Capita Regulatory News (CPI)

Capita Plc Full year results for the year ended 31 December 2012 Good sales, operational and financial performance Financial Underlying* Underlying* Reportedhighlights Year on year change Revenue £3,352m 14% £3,352mOperating profit £471.7m 10% £340.9mProfit before tax £425.6m 10% £290.0mEarnings per share 53.16p 10% 37.08pTotal dividend per 23.5p 10% 23.5pshareFree cash flow £316m 101% £316m *Underlying figures exclude: non-underlying non-cash items ofintangible amortisation, net contingent consideration movements andimpairments of £120.5m (2011: £56.5m); non-underlying acquisition costs of£10.3m (2011: £15.4m); and non-cash mark to market finance costs of £4.8m(2011 £10.4m). Highlights Return to organic growth

- Record sales year, £4.0bn of contract wins (2011: £2.0bn), 90% new/10%extensions

- Win rate of better than 1 in 2

- Largest ever contract win, Staffordshire County Council, £1.7bn over 20years

- Organic growth of 3% (2011: -7%)

Extending our capability and reach

- Broadened our operational capability and market reach: £178m spent on 14acquisitions in 2012

- New service delivery operation established in South Africa

Return to excellent cash generation

- Operating cash flow before settlements of £519m (2011: £364m)

- Operating profit to operating cash conversion rate sharply improved to 110%(2011: 85%)

- Free cash flow more than doubled to £316m

Delivering strong returns

- Underlying earnings per share up 10% to 53.16p

- Total dividend up 10% to 23.5p

Strong start to 2013

- Secured £160m contract with Carphone Warehouse

- Announced today, 2 year extension of Civil Service Learning agreement

- £5.2bn current pipeline (Nov 2012: £4.8bn)(1)

1 We have adjusted the criteria of our bid pipeline from 1 January 2013 toreflect the greater size of the Group and the opportunities we are addressing.We now report all bids worth £25m or above (previously £10m or above), nowcapped at £1bn (previously £500m). Under the previous criteria the bidpipeline today would have stood at £4.8bn (Nov 2012: £4.0bn).

Paul Pindar, Chief Executive of Capita plc, commented:

"2012 was a year of strong sales and operational performance. Wemaintained good profit performance, returned to organic growth and deliveredimproved cash generation. This has positioned us well for 2013.

Our major contract sales success in 2012 gives us excellent revenuevisibility for 2013. The continued buoyant sales environment, as evidenced bythe rapid replenishment of our bid pipeline, provides the ingredients forfurther growth in 2013 and underpins our confidence in the Group's long termperformance prospects." For further information: Capita plc Tel: 020 7799 1525

Shona Nichols, Corporate Communications Director

Capita press office Tel: 020 7654 2152 or020 7654 2399 out of hours

FTI Consulting Tel: 020 7269 7291

Andrew Lorenz

Strongly positioned for growth across multiple markets

Overview

2012 was an excellent year for Capita. We achieved record sales,securing £4.0bn (2011: £2.0bn) of contract wins, comprising 90% new businessand 10% extensions. This reflects the health of the UK business processmanagement (BPM) and customer management market and the strength of our manyservice propositions. We have achieved particular sales success across thecentral and local government markets and in health, justice and emergencyservices, defence and the private sector.

We have delivered against the three key objectives that we set forthe year:

- maintaining good profit performance

- securing organic growth of 3% for the full year

- delivering improved conversion of operating profit to operatingcash compared to 2011.

In the full year 2012, revenue increased by 14% to £3,352m (2011:£2,930m). Underlying operating profit (2) rose by 10% to £471.7m (2011:£427.4m) and underlying profit before taxation (2) increased by 10% to £425.6m(2011: £385.2m). Underlying earnings per share(2) grew by 10% to 53.16p (2011:48.49p). We have increased our total dividend for the full year 2012 by 10% to23.5p per share (2011: 21.4p).

The majority of our divisions traded well in 2012, withparticularly strong performance across our Customer Management &International, Justice & Secure Services, Workplace Services and Investor &Banking divisions. The trading activities of 2 of our divisions, PropertyServices and parts of our IT business, continue to be adversely affected bychallenging economic conditions but are well positioned to benefit as theeconomy recovers. Our General Insurance division had a poor year with lowerrevenues and profits and we have therefore strengthened both the leadershipand sales teams to reinvigorate these operations.

We completed a range of acquisitions in 2012 which havestrengthened our position in our target markets and played a key role inenhancing our client propositions, contributing to our contract wins andfuelling further organic growth.

Good financial performance

- Revenue - In the full year 2012, revenue increased by 14% to£3,352m (2011: £2,930m). This comprised 3% organic growth (5% major contracts,1% other business growth, offset by 3% attrition) and 11% from acquisitions,completed in 2011 (6%) and 2012 (5%). - Operating profit & margin - Underlying operating profit rose by10% in 2012 to £471.7m (2011: £427.4m). The competitive landscape of the BPMmarket remains consistent allowing the Group to generate stable underlyingoperating margins. However, the nature of our business means there will be newcontracts, acquisitions and investments which will, at times, have an initialadverse impact on Group margins in a particular year. In 2012, the Group's underlying operating margin (2) was 14.07%(2011: 14.59%). Our margins were slightly lower than the previous period (52bpts) due to: the initial implementation costs of major new contracts; the setup costs of expanding our international service delivery network in Poland andSouth Africa; and the underperformance of our General Insurance and PropertyServices divisions and 2 contracts - the courts' interpretation servicescontract and the DVLA Vehicle Excise Duty service contract.

2 Excludes non-underlying items detailed in note 2 administrativeexpenses, in the notes to the preliminary statement.

2012 was preceded by 2 years of higher operating margins in 2010and 2011, which in part was a consequence of a period of lower levels of newcontract implementations. Following our sales successes in 2012, we will beimplementing a significant number of new contracts in 2013. Consequently, dueto the increased level of start up costs, we expect operating margins in 2013to revert to the levels prevailing just prior to 2010 and 2011. Our underlying figures exclude: non-cash items of intangibleamortisation, net contingent consideration movements and impairments of£120.5m (2011: £56.5m); acquisition costs of £10.3m (2011: £15.4m); andnon-cash mark to market finance costs of £4.8m (2011: £10.4m). After thesenon-underlying items, reported operating profit for 2012 is £340.9m (2011:£355.5m), reported profit before tax is £290.0m (2011: £302.9m) and reportedearnings per share is 37.08p (2011: 39.16p). These figures were impacted byhigher amortisation of goodwill arising from increased levels of acquisitionsand impairments of goodwill relating to our acquisition of Applied LanguageSolutions and of our investment loan in Optima Legal Services (see note 2administrative expenses in the notes to the preliminary statement).

