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Capita Group PLC (CPI)

  Print      Mail a friend       Annual reports

Thursday 22 February, 2001

Capita Group PLC

Final Results

Capita Group PLC
22 February 2001 

Preliminary results for the year ended 31 December 2000

Continued strong growth in all markets


-            Strong growth over the year, leading to record operating profits
of £53.1m up 46% on 1999;

-            Operating margins increased from 10.9% to 12%;

-            £700m of new major contracts won in 2000, representing a win
rate of one out of every two opportunities bid for;

-            Largest ever contract secured in July - £400m, 10 year contract
to set up and administer the Criminal Records Bureau for the Home Office;

-            Acquisitions of Eastgate and IRG, provide increased
opportunities in the private sector;

-            In January, secured largest ever private sector contract win - £
323m, 10 year contract to develop and administer general insurance activities
for Abbey National.

Financial highlights:

                        Year ended 31 December  Year ended 31 December   Change
                                 2000           1999

Turnover                        £453m                    £327m            +39%

Operating profit*               £53.1m                   £36.4m           +46%

Pre-tax profit*                 £51.2m                   £36.3m           +41%

Earnings per share*           5.6 pence               4.07 pence**        +38%

Total dividend per            1.65 pence              1.27 pence**        +30%
Operating cashflow              £68.9m                   £34.3m          +101%

* before amortising goodwill

** restated following bonus issue in August 2000

Rod Aldridge, Executive Chairman of The Capita Group Plc, commented:

'By any measure, the last 12 months have been a particularly successful period
for Capita.  We are at the forefront of the evolution of business process
outsourcing in the UK, helping our customers, both in the public and private
sectors, to react positively to the challenges they face in their own markets.

'The record levels of new business secured in 2000 already underpin strong
organic growth for 2001.  The year has started strongly with current trading
materially ahead of the corresponding period last year.

'Our existing markets continue to offer numerous opportunities for profitable
growth and the new sectors we are entering will enhance this further.  We view
the current year, and beyond with considerable confidence.'


For further information:

The Capita Group Plc                                Tel:   020 7799 1525

Rod Aldridge OBE, Executive Chairman

Paul Pindar, Chief Executive

Shona Nichols, Group Marketing Director

Hogarth Partnership Limited

James Longfield/John Olsen                          Tel:   020 7357 9477



By any measure, the last 12 months have been a particularly successful period
for Capita, the UK's fast growing professional support services group.
Highlights from the year include:

-                   Continued strong growth leading to record profits

-                   Strong operating cash flow

-                   The Group's largest ever public sector contract win, worth

-                   Our largest ever private sector contract win, worth £323m

-                   Two key acquisitions, underpinning significant growth in
the financial services market.

Capita is at the forefront of the evolution of business process outsourcing in
the UK, leading and shaping, not following and replicating.  We help our
customers, both in the public and private sectors, to react positively to the
challenges they face in their own markets. We harness the best of IT and
business processes to provide new models and methods of delivering services.
We focus on adding value and supporting step changes in organisations by
providing new service infrastructures and increasing the flexibility,
responsiveness and quality of services.


In the year ended 31st December 2000, our turnover increased by 39% to £453m
(1999: £327m); operating profits before goodwill amortisation rose by 46% to £
53.1m (1999: £36.4m) and net profits before taxation and amortisation of
goodwill increased by 41% to £51.2m (1999: £36.3m).  Our operating margins
have widened from 10.9% to 12%.  Earnings per share before amortising goodwill
advanced by 38% to 5.60p (1999: 4.07p, re-stated following a bonus issue in
August 2000).

The underlying strength of Capita's business is demonstrated by our positive
operating cash flow with £68.9m (1999: £34.3m) being generated during the
period.  We have increased gearing during the year to fund acquisitions which
has, in turn, created a more efficient capital structure.


