Information  X 
Enter a valid email address

Capita Group PLC (CPI)

  Print      Mail a friend       Annual reports

Thursday 25 February, 2010

Capita Group PLC

Final Results


                                                               25 February 2010

                             THE CAPITA GROUP PLC                              

            Preliminary Results for the year ended 31 December 2009            

                       STRONG PERFORMANCE AND PROSPECTS                        

Financial Highlights

                               Year ended 31      Year ended 31     Change     
                               December 2009      December 2008                
                                                                               
Turnover                       £2,687m            £2,441m           +10%       
                                                                               
Underlying operating profit*   £357.7m            £320.9m           +11%       
                                                                               
Underlying profit before tax*  £325.1m            £277.2m           +17%       
                                                                               
Underlying earnings per share* 38.75p             33.26p            +17%       
                                                                               
Total dividend per share       16.8p              14.4p             +17%       

* excludes intangible amortisation of £28.1m (2008: £18.6m), the non-cash
impact of mark to market movement on financial instruments of £1.4m negative
(2008: £32m negative), loss on disposal of business £7.5m and an estimate for
costs of £30m relating to the suspension of 2 OEIC investment funds for which
Capita Financial Managers is the authorised corporate director.

Key points

  * Steady organic growth. Major contract wins and renewals of £1bn (2008: £
    1.24bn).
   
  * Bid pipeline stands at £3.7bn (Feb 2009: £3.1bn); increasingly active
    market.
   
  * Broadened our operational capability: £177.5m spent on 12 acquisitions.
   
  * Continued underlying operating margin progression: increased by 16 basis
    points to 13.31%
   
(2008: 13.15%).

  * Strong underlying free cash flow up by 28% to £280m (2008: £219m).
   
  * 17% dividend increase, maintaining our dividend cover of 2.3 times.
   
Paul Pindar, Chief Executive of Capita Group Plc, commented:

"Capita delivered a strong performance in 2009. Organic growth was steady
across the year with a number of new major contracts secured in the year and
with businesses across the Group delivering robust results. Additional spend by
existing clients was lower in 2009 but a focus on optimising our operational
infrastructure and the growth of our offshore operation ensured that we
continued to increase margins.

Capita is well placed to continue its growth and is enjoying a healthy flow of
new business opportunities. Our pipeline of sales prospects, strong forward
visibility of revenues from our long term contracts and consistent operational
performance position us well for further progress in 2010 and thereafter."

For further information:

The Capita Group Plc                              Tel: 020 7799 1525         
                                                                             
Paul Pindar, Chief Executive                                                 
                                                                             
Shona Nichols, Corporate Communications Director                             
                                                                             
Capita Press Office                               Tel: 0207 654 2152 or      
                                                                             
                                                  020 7654 2399 out of hours 
                                                                             
Financial Dynamics                                Tel: 020 7269 7121         
                                                                             
Andrew Lorenz                                                                

                             The Capita Group Plc                              

           Preliminary Statement for the year ended 31 December 2009           

Capita delivered a strong performance in 2009. Organic growth was steady with a
number of new major contracts secured in the year and with businesses across
the Group delivering robust results.

In the year ended 31 December 2009, turnover increased by 10% to £2,687m (2008:
£2,441m). Underlying operating profit* rose by 11% to £357.7m (2008: £320.9m)
and underlying profit before taxation* increased by 17% to £325.1m (2008: £
277.2m). Underlying earnings per share* grew by 17% to 38.75p (2008: 33.26p).
Underlying free cash flow** increased by 28% to £280m (2008: £219m).

We have increased our total dividend for the year by 17% to 16.8p (2008:
14.4p).

* excludes intangible amortisation of £28.1m (2008: £18.6m), the non-cash
impact of mark to market movement on financial instruments of £1.4m negative
(2008: £32m negative), loss on disposal of business of £7.5m and an estimate
for costs of £30m relating to the suspension of 2 OEIC investment funds for
which Capita Financial Managers is the authorised corporate director.

** underlying cash flow excludes an exceptional additional pension contribution
to the Group Final Salary Pension Scheme of £40m.

Building value for shareholders

In addition to the financial measures reported above we focus on a number of
other key financial measures to ensure we build value for shareholders on a
consistent basis over the long term:

  * Margin - We continue to focus on generating a steadily improving operating
    margin. In the year, the underlying operating margin has increased by 16
    basis points to 13.31% (2008:13.15%).
   
  * Cash flow - The strength of our business model is reflected in our
    excellent cash flow, with £437m (2008: £392m) generated by operations in
    the period, representing an operating profit to cash conversion rate of
    122% (2008: 122%). Our underlying free cash flow increased by 28% to £280m
    (2008: £219m).
   
We use surplus cash to add value in 3 main ways: through acquisitions, share
buybacks and dividends:

  * Acquisitions - Acquisitions help us to enter new markets where we can grow
    organically, strengthen existing market positions and build economies of
    scale, or access a new customer base. In 2009, we spent £177.5m on 12
    acquisitions. There is currently a good volume of opportunities valued at
    attractive levels and we expect this position to continue through 2010. We
    will continue to ensure counterparty risk is fully assessed and be
    disciplined when assessing opportunities.
   
  * Share buybacks - Opportunistic share buybacks help us to maintain an
    efficient capital structure and minimise our long term cost of capital. In
    2009, the Group did not buy back any shares as we have focused our capital
    on the flow of attractive acquisition opportunities. We will however
    continue to buy back shares if and when opportunities arise. There are 617m
    shares in issue. The Group has authority to re-purchase up to 10% of its
    issued share capital and we plan to seek renewal of this authority at the
    Annual General Meeting.
   
  * Regular dividends - The Board is recommending a final dividend of 11.2p per
    ordinary share (2008: 9.6p), making a total of 16.8p (2008: 14.4p) for the
    year. This represents an increase of 17%. The final dividend will be
    payable on 24 May 2010 to shareholders on the register at the close of
    business on 16 April 2010. Including the proposed final dividend, Capita's
    total dividend will have grown at a compound annual rate of 25% over the 5
    years to 31 December 2009. Dividend cover for 2009 remains at 2.31 times
    (2008: 2.31 times).
   
Including the proposed dividend, £929m will have been returned to shareholders
in respect of the last 5 years - £367m in ordinary dividends, £155m in special
dividends and £407m through share buybacks.

  * Capital expenditure - We aim to contain capital expenditure at or below 4%
    of revenue. During the year, we met this objective with net capital
    expenditure at 2.5% (2008: 3.5%) of revenue.
   
  * Return on capital employed - We focus on driving a steadily increasing
    return on capital. During 2009, the post tax return on average capital
    employed (including debt) has improved to 20.6% (2008: 20.3%). This
    compares to our post tax estimated weighted average cost of capital which
    is 7.9%.
   
Additional financial information

Businesses across the Group performed well in 2009. The majority of our
businesses delivered good sales and operational performance, especially our
businesses servicing the local authority and education markets. Less than 10%
of our Group revenues are generated by businesses that are potentially
vulnerable to a weaker economy and the majority of these delivered to our 2009
business plan expectations, particularly our property consultancy, resourcing
and share registration businesses. Conversely, our collectives and investment
trust administration business, Capita Financial Managers (CFM), which
administers nearly 600 funds and has annual revenues of c. £50m, was adversely
affected by the increased costs of IT and the sharply increasing obligations of
regulatory compliance.

Arch cru Funds - As previously reported, dealings in 2 open ended investment
companies, for which CFM is the authorised corporate director (ACD) and Arch
Financial Products LLP was the delegated investment manager, were suspended on
13 March 2009, as a result of illiquidity in the underlying investments of the
OEICs and an anticipated inability to meet future redemptions. This was
exacerbated by unprecedented market turmoil post the collapse of Lehman
Brothers. Since the suspension, CFM, has been working with specialist advisers
to conduct a detailed review of the underlying assets of the OEICs and options
for their future. This review was completed in December 2009. The underlying
assets of the OEICs have fallen in value and remain illiquid. CFM has advised
investors that the only feasible option in the best interests of investors as a
whole is for the OEICs to be wound up, with the underlying assets being
realised in an orderly manner over a period of time, and the proceeds being
returned to investors in the OEICs.

In addition, CFM has informed investors in the OEICs that it is undertaking a
review to determine whether such investors have suffered any detriment and, if
so, to what extent any of the parties involved should be responsible for
compensating them. This is a complex exercise and it is taking longer than
anticipated, but we are determined to ensure that the matter is concluded in a
way that takes appropriate account of the results of the review and the
interests of investors in the OEICs, but also recognises the interests of
Capita's shareholders. The detailed work undertaken since March 2009 has
resulted in significant costs. We have set aside estimated costs of £30m (both
incurred and potentially to be incurred) in respect of resolving this matter.
This figure has been disclosed separately from the Group's underlying profit in
our accounts for the year ended 31 December 2009.

CFM predominately provides administration services to investment funds and, in
some cases, additionally acts as ACD. In the light of the experience gained
from the Arch cru situation, we have undertaken a strategic review of CFM and
decided that the balance between risk and reward in some of the ACD business
does not serve our shareholders well. Accordingly, we are now in active
discussions to dispose of part of this business.

Pension payment - As reported in February 2009, following our latest tri-annual
funding valuation, we decided to make an exceptional additional pension
contribution of £50m into the Group Final Salary Pension Scheme. £10m was paid
in December 2008 and the remaining £40m was paid in January 2009. At the year
end, the deficit under International Accounting Standard (IAS) 19 was £31.9m.

Debt profile - We aim to maintain a conservative balance sheet with substantial
headroom to take advantage of opportunities to add value to shareholders as
they arise. Following repayment of £100m in June 2009, we have £579m of private
placement debt which matures between 2012 and 2018. Alongside this we have
raised a £200m bank term loan maturing in July 2011 and have an unused
revolving credit facility of £245m maturing in December 2011.

Our marketplace

We remain the clear leader in the overall UK BPO market with 27.0%† market
share (2008:25.5%). Independent analysts have estimated that the total 2009
market for BPO in the UK was £6.0bn, against market potential of £94.2bn a year
†. The capacity for long term growth therefore remains substantial as
organisations review their business models and acknowledge the benefits of
outsourcing.

We remain focused on selecting opportunities where we believe we can meet
clients' expectations and add value, fuelling controlled growth and achieving a
reasonable return for the Group.

In 2009, our most active market was local government. We also saw increased
activity in financial services and central government and ongoing interest from
the life and pensions market. We have seen a steady flow of outsourcing
opportunities across both public and private sectors in 2009. As a result, the
sector split of revenues remained broadly in balance at 50% private/50% public.
(2008: 52%/48%).


Public sector: Across a number of our divisions, we provide outsourcing and
professional support services to both local authorities and central government.
We have built particular expertise in education, transport and health - and
have a growing interest in the defence sector. We expect fiscal pressure on
public spending to heighten the focus on outsourcing in the public sector in
2010. Irrespective of which party wins the General Election, central government
departments in particular will need to achieve significant cost efficiencies
without compromising the availability or quality of frontline public services.
A combination of reduced public sector revenues and increased demand for
services is likely to add pressure on budgets both locally and centrally. With
our solid track record of delivering public sector contracts, we are well
placed to help organisations to introduce new, more sustainable and streamlined
ways of working to meet public needs.

Private sector: The 3 main private sector markets we focus on are life and
pensions, insurance and financial services. We also support an increasing
number of organisations in other markets and we have a growing interest in the
banking and utilities sectors. In the current economic climate, there is
increased pressure on commercial organisations to drive down operational costs
without compromising customer service or their competitiveness in their
marketplace. As they strive to do this, and to bring new products to market
faster, we expect them to consider the higher productivity and enhanced
operational and advisory capabilities that an experienced outsourcing service
provider can bring. Many of our private sector clients are also looking at the
benefits that Capita can offer through a blended onshore/offshore service
delivery model.

                                                                    † Ovum 2009

Generating profitable growth

We generate profitable growth by winning business from new and existing
customers in the UK and Ireland and supplement this by acquiring businesses
that broaden our skill base and extend our market reach.

Organic growth

We have a centrally managed major sales team, as well as sales teams within
each of our businesses, focused upon securing contracts with both existing and
new customers. Our markets continue to offer good opportunities and our new
sales performance in 2009 was satisfactory. However, due to the prevailing
economic conditions it was more difficult to secure additional revenues from
existing clients.

Our major sales team pursues complex, long term contracts which bring together
a wide range of the Group's skills and generate high quality, recurring
revenues. Securing and renewing major contracts is an important component of
our growth.

In 2009, we secured and extended 15 major contracts with a total value of £
1.0bn (2008: 17 contracts totalling £1.24bn). These include:

  * AXA Sun Life: Contract secured to administer 3.2 million life and pensions
    policies, worth £523m over 15 years. The contract started on 1 June with
    1,150 employees in the UK transferring to Capita. We have already achieved
    step improvements in service as well as hitting our critical service level
    targets. In September, we transferred a further 550 people from AXA in
    India.
   
