where appropriate, for the effects of all 

potentially dilutive ordinary shares corresponding to (i) stock 

options (see Note 10.A. – “Stock option plans and share grants”) 

and (ii) bonds convertible/exchangeable into existing or new Cap 

Gemini shares. 

F) Revenue recognition and recognition of the cost 

of services rendered 

The method for recognizing revenues and costs depends on the nature 

of the services rendered: 

A. TIME AND MATERIALS CONTRACTS: 

Revenues and costs relating to time and materials contracts are recognized 

as services are rendered. 

B. LONG-TERM FIXED PRICE CONTRACTS: 

Revenues from long-term fixed price contracts, including systems 

development and integration contracts, are recognized under the 

“percentage-of-completion” method. Costs related to long-term fixed 

price contracts are recognized as they are incurred. 

C. OUTSOURCING CONTRACTS: 

Revenues from outsourcing agreements are recognized over the life 

of the contract as the services are rendered. When the services are 


69

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GROUP CONSOLIDATED FINANCIAL STATEMENTS 


made up of various different components which are not separately 

identifiable, the related revenues are recognized on a straight-line 

basis over the life of the contract. 

The related costs are recognized as they are incurred. However, 

a portion of costs incurred in the initial phase of outsourcing 

contracts (transition and/or transformation costs) may be deferred 

when they relate directly to the specific contract, relate to future 

activity on the contract and/or will generate future economic 

benefits, and are recoverable. These costs are allocated to workin-progress 

and any repayment is recorded as a deduction of the 

costs incurred. 

When the projected cost of the contract exceeds contract revenues, 

an expense is recognized for the amount of the difference. 

Revenues receivable from these contracts are recognized in assets 

under “Accounts and notes receivable” when invoiced to customers, 

and under “Accrued income” when they are not yet invoiced. 

G) Goodwill and intangible assets 

A. GOODWILL 

Goodwill represents the excess of the cost of a business combination 

over the Group’s interest in the net fair value of the identifiable 

assets, liabilities and contingent liabilities at the date of acquisition, 

which is generally the date on which control is acquired. Goodwill 

is not amortized. 

The cost of a business combination is allocated by recognizing the 

identifiable assets acquired and liabilities and contingent liabilities 

assumed at their fair values at the acquisition date, except for noncurrent 

assets classified as held for sale, which are recognized at fair 

value less costs to sell. 

If the Group’s interest in the net fair value of the identifiable assets, 

liabilities and contingent liabilities is greater than the cost of the 

business combination, the excess is recognized immediately in the 

statement of income for the year of the acquisition, once the value 

of the identifiable assets, liabilities and contingent liabilities of the 

acquiree as well as the valuation of the cost of the business combination 

have been verified. 

B. INTANGIBLE ASSETS 

Computer software and user rights acquired on an unrestricted 

ownership basis, as well as software developed for internal use which 

has a positive, lasting and quantifiable effect on future results, are 

capitalized and amortized over three to five years. 

The capitalized costs of software developed for internal use represent 

costs that directly relate to its production, i.e., the salary costs of staff 

that developed the software concerned, as well as a directly attributable 

portion of production overheads. 


H) Property, plant and equipment 

The carrying amount of property, plant and equipment corresponds 

to the historical cost of these items, less accumulated depreciation 

and impairment. No items of property, plant and equipment have 

been revalued. Buildings owned by the Group are measured based 

on the components approach. 

The cost of property, plant and equipment does not include any 

borrowing costs. 

Subsequent expenditure (replacement and compliance costs of property, 

plant and equipment) are capitalized and depreciated over the 

remaining useful life of the asset concerned. Ongoing maintenance 

costs are expensed as incurred. 

Depreciation is calculated on a straight-line basis over the estimated 

useful lives of the assets concerned. It is calculated based on the 

acquisition cost, less the residual value. 

Property, plant and equipment are depreciated over the following 

estimated useful lives: 

Buildings . . . . . . . . . . . . . . . . . . . . . . . . . .20 to 40 years 

Fixtures and fittings . . . . . . . . . . . . . . . . . . . . . . 10 years 

Computer equipment . . . . . . . . . . . . . . . . . . . 3 to 5 years 

Office furniture and equipment . . . . . . . . . . . . . 5 to 10 years 

Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 years 

Other equipment . . . . . . . . . . . . . . . . . . . . . . . . . 5 years 

Residual values and estimated useful lives are reviewed at each balance 

sheet date. 

The sale of property, plant and equipment gives rise to disposal gains 

and losses corresponding to the difference between the selling price 

and carrying amount of the asset concerned. 

I) Impairment of goodwill, intangible and tangible 

assets 

Intangible and tangible assets are tested for impairment when there is 

an indication at the balance sheet date that their recoverable amount 

may be less than their carrying amount. Goodwill is tested for impairment 

at least once a year. 

The impairment test consists of assessing the recoverable amount of 

each asset or group of assets (cash generating unit – CGU). The assessment 

is notably performed using the discounted cash flows method 

and the recoverable amount of each CGU is calculated based on 

various parameters used in the budget procedure and three-year strategic 

plan extrapolated over a period of five years, including growth 

and profitability rates considered reasonable. Standard discount rates 

(based on the weighted average cost of capital) and standard long-

term growth rates for the period beyond five years are applied to all 

valuations of CGUs. These rates are determined based on analyses 

of the business segments in which the Group operates. When the 

recoverable amount of a CGU is less than its carrying amount, the 

impairment loss is deducted from goodwill to the extent possible 

and charged to operating profit under “Other operating income and 

expense, net”. 

J) Leases 

Contracts and agreements entered into by the Group are analyzed 

to determine if they are, or contain, leases. 

Leases that do not transfer to the Group substantially all of the risks 

and rewards incidental to ownership are classified as operating 

leases, and give rise to lease payments recorded in expense over the 

lease term. 

However, when the Group assumes substantially all of the risks and 

rewards incidental to ownership, the lease is classified as a finance 

lease and is recognized as an asset at the lower of the fair value of the 

leased asset and the present value of future minimum lease payments, 

with the related obligation recorded in liabilities within financial debt. 

The asset is depreciated over the period during which it is expected 

to be used by the Group and the obligation is amortized over the 

lease term. Deferred tax is recognized accordingly. 

K) Treasury stock 

Cap Gemini S.A. shares held by the Company or by any consolidated 

companies are shown as a deduction from equity, at cost. The proceeds 

from sales of treasury stock are taken directly to equity, net of 

the tax effect, so that the gain or loss on the sale has no impact on 

profit for the period. 

L) Deferred taxes 

Deferred taxes are recorded to take into account temporary differences 

between the carrying amounts of certain assets and liabilities 

and their tax basis. 

Deferred tax is recognized in profit or loss for the period when the 

related transaction or other event is recognized in profit or loss, except 

to the extent that the tax arises from a transaction or event which 

is charged or credited directly to equity, in which case the related 

deferred tax is also recognized directly in equity (see the consolidated 

statement of recognized income and expense). 

Deferred taxes are accounted for using the balance sheet liability 

method and are measured at the tax rates that are expected to be 

applied to the period when the asset is realized or the liability is 

settled, based on tax rates (and tax laws) that have been enacted 

or substantively enacted by the balance sheet date. Adjustments 

to deferred taxes for changes in tax rates (or tax laws) previously 

recognized in the statement of income or in equity are recognized 

in the statement of income or in equity, respectively, for the period 

in which these changes become effective. 

Deferred tax assets are recognized when it is probable that taxable 

profits will be available against which the deferred tax asset can be 

utilized. The carrying amount of deferred tax assets is reviewed at each 

balance sheet date. This amount is reduced to the extent that it is no 

longer probable that sufficient taxable profit will be available to allow 

the benefit of all or part of that deferred tax asset to be utilized. Any 

such reduction is reversed when it becomes probable that sufficient 

taxable profit will be available. 

Deferred tax assets and liabilities are offset if, and only if, the subsidiaries 

have a legally enforceable right to set off current tax assets against 

current tax liabilities, and when the deferred taxes relate to income 

taxes levied by the same taxation authority at the same time. 

M) Financial instruments 

Financial instruments consist of: 

financial assets, which primarily include other non-current assets, 

accounts and notes receivable, other receivables, cash at bank and 

short-term investments; 

financial liabilities, which include long-term financial debt, other 

non-current liabilities, short-term financial debt and bank overdrafts, 

accounts and notes payable and other payables. 

Financial instruments (assets and liabilities) are first booked in the 

balance sheet at their initial fair value. 

The subsequent measurement of financial assets and liabilities is based 

either on their fair value or amortized cost depending on their classification 

in the balance sheet. Financial assets measured at amortized 

cost are subject to tests to assess their recoverable amount as soon as 

there are indicators of a loss in value, and at least at each balance sheet 

date. The loss in value is recognized in the statement of income. 

The fair value of an asset is the amount for which an asset could be 

exchanged, or a liability settled, between knowledgeable, willing 

parties in a arm’s length transaction. 

Amortized cost corresponds to the initial carrying amount (net 

of transaction costs), plus interest calculated using the effective 

interest rate, and less cash outflows (interest payments and repayment 

of principal). Accrued interest (income and expense) is not recorded 

on the basis of the financial instrument’s nominal interest rate, but on 

its effective interest rate (actuarial rate including costs, commissions 

and any redemption premium). 

Financial instruments (assets and liabilities) are derecognized when 

the related risks and rewards of ownership have been transferred, and 

when the Group no longer exercises control over the instruments. 

a) Recognition and measurement of financial assets 

Other non-current assets 

Other non-current assets chiefly comprise: 

i. Shares in non-consolidated companies: 

The Group holds shares in certain companies over whose management 

it does not exercise significant influence or control. 

These shares mainly represent long-term investments supporting 

strategic alliances with the companies concerned. The investments 

in non-consolidated companies are analyzed as available-for-sale 

financial assets and are thus recognized at fair value. For listed 

shares, fair value corresponds to the share price. If the fair value 

cannot be determined reliably, the shares are recognized at cost. 

Shares in non-consolidated companies are recorded as follows: 

– Any change in the fair value of shares in non-consolidated companies 

after initial recognition is recorded through equity. 


71

72 ANNUAL 



– In the event of an objective indication of a decrease in fair 

value (in particular, a significant or prolonged decline in 

the asset’s value), an impairment loss is recognized in profit 

or loss. 

– When the impact of a change in fair value has previously been 

recognized in equity and there is objective evidence that the 

asset is impaired, or in the event of the disposal of the shares, 

the impairment loss or impact of derecognition of the shares 

is dealt with through financial income and expense, and offset 

where appropriate by a full or partial write-back of the amount 

recorded in equity. 

ii. Aides à la construction (building aid program) loans in 

France, security deposits and guarantees, and other longterm 

loans; 

iii. Receivables due from the French Treasury resulting from an 

election to carry back tax losses; 

iv. Receivables which are expected to be settled beyond the normal 

operating cycle of the business to which they relate; and 

v. Non-current derivative instruments. 

These other non-current assets are carried at amortized cost, with 

the exception of: 

shares in non-consolidated companies, which are recognized at 

fair value (see above); 

non-current derivative instruments, which are recognized at their 

fair value (see below). 

Accounts and notes receivable 

Accounts and notes receivable correspond to the fair value of the 

expected consideration to be received. Where payment is deferred 

beyond the usual periods applied by the Group and whose effect is 

material on the fair value revaluation, the future payments concerned 

are discounted. 

Short-term investments 

Short-term investments are recognized in the balance sheet at their 

fair value at the year end. For listed securities, fair value corresponds 

to market price at the balance sheet date. Gains and losses from 

changes in fair value are recognized in the statement of income under 

“Income from cash and cash equivalents”. Short-term investments 

mainly consist of mutual fund units and negotiable debt securities 

that can be rapidly converted into known amounts of cash that are 

not exposed to any material risk of impairment in value in the event 

of a change in interest rates. 

Derivative instruments 

Derivative instruments are initially recognized at fair value. Except as 

described below concerning hedging instruments, changes in the fair 

value of derivative instruments, estimated based on market rates or data 

provided by the bank counterparties, are recognized in the statement 

of income at the balance sheet date. 


Derivative instruments that qualify for hedge accounting are classified 

as fair value hedges or cash flow hedges in accordance with the 

criteria set out in IAS 39 – “Financial Instruments: Recognition and 

Measurement”. 

The accounting treatment applied to these instruments is as follows: 

For fair value hedges of financial instruments recognized in the 

balance sheet, the change in fair value recognized in profit is offset 

by a symmetrical change in the fair value of the hedged instrument, 

to the extent that the hedge is effective. 

For cash flow hedges of future transactions, (i) the effective portion 

of the change in fair value of the derivative instrument is recorded 

directly in equity and taken to income when the hedged item itself 

affects profit, and (ii) the ineffective portion is recognized directly 

in income. 

The effectiveness of a hedge is demonstrated by means of prospective 

and retrospective tests performed at each balance sheet date. These 

tests are designed to validate whether the hedge qualifies for hedge 

accounting, by demonstrating that the hedging relationship is effective. 

The 80% to 125% range set in IAS 39 for retrospective tests is 

also used for the prospective tests. 

b) Recognition and measurement of financial liabilities 

Long-term financial debt 

Long-term financial debt mainly consists of loans granted by banks, 

bonds and obligations under finance leases. 

Loans granted by banks and bonds are initially recognized at fair 

value and are subsequently measured at amortized cost at each 

period-end up to maturity. 

Fair value determined for the purpose of initial recognition corresponds 

to the present value of future cash outflows discounted 

at the market interest rate, minus transaction costs and any issue 

premiums. 

Regarding convertible bonds, the difference between the nominal 

amount of the bonds and the fair value of the liability component as 

calculated above is recorded under equity. 

In each subsequent period, the interest expense recorded in the 

statement of income corresponds to the theoretical interest charge 

calculated by applying the effective interest rate to the carrying 

amount of the loan. The effective interest rate is calculated when the 

loan is taken out and corresponds to the rate that exactly discounts 

estimated future cash payments through the expected life of the loan 

to the initial fair value of the liability component of the loan. 

The difference between interest expense thus calculated and the 

nominal amount of interest is recorded in profit or loss, with the 

corresponding adjustment posted to liabilities.

Other financial liabilities 

With the exception of derivative instruments, other financial liabilities 

are measured at amortized cost, calculated in accordance with the 

principles set out above. 

Derivative instruments are measured at fair value in accordance with 

the principles set out above in a) Recognition and measurement of 

financial assets. 

N) Net cash and cash equivalents 

Net cash and cash equivalents comprise cash and cash equivalents 

less short- and long-term financial debt. 

Cash and cash equivalents correspond to short-term investments 

and cash, less bank overdrafts and derivative instruments when the 

underlying elements to which these relate are included in net cash 

and cash equivalents. 

O) Pensions and other post-employment benefits 

Defined contribution plans 

Defined contribution plans are funded by contributions paid by 

employees and Group companies to the organizations responsible 

for managing the plans. The Group’s obligations are limited to the 

payment of such contributions which are recorded in the statement 

of income as incurred. 

Defined benefit plans 

Defined benefit plans consist of either: 

Unfunded plans, where benefits are paid directly by the Group. The 

related obligation is covered by a provision corresponding to the 

discounted present value of future benefit payments. Estimates are 

based on regularly reviewed internal and external parameters; 

Funded plans, where the benefit obligation is covered by external 

funds. Group contributions to these external funds are made in 

accordance with the specific regulations in force in each country. 

Obligations under these plans are generally determined by independent 

actuaries using the projected unit credit method. Under 

this method, each period of service gives rise to an additional 

unit of benefit entitlement and each of these units is valued 

separately in order to obtain the amount of the Group’s final 

commitment. 

The resulting obligation is discounted by reference to market yields 

on high quality corporate bonds, of a currency and term consistent 

with the currency and term of the post-employment benefit obligation. 

For funded plans, only the deficit is covered by a provision. 

Current and past service costs – corresponding to an increase in 

the obligation – are respectively recorded in operating expense 

as incurred, over the residual vesting period of the rights concerned. 

The impact during the year of discounting pension benefit obligations, 

as well as any changes in the expected return on plan assets, is 

recorded under “Other financial income and expense, net”. 

Actuarial gains and losses correspond to the effect of changes in 

actuarial assumptions and experience adjustments (i.e., differences 

between projected actuarial assumptions and actual data) on the 

amount of the defined benefit obligation or the value of plan assets. 

The Group has decided to recognize in equity the full amount of 

actuarial gains and losses relating to defined benefit plans in the 

period in which they arise, in line with the amendment to IAS 19 

– “Employee Benefits: Actuarial Gains and Losses, Group Plans and 

Disclosures”, effective January 1, 2006 (see Note 2 – “Change in 

accounting method”). 

P) Stock options granted to employees 

Stock options may be granted to a certain number of Group employees 

entitling them to purchase Cap Gemini shares issued for this purpose 

over a period of five or six years, at an exercise price set when the 

options are granted. 

Stock options are measured at fair value, corresponding to the value 

of the benefit granted to the employee on the grant date. The amount 

is recognized in “Other operating income and expense, net” in the 

statement of income on a straight-line basis over the option vesting 

period, with a corresponding adjustment to equity. 

The fair value of stock options is calculated using the Black and Scholes 

option pricing model which incorporates assumptions concerning 

the option exercise price and the vesting period, the share price at the 

date of grant, implicit share price volatility, and the risk-free interest 

rate. The expense recognized also takes into account staff attrition 

rates for eligible employee categories. 

In accordance with IFRS 1 – “First-time Adoption of International 

Financial Reporting Standards”, only stock options granted after 

November 7, 2002 with a vesting date after January 1, 2005, are 

measured and recognized as “Other operating income and expense, 

net”. Recognition and measurement of stock options granted prior 

to November 7, 2002 is not required. 

Q) Provisions 

A provision is recognized in the balance sheet if, and only if, (i) the 

Group has a present obligation (legal or constructive) as a result of 

a past event; (ii) it is probable that an outflow of resources embodying 

economic benefits will be required to settle the obligation; and 

(iii) a reliable estimate can be made of the amount of the obligation. 

Provisions are discounted when the impact of the time value of 

money is material. 

R) Consolidated statement of cash flows 

The consolidated statement of cash flows analyzes cash flows from 

operating, investing and financing activities. 

S) Segment Information 

The Group’s operations are managed on the basis of geographic 

areas, business segments and its clients’ business lines. Only the 

geographic entities constitute profit centers for which detailed performance 

measurements exist. The primary reporting corresponds to 

the geographic areas housing the Group’s operations. The secondary 

reporting corresponds to the Group’s business segments. 

Costs relating to operations and incurred at Group level on behalf 

of geographic areas and business lines are attributed to the segments 

concerned either directly or on the basis of reasonable assumptions. 

Items that have not been allocated correspond to headquarters’ 

expenses. 

Inter-segment transfer prices are determined based on competitive 

market prices. 


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74 ANNUAL 



T) Exchange gains and losses on intragroup 

transactions 

The results and financial position of a foreign subsidiary are included 

in the Group’s consolidated financial statements using normal consolidation 

procedures, such as the elimination of intragroup balances and 

intragroup transactions. However, an intragroup short- or long-term 

monetary asset (or liability) cannot be eliminated against the corresponding 

intragroup liability (or asset) without showing the results of 

currency fluctuations in the consolidated financial statements. This is 

because the monetary item represents a commitment to convert one 

currency into another and exposes the Group to a gain or loss through 

currency fluctuations. Accordingly, in the consolidated financial 

NOTE 2 – CHANGE IN ACCOUNTING METHOD 

The Group has decided to recognize in equity the full amount of actuarial 

gains and losses relating to defined benefit plans in the period in 

which they arise, in line with the amendment to IAS 19 – “Employee 

Benefits: Actuarial Gains and Losses, Group Plans and Disclosures”, 

effective January 1, 2006. It will no longer use the corridor method, 

which consists of recognizing the portion of net cumulative unrecognized 

actuarial gains and losses that exceeds the greater of (i) 10% 

of the present value of the defined benefit obligation and (ii) 10% 

of the fair value of the plan assets at the balance sheet date, over the 

average remaining service lives of plan participants. 

This change in accounting method was applied retrospectively in 

accordance with the transitional provisions of the amended IAS 19, 

as follows: 

Retrospective impacts of this change in method in the balance sheet are set out below: 



statements, such an exchange difference continues to be recognized 

in profit or loss or is classified in equity if the underlying forms an 

integral part of the net investment in the foreign operation. 

U) Non-current assets held for sale and discontinued 

operations 

Non-current assets that meet the criteria to be classified as held for 

sale, and liabilities relating to discontinued operations are presented 

separately on the face of the balance sheet if their carrying amount 

will be recovered principally through a sale transaction rather than 

through continuing use. These assets and liabilities are measured at 

the lower of the carrying amount and fair value less costs to sell. 

In the statement of income, this change in accounting method did 

not have any impact on the results reported for 2005 and previous 

years as actuarial gains and losses fell within the thresholds 

stipulated by the corridor method. 

In the balance sheet, this change of method resulted in all cumulative 

actuarial gains and losses – previously unrecognized due to the 

application of the corridor method being recorded under provisions 

for pensions and other post-employment benefits – and the 

corresponding deferred tax impacts, with the corresponding entry 

posted in shareholders’ equity. 

December 31, 

2004 (1) 

December 31, 

2005 (1) 

Cumulative impact on provisions for pensions and other post-employment 

benefits 

35 259 

Cumulative impact on deferred tax assets 3 17 

Cumulative impact on equity (32) (242) 

(1) Amounts calculated using the exchange rate applicable at the balance sheet date of the corresponding accounting period. 

Accordingly, at December 31, 2004 and 2005, actuarial gains and losses recognized retrospectively correspond to net actuarial losses of 

€35 million and €259 million, respectively. At December 31, 2005, €244 million related to funded defined benefit plans, and €15 million 

related to unfunded defined benefit plans (see Note 19 – “Provisions for pensions and other post-employment benefits”). 

At December 31, 2006, the application of the new method led to recognition in equity of a net actuarial gain amounting to €150 million 

(excluding deferred taxes), and a corresponding decrease in provisions for pensions and other post-employment benefits (see Note 19 – “Provisions 

for pensions and other post-employment benefits” and the consolidated statement of recognized income and expense).

NOTE 3 – CHANGES IN GROUP STRUCTURE 

A) 2004 and 2005 

The main changes in Group structure in 2004 and 2005 were as 

follows: 

In the United States, the Group formed Capgemini Energy LP as part 

of a ten-year service contract, effective July 1, 2004, with the American 

power company TXU Energy Company LLC. At December 31, 

2004, Capgemini Energy LP, was 97.1%-owned by the Group and 

was fully consolidated. 

In January 2005, the Group sold its 25.22% stake in IS Energy for 

€21 million, further to the exercise by E.ON of the call option it held 

on IS Energy’s shares. 

On June 16, 2005, the Group sold its US healthcare business to the 

Accenture group for €143 million. 

On August 12, 2005, the Group entered into an alliance with the 

Japanese group NTT Data Corporation and sold its 95% stake in 

Capgemini Japan K.K. for €30 million. 

B) 2006 

The main changes in Group structure in 2006 were as follows: 

On September 30, 2006, the Group acquired 100% of the capital of 

German group FuE (FuE-Future Engineering GmbH, FuE-Future 

Engineering & Consulting GmbH and Computer Konzept EDV 

Beratung und Betreuung GmbH). The FuE group is Germany’s 

NOTE 4 – REVENUES 

Revenues break down as follows by geographic areas: 


leading aerospace consulting and engineering firm, based mainly in 

Hamburg, Bremen, Baden-Baden and Toulouse. The Group has a 

headcount of approximately 250. 

The provisional allocation of the acquisition price led to the recognition 

of €3 million in amortizable intangible assets and €29 million 

in goodwill. At the acquisition date, the FuE group’s net assets stood 

at €8 million, including cash and cash equivalents amounting to €5 

million. Its contribution to consolidated revenues and profit for 2006 

is €6 million and €1 million, respectively. 

On October 11, 2006, the Group purchased 51% of the capital of 

Unilever Shared Service Limited (also known as Indigo), a subsidiary 

of Hindustan Lever Limited (Unilever group). Indigo is an administrative, 

financial and control service center for Unilever in India, and 

owns centers in Bangalore and Chennai, employing nearly 600 service 

professionals. Indigo is fully consolidated at December 31, 2006. 

The purchase agreement includes a call/put option for Capgemini/ 

Hindustan Lever Limited on the remaining 49% of Indigo, exercisable 

from October 1, 2008 for a period of six months. If exercised, 

the Group would own 100% of Indigo. At December 31, 2006, the 

Group recognized a financial debt for an amount equal to the present 

value of the option at that date. The difference between the present 

value of the option and the carrying amount of the related minority 

interests is recorded in goodwill. 

The provisional allocation of the acquisition price led to the recognition 

of €2 million in amortizable intangible assets and €20 million in 

goodwill. At the acquisition date, Indigo’s net assets stood at €1 million, 

including financial debt of €1 million. Indigo’s contribution 

to consolidated revenues for 2006 is €3 million. Its contribution to 

consolidated profit for the year is not material. 

2004 2005 2006 


North America 1,351 22 1,353 20 1,341 17 

United Kingdom and Ireland 1,288 20 1,738 25 2,126 28 

Nordic countries 391 6 415 6 441 6 

Benelux 857 14 956 14 1,046 14 

Germany and Central Europe 477 8 443 6 514 7 

France 1,479 24 1,666 24 1,816 23 

Southern Europe 299 5 310 4 339 4 

Asia-Pacific 93 1 73 1 77 1 

TOTAL 6,235 100 6,954 100 7,700 100 

The year-on-year increase in revenues in 2006 is 10.7% on a current Group structure and exchange rate basis and 12.1% on a like-for-like 

basis (based on constant exchange rates and Group structure). 


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NOTE 5 – OPERATING EXPENSES BY NATURE 

The analysis of operating expenses by nature is as follows: 



Amount 

2004 2005 2006 

% 

revenues 

Amount 

% 

revenues 

Amount 

% 

revenues 

Personnel costs 4,001 64.2 4,175 60.0 4,336 56.3 

Travel expenses 309 5.0 309 4.5 340 4.4 

4,310 69.2 4,484 64.5 4,676 60.7 

Purchases and sub-contracting expenses 1,437 23.0 1,808 26.0 2,068 26.9 

Rent and local taxes 282 4.5 240 3.5 268 3.5 

Depreciation, amortization and provisions 230 3.7 197 2.8 241 3.1 

TOTAL 6,259 100.4 6,729 96.8 7,253 94.2 

Foreign currency gains and losses included within operating items in 2006 are not material. 