The Board is recommending a final dividend of 1.1p per ordinary share making a
total of 1.65p (1999: 1.27p net, re-stated) for the year. This represents a
30% increase on the dividends paid in respect of the 1999 financial year. The
total dividend for the year is covered 3.4 times by the earnings per ordinary
share, before amortisation of goodwill. The final dividend will be payable on
27th April 2001 to shareholders on the register at the close of business on
30th March 2001.

Creating and sustaining growth

Three complementary approaches underpin our growth strategy.  First, we seek
to win major contracts delivering complex projects that utilise our skills
across the Group and which generate high quality, recurring revenues.
Secondly, each of our individual areas of business is structured to secure
incremental revenue through new business wins and the development of existing
client relationships.  Thirdly, we continue to make strategic acquisitions to
strengthen our presence within a market or our service capability.  In 2000,
we have surpassed the targets that we set ourselves in each of these three

Major contracts

2000 was our most successful year ever, with Capita winning £700m of new major
contracts, representing one out of every two opportunities we bid.

At our Interim Results in July, we reported several key contract wins
including a £50m agreement with the DfEE to administer the introduction of
Individual Learning Accounts and a £10m contract with the Benefits Agency to
deliver the new Winter Fuel Payment Scheme.  Most notably, we also announced
that the Group had been awarded a 10-year partnership worth £400m to set up
and administer the Criminal Records Bureau (CRB), a new Government Agency
designed to support safer recruitment to protect children and vulnerable
adults from harm.  The first two contracts have been implemented during the
second half and are running very successfully.  The implementation of the CRB
contract, which has a longer lead-time, is also progressing well, with
distribution of certificates due to commence later this year.

Our major contract sales successes have continued in the second half of the
year.  In October, Blackburn with Darwen Borough Council selected Capita as
its preferred  partner to deliver a wide range of support services to the
Council.  The scope and duration of this contract is in the final stages of
negotiation.  We expect to confirm the outcome of our discussions by the end
of March.  However, I am able to indicate today that we anticipate the
eventual size of the contract will be materially larger than the £80 million
over ten years previously announced.

In November, we were chosen as strategic partner by Cumbria County Council to
manage and develop its Design and Business Services Directorate.  This
Directorate, as well as providing services to the local authority, has over
500 external clients, including schools, other local authorities, NHS Trusts,
Central Government Departments and private sector organisations such as Boots,
BT and the Rank Organisation.  This is a 7-year partnership valued at £140m,
in which 600 staff employed within the Council transferred to Capita on 1st
February 2001.

2001 has also started well.  Last month, we announced the signing of a 10 year
contract with Abbey National Plc worth £323m to develop, manage and administer
the systems development and core processing activities of its general
insurance business.  Capita will introduce a new technology platform, Consumer
Direct, jointly developed with Cap Gemini Ernst and Young, and administer all
active policies. Work has started on the contract and more than 500 employees
will transfer to Capita on 1st March.

Whilst we continue to be highly selective, our current sales pipeline across
both the public and private sectors remains very strong and we expect to make
further announcements in the coming months.  We have no major re-bids in 2001.

Business development

During the year, we substantially strengthened the business development
resources we have within each of our 5 areas of business. This investment has
been rewarded with strong organic growth coming from both winning more work
from existing customers and by attracting a succession of new clients to the

Our contract with Westminster City Council for the provision of HR personnel,
professional and administrative services has been extended for two years until
September 2003.  We have also renegotiated our Housing Benefits contracts with
Westminster and the London Borough of Bexley to reflect recent changes in
regulations, generating further revenue of £10m over the remaining period. The
Cabinet Office has extended for two years, until April 2003, our contract for
recruitment of fast track civil servants.  Contracts with Birmingham City
Council, Canterbury City Council, the London Boroughs of Camden and Haringey
involving the collection of Council Tax, Non-domestic Rates and road traffic
debts have also been extended for periods varying from 2 to 5 years.

New pay and pensions contracts have been won with DERA, which is an Agency of
the MoD, Texaco and the Simon Group, along with recruitment work supporting
several large scale start up and organisational change projects in public
sector organisations.  Significant consultancy contracts have been undertaken
for the Cabinet Office, Foreign and Commonwealth Office, Employment Service,
the DfEE and the Millennium Commission.  We secured our first major schools
infrastructure contract in Bradford as part of the Bovis team.  The Government
recently announced a 3 year, £4 billion school building investment initiative
in England and we expect to win other consultancy work as a part of this

For a number of our existing customers, we have also broadened the scope of
our relationship.  For example, in our contract with the Benefits Agency, we
have agreed a range of additional services generating a further £15m over 18
months.  Norfolk County Council, where we have a 10 year partnership, has
recently been awarded £4m by the DETR for e-government initiatives.  We will
be working with them on the development and implementation of this strategy.
We have also broadened the contract we have with Norwich Union generating
further revenue of £10m over the next two years.


We have continued our policy of making acquisitions where we believe we can
add value for shareholders over both the short and long term.  I would like to
highlight two significant transactions during the year.

In April, we acquired IRG (renamed Capita IRG) for £100m.  This shareholder
services business brought 1,200 new public company clients to the Group and we
have subsequently gained a further 220.  Of this client base, only 10%
currently buy more than one of Capita IRG's services.  There is therefore
considerable scope for growth within the business.  Capita IRG has acted as
the registrar in 80% of the London Stock Market flotations over the past year,
a significant increase in its market share.  We have also acted in a number of
major corporate transactions, including the £4.5bn acquisition of Thames Water
by RWE AG.  This is 50% bigger than the largest transaction in which Capita
IRG acted when it was privately owned.

Capita IRG has also increased brand awareness of the Capita Group across the
private sector, creating and influencing other outsourcing sales
opportunities.  We are delighted by the manner in which Capita IRG has been
integrated within Capita and its subsequent performance.  Underlying revenues
are already 18% higher than the corresponding period 12 months ago and we
anticipate further growth in the current year.

In October, we acquired the remaining 74% of Eastgate Group Limited for an
initial consideration of £9m and a deferred consideration of £6m, which will
be payable in September 2001.  During our 18 months as a minority investor in
Eastgate, we reached two clear conclusions.  First, the market opportunity for
insurance outsourcing services was substantial; secondly, the company required
stronger managerial and financial resources to exploit the opportunity.  Our
first view has already been confirmed by securing the contract with Abbey
National in which Capita played a key role.  Its announcement has created a
substantial pipeline of customers across the finance and insurance sectors
keen to explore this service delivery model.  We are confident that similar
contracts will follow.  Secondly, I am delighted by the speed with which
Eastgate's business has been materially improved following our acquisition and
we have already made substantial efficiencies.

We welcome all the employees of our newly acquired businesses into Capita,
along with those that have joined us through contract wins or by direct

Our markets

Our core markets of local government, education, central government and the
private sector continue to offer a myriad of opportunities.  Indeed, we
believe that our addressable market in the UK will be worth £30bn per annum
within 3 years.

All of our markets are active and our key internal decisions remain where to
direct our sales resources to conclude the best deals and to make best use of
our infrastructure.  We do not rely on any one sector for our continued growth
and have set no target for the overall mix of our business.  Romtec's latest
industry survey, Datacenter, Facilities Management and BPO Market 2000,
confirms the progress that we have made this year.  It states that we are
number one in the local government market with 20% share (third in 1999),
number three in central government with 7% share (fifth in 1999) and number
two overall in the BPO market with 15% share (fifth in 1999).

Local Government

The pressures on local authorities to enhance and modernise their services
continue to fuel the growth of BPO in this market and we are well positioned
to continue to benefit from this.

