How To Reduce The Capital Of Cap Gemini S.A.A

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1 CAP GEMINI S.A. SUMMARIZED FINANCIAL STATEMENTS The full financial statements, including the notes, may be obtained from the Company on request. reports below relate to the full financial statements. STATUTORY AUDITORS GENERAL REPORT ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2003 To the shareholders of Cap Gemini S.A. In compliance with the assignment entrusted to us by your Annual Shareholders Meeting, we hereby report to you, for the year ended December 31, 2003, on: the audit of the accompanying financial statements of Cap Gemini S.A., the specific verifications and information required by law. These financial statements have been approved by the Board of Directors. Our responsibility is to express an opinion on these financial statements based on our audit. Opinion on the financial statements We conducted our audit in accordance with the professional plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from 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 financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements give a true and fair view of the Company s financial position and its assets and liabilities as of December 31, 2003, and of the results of its operations for the year then ended in accordance with French accounting principles and regulations. Justification of our assessments In accordance with the obligation to justify our assessments set down in article L of the French Commercial Code (Code de Commerce), applicable for the first time to this financial year, we draw your attention to the matters set out below which contribute to the opinion expressed above in relation to the financial statements taken as a whole: Investments in subsidiaries and affiliates in an amount of 6,691 million are recorded in the balance sheet for the year ended December 31, The accounting principles used and the methods applied to determine the value in use of these investments are described in notes 1 and 2.2 to the financial statements. As part of our assessments, we verified whether the approach applied was correct and that the assumptions used and resulting valuations were consistent overall. Specific verifications and information We have also performed the specific verifications required by law, in accordance with the professional standards applied in France. We have no comments as to the fair presentation and the conformity with the financial statements of the information given in the Management Report of the Board of Directors and in the documents addressed to the shareholders with respect to the financial position and the financial statements. In accordance with the law, we have verified that the Management Report of the Board of Directors contains the appropriate disclosures as to the acquisition of shares and controlling interests, together with the identity of the principal shareholders. Frédéric Quelin 72

2 STATUTORY AUDITORS SPECIAL REPORT ON CERTAIN RELATED PARTY AGREEMENTS FOR THE YEAR ENDED DECEMBER 31, 2003 Agreement signed with Lazard Frères authorized by the To the shareholders of Cap Gemini S.A., Board of Directors on February 26, 2003 In our capacity as Statutory Auditors of Cap Gemini S.A., we are required to report on certain contractual agreements with certain related parties of which we have been advised. Agreements entered into during the year Under the provisions of article L of the Commercial Code, we have been informed of the agreements approved in advance by the Board of Directors. Our responsibility does not include identifying any undisclosed agreements. We are required to report to shareholders, based on the information provided, about the main terms and conditions of agreements 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. Director concerned: Bruno Roger Type and purpose of agreement: Agreement with Lazard Frères to act as an exclusive financial consultant to assist the Company in researching transactions aimed at changing its scope of operations and/or its financial structure, and in carrying out any such transactions. The agreement was entered into for a period of seven months from the date of signature and is tacitly renewable for a period of 6 months. Terms and conditions: the agreement provides for the payment of a success fee corresponding to 80% of the standard market rates. If no such transactions were carried out before September 30, 2003 Cap Gemini S.A. had to pay a 400,000 retainer fee for all work carried out since the signature of the agreement. We conducted our review in accordance with the professional carry out the necessary procedures to verify the consistency of the information disclosed to us with the source documents. During 2003 Lazard Frères received total fees of 1,711,742 under the agreement, representing the success fee on the Transiciel transaction (including the 400,000 retainer fee). Frédéric Quélin 73 ANNUAL REPORT 2003 Capgemini

3 Capgemini S.A. SUMMARIZED FINANCIAL STATEMENTS Capgemini SUMMARIZED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2001, 2002 AND 2003 in millions of euros Operating revenue Operating expenses (18) (18) (24) OPERATING INCOME Interest income/(expenses), net (1,960) (4,629) (155) Other income and expenses, net (16) 258 (3) Income tax (64) 92 4 NET INCOME/(LOSS) (1,874) (4,135) (42) SUMMARIZED BALANCE SHEETS AS OF DECEMBER 31, 2001, 2002 AND 2003 in millions of euros ASSETS Non-current assets 11,013 6,734 7,036 Current assets Other assets TOTAL ASSETS 11,638 7,354 7,965 LIABILITIES AND SHAREHOLDERS EQUITY Shareholders equity 11,415 7,222 7,376 Provisions Long and short-term debt 6 14 (*) 476 Other liabilities TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 11,638 7,354 7,965 (*) of which 460 million related to the issuance of bonds convertible into new shares and/or exchangeable for existing shares (OCEANEs) 74