  * Learning and Skills Council (LSC): Following our appointment to take over
    interim responsibility for the administration of the Learner Support
    Programme in November 2008, we signed a contract in March 2009 with the LSC
    valued at £68m over 4 years until 2013, with an option to extend for a
    further 2 years. The contract, to administer and assess applications for a
    range of allowances to support learners including the Education Maintenance
    Allowance (EMA) and the Adult Learning Grant (ALG), is progressing well. We
    currently process and pay over 600,000 Learners per week, on behalf of
    4,000 Learning Provider institutions, and deal with approximately 2 million
    calls per annum.
   
  * Office of National Statistics: Our contract for the 2011 Census is well
    underway with the first rehearsal successfully completed in October. As
    part of our delivery model, we have implemented an innovative IVR solution
    for time and attendance as well as travel and expenses data capture for
    field operatives. The contract is worth £25m over 2 and a half years.
   
  * Department for Children, Schools and Families (DCSF): The contract for the
    management of the National Strategies has been extended by 1 year from the
    end of March 2010, when the current 5 year contract is due to end. The DCSF
    has indicated that the minimum value of the 1 year contract extension will
    be £64m. The recently published Schools White Paper has signalled a new
    approach to school accountability and improvement support with greater
    focus on the development of school to school support and quality assured
    providers. As a result, the National Strategies' contract will not be
    re-tendered and will end on 31 March 2011. The National Strategies have
    played a key role in building local capacity and will continue to do so
    throughout the remaining period of the contract.
   
  * BBC Audience Services: We were successful in being awarded a new contract,
    worth c. £45m over 9 years, to handle complaints, comments and enquiries
    via phone calls, emails, SMS and letters. We will also provide action lines
    for issue-related programming, audience management and ticketing, as well
    as daily feedback to the BBC from viewers and listeners about how audiences
    feel about BBC content.
   
  * Becta: Our contract to administer and market the Home Access Grant on
    behalf of Becta is progressing well, including a controlled launch and take
    up of the scheme. We have developed interfaces with multiple equipment
    suppliers to process grant payments which will total £136m over the period
    of the contract. The contract is valued at £15.7m, commenced on 16 October
    2009 and will run to June 2011.
   
  * NHS BSA: In December, we signed a contract, worth £100m over 7 years, to
    administer the processing and payment of circa 40 million claims made
    annually by dentists for NHS dental treatment administered and to provide a
    managed IT service to support the Authority, its current portfolio of
    activities and future growth. The service, which is due to commence in July
    2010, will be delivered by our Health and IT Services businesses.
   
8 contracts and renewals worth between £10m and £50m were secured with an
aggregate value of £159m with Hart District Council, Havant Borough Council,
Breckland District Council, Charnwood Borough Council, eircom, Threadneedle,
NHS Employers and the Driving Standards Agency.

To date in 2010, 9 new contracts and extensions worth between £10m and £50m
with an aggregate value of £195m have been secured. This includes a life and
pensions contract with Aviva Life International in Ireland, a contract with AXA
to provide administration services for Sainsbury's pet insurance offering,
extensions of our DWP Records Management and Constructionline contracts and:

  * Building Schools for the Future (BSF): A number of BSF contracts involving
    the provision of property consultancy and ICT for clients such as
    Wolverhampton City Council, worth £34m, and Rochdale Metropolitan Borough
    Council.
   
  * Nottingham City Council: An arrangement to provide networking, applications
    and services to the Council, worth £30m, secured by our newly acquired
    Synetrix business.
   
Bid pipeline: Alongside these contract wins, our bid pipeline has been
replenished and reflects the quality of business opportunities across our
markets. The bid pipeline currently stands at £3.7bn (Feb 2009: £3.1bn) and
only includes bid situations in which we are shortlisted as 1 of 4 or fewer
competitors and caps our largest bids at £500m. Behind this is an active
prospect list of opportunities which are yet to reach a shortlist stage.

Contract renewals: We have no material rebids of our contracts (defined as
having annual revenue in excess of 1% of 2009 turnover) in 2010 and 2011, 2
rebids in 2012 and none in the following 2 years.

Stimulating growth through acquisition

A key element of our growth is the acquisition of small to medium sized
companies which widen our skills and knowledge, extend our presence in existing
marketplaces or provide a foothold in a new market. We have substantial
experience of integrating acquired businesses and achieving synergies with our
existing operations.

In 2009, we completed 12 acquisitions for a total consideration of £177.5m,
including:

  * CHKS and NHS Membership Services: CHKS Limited, a healthcare intelligence
    business, and NHS Membership Services, which provides membership services
    and engagement programmes for over 50 NHS foundation trusts, add further
    strength to our position in the health market. The 2 businesses were
    acquired for an aggregate consideration of £13.6m.
   
  * Hero Insurance Services: A personal lines broker primarily offering
    insurance for cars and motorbikes, acquired in March for £15m. Hero has
    been integrated with our existing Insurance Distribution businesses (BDML,
    Lancaster Insurance and Thornside) and is already achieving significant
    efficiency improvements through cost management and driving through synergy
    savings.
   
  * Capmark Services Europe: Acquired for £10m in June, Capmark provides
    administration services for commercial mortgage backed securities,
    commercial mortgages, commercial property loans and asset managers from
    offices based in the UK, Ireland and Germany.
   
  * Carillion IT Services Ltd ("CITS"): An IT services business, acquired for £
    36m in June, which offers outsourcing, managed services and network
    infrastructure solutions to external clients. The acquisition enhances and
    expands Capita's position in the IT services market, increasing our scale,
    customer base and reach across the UK. There will be significant
    operational and cost synergies by bringing together CITS and Capita IT
    Services.
   
  * Synetrix (Holdings) Ltd: A provider of ICT application and communications
    solutions to both public and private sector organisations and specialises
    in the design, development, integration and deployment of converged
    networks, hosted application solutions, managed security solutions and
    software platforms. This acquisition, made in December for £75m, further
    strengthens our position in the IT services market.
   
In 2010, our pipeline of potential acquisitions is healthy. To date, we have
acquired 2 businesses for a total consideration of £16.8m:

  * Inventures, a leading healthcare property consultancy for £6.8m. With 4 UK
    offices and more than 100 consultants, Inventures provides programme and
    project management, property and estate management, healthcare planning and
    facilities management advice to the NHS and other public sector bodies
    across the UK.
   
  * NB Real Estate Ltd, for £10m on a cash-free, debt-free basis, plus a
    contingent deferred consideration of up to £10m payable on the achievement
    of certain performance targets. The continuing pressure on public service
    spending and the wider UK economy will drive more organisations to consider
    more innovative and efficient ways to manage their property assets and the
    acquisition of NB Real Estate positions Capita strongly to fulfil this
    demand.
   
