from CAPGEMINI (EPA:CAP)
2024 INTERIM FINANCIAL REPORT
CONTENTS
Financial highlights ............................................................................................................................................................................. 3
Statutory auditors' report on the 2024 half-yearly financial information ........................................................................... 4
Interim financial review ..................................................................................................................................................................... 5
Condensed interim consolidated financial statements for the half-year ended June 30, 2024 ..................................... 9
Declaration by the person responsible for the interim financial report .............................................................................. 28
Financial highlights
CONSOLIDATED FINANCIAL STATEMENTS
(in millions of euros) | First-half 2020** | First-half 2021 | First-half 2022 | First-half 2023 | First-half 2024 |
Revenues | 7,581 | 8,711 | 10,688 | 11,426 | 11,138 |
Operating expenses | (6,763) | (7,669) | (9,387) | (10,013) | (9,754) |
Operating margin * | 818 | 1,042 | 1,301 | 1,413 | 1,384 |
% of revenues | 10.8 % | 12.0 % | 12.2 % | 12.4 % | 12.4 % |
Operating profit | 577 | 812 | 1,068 | 1,151 | 1,147 |
% of revenues | 7.6 % | 9.3 % | 10.0 % | 10.1 % | 10.3 % |
Profit for the period attributable to owners of the Company | 311 | 443 | 667 | 809 | 835 |
% of revenues Earnings per share | 4.1 % | 5.2 % | 6.3 % | 7.1 % | 7.5 % |
Average number of shares outstanding during the period | 167,646,025 | 168,453,627 | 170,561,706 | 171,947,414 | 170,981,563 |
Basic earnings per share (in euros) | 1.86 | 2.63 | 3.91 | 4.70 | 4.88 |
Normalized earnings per share * (in euros) | 2.80 | 3.58 | 4.87 | 5.80 | 5.88 |
Goodwill at June 30 | 10,316 | 10,096 | 11,087 | 10,955 | 11,357 |
Equity attributable to owners of the company at June 30 | 5,922 | 6,681 | 8,938 | 10,063 | 10,843 |
(Net debt)/ Net cash and cash equivalents* at June 30 | (6,008) | (4,826) | (4,094) | (3,244) | (2,775) |
Organic free cash flow* at June 30 | 106 | 429 | 193 | (53) | 163 |
Average number of employees | 239,086 | 276,700 | 339,635 | 355,667 | 337,848 |
Number of employees at June 30 | 265,073 | 289,501 | 352,148 | 349,469 | 336,923 |
* Operating margin, normalized earnings per share, net debt / net cash and cash equivalents and organic free cash flow, alternative performance measures monitored by the Group, are defined in Note 3 - Alternative performance measures, to the consolidated interim financial statements for the half-year ended June 30, 2024.
** First-half 2020 data reflects the consolidation of Altran from April 1, 2020.
Statutory auditors' report on the 2024 half-yearly financial information
Statutory auditors’ report on the half-yearly financial information
(For the period from January 1, 2024 to June 30, 2024)
To the Shareholders
CAPGEMINI SE
11 rue de Tilsitt
75017 Paris
In compliance with the assignment entrusted to us by Annual General Meeting and in accordance with the requirements of article L. 451-1-2 III of the French Monetary and Financial Code (“Code monétaire et financier”), we hereby report to you on:
– the review of the accompanying condensed half-year consolidated financial statements of Capgemini SE, for the period from January 1, 2024 to June 30, 2024;
– the verification of the information presented in the half-year management report.
These condensed half-year consolidated financial statements are the responsibility of the Board of Directors. Our role is to express a conclusion on these financial statements based on our review.
I - Conclusion on the financial statements
We conducted our review in accordance with professional standards applicable in France.
A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with professional standards applicable in France and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed half-year consolidated financial statements are not prepared, in all material respects, in accordance with IAS 34- standard of the IFRSs as adopted by the European Union applicable to interim financial information.
II - Specific verification
We have also verified the information presented in the half-year management report on the condensed half-year consolidated financial statements subject to our review. We have no matters to report as to its fair presentation and consistency with the condensed half-year consolidated financial statements.
French original signed by
Neuilly-sur-Seine and Courbevoie, July 30, 2024
The Statutory Auditors
PricewaterhouseCoopers Audit FORVIS MAZARS
Itto El Hariri Romain Dumont Anne-Laure Rousselou Emilie Loréal
Interim financial review
In an economic environment which remained soft, Capgemini demonstrated in the first half of 2024 the strength of its positioning, as illustrated by the performance of the Strategy & Transformation business, and the resilience of its operating model.
Clients remained focused on driving efficiency through cost transformation programs. Demand for non-strategic and discretionary deals remained soft. In that context, the Group’s most innovative services in Cloud, Data & AI (Artificial Intelligence) and Intelligent Industry continued to enjoy a solid traction.
As anticipated, after having passed the trough in the first quarter, with a -3.3% revenue contraction at constant currency, revenue growth rates improved in the second quarter in all businesses and almost all regions and sectors, as the demand environment is starting slowly to improve. Q2 revenues contraction was limited to -1.9% at constant currency, with a visible improvement of the North America region which had declined the most in Q1.
Overall, revenue came down in the first half of the year, as anticipated, by -2.6% at constant currency. With the improvement of its mix of offerings toward more value-added services, the Group was able to maintain its operating margin and improve its cash flow generation compared with the first half of 2023.
FINANCIAL PERFORMANCE
Capgemini generated revenues of €11,138 million in H1 2024, down -2.5% year-on-year on a reported basis and -2.6% at constant exchange rates. On an organic basis (i.e., restated for changes in Group scope and exchange rates), revenues contracted by -3.0%.
Bookings totaled €11,793 million in the first half of 2024, down -1.7% at constant exchange rates, leading to a book-to-bill ratio of 1.06 for the period. Booking trends also improved in Q2: at €6,138 million, Q2 bookings were stable year-on-year at constant currency and the book-to-bill ratio reached 1.09, which is above historical average and reflects ongoing robust commercial momentum.
The continued shift in Capgemini’s mix of offerings towards more innovative and value-added services more than compensated for the inflation impact, illustrating the resilience of the Group’s operating model. The 50-basis point increase in gross margin to 26.7% has offset the investment in selling efforts to fuel future growth. Selling expenses reached €824 million in H1 2024 or 7.4% of revenues, compared with 7.0% in H1 last year, while general and administrative expenses totaled €766 million or 6.9% of revenues, compared with 6.8% in H1 2023.
Consequently, operating expenses totaled €9,754 million in H1 2024 compared with €10,013 million in H1 2023, and the operating margin amounted to €1,384 million or 12.4% of revenues, a stable % year-on-year.
Looking at operating costs by nature, as a % of Group revenues, personnel costs increased from 69.7% in H1 2023 to 70.1% in H1 2024, fully offset by a decrease in most of other categories of costs.
Other operating income and expenses represent a net expense of €237 million, down by €25 million year-on-year. This decrease is mainly attributable to lower restructuring charges (€53 million in H1 2024 compared with €68 million in H1 last year).
Consequently, the operating profit amounts to €1,147 million, almost flat year-on-year in value and up +20 basis points in % of Group revenues, to 10.3%.
Net financial result is an income of €20 million compared with a €22 million expense in H1 2023, reflecting mainly higher interest income.
The income tax expense is €326 million, up by €13 million. The effective tax rate is 28.0% in H1 2024, compared with 27.8% for the same period last year.
Taking into account the share of profits of associates and joint-ventures as well as non-controlling interests, for an aggregate amount of -€6 million, the Group share in net profit for H1 2024 is up +3% year-on-year at €835 million. Basic earnings per share increased by +4% year-onyear to €4.88. Normalized earnings per share stands at €5.88, compared with €5.80 in H1 2023.
Group cash from operations decreased to €1,560 million in H1 2024 from €1,658 million in H1 2023, mainly driven by lower Group revenues over the period. Income tax paid decreased by €86 million to €101 million. The change in operating working capital requirement also decreased, from €1,227 million in H1 2023 to €1,003 million in H1 2024. Consequently, net cash from operating activities increased to €456 million, compared with €244 million in H1 last year. Capital expenditure (net of disposals) totaled €135 million or 1.2% of revenues, compared with 1.1% in H1 2023. Taking into account interest paid and received as well as lease debt repayment, organic free cash flow generation amounted to €163 million in H1 2024, compared with -€53 million for the same period last year.
Capgemini announced or closed four acquisitions since the beginning of the year. Total cash outflow for acquisitions amounted to €30 million in H1. The Group also paid dividends of €580 million (€3.40 per share) and allocated €325 million (net) to share buybacks.
HEADCOUNT
The Group’s total headcount stands at 336,900 as at June 30, 2024, down -4% year-on-year and virtually stable since the end of March. The offshore workforce stands at 192,500 employees or 57% of the total headcount.
OPERATION BY REGION
Revenues Year-on-year growth Operating margin rate
H1 2024 (in millions of euros) | Reported | At constant exchange rates | H1 2023 | H1 2024 | |
North America | 3,108 | -5.5% | -5.4% | 15.2% | 15.5% |
United Kingdom and Ireland | 1,380 | -0.4% | -2.8% | 18.4% | 20.5% |
France | 2,245 | -2.7% | -2.7% | 11.1% | 9.1% |
Rest of Europe | 3,470 | -0.1% | -0.1% | 10.5% | 11.1% |
Asia-Pacific and Latin America | 935 | -3.7% | -1.6% | 10.2% | 10.5% |
TOTAL | 11,138 | -2.5% | -2.6% | 12.4% | 12.4% |
At constant exchange rates, revenues in the North America region (28% of Group revenues in H1 2024) decreased by -5.4% year-on-year. The Financial Services, TMT (Telecoms, Media and Technology) and Consumer Goods & Retail sectors contributed the most to this decline, partly offset by growth in the Manufacturing sector. Operating margin increased to 15.5%, compared with 15.2% in H1 last year.
Revenues in the United Kingdom and Ireland region (12% of Group revenues) declined by -2.8%, mostly driven by the Financial Services and Consumer Goods & Retail sectors. Conversely, the Energy & Utilities and Services sectors enjoyed a solid growth. Operating margin rose from 18.4% to 20.5%.
Activity in France (20% of Group revenues) was down -2.7%. Solid momentum in the Public Sector was more than offset by visible softness in the TMT, Manufacturing and Financial Services sectors. Operating margin decreased from 11.1% in H1 2023 to 9.1%.
Revenues in the Rest of Europe region (31% of Group revenues) were virtually stable at -0.1%. The underlying sector performance proved quite contrasted, with a strong momentum in the Energy & Utilities and Public Sectors offset by a visible contraction of the TMT sector. Operating margin increased to 11.1%, compared with 10.5% in H1 last year.
Finally, revenues in the Asia-Pacific and Latin America region (9% of Group revenues) were down -1.6%. This contraction was mainly driven by the decline of the Financial Services sector, partly offset by the Consumer Goods & Retail and Public Sectors which proved quite dynamic over the period. The region reported an operating margin of 10.5%, up from 10.2% in H1 2023.
OPERATIONS BY BUSINESS
When determining activity trends by business and in accordance with internal operating performance measures, growth at constant exchange rates is calculated based on total revenues, i.e., before elimination of inter-business billing. The Group considers this to be more representative of activity levels by business. As its businesses change, an increasing number of contracts require a range of business expertise for delivery, leading to a rise in inter-business flows.
Total revenues Year-on-year growth
H1 2024 | At constant exchange rates in | |
(% of Group revenues) | Total revenues of the business | |
Strategy & Transformation | 9% | +2.7% |
Applications & Technology | 62% | -3.4% |
Operations & Engineering | 29% | -1.8% |
At constant exchange rates, total revenues of Strategy & Transformation services (9% of the Group’s total revenues in H1 2024) increased by +2.7% year-on-year at constant exchange rates. Client demand for strategic consulting on their transition towards a more digital and sustainable model is supplemented by their growing interest in exploring the broad GenAI opportunity.
Total revenues of Applications & Technology services (62% of the Group’s total revenues and Capgemini’s core business) declined by -3.4%.
Lastly, Operations & Engineering (29% of the Group’s total revenues) total revenues decreased by -1.8%.
ANALYSIS OF THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED JUNE
30, 2024
Consolidated Income Statement
Revenues for the first-half 2024 totaled €11,138 million, compared with €11,426 million for the first-half 2023, representing a decrease of -2.5% on a reported basis and a -2.6% revenue decreasing at constant exchange rates.
The operating margin for the first six months of 2024 was €1,384 million, compared with €1,413 million for the same period in 2023, representing a margin rate of 12.4% as for first half-year 2023.
Operating profit is €1,147 million for the first-half 2024 compared with €1,151 million for the first-half 2023, after taking into account other operating income and expense representing a net expense of €237 million in the first-half 2024 compared with €262 million in the first-half 2023.
The net financial income was €20 million in the first-half 2024 compared with a net financial expense of €22 million for the same period in 2023.
The income tax expense for the first-half 2024 is €326 million, compared with €313 million for the first-half 2023. The effective tax rate is 28.0% for the first six months of 2024 compared with 27.8% in the first-half 2023.
Profit for the period attributable to owners of the Company is therefore €835 million for the first-half 2024 compared with €809 million for the first-half 2023. Normalized earnings per share are therefore €5.88 based on an average of 170,981,563 ordinary shares outstanding in the first-half 2024, compared with €5.80 based on an average of 171,947,414 ordinary shares outstanding in the first-half 2023.
Consolidated Statement of Financial Position
Equity attributable to owners of the Company totaled €10,843 million at June 30, 2024, up €389 million on December 31, 2023. This increase was mainly due to:
► the net profit for the period of €835 million,
► the positive impact of other comprehensive income of €355 million, including translation adjustments of €229 million,
► the impact of incentive instruments and employee share ownership of €109 million, partially offset by the payment to shareholders of dividends of €580 million and the elimination of treasury shares bought back during the period for €332 million.
Non-current assets totaled €15,252 million at June 30, 2024, up €296 million on December 31, 2023, mainly due to the impact of the appreciation of the US dollar on goodwill denominated in this currency and the increase in the defined benefit pension plan surplus in the United Kingdom linked to the increase in discount rates.