4 SUBSIDIARIES AND INVESTMENTS in millions of euros Capital Other (%) Number Book value Loans & Guarantees 2003 Dividends shareholders interest of of shares advances given revenue received equity (including shares owned Gross Net granted (2) net income for the year) (1) SUBSIDIARIES Cap Gemini North America 1 1, % 964,000 5,475 2, CGS Holdings Ltd (UK) % 453,513, Gemini Consulting Holding % 1, Ltd (UK) CGEY Oldco Ltd (UK) % 1,033,938, CGEY Old Ireland Ltd % 71, CGEY AB (Sweden) % 21, Cap Gemini Europe BV % 194, (Netherlands) Cap Gemini NV (Benelux) % 43,287,967 1,214 1, CGEY Deutschland Holding % GmbH (Germany) CGEY Deutschland GmbH % (Germany) CGEY Consultants Osterreich % 36, AG (Austria) CGEY Suisse % 5, CGEY Polska Sp Z.o.o 3 (3) % 106, (Poland) CGEY France S.A.S 40 (25) 98.98% 2,474, Cap Gemini Telecom % 8,855, S.A.S (France) Transiciel S.A % 17,571, CGEY Italia Spa (Italy) % 1,038, CGEY Espana SL (Spain) 13 (56) % 132, CGEY Portugal Serviços de 6 (10) % 1,191, Consultoria e Informatica S.A. (Portugal) Cap Gemini Asia Pacific Pte 80 (82) % 171,108, (Singapore) CGEY Australia Pty Ltd 99 (96) % 1,200, (Australia) CGEY New Zealand Ltd 9 (9) % 3,000, (New Zealand) Sogeti France SAS % 7,311, Sogeti Spain SL % 530, Sogeti Sverige AB % 5, Cap Gemini Service S.A.S 1 (8) % 1,500, (France) SCI Paris Etoile % 9, SCI du Château de Béhoust % Immobilière les Fontaines 8 (4) % 499, S.A.R.L Other (France) nm nm nm nm nm 0 Other (outside France) nm nm nm nm nm - INVESTMENTS As of December 31, 2003, investments held by Cap Gemini SA are not material. (1) Excluding share capital and before appropriation of income for the year. (2) As of December 31, 2003, guarantees granted by the Company to its subsidiaries for financing facilities amounted to 341 million, of which 73 million have been used. nm : not meaningful. Cap Gemini S.A. is the head of the French tax group made up of 12 companies. The impact of tax consolidation in 2003 was a benefit of 5 million. The net income of subsidiaries and investments is not provided because disclosure would be prejudicial to the Company s commercial and financial strategy. As stated on page 2, the Group intends to adopt the name Capgemini from April 15, Therefore actions have been taken to remove the words Ernst & Young from the names of the subsidiaries. 75 ANNUAL REPORT 2003 Capgemini

5 Capgemini S.A. SUMMARIZED FINANCIAL STATEMENTS Capgemini CHANGES IN SHAREHOLDERS EQUITY in millions of euros 2002 Net income Other appropriation 2002 movements 2003 Share capital 1, ,049 Additional paid-in-capital 11,711 (5,807) 151 6,055 Legal reserve Untaxed reserves Other reserves Retained earnings (1,672) 1, Dividends paid Net income/(loss) (4,135) 4,135 (42) (42) TOTAL 7, ,376 FIVE-YEAR FINANCIAL SUMMARY in millions of euros I-SHARE CAPITAL AT YEAR-END Share capital ,002 1,004 1,049 Number of common shares outstanding 77,945, ,305, ,244, ,479, ,165,349 Maximum number of future shares to be created: - through exercise of stock options 6,038,838 7,487,783 10,463,754 10,951,340 10,004,465 - through conversion of convertible bonds ,019,607 - through warrants related to Transiciel acquisition ,602 II-OPERATIONS AND RESULTS OF THE CURRENT YEAR Operating revenue Operating revenue and financial revenue Income before taxes, amortization and provisions (1,523) 108 Income tax (92) (4) Net income/(loss) (1,874) (4,135) (42) Distributed income 78 (a) (b) 0 III-EARNINGS PER SHARE in euros Earnings after taxes, but before amortization and provisions (11.40) 0.86 Net earnings (14.96) (32.96) (0.32) Dividend per share, net (b) 0 IV-EMPLOYEE DATA Average number of employees during the year Total payroll Total benefits (a) Representing a dividend of 149 million and dividend equalization tax (précompte) of 15 million. (b) Subject to approval by the Ordinary Shareholder s Meeting of April 29,

6 STATUTORY AUDITORS SPECIAL REPORT ON THE CANCELING OF SHARES BOUGHT BACK BY THE COMPANY To the shareholders of Cap Gemini S.A., In our capacity as Statutory Auditors of Cap Gemini S.A. and pursuant to the provisions of article L , paragraph 4 of the Commercial Code relating to the canceling of shares bought back by the Company, we hereby present our report on the reasons and terms of the proposed capital reduction. We conducted our review in accordance with the professional review the proposed capital reduction in order to ensure whether the reasons and terms thereof are fair. The proposed capital reduction would take place further to the buyback of shares representing a maximum of 10% of the Company s share capital as of December 31, 2003, in accordance with article L , paragraph 4 of the Commercial Code. The Board of Directors is seeking an eighteen-month authorization for this buyback program in the fifth resolution of the Ordinary Shareholders Meeting. 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 5 years. We have no comment to make on the reasons or terms of the proposed capital reduction, the implementation of which depends on the Ordinary Shareholders Meeting approving the buy back of the Company s shares. Frédéric Quélin 77 ANNUAL REPORT 2003 Capgemini

7 Capgemini S.A. SUMMARIZED FINANCIAL STATEMENTS Capgemini STATUTORY AUDITORS SPECIAL REPORT ON THE ISSUANCE OF SHARES AND SHARE EQUIVALENTS WITH DELEGATION OF POWERS To the shareholders of Cap Gemini S.A., In our capacity as Statutory Auditors of Cap Gemini S.A. and pursuant to the provisions of articles L , L , L and L of the Commercial Code, we hereby present our report on the following planned issues: - the issuance of shares without pre-emptive subscription rights, as presented in the ninth resolution, - the public issuance of equity warrants and hybrid securities, as presented in the eleventh to fourteenth resolutions, - the issuance of shares and/or hybrid securities as payment for shares tendered to any public exchange offer made by the Company, as presented in the fifteenth resolution, as submitted to shareholders for approval. As described in its report, the Board of Directors is asking for authorization to establish the terms and conditions of these issues. Shareholders will also be asked to waive their preemptive rights to subscribe for securities issued under the terms of the ninth, twelfth, fourteenth and fifteenth resolutions as well as for shares issued subsequently on conversion, exchange or exercise of equity warrants or any other method as provided for under resolutions eleven to fourteen. 1/ Issuance of shares without pre-emptive subscription rights In the ninth resolution, the Board of Directors is seeking authorization to issue new shares at par or at a premium, to be paid up in cash or by capitalizing debt, without pre-emptive subscription rights for existing shareholders. The total amount of capital increases that may be carried out pursuant to this resolution will be covered by the blanket authorization to increase the capital to a maximum nominal amount of 1.5 billion, which shareholders will be asked to approve in the eighth resolution. 2/ Issuance of equity warrants In the eleventh and twelfth resolutions the Board of Directors is seeking authorization to issue equity warrants, with preemptive subscription rights for existing shareholders under the eleventh resolution, and without pre-emptive subscription rights under the twelfth resolution. Under each of these resolutions, the share capital may be increased by a maximum of 400 million due to the exercise of equity warrants. Shareholders are also asked to expressly waive their pre-emptive rights, in favor of the warrant-holders, to subscribe for the shares to be issued on the exercise of the warrants. 3/ Issuance of hybrid securities In the thirteenth and fourteenth resolutions the Board of Directors is seeking authorization to issue hybrid securities convertible, redeemable, exchangeable or otherwise exercisable for shares of the Company, at any time or at fixed dates. These issues would be with pre-emptive subscription rights for existing shareholders under the thirteenth resolution and without pre-emptive subscription rights under the fourteenth resolution. The securities that may be issued pursuant to these resolutions may include: a) securities representing a portion of the Company s share capital combined with warrants entitling the holder to subscribe for shares in the Company; in this case, the aggregate par value of the securities to which said warrants are attached may not exceed 400 million; b) debentures other than convertible debentures, debentures with equity warrants or the securities referred to in a) above; in this case, the aggregate face value of the securities issued may not exceed 3 billion. In all cases, the aggregate par value of the shares issued on exercise of the warrants referred to in a) above, or on conversion, redemption or exchange of the securities referred to in b) above, or on presentation of a warrant attached to the securities or otherwise may not exceed 400 million, not including any potential adjustments. These authorizations entail the waiver by the shareholders, in favor of the holders of any of the above securities, of their preemptive right to subscribe for the shares to be issued on conversion, redemption or exchange of the securities, on exercise of a warrant or otherwise. 4/ Issuance of shares and/or hybrid securities as payment for shares tendered to any public exchange offer made by the Company In the fifteenth resolution the Board of Directors is seeking an authorization to use the authorizations granted under the ninth, twelfth and fourteenth resolutions mentioned in 1), 2) and 3) above or in the fifteenth and seventeenth resolutions of the Extraordinary Shareholders Meeting of May 7, 2003, in order to issue shares and/or hybrid securities to remit as payment for shares tendered to any public exchange offer made in France or abroad by the Company. 78