Best value became a statutory duty for all local authorities in April 2000 and
already there is evidence that authorities are using it to develop new
approaches to service delivery and to strategic partnerships with the private
sector, clearly demonstrated by our new relationships with Cumbria and
Blackburn with Darwen.  The other drivers that will influence local government
decision-making are the Government's targets for e-government and a desire to
improve public access to services.  In anticipation of these new market
demands, we have been developing a leading edge web enabled software solution
named Academy Direct, to provide a single, intelligent gateway for the public
to access local authorities' services 24 hours a day and 7 days a week via
traditional and all new electronic communications channels.  I am pleased to
announce that Academy Direct has now secured its first customer, Weymouth
Borough Council, and we have had an overwhelming response from other local
authorities expressing interest in the product.

As part of the quest to modernise services, we also anticipate that local
authorities will be encouraged to centralise certain services, particularly
the collection of Council Tax.  We are in a prime position to assist with the
delivery and transformation of services in this way through our network of
business centres across the UK.


The education sector continues to provide Capita with further opportunities
for significant business growth.  Capita is positioned as the leading private
sector partner to local education authorities (LEA's) and to schools for
support services.  In 2000, we have enhanced our education offering by
establishing Capita Strategic Education Services, led by a very experienced
team recruited from LEA's, Ofsted and other organisations associated with the
sector.  We also formed an Alliance with the Local Government Association and
the Improvement and Development Agency.  Capita is now in a position to grow
further our business in the education sector with our full range of education
support, advisory and managed services.

I am pleased to report that Capita has recently been chosen as the preferred
bidder to work with Leeds City Council to provide advice to the LEA and
support the schools in the city.  Initially, this will be consultancy led but
will provide opportunities for the Group to offer other services as the
relationship develops.  We have also won work in Middlesbrough, Thurrock and
have been selected by the DfEE to develop new models of service delivery in
education for Oxfordshire, West Berkshire, Wokingham and North Somerset.

E-services will be increasingly important in education.  Our education portal
is on target to be launched in the second half of this year and as part of
this initiative, we recently launched a new internet based service, the
Parents Gateway, which will give parents secure access to information such as
the child's timetable and homework requirements, attendance and disciplinary
record and their exam results.  This will be connected directly into our SIMS
software used by 90% of all schools in the country, making it a cost effective
service for schools to offer.  The education portal provides Capita with a
direct channel to deliver the range of its business support, education and
human resource services directly to schools.  Our network of business centres
will enable us to develop regional education support hubs.

Central Government

The last year has seen much expansion of private sector involvement in central
government business.  Capita is now seen as a leading player in this market
with a strong record in implementing and running new Government initiatives
such as the CRB, Individual Learning Accounts and Winter Fuel payments.  All
political parties have made it clear that they welcome the involvement of the
private sector in the development and delivery of public services.  The
Government is progressing with its Better Quality Services programme across
central government and its agencies. This, along with the demanding
e-government targets set by the Prime Minister, will create an increasing
level of business opportunities.  Capita continues to work with Government
Departments to shape new ways of delivering services and to foster better
understanding of how the private sector can contribute to the transformation
of public services.

Private sector

Demand for our services across the private sector is buoyant.  A survey
published by Nelson Hall in June 2000 indicated that the potential demand for
outsourcing services in HR, back office, administration, billing and customer
call centres will more than quadruple over the next three years; key services
in which Capita has considerable experience.

Our current focus is on the financial services area, where we believe that the
increased competition for our clients in this market and the need to introduce
e-business solutions will be strong drivers to outsource a wide range of
services.  Within the insurance market, the Group now has a very strong
capability following the acquisition of Eastgate.  We provide services for 145
Lloyds syndicates and 70 insurers, dealing with over 5 million assistance
calls and approaching 1 million household, motor and travel claims.  We are
the UK's largest third party insurance claims administrator and the largest
provider of insurance help line facilities in the UK.  Our depth of insurance
administration experience alongside Consumer Direct, positions us as a key
partner to clients wishing to transform their organisations.  Offering
e-commerce, straight through processing and a fully integrated sales and
service capability, Consumer Direct enables companies to become virtual
insurance organisations.  They can efficiently offer their customers general
insurance products supported by a panel of risk carriers, under their own
brand, through whatever distribution channel they choose, including face to
face, call centre, internet access, WAP phone and interactive TV.  It is a
leading edge technology and process platform and has created wide interest in
the industry, particularly following Abbey National's decision to be the first
customer to use it.

Our people

During the year we undertook a series of roadshows around the United Kingdom
giving us the opportunity to talk directly to and hear from a significant
proportion of our staff.  We are privileged to have such a strong and growing
team of enthusiastic and committed people.  We enjoy a positive culture, which
places a high priority on delivering what we promise to both colleagues and
customers alike, resulting in many commendations from our clients for the
manner in which we deliver services. I  would like to place on record the
Board's thanks to all of our staff who continue to contribute to the Group's

In September, we introduced a Sharesave Scheme, available to all employees
within the Group.  We are delighted by the response to this Scheme with nearly
50% of our staff choosing to participate in its first year of operation.  We
intend to invite staff to join this Scheme on an annual basis so that existing
and new staff can all share in our success.

Board changes

Derek Fowler CBE, our non-executive Deputy Chairman retired from the Board in
November.  Derek joined the Board before the Group floated on the USM in 1989.
  He has been an invaluable source of advice and support to the Board as a
whole and to me personally.  On behalf of the Board, I extend our sincere
thanks for his contribution to Capita and our best wishes for his well-earned

I am delighted to welcome Eric Walters as a non-executive Director.  Eric was
a Senior Partner of the private equity firm Alchemy Partners, which he joined
in 1997 from Schroder Ventures, another leading private equity firm.  Eric's
extensive management expertise and his breadth of experience across many
private sector industries will be invaluable.


The record levels of new business secured in 2000 already underpin strong
organic growth for 2001.  The year has started strongly with current trading
materially ahead of the corresponding period last year.

Our existing markets continue to offer many opportunities for profitable
growth and we anticipate that the new market sectors we are penetrating will
enhance this further. This position, coupled with the depth, calibre and
experience of our senior management team, results in the Board viewing the
current year and beyond with considerable confidence.

Rodney M Aldridge OBE

Executive Chairman

21st February 2001

Group Profit and Loss Account

for the year ended 31st December 2000
                                  2000                         1999

                       Before     Goodwill          Before     Goodwill
                     goodwill Amortisation Total   goodwill Amortisation Total
               Notes   £000's    £000's    £000's   £000's    £000's    £000's

Turnover         1
Continuing            400,853       -     400,853   327,199     -       327,199

Acquisitions           52,495       -      52,495               -            -  

                      453,348       -     453,348   327,199     -       327,199

Cost of sales         309,951       -     309,951   221,815     -       221,815

Gross profit          143,397       -     143,397   105,384     -       105,384

Administrative         88,915    9,815     98,730    69,594    3,044     72,638

Continuing             46,986   (5,083)    41,903    35,790   (3,044)    32,746
Acquisitions            7,496   (4,732)     2,764        -       -          -

Group                  54,482   (9,815)    44,667    35,790   (3,044)    32,746

Share of
(loss)/profit          (1,358)  (1,429)   ( 2,787)      639   (1,123)      (484)
in associates

profit: Group          53,124  (11,244)    41,880    36,429   (4,167)    32,262
and share of

Net interest           (1,906)    -        (1,906)     (114)     -         (114)

Profit on
activities       1     51,218  (11,244)    39,974    36,315   (4,167)    32,148

Tax on profit          14,868     -        14,868    11,273      -       11,273
on ordinary

Profit on
activities             36,350  (11,244)    25,106    25,042  (4,167)     20,875

Minority                   48     -            48        54       -          54
interest (non-

Profit for the         36,302  (11,244)    25,058    24,988  (4,167)     20,821
financial year

Dividends              10,763      -       10,763     7,921     -         7,921

Retained               25,539  (11,244)    14,295    17,067  (4,167)     12,900
profit for the

Earnings per     2      5.60p   (1.73)p     3.87p     4.07p   (0.68)p     3.39p
share  - Basic

       - Diluted 2      5.41p   (1.66)p     3.75p     3.95p   (0.66)p     3.29p

Balance Sheets
at 31st December 2000

                                                    Group          Company
                                                 2000      1999   2000   1999

                                             £000's    £000's   £000's  £000's
Fixed assets
Intangible assets                            290,965    96,109      -      -
Tangible assets                               37,155    22,252     714     148
Investments                                      450    27,340 374,836 205,989
                                             328,570   145,701 375,550 206,137
Current assets
Trade investments                              3,456       224   2,634     207
Debtors due within one year                  109,933    74,863  46,466  19,225
Debtors due beyond one year                    2,025     2,867      -      -
Cash at bank and in hand                            -    1,710      -      -
                                             115,414    79,664  49,100  19,432
Creditors: amounts falling
 due within one year                         188,896   101,074 100,537  32,002

Net current liabilities                      (73,482)  (21,410)(51,437)(12,570)

Total assets less current liabilities        255,088   124,291 324,113 193,567

Creditors: amounts falling due
 after more than one year                      4,992     6,562   3,000   4,000

Provisions for liabilities
 and charges                                   2,949       987      -      -

                                             247,147   116,742 321,113 189,567

Capital and reserves
Called up share capital                       13,065     4,176  13,065   4,176
Shares to be issued                            4,440       630   4,440     630
Share premium account                        232,813   131,283 232,813 131,283
Merger reserve                                   -        -     22,884  20,893

Profit and loss account (net of goodwill      (3,771)  (20,022) 47,911  32,585
written off)

Shareholders' funds (equity)                   246,547   116,067 321,113 189,567
Minority interest (Non-equity)                    600       675      -      -

                                               247,147   116,742 321,113 189,567

Group Statement of Total Recognised Gains and Losses
for the year ended 31st December 2000
                                                               2000        1999

                                                             £000's      £000's

Profit attributable to the members of the parent             25,058      20,821
Exchange adjustments                                            (35)        (46)
Total recognised gains and losses                            25,023      20,775
Prior year adjustment                                           934
Total recognised gains and losses since last annual report   25,957

Group Cash Flow Statement

for the year ended 31st December 2000

                                                         2000             1999
                                                    £000's £000's £000's £000's
Cash flow from operating activities                        68,910        34,349

Returns on investments and
servicing of finance
Dividends paid to minorities in subsidiaries           (48)          (43)
Interest received                                      885           513
Interest element of finance lease payments             (55)          (48)
Interest paid                                       (1,400)         (822)
Net cash outflow from returns on
investments and servicing of finance                         (618)         (400)

Taxation paid                                             (11,331)      (10,864)

Capital expenditure and financial investment
Purchase of tangible fixed assets                  (17,178)        (12,283)
Purchase of trade investments                       (2,500)            (63)
Purchase of fixed asset investments                      -         (6,500)
Proceeds on sale of fixed assets                       284          1,695
Net cash outflow from capital
expenditure and financial investment                      (19,394)      (17,151)

Acquisitions and disposals
Purchase of subsidiary undertakings                (73,276)        (24,815)
Sale of subsidiary undertakings                          -             120
Overdraft acquired with subsidiary                  (4,024)         (1,925)
Cash sold with subsidiary undertaking                    -            (519)
Purchase of business                                (2,534)             -
Purchase consideration paid by subsidiary           (3,118)             -
Pre-acquisition deferred consideration paid
by subsidiary undertaking
                                                    (3,000)           (950)
Purchase of interest in associated                  (2,176)        (20,647)
Sale of interest in associated undertaking               -             100
Net cash outflow from
acquisitions and disposals                                 (88,128)     (48,636)

Equity dividends paid                                       (9,013)      (6,252)

Net cash outflow before use of financing                   (59,574)     (48,954)