Non-current liabilities totaled €6,202 million at June 30, 2024, down €776 million on December 31, 2023 due to the reclassification of 2020 bond maturing in June 2025.
Trade receivables and contracts assets totaled €5,459 million at June 30, 2024 compared with €5,088 million at December 31, 2023. Trade receivables and contract assets excluding contract costs and net of contract liabilities totaled €4,212 million at June 30, 2024 compared with €3,624 million at December 31, 2023.
Accounts and notes payable mainly consist of trade payables and related accounts, personnel costs and accrued taxes other than income tax and total €4,400 million at June 30, 2024 compared with €4,568 million at December 31, 2023.
Consolidated net debt totaled €2,775 million at June 30, 2024 compared with €2,047 million at December 31, 2023. This €728 million increase in net debt on December 31, 2023 was mainly due to :
► the payment to shareholders of dividends of €580 million,
► net cash outflows of €332 million in respect of transactions in treasury shares,
► cash outflows on business combinations, net of cash and cash equivalents acquired, of €30 million, partially offset by organic free cash flow generation in the first-half 2024 of €163 million.
RELATED PARTIES
No material transactions with related parties took place in the first-half 2024.
MAIN RISKS AND UNCERTAINTIES FOR THE SECOND-HALF OF 2024
The nature and degree of risks to which the Group is exposed have not changed from those presented on pages 109 to 135 of the 2023 Universal Registration Document.
OUTLOOK FOR FISCAL YEAR 2024
The Group’s financial targets for 2024 are updated as follows:
► Revenue growth of -0.5% to -1.5% at constant currency (was 0% to 3%);
► Operating margin of 13.3% to 13.6% (unchanged);
► Organic free cash flow of around €1.9 billion (unchanged).
The inorganic contribution to growth should be around half a point (was ranging from a marginal impact up to 1 point).
Condensed interim consolidated financial statements for the half-year ended June 30, 2024
Consolidated Income Statement
2023 First-half 2023 First-half 2024
(in millions of euros) Notes Amount % Amount % Amount %
Revenues | 4 and 5 | 22,522 | 100 | 11,426 | 100 | 11,138 | 100 |
Cost of services rendered | (16,474) | (73.1) | (8,438) | (73.8) | (8,164) | (73.3) | |
Selling expenses | (1,598) | (7.1) | (803) | (7.0) | (824) | (7.4) | |
General and administrative expenses | (1,459) | (6.5) | (772) | (6.8) | (766) | (6.9) | |
Operating expenses | 6 | (19,531) | (86.7) | (10,013) | (87.6) | (9,754) | (87.6) |
Operating margin [1] | 2,991 | 13.3 | 1,413 | 12.4 | 1,384 | 12.4 | |
Other operating income and expenses | 7 | (645) | (2.9) | (262) | (2.3) | (237) | (2.1) |
Operating profit | 2,346 | 10.4 | 1,151 | 10.1 | 1,147 | 10.3 | |
Net finance costs | 8 | 17 | 0.1 | 10 | 0.1 | 36 | 0.3 |
Other financial income and expense | 8 | (59) | (0.3) | (32) | (0.3) | (16) | (0.1) |
Net financial expense / income | (42) | (0.2) | (22) | (0.2) | 20 | 0.2 | |
Income tax expense | 9 | (626) | (2.8) | (313) | (2.8) | (326) | (3.0) |
Share of profit of associates and jointventures | (10) | – | (4) | – | (3) | – | |
PROFIT FOR THE YEAR | 1,668 | 7.4 | 812 | 7.1 | 838 | 7.5 | |
Attributable to: | |||||||
Owners of the Company | 1,663 | 7.4 | 809 | 7.1 | 835 | 7.5 | |
Non-controlling interests | 5 | – | 3 | – | 3 | – | |
EARNINGS PER SHARE | |||||||
Average number of shares outstanding during the period | 171,350,138 | 171,947,414 | 170,981,563 | ||||
Basic earnings per share (in euros) | 9.70 | 4.70 | 4.88 | ||||
Diluted average number of shares outstanding | 177,396,346 | 178,089,362 | 177,293,357 | ||||
Diluted earnings per share (in euros) | 9.37 | 4.54 | 4.71 |
Consolidated Statement of Comprehensive Income
(in millions of euros) Notes 2023 First-half 2023 First-half 2024
Actuarial gains and losses on defined benefit pension plans, net of tax (1) | 15 | (57) | (5) | 71 |
Remeasurement of cash flow and net investment hedging instruments, net of tax (2) | 50 | 89 | 56 | |
Other, net of tax (1) | 4 | – | (1) | |
Translation adjustments (2) | (255) | (102) | 229 | |
OTHER ITEMS OF COMPREHENSIVE INCOME | (258) | (18) | 355 | |
Profit for the year (reminder) | 1,668 | 812 | 838 | |
Total comprehensive income for the period | 1,410 | 794 | 1,193 | |
Attributable to: | ||||
Owners of the Company | 1,405 | 791 | 1,190 | |
Non-controlling interests | 5 | 3 | 3 |
(1) Other items of comprehensive income that will not be reclassified subsequently to profit or loss.
(2) Other items of comprehensive income that may be reclassified subsequently to profit or loss.