- Cash flow - During 2012, we identified a number of measures todrive strong cash flow across our business units and to ensure that cashmanagement is a priority for both our finance and operational managementteams. We have introduced new incentives and penalties at business unit levelto drive behavioural change to improve the use of working capital.

In 2012, cash flow generated by operations increased 43% to £519m(2011: £364m) representing an operating profit to operating cash conversionrate (defined as cash generated from operations before settlements divided byunderlying operating profit for the year) of 110% (2011: 85%). Thisimprovement in cash conversion in 2012 was a result of the internal measuresdetailed above. We expect our operating profit to operating cash conversionrate to continue to be at or around 100% going forward.

- Free cash flow - (defined as operating cash flow beforesettlements, less capital expenditure, interest and taxation for the year)increased to £316m (2011: £157m). This was mainly due to the working capitalimprovement described above.

- Regular dividends - The Board is recommending a final dividend of15.6p per ordinary share (2011: 14.2p), making a total of 23.5p for the year(2011: 21.4p) representing an increase for the year of 10%. The final dividendwill be payable on 28 May 2013 to shareholders on the register at the close ofbusiness on 19 April 2013. Including the proposed final dividend, Capita'stotal dividend will have grown at a compound annual rate of 14% over the 5years to 31 December 2012. Dividend cover is 2.26 times for 2012. - Capital expenditure - We aim to contain capital expenditure at orbelow 4% of revenue. In 2012, we met this objective, with net capex at 2.9% ofannual revenue (2011: 3.5%). There are currently no indications of significantcapex requirements in our business forecasts or bid pipeline.

- Return on capital employed - We focus on driving a healthy returnon capital. During 2012, our post-tax return on average capital employed was16.0% (2011: 16.5%). This compares to our estimated post-tax WACC which is7.0%. We expect return on capital employed to improve as organic growthreturns and recent acquisitions deliver their full profit potential.

- Debt profile - As at 31 December 2012, we have £1,148m of privateplacement bond debt of which only £99m matures before August 2015 with theremainder gradually maturing to 2021. In addition, we have £185m of bank debtunder a 2 year term loan facility maturing in February 2014, offset by £320mof cash held on deposit.

Our aim continues to be to keep the ratio of net debt to EBITDA inthe range of 2 to 2.5 over the long term and we would be unlikely to incurborrowings which would reduce interest cover below 7 times. At 31 December2012, our annualised net debt to EBITDA ratio was 1.99 (2011: 2.48) withannualised interest cover at 10.2 times (2011: 10.2 times).

- Total shareholder returns - Over the 10 year period to 31December 2012, Capita has delivered £1.2bn (net of £274m equity raising inApril 2012) to shareholders through dividends, share buybacks and a specialdividend. Capita's total shareholder return over the same period is 265%compared to 113% for the FTSE 100.

Returning to profitable organic growth

We generate profitable growth by winning business from new andexisting customers and through acquiring businesses that enhance ourpropositions and broaden our capability and market reach. We are stronglypositioned across our target markets. 2012 was an excellent sales year andpositions us well for renewed strong organic growth. 2013 has started wellwith a major contract win and extension to date.

Major contracts - 2013 to date

- Carphone Warehouse - contract to provide all non-store customer contact in anumber of different areas across the business and support all aspects ofcustomer service strategy. The contract is worth around £160m over 10 yearsand is expected to commence on 1 April 2013.

- Announced today, an extension to our Civil Service Learningagreement, worth at least £60m over 2 years to end March 2016.

Major contract wins - 2012

2012 was another record sales year for Capita securing 35 new andextended major contracts with a total value of £4.0bn, double the valuesecured in the previous year (2011: 26 contracts totalling £2bn) representinga higher than 1 in 2 win rate. This includes:

Major contracts worth over £50m include:

- Recruiting Partnering Project (RPP) - partnering with theMinistry of Defence to deliver RPP for the Army, and the enabling ICT for theRoyal Navy and the Royal Air Force, in a contract valued at approximately £50mper annum over 10 years. Service delivery is progressing and the first newtelevision recruitment advertisement campaign for the TA has recently beenaired, incorporating live broadcast streams from Afghanistan.

- Civil Service Learning agreement - selected by the Cabinet Officein February 2012 to manage exclusively the provision of training across theCivil Service in a 2 year contract. As stated above this contract has now beenextended for a further 2 years to 2016.

- 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 pensionsadministration in a 10 year relationship expected to generate revenues ofapproximately £154m. Our existing IT Services contract that commenced in 2010was also extended concurrent with the new contract bringing additionalrevenues of £18m over an additional 2 years to 2022.

- North Tyneside Council - selected to provide property, highwaysand maintenance services in a partnership designed to deliver both costsavings and improved services to citizens, in a contract expected to be worthapproximately £152m over 15 years, with significant opportunities for growth.

- Personal Independence Payment (PIP) assessments, Central England & Wales andNorthern Ireland - awarded two of the regional contracts to deliver PIPassessments. Awarded the contract to deliver the PIP assessments for CentralEngland and Wales by the Department for Work and Pensions, anticipated to beworth around £140m over five years. Awarded the contract to deliver PIPassessments in Northern Ireland by The Northern Ireland Social SecurityAgency, worth approximately £65m over five years.

- London Borough of Barnet - selected as preferred bidder to deliver theLondon Borough of Barnet's new support and customer service organisation(NSCSO). The contract award is subject to a potential judicial review whichmay delay the expected service commencement date.

- Staffordshire County Council - creation of an innovative, neweducational support services joint venture (JV), in which Capita holds amajority stake, which will initially deliver a range of educational supportservices for schools and academies in the Staffordshire region. These servicesare expected to generate revenues of approximately £85m per annum over 20years.

