13 November 2012 Interim Management Statement Capita plc ('Capita'), the UK's leading business process management (`BPM') and professional services company, is today issuing its interim management statement, covering trading and financial progress to date in 2012. Overview Capita has achieved a strong sales performance to date in 2012 with record major contract wins totalling £1.7bn. We are experiencing high levels of sales activity in the UK business process management and customer services marketplace as evidenced by both our bid pipeline, which has been swiftly replenished and currently stands at £4.0bn (July 2012: £4.1bn), and the buoyant prospects list sitting behind this. We are expecting a number of decisions regarding bids in the pipeline towards the end of Q4 and in Q1 2013. We remain well placed to achieve renewed organic growth in line with expectations in 2012 and anticipate further strong progress in 2013. Performance across our key financial metrics is in line with expectations. At the beginning of this year, we set ourselves three key objectives for 2012: * achieve continued strong profit performance * secure organic growth of 3% for the full year * deliver improved conversion of operating profit to operating cash compared to 2011. We believe we are on track to achieve all of these. Securing organic growth In 2012 to date, we have won 33 major sales contracts with an aggregate value of £1.7bn (November 2011 IMS: 16 new contracts totalling £1.3bn) of which 76% relates to new contract wins and 24% to renewals. Major contracts worth over £50m include: * Recruiting Partnering Project (RPP) - partnering with the Ministry of Defence to deliver RPP for the Army, and the enabling ICT for the Royal Navy and the Royal Air Force, in a contract valued at approximately £50m per annum over 10 years. * Civil Service Learning agreement -selected by the Cabinet Office to manage exclusively the provision of training across the Civil Service in a 2 year contract, with the option to extend for a further 2 years. * West Sussex County Council Support Services partnership - selected to deliver a range of services including HR and payroll, finance, office services, online service delivery, procurement and pensions administration in a 10 year relationship expected to generate revenues of approximately £ 154m. Our existing IT Services contract that commenced in 2010 was also extended concurrent with the new contract bringing additional revenues of £ 18m over an additional 2 years to 2022. * Personal Independence Payments (PIP)-awarded one of three regional contracts by the Department for Work and Pensions to deliver disability assessments across central England and Wales, in a contract anticipated to be worth around £140m over five years. * North Tyneside Council - selected as preferred bidder to provide wide-ranging property, highways and maintenance services in a partnership designed to deliver both cost savings and improved services to citizens, in a contract expected to be worth approximately £152m over 15 years, with significant opportunities for growth. * 3major private sector contracts - our expanded customer management offering has secured 3 major contracts to date in 2012, worth in aggregate £161m over 3 to 5 years, including a full customer management service for Debenhams plc, another major UK retailer and Scottish Power. Contracts worth between £10-50m include: * 8 customer management contracts in the motor, retail and utilities markets worth in aggregate £124m over 2 to 5 years. * Oxfordshire County Council - Capita Symonds, our property consultancy, selected to support Carillion's partnership with the Council in a contract worth approximately £42m over 10 years. * UK Border Agency - selected to deliver contact management services, worth up to £30m over 4 years, to support the management of the 'overstayer' backlog. * London Fire and Emergency Planning Authority - selected to provide control room services and mobilisation and communications technologies in a contract worth approximately £20m over 10 years. * Southwark Council - awarded a 4 year contract for an IT managed service designed to help transform the council and deliver benefits for both customers and the workforce. * Ministry of Justice - Capita's secure information solutions business has been awarded a contract worth around £21m over 3 years for the application management and hosting of the Criminal Justice System Exchange (CJSE). This contract has the potential to be extended up to a maximum 5 year term. Sales update Bid pipeline: This pipeline is a snapshot of major bid opportunities, worth £ 10m or above, where we have been shortlisted by the client to the last 4 bidders or fewer. Notwithstanding the record level of major sales contracts secured to date in 2012, our bid pipeline has been replenished swiftly and currently stands at £4.0bn (July 2012: £4.1bn). The bid pipeline comprises 26 bids, 98% relating to new contracts and 2% renewals. By value, 68% of the bids in the pipeline are public sector, mainly in central government, local government, education and defence and 32% are in the private sector, from the financial services, retail, utilities and telecoms sectors. Behind our bid pipeline, there is a strong prospect list of opportunities at various stages of the bid process, including a number which are close to shortlist stage. Contract rebids: Over the next 7 years to 2019, we only have 2 material contracts (defined as having forecast annual revenue in excess of 1% of 2011 turnover) due for rebid - the Civil Service Learning agreement in 2014 and the Phoenix contract in 2019. Criminal Records Bureau contract update - We announced in September that the Home Office is pursuing discussions with another supplier regarding the new Disclosure and Barring Service (DBS) operations. The CRB has advised Capita of its intention to extend the current CRB contract with Capita beyond the original expiry date of 31 March 2013, and the terms of this extension agreement are now being finalised. Market update We are currently seeing a good flow of opportunities from across our public and private sector markets as organisations look for ways to improve the efficiency of their operating models and protect frontline services. The public sector is buoyant, with significant activity across local government and central government, most notably the Ministry of Justice and Ministry of Defence. There is also a steady flow of opportunities across the emergency services and health markets. In the private sector, we are seeing a high level of demand for customer management services and increasingly additional wider back office support, particularly from retail, utilities, telecoms and financial services organisations. In recognition of the market potential and strong growth of both our customer contact management and justice and secure services businesses, we have separated these areas from their existing divisions to create two further new divisions. As well as our emphasis on existing markets, we are continuing to develop our interests in new markets and are currently appointing two senior market development directors, who will join Capita with expertise in the defence sector and the banking sector. Acquisitions The acquisition of small to medium sized businesses continues to supplement Capita's long term organic growth, providing entry into new markets and enhancing our sales offering by adding further scale and complementary capabilities to the Group's propositions for clients. Acquisitions to date in 2012: we have purchased 14 companies for a total cash consideration of £178m. Since our H1 results announcement in July 2012, we have completed a number of acquisitions including: Expotel, a UK hotel, business travel and conference booking agent, for a consideration of £16m and Reliance Secure Task Management, a medical assessment and criminal justice support services firm, for £20m. The acquisition pipeline remains encouraging. Delivery network: Following the acquisition of Full Circle in July 2012, a leading contact centre solutions business based in South Africa, we now have approximately 170 employees, in Cape Town and have already started to provide new customer management services for an existing client. Outlook We remain on track to deliver strong revenue growth in 2012 as a result of both major contract wins and acquisitions completed during 2011 and 2012. We are confident that we will deliver 3% organic growth for the year and an improved cash conversion rate for 2012 as compared to 2011, with further improvement anticipated in 2013. We have good revenue visibility for 2013 which, together with the current buoyant sales environment, underpins our confidence in the Group's long term performance and growth prospects. -ends- Conference Call: Paul Pindar, Chief Executive of Capita plc, will host a conference call for investors and analysts at 8.00am UK time today, details below: UK Access Number: +44 (0)20 3140 0668 Participant PIN Code: 296508# Replay details: +44 (0)20 3140 0698 (available for 2 weeks following the call) Reference: 387947# For further information: Capitaplc Tel: 020 7799 1525/020 7654 2219 Paul Pindar, Chief Executive Shona Nichols, Corporate Communications Director Capita Press Office Tel: 020 7654 2399 FTI Consulting Tel: 020 7269 7191 Andrew Lorenz/Nick Hasell Capita plc is the UK's leading provider of business process management (BPM) and integrated professional support service solutions. With 46,500 people at more than 350 sites, including 68 business centres across the UK, Europe and India, the Group uses its expertise, infrastructure and scale benefits to transform its clients' services, driving down costs and adding value. Capita is quoted on the London Stock Exchange (CPI.L), and is a constituent of the FTSE 100 with 2011 turnover of £2.9 billion and profit before tax of £385 million. Further information on Capita plc can be found at: www.capita.co.uk. END -0- Nov/13/2012 07:00 GMT
CAPITA PLC: Capita plc - Interim Management Statement
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