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Capita Group PLC (CPI)

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Tuesday 10 May, 2011

Capita Group PLC

Interim Management Statement


The Capita Group Plc ("Capita"), the UK's leading business process outsourcing
("BPO") and professional services company, is today issuing its interim
management statement, covering the 4 months to 30 April 2011 and progress to
date. This statement coincides with Capita's Annual General Meeting which is
taking place today.

Update on performance, acquisitions and financial position

Capita's businesses have performed solidly in the first 4 months of 2011 and
our operational performance for clients remains excellent. We are experiencing
a busy sales period with a record bid pipeline and a strong list of
opportunities sitting behind the pipeline, reflecting the appetite for
outsourcing, particularly across the life and pensions and local government
markets. We have also been active in the period acquiring organisations with
complementary skills which will add further value to the Group.

We are maintaining good progress across our key financial metrics and are well
placed to achieve reasonable revenue growth and continued margin progression
this year.

Generating profitable growth organically and through acquisitions of small to
medium sized businesses

Contracts and renewals: To date in 2011, we have signed 7 new contracts with an
aggregate value of £313m. These are new, extended and expanded contracts to
administer the Teachers' Pension Scheme, provide life and pensions
administration for MetLife, deliver a shared services contract for the London
Boroughs of Bromley and Lewisham, provide IT outsourcing for English Heritage,
deliver revenues administration for the London Borough of Brent, provide
managed resourcing services regarding contractors for EDF Energy, and an
agreement with the National Policing Improvement Agency (NPIA) to be one of 3
companies on the Digital Interviewing Framework.

We have also announced that we are in discussions with Zurich Financial
Services Group ("Zurich") regarding a potential extension of Capita's existing
contract to administer some of the processes for Zurich's UK operations, and
the expansion of its scope to support some of Zurich Global Life's
administration hubs in Europe and the Middle East. Contract negotiations
continue to progress well and we are looking for service commencement during Q3
this year.

We announce the size of our bid pipeline twice a year at our half and full year
results. Our bid pipeline is a snapshot of bids, worth £10m or above, where we
have been shortlisted to the last 4 or fewer. Our bid pipeline stood at a
record level at £4.7bn on 24 February 2011 (Feb 2010: £3.7bn) and contains
opportunities across all our target markets. There are 3 bids in our bid
pipeline where the potential client has publicly announced that Capita is on
the shortlist. These are the bids to administer army recruitment for the MOD,
to support Edinburgh City Council and the rebid to administer TV licensing for
the BBC.

We face no material rebids (greater than 1% of previous year's revenue) until

Market update: The market for outsourcing has become more active following a
quiet 2009 and 2010. In the private sector, opportunities are particularly
buoyant in the life and pensions, financial services and insurance markets. In
the public sector, the number of new tenders across our areas of expertise is
now at the levels enjoyed prior to the May 2010 elections and the public sector
spending freeze. The most active public sector markets are local government and
the defence market.

Opportunities in central government are beginning to emerge. We believe that
the Government remains focussed on delivering more cost effective public
services with the support of the private sector and, alongside this,
encouraging wider participation in this market by SMEs and third sector
organisations. A spectrum of engagement models, such as joint ventures and
mutuals, are currently being explored and we welcome the opportunity to engage
in delivering services in this manner.

Capita's vast experience of a range of delivery models positions us well as a
considered partner. Our successful public sector joint venture in Service
Birmingham has delivered substantial savings to the Council, while also
improving public services and investing in local community initiatives led by
charities and other third sector organisations.

Acquisitions: To date in 2011, we have acquired 6 businesses for a total cash
consideration of £80m. These acquisitions have strengthened and added further
scale in our target markets, opened up additional market segments and added new
complementary capabilities to the Group.

The acquisitions are: Xayce, a business transformation consultancy focussed on
the financial services market; the securitised commercial loan administration
business of Barclays Capital Mortgage Servicing Limited, adding further scale
to our financial services operations; Talis Information Limited, a provider of
management software and managed services, extending our offering to the
academic and public sectors; Right Document Solutions, a provider of document
consultancy and managed print services, increasing our capabilities in this
area; Tribal Group Plc's health and government divisions, adding further
expertise to our health offering and extending our government consultancy
capabilities; and Technophobia, a developer of next generation web applications
extending our IT offering.

There continues to be a good volume of potential acquisitions priced at
attractive levels and we expect to acquire further businesses this year to
enhance our capabilities and to take us into complementary areas.

Building further service delivery infrastructure and capabilities in Poland and

Capita's plans to create a multi-lingual shared services centre in Krakow,
Poland, are on schedule.  We have opened temporary offices and have signed
heads of terms to lease a 500 seat capacity shared services centre in Krakow
city centre.  With effect from Q4 2011, services will be delivered to existing
clients and with effect from 2012 they will be delivered to new clients.  The
business centre language will be English and services will be delivered in the
primary European languages in accordance with the requirements of our clients. 

Capita India continues to provide excellent financial and service quality
benefits to the Group from its business centres in Mumbai, Pune and Bangalore. 
We have further enhanced our capacity and capabilities to maintain the high
quality of existing service delivery and provide capacity to support new
business opportunities.


Capita is well placed to achieve steady revenue growth and continued margin
progression in 2011.

As indicated at our Preliminary Results in February, we expect turnover growth
to be modest in the first half of 2011 due to the quieter sales activity in
2010 and the continued impact of public spending cuts on a small number of our
trading activities. Our record bid pipeline and buoyant wider sales activity
provides us with a good platform for better progress in the second half of the
year, with decisions expected on several bids in the bid pipeline in Q3 and Q4
this year.

We see the benefits of the operational efficiencies we implemented in 2010 and
our increasing scale and capabilities continuing to drive forward our margins
in the first half and the year as a whole.


Notes to editors:

Capita's 2011 Annual General Meeting will commence at 11.00am today at Deutsche
Bank, Winchester House, 1 Great Winchester Street, London EC2N 2DB.

For further information:

The Capita Group Plc
Tel: 020 7799 1525
Paul Pindar, Chief Executive
Shona Nichols, Corporate Communications Director

Media enquiries
Capita press office
Caroline Mooney
Tel: 0207 654 2152 or 020 7654 2399 (out of hours)

The Capita Group Plc is the UK's leading provider of BPO and integrated
professional support service solutions.  With 37,000 people at more than 350
sites, including 64 business centres across the UK, Ireland, the Channel
Islands and India, the Group uses its expertise, infrastructure and scale
benefits to transform its clients' services, driving down costs and adding
value. Capita is quoted on the London Stock Exchange (CPI.L), and is a
constituent of the FTSE100 with revenues for 2010 of £2,744 million.  Further
information on The Capita Group Plc can be found at: