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Capita Group PLC (CPI)

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Tuesday 18 November, 2008

Capita Group PLC

Interim Management Statement

18 November 2008


The Capita Group Plc ("Capita"), the UK's leading business process outsourcing
("BPO") and professional services company, is today issuing its interim
management statement covering the 10 months to 31 October 2008 and activity to

Performance update

Capita has continued to perform well in the second half of 2008 and businesses
across the Group are trading strongly. We have focused on successfully
implementing the major contracts won in late 2007 and in the first half of 2008
and we have secured further significant contracts since then. The market for
outsourcing opportunities remains buoyant as evidenced by our recent sales
success and the current level of sales activity across the Group.

Update on financial position

The financial position of the Group remains strong. We have a conservative and
efficient capital structure with a relatively low level of gearing. Our aim is
to keep capital expenditure at or below 4% of revenue and we believe this is
sustainable for the foreseeable future. There are currently no indications of
significant capex requirements in our business forecasts or bid pipeline. It is
important for our clients that we are a low risk, stable partner, particularly
where we are delivering large scale operations on their behalf.

We continue to generate strong operating and free cash flow. We return surplus
cash to shareholders through dividends and share buybacks when market
conditions are attractive. In the second half of the year in 2008, the Group
has bought back 396,315 shares (representing approximately 0.064% of the issued
share capital) at an average price of 597p per share. Following these buybacks,
the Company has 608,519,694 shares in issue as at 17 November 2008, excluding
10,668,305 shares currently held by the Capita Employee Benefit Trust.

Major contracts and acquisitions

In the period to date, we have won major contracts to deliver outsourced
services worth a total of £1.21bn.

The contract awarded by the Department of Health, to develop and deliver NHS
Choices, the digital channel to connect citizens and intermediaries with the
NHS, has been signed and is worth £60m over 3 years, with an option to extend
for a further 2 years. Service commenced on 12 November 2008.

The contract awarded by the Health and Safety Executive, to operate a new gas
installer registration scheme in Great Britain, replacing the current CORGI
scheme, was signed on 8 September 2008, and is now worth £140m over a 10 year
period. The project has started well and full operation of the scheme will
commence on 1 April 2009.

November has been a very active month for us with contracts secured with:

  * Abbey Life and Deutsche Bank (AG) - to provide administrative services for
    approximately 1.1 million life and pensions policies. Abbey Life was
    acquired by Deutsche Bank, in October 2007, from Lloyds TSB. The deal,
    which is subject to final agreement of commercial terms, is worth £130m
    over 10 years and will involve the transfer of approximately 300
    Bournemouth-based staff to Capita under TUPE. The service is expected to
    start in January 2009.
  * Sheffield City Council - selected as preferred bidder to deliver a
    partnership to help drive business transformation for the benefit of the
    entire Sheffield community. Capita will deliver a wide range of services
    including ICT, revenue, benefits and cashiering, HR and payroll and
    financial business transactions. The contract is expected to be worth in
    the region of £200m over 7 years with the option to extend by 3 further 2
    year periods.
Our bid pipeline remains healthy and is being replenished at a steady rate. We
remain encouraged by the level of opportunities across our chosen markets and
believe that in the current economic climate there will be an increased focus
on the benefits that outsourcing can deliver.

Acquisitions continue to form an important part of our growth strategy. In
October, we acquired network services firm ABSNet for £13.6m. This acquisition
will add valuable new expertise and capacity to Capita IT Services' existing
networks business.

To date in 2008, we have acquired 10 businesses for a total consideration of £
144.2m. We have a good pipeline of potential acquisitions and current economic
conditions are conducive to us continuing our acquisition activity.

Operational delivery and performance

We continue our excellent track record of good operational delivery on behalf
of our clients. The contracts for the Health and Safety Executive and
Department of Health NHS Choices have started well. We believe these two
contracts provide us with a solid platform to expand our business in these

The third quarter has also seen the continued smooth transition of our largest
contract to date, worth £722m over 15 years with Prudential. The contract
commenced in April 2008 with the transfer of 1,750 Prudential staff working in
the UK. A further 1,250 staff working in Mumbai transferred on 1 October 2008
therefore almost doubling our operations in India.


Trading across the Group remains strong and we are confident we will deliver
2008 results in line with expectations. With the contracts won this year,
trading prospects across our businesses looking steady and a buoyant bid
pipeline, we have the ingredients in place to perform well in 2009 and beyond.


Paul Pindar, Chief Executive of The Capita Group Plc, will host a conference
call for investors and analysts at 9.30am today.

Details of the conference call are: dial-in number: +44 (0) 1452 542 303, call
reference: 71431526.

A replay of the call will be available until 22nd November 2008: dial-in
number: +44 (0) 1452 550 000, call reference: 71431526.

For further information please contact:

Paul Pindar, Chief Executive
Shona Nichols, Corporate Communications Director
Tel: 020 7799 1525

Media enquiries:

Caroline Mooney
Capita press office
Tel: 0207 654 2152 or 0870 2400 488 (out of hours)

Andrew Lorenz
Financial Dynamics
Tel: 020 7269 7121

The Capita Group Plc is the UK's leading provider of integrated professional
support service solutions.  The Group's service capabilities encompass customer
services, financial services, human resource services, software services,
systems and strategic support and property services delivered to both public
sector and private organisations.  With over 32,000 employees at more than 300
offices across the UK, Ireland and India, Capita is quoted on the London Stock
Exchange (CPI.L), and is a constituent of the FTSE100 with revenues for 2007 of
£2,073 million.

Further information on The Capita Group Plc can be found at: