Capita Regulatory News (CPI)

12 November 2014 Capita plc - Interim management statement Capita plc ('Capita'), the UK's leading customer and business processmanagement (`BPM') company, is today issuing its interim management statementcovering trading and financial progress to date in 2014. Update on performance Following a strong period of sales wins in 2013 and this year and with goodperformance across the majority of our businesses, we remain on track toachieve at least 8% organic growth, net of attrition, for the full year 2014(2013: 8%). Our sales performance to date, together with the acquisitionscompleted over the year and our steady operating performance, gives usconfidence in meeting consensus market expectations for 2014. Financial performance: Our key financial metrics remain healthy. In particular,cashflow remains good with strong control across the Group underpinning ourconfidence that the conversion rate of operating profit to operating cash willmeet our target of being at or around 100% for 2014. We continue to generatestrong margins and as stated previously, we believe that our underlying Groupoperating margin can be maintained in the range of 12.5% to 13.5% for theforeseeable future. We anticipate that the underlying Group operating marginfor the full year 2014 will be comfortably within this range and ahead of thehalf year margin of 12.6%. Major sales: Capita has secured £1.63bn (Nov 2013: £2.9bn which included ourlargest ever contract with O2 of £1.2bn) of major new contract opportunities todate this year with clients including The Co-operative Bank, DefenceInfrastructure Organisation, Transport for London, John Lewis, Scottish WideArea Network and BAE Systems. Bid pipeline: Our bid pipeline currently stands at £4.1bn (July 2014: £5.7bn)comprising 26 bids (87% new business and 13% renewals). The pipeline has seensome significant movement since the half year. Some £2.8bn has come out of thebid pipeline in this period following our appointment as preferred bidder byThe Co-operative Bank, not securing any of the Transforming Rehabilitationcontracts and our decision to withdraw from a central government contract. Inaddition a financial services client, where we were sole bidder, halted theirbid process at a late stage. Reflecting the continued buoyancy of the market,we have already swiftly begun to replenish the bid pipeline with £1.2bn worthof new bids where we have been shortlisted, entering the bid pipeline since thehalf year. Our win rate this year therefore currently stands at 1 in 2, the rate we haveheld or exceeded for the past 3 years. Sales activity across our 11 targetmarkets remains strong with a number of opportunities expected to reachshortlist stage shortly, particularly in the private sector, which willreplenish our bid pipeline further in the next few months. The pipeline is a snapshot of major bid opportunities worth £25m or above,capped at £1bn and where we have been shortlisted by the client to the last 4bidders or fewer. We announce the pipeline three times each year, in February,July and November. Acquisitions: During the year to date, we have also acquired 13 complementarybusinesses for a total consideration of £285m, enhancing and expanding oursales proposition to clients and supporting the delivery of future organicgrowth. Delivering profitable organic growth We continue to generate profitable growth by winning business with new andexisting clients. To date in 2014, we have secured 13 new and extended majorcontracts with an aggregate value of £1.63bn. News since the half yearincludes: * The Co-operative Bank - Announced yesterday, selected as preferred bidder to transform The Co-operative Bank's mortgage servicing operation in the UK. Subject to final terms and approvals the deal would be worth up to £ 325m over 10 years and is anticipated to start in the first quarter of 2015. Under the terms of the deal, one of the largest of its kind in a decade if agreed, comprising more than 250,000 mortgage customers and £23bn of lending, Capita would take over and transform The Co-operative Bank's mortgage servicing operations in Leek in Staffordshire and Plymouth. We would install new systems - designed to drive efficiency while simplifying business processes in a regulated environment - to improve the experience for The Co-operative Bank's customers and support business growth. This represents good progress in establishing a strong presence in the retail mortgage servicing and builds upon our recent acquisition of Crown Mortgage Services. * Transport for London (TfL) - secured a 5 year, £145m contract with TfL to operate and enforce the congestion charging, low emission zone and traffic enforcement notice processing schemes. Capita will take full responsibility for the schemes in November 2015, following a period of implementation which commenced earlier in 2014. Capita has taken over the existing London Road User Charging agreement for both Congestion Charging and the Low Emission Zone ahead of go-live of the new contracts in November 2015. This additional work is worth in excess of £30m to Capita. Major contract implementations are progressing well and to timetable. ScottishWide Area Network (SWAN) has now delivered 1,000 sites onto the network,constructed a new core network, built an operations centre and also achievedPSN (Public Service Network) status. The DIO contract is in full operation,with our leadership team fully embedded into the MOD following the successfulmobilisation period. Contract rebids: We have one material contract up for rebid in 2015 (arisingfrom a recent acquisition) and then no further material rebids for the next 5years (defined as having forecast annual revenue in excess of 1% of 2013revenue). Securing value enhancing acquisitions Our acquisition strategy supports the expansion of our market reach andcapability enabling us to generate further future organic growth. We acquiresmall to medium sized businesses which build capability in existing areas andenhance our sales propositions and which also accelerate entry into newsectors. To date in 2014, we have acquired 13 companies for a total cashconsideration of £285m. This year we have entered a number of new markets and territories such as: thedomestic mortgage servicing market through the acquisition of Crown MortgageServices, new market segments such as food and agriculture through our recentacquisition of SouthWestern in Ireland and our acquisition of tricontes inGermany enables us to further support existing clients with European parentsand subsidiaries and grow our customer management presence in Germany. We havealso enhanced our IT and software capabilities. Since the half year we have made 3 acquisitions including: Expanding our customer management market reach - We have further expanded ourcustomer management capability and reach with the acquisition of SouthWestern,the leading domestic provider of outsourced managed services in Ireland.SouthWestern delivers customer relationship management, financial sharedservices, data processing and inspectorate services to private and publicsector organisations, from offices in Ireland, the UK and Poland. Extending our financial services capabilities into new segments - We haveexpanded our services to corporates with the acquisition of Throgmorton, one ofthe leading specialist accountancy and back office service providers to thefinancial services industry. Its clients include more than 300 investmentfunds, private equity firms and corporate finance boutiques both in the UK andthe US. Expanding our capability in the legal market - We have expanded our softwareofferings with the acquisition of Eclipse Hardware Ltd (known as Eclipse LegalSystems) which provides case management software and services to over 20,000legal professionals in law firms, Alternative Business Structures, claimsdepartments and commercial organisations. Outlook The UK market for customer and business process management remains highlyactive and Capita is well positioned to secure major outsourcing andtransformational partnership opportunities across an increased number ofprivate and public sector markets. Our unrivalled and growing breadth ofcapability provides us with a greater reach across these diversified marketsand increases our ability to be highly selective regarding the opportunities wepursue. Our bid pipeline is being replenished swiftly and with strong salesactivity, particularly across the private sector and local government, there isa good flow of further opportunities which will continue to fuel the bidpipeline and organic growth in 2015 and the following years. Our sales performance to date, together with the acquisitions completed overthe year and our steady operating performance, gives us confidence in meetingconsensus market expectations for 2014. As a consequence of our sales successesand business performance in 2014 and our current bid and acquisition pipelines,we have the ingredients in place to deliver further revenue and profit growthin 2015 and beyond. See separate Capita Board Update announcement. -ends- Analyst & investor conference call Andy Parker, Chief Executive of Capita plc, will host an analyst call in Londonat 8.00am UK time today. Please dial into the call in time to allow forregistration. Dial-in number: +44 (0) 20 3139 4830Participant PIN Code: 91663108# Replay: A replay of the conference call will be available for 7 days bydialling +44 (0) 20 3426 2807 (access code is 651292#) For further information: Capita plcTel: 020 7654 2219Andy Parker, Chief ExecutiveShona Nichols, Executive Director,Corporate Development & Communications Media enquiries only:Capita press officeCaroline MooneyTel: 020 7654 2152 or 020 7654 2399 (out of hours)Email: caroline.mooney@capita.co.uk About Capita Capita plc is the UK's leading provider of customer and business processmanagement (BPM) and integrated professional support service solutions. With64,000 people at more than 400 sites, including 73 business centres across theUK, Europe, India and South Africa, the Group uses its expertise,infrastructure and scale benefits to transform its clients' services, drivingdown costs and adding value. Capita is quoted on the London Stock Exchange(CPI.L), and is a constituent of the FTSE 100 with 2013 revenue of £3.9bn.Further information on Capita plc can be found at: www.capita.co.uk