The JV will additionally focus on achieving significant growththrough securing new local authority, school, academy and further and highereducation clients across the UK. With the UK schools education supportservices market currently estimated to be worth around £16bn per year, the JVis targeting total revenue of at least £2bn over the first 10 years. - Fire Service College (FSC) - selected by the Department forCommunities and Local Government to run the FSC, the largest single providerof specialist operational fire and rescue training in the UK. Our aim is todevelop the College into a leading edge training facility and to expand boththe range of training available to the fire service, other emergency servicesand into related markets, such as defence, oil and gas. Over the next 10 yearswe anticipate growing the FSC, which currently generates annual revenues ofapproximately £15m, to an organisation capable of generating total revenues inexcess of £200m in that period. FSC occupies a 365 acre site inMoreton-in-Marsh, Gloucestershire.

- 3 major private sector contracts - our expanded customermanagement offering has secured 3 major contracts to date in 2012, worth inaggregate £161m over 3 to 5 years, including a full customer managementservice for Debenhams plc, another major UK retailer and Scottish Power.

Major contracts worth between £10-50m include:

- 8 customer management contracts in the motor, retail andutilities markets worth in aggregate £124m over 2 to 5 years.

- Oxfordshire County Council - Capita Symonds, our propertyconsultancy, selected to support Carillion's partnership with the Council in acontract worth approximately £42m over 10 years.

- UK Border Agency - selected to deliver contact managementservices, worth up to £30m over 4 years, to support the management of the`overstayer' backlog.

- London Fire and Emergency Planning Authority - selected toprovide control room services and mobilisation and communications technologiesin a contract worth approximately £20m over 10 years.

- Southwark Council - awarded a 4 year contract for an IT managedservice designed to help transform the council and deliver benefits for bothcustomers and the workforce.

- Ministry of Justice - Capita's secure information solutionsbusiness has been awarded a contract worth around £21m over 3 years for theapplication management and hosting of the Criminal Justice System Exchange(CJSE).

Buoyant sales outlook for 2013

Our bid pipeline: Despite an extremely active few months in terms of clientdecisions, the pipeline has been rapidly replenished and now stands at £5.2bn(November 2012: £4.8bn) and comprises 27 bid situations across our targetmarkets, with the highest value of bids being in central government, followedby local government, private sector and defence. Behind this is an activeprospect list of opportunities, including a number of bids which are expectedto reach shortlist stage shortly. We have adjusted the criteria of our bid pipeline from 1 January 2013 toreflect the greater size of the Group and the opportunities we are addressing.Our bid pipeline now contains all bids worth £25m or above, with bids cappedat £1bn (previously £10m or above, capped at £500m) and where we have beenshortlisted to the last 4 or fewer. Under the previous criteria the bidpipeline today would have stood at £4.8bn (Nov 2012: £4.0bn). We announce thevalue of the pipeline three times a year and it is therefore a snapshot at aspecific point in time.

Contract rebids: Over the next 5 years, there are no materialcontracts due for rebid (defined as having forecast annual revenue in excessof 1% of 2012 revenue). The next major contract up for renewal will be thePhoenix contract in 2019.

Market update: Independent industry analyst, IDC, estimates thatthe total market for customer management and BPM (3) in the UK in 2012 was£10.3bn (2011: £9.9bn) against market potential of £117bn (4) a year. Thecapacity for long term growth is therefore substantial. By moving from inhouse service provision to a specialist third party provider, government andcommercial entities can benefit from specialist support, economies of scaleand flexible delivery options. We remain the clear leader in the overall UK customer managementand BPM market holding 22.2% market share (2011: 19.8%) with our nearestcompetitor reported to have 4.4% market share (2011: 3.8%). From our initialentry into the one market of local government in 1984, we now work across 10private and public markets, applying the same principles and benefits ofscale. In 2012 our revenues were split 53% private/47% public (H1 2012:54%/46%). Public sector: The ongoing pressure to reduce budgets whilstmaintaining frontline services is creating a strong pipeline of opportunitiesin the public sector, where we are seeing renewed vigour and innovation interms of how the private sector can support central and local governmentobjectives. For example, our groundbreaking education support servicescontract with Staffordshire County Council, where we are delivering servicesback to the Council and at the same time growing the JV into a commercialoperation, is positioned well to meet the requirements of the rapidly changingeducation market in the UK. In 2012, we increased our presence in our newermarket sectors of defence, health, justice and emergency services and we areseeing significant potential for further growth in our more established marketsectors. Private sector: Commercial organisations are facing continuedpressure to maintain their competitive position by driving down operationalcosts and introducing new products to market faster, whilst maintaining highlevels of customer acquisition and service. The acquisitions of Ventura andVertex Private Sector in 2011, which have been fully integrated into Capita in2012, have significantly enhanced our customer management capabilities. Today,we have a strong pipeline of opportunities and we are securing relationshipsthat would not have been possible as three separate entities. Our applicationof customer insight, behavioural analytics, multiple channel integration andintelligent, responsive digital services enables us to deliver real value tothe business models of our commercial clients. These capabilities are equallykey to designing and delivering more effective and efficient responsive publicservices. Across the banking and financial services sectors, ouradministration services are experiencing high demand and we are developing newpropositions that build upon and extend our existing ones.

3 IDC 2012: BPM market including customer management services. BPM marketexcluding customer management services 2012: £8.5bn (2011: £8.1bn).

4 IDC 2010

Enhancing capabilities, increasing our resources and expanding ourinfrastructure

The strength of our offering is a result of our proactivedevelopment of the Group's capability and infrastructure, both internally andthrough selective acquisition, ensuring that we have the right resources inplace to deliver tailored service solutions for our clients. In 2012, weacquired a number of organisations that extended our market reach andinternational delivery network and added complementary skills andcapabilities, enhancing our propositions and strengthening our ability tosecure further growth.

Acquisitions: In 2012, we purchased 14 companies for a total cashconsideration of £178m with a particular focus on enhancing our proposition inour newer markets, notably, emergency services and health, as well as addingcapability to our more established operations including pensionsadministration, business travel and financial services. We further extended the capability of our corporate pensions andactuarial business, through the acquisition of Bluefin Corporate Consulting,provider of employee benefits consultancy to medium and large corporations,for £50m. The acquisition has been integrated with Capita Hartshead andrebranded Capita Employee Benefits. In the travel administration market, weacquired Expotel Group, a UK hotel, business travel and conference bookingagent, for £16m. The acquisition brings considerable experience in venue andevent management, which, alongside our existing business, creates aproposition of genuine scale and depth in this fast growing area of themarket. In the health arena, the acquisitions of Medicare First, ClinicalSolutions and Medicals Direct, have significantly developed our offering toclients in this continually evolving marketplace. For example, the home-basedmedical screening services of Medicals Direct, combined with the deliveryinfrastructure and transformation capabilities of the Group, not only helpedus to win but are also playing a key role in delivering our new DWP PIPcontracts. In the justice and secure services market, we have invested £24m on2 acquisitions in 2012 (Reliance Secure Task Management and Fortek) and this,together with the acquisitions we completed in 2010 and 2011, has helped us tocreate an unparalleled offering and to win new contracts across our policeclient base and with the UKBA and Ministry of Justice. Our focus is now on achieving the successful integration of these businessesand realising synergies. Alongside the significant recovery in organic growth,we continue to see many attractive opportunities for bolt on acquisitions andwe therefore expect our acquisition activity in 2013 to be at similar levelsto 2012. In early February 2013, we purchased Northgate Managed ServicesLimited (NMS) for an enterprise value of £65m. NMS complements our existingIT Services business, providing cloud-based infrastructure solutions andspecialist managed services. International delivery network: Our delivery network now includes 70 centresin the UK, the Channel Islands and Europe and offshore in India and SouthAfrica. By offering onshore, nearshore, offshore or blended service deliveryoptions in a time zone that suits our clients, we can provide maximumflexibility, quality and cost savings in our sales propositions. In July2012, we enhanced our delivery offering through the acquisition of a leadingcontact centre solutions business based in South Africa, Full Circle, and we now have approximately 200 employees in Cape Town. We have already started

to provide new customer management services for an existing client.

We have continued to invest in our Central European business centrewhich we set up in Krakow, Poland in 2011. This is now fully operational andservicing a number of existing Capita clients in English and other coreEuropean languages. The 550 seat capacity centre in Krakow is located close tothe city centre and the university with access to a skilled, multi-lingualworkforce. We are continuing to broaden the services we deliver from thecentre. For example, we now employ 8 veterinary technicians to support petinsurance claims and 80 legal professionals who deliver legal research andadministration services.

Our people and organisational structure

Our people: The Board would like to take this opportunity to thankall our people for their continued hard work and dedication which underpinsCapita's performance. Our employees join us through direct recruitment,contracts or acquisitions and their commitment and enthusiasm play a vitalrole in helping us to meet client expectations and sustain our growth.

Operational structure and leadership: During the year, we furtherstrengthened our management teams to prepare us for our next stage of growth,ensuring we have the strongest operational team in place to maintain our trackrecord of quality service delivery and sustained, disciplined growth. Tofurther support our clients and the markets in which we operate, we have madesome further minor changes to our operational structure for 2013. With effectfrom 1 January 2013, we now operate in 10 market facing or service specificdivisions.

Group Board: Senior Independent Director, Nigel Wilson, who joinedCapita in May 2010, stepped down from the Board with effect from 31 December2012. Gillian Sheldon joined the Board on 1 September 2012 as Non-ExecutiveDirector. Gillian, a Senior Banker at Credit Suisse, brings substantialexperience of advising boards across a wide range of complex situations andtransactions. She is a member of the nomination, audit and remunerationcommittees and, with effect from 1 January 2013, Senior Independent Director.

Future prospects

2012 was a year of strong sales and operational performance. Wemaintained good profit performance, returned to organic growth and deliveredimproved cash generation. This has positioned us well for 2013.

Our major contract sales success in 2012 gives us excellent revenue visibilityfor 2013. The continued buoyant sales environment, as evidenced by our bidpipeline, provides the ingredients for further growth in 2013 and underpinsour confidence in the Group's long term performance prospects.

Preliminary Statement

Consolidated income statement

for the year ended 31 December 2012

2012 2011 Underlying Non-underlying Total

Underlying Non-underlying Total

Notes £m £m £m £m £m £m Continuing operations:Revenue 1 3,351.8 - 3,351.8 2,930.2 - 2,930.2Cost of sales 2,411.0 - 2,411.0 2,094.7 - 2,094.7Gross profit 940.8 - 940.8 835.5 - 835.5 Administrative expenses 2 469.1 130.8 599.9 408.1 71.9 480.0Operating profit 1 471.7 (130.8) 340.9 427.4 (71.9) 355.5Net finance costs 3 (46.0) (4.8) (50.8) (42.0) (10.4) (52.4)Investment expense (0.1) - (0.1) (0.2) - (0.2)Profit before tax 425.6 (135.6) 290.0 385.2 (82.3) 302.9Income tax expense (87.3) 33.3 (54.0) (90.5) 25.6 (64.9)Profit for the year 338.3 (102.3) 236.0 294.7 (56.7) 238.0Attributable to:Equity holders of the parent 338.3 (102.3) 236.0 294.7 (56.7) 238.0Earnings per share 4- basic 53.16p (16.08)p 37.08p 48.49p (9.33)p 39.16p- diluted 52.58p (15.90)p 36.68p 48.38p (9.31)p 39.07p

Consolidated statement of comprehensive income

for the year ended 31 December 2012

2012 2012 2011 2011 £m £m £m £mProfit for the year 236.0 238.0Other comprehensive income/(expense):Actuarial losses on defined benefit pension schemes (28.4) (104.4)Income tax effect 2.6 24.1 (25.8) (80.3) Exchange differences on translation of foreign operations (5.8) 2.1Losses on cash flow hedges arising during the year (11.3) (16.5)Reclassification adjustments for gains included in the income statement (1.2) (5.0)Income tax effect 2.7 5.6 (9.8) (15.9) Other comprehensive expense for the year net of tax (41.4) (94.1)Total comprehensive income for the year net of tax 194.6 143.9Attributable to:Equity holders of the parent 194.6 143.9 Consolidated balance sheet at 31 December 2012 2012 2011 Notes £m £m Non-current assetsProperty, plant and equipment 358.3 330.2Intangible assets 1,919.9 1,828.9Financial assets 236.2 293.8Deferred taxation 1.3 -Trade and other receivables 72.7 65.8 2,588.4 2,518.7Current assetsFinancial assets 8.0 3.0Funds receivables 108.0 98.0Trade and other receivables 839.1 846.3Cash 319.9 71.5 1,275.0 1,018.8Total assets 3,863.4 3,537.5Current liabilitiesTrade and other payables 971.1 936.5Financial liabilities 121.5 36.5Funds payables 121.2 107.1Provisions 7 23.6 17.0Income tax payable 46.7 47.0 1,284.1 1,144.1Non-current liabilitiesTrade and other payables 12.5 20.0Financial liabilities 1,539.7 1,695.9Deferred taxation - 21.0Provisions 7 40.9 46.7Employee benefits 108.1 85.7 1,701.2 1,869.3Total liabilities 2,985.3 3,013.4Net assets 878.1 524.1Capital and reservesIssued share capital 13.8 13.0Share premium 470.4 459.4Employee benefit trust & treasury shares (0.4) (0.4)Capital redemption reserve 1.8 1.8Foreign currency translation reserve 1.7 7.5Net unrealised losses reserve (17.3) (7.5)Retained earnings 408.1 50.3Equity shareholders' funds 878.1 524.1 Included in aggregate financial liabilities is an amount of £1,370.1m (2011:£1,432.2m) which represents the fair value of the Group's bonds which shouldbe considered in conjunction with the aggregate value of currency and interestrate swaps of £222.4m included in financial assets and £0.3m included infinancial liabilities (2011: £256.8m included in financial assets and £0.9mincluded in financial liabilities). Consequently, this gives an effectiveliability of £1,148.0m (2011: £1,176.3m).

Consolidated statement of changes in equity

for the year ended 31 December 2012

Employee benefit Foreign Net trust & Capital currency unrealised Share Share treasury redemption Retained translation losses Total capital premium shares reserve earnings

reserve reserve equity

£m £m £m £m £m £m £m £mAt 1 January 2011 13.0 454.9 (0.5) 1.8 12.5 5.4 8.4 495.5Profit for the year - - - - 238.0 - - 238.0Other comprehensiveexpense - - - - (80.3) 2.1 (15.9) (94.1)Total comprehensiveincome for the year - - - - 157.7 2.1 (15.9) 143.9Share based payment - - - - 8.3 - - 8.3Income tax deduction onexercise of stockoptions - - - - (3.8) - - (3.8)Deferred income taxrelating to share basedpayments - - - - 0.7 - - 0.7Shares issued - 4.5 0.1 - (0.1) - - 4.5Equity dividends paid - - - - (125.0) - - (125.0)At 1 January 2012 13.0 459.4 (0.4) 1.8 50.3 7.5 (7.5) 524.1Profit for the year - - - - 236.0 - - 236.0Other comprehensiveexpense - - - - (25.8) (5.8) (9.8) (41.4)Total comprehensiveincome for the year - - - - 210.2 (5.8) (9.8) 194.6Share based payment - - - - 9.1 - - 9.1Deferred income taxrelating to share basedpayments - - - - 6.2 - - 6.2Shares issued 0.8 11.0 - - 270.4 - - 282.2Equity dividends paid - - - - (138.1) - - (138.1)At 31 December 2012 13.8 470.4 (0.4) 1.8 408.1 1.7 (17.3) 878.1

Consolidated cash flow statement

for the year ended 31 December 2012

2012 2011 £m £m Cash flows from operating activitiesOperating profit on continuing activities before interest and taxation 340.9 355.5Depreciation 71.7 70.2Amortisation of intangible assets (treated as depreciation) 1.2 0.2Amortisation of intangible assets recognised on acquisition 95.3 67.7Share based payment expense 9.1 8.3Pensions (6.9) (33.3)Adjustment for non-cash items: contingent consideration releases, impairments 25.2 (11.2)of goodwill and investment loan(Profit)/loss on sale of property, plant and equipment (0.1) 0.7Movement in provisions (18.2) (9.2)Net movement in payables and receivables 1.0 (84.9)Cash generated from operations before settlements 519.2 364.0Settlement of Arch cru - (17.9)Settlement of Cumbria County Council pension deficit 0.8 (10.0)Cash generated from operations 520.0 336.1Income tax paid (62.3) (62.6)Net interest paid (46.0) (42.0) Net cash inflow from operating activities 411.7 231.5Cash flows from investing activitiesPurchase of property, plant and equipment (95.5) (102.3)Purchase of intangible assets (5.8) (8.0)Proceeds from sale of property, plant and equipment 1.4 0.1Acquisition of subsidiary undertakings and businesses (144.4) (352.2)Debt repaid on the acquisition of subsidiaries (57.1) (22.3)Cash/(overdraft) acquired with subsidiary undertakings 17.6 (9.6)Purchase of financial assets - (0.2)Investment loan 0.3 -Return on investment in joint venture - 0.3Net cash outflow from investing activities (283.5) (494.2)Cash flows from financing activitiesIssue of ordinary share capital 284.9 4.5Share transaction costs (2.7) -Dividends paid (138.1) (125.0) Capital element of finance lease rental payments (1.7) (1.0)Instalment debtor movement - 14.2Asset based securitised financing - (11.7)Repayment of loan notes (2.3) -Proceeds on issue of term debt and bonds 160.3 339.8Revolving credit facility (178.0) 178.0Financing arrangement costs (1.5) (3.2) Net cash inflow from financing activities 120.9 395.6Increase in cash and cash equivalents 249.1 132.9Cash and cash equivalents at the beginning of the period 71.5 (60.3)Impact of movement in exchange rates (0.7) (1.1)Cash and cash equivalents at 31 December 319.9 71.5Cash and cash equivalents comprise:Cash at bank and in hand 319.9 71.5Total 319.9 71.5

Notes to the preliminary statement

for the year ended 31 December 2012

1 Segmental information

The Group's operations are organised and managed separately according to thenature of the services provided, with each segment representing a strategicbusiness unit offering a different package of related services across theGroup's markets. No operating segments have been aggregated to form thereportable operating segments below. The information disclosed belowrepresents the way in which the results of the businesses are reported to theGroup Board. The comparative figures have been restated due to areorganisation of the Group's business segments during the year and aconsequent change in the way in which the results of the businesses arereported to the Group Board. Before eliminating sales between business unitson consolidation, the Group accounts for sales between business units as ifthey were to a third party at market rates.