Consolidated Statement of Financial Position
(in millions of euros) Notes June 30, 2023 December 31, 2023 June 30, 2024
Goodwill | 10 | 10,955 | 11,213 | 11,357 |
Intangible assets | 866 | 798 | 839 | |
Property, plant and equipment | 835 | 788 | 755 | |
Lease right-of-use assets | 833 | 783 | 834 | |
Deferred tax assets | 657 | 560 | 541 | |
Other non-current assets | 11 | 813 | 814 | 926 |
Total non-current assets | 14,959 | 14,956 | 15,252 | |
Contract costs | 12 | 139 | 132 | 141 |
Contract assets | 12 | 2,491 | 1,670 | 2,383 |
Trade receivables | 12 | 3,001 | 3,286 | 2,935 |
Current tax receivables | 286 | 148 | 343 | |
Other current assets | 13 | 905 | 811 | 866 |
Cash management assets | 14 | 575 | 161 | 367 |
Cash and cash equivalents | 14 | 3,195 | 3,536 | 2,572 |
Total current assets | 10,592 | 9,744 | 9,607 | |
TOTAL ASSETS | 25,551 | 24,700 | 24,859 |
Notes June 30, 2023 December 31, 2023 June 30, 2024
(in millions of euros)
Share capital | 1,389 | 1,381 | 1,381 | |
Additional paid-in capital | 3,706 | 3,482 | 3,482 | |
Retained earnings and other reserves | 4,159 | 3,928 | 5,145 | |
Profit for the year | 809 | 1,663 | 835 | |
Equity (attributable to owners of the Company) | 10,063 | 10,454 | 10,843 | |
Non-controlling interests | 17 | 19 | 22 | |
Total equity | 10,080 | 10,473 | 10,865 | |
Long-term borrowings | 14 | 5,663 | 5,071 | 4,276 |
Deferred tax liabilities | 308 | 275 | 310 | |
Provisions for pensions and other post-employment benefits | 15 | 360 | 331 | 298 |
Non-current provisions | 16 | 340 | 327 | 304 |
Non-current lease liabilities | 641 | 598 | 652 | |
Other non-current liabilities | 17 | 388 | 376 | 362 |
Total non-current liabilities | 7,700 | 6,978 | 6,202 | |
Short-term borrowings and bank overdrafts | 14 | 1,339 | 675 | 1,421 |
Accounts and notes payable | 4,314 | 4,568 | 4,400 | |
Contract liabilities | 12 | 1,252 | 1,332 | 1,106 |
Current provisions | 16 | 107 | 118 | 101 |
Current tax liabilities | 315 | 123 | 387 | |
Current lease liabilities | 258 | 251 | 252 | |
Other current liabilities | 17 | 186 | 182 | 125 |
Total current liabilities | 7,771 | 7,249 | 7,792 | |
TOTAL EQUITY AND LIABILITIES | 25,551 | 24,700 | 24,859 |
Consolidated Statement of Cash Flows
(in millions of euros) Notes 2023 First-half 2023 First-half 2024
Profit for the year | 1,668 | 812 | 838 | |
Depreciation, amortization and impairment of fixed assets and lease right-of-use assets | 700 | 345 | 339 | |
Change in provisions | (65) | (20) | (45) | |
Losses/(Gains) on disposals of assets and other | 22 | 17 | 5 | |
Expenses relating to share based compensation | 185 | 93 | 109 | |
Expenses relating to employee ownership plan | 67 | – | – | |
Net finance costs | 8 | (17) | (10) | (36) |
Income tax expense/(income) | 9 | 626 | 313 | 326 |
Unrealized (gains) losses on changes in fair value and other financial items | 122 | 108 | 24 | |
Cash flows from operations before net finance costs and income tax (A) | 3,308 | 1,658 | 1,560 | |
Income tax paid (B) | (463) | (187) | (101) | |
Change in trade receivables, contract assets net of liabilities and contract costs | 1 | (603) | (563) | |
Change in accounts and notes payable | (168) | (160) | 58 | |
Change in other receivables/payables | (153) | (464) | (498) | |
Change in operating working capital (C) | (320) | (1,227) | (1,003) | |
NET CASH FROM (USED IN) OPERATING ACTIVITIES (D=A+B+C) | 2,525 | 244 | 456 | |
Acquisitions of property, plant and equipment and intangible assets | (259) | (127) | (136) | |
Proceeds from disposals of property, plant and equipment and intangible assets | 5 | 2 | 1 | |
Acquisitions of property, plant and equipment and intangible assets, net of disposals | (254) | (125) | (135) | |
Cash (outflows) inflows on business combinations net of cash and cash equivalents acquired | 2 | (343) | 14 | (30) |
Cash (outflows) inflows in respect of cash management assets | 215 | (195) | (200) | |
Other cash (outflows) inflows, net | (1) | (16) | (29) | |
Cash outflows from other investing activities | (129) | (197) | (259) | |
NET CASH FROM (USED IN) INVESTING ACTIVITIES (E) | (383) | (322) | (394) | |
Proceeds from issues of share capital | 465 | – | – | |
Dividends paid | (559) | (559) | (580) | |
Net payments relating to transactions in Capgemini SE shares | (876) | 9 | (332) | |
Proceeds from borrowings | 1,905 | 656 | 176 | |
Repayments of borrowings | (2,932) | (390) | (176) | |
Repayments of lease liabilities | (297) | (148) | (144) | |
Interest paid | (182) | (113) | (126) | |
Interest received | 171 | 89 | 112 | |
NET CASH FROM (USED IN) FINANCING ACTIVITIES (F) | (2,305) | (456) | (1,070) | |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (G=D+E+F) | (163) | (534) | (1,008) | |
Effect of exchange rate movements on cash and cash equivalents (H) | (115) | (70) | 60 | |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD (I) | 14 | 3,795 | 3,795 | 3,517 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD (G+H+I) | 14 | 3,517 | 3,191 | 2,569 |
Consolidated Statement of Changes in Equity
Income and expense
Number of Share Additional paid-in Treasury shares Consolidated earnings and retained recognized in equity (to owners of attributable Equity controlling interestsNon- Total equity shares capital capital other reserves adjustmentsTranslation Other the Company)
(in millions of euros)
At December 31, 2023 | 172,608,113 | 1,381 | 3,482 | (237) | 6,518 | (263) | (427) | 10,454 | 19 | 10,473 |
Dividends paid out for 2023 | – | – | – | – | (580) | – | – | (580) | – | (580) |
Incentive instruments and employee share ownership | – | – | – | 1 | 108 | – | – | 109 | – | 109 |
Elimination of treasury shares | – | – | – | (332) | – | – | – | (332) | – | (332) |
Transactions with non-controlling interests and others | – | – | – | – | 2 | – | – | 2 | – | 2 |
Transactions with shareholders and others | – | – | – | (331) | (470) | – | – | (801) | – | (801) |
Income and expense recognized in equity | – | – | – | – | (76) | 229 | 202 | 355 | – | 355 |
Profit for the year | – | – | – | – | 835 | – | – | 835 | 3 | 838 |
At June 30, 2024 | 172,608,113 | 1,381 | 3,482 | (568) | 6,807 | (34) | (225) | 10,843 | 22 | 10,865 |
Income and expense
Consolidated recognized in equity Equity
Number of shares capitalShare Additional paid-in capital Treasury shares earnings and retained other (to owners of attributable the controlling interestsNon- Total equity
reserves adjustmentsTranslation Other Company)
(in millions of euros)
At December 31, 2022 | 173,582,113 | 1,389 | 3,706 | (288) | 5,350 | (8) | (422) | 9,727 | 16 | 9,743 |
Dividends paid out for 2022 | – | – | – | – | (559) | – | – | (559) | – | (559) |
Incentive instruments and employee share ownership | – | – | – | 1 | 92 | – | – | 93 | – | 93 |
Elimination of treasury shares | – | – | – | 8 | 1 | – | – | 9 | – | 9 |
Transactions with non-controlling interests and others | – | – | – | – | 2 | – | – | 2 | (2) | – |
Transactions with shareholders and others | – | – | – | 9 | (464) | – | – | (455) | (2) | (457) |
Income and expense recognized in equity | – | – | – | – | – | (102) | 84 | (18) | – | (18) |
Profit for the year | – | – | – | – | 809 | – | – | 809 | 3 | 812 |
At June 30, 2023 | 173,582,113 | 1,389 | 3,706 | (279) | 5,695 | (110) | (338) | 10,063 | 17 | 10,080 |
5.2.6 Notes to consolidated financial statements for the half-year ended June 30, 2024
NOTE 1 Accounting basis
The condensed interim consolidated financial statements for the half-year ended June 30, 2024, and the notes thereto were drawn up under the responsibility of the Board of Directors and reviewed by the Board of Directors' meeting of July 25, 2024.
