CAPGEMINI_REGISTRATION_DOCUMENT_2017

FINANCIAL INFORMATION

4.2 Consolidated Financial Statements

Organic free cash flow Organic free cash flow calculated based on items in the Statement of Cash Flows is equal to cash flow from operations less acquisitions of property, plant, equipment and intangible assets (net of disposals) and adjusted for flows relating to the net interest cost.

At December{31 (in millions of euros)

2016

2017

Cash flows from operations

1,319

1,330

Acquisitions of property, plant and equipment and intangible assets

(197)

(241)

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

21

15

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

(176)

(226)

Interest paid

(115)

(86)

Interest received

43

62

Net interest cost

(72)

(24)

ORGANIC FREE CASH FLOW

1,071

1,080

4

Currency, interest rate and counterparty risk management Note{23 Currency risk management

Currency risk and hedging financial transactions b) The Group is exposed to the risk of exchange rate fluctuations in respect of: inter-company financing transactions, mainly within the parent company, these flows generally being hedged (in particular using forward purchase and sale foreign exchange contracts); fees paid to the parent company by subsidiaries whose X functional currency is not the euro. Sensitivity of revenues and the operating margin* to c) fluctuations in the main currencies A 10% fluctuation in the US{dollar-euro exchange rate would trigger a corresponding 2.8% change in revenues and a 2.4% change in the operating margin{ (1) amount. Similarly, a 10% fluctuation in the pound sterling-euro exchange rate would trigger a corresponding 1.3% change in revenues and a 1.2% change in the operating margin{ (1) amount. Hedging derivatives B) Amounts hedged at December{31, 2017 using forward purchase and sale foreign exchange contracts, mainly concern the parent company and the centralized management of currency risk on operating transactions and inter-company financing transactions.

Exposure to currency risk and currency risk A) management policy

Currency risk and hedging operating transactions a) The significant use of offshore production centers located in India, Poland, China and Latin America, exposes the Group to currency risk with respect to some of its production costs. The Group implements a policy aimed at minimizing and managing these currency risks, due in the majority to internal flows with India. The hedging policy and the management of operational currency risk is centralized at parent company level. Currency risk is managed primarily based on periodic reporting by subsidiaries of their exposure to currency risk over principally the coming one{to three{years. On this basis, the parent company acting as an internal bank, grants internal currency guarantees to subsidiaries and enters into currency hedges with its bank counterparties, primarily through forward purchase and sale foreign exchange contracts. These hedging transactions are recorded in accordance with cash flow hedge accounting rules.

Operating margin, an alternative performance measure monitored by the Group, is defined in Note{3 - Alternative performance measures. (1)

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REGISTRATION DOCUMENT 2017 — CAPGEMINI