Optimising operational efficiency

We have built up an extensive operational infrastructure and a depth of
capabilities which enable us to fully support our clients, provide flexible
operating models and share economies of scale. Wherever possible, we will
migrate and integrate systems, share resources and rationalise premises to
optimise our infrastructure while maintaining and enhancing services. In 2009,
we have taken significant steps forward in this ongoing process, particularly
across our Life & Pensions business.

Our business centres, where we run a broad range of shared services to provide
cost efficiencies to customers and a higher level of service quality, form a
central part of our service delivery infrastructure. At the end of 2009, we had
60 business centres onshore in the UK, nearshore in Ireland and the Channel
Islands, and offshore in India. Our infrastructure allows us to offer clients
an onshore/offshore delivery model structured to meet their individual needs,
delivering maximum service flexibility, quality and cost effectiveness.

We established our offshore operations in India in 2003 and they play an
increasingly important role in our business and long term growth strategy.
Capita India is fully integrated into the Group and operates like any other
Capita business with the same values, technical infrastructure and operating
model. It continues to develop strongly both in scale and scope of services and
is a compelling proposition when offered as part of many of our bids. It also
plays an increasing role in supporting Group businesses and Group support
functions. We now have 3 sites in Mumbai, 1 site in Pune and a new office in
Bangalore. These sites are specialist centres, delivering services to multiple
clients or providing multiple services to a single client. At the end of 2009,
our Indian operations represented approximately 10% of our overall headcount
and delivered significant growth in profits.

Group Board

After 9 years with Capita, Eric Walters decided to step down as Chairman with
effect from 1 January 2010. We thank Eric for his considerable contribution and
wish him well as he pursues other interests. We are delighted that Martin
Bolland, who has been an active and valuable Non-Executive Director since March
2008, has assumed the role of Chairman. We also announced last year that Paddy
Doyle would be moving to a part-time Executive Director role. He has now
decided to reduce his business interests further and will continue on the Board
as a Non-Executive Director from 1 March 2010. We welcome Paddy's continued
valuable contribution to the Group.

The Board has considered the number of Independent Non-Executive Directors,
specifically with relevant financial experience, and will be recruiting to add
further Non-Executives to the Board. Whilst this process is taking place,
Martin will continue as Chairman of the Audit Committee and Senior Independent
Director until an appropriate replacement is appointed.

Valuing our people

Capita owes its success to its people and the Board would like to take this
opportunity to thank all the talented employees across our businesses who have
played a key role in Capita's consistent growth. Against a backdrop of
difficult market conditions during 2009, the effort made by our 36,800
employees has been outstanding and has contributed to another successful year
for the Group. Whether joining us through direct recruitment, contracts or
acquisitions, their hard work, commitment and enthusiasm play a vital role in
helping us to meet client expectations and in sustaining our growth.

Future prospects

Capita is well placed to continue its growth and is experiencing a healthy flow
of new business opportunities. Our pipeline of sales prospects, strong forward
visibility of revenues from our long term contracts and consistent operational
performance position us well for further strong progress in 2010 and
thereafter.

                                    -Ends-                                     

Preliminary Statement

Consolidated income statement

for the year ended 31 December 2009

                     Underlying Non-underlying    2009 Underlying Non-underlying    2008
                                                 Total                             Total
                                                                                        
               Notes         £m             £m      £m         £m             £m      £m
                                                                                        
Continuing                                                                              
operations:                                                                             
                                                                                        
Revenue        1        2,686.8              - 2,686.8    2,441.4              - 2,441.4
                                                                                        
Cost of sales           1,937.0              - 1,937.0    1,757.8              - 1,757.8
                                                                                        
Gross Profit              749.8              -   749.8      683.6              -   683.6
                                                                                        
Administrative 2          392.1           58.1   450.2      362.7           18.6   381.3
expenses                                                                                
                                                                                        
Operating      1          357.7         (58.1)   299.6      320.9         (18.6)   302.3
profit                                                                                  
                                                                                        
Net finance    3         (32.8)          (1.4)  (34.2)     (43.5)         (32.0)  (75.5)
costs                                                                                   
                                                                                        
Investment                  0.2              -     0.2      (0.2)              -   (0.2)
gain/(loss)                                                                             
                                                                                        
Loss on        4              -          (7.5)   (7.5)          -              -       -
business                                                                                
disposal                                                                                
                                                                                        
Profit before             325.1         (67.0)   258.1      277.2         (50.6)   226.6
tax                                                                                     
                                                                                        
Income tax               (87.1)           17.9  (69.2)     (74.9)           14.1  (60.8)
expense                                                                                 
                                                                                        
Profit for the            238.0         (49.1)   188.9      202.3         (36.5)   165.8
year                                                                                    
                                                                                        
Attributable                                                                            
to:                                                                                     
                                                                                        
Equity holders            238.0         (49.1)   188.9      202.3         (36.5)   165.8
of the parent                                                                           
                                                                                        
Earnings per   5                                                                        
share                                                                                   
                                                                                        
- basic                  38.75p        (7.99)p  30.76p     33.26p        (6.00)p  27.26p
                                                                                        
- diluted                38.42p        (7.92)p  30.50p     32.96p        (5.95)p  27.01p

Consolidated statement of comprehensive income

for the year ended 31 December 2009

                                                   2009    2009   2008    2008
                                                                              
                                                     £m      £m     £m      £m
                                                                              
Profit for the year                                       188.9          165.8
                                                                              
Other comprehensive income/(expense):                                         
                                                                              
Actuarial losses on defined benefit pension      (58.2)         (48.1)        
schemes                                                                       
                                                                              
Income tax effect                                  16.3           13.5        
                                                                              
                                                         (41.9)         (34.6)
                                                                              
Exchange differences on translation of foreign            (2.3)            5.9
operations                                                                    
                                                                              
Losses/(gains) on cash flow hedges arising       (10.8)           20.9        
during the year                                                               
                                                                              
Reclassification adjustments for gains included   (4.1)          (0.8)        
in the income statement                                                       
                                                                              
Income tax effect                                   4.2          (5.6)        
                                                                              
                                                         (10.7)           14.5
                                                                              
Other comprehensive expense for the year net of          (54.9)         (14.2)
tax                                                                           
                                                                              
Total comprehensive income for the year net of            134.0          151.6
tax                                                                           
                                                                              
Attributable to:                                                              
                                                                              
Equity holders of the parent                              134.0          151.6

Consolidated balance sheet

at 31 December 2009

                               2009        2008
                                               
                     Notes       £m          £m
                                               
                                               
                                               
Non-current assets                             
                                               
Property, plant and           256.6       238.3
equipment                                      
                                               
Intangible assets           1,107.0       907.0
                                               
Financial assets              186.3       332.4
                                               
Trade and other                20.3         8.1
receivables                                    
                                               
Deferred taxation               0.0         3.0
                                               
                            1,570.2     1,488.8
                                               
Current assets                                 
                                               
Financial assets                2.0         5.2
                                               
Trade and other               618.4       583.6
receivables                                    
                                               
Cash                          181.5        86.7
                                               
                              801.9       675.5
                                               
Total assets                2,372.1     2,164.3
                                               
Current liabilities                            
                                               
Trade and other               794.5       690.4
payables                                       
                                               
Financial                      19.8       116.5
liabilities                                    
                                               
Provisions               7     27.6         2.3
                                               
Income tax payable             37.5        40.4
                                               
                              879.4       849.6
                                               
Non-current                                    
liabilities                                    
                                               
Trade and other                 9.0         9.6
payables                                       
                                               
Financial                     951.3       882.7
liabilities                                    
                                               
Deferred taxation              13.9           -
                                               
Provisions               7     20.4         1.0
                                               
Employee benefits              31.9        24.5
                                               
                            1,026.5       917.8
                                               
Total liabilities           1,905.9     1,767.4
                                               
Net assets                    466.2       396.9
                                               
Capital and reserves                           
                                               
Issued share capital           12.9        12.8
                                               
Share premium                 435.2       410.4
                                               
Employee Benefit              (0.2)       (0.2)
Trust                                          
                                               
Capital redemption              1.8         1.8
reserve                                        
                                               
Foreign currency                4.3         6.6
translation                                    
                                               
Net unrealised gains            7.8        18.5
reserve                                        
                                               
Retained earnings               4.4      (53.0)
                                               
Equity shareholders'          466.2       396.9
funds                                          

Included in aggregate financial liabilities is an amount of £720.5m (2008: £
953.1m) which represents the fair value of the Group's bonds which should be
considered in conjunction with the aggregate value of currency and interest
rate swaps of £139.9m included in financial assets and £0.6m included in
financial liabilities (2008: £274.3m included in financial assets).
Consequently, this gives an effective liability of £581.2m (2008: £678.8m).

Consolidated statement of changes in equity

for the year ended 31 December 2009

                Share   Share Employee    Capital Retained     Foreign        Net  Total
              capital premium  Benefit redemption earnings    currency unrealised equity
                                 Trust    reserve          translation      gains       
                                shares                         reserve    reserve       
                                                                                        
                   £m      £m       £m         £m       £m          £m         £m     £m
                                                                                        
At 1 January     12.6   374.9        -        1.8   (62.2)         0.7        4.0  331.8
2008                                                                                    
                                                                                        
Profit for          -       -        -          -    165.8           -          -  165.8
the year                                                                                
                                                                                        
Other               -       -        -          -   (34.6)         5.9       14.5 (14.2)
comprehensive                                                                           
expense                                                                                 
                                                                                        
Total               -       -        -          -    131.2         5.9       14.5  151.6
comprehensive                                                                           
income for                                                                              
the year                                                                                
                                                                                        
Share based         -       -        -          -      9.2           -          -    9.2
payment                                                                                 
                                                                                        
Income tax          -       -        -          -     17.6           -          -   17.6
deduction on                                                                            
exercise of                                                                             
stock options                                                                           
in excess of                                                                            
share based                                                                             
payments                                                                                
                                                                                        
Deferred            -       -        -          -    (2.2)           -          -  (2.2)
income tax                                                                              
relating to                                                                             
share based                                                                             
payments                                                                                
                                                                                        
Share               -       -        -          -    (0.4)           -          -  (0.4)
transaction                                                                             
costs                                                                                   
                                                                                        
Shares issued     0.2    35.5                   -        -           -          -   35.7
                                                                                        
Employee            -       -    (0.2)          -   (68.2)           -          - (68.4)
benefit trust                                                                           
shares                                                                                  
purchased                                                                               
                                                                                        
Equity              -       -        -          -   (78.0)           -          - (78.0)
dividends                                                                               
paid                                                                                    
                                                                                        
At 1 January     12.8   410.4    (0.2)        1.8   (53.0)         6.6       18.5  396.9
2009                                                                                    
                                                                                        
Profit for          -       -        -          -    188.9           -          -  188.9
the year                                                                                
                                                                                        
Other               -       -        -          -   (41.9)       (2.3)     (10.7) (54.9)
comprehensive                                                                           
expense                                                                                 
                                                                                        
Total               -       -        -          -    147.0       (2.3)     (10.7)  134.0
comprehensive                                                                           
income for                                                                              
the year                                                                                
                                                                                        
Share based         -       -        -          -      9.8           -          -    9.8
payment                                                                                 
                                                                                        
Income tax          -       -        -          -      6.0           -          -    6.0
deduction on                                                                            
exercise of                                                                             
stock options                                                                           
in excess of                                                                            
share based                                                                             
payments                                                                                
                                                                                        
Deferred            -       -        -          -   (12.2)           -          - (12.2)
income tax                                                                              
relating to                                                                             
share based                                                                             
payments                                                                                
                                                                                        
Shares issued     0.1    24.8        -          -        -           -          -   24.9
                                                                                        
Equity              -       -        -          -   (93.2)           -          - (93.2)
dividends                                                                               
paid                                                                                    
                                                                                        
At 31            12.9   435.2    (0.2)        1.8      4.4         4.3        7.8  466.2
December 2009                                                                           

Consolidated cash flow statement

for the year ended 31 December 2009

                                                               2009       2008
                                                                              
                                                                 £m         £m
                                                                              
Cash flows from operating activities                                          
                                                                              
Operating profit on continuing activities before              299.6      302.3
interest and taxation                                                         
                                                                              
Depreciation                                                   54.4       50.0
                                                                              
Amortisation of other intangible assets (treated as             1.2        1.5
depreciation)                                                                 
                                                                              
Amortisation of intangible assets created on acquisition       28.1       18.6
                                                                              
Share based payment expense                                     9.8        9.2
                                                                              
Pension charge                                                 21.2       19.3
                                                                              
Pension contributions before exceptional additional          (32.0)     (28.5)
contribution                                                                  
                                                                              
Loss on sale of property, plant and equipment                   1.1        1.1
                                                                              
Movement in provisions                                         25.5      (2.2)
                                                                              
Movement in provisions due to reclassification from            17.2          -
payables during the year                                                      
                                                                              
Decrease/(increase) in receivables                             18.6     (90.7)
                                                                              
(Decrease)/increase in payables                               (8.0)      111.4
                                                                              
Cash generated from operations before exceptional             436.7      392.0
additional pension contribution                                               
                                                                              