A) IFRS standards base
The condensed interim consolidated financial statements for the first-half 2024 have been prepared in accordance with lAS 34, Interim Financial Reporting, as issued by the International Accounting Standards Board (IASB), and endorsed by the European Union. They therefore do not include all the information required under IFRS for full financial statements. These condensed interim consolidated financial statements nonetheless present a selection of notes explaining the major events and transactions of the period in order to understand the changes in the Group’s financial position and performance since the last annual consolidated financial statements.
These condensed interim consolidated financial statements for the half-year ended June 30, 2024 should be read in conjunction with the Group’s annual consolidated financial statements for the year ended December 31, 2023.
The Group also takes account of the positions adopted by Numeum (merger of Syntec Numérique and TECH IN France), an organization representing major consulting and computer services companies in France, regarding the application of certain IFRS.
B) New standards and interpretations applicable in 2024
a) New standards, amendments and interpretations of mandatory effect at January 1st, 2024
The accounting policies applied by the Capgemini Group are unchanged on those applied for the preparation of the December 31, 2023 consolidated financial statements.
The standards, amendments, and interpretations which entered into mandatory effect on January 1st, 2024 did not have a material impact on the Group financial statements.
b) Other new standards not yet in effect at January 1st, 2024 or adopted early The Group did not adopt early any new standards not yet in effect at January 1st, 2024.
C) Use of estimates
The preparation of consolidated financial statements involves the use of estimates and assumptions which may have an impact on the reported values of assets and liabilities at the period end or on certain items of either net profit or the income and expenses recognized directly in equity for the year. Estimates are based on economic data and assumptions which are likely to vary over time and interpretations of local regulation when necessary. They have notably been made in an ongoing uncertain economic and geopolitical context. These estimates are subject to a degree of uncertainty and mainly concern revenue recognition on a percentage-of-completion basis, provisions, measurement of the amount of intangible assets and deferred tax assets, provisions for pensions and other post-employment benefits, the fair value of financial instruments and the calculation of the tax expense.
Climate change risks result from both increasingly frequent exposure to extreme weather events and transition to a low energy business model. The Group considers the financial consequences of damage directly related to extreme weather events to be limited. The Group has also taken the effects of its sustainable development policy into account in the main closing estimates.
NOTE 2 Changes in consolidation scope
There have been no major changes in the consolidation scope during the first semester of 2024.
NOTE 3 Alternative performance measures
The alternative performance measures monitored by the Group are defined as follows: – Organic growth, or like-for-like growth, in revenues is the growth rate calculated at constant Group scope and exchange rates. The Group scope and exchange rates used are those for the reported period; – Growth at constant exchange rates in revenues is the growth rate calculated at exchange rates used for the reported period; – Operating margin is equal to revenues less operating expenses. It is calculated before “Other operating income and expense” which include amortization of intangible assets recognized in business combinations, the IFRS2 expenses for share based compensation (including social security contributions and employer contributions) and employee ownership plan, and non-recurring revenues and expenses, notably impairment of goodwill, negative goodwill, capital gains or losses on disposals of consolidated companies or businesses, restructuring costs incurred under a detailed formal plan approved by the Group’s management, the cost of acquiring and integrating companies acquired by the Group, including earn-outs comprising conditions of presence, and the effects of curtailments, settlements and transfers of defined benefit pension plans; – Normalized earnings per share are calculated by dividing normalized profit or loss attributable to owners of the Company by the weighted average number of ordinary shares outstanding during the period, excluding treasury shares. Normalized net profit or loss is equal to profit for the year attributable to owners of the Company corrected for the impact of items recognized in “Other operating income and expense” (see Note 7 – Other operating income and expenses), net of tax calculated using the effective tax rate; – Net debt (or net cash and cash equivalents) comprises (i) cash and cash equivalents, as presented in the Consolidated Statement of Cash Flows (consisting of short-term investments and cash at bank) less bank overdrafts, (ii) cash management assets (assets presented separately in the Consolidated Statement of Financial Position due to their characteristics), less (iii) short- and long-term borrowings. Account is also taken of (iv) the impact of hedging instruments when these relate to borrowings, intercompany loans and own shares; – Organic free cash flow calculated based on items in the Statement of Cash Flows is equal to cash flow from operations less acquisitions of property, plant, equipment and intangible assets (net of disposals) and repayments of lease liabilities and adjusted for flows relating to the net interest cost. |
Main alternative performance measures are reconciled below :
(in millions of euros) First-half 2023 First-half 2024
Profit for the year attributable to owners of the Company | 809 | 835 |
Other operating income and expenses, net of tax calculated at the effective tax rate (1) | 189 | 171 |
Normalized profit for the year attributable to owners of the Company | 998 | 1,006 |
Weighted average number of ordinary shares outstanding | 171,947,414 | 170,981,563 |
NORMALIZED EARNINGS PER SHARE (in euros) | 5.80 | 5.88 |
(1) See Note 9 - Income Tax
(in millions of euros) First-half 2023 First-half 2024
Cash flows from operating activities | 244 | 456 |
Acquisitions of property, plant and equipment and intangible assets | (127) | (136) |
Proceeds from disposals of property, plant and equipment and intangible assets | 2 | 1 |
Acquisitions of property, plant and equipment and intangible assets (net of disposals) | (125) | (135) |
Interest paid | (113) | (126) |
Interest received | 89 | 112 |
Net interest cost | (24) | (14) |
Repayments of lease liabilities | (148) | (144) |
ORGANIC FREE CASH FLOW | (53) | 163 |
NOTE 4 Operating segments
Group Management analyzes and measures activity performance in the geographic areas where the Group is present. The geographic analysis enables management to monitor the performance: – of commercial development: it focuses on trends in major contracts and clients in Group markets across all its businesses. This monitoring seeks to coordinate the service offering of the different businesses in the countries, given their considerable interaction and to measure the services rendered. – at operational and financial level: management of treasury and support services, the operating investment and financing policies and the acquisition policy are decided and implemented by geographic area. Accordingly, the Group presents segment reporting for the geographic areas where it is located. The Group segments are defined as geographic areas (e.g. France) or groups of geographic areas (Rest of Europe). Geographic areas are grouped together based on an analysis of the nature of contracts, the typology of customer portfolios and the uniformity of operating margins*. Inter-segment transactions are carried out on an arm’s length basis. The performance of operating segments is measured based on the operating margin*. This indicator enables the measurement and comparison of the operating performance of operating segments, irrespective of whether their business results from internal or external growth. Costs relating to operations and incurred by Group holding companies on behalf of geographic areas are allocated to the relevant segments either directly or on the basis of an allocation key. Items not allocated correspond to headquarter expenses. The operating margin* realized by the main offshore delivery centers (India and Poland) is reallocated to the geographic areas managing the contracts to enable a better understanding of the performance of these areas. * Operating margin, an alternative performance measure monitored by the Group, is defined in Note 3 - Alternative performance measures. |
The Group communicates segment information for the following geographic areas: North America, France, United Kingdom and Ireland, the Rest of Europe, Asia-Pacific and Latin America.
First-half 2024 United Asia-Pacific
North Kingdom Rest of and Latin HQ
(in millions of euros) America France and Ireland Europe America (1) expenses Eliminations Total
Revenues | ||||||||
- external | 3,108 | 2,245 | 1,380 | 3,470 | 935 | – | – | 11,138 |
- inter-geographic area | 113 | 258 | 152 | 327 | 1,319 | – | (2,169) | – |
TOTAL REVENUES | 3,221 | 2,503 | 1,532 | 3,797 | 2,254 | – | (2,169) | 11,138 |
OPERATING MARGIN (2) | 481 | 205 | 282 | 384 | 98 | (66) | – | 1,384 |
% of revenues | 15.5 | 9.1 | 20.5 | 11.1 | 10.5 | – | – | 12.4 |
OPERATING PROFIT | 414 | 158 | 253 | 327 | 61 | (66) | – | 1,147 |
(1) The Asia-Pacific and Latin America area includes the following countries in particular: India, Australia, Brazil, Mexico and other Asian Pacific and Latin American countries.
(2) Operating margin, an alternative performance measure monitored by the Group, is defined in Note 3 - Alternative performance measures.
First-half 2023
United Asia-Pacific
North Kingdom Rest of and Latin HQ
(in millions of euros) America France and Ireland Europe America (1) expenses Eliminations Total
Revenues | ||||||||
- external | 3,288 | 2,308 | 1,386 | 3,472 | 972 | – | – | 11,426 |
- inter-geographic area | 119 | 241 | 147 | 326 | 1,377 | – | (2,210) | – |
TOTAL REVENUES | 3,407 | 2,549 | 1,533 | 3,798 | 2,349 | – | (2,210) | 11,426 |
OPERATING MARGIN (2) | 500 | 257 | 255 | 365 | 99 | (63) | – | 1,413 |
% of revenues | 15.2 | 11.1 | 18.4 | 10.5 | 10.2 | – | – | 12.4 |
OPERATING PROFIT | 440 | 188 | 224 | 301 | 61 | (63) | – | 1,151 |
(1) The Asia-Pacific and Latin America area includes the following countries in particular: India, Australia, Brazil, Mexico and other Asian Pacific and Latin American countries.
(2) Operating margin, an alternative performance measure monitored by the Group, is defined in Note 3 - Alternative performance measures.
2023
United Asia-Pacific
North Kingdom Rest of and Latin HQ
(in millions of euros) America France and Ireland Europe America (1) expenses Eliminations Total
Revenues | ||||||||
- external | 6,462 | 4,537 | 2,709 | 6,837 | 1,977 | – | – | 22,522 |
- inter-geographic area | 224 | 494 | 301 | 665 | 2,736 | – | (4,420) | – |
TOTAL REVENUES | 6,686 | 5,031 | 3,010 | 7,502 | 4,713 | – | (4,420) | 22,522 |
OPERATING MARGIN (2) | 1,010 | 571 | 504 | 800 | 241 | (135) | – | 2,991 |
% of revenues | 15.6 | 12.6 | 18.6 | 11.7 | 12.2 | – | – | 13.3 |
OPERATING PROFIT | 874 | 390 | 431 | 639 | 147 | (135) | – | 2,346 |
(1) The Asia-Pacific and Latin America area includes the following countries in particular: India, Australia, Brazil, Mexico and other Asian Pacific and Latin American countries.
(2) Operating margin, an alternative performance measure monitored by the Group, is defined in Note 3 - Alternative performance measures.
NOTE 5 Revenues
In the first-half 2024, revenues decreased by -2.5% compared with first-half 2023 on a reported basis. Revenues decreased by -2.6% at constant exchange rates(1) compared to first-half 2023 , while organic growth(1) was negative at -3.0%.
Change
First-half 2023 reported excat constant hange rates (1) First-half 2024
(in millions of euros)
North America | 3,288 | -5.5 % | -5.4 % | 3,108 | |
France | 2,308 | -2.7 % | -2.7 % | 2,245 | |
United Kingdom and Ireland | 1,386 | -0.4 % | -2.8 % | 1,380 | |
Rest of Europe | 3,472 | -0.1 % | -0.1 % | 3,470 | |
Asia-Pacific and Latin America | 972 | -3.7 % | -1.6 % | 935 | |
TOTAL | 11,426 | -2.5 % | -2.6 % | 11,138 |
(1) Organic growth and growth at constant exchange rates, alternative performance measures monitored by the Group, are defined in Note 3- Alternative performance measures.
NOTE 6 Operating expenses by nature
2023
(in millions of euros) Amount revenues% of Amount revenues% of Amount revenues% of
Personnel expenses | 15,341 | 68.2 % | 7,969 | 69.7 % | 7,807 | 70.1 % |
Travel expenses | 322 | 1.4 % | 161 | 1.4 % | 145 | 1.3 % |
Purchases and sub-contracting expenses | 2,977 | 13.2 % | 1,446 | 12.7 % | 1,403 | 12.6 % |
Rent and local taxes | 209 | 0.9 % | 106 | 0.9 % | 103 | 0.9 % |
Charges to depreciation, amortization, impairment, provisions and proceeds from asset disposals | 682 | 3.0 % | 331 | 2.9 % | 296 | 2.7 % |
OPERATING EXPENSES | 19,531 | 86.7 % | 10,013 | 87.6 % | 9,754 | 87.6 % |
NOTE 7 Other operating income and expenses
(in millions of euros) 2023 First-half 2023 First-half 2024
Amortization of intangible assets recognized in business combinations | (123) | (63) | (64) |
Expenses relating to share based compensation | (214) | (106) | (121) |
Expenses relating to employee ownership plan | (67) | – | – |
Restructuring costs | (179) | (68) | (53) |
Integration costs for companies acquired | (44) | (22) | (15) |
Acquisition costs | (15) | (7) | (4) |
Other operating expenses | (49) | (21) | (21) |
Total operating expenses | (691) | (287) | (278) |
Other operating income | 46 | 25 | 41 |
Total operating income | 46 | 25 | 41 |
OTHER OPERATING INCOME AND EXPENSES | (645) | (262) | (237) |
Expenses relating to share based compensation
The expense relating to share based compensation is €121 million, compared with €106 million in first-half 2023. This increase mainly results from the change in the share price over the period impacting the IFRS expense of new plans.
Expenses relating to employee ownership plan
As of December 31, 2023, expenses relating to employee ownership plan correspond to the 2023 ESOP plan, for which the capital increase was on December 19, 2023.
Restructuring costs
First-half 2024 restructuring costs primarily concern workforce reduction measures and real estate restructurings.
NOTE 8 Net financial expense / income
(in millions of euros) Note 2023 First-half 2023 First-half 2024
Income from cash, cash equivalents and cash management assets | 171 | 89 | 112 | |
Net interest on borrowings | (142) | (73) | (70) | |
Net finance costs at the nominal interest rate | 29 | 16 | 42 | |
Impact of amortized cost on borrowings | (12) | (6) | (6) | |
Net finance costs at the effective interest rate | 17 | 10 | 36 | |
Net interest cost on defined benefit pension plans | 15 | (3) | (1) | (1) |
Interest on lease liabilities | (29) | (14) | (16) | |
Exchange gains (losses) on financial transactions | (17) | – | 15 | |
(Losses) Gains on derivative instruments | (1) | (13) | (20) | |
Other | (9) | (4) | 6 | |
Other financial income and expense | (59) | (32) | (16) | |
NET FINANCIAL EXPENSE / INCOME | (42) | (22) | 20 |
The variation in income from cash, cash equivalents and cash management assets over the period is mainly due to the increase in cash invested in the Group's various geographies, in a context of high interest rates.