Personnel costs break down as follows: 

in millions of euros 2004 2005 2006 

Wages and salaries 3,171 3,283 3,429 

Payroll taxes 747 803 818 

Pension costs related to defined benefit plans and other 

post-employment benefit expenses (1) 83 89 89 

TOTAL 4,001 4,175 4,336 

(1) See Note 19 – “Provisions for pensions and other post-employment benefits”. 

NOTE 6 – OTHER OPERATING INCOME AND EXPENSE, NET 


Restructuring costs (240) (164) (94) 

Expenses relating to stock options and share grants (1) (4) (12) (17) 

Impairment of goodwill (19) (6) (3) 

Capital gains on the sale of consolidated companies or businesses 6 166 - 

Other operating income and expense - 5 1 

TOTAL (257) (11) (113) 

(1) These expenses are calculated as explained in Note 10.A. – “Stock option plans and share grants”.

In 2004 and 2005, restructuring costs are chiefly related to workforce 

reduction measures and the streamlining of the Group’s real estate 

assets (respectively €153 million and €87 million in 2004; and 

€83 million and €66 million in 2005). In 2005, restructuring costs 

also include €15 million euros related to the accelerated amortization 

of software in North America. 

In 2005, other operating income and expense, net, also includes 

capital gains on the sales of consolidated companies (arising from 

the sale of the Group’s interests in IS Energy in Germany and the 

subsidiary Capgemini Japan K.K.) and businesses relating to the 

disposal of the healthcare business in North America. 

NOTE 7 – FINANCE COSTS, NET 

Finance costs, net, can be analyzed as follows: 

In 2006, other operating income and expense, net, essentially concerns 

restructuring costs incurred within the scope of the “MAP” 

program for streamlining the Group’s outsourcing activities, breaking 

down as follows: 

€67 million in costs directly related to workforce reduction measures, 

mainly concerning France (€24 million), the United Kingdom 

(€15 million), Benelux (€8 million), the United States (€6 million) 

and Germany and Central Europe (€6 million). 

€16 million relating to measures taken to streamline the Group’s 

real estate assets, principally in the United Kingdom. 

€11 million in industrialization and migration costs relating to the 

implementation of the Rightshore strategy. 


Gross finance costs (46) (57) (67) 

Income from cash and cash equivalents 18 33 57 

FINANCE COSTS, NET (28) (24) (10) 

Gross finance costs 

Gross finance costs can be broken down as follows: 


Interest on convertible bonds (20) (30) (43) 

Other interest expenses (26) (27) (24) 

TOTAL (46) (57) (67) 

Interest on convertible bonds relates to interest expense on the 

“OCEANE 2003” and “OCEANE 2005” bonds convertible/exchangeable 

into new or existing Cap Gemini shares, issued on June 24, 2003 

and June 16, 2005, respectively. In 2006, this includes €24 million 

in notional interest. 

The change in this item over the periods presented is a result of the 

“OCEANE 2005” convertible/exchangeable bond issue, representing 

an expense (coupon and notional interest) of €10 million in 2005 

and €19 million in 2006. 

Other interest expenses in 2006 mainly correspond to: 

– €10 million in notional interest related to finance leases (mainly 

concerning the United Kingdom and France); 

– €5 million in notional interest related to the recognition of financial 

debt following the recognition in the balance sheet of carry-back tax 

credits sold in 2003 and 2004. The financial expense is offset by 

notional income related to the carry back tax credits and recorded 

in operating income; 

– €5 million in notional interest related to the recognition in financial 

debt of the present value of the put option granted to the TXU 

group in connection with the 10-year outsourcing contract signed 

on May 17, 2004. 

Income from cash and cash equivalents 

Income from cash and cash equivalents mainly consists of income 

on investments. The increase in income from cash and cash equivalents 

chiefly reflects increased cash available, due in particular to 

the reinvestment of funds generated by the June 16, 2005 convertible/exchangeable 

bond issue (“OCEANE 2005”) and the increase 

in interest rates, particularly in Europe. 


77

78 ANNUAL 



NOTE 8 – OTHER FINANCIAL INCOME AND EXPENSE, NET 

Other financial income and expense, net consists of: 


Remeasurement of financial instruments at fair value 3 2 5 

Capital gains on the sale of investments in non-consolidated companies 18 3 - 

Exchange gains and other 6 4 8 

TOTAL OTHER FINANCIAL INCOME 27 9 13 

Remeasurement of financial instruments at fair value (3) (2) (9) 

Impairment of investments in non-consolidated companies - (3) - 

Net interest cost on defined benefit plans (1) (9) (8) (9) 

Expenses related to the measurement of financial liabilities in accordance 

with the amortized cost method 

(5) (4) (3) 

Exchange losses and other (9) (6) (10) 

TOTAL OTHER FINANCIAL EXPENSES (26) (23) (31) 

TOTAL OTHER FINANCIAL INCOME AND EXPENSE, NET 1 (14) (18) 

(1) See Note 19 – “Provisions for pensions and other post-employment benefits”. 

The changes in this caption are primarily attributable to: 

Between 2004 and 2005: the impact of the €18 million capital 

gain on the sale of the Group’s non-consolidated stake in Vertex 

in 2004; 

NOTE 9 – INCOME TAX EXPENSE 

Income tax expense can be analyzed as follows: 


Between 2005 and 2006: changes in the market value of the interest 

rate swap relating to the June 24, 2003 convertible/exchangeable 

bond issue (“OCEANE 2003”). This generated €1 million in financial 

income in 2005, compared to financial expense of €5 million 

during 2006. 


Current income taxes 11 (34) (49) 

Deferred income taxes (237) (1) 36 

TOTAL (226) (35) (13) 

Current income tax expense for 2006 comprises: 

€39 million in income taxes on profits, chiefly relating to the 

Netherlands, Germany and India. 

€10 million in taxes not based on taxable income, mainly related 

to North America and Italy. 

Net deferred tax income for 2006 primarily reflects: 

deferred tax assets recognized on temporary differences and tax 

loss carry-forwards arising in previous years and in 2006 (€94 

million), due to an improved profitability in various countries 

over the past two years and to future growth expectations. This 

recognition concerns France (€40 million, see Note 13 – “Deferred 

taxes”), the United Kingdom (€32 million, see Note 13 – “Deferred 

taxes”), Germany (€22 million), Norway (€8 million), and €8 million 

reversals of temporary differences in several countries. 

A total expense of €58 million related to the utilization of deferred 

tax assets on tax loss carry-forwards previously recognized in 

balance sheet due to taxable net income for the period. Of this 

amount, €43 million concern France. 

In 2006, the Group’s average effective rate of income tax was 4.2% 

of pre-tax profit. The effective rate of income tax in 2006 is also 

significantly affected by the recognition of deferred tax assets arising 

from temporary differences and tax loss carry-forwards available 

to the Group. As the Group operates in countries with different 

tax regimes, the effective rate of income tax varies from one year 

to the next based on changes in each country’s contribution to 

consolidated profit.

The difference between the French standard rate of income tax and the effective tax rate of the Group can be analyzed as follows: 


STANDARD TAX RATE IN FRANCE (%) 35.4 34.9 34.4 

Tax (expense)/income at the standard rate 109 (61) (105) 

Impact of: 

Deferred tax assets unrecognized or depreciated on temporary differences and tax loss carryforwards 

(117) (16) (11) 

Impact of revaluation of deferred tax assets recognized in North America related to the Ernst & 

Young acquisition 

(226) - - 

Impact of revaluation of deferred tax assets recognized in France 36 36 40 

Recognition of deferred tax assets on temporary differences and tax loss carry-forwards arisen 

prior to January 1, 2006 

- 10 53 

Utilization of previously unrecognized tax loss carry-forwards - 4 41 

Difference in tax rates between countries 3 1 6 

Permanent differences and other items (31) (9) (37) 

Tax expense at the effective rate (226) (35) (13) 

EFFECTIVE RATE OF INCOME TAX (%) (73.4) 19.9 4.2 

In 2006, the Group’s effective tax rate principally reflects: 

The non-recognition of deferred tax assets on temporary differences 

and tax loss carry-forwards for an amount of €11 million. 

The revaluation impact of deferred tax assets recognized in France 

in accordance with the procedures described in Note 13 – “Deferred 

taxes”. 

€53 million in deferred tax assets recognized on temporary differences 

and tax loss carry-forwards arising in previous years, other 

than those relating to France. 

The utilization of previously unrecognized tax loss carry-forwards 

against taxable profit, chiefly in the United Kingdom and Norway, 

representing an amount of €41 million. 

Permanent differences and other items amounting to €37 million 

in 2006, including: 

– €10 million in taxes not based on taxable income, mainly related 

to North America and Italy. 

– €27 million in permanent differences and other items. 

Deferred tax liabilities relating to the equity component of the 

“OCEANE 2005” bonds issued on June 16, 2005, and deferred tax 

assets relating to (i) the purchase of a call option aimed at neutralizing 

the dilutive impact of the “OCEANE 2003” bonds issued on 

June 24, 2003, and (ii) actuarial gains and losses, were recorded 

through equity (see the consolidated statement of recognized income 

and expense). 

During 2006 and in previous financial years, some Group companies 

have undergone tax audits leading in some cases to tax 

reassessments. A number of these reassessments have been challenged 

and certain litigation proceedings were in progress at the 

balance sheet date. 


79

80 ANNUAL 



NOTE 10 – SHAREHOLDERS’ EQUITY 

A) Stock option plans and share grants 

At the May 24, 1996, May 23, 2000 and May 12, 2005 Annual 

Shareholders’ Meetings, the Directoire and the Board of Directors, 

respectively, were given a five-year authorization in respect of the 

The main features of these plans and their bases of calculation are set out in the table below: 


1996 Plan 2000 Plan 2005 Plan Total 

Date of Shareholders’ Meeting May 24, 1996 May 23, 2000 May 12, 2005 

Maximum number of shares to be issued on exercise 

of options 

6,000,000 12,000,000 6,000,000 

Date options first granted under the plan 

July 1, 

1996 

September 1, 

2000 

October 1, 

2001 

October 1, 

2005 

Deadline for exercising stock options after their 

grant date (based on progressive tranches) 6 years 6 years 5 years 5 years 

Exercise price as a % of the average share price 

over the twenty stock market trading days 

preceding the grant date 80% 80% 100% 100% 

Exercise price (per share and in euros) of the 

various stock option grants: 

May 24, 1996 plan (1996 plan) and the May 23, 2000 plan (2000 

plan), and an authorization period of 38 months in respect of the 

May 12, 2005 plan (2005 plan), to grant stock options to a certain 

number of Group employees on one or several occasions. 

Low - 139.00 21.00 30.00 

High - 139.00 40.00 43.00 

Maximum number of shares to be issued on 

exercise of outstanding options at December 31, 

2005 559,000 10,627,300 1,915,500 13,101,800 

Number of new stock options granted during the 

year Plan expired Plan expired 2,067,000 2,067,000 

Number of options forfeited or canceled during 

the year 

559,000 3,188,197 112,500 3,859,697 

Number of options exercised in 2006 

Maximum number of shares to be issued on 

exercise of outstanding options at December 31, 

- 773,838 (1) 16,555 (2) 790,393 

2006 - 6,665,265 (3) 3,853,445 (4) 10,518,710 

Residual weighted average life (in years) - 2.22 4.29 - 

(1) At December 31, 2006, the following stock options had been exercised: 498,441 stock options granted at a price of €24; 16,300 stock options granted 

at a price of €40; 21,802 stock options granted at a price of €31; 206,845 stock options granted at a price of €21; and 30,450 stock options granted 

at a price of €27. 

(2) Representing 16,555 stock options purchased at a price of €30. 

(3) Representing 486,500 shares purchased at a price of €139; 892,359 shares at €24; 917,300 shares at €40; 240,101 shares at €31; 2,814,155 shares 

at €21; and 1,314,850 shares at €27. 

(4) Representing 1,787,945 shares purchased at a price of €30 and 2,065,500 shares purchased at a price of €43. 

The Group has no contractual or implicit obligations to purchase or settle the options in cash. 

In the event of a notice of authorization of a tender offer or public exchange offer for some or all of the Company’s shares published by 

Euronext, option holders would be entitled, if they so wish, to exercise all of their remaining unexercised options immediately.

Fair value of options granted and impact on the financial statements 

In accordance with IFRS 1 – “First-time Adoption of International Financial Reporting Standards”, only stock options granted after November 7, 

2002 with a vesting date after January 1, 2005, are measured at fair value and recognized within “Other operating income and expense, net”. 

Recognition and measurement of stock options granted prior to November 7, 2002 is not required. 

Summary 2000 Plan 2005 Plan 

Dates of the stock option grants impacted October 1, April 1, October 1, April 1, October 1, October 1, 

by restatements in accordance with IFRS 2 2003 2004 2004 2005 2005 2006 

Number of stock options initially granted 

Exercise price (per share and in euros) of 

1,406,000 566,000 3,634,500 1,623,000 1,915,500 2,067,000 

the various stock option grants 40 31 21 27 30 43 

Share price at the grant date 35.88 31.19 19.09 27.06 32.59 41.84 

Number of shares subscribed at December 31, 

2006 

Principal market conditions at the grant 

date 

16,300 21,802 235,645 30,450 16,555 - 

Volatility 

Average length of the option exercise period 

37-38% 38.1-38.8% 37.5-38.5% 32.4-33.8% 27.4-29.4% 32.4-35.9% 

(years) 3.5-4.25 3.5-4.25 3-4.25 3-4.25 3-4.25 3-4.25 

Risk-free interest rate 2.7-3.1% 2.8-3% 3-3.3% 2.2-2.9% 2.3-2.7% 3.5-3.6% 

Expected dividend rate 1% 1% 1% 1% 1% 1% 

Off-market conditions 

Employee presence within the Group at the 

exercise date yes yes yes yes yes yes 

Other no yes (1) no no no no 

Pricing model used to calculate stock 

option fair values 

Black & Scholes model 

Range of fair values in euros 

Maximum number of shares to be issued 

8.7-10.3 9.2-10.3 4.5-5.7 6.2-7.8 7.6-9.4 10.7-11.7 

on exercise of outstanding options at 

December 31, 2006 917,300 240,101 2,814,155 1,314,850 1,787,945 2,065,500 

(1) Certain Transiciel employees were granted stock options whose final number was subject to the Sogeti entity attaining a target adjusted gross operating 

profit, set out in a prospectus which was approved by the Commission des Opérations de Bourse under reference number 03-935 on October 29, 

2003. 

Based on the calculation parameters used to determine fair value 

under the Black & Scholes option pricing model (see Note 1.P. 

– “Stock options granted to employees”), the expense to be recorded 

between 2007 and 2010 with respect to the six option grants falling 

within the scope of IFRS 2 totals €25 million. The expense recorded 

in 2006 in “Other operating income and expense, net” amounts to 


Share grants made in connection with agreements signed on 

the May 2000 acquisition of Ernst & Young’s consulting 

business 

These agreements included an employee-retention scheme applicable 

over a maximum five-year period for the key employees of Ernst & 

Young’s consulting business who joined the Group. This scheme was 

based on the gradual acquisition of ownership of shares granted to 

the sellers of Ernst & Young’s consulting business. If a person covered 

by this scheme left the Group he or she could be required to return a 

portion of the shares received in May 2000. The agreements also provided 

that ownership of a portion of the shares thus returned would 

automatically be transferred to Cap Gemini S.A. (to be subsequently 

canceled or sold) with the balance to be held within the local entities 

to which employees having left the group were attached (trusts and 

bank accounts) as part of the employee-retention scheme, in order 

to be subsequently reallocated to other employees in the countries 

concerned. As certain shares were sold, in accordance with the provisions 

of the agreements, prior to their ownership fully vesting in 

the beneficiaries concerned and who subsequently left the Group, 

cash amounts were also paid to these entities. These cash amounts 

corresponded to the disposal gain on the shares returned, which 

could, where appropriate, be granted to employees in the countries 

concerned in the form of exceptional remuneration. 

The reallocations of Cap Gemini shares under this scheme are based 

on the gradual acquisition of ownership of the shares – i.e., vesting 

conditions – for which the timeframe is similar to that applicable to 

the stock options granted by Cap Gemini S.A. 

In application of the amendment to Interpretation 12 of the Standing 

Interpretations Committee (SIC 12) issued in November 2004, the 

Cap Gemini shares and cash corresponding to the proceeds from the 

sale of Cap Gemini shares held in the trusts and bank accounts set up 

at the time of the May 2000 acquisition of Ernst & Young’s consulting 

business were consolidated as from January 1, 2005. 


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82 ANNUAL 



In 2006, the above-mentioned entities granted 130,400 Cap Gemini 

shares to their respective employees (primarily in North America). In 

view of the applicable vesting conditions and the number of shares 

reallocated since November 7, 2002, the related expense for 2006 

calculated in accordance with IFRS 2 and recognized in “Other 

operating income and expense, net” amounts to €2 million. The 

total expense to be amortized between 2007 and 2010 amounts to 

€7 million. 

B) Share buyback program 

The share buyback program has been described in a prospectus 

launched on March 30, 2006. 

At December 31, 2006, the €1 million change in treasury shares held 


within the scope of the share buyback program (exlusively acquired 

in the context of a liquidity contract set from September 30, 2005) 

is deducted from consolidated equity. 

C) Earnings per share 

Basic earnings per share 

Basic earnings per share are calculated by dividing profit or loss for the 

year by the weighted average number of ordinary shares outstanding 

during the period, excluding treasury stock. The weighted average 

number of ordinary shares is adjusted by the number of ordinary 

shares bought back or issued during the period. 

2004 2005 2006 

Attributable profit/(loss) for the year (in millions of euros) (534) 141 293 

Interest expense on “OCEANE 2005” bonds (net of taxes) - 6 12 

Diluted attributable profit/(loss) for the year (in millions of euros) (534) 147 305 

Weighted average number of ordinary shares (diluted) 

2004 2005 2006 

Attributable profit/(loss) for the year (in millions of euros) (534) 141 293 


BASIC EARNINGS/(LOSS) PER SHARE (in euros) (4.07) 1.07 2.21 

The increase in the number of shares between 2004 and 2005 is due 

to the exercise of stock options held by employees. The increase in 

the number of shares between 2005 and 2006 reflects the exercise 

of stock options held by employees, the Transiciel earn-out payment 

and the issue of new shares in connection with the capital increase 

of December 6, 2006. 

Diluted earnings per share 

Diluted earnings per share are calculated by assuming conversion 

into ordinary shares of all dilutive instruments outstanding at the 

balance sheet date. 

The average share price in 2006 was €42.37. 

At December 31, 2006, instruments considered dilutive for the 

purpose of calculating earnings per share include: 

Employee stock options considered to be potentially dilutive when 

the average market price of ordinary shares during the period 

exceeds the exercise price of the option including its fair value. 

“OCEANE 2005” convertible/exchangeable bonds issued on June 

16, 2005, as the €12 million interest expense recorded (net of taxes) 

on the bonds is lower than basic earnings per share (see Note 17 

– “Net cash and cash equivalents”). 


Adjustments: 

– conversion of “OCEANE 2003” bonds - - - 

– conversion of “OCEANE 2005” bonds (weighted average) - 5,905,405 11,810,810 

– exercise of share warrants relating to the acquisition of the Transiciel group 508,600 315,790 - 

– exercise of employee stock options 988,354 859,828 2,647,793 


DILUTED EARNINGS/(LOSS) PER SHARE (in euros) (4.02) 1.06 2.07

Dilutive impact of the June 24, 2003 convertible/exchangeable bond 

issue (“OCEANE 2003”): 

These bonds were not considered dilutive at December 31, 2005 

as the interest expense recorded (net of taxes) exceeded basic 

earnings per share. 

The bonds are not considered dilutive at December 31, 2006 – even 

though the €14 million interest expense recognized on the bonds 

(net of taxes) is less than basic earnings per share (see Note 17 

– “Net cash and cash equivalents”) – because the Group acquired 

a call option in June 2005 on an equivalent number of shares to 

those underlying the bond issue (approximately 9 million shares), 

designed to neutralize in full the potential dilutive impact of the 

bonds. Accordingly, attributable net profit has not been adjusted to 

reflect the interest expense, net of taxes, on convertible bonds. 

For information purposes, had the “OCEANE 2003” convertible/ 

exchangeable bond issue been considered dilutive at December 31, 

2006, the weighted average number of ordinary shares would have 

stood at 156,260,933 and diluted earnings per share would have 

amounted to €2.04. 


83

84 ANNUAL 



NOTE 11 – GOODWILL AND INTANGIBLE ASSETS 

Changes in goodwill and intangible assets can be analyzed as follows by type of asset: 

in millions of euros Goodwill Software 


Internally 

generated 

intangible 

assets 

Other 

intangible 

assets Total 

GROSS VALUE 

AT JANUARY 1, 2004 1,788 146 37 38 2,009 

Translation adjustments (16) (7) - (6) (29) 

Acquisitions/Increase - 22 2 50 74 

Disposals/Decrease (14) (29) - (14) (57) 

Changes in Group structure 35 2 - 85 122 

Other movements (7) 50 - 1 44 

AT DECEMBER 31, 2004 1,786 184 39 154 2,163 

Translation adjustments 41 10 - 13 64 

Acquisitions/Increase 1 19 2 5 27 

Disposals/Decrease (5) (20) - (13) (38) 

Changes in Group structure 4 (16) - (2) (14) 

Other movements - 8 - (16) (8) 

AT DECEMBER 31, 2005 1,827 185 41 141 2,194 

Translation adjustments (13) (3) - (9) (25) 

Acquisitions/Increase - 13 9 8 30 

Disposals/Decrease - (59) (1) (15) (75) 

Changes in Group structure 56 - - 6 62 

Other movements - (16) 12 1 (3) 

AT DECEMBER 31, 2006 1,870 120 61 132 2,183 

ACCUMULATED AMORTIZATION 

AT JANUARY 1, 2004 98 21 23 142 

Translation adjustments (5) - 1 (4) 

Additions 33 7 12 52 

Disposals (22) - (13) (35) 

Changes in Group structure - - 8 8 

Other movements 15 - 2 17 

AT DECEMBER 31, 2004 119 28 33 180 

Translation adjustments 7 - 2 9 


Disposals (19) - (12) (31) 

Changes in Group structure (12) - (1) (13) 

Other movements 2 - - 2 

AT DECEMBER 31, 2005 141 35 38 214 

Translation adjustments (3) - (2) (5) 


Disposals (56) (1) (8) (65) 

Changes in Group structure - - - - 

Other movements - - - - 

AT DECEMBER 31, 2006 95 40 46 181 

IMPAIRMENT 

AT JANUARY 1, 2004 - 4 - - 4 

Translation adjustments - - - - - 

Additions 19 - - - 19 

Changes in Group structure - - - - - 

Other movements (7) 4 - - (3) 

AT DECEMBER 31, 2004 12 8 - - 20 


Additions 6 3 - - 9 


Other movements - - - - - 

AT DECEMBER 31, 2005 18 11 - - 29 


Additions 3 - (2) 1 2 


Other movements - (7) 7 - - 

AT DECEMBER 31, 2006 21 4 5 1 31 

NET 

AT DECEMBER 1, 2004 1,774 57 11 121 1,963 

AT DECEMBER 1, 2005 1,809 33 6 103 1,951 

AT DECEMBER 31, 2006 1,849 21 16 85 1,971

Net value of goodwill 

At December 31, 2006, goodwill breaks down by geographic area 

as follows: France (€477 million), United Kingdom (€477 million), 

Benelux (€438 million), North America (€199 million), and Germany 

and Central Europe (€132 million). 

Changes in the net value of goodwill in 2006 primarily reflect: 

goodwill relating to the acquisition of German group FuE on September 

30, 2006, amounting to €29 million; 

goodwill relating to the acquisition of Unilever Shared Service 

Limited (also known as Indigo) on October 11, 2006, amounting 

to €20 million (including the call option on minority interests); 

an impairment loss on United Kingdom goodwill amounting to 

€3 million; 

The main assumptions used to measure the recoverable amount of goodwill are as follows: 

Cash generating units 

North 

America 

translation losses arising on goodwill denominated in foreign currencies, 

amounting to €13 million. 

Goodwill impairment tests 

The carrying amounts of goodwill at December 31, 2006 were tested 

for impairment in accordance with the Group’s related specific procedure. 

Based primarily on the discounted cash flows method, this 

procedure consists of assessing the recoverable amount of each cash 

generating unit (CGU) within the Group. 

CGUs correspond either to subsidiaries or to geographic areas in 

which the Group has operations. 

United 

Kingdom Benelux Sogeti Other Total 

Net carrying amount of goodwill (in millions of euros) 199 477 307 505 361 1,849 

Method used to measure the value of the CGU Value in use 

Number of years over which cash flows are estimated and 

extrapolated indefinitely 

5 years 

Long-term growth rate 3% 

After-tax discount rate at December 31, 2006 (1) 10.9 % 10.1% 

After-tax discount rate at December 31, 2005 (1) 10.5 % 10.1% 

After-tax discount rate at December 31, 2004 (1) 10.1 % 

(1) The application of pre-tax discount rates to pre-tax cash flows leads to the same valuation of CGUs. 

Reconciliation of the acquisition cost of intangible assets in the balance sheet with the amount reported in the cash flow 

statement 

The acquisition cost of intangible assets reported in the balance sheet (€30 million) is different from the figure provided in the cash flow 

statement (€29 million), which excludes transactions with no cash impact (i.e., acquisitions of assets held under finance leases amounting 

to €1 million in 2006). 


85

86 ANNUAL 



NOTE 12 – PROPERTY, PLANT AND EQUIPMENT 

Changes in property, plant and equipment can be analyzed as follows by type of asset: 


GROSS VALUE 


Land, buildings, 

fixtures and fittings 

Computer 

equipment 

Other tangible 

assets Total 

AT JANUARY 1, 2004 456 579 126 1,161 

Translation adjustments (6) (4) (1) (11) 

Acquisitions/Increase 32 98 11 141 

Disposals/Decrease (27) (116) (8) (151) 

Changes in Group structure 5 10 8 23 

Other movements 1 (42) (8) (49) 

AT DECEMBER 31, 2004 461 525 128 1,114 

Translation adjustments 13 17 3 33 



Changes in Group structure (2) (54) (1) (57) 

Other movements 19 (3) (9) 7 

AT DECEMBER 31, 2005 428 439 116 983 




Changes in Group structure 1 - - 1 


AT DECEMBER 31, 2006 407 380 119 906 

o/w finance leases 107 158 10 275 

ACCUMULATED DEPRECIATION 

AT JANUARY 1, 2004 180 375 90 645 

Translation adjustments (4) (4) - (8) 

Additions 43 102 16 161 

Reversals (20) (103) (8) (131) 

Changes in Group structure 5 7 1 13 

Other movements - (13) (2) (15) 

AT DECEMBER 31, 2004 204 364 97 665 

Translation adjustments 9 11 1 21 

Additions 40 80 10 130 

Reversals (63) (117) (13) (193) 

Changes in Group structure - (39) (1) (40) 


AT DECEMBER 31, 2005 195 297 89 581 



Reversals (28) (136) (5) (169) 

Changes in Group structure - - - - 

Other movements (10) - (1) (11) 

AT DECEMBER 31, 2006 192 245 91 528 

o/w finance leases 29 83 9 121 

IMPAIRMENT 

AT DECEMBER 31, 2004 - - - - 

AT DECEMBER 31, 2005 3 - - 3 

AT DECEMBER 31, 2006 3 - - 3 

NET 

AT DECEMBER 31, 2004 257 161 31 449 

AT DECEMBER 31, 2005 230 142 27 399 

AT DECEMBER 31, 2006 212 135 28 375 

o/w finance leases 78 75 1 154

Reconciliation of the acquisition cost of property, plant and equipment in the balance sheet with the amount reported in the cash 

flow statement 

The acquisition cost of property, plant and equipment reported in the balance sheet (€131 million) is different from the figure provided in 

the cash flow statement (€72 million), which excludes transactions with no cash impact (i.e., acquisitions of assets held under finance leases 

amounting to €59 million in 2006). 

NOTE 13 – DEFERRED TAXES 

I. RECOGNIZED DEFERRED TAX ASSETS AND LIABILITIES 

A) Analysis by recovery date 

At December 31 (in millions of euros) 2004 2005 2006 

Deferred tax assets: 

– Deferred tax assets recoverable over one year 705 737 761 

– Deferred tax assets recoverable within one year 73 91 127 

TOTAL DEFERRED TAX ASSETS 

Deferred tax liabilities: 

778 828 888 

– Deferred tax liabilities payable over one year 75 105 108 

– Deferred tax liabilities payable within one year 20 16 10 

TOTAL DEFERRED TAX LIABILITIES 95 121 118 

Deferred tax assets at December 31, 2004 and 2005 have been restated in line with the amended IAS 19 (see Note 2 – “Change in 

accounting method”). 

B) Changes in recognized deferred taxes 


Deferred tax 

assets arising 

from tax loss 

carry-forwards 

Deferred tax 


from the 

acquisition 

of Ernst 

& Young’s 

consulting 

business 

Deferred tax 


from temporary 

differences 

Total 

deferred 

tax assets 

Total 

deferred 

tax liabilities 

(1) 

At January 1, 2006 583 140 105 828 (121) 707 

Translation adjustments - (15) (3) (18) 5 (13) 

Deferred taxes recognized in profit or loss 5 - 31 36 - 36 

Deferred taxes recognized in equity - - 45 4 (2) 43 

Other movements (5) - 2 (3) - (3) 

At December 31, 2006 583 125 180 888 (118) 770 

(1) Deferred tax liabilities relate to temporary differences. 

The breakdown of deferred taxes recognized in profit or loss (€36 million) 

is provided in Note 9 – “Income tax expense”. 

Deferred tax income recorded in equity (€43 million) essentially 

relates to actuarial gains and losses recognized in equity. The change 

reflects the end-2006 recognition in the United Kingdom of €52 million 

in tax assets on actuarial losses (see below, “Deferred tax assets 

arising from temporary differences in the United Kingdom”), as well 

as €8 million in actuarial gains for the year recorded in Canada. 

Deferred tax assets arising from the acquisition of Ernst & 

Young’s consulting business in North America 

The difference between the acquisition price of Ernst & Young’s 

North American consulting business and the tax base of the assets 

and liabilities acquired (€3,034 million at December 31, 2006) is 

amortized over 15 years for tax purposes, representing an income 

tax saving of around €1,183 million based on current tax rates. Over 

Total, 

net 

recent fiscal years, these amortization charges have led to an increase 

in tax losses generated by North American operations that may be 

carried forward over a period of 20 years. In view of the above, the 

Group has potential tax savings available in the form of tax losses and 

tax-deductible future amortization allowances that may be utilized 

up to 2034 under current regulations. 

The value of the related deferred tax asset is reviewed based on an 

estimate of the taxable profit of the Group’s North American operations 

over the next five years using growth and profitability rates 

considered reasonable. 

At December 31, 2006, the value of the deferred tax asset recognized 

in North America is €125 million. 

Deferred tax assets arising from tax loss carry-forwards in France 

In 2002, Cap Gemini S.A. recognized a €2.8 billion net short-term 

capital loss for tax purposes, further to the reorganization of the 

Group’s North American operations. Since December 31, 2003, the 


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88 ANNUAL 



corresponding tax loss may be carried forward indefinitely against 

future taxable profit generated in France. 

At each balance sheet date, this deferred tax asset is adjusted to reflect 

the estimated taxable profit of the Group’s French operations over the 

next 15 years. The calculation is based on growth and profitability 

assumptions considered reasonable, using the following visibility 

parameters: 

100% utilization in the first five years. As from the sixth year, probable 

recoveries are covered by provisions calculated at a standard 

rate of 35%, which is increased by five points per year up to 70% 

in the fifteenth year, and to 100% beyond the fifteenth year. 

This calculation model is based on a progressive decline in visibility as 

regards the future realization of estimates, so that recognized deferred 

tax assets are utilized as follows: 

approximately 60% is utilized in the first five years, 

the remaining 40% is utilized between the sixth and fifteenth 

year. 

At December 31, 2006, the corresponding deferred tax asset 

recognized in France amounts to €522 million (breaking down into 

a long-term portion of €460 million and a short-term portion of 

€62 million). 

C) Analysis by type 

Recognized deferred tax assets at December 31, 2006 can be analyzed as follows by type: 


Deferred tax assets arising from temporary differences in the 


At December 31, 2006, the United Kingdom recognized deferred 

tax assets on temporary differences, chiefly relating to provisions for 

pensions and other post-employment benefits. 

The recognition of this deferred tax asset was adjusted to reflect the 

estimated taxable profit of UK operations over the next five years. 

The calculation is based on growth and profitability assumptions 

considered reasonable. 

In 2006, an amount of €52 million was recognized through equity 

(underlying items recorded in equity between 2004 and 2006 – see 

the consolidated statement of recognized income and expense), and 

€32 million was recorded in the income statement (€28 million of 

which relates to prior years, and €4 million to 2006). 

At December 31, 2006, deferred tax assets recognized amount to 


Other tax loss carry-forwards recognized 

Deferred tax assets recognized on tax loss carry-forwards at Group 

level (€61 million), excluding deferred tax assets recognized in France, 

relate to Germany (€31 million), Norway and Sweden (€11 million), 

Belgium (€6 million), the United Kingdom (€5 million) and other 

countries (€8 million). 

At December 31 (in millions of euros) 

2006 

Tax loss carry-forwards 513 

Acquisition of Ernst & Young’s consulting business 125 

Provisions for pensions and other post-employment benefits 92 

Other 31 

Total deferred tax assets recoverable over one year 761 

Tax loss carry-forwards 70 

Amortization adjustments 20 

Provisions for pensions and other post-employment benefits 10 

Revaluation of work-in-progress 8 

Other 19 

Total deferred tax assets recoverable within one year 127 

TOTAL RECOGNIZED DEFERRED TAX ASSETS 888 

Deferred taxes recognized on the acquisition of Ernst & Young’s consulting business include tax loss carry-forwards generated by taxdeductible 

amortization charges recorded against goodwill, as well as future amortization allowances.

Deferred tax liabilities at December 31, 2006 can be analyzed as follows by type: 


Restatement of tax-deductible goodwill amortization 51 

Equity component of “OCEANE 2003 and 2005” bonds 21 

Restatement of finance leases 10 

Provisions 10 

Other 16 

Total deferred tax liabilities over one year 108 

Revaluation of work-in-progress 9 

Other 1 

Total deferred tax liabilities within one year 10 

TOTAL DEFERRED TAX LIABILITIES 118 

II. UNRECOGNIZED DEFERRED TAX ASSETS 

Unrecognized deferred tax assets can be analyzed as follows: 


Tax loss carry-forwards 564 524 437 

Acquisition of Ernst & Young’s consulting business (1) 1,067 1,183 1,058 

Temporary differences 211 380 188 

TOTAL 1,842 2,087 1,683 

(1) Unrecognized deferred taxes on the acquisition of Ernst & Young’s consulting business include tax loss carry-forwards generated by tax-deductible 

amortization charges recorded against goodwill, as well as future amortization allowances. 

Unrecognized deferred tax assets relating to tax loss carry-forwards 

amounting to €437 million primarily concern France (€130 million) 

and North America (€160 million) at the 2006 year-end. 

At December 31, 2006, unrecognized deferred tax assets on temporary 

differences mainly relate to: 

Changes in provisions for pensions and other post-employment 

benefits (€72 million), essentially in the United Kingdom. 

Differences in revenue recognition in the individual company 

accounts and the consolidated accounts (€25 million). 

III. EXPIRY DATES OF TAX LOSS CARRY-FORWARDS 

The expiry dates of tax loss carry-forwards are as follows: 

2006 

Differences in the methods used for capitalizing and amortizing 

fixed assets in the individual company accounts and consolidated 

accounts (€12 million). 

Restructuring costs (€11 million), provisions (€23 million) and 

other miscellaneous items (€45 million). 

At December 31, 2006, unrecognized deferred tax assets are essentially 

attributable to North America for €1,308 million (€1,058 million of 

which relates to Ernst & Young’s consulting business, €160 million to 

deferred taxes on tax loss carry-forwards and €90 million to deferred 

taxes on temporary differences). 

2004 2005 2006 



y+1 4 - 3 - 62 2 

y+2 3 - 69 2 57 1 

y+3 52 1 48 1 64 2 

y+4 37 1 43 1 8 - 

y+5 23 1 9 - 16 - 

Over 5 years 4,188 97 4,442 96 4,202 95 

TOTAL 4,307 100 4,614 100 4,409 100 

Tax loss carry-forwards do not include tax-deductible amortization charges recorded against goodwill arising from the acquisition of Ernst & 

Young’s consulting business, amounting to €1,627 million at December 31, 2006. 


89

90 ANNUAL 



NOTE 14 – OTHER NON-CURRENT ASSETS 

Other non-current assets can be analyzed as follows: 

At December 31 (in millions of euros) 2004 (1) 2005 (1) 2006 

Shares in non-consolidated companies 5 5 140 

Carry-back tax credits 112 116 121 

Deposits and other long-term investments 56 32 23 

Derivative instruments 1 - 3 

Other 11 11 8 

TOTAL 185 164 295 

(1) The balance sheets at December 31, 2004 and 2005 have been restated in line with the amendment to IAS 19 (see Note 2 – “Change in accounting 

method”). 

Shares in non-consolidated companies 

At December 31, 2006, shares in non-consolidated companies chiefly 

concern: 

The 14.7% interest in Kanbay International, Inc. (“Kanbay”), representing 


On November 21, 2006, Capgemini North America Inc. acquired 

14.7% of the capital and voting rights of Kanbay (at a price 

of USD 29 per share), a global IT services provider specializing 

in the financial services industry. The share acquisition followed 

contracts agreed with certain core shareholders as described in the 

information document filed with the United States Securities and 

Exchange Commission (SEC) on November 13, 2006. 

In parallel, on October 26, 2006 Capgemini and Kanbay entered 

into an agreement under which Capgemini undertook to acquire 

the entire capital of Kanbay through its US subsidiary Capgemini 

North America Inc., subject to certain conditions (see Note 28 

– “Subsequent events”). 

The interest in MEDecision, for a total amount of €5 million, 

which was remeasured through equity following the initial public 

offering in December 2006. 

NOTE 15 – ACCOUNTS AND NOTES RECEIVABLE 

Accounts and notes receivable can be analyzed as follows: 


The 5% stake in Zacatii Consulting Inc. (formerly Capgemini Japan 

K.K.) for €1 million, subject to a call/put option (see Note 25 – “Off 

balance sheet commitments”). 

Carry-back tax credits 

On June 26, 2003 and June 28, 2004, Cap Gemini S.A. sold a 

tax receivable of €90 million and an additional tax receivable of 

€39 million to a credit institution for €74 million and €33 million, 

respectively. These receivables are measured at amortized cost. 

Deposits and other long-term investments 

Deposits and other long-term investments consist of aides à la construction 

(building aid program) loans in France, security deposits 

and guarantees and other long-term loans. 

Derivative instruments 

Interest and currency rates hedges contracts are described in Note 18 

– “Derivative instruments”. 


Accounts receivable 1,329 1,337 1,459 

Provisions for doubtful accounts (37) (33) (25) 

Accrued income 459 467 530 

Work-in-progress 22 27 99 

TOTAL 1,773 1,798 2,063

Total accounts receivable net of advances received from customers can be analyzed as follows in number of days’ revenues: 


Accounts and notes receivable (excluding work-in-progress) 1,751 1,771 1,964 

Advances received from customers (538) (609) (683) 

TOTAL ACCOUNTS RECEIVABLE NET OF ADVANCES 

RECEIVED FROM CUSTOMERS 

1,213 1,162 1,281 

In number of days’ revenues 70 60 60 

NOTE 16 – OTHER RECEIVABLES AND INCOME TAXES 


Income taxes 29 21 20 

Receivables from social security bodies 41 70 55 

Prepaid expenses 139 134 118 

Other 10 25 21 

TOTAL 219 250 214 

NOTE 17 – NET CASH AND CASH EQUIVALENTS 

Net cash and cash equivalents correspond to available cash and cash equivalents less short- and long-term financial debt and derivative 

instruments when the underlying elements to which these relate are included in net cash and cash equivalents. 


Cash and cash equivalents 1,232 2,136 2,859 

Financial debt (948) (1,231) (1,224) 

Derivative instruments (1) 1 (1) (3) 

NET CASH AND CASH EQUIVALENTS 285 904 1,632 

(1) Derivative instruments recognized in assets are shown under “Other non-current assets”, while derivative instruments recognized in liabilities are 

shown under “Other non-current liabilities”. These derivatives relate to interest rate and currency hedges as described in Note 18 – “Derivative instruments”. 

I. CASH AND CASH EQUIVALENTS 

Cash and cash equivalents reported in the consolidated statements of cash flows correspond to short-term investments and cash, less bank 

overdrafts. 


Short-term investments 1,001 1,805 2,460 

Cash 251 416 442 

Bank overdrafts (1) (20) (85) (43) 

CASH AND CASH EQUIVALENTS 1,232 2,136 2,859 

(1) Bank overdrafts are included in liabilities within “Short-term financial debt and bank overdrafts” 

The year-on-year increase in short-term investments in 2006 primarily reflects the investment of the proceeds from the shares issued by Cap 

Gemini on December 6, 2006, and cash generation over the period. 

The cash available is being invested in SICAV funds and other traditional money-market funds. 


91

92 ANNUAL 



II. SHORT- AND LONG-TERM FINANCIAL DEBT 

Financial debt breaks down into short- and long-term debt, as follows: 


“OCEANE 2003 and 2005” bonds (A) 408 814 838 

Obligations under finance leases (B) 164 124 107 

Other long-term financial debt (C) 196 207 215 

Long-term financial debt 768 1,145 1,160 

Obligations under finance leases (B) 64 50 49 

Drawdowns on bank and similar facilities (1) 46 8 6 

Commercial paper - 15 - 

Other short-term financial debt (C) 70 13 9 

Short-term financial debt (2) 180 86 64 

TOTAL FINANCIAL DEBT 948 1,231 1,224 

(1) Drawdowns on bank and similar facilities mainly correspond to drawdowns by Group operating companies on lines of credit. In some circumstances, 

these lines of credit are secured by a guarantee from Cap Gemini S.A. 

(2) Short-term financial debt, including both the current portion of long-term financial debt and all other debt due within one year, is shown in liabilities 

under “Short-term financial debt and bank overdrafts”. 

Analysis of movements in financial debt in the cash flow 

statement: 

The €45 million rise in financial debt reported in the cash flow 

statement chiefly relates to an increase in bond debt (€24 million) 

and other financial debt (€14 million) mainly comprising accrued 

interest on bond issues (€7 million). Increases in debt relating to 

acquisitions of fixed assets under finance leases – amounting to 

€60 million in 2006 – are not taken into account in the cash flow 

statement. 

The €108 million repayment of financial debt in the cash flow 

statement mainly concerns the settlement of obligations under 

finance leases (€77 million), commercial paper (€15 million) and 

other financial debt (€16 million). 

A) Bonds convertible/exchangeable into new or existing 

Cap Gemini shares (“OCEANE”) 

“OCEANE 2005” convertible/exchangeable 

bonds issued on June 16, 2005 

On June 16, 2005, Cap Gemini S.A. issued bonds convertible/ 

exchangeable into new or existing Cap Gemini shares, maturing on 

January 1, 2012 (“OCEANE 2005”). The effective issue and settlement 

date of the bonds was June 24, 2005. 

The total amount of the issue was €437 million, represented by 

11,810,810 bonds with a nominal value of €37 each. The bonds 

bear interest at 1% per year. 

The terms and conditions of this issue are set out in the prospectus 


approved by the AMF on June 16, 2005 under the reference number 

05-564. 

SUMMARIZED MAIN TERMS AND CONDITIONS OF THE 

“OCEANE 2005” 

Conversion and/or exchange of the bonds for shares 

At any time between June 24, 2005 and January 1, 2012 at the 

latest. 

Redemption at maturity 

January 1, 2012 at a price of €41.90 per bond, representing a premium 

of 13.2% over the bonds’ nominal value. 

Early redemption at the Company’s option 

At any time, without limitation on price or quantity, by buying 

back all or some of the bonds either on or off market or by means 

of a public buyback or exchange offer. 

Between June 24, 2009 and December 31, 2011, all outstanding 

bonds may be redeemed at an early redemption price calculated 

in such a way that the resulting yield to maturity is equal to 

that which would have been obtained at maturity, i.e., a rate 

of 2.875%, plus accrued interest, if the product of (i) the then 

current conversion/exchange ratio and (ii) the arithmetic average 

of the opening prices quoted for the Company’s ordinary shares 

on the Eurolist market of Euronext Paris S.A. over a period of 

20 trading days, exceeds 130% of such early redemption price.

Upon early redemption, the bonds may be redeemed either in 

cash or converted into Cap Gemini S.A. shares, at the option of 

the bondholders. 

At any time, for all outstanding bonds, if less than 10% of the 

bonds are still outstanding. 

Early redemption at the option of bondholders 

Bondholders may request the early redemption of all or some of their 

bonds in the event of a change of control of the Company. 

Early repayment 

At the initiative of a majority of bondholders, particularly in the event 

of a failure to pay sums due or to comply with other obligations set out 

in the documentation (beyond any “grace” periods, if applicable), cross 

default (in excess of a minimum threshold), liquidation, dissolution 

or sale of all of the Company’s assets, or delisting of the Company’s 

shares from the Premier Marché of Euronext Paris S.A. 

An upgrade or downgrade in Cap Gemini S.A.’s credit rating would 

not constitute an early redemption event and would have no impact 

on the applicable interest rate. 

Pari passu status 

Cap Gemini S.A. has undertaken that the bonds will rank pari passu 

with all other bonds issued by the Company. 

RECOGNITION OF THE “OCEANE 2005” CONVERTIBLE/ 

EXCHANGEABLE BOND ISSUE AT FAIR VALUE 

At December 31, 2006, the liability component of the “OCEANE 

2005” convertible/exchangeable bonds amounted to €411 million 

(€396 million at December 31, 2005). 

Based on the effective interest rate of 4.5% (4.8% including issue 

costs), the annual interest charge recorded is €19 million, compared 

with a paid coupon of €4.4 million calculated on the basis of the 

bonds’ nominal interest rate (1%). 

“OCEANE 2003” convertible/exchangeable 

bonds issued on June 24, 2003 

On June 24, 2003, Cap Gemini S.A. issued bonds convertible/ 

exchangeable into new or existing Cap Gemini shares, maturing on 

January 1, 2010 (“OCEANE 2003”). The effective issue and settlement 

date of the bonds was July 2, 2003. 


9,019,607 bonds with a nominal value of €51 each. The bonds bear 

interest at 2.5% per year. 

The terms and conditions of this issue are set out in the prospectus 

approved by the AMF on June 24, 2003 under the reference number 

03-607. 

The interest rate swap entered into in 2004 – on which Cap Gemini 

S.A. paid a variable rate (12-month post-fixed Euribor less 0.59%) 

against the fixed rate of the OCEANE convertible or exchangeable 

bonds (2.5%) – was amended in September 2006. The revised 

terms and conditions are described in Note 18 – “Derivative instruments”. 

SUMMARIZED MAIN TERMS AND CONDITIONS OF THE 

“OCEANE 2003” 

Conversion and/or exchange of the bonds for shares 

At any time between August 11, 2003 and the seventh business day 

preceding January 1, 2010. 

Redemption at maturity 

The bonds will be redeemed in full on January 1, 2010 in cash at 

par. 

Early redemption at the Company’s option 

At any time, without limitation on price or quantity, by buying 

back all or some of the bonds either on or off market or by means 

of a public buyback or exchange offer. 

From July 2, 2007 and until the seventh business day preceding 

January 1, 2010, at an early redemption price equal to par plus 

accrued interest, if the product of (i) the then current conversion/exchange 

ratio and (ii) the arithmetic average of the opening 

quoted prices of the Company’s ordinary share on the Premier 

Marché of Euronext Paris S.A. calculated over a period of 20 stock 

exchange trading days, exceeds 125% of such early redemption 

price. Upon early redemption, the bonds may be redeemed either 

in cash or converted into Cap Gemini S.A. shares, at the option 

of the bondholders. 

Early redemption at the option of bondholders 

Bondholders may request the early redemption of all or part of their 

bonds in the event of a change of control of the Company. 

Early repayment 

At the initiative of a majority of bondholders, particularly in the event 

of a failure to pay sums due or to comply with other obligations set out 

in the documentation (beyond any “grace” periods, if applicable), cross 

default (in excess of a minimum threshold), liquidation, dissolution 

or sale of all of the Company’s assets, or delisting of the Company’s 

shares from the Premier Marché of Euronext Paris S.A. 

An upgrade or downgrade in Cap Gemini S.A.’s credit rating would 

not constitute an early redemption event and would have no impact 

on the applicable interest rate. 

Pari passu status 

Cap Gemini S.A. has undertaken that the bonds will rank pari passu 

with all other bonds issued by the Company. 

RECOGNITION OF THE “OCEANE 2003” CONVERTIBLE/ 

EXCHANGEABLE BOND ISSUE AT FAIR VALUE 

At December 31, 2006, the liability component of the “OCEANE 

2003” convertible/exchangeable bonds amounted to €427 million 

(€418 million at December 31, 2005). 

Based on the effective interest rate of 4.8% (5.1% including issue 

costs), the annual interest charge recorded is €21.4 million, compared 

with a paid coupon of €11.5 million calculated on the basis of the 

bonds’ nominal interest rate (2.5%). 


93

94 ANNUAL 



B) Obligations under finance leases 

The amount reported under this caption at December 31, 2006 corresponds mainly to the finance lease relating to the “Les Fontaines” site of 

the Group University located at Gouvieux and investments in Computer equipment made by Capgemini UK Plc and New Horizons Systems 

Solutions LP (Canada). 


Capgemini University 

(Les Fontaines) 

C) Other financial debt 

At December 31, 2006, other financial debt of €224 million mainly 

consists of: 

€121 million relating to the recognition in the balance sheet 

of carry-back tax credits (see Note 14 – “Other non-current 

assets”). 

€65 million corresponding to the present value of the put option 

held by the TXU group in connection with the outsourcing contract 

signed in May 2004. 

€19 million in financial debt owed to TXU under the terms of 

the contract. 

€9 million corresponding to the present value of the put option 

granted to Hindustan Lever Limited in connection with the acquisition 

of Indigo. 

D) Syndicated credit facility obtained by Cap Gemini 

S.A. 

On November 14, 2005, Cap Gemini S.A. signed a €500 million 

multi-currency credit facility with a group of banks maturing on 

November 14, 2010 at the latest. On September 14, 2006, Cap 

Gemini S.A. exercised the one-year extension option on this credit 

facility (agreed by the banks on October 27, 2006), thereby extending 

its maturity to November 14, 2011. 

Use of this credit facility is subject to the following conditions: 

A margin of 0.50% as of today (above Euribor or Libor 1 to 

12 months). In addition, a utilization fee of 0.025% to 0.050% 


Earliest 

start date 

of leases 

Latest 

expiry date 

of leases 

Weighted 

average 

interest rate 

December 

31, 2006 

Dec. 2002 July 2014 

3-month 

Euribor +0.75% 

67 

Capgemini UK Plc Oct. 2000 Nov. 2010 

Fixed rate 

(10.4%) 

37 

New Horizons System Solutions LP Feb. 2003 Oct. 2010 

Fixed rate 

(6.0%) 

13 

Other April 1999 Nov. 2011 - 39 

TOTAL SHORT- AND LONG-TERM OBLIGATIONS 

UNDER FINANCE LEASES 156 

A certain number of leases included in the outsourcing contract signed with Schneider Electric on October 28, 2004 have not yet been 

transferred to the Group. The restatement of finance leases may lead to the recognition of additional financial debt for an estimated maximum 

amount of €8 million, corresponding to the total lease commitments. At December 31, 2006, these commitments are included in “Off 

balance sheet commitments”. 

may apply for drawdowns in excess of certain amount of the credit 

facility. The margin may be adjusted according to the Company’s 

credit rating. 

A fee on undrawn amounts initially set at 35% of the margin (i.e. 

currently 0.175%) that may be reduced to 30% if Cap Gemini 

S.A.’s rating improves. 

An upgrade or downgrade of Cap Gemini S.A.’s credit rating would 

have no impact on the availability of this credit line. 

Cap Gemini S.A. has agreed to comply with the following covenants 

regarding financial ratios (as defined in IFRS): 

the net financial debt to consolidated equity ratio must be less 

than 1 at all times; 

interest cover – i.e., the extent to which finance costs (net) 

adjusted for certain items are covered by consolidated operating 

margin – must be equal to or greater than 3 as at December 

31 and June 30 of each year (based on the 12 months then 

ended). 

At December 31, 2006, the Group complied with these financial 

ratios: 

Net financial debt to consolidated equity ratio is not relevant due 

to a positive net cash and cash equivalents situation. 

The interest cover requirement was not relevant insofar as adjusted 

finance costs (net) were nil.

The facility agreement includes covenants restricting the Company’s 

ability to carry out certain operations. These covenants also apply to 

Group subsidiaries. They include restrictions primarily relating to: 

pledging certain assets as collateral, 

asset sales, mergers or similar transactions. 

Cap Gemini S.A. also committed to standard obligations, including 

obtaining and retaining the necessary authorizations, maintaining 

insurance cover and maintaining pari passu treatment. 

III. MAIN CHARACTERISTICS OF FINANCIAL DEBT 

A) Interest rates and currencies 

Average interest rate on Group financial debt 

In 2006, the average interest rate on the Group’s financial debt was 5.3%. 

Lastly, the agreement contains the usual provisions relating to early 

repayment, including for failure to pay sums due, misrepresentation 

or failure to comply with other obligations included in the agreement 

(subject to any applicable “grace” periods), cross-defaults (in excess 

of a minimum threshold), insolvency and bankruptcy proceedings, 

change of control, or changes which would have a significant negative 

impact on the financial position of the Group. 

At the date of this report, no drawdowns had been made on this 

credit facility. 

Fixed rates/variable rates 

At December 31, 2006, 41% of Group financial debt is at variable rates, of which 35% is capped, and 59% is at fixed rates. 

Analysis of the sensitivity of net finance costs in 2006 to a rise in interest rates 

The impact on gross finance costs of a theoretical 1% annual average rise in interest rates based on an annual average financial debt position, 

is an estimated €1 million (€6 million at December 31, 2005). 

The impact on income from cash and cash equivalents of a theoretical 1% annual average rise in interest rates based on an annual average 

cash and cash equivalents position, is an estimated €20 million (€14 million at December 31, 2005). 

Accordingly, a 1% increase in interest rates would have an estimated €19 million positive impact on net finance costs. 

Effective interest rates (EIR) and maturities of financial debt 

At December 31 2004 2005 2006 

EIR 

Amount 

(€ millions) 

EIR 

Amount 


EIR 

Amount 


Within 

1 year 

1 to 

2 years 

2 to 

5 years 

Short-term investments 2.20% 1,001 2.50% 1,805 3.70% 2,460 2,460 - - - 

Cash 1.90% 251 1.90% 416 2.40% 442 442 - - - 

Bank overdrafts 2.60% (20) 2.80% (85) 3.50% (43) (43) - - - 

Beyond 

5 years 

CASH AND CASH 

EQUIVALENTS 

1,232 

2,136 2,859 2,859 - - - 

“OCEANE 2003” bonds 5.10% 408 5.10% 418 5.10% 427 - - 427 - 

“OCEANE 2005” bonds 

Drawdowns on bank 

- - 4.80% 396 4.80% 411 - - - 411 

and similar facilities 

Obligations under 

2.80% 46 6.10% 8 6.80% 6 6 - - - 

finance leases 4.90% 228 4.60% 174 6.00% 156 49 31 50 26 

Other financial debt 4.60% 266 5.40% 220 5.40% 224 9 94 37 84 

Commercial paper - - 2.65% 15 - - - - - - 

TOTAL FINANCIAL DEBT 948 1,231 1,224 64 125 514 521 


95

96 ANNUAL 



Effective interest rates (EIR) by currency 

At December 31 2006 

B) Fair values 

At December 31 



Carrying 

amount 

2004 2005 2006 

Fair 

value 

Carrying 

amount 

Fair 

value 

Carrying 

amount 

ASSETS 

Short-term investments 1,001 1,001 1,805 1,805 2,460 2,460 

Cash 251 251 416 416 442 442 

Bank overdrafts (20) (20) (85) (85) (43) (43) 

LIABILITIES 

“OCEANE 2003” bonds (1) 408 426 418 425 427 434 

“OCEANE 2005” bonds (2) - - 396 350 411 364 

Drawdowns on bank and similar facilities 46 46 8 8 6 6 

Obligations under finance leases 228 (3) - 174 (3) - 156 (3) - 

Other financial debt 266 267 220 220 224 222 

Commercial paper - - 15 15 - - 

(1) At December 31, 2006, the fair value (stock market value) of the financial instrument amounted to €517 million, versus €465 million and €456 million, 

respectively, at December 31, 2005 and 2004. In view of comparison, the amounts shown as “Fair value” in the table above correspond to the 

debt composant of the bonds. 

(2) At December 31, 2006, the fair value (stock market value) of the financial instrument amounted to €611 million, versus €496 million at December 31, 

2005. In view of comparison, the amounts shown as “Fair value” in the table above correspond to the debt composant of the bonds. 

(3) In view of the number and diverse types and maturities of finance leases, this information is not deemed to be relevant. 

NOTE 18 – DERIVATIVE INSTRUMENTS 

A) Interest rate hedges 

At December 31, 2006, three interest rate hedges were outstanding in 

the form of swaps and options (caps and floors) on a total amount of 

€593 million (versus €497 million at December 31, 2005), for periods 

ranging from two months to eight years: the main characteristics of 

these contracts are as follows: 

Euro US dollar Pound sterling Other Total 

EIR Amount EIR Amount EIR Amount Amount Amount 

(€ millions)) (€ millions) (€ millions) (€ millions) (€ millions) 

“OCEANE 2003” bonds 5.10 % 427 - - - - - 427 

“OCEANE 2005” bonds 4.80 % 411 - - - - - 411 

Drawdowns on bank and similar facilities - - 6.40% 1 - - 5 6 

Obligations under finance leases 3.40% 94 6.10% 11 10.40% 37 14 156 

Other financial debt 3.90% 138 5.50% 84 - - 2 224 

TOTAL FINANCIAL DEBT - 1,070 - 96 - 37 21 1,224 

Fair 

value 

An interest rate swap contracted by Cap Gemini S.A. on October 28, 

2004 and maturing in January 2010, as a hedge of the “OCEANE 

2003” convertible/exchangeable bonds. This swap covers a notional 

amount of €460 million over a remaining period of three years. 

In view of the increase in short-term interest rates in 2006 and current 

market forecasts through to the maturity of the “OCEANE 2003” 

bonds on January 1, 2010, this interest rate swap was amended on 

September 15, 2006. Under the revised terms of the swap contract,

Cap Gemini S.A. pays a variable rate of 3-month post-fixed Euribor 

(12-month post-fixed Euribor less 0.59% under the previous terms) 

against the fixed rate of the OCEANE bonds (2.5%). The variable rate 

is now capped at 3.07% (3.41% under the previous terms), while 

the floor is unchanged at 1.41%. The revised terms of the interest 

rate swap contract do not affect the zero-cost automatic deactivation 

clause in the event that the Company exercises its right (under certain 

conditions) to redeem the bonds early (the terms and conditions of 

the contract are set out in Note 17 – “Cash and cash equivalents” and 

in the prospectus approved by the AMF on June 24, 2003 under the 

reference number 03-607). 

The measurement of this contract at market value at December 31, 

2006 resulted in a loss of €5 million recorded under “Other financial 

income and expense, net”. In the balance sheet at December 31, 

2006, this contract is valued at €6 million and is included under 

the line “Other non-current liabilities”. 

An interest rate swap contract maturing in July 2014, covering 50% 

B) Currency hedges 

Group exposure to currency risks 

The Group’s exposure to currency risks arising from transactions recognized at December 31, 2006 by Group operating subsidiaries and 

denominated in currencies other than the functional currency, is as follows: 

in millions of euros Euro US dollar 

2006 

Pound 

sterling 

Swedish 

krona 

Other 

currencies (1) 

TOTAL ASSETS 48 27 11 8 16 

TOTAL LIABILITIES (34) (10) (295) (1) (14) 

Exposure to currency risks before hedging 14 17 (284) 7 2 

Amounts hedged (6) (10) 280 (5) (6) 

Exposure to currency risks after hedging 8 7 (4) 2 (4) 

(1) Other currencies essentially include Australian and Canadian dollars, and Swiss francs. 

At December 31, 2006, hedges acquired concern Cap Gemini S.A. for intercompany financing transactions, and Group subsidiary Capgemini 

Consulting India Private Ltd. for its subcontracting activities realized for other Group regions. 

Currency hedges 

At December 31, 2006, currency swaps totaled €416 million (versus 

€207 million at December 31, 2005), as follows: 

Hedges of commercial transactions in India expiring in 2007 and 

2008 in the form of currency swaps for a total equivalent value of 

€90 million. The swaps relate to amounts denominated in euros, 

US dollars and Pounds sterling. 

Currency swaps expiring in 2007, acquired as hedges of intercompany 

financing transactions and concern amounts in Pounds 

sterling, US dollars, Australian dollars, Swedish krona and Swiss 

francs for a total equivalent value of €326 million. 

Besides, on November 3, 2006, Cap Gemini S.A. purchased a currency 

option conferring the right (but not the obligation) to purchase 

until February 26, 2007– at a pre-set price – USD 650 million for 

an equivalent value of €518 million. This contract is designated to 

hedge a portion of the Group currency risk exposure arising from 

of a finance lease taken out by S.A.R.L. Immobilière Les Fontaines 

(Capgemini University) in 2002, for a notional amount of €33 million. 

Under the terms of the swap, S.A.R.L. Immobilière Les Fontaines 

pays a fixed rate of 3.51% and receives 3-month Euribor. 

The measurement of this contract at market value at December 31, 

2006 resulted in a gain of €1 million recorded under “Other financial 

income and expense, net”. In the balance sheet at December 31, 

2006, this contract is valued at €1 million and is included under 

the line “Other non-current assets”. 

End of February, an interest rate swap contract covering Cap 

Gemini S.A.’s short-term investments, maturing in February 2007, 

and for a notional amount of €100 million. Under the terms of the 

swap, the Group pays a variable rate (Eonia) and receives a fixed 

rate of 2.86%. 

The measurement of this contract at market value at December 

31, 2006 resulted in a loss of €0.2 million recorded under 

“Other financial income and expense, net”. In the balance sheet 

at December 31, 2006, this contract is valued at €0.2 million and 

is included under the line “Other non-current liabilities”. 

the acquisition of Kanbay in 2007 announced October 26, 2006 for 

1.26 billion (see Note 28 – “Subsequent events”). Considering the 

acquisition of 14.7% of Kanbay on November 21, 2006, this option, 

expiring on February 26, 2007, hedges 60% of the remaining currency 

risk exposure as at December 31, 2006. The cost of this contract is 

recorded within “Other financial income and expense, net” in an 

amount of €3.3 million. At December 31, 2006, its carrying amount 

in the balance sheet is not material. 

All of the currency hedges contracts are designated and treated as fair 

value or cash flow hedges, and are recorded in the balance sheet at 

December 31, 2006 under “Other non-current assets” in an amount 

of €2 million. In the statement of income, these contracts led to a 

€2.6 million loss, including a net finance cost of €0.3 million recorded 

under “Other financial income and expense, net”. 


97

98 ANNUAL 



NOTE 19 – PROVISIONS FOR PENSIONS AND OTHER POST-EMPLOYMENT BENEFITS 

Changes in provisions for pensions and other post-employment benefits can be analyzed as follows: 


Provisions for pensions and other post-employment benefits at 

December 31, 2005 have been restated in line with the amendment 

to IAS 19 (see Note 2 – “Change in accounting method”). 

There are two categories of retirement plans: 

Defined contribution plans 

Defined contribution plans have been set up in the majority of 

European countries (France, Benelux, Germany and Central Europe, 

Nordic countries, Italy and Spain) as well as in the United States and 

Asia-Pacific countries. 

These plans are funded by contributions paid to authorized agencies, 

which are expensed as incurred. The Group’s obligation under these 

plans is recorded in “Accounts and notes payable”. 

I. PROVISIONS FOR FUNDED DEFINED BENEFIT PLANS 

A) Analysis of obligation 



Defined benefit plans 

Two types of defined benefit plans are recognized in provisions for 

pensions and other post-employment benefits: 

Funded defined benefit plans. These plans exist in the United 

Kingdom and Canada, as well as in other regions (the United States, 

Ireland, Sweden, Benelux, Germany, Switzerland and France). 

Unfunded defined benefit plans. These plans correspond to retirement 

bonuses and healthcare coverage and mainly concern Canada, 

Germany and Central Europe, France, Italy and Sweden. 

2004 2005 2006 

United 

Kingdom Canada Other Total 

United 


United 


Present value of 

obligation 993 138 72 1,203 1,572 212 104 1,888 1,647 197 113 1,957 

Fair value of plan 

assets 673 132 52 857 1,045 182 76 1,303 1,212 193 84 1,489 

FUNDING DEFICIT 

o/w actuarial gains 

and losses recogni- 

320 6 20 346 527 30 28 585 435 4 29 468 

zed in equity 24 6 3 33 198 33 13 244 75 9 7 91 

NET PROVISIONS 

IN THE BALANCE 

SHEET 320 6 20 346 527 30 28 585 435 4 29 468 

Assets (1) - (13) - (13) - - - - - (3) - (3) 

Liabilities 320 19 20 359 527 30 28 585 435 7 29 471 

(1) These amounts correspond to funding surpluses in one of the Canadian plans. 

Provisions for pensions 

and other post-employment 

benefits 

December 31, 2005 696 

Translation adjustments 3 

Increase – Personnel costs 98 

Decrease – Benefits and contributions (61) 

Change in actuarial gains and losses recognized in equity (150) 

Other movements 5 

December 31, 2006 591 

At December 31, 2006, the net benefit obligation for other regions, amounting to €29 million, primarily concerns the United States (€18 million), 

Germany and Central Europe (€4 million), Ireland (€3 million), Benelux (€1 million) and Nordic countries (€1 million).

B) Analysis of movements in provisions 

Analysis of changes in the present value of pension obligations and plan assets 


Present value 

of obligation 

Fair value 

of plan assets 

Net provisions in 

the balance sheet 

At January 1, 2005 

Net expense for the year: 

1,203 (857) 346 

– Service cost 78 - 78 

– Interest cost 73 - 73 

– Expected return on plan assets - (68) (68) 

Benefits paid to employees (31) 28 (3) 

Contributions paid - (57) (57) 

Changes in actuarial gains and losses 313 (120) 193 

Translation adjustments 63 (50) 13 

Aspire Plan at transfer date (1) 178 (165) 13 

Other movements 11 (14) (3) 

At December 31, 2005 


1,888 (1,303) 585 



– Effect of curtailments and settlements (2) (27) 17 (10) 

– Expected return on plan assets - (89) (89) 

Contributions paid by employees 6 (6) - 

Benefits paid to employees (37) 37 - 

Contributions paid - (57) (57) 

Changes in actuarial gains and losses (81) (73) (154) 

Translation adjustments 6 - 6 

Other movements 18 (15) 3 

At December 31, 2006 1,957 (1,489) 468 

(1) Commitments related to the signing of the Aspire contract in the UK were transferred in 2005, as the voluntary subscription period open to employees 

in respect of Capgemini UK Plc’s retirement plan expired during the first half of 2005. At the transfer date, the previous service provider undertook 

to refinance the plan, concerning 1,530 employees, based on a valuation performed by actuaries. 

(2) In 2006, plan curtailments and settlements essentially concern employee transfers in connection with the sale of infrastructure and network management 

services to British Telecom in the United Kingdom. 

Service cost for the year amounts to €91 million – mainly concerning 

the United Kingdom (€68 million) and Canada (€12 million) – and 

is calculated on the basis of the assumptions detailed below. 

Interest cost for the year corresponds to the discounting of the obligation 

in an amount of €93 million, which chiefly concerns the United 

Kingdom (€76 million) and Canada (€11 million) and is calculated 

on the basis of the assumptions detailed below. 

The expected return on plan assets (€89 million) mainly concerns 

the United Kingdom (€72 million) and Canada (€13 million) and is 

calculated on the basis of the assumptions detailed below. 

Benefits paid to employees, totaling €37 million, chiefly relate to the 

United Kingdom (€20 million) and Canada (€10 million). 

Contributions to plan assets totaled €57 million during the year. 

The main contributors were the United Kingdom (€40 million) and 

Canada (€12 million). 

Analysis of changes in recognized actuarial gains and losses 

Changes in actuarial gains and losses reflect increases or decreases 

in the present value of the obligation or the fair value of the related 

plan assets. 

Actuarial gains and losses include (i) the impacts of changes in actuarial 

assumptions (essentially the discount rate and expected rate of 

return on plan assets) and (ii) the effects of differences between the 

projected actuarial assumptions and actual outcomes (experience 

adjustments, as described in section III – “Analysis of actuarial gains 

and losses: experience adjustments”). 

The €193 million recognized actuarial loss in 2005 arises essentially 

from the decrease in rates used to discount obligations in the United 

Kingdom and Canada, and also from the adoption of a new mortality 

table in the United Kingdom. 

The €154 million recognized actuarial gain in 2006 reflects changes in 

actuarial assumptions, of which €125 million is due to the 0.5-point 

increase in the discount rate in the United Kingdom. 


99

100 ANNUAL 



C) Analysis of plan assets 

The main plan asset categories can be analyzed as follows: 

in millions of euros 2004 % 2005 % 2006 % 

Shares 567 66 852 65 958 64 

Bonds 231 27 388 30 456 31 

Real estate assets 26 3 32 3 39 3 

Cash and cash equivalents 21 3 14 1 16 1 

Other 12 1 17 1 20 1 

TOTAL 857 100 1,303 100 1,489 100 

D) Employees of funded defined benefit plans 


2004 

Total 

2005 

Total 

2006 

United 


Current employees 5,991 10,939 4,290 932 6,961 12,183 

Former employees 5,651 6,307 6,207 37 1,175 7,419 

Retirees 811 936 1,028 107 32 1,167 

TOTAL 12,453 18,182 11,525 1,076 8,168 20,769 

The increase in employees is attributable to the expansion of Group operations in India. 

At December 31, 2006, total other employees are primarily based in India (6,152 employees) and the present value of the related obligation 

amounted to €2 million. In India, the Group has taken out an insurance contract to cover its obligation to pay bonuses to employees with at 

least two years’ service who leave the Group. 

E) Principal actuarial assumptions 

Discount rate and salary inflation rate 

2004 2005 2006 

(%) United Kingdom Canada Other 

Discount rate 3.5 - 7.0 2.6 - 7.4 5.3 5.3 2.6 - 8.1 

Salary inflation rate 1.5 - 6.0 1.5 - 6.0 3.5 3.3 1.5 - 6.0 

Analysis of the expected rate of return on plan assets 

2004 2005 2006 

in millions of euros United Kingdom Canada Other 

Shares 4.0 - 8.6 4.8 - 8.6 8.0 8.5 6.0 - 7.3 

Bonds 2.5 - 7.0 2.4 - 7.8 4.6 - 5.3 5.3 2.5 - 7.3 

Real estate assets 6.3 - 6.5 6.0 - 6.5 6.5 - 5.0 - 6.3 

Cash and cash equivalents 3.8 3.8 3.8 - 2.0

F) Contributions to plans in 2007 

The Group expects to pay €62 million in contribution into its defined benefit pension plans in 2007. 

II. PROVISIONS FOR UNFUNDED DEFINED BENEFIT PLANS 

A) Analysis of obligation 


2004 2005 2006 

Total Total France Canada 

Germany 

and Central 

Europe 

Italy Sweden Total 

Present value of obligation 105 116 38 34 25 15 13 125 

Fair value of plan assets 

FUNDING DEFICIT 105 116 38 34 25 15 13 125 

o/w actuarial gains and losses recognized 

in equity 2 15 7 3 5 - 3 18 

Unrecognized past service costs (5) (5) (5) - - - - (5) 

NET PROVISIONS IN BALANCE SHEET 

Assets 

100 111 33 34 25 15 13 120 

Liabilities 100 111 33 34 25 15 13 120 

In France and Italy, the defined benefit plan concerns retirement bonuses. In Canada, it relates mainly to healthcare coverage, and in Germany 

and Central Europe chiefly concerns supplementary pension plans provided in addition to the statutory scheme. 

B) Analysis of movements in obligation 


Present 

value of 

obligation 

Fair value 

of plan 

assets 

Unrecognized 

past 

service 

costs 

Net provision 

in the balance 

sheet 

AT JANUARY, 1 2005 105 (5) 100 

Changes in Group structure 


(11) - (11) 



Benefits paid to employees (5) - (5) 

Changes in actuarial gains and losses 13 - 13 

Translation adjustments 3 - 3 

Other movements (3) - (3) 

AT DECEMBER 31, 2005 116 (5) 111 

Changes in Group structure 


- - - 



– Effect of curtailments and settlements (1) - (1) 

Benefits paid to employees (4) - (4) 

Changes in actuarial gains and losses 4 - 4 

Translation adjustments (3) - (3) 

Other movements (1) - (1) 

AT DECEMBER 31, 2006 125 (5) 120 

Service cost for the year, amounting to €9 million, relates to Italy (€3 million), Canada (€3 million), France (€2 million) and Germany and 

Central Europe (€1 million). 

Benefits paid to employees mainly concern Italy (€2 million), Canada (€1 million) and Germany and Central Europe (€1 million). 


101

102 ANNUAL 



Analysis of recognized actuarial gains and losses 

Actuarial losses for the year include the impact in France of the social security financing law published on December 22, 2006. 

C) Employees of unfunded defined benefit plans 


2004 2005 2006 

Total Total France Canada 

Germany 

and Central 

Europe 

Italy Sweden Total 

Current employees 23,767 19,989 20,086 1,864 400 1,271 32 23,653 

Former employees 986 1,148 - 74 100 - 811 985 

Retirees 116 120 - 214 57 - 11 282 

TOTAL 24,869 21,257 20, 086 2,152 557 1,271 854 24,920 

D) Principal actuarial assumptions 

(%) 

2004 2005 2006 

France Canada 

Germany 

and Central 

Europe 

Italy Sweden 

Discount rate 4.4 - 6.0 3.7 - 6.0 4.2 5.3 4.5 4.4 3.9 

Salary inflation rate 1.5 - 4.8 2.0 - 4.5 1.5 3.3 2.0 4.5 2.0 

III. ANALYSIS OF ACTUARIAL GAINS AND LOSSES: EXPERIENCE ADJUSTMENTS 

This analysis concerns both funded and unfunded defined benefit plans. 

Experience adjustments are the effects of differences between the projected actuarial assumptions and what has actually occurred. 

The amounts relating to the current year and the prior years presented break down as follows: 


Experience adjustment on liabilities (1) 17 37 37 

Experience adjustment on assets (2) 27 112 50 

(1) + : liabilities increase / - : liabilities decrease 

(2) + : assets increase / - : assets decrease 

The experience adjustments chiefly concern the United Kingdom and Canada. 

IV. SENSITIVITY TO CHANGES IN HEALTHCARE ASSISTANCE COSTS 

Healthcare assistance costs exclusively concern Canada. In 2004, 2005 and 2006, a 1% change in healthcare assistance costs would have an 

impact of approximately €1 million in the statement of income (service cost and interest cost), and an impact of between a negative €4 million 

and a positive €5 million in the balance sheet.

NOTE 20 – CURRENT AND NON-CURRENT PROVISIONS 

Changes in current and non-current provisions can be analyzed as follows: 

in millions of euros 2005 2006 

AT JANUARY 1 39 34 

Additions 18 73 

Reversals (utilization of provisions) (18) (9) 

Reversals (surplus provisions) (10) (3) 

Other 5 3 

AT DECEMBER 31 34 98 

At December 31, 2006, current and non-current provisions mainly concerned risks relating to projects and contracts amounting to €88 million 

and risks relating to tax and labor disputes in an amount of €10 million (€6 million at December 31, 2005). 

NOTE 21 – OTHER NON-CURRENT LIABILITIES 

Other non-current liabilities primarily relate to restructuring costs concerning real estate streamlining measures mainly implemented in 

previous years in the United States and United Kingdom, the non-current portion of the special employee profit-sharing reserve in France as 

well as interest rate hedges (see Note 18 – “Derivative instruments”). 

NOTE 22 – ACCOUNTS AND NOTES PAYABLE 

Total accounts and notes payable excluding advances received from customers (as presented separately), break down as follows: 


Accounts payable 534 735 817 

Accrued taxes other than on income 251 294 306 

Personnel costs 697 787 858 

Other 62 65 38 

TOTAL 1,544 1,881 2,019 

The change in accounts and notes payable is directly in line with movements in “Purchases and sub-contracting expenses” and “Personnel 

costs”, and reflects the growth in the Group’s business. 

NOTE 23 – OTHER PAYABLES AND INCOME TAXES 


Taxes payable 56 47 65 

Other payables 37 19 48 

TOTAL 93 66 113 

Other payables include the current portion of the special employee profit-sharing reserve and other current liabilities. The year-on-year change 

reflects employee profit-sharing in France and the balance outstanding on the acquisition of the FuE group in Germany. 


103

104 ANNUAL 



NOTE 24 – GROUP MANAGEMENT COMPENSATION 

The table below provides a breakdown of compensation due to members of the Group Management team (24 members at December 31, 

2006 against 20 members at December 31, 2005). 

in thousands of euros 2005 2006 

Short-term benefits excluding employer payroll taxes (1) 14,632 17,693 

Short-term benefits: employer payroll taxes 2,451 3,257 

Post-employment benefits (2) 504 497 

Share-based payment (3) 973 1,527 

(1) Includes gross wages and salaries, bonuses, profit-sharing, directors’ fees and advantages in kind. 

(2) This amount mainly includes statutory retirement indemnities. 

(3) This amount corresponds to the annual expense relating to the award of stock options. 

NOTE 25 – OFF BALANCE SHEET COMMITMENTS 

A) Commitments given 


On non-cancelable leases 1,078 1,046 867 

On suppliers contracts 70 89 91 

Other commitments given 75 44 42 

TOTAL 1,223 1,179 1,000 

The Group’s commitments under non-cancelable leases can be analyzed as follows: 


Computer 

equipment 

Offices Vehicles Other Total 

y+1 31 146 50 6 233 

y+2 17 131 37 7 192 

y+3 7 110 21 4 142 

y+4 2 87 6 - 95 

y+5 2 69 - - 71 

y+6 and subsequent years - 134 - - 134 

TOTAL AT DECEMBER 31, 2006 59 677 114 17 867 

TOTAL AT DECEMBER 31, 2005 100 817 117 12 1,046 

TOTAL AT DECEMBER 31, 2004 69 888 112 9 1,078 


At December 31, 2006, commitments relating to non-cancelable 

leases were mainly given in the United Kingdom (€149 million), 

Benelux (€146 million), France (€140 million), Germany and 

Central Europe (€122 million) and North America (€105 million). 

Lease payments recognized in the income statement during the 

year totaled €229 million. 

The year-on-year decrease in commitments under computer equipment 

leases reflects the expiry of a certain number of contracts in 

2006, notably in the United Kingdom and France. 

Office lease terms depend on the geographic area and vary between 

five and twenty-five years. Vehicle leases are short-term contracts 

of three to five years. The year-on-year change in 2006 in commitments 

under non-cancelable office leases essentially reflects the 

streamlining of the Group’s real estate assets. 

Commitments given on suppliers contracts primarily represent 

purchase orders to be issued under global purchase contracts. 

Other commitments given relate mainly to: 

– bank guarantees given to the tax authorities in connection with 

tax disputes in France and Spain; 

– commitments relating to employees in the Netherlands and 

Sweden. 

B) Commitments given and received on minority 

interests 

On April 12, 2005, the Group entered into an alliance with the 

Japanese group NTT Data Corporation to sell 95% of its stake in 

Capgemini Japan K.K. for €30 million. The sale agreement granted 

a put option to the Capgemini Group on its residual 5% interest in 

Zacatii Consulting Inc. (formerly Capgemini Japan K.K.) and a call 

option to NTT Data Corporation in relation to the same shares. These 

options are exercisable for a period of two years as from July 14, 2008 

at the higher of the market value of the shares at the exercise date 

NOTE 26 – SEGMENT INFORMATION 

I. SEGMENT REPORTING BY GEOGRAPHIC AREA 

The Group has operations in the following eight geographic areas: 

and the valuation of the shares as determined based on the initial 

transaction cost (i.e., €1 million for the residual 5% stake in Zacatii 

Consulting Inc. at December 31, 2006). 

C) Commitments given on clients’ contracts 

For various large contracts signed by Group entities, the Group has 

provided performance and/or financial guarantees, in particular 

concerning the “Aspire” contract signed with the UK Inland Revenue 

on January 5, 2004 for an estimated amount of £3 billion, the TXU 

contract signed on May 17, 2004 for USD 3.5 billion, the Schneider 

Electric Industries SAS contract signed on October 28, 2004 for 

€1.6 billion, Metropolitan Police for £350 million and the framework 

contract of Euroclear. 

The Group has also provided limited financial guarantees, relating to 

client contracts, for a total amount of €91 million at December 31, 

2006. 

Certain clients have been granted bank guarantees given by the Group 

for a global amount of €55 million at December 31, 2006. 

In addition to the standard clauses, the outsourcing contract signed 

with TXU Energy Company LLC and TXU Electric Delivery Company 

(formerly Oncor Electric Delivery Company) entitles the TXU 

group to terminate the contract if the Group’s corporate credit rating 

is downgraded to below investment grade. The contract nevertheless 

remained in force following the downgrade of the Group’s credit 

rating by Standard & Poor’s on January 7, 2005. 

D) Financial debts secured by assets 

Some financial debts are secured by assets recorded in the balance 

sheet. At December 31, 2006, these borrowings included €156 million 

relating to obligations under finance leases, and €121 million 

relating to the reinstatement in the balance sheet of carry-back tax 

credits (see Note 17 – “Net cash and cash equivalents”, Note 12 

– “Property, plant and equipment” and Note 14 – “Other non-current 

assets”). 

Geographic area Countries 

North America Canada, Mexico, United States 

United Kingdom and Ireland Ireland, United Kingdom 

Nordic countries Denmark, Finland, Norway, Sweden 

Benelux Belgium, Luxembourg, Netherlands 

Germany and Central Europe Austria, Germany, Poland, Switzerland and other eastern European countries 

France France 

Southern Europe Italy, Portugal, Spain 

Asia-Pacific Australia, China, India 


105

106 ANNUAL 



A) Analysis of results by geographic area 

Results for 2006 break down as follows by geographic area: 


North 

America 


United 

Kingdom 

and Ireland 

Nordic 

countries Benelux 

Germany 

and Central 

Southern 

Europe France Europe 

Asia- 

Pacific 

Not 

allocated 

(1) 

Eliminations 

Total 

REVENUES 

- external 1,341 2,126 441 1,046 514 1,816 339 77 - - 7,700 

- inter-geographic area 12 48 23 45 60 74 28 130 (420) 

TOTAL REVENUES 1,353 2,174 464 1,091 574 1,890 367 207 - (420) 7,700 

OPERATING MARGIN 72 164 32 142 52 5 15 13 (48) - 447 

% 5.4 7.7 7.4 13.5 10.2 0.3 4.4 16.4 - - 5.8 

OPERATING PROFIT/(LOSS) 66 127 29 131 40 (30) 9 11 (49) - 334 

Finance costs, net (10) 

Other financial income and expense, net (18) 

Income tax expense (13) 

PROFIT FOR THE YEAR 293 

PROFIT ATTRIBUTABLE TO 

EQUITY HOLDERS OF THE 

293 

PARENT 

(1) Items not allocated correspond to headquarters’ expenses. 

Operating margin improved in all geographic areas except France, where the overall profitability of the Consulting Services and Technology 

Services businesses is not sufficient to offset the impact of difficulties encountered on the Schneider Electric contract (delays in the delivery 

of the Global Core System, and the greater-than-expected complexity of its future operation). 

As regards other operating income and expense for the year, refer to Note 6 – “Other operating income and expense, net”. 



North 

America 

United 

Kingdom 

and Ireland 

Nordic 

Germany 

and Central 

countries Benelux Europe France 

Southern 

Europe 

Asia- 

Pacific 

Not 

allocaEliminated (1) tions Total 

REVENUES 

– external 1,353 1,738 415 956 443 1,666 310 73 - - 6,954 

– inter-geographic area 17 50 17 49 42 67 22 70 - (334) - 

TOTAL REVENUES 1,370 1,788 432 1,005 485 1,733 332 143 - (334) 6,954 

OPERATING MARGIN (26) 67 24 101 36 44 9 9 (39) - 225 

% (1.9) 3.8 5.9 10.6 8.2 2.6 2.9 12.1 - - 3.2 

OPERATING PROFIT/(LOSS) 20 56 14 85 50 16 5 8 (40) - 214 

Finance costs, net (24) 

Other financial income and expense, net (14) 


PROFIT FOR THE YEAR 141 

PROFIT ATTRIBUTABLE TO EQUITY 

HOLDERS OF THE PARENT 

141 

(1) Items not allocated correspond to headquarters’ expenses.



North 

America 

United 

Kingdom 

and Ireland 

Nordic 

Germany 

and Central 

countries Benelux Europe France 

Southern 

Europe 

Asia- 

Pacific 

Not 

allocated 

(1) 

Eliminations 

Total 

REVENUES 

– external 1,351 1,288 391 857 477 1,479 299 93 - - 6,235 

– inter-geographic area 13 35 12 45 23 64 12 50 - (254) - 

TOTAL REVENUES 1,364 1,323 403 902 500 1,543 311 143 - (254) 6,235 

OPERATING MARGIN (108) 8 1 46 15 54 (10) 3 (33) - (24) 

% (8.0) 0.6 0.3 5.4 3.1 3.6 (3.3) 3.2 - - (0.4) 

OPERATING PROFIT/(LOSS) (149) (26) (15) (2) (6) (10) (41) 1 (33) - (281) 

Finance costs, net 

Other financial income and expense, 

(28) 

net 1 


LOSS FOR THE YEAR (534) 

LOSS ATTRIBUTABLE TO EQUITY 

HOLDERS OF THE PARENT 

(1) Items not allocated correspond to headquarters’ expenses. 

B) Analysis of depreciation, amortization and other expenses with no cash impact 

Depreciation, amortization and other expenses with no cash impact break down as follows for 2006: 


North 

America 

United 

Kingdom and 

Ireland 

Nordic 


Germany 

and Central 

Europe France 

Southern 

Europe 

Asia- 

Pacific 


(534) 

Not allocated 

Total 

Depreciation and 

amortization expense (31) (54) (7) (17) (21) (25) (5) (6) (1) (167) 

Additions to provisions, net (1) (2) (6) - (2) (10) (42) (1) (2) - (65) 

TOTAL (33) (60) (7) (19) (31) (67) (6) (8) (1) (232) 

(1) This item includes net movements in provisions for doubtful accounts and current and non-current provisions. 



North 

America 

United 

Kingdom and 

Ireland 

Nordic 


Germany 

and Central 

Europe France 

Southern 

Europe 

Asia- 

Pacific 

Not allocated 

Total 



Additions to provisions, net (1) 1 (1) - (1) - (10) (1) 1 - (11) 

TOTAL (46) (48) (8) (26) (24) (35) (5) (4) (1) (197) 


107

108 ANNUAL 





North 

America 


United 

Kingdom 

and Ireland 

Nordic 


Germany 

and Central 

Europe France 

Southern 

Europe 

Asia- 

Pacific 

Not 

allocated 

Total 



Additions to provisions (1) (2) (1) - (2) (3) (3) (1) (3) - (15) 

TOTAL (51) (61) (9) (30) (35) (30) (6) (7) (1) (230) 


C) Analysis of assets and liabilities by geographic area 

The location of assets corresponds to the location of the Group’s clients, except for those concerning outsourcing centers such as in India. 

At December 31, 2006, assets and liabilities break down as follows by geographic area: 


North 

America 

United 

Kingdom 

and 

Ireland 

Nordic 


Germany 

and 

Central 

Southern 


Asia- 

Pacific 

Not 

allocated 

Eliminations 

Total 

Assets by geographic area: 

– external 748 1,053 316 883 420 1,455 193 103 166 - 5,337 

– inter-geographic area 10 22 6 21 16 49 6 25 23 (178) - 

TOTAL ASSETS BY 

GEOGRAPHIC AREA 

758 1,075 322 904 436 1,504 199 128 189 (178) 5,337 

Deferred income tax assets 888 

Recoverable income tax 20 

Short-term investments 2,460 

Derivative instruments (1) 3 

TOTAL ASSETS 

Liabilities by geographic area: 

8,708 

– external 566 1,214 195 262 203 953 136 50 19 - 3,598 

– inter-geographic area 40 33 15 25 15 39 8 (8) 10 (177) - 

TOTAL LIABILITIES BY 


606 1,247 210 287 218 992 144 42 29 (177) 3,598 

Total equity 3,697 

Deferred income tax liabilities 118 

Current income tax liabilities 65 

Financial debt 1,224 

Derivative instruments (1) 6 

TOTAL EQUITY AND 

LIABILITIES 

(1) Interest rate hedges (see Note 18 – “Derivative instruments”). 

8,708



North 

America 

United 

Kingdom 

and 

Ireland 

Nordic 


Germany 

and 

Central 

Southern 


Asia- 

Pacific 

Not 

allocated 

Eliminations 

Total 


– external (1) 674 981 257 899 348 1,348 201 71 178 - 4,957 




696 1,003 266 918 363 1,413 210 89 214 (215) 4,957 

Deferred income tax assets (1) 828 



TOTAL ASSETS 


7,611 

– external (1) 634 1,100 159 321 174 864 143 38 28 - 3,461 

– inter-geographic area 41 46 11 32 18 45 10 (1) 10 (212) - 



675 1,146 170 353 192 909 153 37 38 (212) 3,461 

Total equity (1) 2,750 



Financial debt 1,231 

Derivative instruments 1 


LIABILITIES 

7,611 

(1) Total assets and liabilities by geographic area have been restated in accordance with the amendment to IAS 19 (see Note 2 – “Change in accounting 

method”). 



North 

America 

United 

Kingdom 

and 

Ireland 

Nordic 


Germany 

and 

Central 

Europe France 

Southern 

Europe 

Asia- 

Pacific 

Not 

allocated 

Eliminations 

Total 


– external (1) 687 1,010 299 814 383 1,210 209 57 158 - 4,827 




716 1,033 305 835 394 1,245 215 72 179 (167) 4,827 

Deferred income tax assets (1) 778 



Derivative instruments 1 

TOTAL ASSETS 


6,636 

– external (1) 465 757 178 225 202 757 161 34 2 - 2,781 




501 780 185 248 233 780 169 43 5 (163) 2,781 

Total equity (1) 2,756 



Financial debt 948 


LIABILITIES 

6,636 

(1) Total assets and liabilities by geographic area have been restated in accordance with the amendment to IAS 19 (see Note 2 – “Change in accounting 

method”). 


109

110 ANNUAL 



D) Analysis of acquisitions of intangible assets and property, plant and equipment 

Acquisitions of intangible assets and property, plant and equipment can be analyzed as follows: 


North America 35 38 31 

United Kingdom and Ireland 61 27 47 

Nordic countries 8 8 4 

Benelux 20 9 6 

Germany and Central Europe 54 20 26 

France 29 24 30 

Southern Europe 2 8 4 

Asia-Pacific 7 8 13 

TOTAL 216 142 161 

The acquisition cost of intangible assets and property, plant and equipment reported in the balance sheet for 2006 is different from the figure 

provided in the cash flow statement (€101 million) which excludes transactions with no cash impact (e.g. acquisitions of assets held under 

finance leases). 

II. SEGMENT REPORTING BY BUSINESS SEGMENTS 

The Group’s services are organized into four businesses: 

Consulting Services, which involves helping to enhance the performance of organizations, based on in-depth knowledge of client industries 

and processes. 

Technology Services, which involves integrating IT systems and applications that enable the planning, design, management and development 

of IT systems and applications. 

Outsourcing Services, which involves managing all or part of a company’s IT or business process needs (“Business Process Outsourcing”). 

Local Professional Services, which involves providing IT assistance and expertise within client companies. 

Revenues break down as follows by business: 



2004 2005 2006 


Consulting Services 1,027 16 918 13 851 11 

Technology Services 2,163 35 2,307 33 2,619 34 

Outsourcing Services 2,034 33 2,611 38 3,008 39 

Local Professional Services 1,011 16 1,118 16 1,222 16 

TOTAL 6,235 100 6,954 100 7,700 100 

Operating margin breaks down as follows by business: 


2004 2005 2006 


Consulting Services 10 1.1 41 4.5 86 10.1 

Technology Services (44) (2.0) 118 5.1 196 7.5 

Outsourcing Services (40) (2.0) 3 0.1 93 3.1 

Local Professional Services 83 7.8 102 9.1 120 9.8 

Not allocated (33) - (39) - (48) - 

TOTAL (24) (0.4) 225 3.2 447 5.8

NOTE 27 – NUMBER OF EMPLOYEES 

A) Average number of employees 

The breakdown of average headcount across the Group’s geographic areas is as follows: 

2004 2005 2006 

Employees % Employees % Employees % 

North America 8,338 15 7,381 12 6,272 10 


Nordic countries 3,652 6 3,439 6 3,480 5 

Benelux 8,356 15 8,402 14 8,807 14 

Germany and Central Europe 3,256 6 3,487 6 4,336 7 

France 18,443 32 19,196 32 19,924 31 

Southern Europe 5,210 9 5,246 9 5,982 9 

Asia-Pacific 2,509 4 3,762 6 6,167 10 

Not allocated 152 - 153 - 151 - 

TOTAL 57,387 100 59,734 100 64,013 100 

B) Number of employees at December 31 

The breakdown of headcount at the year end across the Group’s geographic areas is as follows: 

At December 31 2004 2005 2006 

Employees % Employees % Employees % 

North America 8,893 15 6,351 10 6,441 10 


Nordic countries 3,485 6 3,429 6 3,608 5 

Benelux 8,306 14 8,613 14 9,014 13 

Germany and Central Europe 3,390 6 3,732 6 5,137 8 

France 18,508 31 19,714 32 20,287 30 

Southern Europe 5,151 9 5,591 9 6,235 9 

Asia-Pacific 2,901 5 4,628 8 8,231 12 

Not allocated 156 - 152 - 151 - 

TOTAL 59,324 100 61,036 100 67,889 100 

NOTE 28 – SUBSEQUENT EVENTS 

In the dispute between Cap Gemini S.A. and Georges Cohen, the 

former managing director of Transiciel (acquired by the Company 

in 2003 through a public exchange offer whose exchange ratio 

was challenged by Georges Cohen), the Paris Commercial Court 

rejected all of the plaintiff’s demands in a judgement handed down 

on January 19, 2007. Georges Cohen has signaled his intention to 

appeal the judgement. 

On February 8, 2007, Kanbay’s Annual Shareholders’ Meeting 

approved the company’s acquisition by Capgemini in accordance 

with the terms and conditions of the agreement announced on 

October 26, 2006. 

Capgemini agreed to pay a consideration of USD 29 per share 

– including Kanbay stock options, share warrants and preferred 

shares – thereby valuing the transaction at USD 1.26 billion. 

Founded in 1989 and listed on the Nasdaq since 2004, Kanbay 

provides highly integrated management consulting, technology 

integration & development and outsourcing solutions 

through its single global delivery platform specialized mainly 

in financial services and consumer products, but also covering 

the telecommunications, media, life sciences and travel and 

leisure sectors. 

In 2005, Kanbay recorded revenues of USD 230.5 million and 

operating profit of USD 41.3 million. For 2006, preliminary 

revenues and net income (unaudited) stands respectively at USD 

414.0 million and USD 34.3 million (figures in US GAAP). 

As at end-October 2006, Kanbay had a worldwide headcount of 

approximately 6,900, including 5,000 employees in India and 

1,600 employees in North America. Kanbay is a CMM Level 5 

assessed company (the universal Capability Maturity Model, 


111

112 ANNUAL 



used by organizations to identify best practices in software development 

and maintenance) headquartered in Rosemont, Illinois. 

It has offices in North America, London, Singapore, Hong Kong, 

Tokyo and Melbourne, and owns production sites in India at 

Pune, Hyderabad, Chennai and Bangalore. 

A detailed description of Kanbay and its activities may be obtained 

from the company’s 10-K filing for 2005 from the SEC’s website 

at www.sec.gov, or the “Investor Relations” section of Kanbay’s 

website at www.kanbay.com. 


On February 8, 2007, Sogeti USA acquired Chicago-based company 

Software Architects. Software Architects has a total headcount of 

500 and operations in 10 American cities. In 2005, the company 

posted revenues and profit of USD 66 million and USD 4 million, 

respectively. In 2006, revenues came in at USD 68 million (figures 

in US GAAP). 

At the Annual Shareholders’ Meeting, the Board of Directors will 

recommend a dividend payment of €0.70 per share for 2006.

NOTE 29 – LIST OF CONSOLIDATED COMPANIES BY COUNTRY 

At December 31, 2006 a total of 109 companies were consolidated by the Group. 

Country Consolidated company 

% 

interest 

Consolidation 

method 

GERMANY Capgemini Deutschland GmbH (Berlin) 100.0% FC 

Capgemini Deutschland Holding GmbH 100.0% FC 

Capgemini Systems GmbH (Stuttgart) 100.0% FC 

SD&M Software Design and Management AG (Münich) 100.0% FG 

Plecto AG (Traustein) 100.0% FC 

Sogeti Deutschland GmbH (Berlin) 100.0% FC 

Cap Gemini Telecom Media & Networks Deutschland GmbH 100.0% FC 

FuE-Future Engineering Gmbh 100.0% FC 

FuE-Future Engineering & Consulting Gmbh 100.0% FC 

Computer Konzept EDV Beratung und Betreuung Gmbh 100.0% FC 

AUSTRALIA Capgemini Australia Pty Ltd. 100.0% FC 

Capgemini Business Services Australia Pty Ltd. 100.0% FC 

AUSTRIA Capgemini Consulting Österreich AG 100.0% FC 

BELGIUM Capgemini Belgium N.V./S.A. 100.0% FC 

Sogeti Belgium S.A. 100.0% FC 

Sogeti NV/SA (Belgium) 100.0% FC 

Sogeti International S.A. 100.0% FC 

CANADA Capgemini New Brunswick Inc. 100.0% FC 

Capgemini Nova Scotia Ltd. 100.0% FC 

Capgemini Canada Inc. 100.0% FC 

Inergi Inc. 100.0% FC 

Inergi LP 100.0% FC 

New Horizons System Solutions LP 100.0% FC 

New Horizons System Solutions Inc. 100.0% FC 

CHINA Capgemini (Shanghai) Co. Ltd. 100.0% FC 

Capgemini Hong Kong Ltd. 100.0% FC 

Capgemini Business Services (China) Ltd. 100.0% FC 

Capgemini Business Services (Asia) Ltd. 100.0% FC 

DENMARK Capgemini Danmark AS 100.0% FC 

Sogeti Danmark 100.0% FC 

SPAIN Capgemini España, S.L. 100.0% FC 

Sogeti España S.L. 100.0% FC 

InQA Test Labs SL 100.0% FC 

QAlis Solutions SL 100.0% FC 

UNITED Capgemini America Inc. 100.0% FC 

STATES Capgemini Applications Services LLC 100.0% FG 

Capgemini Financial Services LLC 100.0% FC 

Capgemini U.S. Consulting B.V. 100.0% FC 

Capgemini Holding Inc. 100.0% FC 

Capgemini U.S. LLC 100.0% FC 

Capgemini North America Inc. 100.0% FC 

Capgemini Technologies LLC 100.0% FC 

Capgemini Government Solutions LLC 100.0% FC 

Capgemini Energy GP LLC 100.0% FC 

Capgemini Energy Holdings LLC 100.0% FC 

Capgemini Energy LP 97.1% FC 

Sogeti USA LLC 100.0% FC 

FINLAND Capgemini Finland Oy 100.0% FC 

FC = Full consolidation 


113

114 ANNUAL 





% 

interest 

Consolidation 

method 

FRANCE Cap Gemini S.A. Parent company FC 

Capgemini France S.A.S 100.0% FC 

Capgemini Gouvieux S.A.S 100.0% FC 

Capgemini Service S.A.S. 100.0% FC 

Capgemini Université S.A.S 100.0% FC 

Immobilière Les Fontaines S.A.R.L. 100.0% FC 

SCI Béhoust 100.0% FC 

SCI Paris Etoile 100.0% FC 

Capgemini Consulting S.A.S. 100.0% FC 

Capgemini Finance et Services S.A.S. 100.0% FC 

Capgemini Industrie et Distribution S.A.S. 100.0% FC 

Capgemini Est S.A.S. 100.0% FC 

Capgemini Ouest S.A.S. 100.0% FC 

Capgemini Sud S.A.S. 100.0% FC 

Capgemini Outsourcing Services S.A.S. 100.0% FC 

Capgemini OS Electric S.A.S. 100.0% FC 

Cap Gemini Telecom & Media S.A.S 100.0% FC 

Sogeti S.A.S. 100.0% FC 

Sogeti Infrastructure Service S.A.S. 100.0% FC 

Sogeti Application Service S.A.S. 100.0% FC 

Sogeti Régions S.A.S 100.0% FC 

Sogeti Services S.A.S. 100.0% FC 

Sogeti High Tech 100.0% FC 

Chryseis Micro et Réseaux E.U.R.L. 100.0% FC 

UNITED Capgemini UK Plc 100.0% FC 

KINGDOM CGS Holdings Ltd. 100.0% FC 

Sogeti UK 100.0% FC 

HUNGARY Capgemini Magyarorszag Kft 100.0% FC 

INDIA Capgemini Consulting India Private Ltd. 100.0% FC 

InQA Test Labs Private Ltd (India) 100.0% FC 

Unilever Shared Service Ltd 51.0% FC 

IRELAND Sogeti Ireland Ltd. 100.0% FC 

ITALY Capgemini Italia S.p.A. 100.0% FC 

LUXEMBOURG Sogeti Luxembourg S.A. 100.0% FC 

Capgemini Reinsurance Company S.A. 100.0% FC 

Sogeti PSF Luxembourg S.A. 100.0% FC 

MEXICO Capgemini Mexico S. de R.L. de C.V. 100.0% FC 

NORWAY Capgemini Norge AS 100.0% FC 

FC = Full consolidation


% 

interest 

Consolidation 

method 

NETHERLANDS Capgemini Outsourcing B.V. 100.0% FC 

Capgemini Interim Management B.V 100.0% FC 

Capgemini Nederland B.V. 100.0% FC 

Capgemini Sourcing B.V. 100.0% FC 

Capgemini Educational Services B.V. 100.0% FC 

Capgemini N.V. 100.0% FC 

Paul Postma Marketing Consultancy B.V. 100.0% FC 

Capgemini Datacenter Amsterdam B.V. 100.0% FC 

Sogeti Nederland B.V. 100.0% FC 

Capgemini International B.V. 100.0% FC 

Cap Gemini Telecom Media & Networks Nederland B.V. 100.0% FC 

POLAND Capgemini Polska Sp z.o.o. 100.0% FC 

PORTUGAL Capgemini Portugal, Serviços de Consultoria e Informatica S.A. 100.0% FC 

CZECH 

REPUBLIC 

Capgemini Czech Republic S.r.o. 100.0% FC 

SERBIA Capgemini d.o.o (Serbia and Montenegro) 100.0% FC 

SINGAPORE Capgemini Asia Pacific Pte Ltd. 100.0% FC 

SLOVAKIA Capgemini Slovensko, s.r.o. 100.0% FC 

SWEDEN Capgemini AB 100.0% FC 

Capgemini Sverige AB 100.0% FC 

Sogeti Sverige AB 100.0% FC 

SWITZERLAND Capgemini Suisse S.A. (Zurich) 100.0% FC 

SD&M Schweiz AG (Zurich) 100.0% FC 

Sogeti Suisse S.A. 100.0% FC 

FC = Full consolidation 


115

116 ANNUAL 

CAP GEMINI S.A. SUMMARIZED 

FINANCIAL STATEMENTS 

The Statutory’s Auditors’ report of February 15, 2007 on the full parent company financial statements, including the notes thereto, are free 

from qualification. These documents are available upon request from the Company. 

SUMMARIZED STATEMENTS OF INCOME 



Operating revenue 130 162 183 

Operating expenses (42) (29) (35) 

OPERATING INCOME 88 133 148 

Interest income/(expenses), net (756) 28 21 

Other income and expenses, net (324) (9) 3 

Income tax 43 21 23 

NET INCOME/(LOSSES) (949) 173 195 

SUMMARIZED BALANCE SHEETS 

AS OF DECEMBER 31, 2004, 2005 AND 2006 


ASSETS 

Non-current assets 6 251 6 013 6 533 

Current assets 804 1 703 1 977 

Other assets 7 81 70 

TOTAL ASSETS 7 062 7 797 8 580 

LIABILITIES AND SHAREHOLDERS’ EQUITY 

Shareholders’equity 6 433 6 611 7 268 

Provisions 10 11 17 

Long and short-term debt 482 1 148 1 272 

Other liabilities 137 27 23 

TOTAL LIABILITIES AND SHAREHOLDERS’EQUITY 7 062 7 797 8 580 


FIVE-YEAR FINANCIAL SUMMARY 

in millions of euros 2002 2003 2004 2005 2006 

I - SHARE CAPITAL AT YEAR-END 

Share capital 1 004 1 049 1 051 1 053 1 153 

Number of common shares outstanding 125 479 105 131 165 349 131 383 178 131 581 978 144 081 808 

Maximum number of future shares to be created: 

- through exercise of share warrants 10 951 340 10 004 465 12 289 150 13 101 800 10 518 710 

- through conversion of convertible bonds - 9 019 607 9 019 607 20 830 417 (1) 20 830 416 

- through warrants related to Transiciel acquisition - 503 602 508 600 315 790 (2) - 

II - OPERATIONS AND RESULTS OF THE CURRENT YEAR 

Operating revenue 162 136 130 162 183 

Operating revenue and financial revenue 248 175 876 547 376 

Income before taxes, amortization and provisions (1 523) 108 (491) 395 202 

Income tax (92) (4) (43) (21) (23) 

Net income / (losses) (4 135) (42) (949) 173 195 

Distributed income 0 0 0 66 (3) 101 

III - EARNINGS PER SHARE (in euros) 

Earnings after taxes, but before 

amortization and provisions (11,40) 0,86 (3,41) 3,16 1,56 

Net earnings (32,96) (0,32) (7,22) 1,31 1,35 

Dividend per share, net 0 0 0 0,50 (3) 0,70 

IV - EMPLOYEE DATA 

Average number of employee during the year - - - - - 

Total payroll - - - - - 

Total benefits - - - - - 

(1) Cap Gemini S.A. decided to neutralize in full the potential dilutive impact of the OCEANE bonds issued on June 24, 2003 and due January 1, 2010, 

through the acquisition from Société Générale in June 2005 of a call option on a number of shares equal to the underlying number of shares of this 

OCEANE, and with an exercise price and maturity matching those of the OCEANE. 

(2) 312 127 Cap Gemini shares have been created in august 2006 following the exercice of the warrants issued in the context of the Transiciel acquisition 

(3) Subject to approval by the Extraordinary Shareholders’ Meeting of April 26, 2007 (April 10, 2007 on first call). 

CHANGES ON SHAREHOLDERS’ EQUITY 

in millions of euros December 31, 

2005 

Net income 

appropriation 

2005 

Other 

changes 

December 31, 

2006 

Share capital 1 053 - 100 1 153 

Additional paid-in-capital 5 074 - 428 5 502 

Legal reserve 80 5 20 105 

Untaxed reserves - - - - 

Other reserves 231 - (20) 211 

Retained earnings - 102 - 102 

Dividends paid - 66 (66) - 

Net income / (losses) 173 (173) 195 195 

TOTAL 6 611 0 657 7 268 


117

118 ANNUAL 

CAP GEMINI S.A. SUMMARIZED FINANCIAL STATEMENTS 


III - SUBSIDIARIES AND INVESTMENTS 

in millions of euros Capital Other 

shareholders’ 

equity (including 

net income for 

the year) 

SUBSIDIARIES 

% 

interest 

Number 

of 

shares 

owned 

Book value 

of shares 

Gross Net 

Loans & 

advances 

granted 

Guarantees 

given 

(1) 

2006 

Revenue 

Dividends 

received 

Capgemini North America Inc 1 1 754 100,00% 982 000 5 515 1 247 129 - 3 - 

CGS HOLDINGS Ltd 791 1 100,00% 558 777 061 721 721 - - - - 

Gemini Consulting Holding Ltd 0 11 100,00% 1 083 23 23 - - - - 

Capgemini Oldco Ltd 15 32 100,00% 1 033 938 857 801 264 - - - - 

Capgemini Old Ireland Ltd 0 0 100,00% 71 662 16 0 - - - - 

Capgemini AB (Sweden) 3 243 100,00% 24 714 352 352 5 9 - - 

Capgemini NV (Benelux) 2 209 100,00% 45 787 968 1 467 1 179 - - - - 

Capgemini TMN Nederland BV 0 1 100,00% 18 000 5 5 - - 7 - 

Capgemini Deutschland Holding GmbH 102 23 94,43% 1 581 460 18 50 10 - 

Capgemini Deutschland GmbH 12 101 2,90% 1 10 10 - - 207 - 

Cap Gemini Telecom Media & Networks 

Deutschland GmbH 0 17 100,00% 1 51 14 37 - 21 - 

Capgemini Consulting Österreich AG 0 2 100,00% 36 791 42 30 - - 55 - 

Capgemini Suisse AG 0 1 100,00% 500 39 32 - 44 52 - 

Capgemini Polska Sp Z.o.o (Poland) 4 3 100,00% 129 111 24 16 - 44 43 - 

Capgemini Magyarorszag Kft 0 3 100,00% 1 2 2 - - 8 3 

Capgemini France SAS 54 317 100,00% 3 475 508 673 673 - 21 87 - 

Capgemimi Telecom & Media SAS 17 244 100,00% 1 090 762 171 171 - - 206 8 

SOGETI S.A. 0 0 99,80% 619 0 0 - - - - 

SOGETI SAS 261 363 100,00% 52 106 876 754 754 - - 29 9 

Capgemini Italia S.p.A. 11 – 8 100,00% 2 200 000 489 4 1 8 88 - 

Cap Gemini Telecom Media & Networks 

Italia S.p.A. 0 1 100,00% 20 000 14 0 - - - - 

Capgemini España S.L. 

(Sociedad Unipersonal) 11 – 2 100,00% 106 245 194 150 17 - 198 - 

Capgemini Portugal, 

Serviços de Consultoria e Informatica, SA 8 3 100,00% 1 698 842 44 44 - - 28 1 

Capgemini Asia Pacific Pte. Ltd. 

(Singapour) 116 – 105 100,00% 235 204 000 134 35 - - 1 - 

Capgemini Australia Pty Ltd (Australie) 28 – 26 100,00% 1 450 000 166 54 6 24 53 - 

Unilever India Shared Services Ltd 9 – 8 50,90% 2 545 9 9 - - 3 - 

Capgemini Service S.A.S 2 0 100,00% 1 500 000 59 0 - 15 159 - 

SCI Paris Etoile 0 4 99,99% 9 999 48 31 - - 3 2 

SCI du Château de Béhoust 0 0 99,00% 99 0 0 - - - - 

Immobilière les Fontaines S.A.R.L 2 7 99,84% 619 000 32 32 - 67 6 - 

Capgemini Université SAS 0 0 100,00% 2 500 0 0 - - 16 - 

Capgemini Gouvieux SAS 0 0 100,00% 10 000 0 0 - - 22 - 

Other French compagnies nm nm nm nm 4 4 nm nm nm nm 

Other foreign compagnies nm nm nm nm 4 1 nm nm nm nm 

INVESTMENTS 

As of December 31, 2006, investments held by Cap Gemini S.A. are not material 

nm : not meaningful 

The net income of subsidiaries and investments is not provided because disclosure would be prejudicial to the Company’s commercial and financial 

strategy. 

(1) As of December 31, 2006, the amount of guarantees and letters of comfort granted by the Company to its subsidiaries for financial facilities amounts 

to 320 million euros, of which 46 million euros have been used. 

Cap Gemini S.A. is at the head of the French tax group made up of 25 companies. The impact of tax consolidation in 2006 is a benefit of 21 million 

euros. 

The book value at year end is the fair value for the group. This value is mainly calculated using discounted net cash flows adjusted by the net debt 

A depreciation is booked when the fair value represents less than the gross book value. 


STATUTORY AUDITORS’ SPECIAL REPORT ON REGULATED AGREEMENTS AND COMMITMENTS 

WITH THIRD PARTIES 

YEAR ENDED DECEMBER 31, 2006 

This is a free translation into English of the Statutory Auditors’ special report on regulated agreements and commitments issued in 

the French language and is provided solely for the convenience of English speaking readers. This report on regulated agreements and 

commitments should be read in conjunction with, and construed in accordance with, French law and professional auditing standards 

applicable in France. 


In our capacity as Statutory Auditors of your Company, we hereby 

present our report on regulated agreements and commitments 

with third parties. 

Regulated agreements and commitments entered into during 

the year 

In accordance with article L.225-40 of the French Commercial 

Code (Code de commerce), we have been advised of the following 

agreements and commitments which were authorized by the 

Board of Directors. 

Our responsibility does not include identifying any undisclosed 

agreements or commitments. We are required to report to shareholders, 

based on the information provided, on the main terms 

and conditions of the agreements and commitments that have 

been disclosed to us, without commenting on their relevance or 

substance. Under the provisions of article 92 of the March 23, 1967 

decree, it is the responsibility of shareholders to determine whether 

the agreements are appropriate and should be approved. 

We carried out our work in accordance with the professional 

standards applicable in France. These standards require that we 

perform procedures to verify that the information given to us 

agrees with the underlying documents. 

Underwriting agreement entered into with Lazard 

Frères Banque S.A. authorized by the Board of 

Directors’ meeting of November 29, 2006 

Director concerned: Bruno Roger 

Nature and purpose: in connection with the Company’s capital 

increase decided on December 6, 2006, the Company entered into 

an underwriting agreement on December 6, 2006 with a banking 

syndicate including Lazard Frères Banque S.A., IXIS Corporate & 

Investment Bank and Morgan Stanley & Co. International Limited. 

The contract provides for the placement of shares to be issued. 

Main terms and conditions of the underwriting agreement: 

On December 13, 2006 Lazard Frères Banque S.A. undertook 

on behalf of Cap Gemini S.A., severally but not jointly with IXIS 

Corporate & Investment Bank (known as Lazard-Natixis), to 

place or subscribe themselves 3,367,388 Cap Gemini shares at 

a minimum subscription price of €43.87 per share (the definitive 

subscription price was set at €44.50 per share), with the 

possibility for Lazard-Natixis to purchase 336,739 additional 

shares within the scope of the “greenshoe” option provided for 

in the contract; 

On the same date, Cap Gemini S.A. undertook to pay Lazard- 

Natixis, in consideration of its payment on December 13, 2006 

of the subscription price for 3,367,387 Cap Gemini shares, and 

if applicable the 336,739 additional shares within the scope of 

the “greenshoe” option, the following fees: 

- an underwriting fee; 

- a placement fee; 

- if applicable, a variable fee (calculated based on the difference 

between the subscription price and the weighted average 

Cap Gemini share price over the three days prior to the issue 

launch date), and at the entire discretion of Cap Gemini S.A., 

an additional success fee. 

In total, Lazard-Natixis received remuneration of €2,603,858 in 

respect of this agreement for 2006. 

The registration of the two corporate officers on 

the list of beneficiaries of the collective supplementary 

pension scheme set up by the Company and 

authorized by the Board of Directors’ meeting 

of December 13, 2006 

Parties concerned: Serge Kampf and Paul Hermelin 

Nature, purpose and terms: The Board of Directors has authorized 

the creation of a collective pension scheme to supplement the 

obligatory pension scheme, in favor of certain senior executives. 

The characteristics and strict eligibility criteria of the plan are 

as follows: 

- 10 years minimum service in the Group; 

- open to employees having been a member of the Group Management 

team for five years; or of a Group management function 

reporting directly to a member of the Group Management 

team for a period of 10 years; or having made a notable and 

undisputed contribution to the success of the Group for a 

period of 10 years; 

- minimal theoretical remuneration of eight times the French 

Social Security ceiling; 


119

120 ANNUAL 



- reference salary for calculating the pension: average of 3 of 

the 10 best years, capped at sixty times the French Social 

Security ceiling; 

- progressive acquisition of rights capped at 40% of the reference 

salary, and the combined sum of all the party’s pension plans 

capped at 50% of the reference salary; 

- application of the Fillon law dated August 21, 2003: rights 

retained in the event of dismissal (except in case of gross 

misconduct) after age 55; 

- 60% reversionary annuity in the event of death; 


- loss of plan benefits in the event of departure from the Company 

for whatever reason before age 55. 

In light of the above-mentioned criteria, Serge Kampf and Paul 

Hermelin, respectively Chairman of the Board of Directors and 

Chief Executive Officer of the Company, are among the beneficiaries 

eligible for this plan. This agreement came into force from 

January 1, 2007, and neither party received any benefits under 

the agreement in 2006. 






Partner

STATUTORY AUDITORS’ SPECIAL REPORT ON THE CANCELLATION OF SHARES BOUGHT BACK 

BY THE COMPANY 

(COMBINED ORDINARY AND EXTRAORDINARY SHAREHOLDERS’ MEETING OF APRIL 26, 2007 (APRIL 10, ON FIRST 

CALL) - 8TH RESOLUTION) 

This is a free translation into English of the Statutory Auditors’ special report issued in the French language 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. 


In our capacity as Statutory Auditors of Cap Gemini S.A. and pursuant 

to the provisions of article L.225-209, paragraph 7 of the French 

Commercial Code (Code de commerce) relating to the cancelling of 

shares bought back by the Company, we hereby report to you on 

our assessment of the reasons for and the terms and conditions of 

the proposed capital reduction. 

We conducted our work in accordance with the professional standards 

applicable in France. Those standards require that we plan and 

perform a review to examine the fairness of the reasons for the terms 

and conditions of the proposed capital reduction. 

The proposed capital reduction would take place further to the buyback 

of shares representing a maximum of 10% of the Company’s 

share capital, in accordance with the provisions of article L.225-209 of 


the French Commercial Code. The Board of Directors is seekingan 

18-month authorization by the Shareholders’ Meeting for this buyback 

program. 

Shareholders are also asked to grant the Board of Directors full powers 

to cancel the shares acquired, provided that the aggregate number of 

shares cancelled in any given period of 24 months does not exceed 

10% of the Company’s capital. These powers would be exercisable 

for a period of 24 months. 

We have no comment to make on the reasons for or terms of the 

proposed capital reduction, the implementation of which depends 

on the Shareholders’ Meeting approving the buyback of the Company’s 

shares. 





Partner 


121

122 ANNUAL 



STATUTORY AUDITORS’ SPECIAL REPORT ON THE ALLOCATION, FREE OF CONSIDERATION, 

OF EXISTING SHARES OR SHARES TO BE ISSUED TO EMPLOYEES AND/OR CORPORATE 

OFFICERS 

(COMBINED ORDINARY AND EXTRAORDINARY SHAREHOLDERS’ MEETING OF APRIL 26, 2007 (APRIL 10, ON FIRST CALL) 

- 9TH RESOLUTION) 

This is a free translation into English of the Statutory Auditors’ special report issued in the French language 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. 


In our capacity as Statutory Auditors of your Company and in 

accordance with article L.225-197-1 of the French Commercial 

Code (Code de commerce), we hereby present our report on the 

proposed allocation, free of consideration, of existing shares or 

shares to be issued, to employees and/or corporate officers of 

Cap Gemini S.A. and certain related companies within the meaning 

of article L.225-197-2 of the French Commercial Code. 

The Board of Directors is asking shareholders to grant it authorization 

to allocate, free of consideration, existing shares or shares to be issued. 

It is the responsibility of the Board of Directors to prepare a report on 

this operation. It is our responsibility to inform shareholders of any 

observations concerning the information provided in this respect. 


Given the absence of a professional standard applicable to this 

operation, undertaken pursuant to legislative measures adopted on 

December 30, 2004, we have implemented those procedures that 

we deemed necessary. These notably consisted of verifying that the 

proposed terms and conditions and the information given in the 

Board of Directors’ report are in line with the provisions provided 

for by law. 

We have no matters to report on the information provided in the 

Board of Directors’ report on the proposed allocation of shares free 

of consideration. 






Partner

TEXT OF THE DRAFT RESOLUTIONS 

PRESENTED BY THE BOARD OF DIRECTORS TO THE ORDINARY AND 

EXTRAORDINARY SHAREHOLDERS’ MEETING OF APRIL 26, 2007 (APRIL 10, 2007 ON FIRST CALL) 

I – RESOLUTIONS PRESENTED AT THE 

ORDINARY SHAREHOLDERS’ MEETING 

First resolution 

Approval of the 2006 Company financial statements 

After hearing the following: 

the management report presented by the Board of Directors, 

the general report of the Statutory Auditors on their audit of the 

Company financial statements, 

the General Shareholders’ Meeting approves the Company financial 

statements for the year ended December 31, 2006, which show 

profit for the year of €195 million, and gives discharge to the 

Board of Directors for its management of the Company’s affairs 

during the year. 

Second resolution 

Approval of the 2006 consolidated financial statements 

After hearing the following: 

the Group management report of the Board of Directors for 

2006, 

the report presented by the Statutory Auditors, 

the General Shareholders’ Meeting approves the consolidated 

financial statements for the year ended December 31, 2006, which 

show profit for the year of €293 million. 

Third resolution 

Approval of a regulated agreement relating to the 

underwriting agreement entered into with parties including 

Lazard Frères Banque SA 

After hearing the special report of the Statutory Auditors on agreements 

governed by article L.225-38 et seq. of the French Commercial 

Code (Code de Commerce), the General Shareholders’ Meeting 

approves the agreement referred to in said report. 

Fourth resolution 

Approval of a regulated agreement relating to 

the registration of the two corporate officers on the list 

of beneficiaries of the collective pension scheme set up by 

the Company 

After hearing the special report of the Statutory Auditors on agreements 

governed by article L.225-38 et seq. of the French Commercial 

Code (Code de Commerce), the General Shareholders’ Meeting 

approves the agreement referred to in said report. 

Fifth resolution 

Appropriation of profit for the year and approval of dividend 

payout 

The General Shareholders’ Meeting approves the recommendations 

of the Board of Directors with regard to the appropriation 

of distributable profit for the year ended December 31, 2006 and 

accordingly decides to appropriate this distributable profit amounting 

to €194,560,397.44 as follows: 

to the legal reserve (to increase it to 

€115,265,446,40 i.e. 10 % of the share capital at 

December 31, 2006) an amount of ...................... €9,999,864.00 

as a dividend to be paid to shareholders, an amount 

of €0.70 per share, i.e. ........................................... €100,857,266.30 

and with the balance being allocated to retained 

earnings, i.e. .............................................................. €83,703,267.14 

Making a total of.............................................. €194,560,397.44 

Shareholders are reminded that the dividend accordingly set at 

€0.70 for each of the 144,081,809 shares bearing dividend rights 

at January 1, 2006 is eligible for the 40% tax rebate referred to 

in sub-paragraph 2 of paragraph 3 of article 158 of the French 

General Tax Code for individuals subject to personal income tax 

in France. It will be paid as from Monday, April 30, 2007. If the 

Company holds any of its own shares at the time of this dividend 

payment, the amount corresponding to the dividend that would 

have been paid in respect of these shares will be allocated to 

retained earnings. 

Pursuant to article 243 bis of the French General Tax Code, the 

General Shareholders’ Meeting notes that a dividend of €0.50 per 

share (fully eligible for the 40% tax rebate) was paid for 2005 and 

that no dividends were paid for 2004 or 2003. 

Sixth resolution 

Renewal of Marcel Roulet’s term of office as a non-voting 

director 

Based on the recommendation of the Board of Directors, the General 

Shareholders’ Meeting renews for a two-year period the term 

of office of the non-voting director Marcel Roulet, whose current 

term of office expires at the close of this Meeting. Mr. Roulet’s new 

term of office will expire at the close of the General Shareholders’ 

Meeting to be called to approve the financial statements for the 

year ending December 31, 2008. 

Seventh resolution 

Authorization to be given to the Board of Directors to enable the 

Company to buy back its own shares within the limit of a number 

of shares equal to a maximum of 10% of its share capital 

In accordance with articles L.225-209 et seq. of the French Commercial 

Code and European Commission Regulation no. 2273/2003 

of December 22, 2003 which came into effect on October 13, 2004, 

and after hearing the report presented by the Board of Directors, 

the General Shareholders’ Meeting grants the Board of Directors an 

authorization to enable the Company to buy back its own shares 

on the open market. 


123

124 ANNUAL 

TEXT OF THE DRAFT RESOLUTIONS 


This authorization is given to allow the Company, if required (in 

descending order of priority): 

to enter into a share management process with an investment 

services provider within the scope of a liquidity agreement in 

accordance with the ethics charter recognized by the AMF; 

to remit the shares thus purchased to holders of securities 

convertible, redeemable, exchangeable or otherwise exercisable 

for Cap Gemini SA shares upon exercise of the rights attached 

thereto, in accordance with the applicable Stock Exchange 

regulations; 

to purchase shares to be retained with a view to remitting them 

in future in exchange or payment for potential external growth 

transactions; 

to award shares to employees and corporate officers (on the 

terms and by the methods provided for by law), in particular 

in connection with stock option plans, plans involving the 

allocation of shares free of consideration, or company savings 

plans; 

to cancel the shares thus purchased subject to adoption of the 

eighth resolution of the Extraordinary Shareholders’ Meeting 

included in the agenda of this Shareholders’ Meeting. 

The transactions described above may be carried out by any 

method allowed under the applicable laws and regulations, including 

through the use of derivative instruments and by means of a 

block purchase or transfer of shares. 

The share buybacks may be carried out at any time, except during 

the suspension periods specified in the General Regulations of the 

Autorité des marchés financiers. 

The General Shareholders’ Meeting resolves that the maximum 

purchase price for shares under the buyback program may not 

exceed €70 per share and that, in accordance with article L 225- 

209 of the French Commercial Code, the maximum number of 

shares that may be acquired under this resolution may not exceed 

10% of the Company’s issued capital as of December 31, 2006, 

corresponding to 14,408,180 shares. The total funds invested in 

the share buybacks may therefore not exceed €1,008,572,600 

(€70 × 14,408,180 shares). 

In the case of a capital increase paid up by capitalizing additional 

paid-in capital, reserves, profit or other amounts by allocating 

shares free of consideration during the period of validity of this 

authorization, as well as in the case of a stock-split or reverse 

stock-split, the above maximum price per share will be adjusted 

based on the ratio between the number of shares issued and 

outstanding before and after the transaction. 

The General Shareholders’ Meeting gives full powers to the Board 

of Directors (including the power of delegation subject to the 

applicable law) to: 


implement this authorization; 

place any and all buy and sell orders and enter into any and all 

agreements, in particular for the keeping of registers of share 

purchases and sales, in accordance with the applicable Stock 

Exchange regulations; 

carry out any and all filings and other formalities and generally 

do whatever is necessary. 

The Board of Directors will be required to report to the shareholders 

at each Annual General Meeting on all of the transactions 

carried out during the year under this authorization. 

This authorization is given for a period of 18 months as from the 

date of this Shareholders’ Meeting, and replaces the authorization 

given in the twentieth resolution adopted by the Ordinary 

Shareholders’ Meeting of May 11, 2006. 

II – RESOLUTIONS PRESENTED 

AT THE EXTRAORDINARY 

SHAREHOLDERS’ MEETING 

Eighth resolution 

Authorization to be given to the Board of Directors to cancel 

shares acquired by the Company pursuant to the seventh 

resolution 

After hearing the report of the Board of Directors and the special 

report of the Statutory Auditors, the General Shareholders’ 

Meeting authorizes the Board of Directors, with the possibility of 

delegating such powers, to: 

cancel – in accordance with article L.225-209 of the French 

Commercial Code – on one or several occasions at its sole 

discretion, all or some of the Capgemini shares held by the 

Company, provided that the aggregate number of shares cancelled 

in any given period of twenty-four months does not 

exceed 10% of the Company’s capital; and to reduce the capital 

accordingly; 

charge the difference between the purchase price of the cancelled 

shares and their par value to additional paid-in capital or any 

distributable reserves. 

The General Shareholders’ Meeting gives full powers to the Board 

of Directors to use the authorization given in this resolution, to 

amend the bylaws to reflect the new capital and to carry out all 

necessary formalities. These powers may also be delegated. 

This authorization is granted for a period of 24 months as from the 

date of this Shareholders’ Meeting and replaces the authorization 

given in the twenty-first resolution adopted by the Extraordinary 

Shareholders’ Meeting of May 11, 2006.

Ninth resolution 

Authorization to be given to the Board of Directors to potentially 

allocate shares free of consideration (whether the shares 

are to be issued or are shares that have been previously bought 

back by the Company) 

In accordance with articles L. 225-197-1 et seq. of the French Commercial 

Code, and after hearing the report of the Board of Directors and the 

Statutory Auditors’ special report, the General Shareholders’ Meeting: 

authorizes the Board of Directors, on one or several occasions, to 

allocate, free of consideration, existing shares or shares to be issued, 

to employees or corporate officers of the Company and/or companies 

or economic interest groups that are related to it under the conditions 

set out in article L 225-197-2 of the French Commercial Code, or to 

certain categories of such employees or corporate officers; 

resolves that, without prejudice to the effect of the adjustments 

mentioned below, the total number of shares allocated without 

consideration may not exceed 0.5% of the Company’s share 

capital (i.e. 720,000 shares); 

resolves that the allocation of the shares to their beneficiaries 

shall only be definitive at the end of a minimum vesting period 

of 2 years as from the allocation of such shares by the Board of 

Directors. However, the shares may be definitively allocated in 

the event of death or incapacity of a beneficiary, corresponding 

to Category 2 or 3 disability as defined in article L. 341-1 of 

the French Social Security Code; 

sets the minimum period for retention of the shares by their 

beneficiaries at 2 years as from their definitive allocation. However, 

no minimum retention period is required in the event of death or 

incapacity of a beneficiary, corresponding to the above-mentioned 

categories under the French Social Security Code; 

notes that, as an exception to the above minimum retention period, 

for shares allocated to corporate officers who fall within the scope 

of article L.225-197-1, II paragraph 4 of the French Commercial 

Code, the Board of Directors may decide that the shares may not be 

transferred by the beneficiaries before the termination of their duties, 

or may set the quantity of shares that said officers will be required 

to hold in registered form until the termination of their duties; 

notes that if the allocation concerns shares to be issued, this 

authorization will automatically entail the waiver of shareholders’ 

pre-emptive rights to purchase such shares; 

gives powers to the Board of Directors to implement this authorization, 

and in particular: 

– to define the terms and conditions for the issue(s) and, in such 

an event, the criteria for allocating the shares and defining 

the beneficiaries thereof; 

– to decide, in the event that transactions are carried out during 

the vesting period that affect the Company’s issued capital, 

whether or not to adjust the number of the shares allocated in 

order to protect the rights of the beneficiaries and, if appropriate, 

define the terms and conditions of such adjustment; 

– to draw any amount from the reserves and/or additional paidin 

capital of the Company in order to carry out the capital 

increase or increases following the definitive allocations of 

shares to be issued, to set the entitlement dates applicable to 

the new shares, and to amend the bylaws accordingly; 

– to carry out all formalities and, more generally, to do whatever 

is necessary. 

This authorization is given for a period of 38 months as from the 

date of this General Shareholders’ Meeting. 

Tenth resolution 

Updating of the bylaws further to Decree no. 2006-1566 of 

December 11, 2006 

The General Shareholders’ Meeting resolves to amend the third, 

fourth, fifth and sixth paragraphs of article 19 of the Company’s 

bylaws (relating to Annual General Meetings) to read as follows: 

“General Shareholders’ Meetings shall be called by the Board of Directors. 

They shall be held either at the Company’s registered office or at any 

other premises in the same “département” or an adjoining “département”, 

as specified in the notice of meeting. 

The voting right attached to shares is proportionate to the capital represented 

by the shares. All shares have the same par value and they 

therefore all carry one voting right. 

Shareholders may participate in General Meetings in person, by proxy 

or by casting a postal vote, subject to submitting evidence of their 

identity and ownership of the shares. Ownership of the shares is evidenced 

by an entry in the Company’s share register in the name of the 

shareholder (or of the intermediary acting on their behalf if they are 

domiciled outside France), or in the register of bearer shares held by 

the applicable authorized intermediary. Such entries must be recorded 

by 12:00 a.m. (Paris time) on the third working day preceding the 

Meeting and any related notices must be filed at the address indicated 

in the notice of meeting. 

In the case of bearer shares, the authorized intermediary shall provide 

a certificate of participation for the shareholders concerned. 

Shareholders who have informed the Company that they wish to participate 

in a Meeting in person, by proxy or by casting a postal vote may not alter 

their method of participation. However, attendance at a Meeting by a 

shareholder in person shall cancel any proxy or postal votes cast. 

To be taken into account, postal votes or proxy forms must be received 

by the Company at least three days prior to the date of the Meeting. 

Where a shareholder has given proxy to a third party and has also sent 

in a postal voting form, if there is any difference in the two votes, the 

postal vote will be taken into account and the proxy ignored. 

General Shareholders’ Meetings shall be chaired by the Chairman of the 

Board of Directors or in his absence, by a director specially authorized 

for this purpose by the Board of Directors. If such a director has not 

been appointed to chair the meeting, the General Shareholders’ Meeting 

itself shall appoint a chairman. 

Minutes of General Shareholders’ Meetings shall be drafted and copies 

certified and distributed in accordance with the law.” 

Eleventh resolution 

Powers to carry out formalities 

The General Shareholders’ Meeting authorizes the bearer of a 

copy or extract of the minutes of this Meeting to execute all filing, 

publication and other formalities required under French law. 


125

126 

ANNUAL 

SPECIFIC INFORMATION 

Company name and head office 

Name: Cap Gemini 

Head office: 11, rue de Tilsitt, 75017 Paris, France 

Legal form and governing law 

The company is a “société anonyme” governed by the French 

Companies Act of July 24, 1966 (Law no. 66-537) and Decree 

no. 67-236 of March 23, 1967 (modified by Decree no. 2006- 

1566 of December 11, 2006). 

Date of incorporation and term 

The Company was incorporated on September 17, 1984. It 

was registered on October 4, 1984. 

The Company was set up for a period of ninety-nine years from 

the date of its registration. It may be wound up in advance 

or have its term extended by decision of the Extraordinary 

Shareholders’ Meeting. 

Corporate purpose (article 3 of the bylaws) 

The Company’s purpose is to assist companies in France and 

abroad in managing and developing their businesses by providing 

them with the benefit of its knowledge of their industry, its knowhow 

in the area of business process engineering and re-engineering, 

and its expertise in the area of information technologies. 

To fulfill this purpose, the Company carries out on behalf of clients, 

either directly or through its subsidiaries or affiliates, one or more 

of the following activities, on an individual or integrated basis: 

1. Management consulting 

Working closely with clients, the Company provides change 

management assistance to companies by helping them to redefine 

or redirect their strategy, change their product and service lines, 

re-engineer their structures and business processes, restore staff 

motivation and achieve other changes. To this end, the Company 

uses all the possibilities offered by the latest information technologies 

wherever appropriate. 

2. Information systems development 

The Company designs and installs information systems. Its services 

include the development of customized software, the installation 

of software applications available on the market or developed 

internally, the integration of systems incorporating hardware, 

communication systems, customized software, software packages 

and other components. The Company also supports clients’ IT 

projects by providing consulting, project management, training 

and assistance services. 

3. Outsourcing 

The Company manages all or part of its clients’ IT resources 


on their behalf. Where requested by clients, the Company may 

perform all or part of this service using its own hardware, telecommunications 

systems and other equipment. 

The Company may also manage the IT-based services offered to 

its clients’ own clientele. In addition, it may work in partnership 

with clients within a structure conducting all or some of these 

activities. 

In order to fulfill its corporate purpose, the Company may decide to: 

create specialist subsidiaries or acquire interests in the capital 

of other companies and manage their business in exchange for 

a fee. Management services include the provision of technical, 

marketing, legal and financial assistance, promotion of a 

consistent image, organization of financial structures, assistance 

in negotiations to help these companies win new contracts, 

training, research and development support, etc., 

invest and manage the Company’s available funds, make cash 

advances, and provide any and all guarantees or collateral on 

behalf of subsidiaries and affiliates, 

obtain or acquire and use any and all patents and manufacturing 

processes and sell, contribute or license any such patents 

and processes. 

In broader terms, the Company’s purpose is to carry out any and 

all commercial, industrial, securities, real estate or financial transactions 

related directly or indirectly to any of the above purposes 

or any similar or associated purpose or which are likely to facilitate 

the fulfillment or furtherance of said purposes. 

Incorporation details 

The Company is registered with the Paris Companies Registry 

(Registre du Commerce des Sociétés) under number 330 703 

844. APE business identifier code: 741 J. 

Consultation of legal documents 

Documents relating to the Company, including the bylaws, the 

financial statements, the reports of the Board of Directors (or 

the Directoire, from May 24, 1996 through May 23, 2000) to 

the General Shareholders’ Meetings, and the Statutory Auditors’ 

reports are available for consultation at the Company’s head office 

at 11, rue de Tilsitt, 75017 Paris, France. 

Fiscal year 

The Company’s fiscal year commences on January 1 and ends 

on December 31. 

Appropriation and distribution of earnings 

The General Shareholders’ Meeting has sole discretionary powers 

to decide the appropriation of distributable income, as defined by 

French company law. Consequently, the General Shareholders’

Meeting may decide to appropriate all or part of distributable 

earnings to revenue reserves, special reserves or retained earnings, 

or to distribute all or part of the amount to shareholders. 

The General Shareholders’ Meeting also decides the terms and 

conditions of payment of dividends. In particular, shareholders 

may be offered a stock dividend alternative, in which case the 

related dividends will be paid in the form of new shares credited 

as fully paid, in compliance with the provisions of the applicable 

laws and regulations. The above provisions also apply to the 

distribution of interim dividends, subject to compliance with 

French company law. 

In addition, the General Shareholders’ Meeting may decide to 

distribute a dividend out of distributable reserves, subject to 

compliance with French company law. 

General Shareholders’ Meetings 

Shareholders may participate in Meetings in person, by proxy or 

by casting a postal vote, subject to submitting evidence of their 

identity and ownership of the shares. Ownership of the shares 

is evidenced by an entry in the Company’s share register in the 

name of the shareholder (or of the intermediary acting on their 

behalf if they are domiciled outside France), or in the register of 

bearer shares held by the applicable authorized intermediary. Such 

entries must be recorded by 12:00 a.m. (Paris time) on the third 

working day preceding the Meeting and any related notices must 

be filed at the address indicated in the notice of meeting. 

Shareholders who have informed the Company that they wish 

to participate in a Meeting in person, by proxy or by casting a 

postal vote may not alter their method of participation. However, 

attendance at a Meeting by a shareholder in person shall cancel 

any proxy or postal votes cast. 

To be taken into account, postal votes or proxy forms must be 

received by the Company at least three days prior to the date of 

the Meeting. 

Where a shareholder has given proxy to a third party and has 

also sent in a postal voting form, if there is any difference in the 

two votes, the postal vote will be taken into account and the 

proxy ignored. 

Disclosure thresholds 

The Extraordinary Shareholders’ Meeting of April 25, 2002 added 

specific disclosure obligations to the Company’s bylaws. The 

bylaws now state that shareholders are required to notify the 

Company if their interest in the Company’s capital or voting rights 

is increased to above or reduced to below 1% or any multiple 

thereof. In the event of failure to comply with these disclosure 

rules, at the request of one or several shareholders with combined 

holdings representing at least 1% of the Company’s capital or 

voting rights, the undisclosed shares will be stripped of voting 

rights. Said sanction will apply for all General Shareholders’ 

Meetings for a period of two years from the date on which the 

failure to disclose is rectified. Said request and the decision of the 

General Shareholders’ Meeting must be recorded in the minutes 

of the Meeting. 

Shareholder identification 

The Company is authorized to obtain details of identifiable holders 

of bearer shares. 

The Extraordinary Shareholders’ Meeting of April 25, 2002 added a 

new article to the Company’s bylaws according to which the Company 

may request from the share transaction clearing organization, 

the name, address, nationality and year of birth for an individual 

or the name, address and date of registration for a Company, of 

any holders of shares and securities convertible, exchangeable, 

redeemable or otherwise exercisable for shares carrying voting 

rights at General Shareholders’ Meetings. The Company may also 

obtain details of how many shares are held by each shareholder 

and any applicable restrictions on said shares. 

Voting rights 

The voting right attached to shares is proportionate to the capital 

represented by the shares. All shares have the same par value and 

they therefore all carry one voting right. 

No shares have double voting rights. 

There are no bonus shares. All registered and bearer shares carry 

one voting right each. 

Changes in share capital and related rights 

Changes in the capital or the rights attached to shares may be 

carried out subject to compliance with French company law and 

the specific provisions of the bylaws, summarized below. 


127

128 ANNUAL 



SHARE CAPITAL 

Amount of capital 

As of December 31, 2006, the Company’s share capital amounted 

to €1,152,654,464, represented by 144,081,808 fully paid-up 

common shares with a par value of €8. 

Shares may be issued in either registered or bearer form, at the 

shareholder’s discretion. 


Financial authorizations 

Financial authorizations currently applicable 

The Combined Shareholders’ Meeting of May 11, 2006 authorized 

the Board of Directors to carry out various transactions in respect 

of the Company’s capital. Under the authorizations the Board of 

Directors may increase capital by a maximum nominal amount 

of €450 million (excluding capital increase through capitalization 

of retained earnings or reserved for employees) and carry 

out issues for an aggregate amount of €3 billion, subject to the 

following ceilings: 

Type of securities Maximum amount 

Date of Expiry date of 

(in euros) authorization authorization 

Common shares paid up by capitalizing retained earnings, 

income or additional paid-in capital 

1.5 billion (nominal value) May 11, 2006 July 11, 2008 

Common shares and/or securities convertible, redeemable, 

exchangeable or otherwise exercisable for new shares of the 

Company, or granting a right to allocation of debt 

instruments, with PSR 

Common shares and/or other securities convertible, 

redeemable, exchangeable or otherwise exercisable for new 

shares of the Company, or granting a right to allocation of 

debt instruments, without PSR (3) 

450 million (nominal value) (1) 

3 billion (2) May 11, 2006 July 11, 2008 

200 million (nominal value) (1) 

1.5 billion (2) May 11, 2006 July 11, 2008 

Common shares without PSR 

(French law on employee savings plans) 28 million (nominal value) May 11, 2006 July 11, 2008 

PSR = pre-emptive subscription rights 

(1) Ceiling for increases in the Company’s share capital (nominal value) permissible through the issuance of shares or of securities 

convertible, redeemable, exchangeable or otherwise exercisable for new shares of the Company. 

(2) Overall ceiling for the issuance of securities convertible, redeemable, exchangeable or otherwise exercisable for new shares of the 

Company, or granting a right to allocation of debt instruments. 

(3) Including those issued to provide payment for shares/securities tendered to a share exchange offer initiated by the Company for 

shares in a company listed on a regulated market, or as payment for contributions in kind to the Company of shares and/or securities. 

Apart from the specific ceilings set out in the table above, capital increases carried out as payment for contributions in kind are also 

capped at 10% of the Company’s current share capital. 

In the event that securities are issued without pre-emptive subscription 

rights, shareholders may be given a non transferable 

priority right to subscribe for the securities by the Board of Directors. 

On November 29, 2006, the Board of Directors decided to issue 

shares for cash without pre-emptive subscription rights or priority 

subscription period for existing shareholders, further to a 

delegation of authority without pre-emptive subscription rights. 


11,397,310 new shares with a nominal value of €8 each (i.e., a 

total nominal issue amount of €91 million).

Proposed renewals of financial authorizations 

Taking into consideration the fact that the delegations of authority 

are valid until July 11, 2008, the Board of Directors decided not 

propose their renewal to the Extraordinary Shareholders’ Meeting 

of April 26, 2007 (April 10, 2007 on first call). 

Summary presentation 1996 plan 

(plan no. 4) 

Share equivalents 

Stock options 

At the May 24, 1996, May 23, 2000 and May 12, 2005 Annual 

Shareholders’ Meetings, the Directoire and the Board of Directors 

were given a five-year authorization in respect of the May 24, 

1996 and May 23, 2000 plans, and an authorization period of 

38 months in respect of the May 12, 2005 plan, to grant stock 

options to a certain number of Group employees on one or several 

occasions. 

The main features of these plans and their bases of calculation are 

set out in the table below: 

2000 plan 

(plan no. 5) 

2005 plan 

(plan no. 6) 

Date of Shareholders’ Meeting May 24, 1996 May 23, 2000 May 12, 2005 

Total number of stock options that may be subscribed 6,000,000 12,000,000 6,000,000 

First options granted on: July 1, 1996 September 1, 2000 October 1, 2001 October 1, 2005 

Exercise period 

Exercise price as a % of the average of prices quoted for 

Cap Gemini shares over twenty trading days preceding the 

6 years 6 years 5 years 5 years 

date of grant 

Exercise price per share in: 

80% 80% 100% 100% 

– Minimum 

- 

139.00 

21.00 30.00 

– Maximum 

Number of shares at December 31, 2005 that may be 

subscribed in respect of options previously granted and not 

- 

139.00 

40.00 43.00 

yet exercised 559,000 10,627,300 1,915,500 

Number of new options granted during the year 

Number of options that lapsed or were cancelled during the 

Plan terminated Plan terminated 2,067,000 

year 559,000 3,188,197 112,500 

Number of options exercised at December 31, 2006 

Number of shares at December 31, 2006 that may be 

subscribed in respect of options granted previously that have 

- 773,838 (1) 16,555 (2) 

not been exercised - 6,665,265 (3) 3,853,445 (4) 

Weighted average residual life - 2.22 4.29 

(1) At December 31, 2006, the following stock options had been exercised: 498,441 stock options granted at a price of €24; 16,300 

stock options granted at a price of €40; 21,802 stock options granted at a price of €31; 206,845 stock options granted at a price of 

€21; and 30,450 stock options granted at a price of €27. 

(2) Representing 16,555 stock options purchased at a price of €30. 

(3) Representing 486,500 shares purchased at a price of €139; 892,359 shares at €24; 917,300 shares at €40; 240,101 shares at €31; 

2,814,155 shares at €21; and 1,314,850 shares at €27. 

(4) Representing 1,787,945 shares purchased at a price of €30 and 2,065,500 shares purchased at a price of €43. 


129

130 ANNUAL 



The Group has no contractual or implicit obligations to purchase 

or settle the options in cash. 

In the event of the publication by Société des Bourses Françaises 

of an authorized tender offer to acquire the Company’s shares and 

other securities giving access to the Company’s capital or voting 

rights, all outstanding stock options would become immediately 

exercisable at the option holders’ discretion. 

The potential number of shares to be created on the exercise 

of options outstanding as of December 31, 2006 amounted to 

10,518,710. If all of these options were exercised at December 31, 

2006 – irrespective of whether the exercise price is higher than 

the market price – the dilutive effect would be 6.80%. 

Issuance of bonds convertible into new shares 

and/or exchangeable for existing Cap Gemini S.A. 

shares (OCEANEs) 

On June 24, 2003, Cap Gemini S.A. issued bonds convertible into 

new shares and/or exchangeable for existing shares maturing on 

January 1, 2010 (OCEANE 2003) in the amount of €460 million. 

The 9,019,607 OCEANEs created on July 2, 2003 have a nominal 

value of €51 each. A prospectus concerning this bond issue 


was approved by the Commission des Opérations de Bourse on 

June 24, 2003 under number 03-607. 

On June 16, 2005, Cap Gemini S.A. issued bonds convertible into 

new shares and/or exchangeable for existing shares, maturing on 

January 1, 2012 (OCEANE 2005) in the amount of €437 million. 

The 11,810,810 OCEANEs created on June 24, 2005 have a 

nominal value of €37 each. A prospectus concerning this bond 

issue was approved by the French Financial Markets Authority 

(AMF) on June 16, 2005 under number 05-564. 

If these bonds were converted into new Cap Gemini shares as 

of December 31, 2006, the dilutive impact would be 12.63%. It 

should however be pointed out that the potential dilutive impact 

of the 2003 OCEANEs would be fully neutralized if the Company 

exercised its stock options acquired on June 27, 2005. In this case, 

the dilutive impact of the 2005 OCEANEs would be 7.58%. 

Other securities giving access to the Company’s 

capital 

As of December 31, 2006, if the maximum number of potential 

shares was issued through the exercise of stock options, the 

conversion of OCEANE bonds issued in 2003 and 2005, the 

dilutive impact would be 17.87% (13.42% taking into account 

the dilutive impact of the 2005 OCEANEs only).

Changes in the Company’s capital over the past five years 

Number of shares Share capital Additional 

paid-in capital 

(in euros) 

(in euros) 

AS OF JANUARY 1, 2002 125,244,256 1,001,954,048 11,771,288,329 

Dividend paid out of additional paid-in capital - - (50,097,702) 

Capital reduction: 

– by cancellation of shares returned by former Ernst & Young 

partners who have left the Group (237,352) (1,898,816) (18,106,308) 

Issuance of shares for cash: 

– shares issued upon exercise of stock options 472,201 3,777,608 8,653,224 

AS OF DECEMBER 31, 2002 125,479,105 1, 003,832,840 11,711,737,543 

Net loss for 2002 and losses brought forward from 

prior year - - (5,806,779,517) 

Capital reduction: 

– by cancellation of shares returned by former Ernst & Young 

partners who have left the Group (41,360) (330,880) (1,193,207) 

Increase in share capital: 

– upon the public exchange offer for Transiciel shares 

– share issuance costs charged against additional paid-in capital 

5,689,304 

- 

45,514,432 

- 

156,114,502 

(4,675,700) 


– shares issued upon exercise of stock options 38,300 306,400 612,800 

AS OF DECEMBER 31, 2003 131,165,349 1,049,322,792 6,055,816,421 


– shares issued upon extension of the public exchange offer for 

Transiciel shares 


211,129 

- 

1,689,032 

- 

5,793,380 

(679,180) 


– shares issued upon exercise of stock options 6,700 53,600 107,200 

AS OF DECEMBER 31, 2004 131,383,178 1,051,065,424 6,061,037,821 

Net loss for 2004 and losses for the prior year charged 

against additional paid-in capital - - (990,396,277) 


– shares issued upon exercise of stock options 198,800 1,590,400 3,094,400 

AS OF DECEMBER 31, 2005 131,581,978 1,052,655,824 5,073,735,944 


– upon the public exchange offer for Transiciel shares 



By subscription of 11,397,310 shares issued at 44.5 euros 


– shares issued upon exercise of stock options 

312,127 

- 

11,397,310 

- 

790,393 

2,497,016 

- 

91,178,480 

- 

6,323,144 

8,564,765 

(237,000) 

416,001,815) 

(8,735,175) 

12,629,847 

AS OF DECEMBER 31, 2006 144,081,808 1,152,654,464 5,501,960,196 


131

132 ANNUAL 



Current ownership structure 

The ownership structure as of December 31, 2006 is presented 

on page 34. No shares carry double voting rights. 

As of December 31, 2006, the Company held 80,280 of its own 

shares acquired under the liquidity contract which was set up by 

CA Cheuvreux. In accordance with French company law, these 

shares are stripped of their voting rights. 

As of December 31, 2006, there were 1,506 holders of registered 

shares. 

On the basis of the information received by the Company (on 

September 8 and September 12, 2006, respectively), and in the 

absence of any subsequent disclosures, as of December 31, 2006 

Goldman Sachs Asset Management LP and Barclays plc each held, 

directly or indirectly, more than 5% of the share capital or rights 

to vote in the Shareholders’ Meetings of our Company. 

In accordance with article 10 of the Company’s bylaws, the companies 

listed below made the following disclosures to the Company 

during the 2006 fiscal year: 

Trief Corporation SA (100%-owned by Wendel Investissement) 

disclosed that it had fallen below the threshold of 1% of the 

Company’s capital and voting rights; 

Changes in ownership structure over the last three years 


Caisse Nationale des Caisses d’Epargne et de Prévoyance disclosed 

that it had exceeded the threshold of 1% of the Company’s 

capital and voting rights; 

The funds managed by Arnhold and S. Bleichroeder Advisers 

LLC disclosed that they had fallen below the threshold of 1% 

of the Company’s capital and voting rights; 

Caisse des Dépôts et Consignations disclosed that it had fallen 

below the threshold of 1% of the capital followed by 1% of the 

voting rights; 

Société Générale Group disclosed that it had successively fallen 

below the thresholds of 4%, then 3%, then 2% of the capital 

and voting rights, and had subsequently successively exceeded 

and then fallen below the threshold of 3% of the Company’s 

capital and voting rights; 

UBS Global Asset Management disclosed that it had fallen below 

the threshold of 1% of the Company’s capital and voting rights; 

UBS Investment Bank disclosed that it had successively fallen 

below the threshold of 1%, and then exceeded the thresholds 

of 1%, then 2%, then fell below the thresholds of 2%, then 1% 

and finally exceeded the threshold of 1% of the capital and 

voting rights. 

Shares held by members of the Board of Directors represent 4.3% 

of the Company’s capital. 

As of December 31, 2004 As of December 31, 2005 As of December 31, 2006 

Number of 

shares 

% 

interestl 

% 

voting 

rights 

Number of 

shares 

% 

interestl 

% 

voting 

rights 

Number of 

shares 

% 

interestl 

Wendel Investissement 3,118,514 2.4 2.4 2,068,514 1.6 1.6 NS NS NS 

Serge Kampf 

6,819,947 5.2 5.2 6,121,641 4.6 4.6 5,951,641 4.1 4.1 

Paul Hermelin 

140,048 0.1 0.1 140,048 0.1 0.1 140,048 0.1 0.1 

Public (1) 

(bearer + registered) 121,292,429 92.3 92.3 123,165,891 93.6 93.7 137,909,839 95.8 95.8 

Treasury stock (2) 

12,240 0.0 0.0 85,884 0.1 0 80,280 NS NS 

Own shares 

- - - 

- - - 

- - - 

TOTAL 

131,383,178 100.0 100.0 131,581,978 100.0 100.0 144,081,808 100.0 100.0 

(1) Including capital held by managers, particularly those who have exercised stock options in the past and retained their shares, as well as shares received in May 

2000 by former Ernst & Young Consulting partners who became Group employees after the acquisition of the Ernst & Young Consulting businesses. 

(2) As of December 31, 2006, the Company held 80,280 of its own shares which were acquired under the liquidity contract set up by CA Cheuvreux. 

These shares are stripped of voting rights in accordance with the law. 

The Company does not hold any “own shares” other than those classified as treasury stock. 

Based on a study carried out on December 29, 2006, the Company 

has 87,793 identifiable holders of bearer shares holding at 

least 10 shares. 

No shares carry double voting rights. 

Shareholders’ agreements 

There are no shareholder pacts or agreements in force. 

% 

voting 

rights

CORPORATE GOVERNANCE 

To avoid repetition, please refer to Chapter I of the Chairman’s 

Report for further details. 

Board of Directors 

Members: 11 directors 

– Directors: 

Serge KAMPF, Michel JALABERT 

Chairman Phil LASKAWY 

Daniel BERNARD Thierry de MONTBRIAL 

Yann DELABRIÈRE Ruud van OMMEREN 

Jean-René FOURTOU Terry OZAN 

Paul HERMELIN, Bruno ROGER 

CEO 

After extensive examination of their personal situations, the 

7 directors whose names have been underlined were considered 

by the Board as being “independent”. 

Term of office: 4 years. 

Given that the Shareholders’ Meeting of May 11, 2006 decided, 

in response to the proposal of the Board of Directors, to reduce 

the term of office of directors of the Company from 6 years to 

4 years (with this measure being applied immediately to the 

current terms of office), 

– the term of office of Mr. Daniel Bernard and that of Mr. Thierry 

de Montbrial, directors appointed by the Shareholders’ Meeting 

of May 12, 2005, will end on the date of the Ordinary 

Shareholders’ Meeting which will be convened in spring 

2009 to approve the financial statements of the year ending 

December 31, 2008, 

– the terms of office of Messrs. Yann Delabrière, Jean-René Fourtou, 

Paul Hermelin, Michel Jalabert, Serge Kampf, Phil Laskawy, 

Ruud van Ommeren, Terry Ozan and Bruno Roger, renewed 

by the Shareholders’ Meeting of May 11, 2006, will end on 

the date of the Ordinary Shareholders’ Meeting which will be 

convened in spring 2010 to approve the financial statements 

of the year ending December 31, 2009. 

Minimum number of shares: 

Each director must personally hold at least 100 shares in the Company. 

Non-voting directors are not subject to this obligation. 

Meetings: 

– 6 times per year at the registered office of the Company in Paris 

(or at any other venue stated in the notice of meeting). 

– Attendance rate in 2006: 87% (the Board met 8 times in 

2006). 

Non-voting membership 

Members: 3 non-voting members 

Pierre HESSLER Marcel ROULET Geoff UNWIN 

Term of office: 2 years. 

Given that the Shareholders’ Meeting of May 11, 2006 decided, 

in response to the proposal of the Board of Directors, to reduce 

the term of office of non-voting directors of the Company from 

6 years to 2 years (with this measure being applied immediately 

to the current terms of office), 

– the term of office of Mr. Marcel Roulet, non-voting director 

appointed by the Shareholders’ Meeting of May 12, 2005, will 

end on the date of the Shareholders’ Meeting of April 26, 2007 

(initially convened April 10, 2007), 

– the term of office of Mr. Pierre Hessler and that of Mr. Geoff 

Unwin, renewed by the Shareholders’ Meeting of May 11, 2006, 

will end on the date of the Ordinary Shareholders’ Meeting 

which, in spring 2008, will be convened to approve the financial 

statements of the year ending December 31, 2007. 

Rules of Procedure 

The Board has established Rules of Procedure (which it amended on 

July 26, 2006), principally in order to lay down the breakdown of tasks 

between the Board itself, the Committees set up by (and within) the 

latter, the Chairman and the CEO. It also provides the list of obligations 

that directors and non-voting members shall undertake to abide by. 

Specialized Committees 

The general purpose of such Committees is to examine or to prepare 

certain resolutions involving their particular areas of expertise, 

to draft proposals and to transmit viewpoints or recommendations 

to the Board with regard to any decisions to be made. They have 

no decision-making authority – decisions being taken by the Board 

of Directors, meeting according to the requisite procedure – and 

may not treat subjects outside their own fields of competence. 

There are four such Committees: 

Audit Committee 

– Chairman: Yann Delabrière 

– Other Directors: Michel Jalabert, Phil Laskawy and Marcel 

Roulet (non-voting director) 

– Meetings: 6 in 2006, with an attendance rate of 89% 

Appointments and Remuneration Committee 

– Chairman: Ruud van Ommeren 

– Other Directors: Michel Jalabert, Thierry de Montbrial, Terry 

Ozan and Pierre Hessler (non-voting director) 


Ethics and Corporate Governance Committee 

– Chairman: Serge Kampf 

– Other Directors: Daniel Bernard, Paul Hermelin, Phil Laskawy 

and Bruno Roger 

– This committee, which was created in the second half of 2006, 

did not hold any official meetings in 2006. 

Strategy and Investment Committee 

– Chairman: Jean-René Fourtou 

– Other Directors: Daniel Bernard, Paul Hermelin, Thierry de 

Montbrial, Bruno Roger and Geoff Unwin (non-voting director) 



133

134 ANNUAL 



List of Directorships and other offices held by members of the Board of Directors 

Directorships and other offices held by the 11 voting members of the Board of Directors in 2006 are as follows: 

MEMBERS 

OF THE BOARD 

Serge KAMPF 

Date of birth: 

October 13, 1934 

Daniel BERNARD 


February 18, 1946 

FIRST 

APPOINTMENT 

AND EXPIRY* 

OF TERM OF 

OFFICE 

OFFICES HELD IN 2006 

AND TODAY 

2000-2009 Principal offi ce: 

Chairman of the Board of Directors of: 

CAP GEMINI S.A. 

Other offi ces: 

Chairman of: 

Capgemini Service S.A.S. 

Capgemini Suisse S.A. 

Director of: 

Capgemini North America Inc. (U.S.A.) 

SANOFI-AVENTIS S.A. 

Member of the Selection, Remuneration 

and Corporate Governance Committee of: 


Number of shares held as of December 31, 

2006: 

5,951,641 

2005 -2008 Principal offi ce: 

Chairman of: 

PROVESTIS 


Vice-Chairman of the Board of Directors of: 

KINGFISHER 

Director of: 

ALCATEL LUCENT 



2006: 

150 

* At the date of the Shareholders’ Meeting held to approve the financial statements of the year concerned. 


OTHER OFFICES HELD DURING 

THE LAST FIVE YEARS 

OUTSIDE 

THE GROUP 

Member of the Supervisory Board and 

Chairman of the Selection and 

Remuneration Committee of: 

AVENTIS 

Chairman and Chief Executive Offi cer of: 

CARREFOUR 

Director of: 

SAINT-GOBAIN

MEMBERS 

OF THE BOARD 

Yann DELABRIÈRE 


December 19, 1950 

Jean-René FOURTOU 


June 20, 1939 

FIRST 

APPOINTMENT 

AND EXPIRY* 

OF TERM OF 

OFFICE 


AND TODAY 



FAURECIA 


Director of: 



2006: 

800 


Chairman of the Supervisory Board of: 

VIVENDI 



GROUPE CANAL+ 

Vice-chairman and member of the 

Supervisory Board of: 

AXA 

Member of the Supervisory Board of: 

MAROC TELECOM 

Director of: 



AXA MILLESIMES S.A.S 

NBC UNIVERSAL INC. (USA) 

NESTLE (Switzerland) 

Member of the Selection, Remuneration 

and Corporate Governance Committee of: 


Honorary Chairman of: 

THE INTERNATIONAL CHAMBER OF 

COMMERCE 


2006: 

4,000 




OUTSIDE 

THE GROUP 

Member of the Executive Committee 

and Chief Financial Offi cer of: 

PSA PEUGEOT CITROËN 


BANQUE PSA FINANCE 

CREDIPAR (Compagnie Générale de 

Crédit aux Particuliers) 


PEUGEOT FINANCE 

INTERNATIONAL NV 

Chairman of the Board of Directors of: 

PEUGEOT CITROËN ARGENTINA 

PERGOLESE INVESTISSEMENTS 

Vice-Chairman and Mananing 

Director of: 

PSA INTERNATIONAL 

Director of: 

PEUGEOT CITROËN AUTOMOBILES 

AUTOMOBILES CITROËN 

GEFCO 

Manager (Gérant) of: 

GIE PEUGEOT CITROËN 

Finance et Comptabilité (Belgium) 

PSA Services S.R.L. (Italy) 


VIVENDI ENVIRONNEMENT 

Vice-chairman of the Supervisory Board 

and Member of the Strategic Committee 

of: 

AVENTIS 

Chairman and Chief Executive Offi cer 

of: 

VIVENDI UNIVERSAL 

Director of: 

PERNOD 

RHODIA 

AXA FINANCIAL 

THE EQUITABLE LIFE ASSURANCE 

E.A.D.S. 

SCHNEIDER 


135

136 ANNUAL 



MEMBERS 

OF THE BOARD 

Paul HERMELIN 


April 30, 1952 

Michel JALABERT 


January 20, 1933 


FIRST 

APPOINTMENT 

AND EXPIRY* 

OF TERM OF 

OFFICE 


AND TODAY 

2000-2009 Principal offi ces: 

Director and Chief Executive Offi cer of: 


Chief Executive Offi cer 

of Capgemini Group 


Chairman of: 

Capgemini France S.A.S. 

CAP SOGETI 2005 S.A.S. 

CAP SOGETI FRANCE 2005 S.A.S. 

SOGETI FRANCE 2005 S.A.S. 


Capgemini Holding Inc. (U.S.A.) 

Capgemini Energy GP LLC (USA) 

Chief Executive Offi cer of: 

Capgemini Service S.A.S. 


Director of: 

Capgemini America, Inc. (USA) 

Capgemini US LLC (USA) 

Cgs Holdings Ltd (UK) 

SOGETI (Belgium) 

Capgemini Australia Pty Ltd 




2006: 

140,048 


Director of: 



Nil 


2006: 

425 




OUTSIDE 

THE GROUP 

Nil 

Nil

MEMBERS 

OF THE BOARD 

Phil LASKAWY 


March 31, 1941 

Thierry de MONTBRIAL 


March 3, 1943 

Ruud van OMMEREN 


September 11, 1936 

FIRST 

APPOINTMENT 

AND EXPIRY* 

OF TERM OF 

OFFICE 


AND TODAY 

2002-2009 Principal offi ces: 

Director of: 


GENERAL MOTORS CORPORATION 


Director of: 

HENRY SCHEIN, INC. 

LOEWS CORPORATION 

THE PROGRESSIVE CORPORATION 


2006: 

7,600 


Founder and Chief Executive Offi cer of: 

L’INSTITUT FRANÇAIS DES RELATIONS 

INTERNATIONALES (IFRI) 


Chairman of: 

CENTRE FRANCO-AUTRICHIEN POUR 

LE RAPPROCHEMENT ÉCONOMIQUE 

EN EUROPE 

Professor of Applied Economics and 

International Relations at: 

CONSERVATOIRE NATIONAL DES 

ARTS ET MÉTIERS 

Member of: 

L’INSTITUT DE FRANCE (ACADÉMIE 

DES SCIENCES MORALES ET 

POLITIQUES) 


2006: 

100 


Director of: 





GAK ONROEREND GOED V.O.F. 

DELFTS INSTRUMENTS N.V. 


WILLEM VAN RIJN B.V. 

KONINKLYKE GROLSCH N.V. 


2006: 

100 

* At the date of the General Shareholders’ Meeting held to approve the financial statements of the year concerned. 



OUTSIDE 

THE GROUP 


ERNST & YOUNG 

Director of: 

THE GOODYEAR TIRE & RUBBER 

Company 

HEIDRICK & STRUGGLES International, 

Inc. 

Director of: 

SOCIETE DU LOUVRE 


GTI N.V. 

ANWB 

Member of: 

NATIONAL CIVIL LIBERTIES 

PROTECTION COMMITTEE IN THE 

NETHERLANDS 


137

138 ANNUAL 



MEMBERS 

OF THE BOARD 

Terry OZAN 


July 21, 1946 

Bruno ROGER 


August 6, 1933 


FIRST 

APPOINTMENT 

AND EXPIRY* 

OF TERM OF 

OFFICE 


AND TODAY 


Director of: 



Director of: 

NOTEWORTHY MEDICAL SYSTEMS, 

INC. 

COHESANT TECHNOLOGIES, INC. 

Member of the Strategy Committee of: 

STATE INDUSTRIAL PRODUCTS 


2006: 

24,300 


Chairman of: 

LAZARD FRERES S.A.S. 


Chairman of: 

GLOBAL INVESTMENT BANKING of 

LAZARD 

Director of: 


Non-voting Director of: 

EURAZEO 


2006: 

20,226 

* At the date of the General Shareholders’ Meeting held to approve the financial statements of the year concerned. 



OUTSIDE 

THE GROUP 

Director of: 

KANISA Corporation 


AXA 

PINAULT PRINTEMPS REDOUTE 

Director of: 

COMPAGNIE DE SAINT-GOBAIN 

THALES 

As far as the Company is aware, none of the current members of the Board of Directors: 

– has been sentenced for fraud at any time during the last five years; 

– has been involved in bankruptcy, receivership or liquidation at any time during the last five years; 

– has been subject to any form of official public sanction and/or criminal liability, pronounced by a statutory or regulatory authority 

(including any form of professional organization, as designated); 

– has been prevented by the courts from acting as a member of a governing body, supervisory board or board of directors, or from 

acting for purposes of managing or leading the business of an issuer at any time during the last five years. 

As far as the Company is aware, there has been no: 

– conflict of interest, among the members of the Board of Directors, between their duties towards Capgemini and their private interests 

and/or any other duties; 

– service contract binding the members of the Board of Directors of Cap Gemini S.A. or any of its subsidiaries whatsoever, granting 

any advantages at the term thereof.

DIRECTORS’ INTERESTS 

This information is provided in paragraph 4.10 of the Management 

Report presented to the Board of Directors at the Combined Ordinary 

and Extraordinary Shareholders’ Meeting of April 26, 2007 

(April 10, 2007 on first call). 

Regulated agreements 

In the year ended December 31, 2006, the Board of Directors 

authorized two agreements falling within the scope of article 

L.225-38 of the French Commercial Code: 

a guarantee contract was signed notably with Lazard Frères 

Banque SA with respect to the offer and placement of shares to 

be issued under the proposed capital increase; 

two directors were included in the list of beneficiaries of the 

collective defined benefit pension plan set up by the Company 

in favor of senior management executives that have made a 

significant long-term contribution to the development of the 

Cap Gemini group. 

Loans and guarantees given to directors of 

the Company 

None. 

EMPLOYEE PROFIT-SHARING AND 

INCENTIVE PLANS 

Profit-sharing and incentive plan agreements 

All the French companies in the Group have signed profit-sharing 

agreements in accordance with French law. 

Stock options 

Stock options granted by Cap Gemini S.A. to the top ten employee grantees (non-directors) receiving the highest number of options 

granted and the number of options exercised by the ten non-director employees with the highest number of shares subscribed in this 

manner are as follow: 

Total number of options 

granted//shares 

subscribed 

Weighted average 

exercise price 

(in euros) Plan 

Options granted during the year to the ten employees of all 

companies included in the scope of the option allocation, 

with the highest number of options granted in this manner 200,000 43.00 Plan No. 6 

Options exercised during the year by the ten employees of 

all companies included in the scope of the option allocation, 

with the highest number of shares subscribed in this manner 125,650 23.34 

GROUP MANAGEMENT STRUCTURE 

The Group’s operational management structure is organized as follows: 

The Executive Committee (*) has 9 members (1): 

Paul Hermelin Chief Executive Officer 

Henk Broeders Continental Europe and Asia-Pacific 

Pierre-Yves Cros Strategy 

Philippe Donche-Gay Western Europe and TS Global Coordination 

Alain Donzeaud General Secretary & Human Resources 

Nicolas Dufourcq Deputy CEO - Chief Financial Officer 

Philippe Grangeon Communications 

Luc-François Salvador Local Professional Services (Sogeti) 

Paul Spence Outsourcing 

Other Group directors 

Didier Bonnet Telecom, Media & Entertainment sector 

Philippe Christelle Internal Audit 

Lany Cohen(*) North America CS/TS 

Stanislas Cozon Public Sector 

Jean-Pierre Durant des Aulnois Operational Control 

Hubert Giraud Business Process Outsourcing 

Bernard Helders Manufacturing, Retail & Distribution sector 


Plan No. 5 and 

No. 6 

139

140 ANNUAL 



François Hucher(*) Quality and Production 

Ian Jordan “I 3 ” Transformation Program Manager 

Bertrand Lavayssière Financial Services Sector 

Colette Lewiner Marketing and Energy & Utilities Sector 

Patrick Nicolet(*) Sales 

Salil Parekh(*) Coordination Capgemini – Kanbay in India 

Baru Rao Capgemini India 

Antonio Schnieder(*) Global Coordination Consulting (CS) 

Raymond J. Spencer(*) Chairman and CEO Kanbay International 

(1) The role and function of this committee are described in the Report of Chairman (section 3.2.1). 

(*) Members of the G.M.B. (Group Management Board) of which the 9 members of the Executive committee are also members. 

PERSONS RESPONSIBLE FOR THE AUDIT OF THE ACCOUNTS 

Statutory Auditors: 

PricewaterhouseCoopers Audit 

63, rue de Villiers, 92208 NEUILLY-SUR-SEINE, 

represented by Bernard RASCLE 

First appointed at the Ordinary Shareholders’ Meeting of May 

24, 1996. 

Current term expiring at the close of the Shareholders’ Meeting 

to be called to approve the 2007 financial statements. 

KPMG S.A. 

Immeuble le Palatin, 3, cours du Triangle, 

92939 PARIS LA DÉFENSE Cedex 

represented by Frédéric QUÉLIN 

First appointed at the Ordinary Shareholders’ Meeting of 

April 25, 2002. 

Current term expiring at the close of the Shareholders’ Meeting 

to be called to approve the 2007 financial statements. 


Substitute Auditors: 

Philippe GUEGUEN 

20, rue Garibaldi, 69006 Lyon, France 

Substitute for PricewaterhouseCoopers Audit, 

Appointed at the Ordinary Shareholders’ Meeting of May 7, 

2003. 

Term expiring at the close of the Shareholders’ Meeting to be 

called to approve the 2007 financial statements. 

Guillaume LIVET 

Immeuble le Palatin, 3, cours du Triangle, 

92939 PARIS LA DÉFENSE Cedex 

Substitute for KPMG S.A., 

Appointed at the Ordinary Shareholders’ Meeting of April 25, 

2002. 

Term expiring at the close of the Shareholders’ Meeting to be 

called to approve the 2007 financial statements.

Fees paid by the Group to the Statutory Auditors and members of their networks 

in thousands of euros KPMG PWC 

Amount % Amount % 

2006 2005 2006 2005 2006 2005 2006 2005 

Audit 

Statutory audit, certification of the individual company 

and consolidated financial statements 2,230 2,154 58% 65% 3,190 3,433 49% 65% 

Issuer 307 403 8% 12% 463 488 7% 10% 

Fully consolidated subsidiaries 

Other work and services directly related to the statutory 

1,923 1,751 50% 53% 2,727 2,945 42% 55% 

audit assignment 663 495 17% 15% 586 689 9% 13% 

Issuer 443 359 11% 11% 170 606 3% 11% 

Fully consolidated subsidiaries 220 136 6% 4% 416 83 6% 2% 

SUBTOTAL 

Other services 

2,893 2,649 75% 80% 3,776 4,122 58 % 78% 

Legal, tax and employee-related 811 491 21% 14% 213 244 4% 5% 

Other (1) 154 190 4% 6% 2,472 956 31% 18% 

SUBTOTAL 965 681 25% 20% 2,685 1 200 42% 22% 

TOTAL 3,858 3,330 100% 100% 6,461 5 322 100% 100% 

(1) These services essentially relate to assignments carried out with the scope of client projects and in accordance with the “SAS 70” standard. These 

assignments relate to sites where applications are maintained by our clients covered by the Sarbanes-Oxley Act. 

PERSON RESPONSIBLE FOR 

INFORMATION 

Nicolas DUFOURCQ 

Chief Financial Officer 

11, rue de Tilsitt, 75017 Paris, France 

Tel.: +33 (0)1 47 54 50 00 

2007 PROVISIONAL FINANCIAL 

CALENDAR 

First quarter 2007 revenue announcement: April 26, 2007 

Second quarter 2007 revenue announcement: July 27, 2007 

First half 2007 results announcement: July 27, 2007 

Third quarter 2007 revenue announcement: November 7, 2007 

Fourth quarter 2007 revenue announcement: February 15, 2008 

This provisional calendar is given for information purposes only 

and is subject to subsequent amendments. 


141

142 ANNUAL 



DECLARATION BY THE PERSON RESPONSIBLE FOR THE REGISTRATION 

DOCUMENT 

“I hereby declare that, having taken all reasonable care to ensure that such is the case, the information contained in the registration 

document is, to the best of my knowledge, in accordance with the facts and contains no omission likely to affect its import. 

I obtained a statement from the Statutory Auditors at the end of their engagement affirming that they have read the whole of the registration 

document and examined the information about the financial position and the historical accounts contained therein. 

The statement from the Statutory Auditors does not contain any observation.” 


Paul Hermelin, 

Chief Executive Officer 

This registration document (document de référence) was filed with the Autorité des Marchés Financiers (AMF) on April 16, 

2007, pursuant to article 212-13 of the AMF’s General Regulations. It may not be used in connection with a financial transaction 

unless it is accompanied by an Information Memorandum approved by the AMF. 

In accordance with article 28 of European regulation no. 809/2004 of April 29, 2004, the following information is incorporated 

in this registration document by reference: 

1. Relating to the year ended - the management report consolidated financial statements and Statutory Auyditors’ report 

December 31, 2005: on the consolidated fnancial statements, set out in the registration document filed on 

April 25, 2006 under no. D. 06-0323 (pages 37 to 51 and 62 to 129 respectively). 

- the simplified parent company financial statements of Cap Gemini S.A. set out in the 

registration document filed on April 25, 2006 under no. D. 06-0323 (pages 130 to 132). 

- the Statutory Auditors’ special report on certain related party agreements, set out in the 

registration document filed on April 25, 2006 under no. D. 06-0323 on page 133. 

2. Relating to the year ended - the management report, consolidated financial statements and Statutory Auditors’ report 

December 31, 2004: on the consolidated financial statements, set out in the registration document filed on 

April 27, 2005 under no. D. 05-0562 (pages 27 to 36 and 48 to 88 respectively). 

- the simplified parent company financial statements of Cap Gemini S.A. set out in the 

registration document filed on April 27, 2005 under no. D. 05-0562 (pages 89 to 91). 

- the Statutory Auditors’ special report on certain related party agreements, set out in the 

registration document filed on April 27, 2005 under no. D. 05-0562 on page 92. 

The information included in these two registration documents, other than that referred to above, has been replaced and/or 

updated where necessary, with information included in this registration document. 

Copies of the registration document are available from Cap Gemini S.A., 11, rue de Tilsitt, 75017 Paris, on the website: 

http://investor.capgemini.com and on the website of the AMF: www.amf-france.org

CROSS-REFERENCE TABLE 

To facilitate reading the annual report filed as a registration document (document de référence), the table below provides the key 

information required under Commission Regulation (EC) No 809/2004 dated April 29, 2004. 

1 PERSONS RESPONSIBLE .....................................................................................................................................................................141 to 142 

2 STATUTORY AUDITORS ...................................................................................................................................................................................140 

3 SELECTED FINANCIAL INFORMATION ............................................................................................................................................................2 

4 RISK FACTORS ....................................................................................................................................................................... 30 to 33 and 47 to 48 

5 INFORMATION ABOUT THE ISSUER 

History and development of the Company .............................................................................................................................................3 

Legal information concerning the Company ............................................................................................................................126 to 127 

Investments .................................................................................................................................................................... 12, 70 and 84 to 87 

6 BUSINESS OVERVIE 

Principal activities ................................................................................................................................................................................3 to 5 

Principal markets .................................................................................................................................................................................5 to 8 

The IT services market and competition ...........................................................................................................................................8 to 9 

7 ORGANIZATIONAL STRUCTURE 

Brief description of the Group and position of issuer ...............................................................................................................10 and 11 

List of significant subsidiariess ...................................................................................................................................................113 to 115 

8 PROPERTY, PLANT AND EQUIPMENT .........................................................................................................................................................N/A 

9 OPERATING AND FINANCIAL REVIEW ..................................................................................................................................................37 to 49 

10 CAPITAL RESOURCES 

Information concerning the issuer’s capital resources ...........................................................................................................................47 

Explanation of the sources and amounts of, and a description of, the issuer’s cash flows ................................................................65 

Borrowing requirements and funding structure and information regarding any restrictions on the use of capital resources ...91 to 97 

11 RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES ................................................................................................................N/A 

12 TREND INFORMATION .......................................................................................................................................................................................41 

13 PROFIT FORECASTS OR ESTIMATES ..........................................................................................................................................................N/A 

14 ADMINISTRATIVE, MANAGEMENT, AND SUPERVISORY BODIES AND SENIOR MANAGEMENT .............................................133 to 140 

15 REMUNERATION AND BENEFITS ............................................................................................................................................. 44 to 46 and 104 

16 BOARD PRACTICES ...................................................................................................................................................................................50 to 56 

17 EMPLOYEES 

Number of employees .............................................................................................................................................................14 to 17, 111 

Employee shareholdings and stock options ............................................................................................80 and 81, 129 and 130 and 139 

18 MAJOR SHAREHOLDERS .................................................................................................................................................................... 34 and 132 

19 RELATED PARTY TRANSACTIONS ................................................................................................................................................................104 

20 FINANCIAL INFORMATION CONCERNING THE ISSUER’S ASSETS AND LIABILITIES, FINANCIAL POSITION AND PROFITS AND LOSSES 

Historical financial information ...................................................................................................................................................2 and 142 

Financial statements ......................................................................................................................................................................61 to 118 

Auditing of historical annual financial information ................................................................................................................ 62 and 142 

Dividend policy ......................................................................................................................................................36, 42 to 43, 126 to 127 

Legal and arbitration proceedings ...........................................................................................................................................................31 

21 ADDITIONAL INFORMATION 

Share capital ..................................................................................................................................................................... 43 and 128 to 132 

Memorandum and articles of association ............................................................................................................................... 126 and 127 

22 MATERIAL CONTRACTS ..................................................................................................................................................................................N/A 

23 THIRD PARTY INFORMATION AND STATEMENT BY EXPERTS AND DECLARATIONS OF INTEREST.........................................N/A 

24 DOCUMENTS ON DISPLAY .............................................................................................................................................................................126 

25 INFORMATION ON HOLDINGS .......................................................................................................................................................................118 

N/A: Not applicable. 


PAGE 

143

CONTENTS - Capgemini

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