8 The price of the shares and other securities issued under this authorization will be set based on the laws applicable to public exchange offers. Therefore the rules relating to setting the issue prices of Company shares set out in the above-mentioned resolutions will not apply. Shareholders are expressly asked to waive their pre-emptive rights to subscribe for any shares or other securities issued pursuant to this authorization. The total amount of capital increases that may be carried out pursuant to the authorizations given in the ninth and eleventh to fifteenth resolutions as mentioned above and by the fourteenth to seventeenth resolutions of the Extraordinary Shareholders Meeting of May 7, 2003 will be covered by the blanket authorization to increase the capital to a maximum nominal amount of 1.5 billion given to the Board of Directors in the eighth resolution which you are invited to approve. We conducted our review in accordance with the professional carry out the necessary procedures to review the methods used for determining the exercise price of subscription rights and the issue price for each issue. As the exercise price of subscription rights and the issue price for each issue are to be determined by the Board of Directors when the operations are carried out, we are not in a position to comment on the final terms and conditions under which these issues will be conducted, nor, in consequence, on the proposed waivers of shareholders pre-emptive rights to subscribe for the issues concerned, the principle of which is in keeping with the nature of the proposed operations. In accordance with article of the decree of March 23, 1967, we will issue a supplementary report at the time of each such issue conducted by the Board of Directors. Frédéric Quélin 79 ANNUAL REPORT 2003 Capgemini

9 Capgemini S.A. SUMMARIZED FINANCIAL STATEMENTS Capgemini STATUTORY AUDITORS SPECIAL REPORT ON EMPLOYEE SHARE ISSUES To the shareholders of Cap Gemini S.A., In our capacity as Statutory Auditors of Cap Gemini S.A. and in accordance with article L of the Commercial Code, we hereby present our report on the planned share issues to be offered for subscription in cash by employees who are members of a Company Savings Plan (PEE) set up by the Company or related companies within the meaning of article L of the Commercial Code, as submitted to shareholders for approval. In accordance with the provisions of article L VII of the Commercial Code, and based on its report, the Board of Directors is inviting shareholders to grant it a three-year authorization to set the terms and conditions of any such issue in accordance with article L of the Labor Code. Shareholders are also asked to waive their pre-emptive right to subscribe for any shares to be offered to employees for subscription. Total capital increases resulting from shares issued under the authorization given in this resolution may not exceed 28,000,000, representing 3,500,000 new shares with a par value of 8. We conducted our review in accordance with the professional carry out the necessary procedures to review the methods used for determining the issue price for each issue. Subject to the future examination of the terms and conditions of these issues, we have no comment to make on the methods used to determine the issue price of new shares, as presented in the report of the Board of Directors. As the issue price of new shares is to be determined by the Board of Directors when the operations are carried out, we are not in a position to comment on the final terms and conditions under which these issues will be conducted, nor, in consequence, on the proposed waiver of shareholders' pre-emptive rights to subscribe for the issues concerned, the principle of which is in keeping with the nature of the proposed operations. In accordance with article of the decree of March 23, 1967, we will issue a supplementary report at the time of each such issue conducted by the Board of Directors. Frédéric Quélin 80