Net interest on borrowings (€70 million) and the impact of amortized cost on borrowings (€6 million) total €76 million mainly comprise:
– coupons on the 2018 bond issues of €7 million, plus an amortized cost accounting impact of €3 million,
– coupons on the 2020 bond issues of €38 million, plus an amortized cost accounting impact of €3 million.
Exchange gains on financial transactions and losses on derivative instruments primarily concern inter-company loans denominated in foreign currencies and the impacts of the related hedging arrangements.
Other financial income and expense include in particular in the first half of 2024 the impact of the revaluation at fair value of certain shares in non-consolidated companies (cf. Note 11 - Other non-current assets).
NOTE 9 Income tax expense
The effective tax rate for the half-year is calculated by applying the estimated effective tax rate for the fiscal year to pre-tax net profits for the half-year to June 30.
In 2021, the Organization for Economic Co-operation and Development (OECD) adopted a reform of international tax rules proposing in particular a minimum tax of 15% on profits made by multinational groups meeting certain criteria. These “Global Rules to Combat Tax Base Erosion” or “GloBE Rules”, which are intended to be introduced by jurisdictions into their domestic law, require the concerned groups to calculate a “GloBE” profit and the related taxes jurisdiction by jurisdiction. When this calculation results in an effective tax rate (ETR) of less than
15%, they require the groups to pay additional tax on profits, the level of which must make it possible to achieve the minimum target ETR of 15%.
In December 2022, the Council of the European Union adopted the “Pillar 2” Directive, which aims to transpose the GloBE Rules homogeneously within Member States; these must transpose the directive for a progressive application of the measures from January 1st, 2024.
France has thus transposed the rules of this directive into its national law through the Finance Law for 2024.
During the first-half of 2024, the Group carried out an analysis on the impact of the Safe Harbour measures, considering its geographic footprint and the implementation of certain additional national taxes.
Based on these estimates, for financial year 2024, the impact of this reform taken into account in the projected effective tax rate used as of June 30, 2024 is marginal and therefore has no significant impact on the Group’s tax expense and tax paid for the first-half 2024.
The effective income tax rate for the first-half 2024 is 28.0% based on pre-tax net profit of 1,167 million, compared with 27.2% at December 31, 2023 and 27.8% at June 30, 2023.
The effective income tax rate used to calculate normalized earnings per share at June 30, 2024 is 28.0%.
NOTE 10 Goodwill
The Group has not identified any indications of impairment calling into question the recoverable amount of the Cash Generating Units (CGU) at June 30, 2024.
NOTE 11 Other non-current assets
(in millions of euros) Note June 30, 2023 December 31, 2023 June 30, 2024
Long-term deposits, receivables and other investments | 169 | 172 | 176 | ||
Shares in associates and joint-ventures | 115 | 110 | 126 | ||
Derivative instruments | 76 | 73 | 82 | ||
Non-current tax receivables | 173 | 216 | 216 | ||
Shares in non-consolidated companies | 50 | 58 | 74 | ||
Defined benefit pension plan surplus | 15 | 190 | 153 | 220 | |
Other | 40 | 32 | 32 | ||
OTHER NON-CURRENT ASSETS | 813 | 814 | 926 |
The increase in “Other non-current assets” during the period is mainly explained by the variation in the defined benefit pension plan surplus in the United Kingdom linked to the increase in discount rates over the first half of 2024 in this country as well as the revaluation to fair value of certain shares in non-consolidated companies.
NOTE 12 Trade receivables, contract assets and contract costs
(in millions of euros) June 30, 2023 December 31, 2023 June 30, 2024
Trade receivables | 3,018 | 3,306 | 2,951 |
Provisions for doubtful accounts | (17) | (20) | (16) |
Contract assets | 2,491 | 1,670 | 2,383 |
Trade receivables and contract assets, excluding contract costs | 5,492 | 4,956 | 5,318 |
Contract costs | 139 | 132 | 141 |
TRADE RECEIVABLES, CONTRACT ASSETS AND CONTRACT COSTS | 5,631 | 5,088 | 5,459 |
Total trade receivables and contract assets net of contract liabilities can be analyzed as follows in number of days’ annual revenue:
(in millions of euros) June 30, 2023 December 31, 2023 June 30, 2024
Trade receivables and contract assets, excluding contract costs | 5,492 | 4,956 | 5,318 |
Contract liabilities | (1,252) | (1,332) | (1,106) |
TRADE RECEIVABLES AND CONTRACT ASSETS NET OF CONTRACT LIABILITIES | 4,240 | 3,624 | 4,212 |
In number of days’ annual revenue | 67 | 58 | 68 |
At June 30, 2024, no receivables were assigned with transfer of risk as defined by IFRS 9 to financial institutions (€2 million at December 31, 2023 and €152 million at June 30, 2023). These receivables were therefore derecognized in the Statement of Financial Position at December 31, 2023, and June 30, 2023 respectively.
NOTE 13 Other current assets
(in millions of euros) June 30, 2023 December 31, 2023 June 30, 2024
Social security and tax-related receivables, other than income tax | 319 | 366 | 285 |
Prepaid expenses | 398 | 280 | 399 |
Derivative instruments | 126 | 104 | 122 |
Other | 62 | 61 | 60 |
OTHER CURRENT ASSETS | 905 | 811 | 866 |
The increase in “Other current assets” during the period came mainly from the increase in certain prepaid expenses related to IT expenses and client projects.
NOTE 14 Net debt/net cash and cash equivalents
(in millions of euros) June 30, 2023 December 31, 2023 June 30, 2024
Short-term investments | 2,174 | 2,536 | 1,770 | |
Cash at bank | 1,021 | 1,000 | 802 | |
Bank overdrafts | (4) | (19) | (3) | |
Cash and cash equivalents, net of bank overdrafts | 3,191 | 3,517 | 2,569 | |
Cash management assets | 575 | 161 | 367 | |
Bonds | (5,656) | (5,067) | (4,271) | |
Drawdowns on bank and similar facilities and other borrowings | (7) | (4) | (5) | |
Long-term borrowings | (5,663) | (5,071) | (4,276) | |
Bonds | (1,044) | (654) | (1,417) | |
Drawdowns on bank and similar facilities and other borrowings | (291) | (2) | (1) | |
Short-term borrowings | (1,335) | (656) | (1,418) | |
Borrowings | (6,998) | (5,727) | (5,694) | |
Derivative instruments | (12) | 2 | (17) | |
NET DEBT (1) | (3,244) | (2,047) | (2,775) |
(1) Net debt / net cash and cash equivalents, an alternative performance measure monitored by the Group, is defined in Note 3 - Alternative performance measures.
