Last checked at 3 Apr 2013 11:03
CAPITA PLC - Annual Financial ReportCAPITA PLC - Annual Financial Report
PR Newswire
London, April 3
Capita plc will hold its Annual General Meeting at 11.00am on Tuesday 14 May2013 at Deutsche Bank, 1 Great Winchester Street, London EC2N 2DB.
Pursuant to Listing Rule 9.6.1, copies of the following documents have beensubmitted to the National Storage Mechanism and will shortly be available forinspection at http://www.hemscott.com/nsm.do:
- Annual Report and Accounts for the year ended 31 December 2012
* Notice of Meeting for the 2013 Annual General Meeting
* Form of Proxy
These documents are available on the Company's website: www.capita.co.uk.
Contact: Francesca Todd, Deputy Group Company Secretary, 020 7202 0641
A condensed set of the Company's financial statements and information onimportant events that have occurred during the financial year and their impacton the financial statements, were included in the preliminary resultsannouncement released on 28 February 2013. That information, together with theinformation set out below, which is extracted from the Annual Report andAccounts 2012, is provided in accordance with the Disclosure and TransparencyRule 6.3.5. This information should be read in conjunction with the Company'spreliminary results announcement. This announcement is not a substitute forreading the full Annual Report and Accounts 2012.
Principal risks and uncertainties
Managing our risks
Effective risk management not only acts to protect and maximise the financialperformance of the business, it also offers the opportunity to safely undertakemore complex, operationally challenging projects and attract the higher rewardthat comes with the ability to effectively manage risk. The Group Board isresponsible for ensuring that an appropriate risk management framework is inplace, with relevant systems and controls to identify, assess and mitigatemajor business risks that could impact the delivery of our growth strategy.
The Capita Risk Appetite Statement, is subject to regular review as the Group'splans, controls and level of risk maturity develop over time. It provides aconsistent reference point for the alignment of risk taking and risk managementthroughout the organisation and is reviewed and adopted at divisional andbusiness unit level as applicable.
Implementation of risk management is aligned with Capita's decentralisedbusiness model. Each Divisional Director and/or senior management of theunderlying business unit, is responsible for establishing processes andprocedures to capture, manage, and report on the risks for which they areaccountable in accordance with the agreed Group framework.
Capita operates the `three lines of defence' model, with line managementresponsible for the first line, Risk and Compliance for the second line, andGroup Internal Audit for the third line.
Key risk Potential impacts Mitigating activities includecategories Financial - Adverse effect on - Financial performance of each business financial performance unit is monitored monthly and brand reputation. - Capital expenditure is subject to rigorous monitoring and budgetary controls.Delegates and - Reputation risk and - Rigorous risk-based due diligencecounterparty financial loss e.g. processes for the selection of keyfailure disruption to supply delegates and wider counterparties
chain; service monitoring interruption. Operational - Failure to meet - Operating frameworks and businessrisks contractual service resilience arrangements in place level agreements - Operating performance indicators - Financial penalties reviewed by line management - Potential loss of - Risk committees and Group Board contracts escalation as appropriate - Brand reputation - Risk based independent assurance impacted. - Business resilience arrangements in place - Centralised proactive and reactive PR team provides full issues management communications supportAcquisitions - Planned synergies - Rigorous risk-based due diligenceand organic not achieved
growth - `Black Hat' process: - Adverse impact on financial growth and - Fit with strategy and pricing is performance subject to review and approval by the Group Board - Financial penalties. - Appropriate contractual terms to ensure fair risk/reward profile - Robust integration and transition process. Economic - Weaker economic - Focus on 10 diverse public and privatelandscape conditions are a key sector markets driver for outsourcing, however, - Focus on widening scope of existing extreme economic contracts to help clients save money uncertainty can result in a delay in buying - Supply of services that support decisions and lower essential client functions rather than discretionary spend discretionary activities across some market segments. - Initiatives to increase the efficiency of Group operations. Attract and - Lack of appropriate - Training and developmentretain resources may lead toemployees inability to develop - Continual development through objective and execute business setting and appraisals plans - Competitive incentive and bonus plans - Poor employee morale - Succession planning - Competitive disadvantage. - Comprehensive vetting process in line with roles.Loss of - Contractual and - Appropriate policies and proceduressensitive or regulatory penalties
confidential - Robust information security framework, data - Adverse media including policies and processes comment and reputation impact on brand. - Escalation to risk committees and subsidiary boards - Training and monitoring programme across businesses - Swift adoption of Group policies and protocols by newly acquired businesses - Sharing of best practice and issues through cross-Group forums - Regular monitoring through risk-based audits and follow-up of actions - Centralised proactive and reactive PR team. IT risks - Failure to support - Adoption, implementation and audit of core services and industry recognised controls business needs - Regular and documented disaster - Inability to provide recovery tests adequate disaster recovery services - Regular audit of services and systems to validate adequacy of protective - Failure to protect controls and processes client and Capita data.Fraud, bribery - Potential for civil - Appropriate policies and procedures inand corruption and criminal penalties place including a `speak up' policy
for business and/or senior officers - Anti corruption culture and a zero tolerance approach with a robust - Potential disciplinary process prohibition from bidding for public - Risk assessments of vulnerabilities sector contracts in EU - Monitoring and audit - Media comment and reputation impact. - Centralised proactive and reactive PR team. Regulatory - Non-compliance with - Appropriate policies and procedureslandscape the requirements of our regulatory bodies - Monitoring by Risk, Internal Audit and in the UK or overseas Regulatory Compliance teams (including the Financial Services - Escalation of risks to risk committees Authority in respect and subsidiary boards of regulated UK financial services - Risk-based assurance and actions for business) improvement - Regulatory, - Independent reporting to Group Audit financial and Committee and Group Financial Services contractual penalties Risk & Governance Forum. - Adverse impact on reputation. Health and - Non-compliance with - Rigorously applied health and safetysafety health and safety policy and processes regulations - Health and safety training - Adverse impact on wellbeing of our - Comprehensive Group wide health and employees. safety audits undertaken twice a year. Environmental - As a low impact - Raising awareness of environmental company our key issues and Group sustainability environmental impacts initiatives are energy use, business travel, - Continue to measure and manage our resource use and waste carbon footprint and achieve energy management which we reductions. manage proactively. - Environmental management system in place - Environmental site audits carried out twice a year - Reduction of paper use and increase in recycling. Related party transactionsCompensation of key management personnel
2012 2011 £m £m Short term employment 7.6 5.5benefits Pension 0.1 0.2 Share based payments 3.6 3.6 Total 11.3 9.3Gains on share options exercised in the year by key management personneltotalled £4.6m (2011: £5.8m).
Nigel Wilson, who was Senior Independent Director until his resignation fromthe Board on 31 December 2012, was Group Chief Financial Officer of Legal &General Group Plc until June 2012 when he was appointed as Chief ExecutiveOfficer of that group. The Legal & General Group Plc had an interest in23,279,554 shares in Capita plc as at 20 February 2013 and has a contractualrelationship with the Group. Nigel Wilson did not participate in any Legal &General board discussions or decisions in respect of that company's dealingswith Capita plc which are conducted on an arm's length basis.
Pursuant to the Company's share placing which completed on 24 April 2012, fundsmanaged by Invesco Limited, a substantial shareholder in the Company andtherefore a related party of the Company (in each case, for the purposes of theListing Rules of the UK Listing Authority), subscribed, pro rata to theirpreviously existing holdings, for an additional 8,000,000 shares in the Companyat the placing price of 685p representing an aggregate further investment of £54.8m. In addition, Invesco acquired a further 16,459,384 shares during theyear at market value.
Statement of Directors' responsibility
The Directors confirm that, to the best of their knowledge:
a) the consolidated financial statements in this report, which have beenprepared in accordance with International Financial Reporting Standards (IFRS)as adopted by the European Union, IFRIC interpretations and those parts of theCompanies Act 2006 applicable to companies reporting under IFRS, give a trueand fair view of the assets, liabilities, financial position and profit of theGroup taken as a whole;
b) the parent company financial statements in this report, which have beenprepared in accordance with United Kingdom Accounting Standards (UK GAAP) andapplicable law, give a true and fair view of the assets, liabilities, financialposition and profit of the Company; and
c) the management report contained in this report includes a fair review of thedevelopment and performance of the business and position of the Company and theGroup taken as a whole, together with a description of the principal risks anduncertainties that they face.
By order of the Board P R M Pindar G M Hurst Chief Executive Group Finance Director 27 February 2013