Issue of ordinary share capital                    103,322        48,076
Share issue costs                                   (1,617)         (855)
Factored debt                                       (1,186)             -
Capital element of finance lease rental               (828)         (199)
Repayment of long term loans                       (44,997)             -
Net cash inflow from financing                              54,694       47,022

Decrease in cash in the period                              (4,880)      (1,932)

Notes to the Accounts

for the year ended 31st December 2000

(1) Segmental information

(a) Turnover and profit on ordinary activities before taxation
                                        Class of Business
                                    Human                           and
                       Customer Resources Commercial Property
                       Services  Services   Services Services  Services Total
                         £000's    £000's     £000's   £000's    £000's  £000's
2000      Continuing     90,436   152,229      7,404   51,885   124,666 426,620
          Acquisitions    8,167    12,371     31,957        -         -  52,495
                         98,603   164,600     39,361   51,885   124,666 479,115

          Inter-segment  (1,332)   (1,596)          -  (1,134)  (21,705)(25,767)

          Third party    97,271   163,004     39,361   50,751   102,961 453,348

1999      Continuing     80,091   105,553      7,150   43,205   106,871 342,870

          Inter-segment    (108)   (1,345)        -      (256)  (13,962)(15,671)
          Third party    79,983   104,208      7,150   42,949    92,909 327,199

Profit before tax
2000      Continuing      8,623    16,902      1,227    6,154    14,080 46,986
          Acquisitions      214       954      6,328        -         -  7,496
          Segment         8,837    17,856      7,555    6,154    14,080 54,482

          Associated                                                    (1,358)
          Interest                                                      (1,906)
          Goodwill                                                      (11,244)
          Total                                                         39,974

1999      Continuing      5,709    11,919        729    5,323    12,110 35,790
(restated) operations
          Associated                                                       639
          Interest                                                        (114)
          Goodwill                                                      (4,167)
          Total                                                         32,148
Net assets
2000      Continuing      1,501    (8,087)     4,080    9,116      (604) 6,010
          Acquisitions  (40,242)    1,198     12,121      -         -   (26,927)
                        (38,741)   (6,889)    16,201    9,116      (604)(20,917)
          Associated undertakings                                            75
          Goodwill                                                      290,965
          Non-operating liabilities                                     (22,976)
(restated) Continuing     2,296     1,109      1,924    6,478     4,048  15,855
           Associated undertakings                                       20,145
           Goodwill                                                      96,109
           Non-operating liabilities                                    (15,367)

The results of the Group are now reported under five divisions, which differ
from those reported in the accounts for the year ended 31st December 1999.
Software Services and Systems and Strategic Services have been merged to take
advantage of the synergies within the businesses.  The Commercial Services
Division, a new division formed after the acquisition of IRG Plc, includes
some businesses previously reported under Systems and Strategic Services.  The
effect of this adjustment has been to increase the 1999 Commercial Services
Division, and correspondingly reduce Software, Systems and Strategic Services
division by turnover of £7,150,000, operating profit of £729,000 and net
assets of £1,924,000.

Notes to the Accounts

for the year ended 31st December 2000

(1) Segmental Information (continued)

Included in turnover from acquisitions is £8,167,000 in respect of Eastgate
Group Limited, £31,957,000 in respect of Capita IRG Plc, and £12,371,000 in
respect of Social Housing (London) Limited.

Other minor acquisitions during the year have been completely integrated
within existing businesses of the Group.  Accordingly it is not possible to
determine their post acquisition results.

Included in 'Continuing operations' above within the Property Services
Division is £1,739,000 (1999: £2,070,000) of turnover generated in Europe, and
£9,000 loss before tax (1999: £387,000 loss before tax) generated in Europe.
These operations have ceased in the year. All other turnover and profit before
tax was generated within the United Kingdom. The net assets of the Group are
all based in the United Kingdom, except for net liabilities of £389,000 (1999:
net liabilities of £259,000) in Europe.

Non-operating liabilities comprise taxation and dividend liabilities.

(2) Earnings per share

Earnings per share is calculated on the basis of earnings of £25,058,000
(1999: £20,821,000 restated) and on the weighted average of 648,030,000 (1999:
614,472,000 restated for the bonus issue) shares in issue during the year,
excluding the shares held in the Employee Benefit Trust.

The diluted profit for the year is based on profit for the year of £25,106,000
(1999: £20,875,000), being profit for the year after adjusting for dividends
payable of £48,000 (1999: £54,000) on the convertible preference shares of a
subsidiary undertaking. The number of ordinary shares of 672,478,000 (1999:
633,969,000 restated) is calculated as follows:
                                                                2000       1999

                                                               000's      000's
Basic weighted average number of shares                      648,030    614,472
Dilutive potential ordinary shares:
    Employee share options                                    21,037     16,503
    Shares to be issued in respect of deferred                   888        156
    Convertible preference shares of a subsidiary              2,523      2,838
                                                             672,478    633,969

The additional earnings per share figures shown on the profit and loss are
calculated based on earnings before the impact of goodwill amortisation.  They
are included as they provide a better understanding of the underlying trading
performance of the Group.

(3) Reconciliation of operating profit to net cash inflow from operating

                                                          2000             1999

                                                        £000's           £000's
Operating profit before interest                        44,667           32,746
Depreciation charge                                      9,379            6,757
Amortisation of goodwill                                 9,815            3,044
Provision against trade investments                         73               75
Employee Benefit Trust amortisation                      1,001              533
Loss/(Profit) on sale of fixed assets                       75             (35)
Utilisation of provisions                                (463)          (1,226)
(Increase)/Decrease in debtors                            (11)            4,926
Increase/(decrease) in creditors                         4,374         (12,471)
                                                        68,910           34,349

Notes to the Accounts

for the year ended 31st December 2000

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

           Net debt at     Acquisitions                   Non-cash     Net Debt
           1st Jan          in 2000       Cash Flow       Flow         at 31 Dec
           2000            (exc cash)     Movements       Movements     2000

            £000's         £000's          £000's          £000's         £000's
Cash at      1,710            -           (1,710)           -               -
bank and
in hand

Overdrafts       -            -           (3,170)           -            (3,170)
             1,710            -           (4,880)           -            (3,170)

Factored    (1,186)           -            1,186            -              -

Loan notes (16,128)      (50,378)         18,870            -           (47,636)

Long term        -       (26,127)         26,127            -              -

Finance       (811)       (1,183)            828           (367)         (1,533)

Total      (16,415)      (77,688)         42,131           (367)       (52,339)

          Net funds at     Acquisitions                   Non-cash     Net Debt
           1st Jan          in 1999       Cash Flow       Flow         at 31 Dec
           1999            (exc cash)     Movements       Movements     1999

          £000's             £000's          £000's          £000's      £000's
Cash at    3,642               -           (1,932)            -          1,710
bank and
in hand

Factored       -            (1,186)               -               -     (1,186)
Loan           -           (16,128)               -               -    (16,128)
Finance    (413)              (424)             199           (173)       (811)

Total      3,229           (17,738)          (1,733)          (173)    (16,415)

(5) Preliminary Announcement

The preliminary announcement is prepared on the same basis as set out in
previous year's annual accounts, except for the adoption UITF 27 'Revisions to
estimates of the useful economic life of goodwill and intangible assets'
during the year.  Opening balances and comparatives have been restated where

A duly appointed and authorised committee of the Board of Directors approved
the preliminary announcement on 21st February 2000.

The announcement represents non statutory accounts within the meaning of S240
of the Companies Act 1985.  The statutory Annual Accounts for the year ended
31st December 2000, upon which an unqualified audit opinion has been given and
which did not contain a statement under section 235, 237(2) or 237(3) of the
Companies Act 1985, 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.

It is intended that the Annual Report and Accounts will be posted to
shareholders on 20th March 2000 and will be available to members of the public
at the registered office of the Company from that date.


a d v e r t i s e m e n t