During the first-half 2024, the €728 million increase in net debt on December 31, 2023 chiefly reflects:
► the payment to shareholders of dividends of €580 million,
► net cash outflows of €332 million in respect of transactions in treasury shares,
► cash outflows on business combinations, net of cash and cash equivalents acquired, of €30 million, partially offset by organic free cash flow* generation in the first-half 2024 of €163 million.
Financial asset and liability fair value measurement methods and classifications are unchanged from December 31, 2023.
* Organic free cash flow, an alternative performance measure monitored by the Group, is defined in Note 3 - Alternative performance measures
NOTE 15 Provisions for pensions and other post-employment benefits
(in million of euros) Note June 30, 2023 December 31, 2023 June 30, 2024
NET OBLIGATION AT BEGINNING OF PERIOD | 183 | 183 | 178 | |
Expense for the period recognized in the Income Statement | 11 | 56 | 19 | |
Cost of services rendered | 28 | 53 | 30 | |
Plan curtailments and settlements | (18) | – | (12) | |
Interest cost | 8 | 1 | 3 | 1 |
Impact on income and expense recognized in equity | 1 | 70 | (98) | |
Benefits and contributions | (35) | (123) | (14) | |
Translation adjustments | (7) | (4) | (5) | |
Other movements | 17 | (4) | (2) | |
NET OBLIGATION AT END OF PERIOD | 170 | 178 | 78 | |
o/w Provisions | 360 | 331 | 298 | |
o/w Other non-current assets | 190 | 153 | 220 |
The present value of pensions and other post-employement benefits obligations totaled €3,122 million at June 30, 2024 compared to €3,231 million at December 31, 2023.
The value of the plan assets is equal to €3,044 million at June 30, 2024 compared with €3,053 million at December 31, 2023.
NOTE 16 Non-current and current provisions
A provision is recognized in the Consolidated Statement of Financial Position at the year-end 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.
Movements in non-current and current provisions break down as follows:
(in millions of euros) June 30, 2023 December 31, 2023 June 30, 2024
Beginning of the period | 442 | 442 | 445 |
Allowances | 27 | 60 | 37 |
Reversals (utilization of provisions) | (13) | (32) | (32) |
Reversals (unused provisions) | (10) | (26) | (46) |
Other | 1 | 1 | 1 |
End of the period | 447 | 445 | 405 |
At June 30, 2024, non-current provisions (€304 million) and current provisions (€101 million) concern risks relating to projects and contracts of €100 million (€111 million at December 31, 2023) and risks of €305 million (€334 million at December 31, 2023), mainly relating to labor and legal disputes in France and tax risks (excluding income tax) in India.
NOTE 17 Other non-current and current liabilities
(in millions of euros) June 30, 2023 December 31, 2023 June 30, 2024
Special employee profit-sharing reserve | 37 | 46 | 24 | |
Derivative instruments | 94 | 109 | 81 | |
Liabilities related to acquisitions of consolidated companies | 64 | 53 | 57 | |
Non-current tax payables | 220 | 194 | 201 | |
Other | 159 | 156 | 124 | |
OTHER NON-CURRENT AND CURRENT LIABILITIES | 574 | 558 | 487 |
Other current and non-current liabilities mainly include the non-current tax payables on tax audit, litigation or pre-litigation proceedings in India and France.
The change in “Other non-current and current liabilities” during first-half 2024 came mainly from the change in the fair value of hedging derivatives contracted as part of the centralized management of currency risk.
Liabilities related to acquisitions of consolidated companies mainly comprise earn-outs granted at the time of certain acquisitions.
NOTE 18 Number of employees
Average number of employees by geographic area
First-half 2023 2023 First-half 2024
Number of Number of Number of employees % employees % employees %
North America | 20,175 | 6 | 19,709 | 6 | 18,417 | 6 |
France | 39,568 | 11 | 39,161 | 11 | 38,176 | 11 |
United Kingdom and Ireland | 14,467 | 4 | 14,477 | 4 | 14,430 | 4 |
Rest of Europe | 70,423 | 20 | 69,897 | 20 | 68,461 | 20 |
Africa and Middle East | 6,570 | 2 | 6,794 | 2 | 7,237 | 2 |
Asia-Pacific and Latin America | 204,464 | 57 | 199,755 | 57 | 191,127 | 57 |
AVERAGE NUMBER OF EMPLOYEES | 355,667 | 100 | 349,793 | 100 | 337,848 | 100 |
Number of employees at period-end by geographic area
First-half 2023 2023 First-half 2024
Number of Number of Number of employees % employees % employees %
North America | 19,717 | 6 | 18,941 | 6 | 18,164 | 6 |
France | 39,265 | 11 | 38,460 | 11 | 37,837 | 11 |
United Kingdom and Ireland | 14,595 | 4 | 14,391 | 4 | 14,493 | 4 |
Rest of Europe | 70,211 | 20 | 68,993 | 20 | 68,051 | 20 |
Africa and Middle East | 6,737 | 2 | 7,201 | 2 | 7,195 | 2 |
Asia-Pacific and Latin America | 198,944 | 57 | 192,457 | 57 | 191,183 | 57 |
NUMBER OF EMPLOYEES AT PERIOD-END | 349,469 | 100 | 340,443 | 100 | 336,923 | 100 |
NOTE 19 Off-balance sheet commitments
COMMITMENTS GIVEN
(in millions of euros) June 30, 2023 December 31, 2023 June 30, 2024
On operational contracts | 1,968 | 1,905 | 2,009 |
On leases | 148 | 207 | 138 |
Other commitments given | 62 | 70 | 150 |
COMMITMENTS GIVEN | 2,178 | 2,182 | 2,297 |
COMMITMENTS RECEIVED
(in millions of euros) June 30, 2023 December 31, 2023 June 30, 2024
On operational contracts | – | – | – | |
Other commitments received | 90 | 81 | 76 | |
COMMITMENTS RECEIVED | 90 | 81 | 76 |
Off-balance sheet commitments relating to Group financing remain unchanged compared to December, 31 2023.
Contingent liabilities
In the normal course of their activities, certain Group companies underwent tax audits, leading in some cases to revised assessments in the firsthalf 2024 and in previous fiscal years.
Proposed adjustments were challenged and litigation and pre-litigation proceedings were in progress on June 30, 2024. This is particularly the case in India, where Group subsidiaries have received several tax reassessment notices or proposed tax reassessment notices for income tax, particularly on a recurring basis on transfer pricing issues.
Most often, no amounts have been booked for these disputes in the consolidated financial statements in so far as the Group considers it can justify its positions with serious likelihood of winning.
NOTE 20 Subsequent events
None.
Declaration by the person responsible for the interim financial report
“I hereby declare that, to the best of my knowledge, the condensed interim consolidated financial statements for the half-year ended June 30, 2024 have been prepared in accordance with applicable accounting standards and give a true and fair view of the assets, liabilities, financial position and results of the Company and all the other companies included in the scope of consolidation and that the interim financial review on page 5 gives a fair description of the material events that occurred in the first six months of the fiscal year and their impact on the financial statements, the main related party transactions, as well as a description of the main risks and uncertainties for the remaining six months of the year".
Aiman Ezzat
Chief Executive Officer
[1] Operating margin, an alternative performance measure monitored by the Group, is defined in Note 3 - Alternative performance measures.