The tables below present revenue, result and certain asset and liabilityinformation for the Group's business segments for the years 2012 and 2011. Alloperations are continuing.

Year ended 31 December 2012

Customer IT Justice Manage- InvestorUnder- Health Services & Profess- ment &

lying & & Secure ional Property Workplace Integrated & Inter- General Banking Life &segment Wellbeing Consulting Services Services Services Services Services national nsurance Services Pensions Totalrevenue £m £m £m £m £m £m

£m £m £m £m £m £m

Total 201.7 633.4 198.3 485.3 273.4 383.9 285.6

230.1 148.6 250.3 659.0 3,749.6segmentrevenue Inter- (25.5) (131.1) - (101.3) (17.6) (24.8) (5.0) - - (9.4) (83.1) (397.8)segmentrevenue Third 176.2 502.3 198.3 384.0 255.8 359.1 280.6 230.1 148.6 240.9 575.9 3,351.8partyrevenue Under-lyingsegmentresult

Result 34.1 40.6 23.9 96.4 7.5 48.2 65.4

24.4 18.5 63.8 58.0 480.8afterdepre-ciation Share (0.4) (0.4) (0.1) (1.7) (0.6) (1.1) (2.2) (0.1) (0.8) (0.6) (1.1) (9.1)basedpayment 33.7 40.2 23.8 94.7 6.9 47.1 63.2 24.3 17.7 63.2 56.9 471.7Non-under-lying Intangibleamort-isation (95.3) Acqui-sitioncosts (10.3) Loan (15.0)impairment Goodwill impairment net of contingent (10.2)consideration movements 340.9Netunderlyingfinancecosts (46.0) Financialinstruments- mark tomarket (8.7) Investmentexpense (0.1) Currency swaps' counterparty risk - 3.9mark to market Profit 290.0beforetax Income tax (54.0)expense Profit for 236.0the year Year ended 31 December 2011 Customer IT Justice Manage- InvestorUnder- Health Services & Profess- ment &

lying & & Secure ional Property Workplace Integrated & Inter- General Banking Life &segment Wellbeing Consulting Services Services Services Services Services

national nsurance Services Pensions Totalrevenue £m £m £m £m £m £m £m £m £m £m £m £m Total 162.0 637.7 111.5 503.8 275.9 310.9 232.0 101.4 183.5 223.5 639.1 3,381.3segmentrevenue Inter- (29.0) (126.6) (22.1) (114.9) (20.0) (28.1) (4.0) (1.8) - (10.6) (94.0) (451.1)segmentrevenue Third 133.0 511.1 89.4 388.9 255.9 282.8 228.0 99.6 183.5 212.9 545.1 2,930.2partyrevenue Under-lyingsegmentresult Result 26.2 40.1 15.9 97.3 13.4 38.2 59.0 4.2 29.0 55.5 56.9 435.7afterdepre-ciation Share (0.3) (0.3) (0.1) (1.6) (0.6) (1.0) (2.0) (0.1) (0.7) (0.6) (1.0) (8.3)basedpayment 25.9 39.8 15.8 95.7 12.8 37.2 57.0 4.1 28.3 54.9 55.9 427.4 Non-underlyingIntangibleamorti-sation (67.7) Acquisition (15.4)costs Contingent 11.2considerationmovement 355.5Net underlyingfinance costs (42.0) Financialinstruments -mark tomarket (7.1) Investment (0.2)expense Currency swaps' counterparty risk - (3.3)mark to market Profit 302.9beforetax Income tax (64.9)expense Profit for 238.0the year 2 Administrative expenses

Included within administrative expenses are:

2012

2011

£m

£m

Non-underlying, non-cash items:Intangible amortisation 95.3

67.7

Goodwill impairment net of contingentconsideration movements 10.2

(11.2)

Impairment of Optima investment loan 15.0

-

120.5

56.5

Non-underlying, cash items:Professional fees re acquisitions 9.6

13.3

Stamp duty paid on acquisitions 0.7 2.1 10.3 15.4Total 130.8 71.9 Applied Language Solutions (ALS) was acquired in December 2011 and due touncertainties in the newly won courts' interpretation contract, considerationfor the acquisition was structured with a high proportion of contingentconsideration relative to the initial consideration of £7.5m. Due to theperformance of this contract no contingent consideration is now likely to bepayable and the related goodwill has also been reassessed to £nil. This hasresulted in an impairment of goodwill net of the contingent considerationrelease of £10.6m. There is no cash impact as no contingent consideration hasbeen paid. In 2012, there was other contingent consideration release of £0.4m(2011 £11.2m). The investment loan with Optima Legal Services Ltd has been reduced by £15.0mto £20.7m reflecting a fall in the fair value of the loan as the Optimabusiness has been adversely affected by the downturn in the mortgageadministration market. 3 Net finance costs 2012 2011 £m £mBank interest receivable (0.3) (0.1)Other interest receivable (0.2) (0.3)Interest receivable (0.5) (0.4)Bonds 29.5 26.3 Fixed rate interest rate swaps - realised 9.1 11.5Bank loans and overdrafts 7.9 4.6Interest payable 46.5 42.4Underlying net finance costs 46.0 42.0 Fixed rate interest rate swaps - mark to market 8.2

7.2

Non-designated foreign exchange forwardcontracts - mark to market 0.5

(0.1)

Currency swaps' counterparty risk adjustment - (3.9)

3.3

mark to market1Non-underlying net finance costs 4.8

10.4

Total net finance costs 50.8

52.4

1 The mark to market movement on currency swaps represents the extent to whichthe fair value of these instruments has been affected by the perceived changein the creditworthiness of the counterparties to those instruments. The Groupis comfortable that the risk attached to those counterparties is notsignificant and believes that the currency swaps continue to act as aneffective hedge against the movements in the fair value of the Group's issuedUS$ denominated bonds. 4 Earnings per share

Basic earnings per share amounts are calculated by dividing net profit for theyear attributable to ordinary equity holders of the parent by the weightedaverage number of ordinary shares outstanding during the year.