Income tax paid                                              (58.3)     (48.6)
                                                                              
Exceptional additional pension contribution                  (40.0)     (10.0)
                                                                              
Net interest paid                                            (31.1)     (38.4)
                                                                              
Cash generated from operations after income tax,              307.3      295.0
interest and exceptional additional pension contribution                      
                                                                              
Net cash used in investing activities                                         
                                                                              
Purchase of property, plant and equipment                    (68.4)     (86.4)
                                                                              
Proceeds from sale of property, plant and equipment             0.1        0.3
                                                                              
Purchase of intangible fixed assets                               -          -
                                                                              
Acquisition of subsidiary undertakings and businesses       (197.1)    (188.4)
                                                                              
Cash acquired with subsidiary undertakings                     24.2        8.9
                                                                              
Disposal of financial assets                                    1.6       23.1
                                                                              
Purchase of financial assets                                  (0.4)          -
                                                                              
Investment loan                                               (0.6)      (6.2)
                                                                              
Proceeds on business disposal (net of cash sold)                8.0          -
                                                                              
Return on investment in Joint Venture                           0.4        0.1
                                                                              
                                                            (232.2)    (248.6)
                                                                              
Net cash from financing activities                                            
                                                                              
Issue of ordinary share capital                                24.9       35.7
                                                                              
Share buybacks                                                    -     (68.4)
                                                                              
Share transaction costs                                           -      (0.4)
                                                                              
Dividends paid                                               (93.2)     (78.0)
                                                                              
Capital element of finance lease rental payments                  -      (0.2)
                                                                              
Instalment debtor movement                                    (8.1)          -
                                                                              
Asset based securitised financing                               6.7        0.7
                                                                              
Repayment of loan notes and long term debt                  (108.0)      (3.3)
                                                                              
Proceeds on issue of debt                                     200.0      200.2
                                                                              
Financing arrangement costs                                   (2.6)      (0.7)
                                                                              
                                                               19.7       85.6
                                                                              
Net increase in cash and cash equivalents                      94.8      132.0
                                                                              
Cash and cash equivalents at the beginning of the period       86.7     (45.3)
                                                                              
Cash and cash equivalents at 31 December                      181.5       86.7
                                                                              
Cash and cash equivalents comprise:                                           
                                                                              
Cash at bank and in hand                                      181.5       86.7
                                                                              
Total                                                         181.5       86.7

Notes to the preliminary statement

for the year ended 31 December 2009

1. Segmental information

The Group's operations are organised and managed separately according to the
nature of the services provided, with each segment representing a strategic
business unit offering a different package of related services across the
Group's markets.

Before eliminating sales between business units on consolidation, the Group
accounts for sales between business units as if they were to a third party at
market rates.

The tables below present revenue and result for the Group's business segments
for the years 2009 and 2008.

All operations in 2009 are continuing.

Year Ended 31                                                                                            
December 2009                                                                                            
                                                                                                         
                      HR    Property Insurance Investor Integrated     ICT,   Life & Professional   Total
               Solutions Consultancy  Services Services   Services Health & Pensions     Services        
                                                                   Business                              
                                                                   Services                              
                                                                                                         
Underlying            £m          £m        £m       £m         £m       £m       £m           £m      £m
segment                                                                                                  
revenue                                                                                                  
                                                                                                         
Total segment      312.4       272.7     246.8    179.8      341.3    734.9    581.2        424.7 3,093.8
revenue                                                                                                  
                                                                                                         
Inter-segment     (31.8)      (14.6)         -    (5.3)      (1.3)  (227.5)   (60.5)       (66.0) (407.0)
revenue                                                                                                  
                                                                                                         
Third party        280.6       258.1     246.8    174.5      340.0    507.4    520.7        358.7 2,686.8
revenue                                                                                                  
                                                                                                         
Underlying                                                                                               
segment result                                                                                           
                                                                                                         
Result after        27.4        24.3      30.1     35.8       57.4     59.2     63.0         70.3   367.5
depreciation                                                                                             
                                                                                                         
Share based        (1.2)       (1.2)     (1.7)    (0.7)      (2.4)    (0.8)    (0.9)        (0.9)   (9.8)
payment                                                                                                  
                                                                                                         
                    26.2        23.1      28.4     35.1       55.0     58.4     62.1         69.4   357.7
                                                                                                         
Non-underlying                                                                                           
                                                                                                         
Intangible             -       (1.7)     (4.8)    (4.6)          -    (6.2)    (4.1)        (6.7)  (28.1)
amortisation                                                                                             
                                                                                                         
Arch cru               -           -         -   (30.0)          -        -        -            -  (30.0)
                                                                                                         
                    26.2        21.4      23.6      0.5       55.0     52.2     58.0         62.7   299.6
                                                                                                         
Net finance                                                                                        (32.8)
costs (before                                                                                            
callable                                                                                                 
swaps)                                                                                                   
                                                                                                         
Callable swaps                                                                                        1.1
                                                                                                         
Mark to market                                                                                      (2.5)
movement on                                                                                              
currency swaps                                                                                           
                                                                                                         
Investment                                                                                            0.2
gain                                                                                                     
                                                                                                         
Loss on                                                                                             (7.5)
business                                                                                                 
disposal                                                                                                 
                                                                                                         
Profit before                                                                                       258.1
tax                                                                                                      
                                                                                                         
Corporation                                                                                        (69.2)
taxation                                                                                                 
                                                                                                         
Profit after                                                                                        188.9
tax                                                                                                      

Year Ended 31                                                                                            
December 2008                                                                                            
                                                                                                         
                      HR    Property Insurance Investor Integrated     ICT,   Life & Professional   Total
               Solutions Consultancy  Services Services   Services Health & Pensions     Services        
                                                                   Business                              
                                                                   Services                              
                                                                                                         
Underlying            £m          £m        £m       £m         £m       £m       £m           £m      £m
segment                                                                                                  
revenue                                                                                                  
                                                                                                         
                                                                                                         
                                                                                                         
Total segment      278.5       284.2     263.6    173.9      344.7    505.3    479.6        396.5 2,726.3
revenue                                                                                                  
                                                                                                         
Inter-segment     (20.3)      (22.0)    (17.4)        -      (5.2)  (123.1)   (25.6)       (71.3) (284.9)
revenue                                                                                                  
                                                                                                         
Third party        258.2       262.2     246.2    173.9      339.5    382.2    454.0        325.2 2,441.4
revenue                                                                                                  
                                                                                                         
Underlying                                                                                               
segment result                                                                                           
                                                                                                         
Result after        25.3        24.0      32.7     40.3       56.7     37.8     54.7         58.6   330.1
depreciation                                                                                             
                                                                                                         
Share based        (1.1)       (1.2)     (1.6)    (0.7)      (2.3)    (0.7)    (0.8)        (0.8)   (9.2)
payment                                                                                                  
                                                                                                         
                    24.2        22.8      31.1     39.6       54.4     37.1     53.9         57.8   320.9
                                                                                                         
Non-underlying                                                                                           
                                                                                                         
Intangible         (0.2)       (1.4)     (3.7)    (3.7)          -    (2.4)    (3.8)        (3.4)  (18.6)
amortisation                                                                                             
                                                                                                         
                    24.0        21.4      27.4     35.9       54.4     34.7     50.1         54.4   302.3
                                                                                                         
Net finance                                                                                        (43.5)
costs (before                                                                                            
callable                                                                                                 
swaps)                                                                                                   
                                                                                                         
Callable swaps                                                                                     (32.0)
                                                                                                         
Investment                                                                                          (0.2)
loss                                                                                                     
                                                                                                         
Profit before                                                                                       226.6
tax                                                                                                      
                                                                                                         
Corporation                                                                                        (60.8)
taxation                                                                                                 
                                                                                                         
Profit after                                                                                        165.8
tax                                                                                                      

2. Administrative expenses

Included within Administrative expenses, disclosed in the column headed
'Non-underlying', are:

                                                       2009        2008
                                                                       
                                                         £m          £m
                                                                       
Intangible amortisation                                28.1        18.6
                                                                       
Arch cru costs                                         30.0           -
                                                                       
Total                                                  58.1        18.6

Arch cru costs - dealings in 2 open ended investment companies, for which
Capita Financial Managers (CFM) is the authorised corporate director (ACD) and
Arch Financial Products LLP was the delegated investment manager, were
suspended on 13 March 2009, as a result of illiquidity in the underlying
investments of the OEICs and an anticipated inability to meet future
redemptions. This was exacerbated by unprecedented market turmoil post the
collapse of Lehman Brothers. Since the suspension, CFM, has been working with
specialist advisers to conduct a detailed review of the underlying assets of
the OEICs and options for their future. This review was completed in December
2009. The underlying assets of the OEICs have fallen in value and remain
illiquid. CFM has advised investors that the only feasible option in the best
interests of investors as a whole is for the OEICs to be wound up, with the
underlying assets being realised in an orderly manner over a period of time,
and the proceeds being returned to investors in the OEICs.

In addition, CFM has informed investors in the OEICs that it is undertaking a
review to determine whether such investors have suffered any detriment and, if
so, to what extent any of the parties involved should be responsible for
compensating them. This is a complex exercise and it is taking longer than
anticipated, but we are determined to ensure that the matter is concluded in a
way that takes appropriate account of the results of the review and the
interests of investors in the OEICs, but also recognises the interests of
Capita's shareholders. The detailed work undertaken since March 2009 has
resulted in significant costs. We have set aside estimated costs of £30m (both
incurred and potentially to be incurred) in respect of resolving this matter.
This figure has been disclosed separately from the Group's underlying profit in
our accounts for the year ended 31 December 2009. It is expected that an
outcome will be reached in 2010.

CFM predominately provides administration services to investment funds and, in
some cases, additionally acts as ACD. In the light of the experience gained
from the Arch cru situation, we have undertaken a strategic review of CFM and
decided that the balance between risk and reward in some of the ACD business
does not serve our shareholders well. Accordingly, we are now in active
discussions to dispose of part of this business.

3. Net finance costs

Included in the column headed 'Non-underlying', against the line item net
finance costs, are the following:

                                                   2009        2008
                                                                   
                                                     £m          £m
                                                                   
Callable swaps - mark to market                   (1.1)        32.0
                                                                   
Mark to market movement on                          2.5           -
currency swaps                                                     
                                                                   
                                                    1.4        32.0

*The mark to market movement on currency swaps represents the extent to which
the fair value of these instruments has been affected by the perceived change
in the creditworthiness of the counterparties to those instruments. The Group
is comfortable that the risk attached to those counterparties is not
significant and believes that the currency swaps continue to act as an
effective hedge against the movements in the fair value of the Group's issued
US$ denominated bonds.

4. Loss on business disposal

In the year the Group disposed of the Revenue and Benefits business that it had
acquired in 2008 as part of its acquisition of IBS OPENSystems
(as directed by the Competition Commission). The table below gives a summary of
the disposal:

                                                         2009
                                                             
                                                           £m
                                                             
Fixed assets                                              0.4
                                                             
Debtors                                                   1.9
                                                             
Creditors                                               (2.2)
                                                             
Intangibles                                               5.9
                                                             
Goodwill                                                  7.3
                                                             
Total net assets                                         13.3
disposed of                                                  
                                                             
Transitional services                                     2.2
provided                                                     
                                                             
Net proceeds received in                                (8.0)
cash                                                         
                                                             
Loss on business                                          7.5
disposal                                                     

5. Earnings per share

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

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

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

                                                                   2009    2008
                                                                               
                                                                     £m      £m
                                                                               
Net profit attributable to ordinary equity holders of the         188.9   165.8
parent from operations                                                         
                                                                               
                                                                               
                                                                               
                                                                   2009    2008
                                                                 Number        
                                                                         Number
                                                                million        
                                                                        million
                                                                               
Weighted average number of ordinary shares (excluding trust       614.2   608.3
shares) for basic earnings per share                                           
                                                                               
Dilutive potential ordinary shares:                                            
                                                                               
Employee share options                                              5.2     5.5
                                                                               
Weighted average number of ordinary shares (excluding trust       619.4   613.8
shares) adjusted for the effect of dilution                                    

There have been no other transactions involving ordinary shares or potential
ordinary shares between the reporting date and the date of completion of these
financial statements.

The following additional earnings per share figures are calculated based on
underlying earnings attributable to ordinary equity holders of the parent of £
238.0m (2008: £202.3m) and, after underlying costs, earnings £188.9 (2008: £
165.8m). They are included as they provide a better understanding of the
underlying trading performance of the Group.

                                                                2009       2008
                                                                               
                                                                   p          p
                                                                               
Basic earnings per share -                                     38.75      33.26
underlying                                                                     
                                                                               
- after non-underlying                                         30.76      27.26
                                                                               
Diluted earnings per share -                                   38.42      32.96
underlying                                                                     
                                                                               
- after non-underlying                                         30.50      27.01

6. Dividends paid and proposed

                                                                2009       2008
                                                                               
                                                                  £m         £m
                                                                               
Declared and paid during the year                                              
                                                                               
Ordinary shares (equity):                                                      
                                                                               
Final for 2008 paid: 9.6p per share (2007: 8.0p                 58.8       48.8
per share)                                                                     
                                                                               
Interim for 2009 paid: 5.6p per share (2008: 4.8p               34.4       29.2
per share)                                                                     
                                                                               
                                                                93.2       78.0
                                                                               
Proposed for approval at AGM (not recognised as a                              
liability at 31 December)                                                      
                                                                               
Ordinary shares (equity):                                                      
                                                                               
Final for 2009: 11.2p per share (2008: 9.6p per                 69.1       58.6
share)                                                                         

7. Provisions

                             Insurance  Property    Arch cru     Other     Total
                             provision provision                                
                                                                                
                                    £m        £m          £m        £m        £m
                                                                                
At 1 January 2009                    -       3.3           -         -       3.3
                                                                                
Transfer from accruals               -         -           -       3.0       3.0
in the year                                                                     
                                                                                
Transfer from other               14.2         -           -         -      14.2
payables in the year                                                            
                                                                                
Utilisation                          -     (0.6)           -         -     (0.6)
                                                                                
Additional provisions in           0.8       2.4        20.0       2.6      25.8
the year                                                                        
                                                                                
Provisions acquired                  -       2.2           -         -       2.2
                                                                                
Unwinding of interest on             -       0.1           -         -       0.1
discounted provisions                                                           
                                                                                
At 31 December 2009               15.0       7.4        20.0       5.6      48.0

Certain liabilities previously held within accruals and other payables have
been reclassified as provisions as it is considered that the classification is
more appropriate given the nature of the balances.

The property provision is made on a discounted basis for the future rent
expense and related cost of leasehold property (net of estimated sub-lease
income) where the space is vacant or currently not planned to be used for
ongoing operations. The expectation is that this expenditure will be incurred
over the remaining periods of the leases which range from 1 to 6 years.

Insurance provisions relate to provisions held by the Group's captive insurer.
Such provisions are held until utilised or such time as further claims are
considered unlikely under the respective insurance policies.

Arch cru costs - see note 2.

8. Reconciliation of net cash flow movements in net funds/(debt)

                                 Net Acquisitions                      Net debt
                             Debt at                                         at
                                                                               
                                   1      in 2009 Cash flow   Non-cash       31
                             January  (exc. cash) movements       flow December
                                2009                         movements     2009
                                                                               
At December 2009                  £m           £m        £m         £m       £m
                                                                               
Cash and cash equivalents       86.7            -      94.8          -    181.5
                                                                               
Cash                            86.7            -      94.8          -    181.5
                                                                               
Loan notes                     (3.7)            -       1.4      (0.3)    (2.6)
                                                                               
Bonds †                      (953.1)            -     100.3      132.3  (720.5)
                                                                               
Term debt                          -            -   (197.4)      (0.6)  (198.0)
                                                                               
Currency swaps in relation     269.6            -         -    (133.6)    136.0
to US$ denominated bonds †                                                     
                                                                               
Interest rate swaps in           4.7            -         -      (1.4)      3.3
relation to GBP                                                                
denominated bonds †                                                            
                                                                               
Long term debt                     -        (9.1)       6.3          -    (2.8)
                                                                               
Finance leases                     -        (1.4)         -          -    (1.4)
                                                                               
Sub-total net debt           (595.8)       (10.5)       5.4      (3.6)  (604.5)
                                                                               
Asset based securitised       (10.4)            -     (6.7)          -   (17.1)
finance*                                                                       
                                                                               
Callable swaps                (32.0)            -         -        1.1   (30.9)
                                                                               
                             (638.2)       (10.5)     (1.3)      (2.5)  (652.5)

The aggregate bond fair value above of £720.5m (2008: £953.1m) (included in
Financial liabilities) includes the GBP value of the US$ denominated bonds at
31 December 2009. To remove the Group's exposure to currency fluctuations it
has entered into currency swaps which effectively hedge the movement in the
underlying bond fair value. The interest rate swap is being used to hedge the
exposure to changes in the fair value of GBP denominated bonds. The combined
fair value of the interest and currency swaps, of £139.3m (2008: £274.3m), is
included in Financial assets and Financial Liabilities.

†The sum of these items held at fair value equates to the underlying value of
the Group's bond debt of £581.2m (2008: £678.8m).

*The asset based securitised finance movement represents the net movement on
the underlying balances with customers.

                                 Net Acquisitions                      Net debt
                             Debt at                                         at
                                                                               
                                   1      in 2008 Cash flow   Non-cash       31
                             January  (exc. cash) movements       flow December
                                2008                         movements     2008
                                                                               
                                  £m           £m        £m         £m       £m
                                                                               
Cash and cash equivalents        0.8            -      85.9          -     86.7
                                                                               
Overdrafts                    (46.1)            -      46.1          -        -
                                                                               
Cash                          (45.3)            -     132.0          -     86.7
                                                                               
Loan notes                     (1.7)            -       3.3      (5.3)    (3.7)
                                                                               
Bonds †                      (461.1)            -   (199.5)    (292.5)  (953.1)
                                                                               
Currency swaps in relation    (18.1)            -         -      287.7    269.6
to US$ denominated bonds †                                                     
                                                                               
Interest rate swaps in           0.1            -         -        4.6      4.7
relation to GBP                                                                
denominated bonds †                                                            
                                                                               
Finance leases                 (0.2)            -       0.2          -        -
                                                                               
Sub-total net debt           (526.3)            -    (64.0)      (5.5)  (595.8)
                                                                               
Asset based securitised        (9.7)            -     (0.7)          -   (10.4)
finance*                                                                       
                                                                               
Callable swaps                     -            -         -     (32.0)   (32.0)
                                                                               
                             (536.0)            -    (64.7)     (37.5)  (638.2)

9. Preliminary announcement

The preliminary announcement is prepared in accordance with International
Financial Reporting Standards as adopted by the European Union. A duly
appointed and authorised committee of the Board of Directors approved the
preliminary announcement on 24th February 2010. The announcement represents
non-statutory accounts within the meaning of section 435 of the Companies Act
2006. The statutory accounts for the year ended 31 December 2009, upon which an
unqualified audit opinion has been given and which did not contain a statement
under Section 498 (2) or 498 (3) of the Companies Act 2006, will be sent to the
Registrar of Companies.

Copies of the announcement can be obtained from the Company's registered office
at 71 Victoria Street, Westminster, London SW1H 0XA, or on the Company's
corporate website www.capita.co.uk.

It is intended that the Annual Report and Accounts will be posted to
shareholders on 8 April 2010. It will also be available to members of the
public at the registered office and on the Company's corporate website 
www.capita.co.uk from that date.