Capita plc: Interim Management Statement
14 May 2013
Capita plc - Interim management statement Capita plc ('Capita'), the UK's leading customer and business process management (`BPM') company, is today issuing its interim management statement covering trading and financial progress to date in 2013. This statement coincides with Capita's Annual General Meeting which is taking place today. Update on performance Capita has made a positive start to the year securing £660m of new major sales wins including contracts with the Cabinet Office, Carphone Warehouse and the University of Strathclyde. Our bid pipeline remains strong and comprises opportunities across our target markets, particularly in central and local government and in the private sector, primarily in retail, utilities and financial services. To date in 2013, we have also acquired 7 complementary businesses for a total consideration of £165m, enhancing our propositions to clients in our existing and developing markets and supporting the delivery of further organic growth. We are making good progress across our key financial metrics as anticipated in our preliminary results statement issued on 28 February 2013. Due to our strong major sales performance in 2012 and to date in 2013, we are well placed to achieve organic growth in line with expectations for the full year 2013. Delivering organic growth In the first 19 weeks of 2013, we have secured 4 new major contracts with an aggregate value of £660m (2012 Q1 IMS: 6 new contracts totalling £823m (1)). These include: * Cabinet Office - selected to form a joint venture (JV) with the Cabinet Office to deliver and commercialise the Government's proprietary portfolio of leading and globally renowned best management practice training tools, including PRINCE2®, an established and proven project management methodology, and ITIL®, the most widely accepted approach to IT service management in the world. The JV, in which Capita holds 51%, will own in perpetuity the intellectual
property (IP) of the portfolio and assume the management of the ecosystem of
accredited service organisations through which revenue is currently generated.
It is anticipated that the JV will triple revenues of approximately £40m per
annum by year 10, through further commercialising and developing the product
portfolio in existing and new markets in the UK and internationally, and will
generate healthy margins. * Civil Service Learning agreement - extension to existing contract with the Cabinet Office, worth at least £60m over 2 years to end March 2016. * Carphone Warehouse - contract to provide all non-store customer contact in a number of different areas across the business and support all aspects of
customer service strategy. The contract is worth around £160m over 10 years
and commenced on 1 April 2013. * University of Strathclyde - We are delighted to have secured a major contract in the university sector. This is a sector which we believe has exciting potential. We have been selected as strategic technology partner to support the delivery of significant communications and technology improvements in a contract estimated to be worth up to £40m over 5 years. Capita will work with the University of Strathclyde to design and deliver a long term ICT strategy to integrate and rationalise ICT processes and
resources to better support the University.
Bid pipeline: This pipeline is a snapshot of major bid opportunities, worth £ 25m or above and capped at £1bn, where we have been shortlisted by the client to the last 4 bidders or fewer. As at February 2013, the bid pipeline stood at £5.2bn (November 2012: £4.8bn) comprised of 27 bids of which 98% related to new contracts and 2% to renewals. The pipeline contains opportunities from across all our 10 target markets.
Contract rebids: Over the next 5 years, there are no material contracts due for rebid (defined as having forecast annual revenue in excess of 1% of 2012 revenue). The next major contract due for renewal will be the Phoenix contract in 2019.
Securing value enhancing acquisitions
The acquisition of small to medium sized businesses supports Capita's long term organic growth by providing entry into new markets and enhancing our sales offering by adding further scale and complementary capabilities to the Group's service offering.
To date in 2013, we have acquired 7 companies across a number of areas including justice and emergency services, customer management, education and workplace services for a total cash consideration of £165m. These include:
* Northgate Managed Services (NMS) - provider of cloud-based, infrastructure
solutions and specialist managed services to public, private and third sector organisations, acquired for an enterprise value of £65m. By combining NMS's managed IT services with Capita's complementary business process and IT outsourcing capabilities, Capita will enhance its offering to public and private sector clients. * iQor UK - provider of outsourced debt collection services to both the public and private sectors in the UK, helping companies and organisations to manage high risk customers and ensure revenue collection. Acquired for an enterprise value of £42m, iQor UK will sit within our Customer Management division alongside Capita's existing debt management capability. * KnowledgePool Group - provider of learning managed services, including its three core service components of supplier management, training administration and learning consultancy. The company, which was acquired for £24.5m, manages all learning activity and operations through a single channel that maximises return on training investment for its clients. * G2G3 - provider of immersion and simulation-based training for corporations in the UK and overseas, acquired for £3.5m. The application of game dynamics and game thinking to non-game activities is a rapidly growing method for training employees. The company will sit within our Justice & Secure Services division and will continue to develop simulations for global corporations as well as for the police, emergency services, justice, security, nuclear and oil and gas industries. Outlook The market for customer management and BPM remains very active in the UK with government and commercial organisations under pressure to maintain and develop efficient operational models which deliver quality services while achieving value for money. This buoyant sales environment underpins our confidence in the Group's long term performance and growth prospects. We remain on track to deliver strong growth in 2013 as a result of major contract wins and acquisitions completed during 2012 and to date in 2013 and anticipate continued strong progress into 2014 and beyond. -ends- (1) As a result of the adjustment we made to the criteria of our pipeline effective from 1 January 2013, we now report all bids and major sales wins worth £25m or above (previously £10m or above). The major sales wins figure for Q1 2012, which was reported at £900m in April 2012, has therefore been restated to £823m to reflect this change. For further information: Capita plc Tel: 020 7654 2219 Paul Pindar, Chief Executive Officer Shona Nichols, Corporate Communications Director Media enquiries only: Capita press office Caroline Mooney Tel: 020 7654 2152 or 020 7654 2399 (out of hours) Email: firstname.lastname@example.org Notes to editors Capita plc is the UK's leading provider of business process management and integrated professional support service solutions. With 52,500 people at more than 350 sites, including 70 business centres across the UK, Europe, India and South Africa, 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 2012 revenue of £3.3 billion and profit before tax of £426 million. Further information on Capita plc can be found at: www.capita.co.uk. END -0- May/14/2013 06:00 GMT