Diluted earnings per share amounts are calculated by dividing the net profitfor the year attributable to ordinary equity holders of the parent by theweighted average number of ordinary shares outstanding during the year plusthe weighted average number of ordinary shares that would be issued on theconversion of all the dilutive potential ordinary shares into ordinary shares.

The following reflects the income and share data used in the basic and dilutedearnings per share computations:

2012 2011

£m £mNet profit attributable to ordinary equity holders of the parent from 236.0 238.0operations 2012 2011 Number Number million million Weighted average number of ordinary shares (excluding trust and treasury 636.4 607.7shares) for basic earnings per shareDilutive potential ordinary shares: Employee share options 7.0 1.4Weighted average number of ordinary shares (excluding trust and treasury 643.4 609.1shares) adjusted for the effect of dilutionThere have been no other transactions involving ordinary shares or potentialordinary shares between the reporting date and the date of completion of thesefinancial statements. The following additional earnings per share figures are calculated based onunderlying earnings attributable to ordinary equity holders of the parent of£338.3m (2011: £294.7m) and, after non-underlying costs, earnings of £236.0m(2011: £238.0m). They are included as they provide a better understanding ofthe underlying trading performance of the Group. 2012 2011 p pBasic earnings per share - underlying 53.16 48.49 - after non-underlying 37.08 39.16Diluted earnings per share - underlying 52.58 48.38 - after non-underlying 36.68 39.07 5 Dividends paid and proposed 2012 2011 £m £mDeclared and paid during the yearOrdinary shares (equity):Final for 2011 paid: 14.2p per share (2010: 13.4p per share) 86.7 81.2Interim for 2012 paid: 7.9p per share (2011: 7.2p per share)

51.4 43.8

138.1 125.0Proposed for approval at AGM (not recognised as a liability at 31 December)Ordinary shares (equity):Final for 2012: 15.6p per share (2011: 14.2p per share)

101.3 86.4

6 Business combinations

The Group made a number of acquisitions in 2012 which are shown in aggregate.The fair values of the identifiable assets and liabilities acquired aredisclosed in the table below: Fair value to Group recognised on acquisition £mIntangible assets 81.3Property, plant and 4.8equipmentDeferred tax (3.0)Bank loans and 17.6overdraftsTrade receivables - 64.2grossImpairment of trade (5.2)receivablesPayables (56.2)Accruals (44.4)Long term debt (57.1)Provisions (19.0)Corporation tax 5.1Net assets (11.9)Goodwill arising on 146.9acquisition 135.0Discharged by:Cash 126.6Contingent 8.4consideration accrued 135.0 In all cases 100% of the ordinary share capital was acquired and theconsideration satisfied in cash. The companies acquired have been mainly inthe areas of pensions and employee benefits, security, health and travel andcomplement or extend the Group's existing skill sets and provide opportunitiesfor growth into these markets. In addition during the year the Group settledcontingent consideration payments with regard to previous acquisitionsamounting to £12.0m, all of which had been accrued. Goodwill has arisen on the acquisitions because the fair value of the acquiredassets was lower than the consideration paid; the goodwill represents thevalue to the Group that can be driven from these underlying assets over thelife of the acquired businesses. The total amount of goodwill recognised inthe period that is expected to be deductible for tax purposes is £3.3m (2011:£83.7m). Contingent consideration In respect of the acquisitions made in 2012, the Group has agreed to pay thevendors additional consideration dependent on the achievement of performancetargets in the periods post acquisition. These performance periods are of upto 3 years in duration and will be settled in cash and loan notes on theirpayment date on achieving the relevant target. The range of the possibleadditional consideration payments is estimated to be between £5m and £10m. TheGroup has included £8.4m as contingent consideration. Contingent considerationhas been calculated based on the Group's expectation of what it will pay inrelation to the post-acquisition performance of the acquired entities byweighing the probability of a range of payments to give an estimate of thefinal obligation.

The fair value exercise has been completed on a provisional basis foracquisitions made in 2012. The Group will complete this review in 2013 thoughany adjustment to the carrying value is likely to be insignificant to theindividual acquisition.

Acquisition related costs

The Group incurred acquisition related costs of £10.3m related to professionalfees paid for due diligence, general professional fees and legal advice. Thesecosts have been included in administrative expenses in the Group'sconsolidated income statement. 7 Provisions Insurance captive provision Property £m provision £m Arch cru Other Total £m £m £mAt 1 January 2012 20.3 40.4 0.6 2.4 63.7Utilisation (14.2) (5.6) - (9.0) (28.8)Created/(released) in the year 9.9 (0.1) (0.6) 1.4 10.6Provisions acquired - 4.7 - 14.3 19.0At 31 December 2012 16.0 39.4 - 9.1 64.5

The provisions made above have been shown as current or non-current on thebalance sheet to indicate the Group's expected timing of the matters reachingconclusion.

The insurance provision is made in relation to the Group's professionalindemnity, motor and employee liability exposures. The Group uses a captiveinsurer to reduce the cost of providing this cover for its operations; claimsthat are in excess of the Captive's liability are reinsured with a number oflarge insurance underwriters. The Group makes provision when a claim has beenmade where it is more probable than not that an insured loss will occur. Theseprovisions are reassessed regularly to ensure that the level of provisioningis consistent with the claims that have been reported. In the year the Grouphas settled a number of insurance liabilities which it had provided for inprevious years. Additionally it has made provision for new claims andincreased or decreased existing provisions where more information on theprogress of the claim has become available. Within the property provisions there is included a discounted provision forthe difference between the market value of the property leases acquired in2011 with Ventura and Vertex Private Sector and the lease obligationscommitted to at the date the leases were signed by the previous owners. Thisis in accordance with IFRS 3 (revised) which requires the use of fair valuemeasurement. The remaining property provision is made on a discounted basisfor the future rent expense and related cost of leasehold property (net ofestimated sub-lease income) where the space is vacant or currently not plannedto be used for ongoing operations. The expectation is that this expenditurewill be incurred over the remaining periods of the leases which range from 1to 15 years. Other relates to provisions in respect of potential claims arising due to thenature of some of the operations that the Group provides and provision for anonerous contract in relation to the ALS courts' interpretation contract. Theseare likely to unwind over a period of 1 to 3 years.

8 Additional cash flow information

Reconciliation of net cash flow to movement in net funds/(debt)

Net debt at 31 Net debt at Acquisitions Non-cash December 1 January in 2012 flow 2012 2012 (exc. cash) Cash flow movements £m £m £m movements £m £mCash and cash equivalents 71.5 - 249.1 (0.7) 319.9Cash 71.5 - 249.1 (0.7) 319.9Loan notes (2.3) - 2.3 (0.5) (0.5)Bonds1 (1,432.2) - 24.7 37.4 (1,370.1) Revolving credit facility (176.1)

- 178.0 (1.9) -

Currency swaps in relationto US$ denominated bonds1 242.4 - - (36.2) 206.2Interest rate swaps in relation to GBP denominated bonds1 13.5 - - 2.4 15.9Long term debt - (57.1) 57.1 - -Term loan - - (185.0) - (185.0)Finance leases (3.1) - 1.7 (1.3) (2.7)Underlying net debt (1,286.3) (57.1) 327.9 (0.8) (1,016.3)Fixed rate interest rate swaps (44.7) - - (8.2) (52.9) (1,331.0)

(57.1) 327.9 (9.0) (1,069.2)

The aggregate bond fair value above of £1,370.1m (2011: £1,432.2m) includesthe GBP value of the US$ denominated bonds at 31 December 2012. To remove theGroup's exposure to currency fluctuations it has entered into currency swapswhich effectively hedge the movement in the underlying bond fair value. Theinterest rate swap is being used to hedge the exposure to changes in the fairvalue of GBP denominated bonds. The combined fair value of the interest andcurrency swaps is £222.1m (2011: £255.9m). Net debt at 31 Net debt at Acquisitions Non-cash December 1 January in 2011 flow 2011 2011 (exc. cash) Cash flow movements £m £m £m movements £m £mCash and cash equivalents 38.5 - 34.1 (1.1) 71.5Overdraft and bank loans (98.8) - 98.8 - -Cash (60.3) - 132.9 (1.1) 71.5Loan notes (2.3) - - - (2.3)Bonds1 (1,016.4) - (339.2) (76.6) (1,432.2) Revolving credit facility - - (175.4) (0.7) (176.1)Currency swaps in relationto US$ denominated bonds1 178.5 - - 63.9 242.4Interest rate swaps in relation to GBP denominated bonds1 4.4 - - 9.1 13.5Long term debt - (22.3) 22.3 - -Finance leases (2.4) - 1.0 (1.7) (3.1)Underlying net debt (898.5) (22.3) (358.4) (7.1) (1,286.3) Asset based securitised finance (11.7) - 11.7 - -Fixed rate interest rate swaps (37.5) - - (7.2) (44.7) (947.7)

(22.3) (346.7) (14.3) (1,331.0)

1 The sum of these items held at fair value equates to the underlying value ofthe Group's bond debt of £1,148.0m (2011: £1,176.3m).

9 Pensions (amendment to IAS 19)

The amended IAS 19 standard changes the method of calculating the net interestrelated to the defined benefit pension schemes from one which uses theexpected return on scheme assets to one based on the discount rate. It isestimated that this change will lead to a reduction in profit before tax ofapproximately £10.0m in 2013. In 2013, the prior year comparative for 2012will be restated for this change, reducing profit before tax by £8.6m. From2013, we will split out the financing element of the pension charge fromoperating costs. This is estimated to be approximately £4.0m (2012: £3.6m) ofthe circa £10.0m reduction in profit (2012: £8.6m).

10 Related party transactions

Pursuant to the Company's share placing which completed on 24 April 2012,funds managed by Invesco Limited, a substantial shareholder in the Company andtherefore a related party of the Company (in each case, for the purposes ofthe Listing Rules of the UK Listing Authority), subscribed, pro rata to theirpreviously existing holdings, for an additional 8,000,000 shares in theCompany at the placing price of 685p representing an aggregate furtherinvestment of £54.8 million. In addition, Invesco acquired a further16,459,384 shares during the year at market value. 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.

11 Preliminary announcement

The preliminary announcement is prepared in accordance with InternationalFinancial Reporting Standards as adopted by the European Union. A dulyappointed and authorised committee of the Board of Directors approved thepreliminary announcement on 27th February 2013. The financial information setout above does not constitute the Company's statutory accounts for the yearsended 31 December 2012 or 2011 but is derived from those accounts. Statutory accounts for 2011 have been delivered to the registrar ofcompanies, and those for 2012 will be delivered in due course. The auditor hasreported on those accounts; their reports were (i) unqualified-, (ii) did notinclude a reference to any matters to which the auditor drew attention by wayof emphasis without qualifying their report and (iii) did not contain astatement under section 498 (2) or (3) of the Companies Act 2006. Copies of the announcement can be obtained from the Company'sregistered office at 71 Victoria Street, Westminster, London SW1H 0XA, or onthe Company's corporate websitewww.capita.co.uk/investors/Pages/Investors.aspx.

It is intended that the Annual Report and Accounts will be posted toshareholders in April 2013. It will be available to members of the public atthe registered office and on the Company's Corporate websitewww.capita.co.uk/investors/Pages/Investors.aspx from that date.

12 Statement of Directors responsibilities

The Directors confirm that, to the best of their knowledge theextracts from the consolidated financial statements included in this report,which have been prepared in accordance with International Financial ReportingStandards (IFRS) as adopted by the European Union, IFRIC interpretations andthose parts of the Companies Act 2006 applicable to companies reporting underIFRS, fairly presents the assets, liabilities, financial position and profitof the Group taken as a whole and that the management report contained in thisreport includes a fair review of the development and performance of thebusiness. By order of the Board P R M Pindar G M HurstChief Executive Group Finance Director27 February 2013