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Capita Group PLC (CPI)

  Print      Mail a friend       Annual reports

Thursday 26 July, 2001

Capita Group PLC

Interim Results

Capita Group PLC
26 July 2001

26th July 2001

                             THE CAPITA GROUP PLC

        Interim results for the six months ended 30th June 2001



-         Strong growth throughout the period, leading to record operating
          profits of £31.3 million up 62% on 2000;

-         Turnover increased by 55% to £323m (2000: £208 million) with
          underlying organic growth of 27%;

-         Operating margins risen to 9.7% (2000: 9.2%);

-         Operating cashflow £36.2m, with an operating profit to cash
          conversion rate of 116%;

-         Record £722 million of new major contract wins in the first half,
          exceeding the total for full year 2000 - winning one out of every two 

-         Pipeline of bid opportunities worth £1bn;

-         Acquisition of McLarens Toplis enhances insurance offering, forming
          an integrated insurance business with proforma revenues of £160m per  
          annum. Capita is now the clear market leader in insurance outsourcing 

-         Strong demand for services across all of Capita's chosen markets -
          estimated size of current BPO market in UK increased to £50bn from    
          £30bn, reflecting growing opportunities across private sector and     
          central government.

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

'I am delighted to be able to announce such strong results today.  These
figures represent a period of record growth for the Group.  Our success to
date lays strong foundations for the future.  The non-cyclical nature of our
revenue, underpinned by long-term contracts and the provision of essential
services, means the Group's forward revenues are both highly robust and
visible.  We have secured a record value of major contracts over the last 18
months, which means our targeted revenues for 2001 and 2002 are now
substantially underpinned.  The demand for our services has never been
stronger and the credibility, capability and capacity we have built up over
the past 14 years gives us a real competitive edge.  We are therefore very
confident of the Group's prospects for the year as a whole and for our
continued future growth.'

Financial highlights:

                            Six months ended     Six months ended      Change
                             30th June 2001       30th June 2000

Turnover                         £323m                 £208m            + 55%

Operating profit*                £31.3m               £19.3m            + 62%

Pre-tax profit*                  £29.1m               £18.4m            + 58%

Earnings per share*            3.19 pence           2.06 pence          + 55%

Interim dividend per share     0.75 pence           0.55 pence          + 36%

*before amortising goodwill

For further information:

The Capita Group Plc                        Tel:              020 7799 1525

Rod Aldridge OBE, Executive Chairman        Press Office:     020 7544 3141
Paul Pindar, Chief Executive
Shona Nichols, Group Marketing Director

Issued by:

Finsbury                                    Tel:              020 7251 3801

Morgan Bone
Mark Harris

                             THE CAPITA GROUP PLC

            Interim results for the six months ended 30th June 2001



The Group has made excellent progress in the six months to 30th June 2001.
Capita has strengthened further its relationships with existing customers
whilst also increasing the Group's presence across all its core markets within
the UK.  The non-cyclical nature of our revenue, underpinned by long-term
contracts and the provision of essential services, means the Group's forward
revenues are both highly robust and visible.

Once again, the Group has achieved record results.  Group turnover increased
by 55% to £323 million (half year to 30th June 2000: £208 million), operating
profits before goodwill amortisation rose by 62% to £31.3 million (2000: £19.3
million) and net profits before taxation and goodwill amortisation increased
by 58% to £29.1 million (2000: £18.4 million).  Operating margins have also
increased from 9.2% to 9.7%.  Earnings per share before amortising goodwill
grew by 55% to 3.19p (2000: 2.06p).  Our businesses continue to enjoy
excellent cashflow with £36.2 million generated by operations in the period,
representing an operating profit to cash conversion rate of 116%.


The Board has declared an interim dividend of 0.75p net per ordinary share
(2000: 0.55p), a 36% increase.  The dividend will be payable on 12th October
2001 to shareholders on the register at close of business on 14th September
2001.  The dividend is covered 4.3 times by earnings per share before
amortising goodwill.

Creating Growth

Capita has three complementary approaches in its pursuit of growth.  First, we
seek to secure major contracts to deliver complex projects that use our skills
across the Group and which generate high quality recurring revenues.
Secondly, each of our individual businesses is structured to generate
incremental growth through the development of existing accounts and new
business wins.  Thirdly, we continue to make strategic acquisitions to
strengthen the Group's presence within a specific market and to broaden our
service capability.  I am delighted to report that we have exceeded all our
internal targets during the period in respect of each of these three strands.

Major Contracts

In our full year results announcement on 22nd February 2001, we reported on £
700m of major contract wins secured during 2000.  I am delighted to report
that in the first six months of 2001, we have already surpassed the total for
the previous year, having secured £722m of major contract wins.

We currently have a pipeline of bid opportunities worth £1bn across the public
and private sectors.  We expect to be in a position to make further
announcements in the coming months.

Our success rate on large contracts over the past two years has been one out
of every two contracts bid for, compared to an industry average of one in
five.  This success is due to the breadth of the integrated service offering
we are now able to provide to customers which is unparalleled in the industry,
the way we lead and shape the opportunities we undertake and our track record
of service delivery over the past 14 years.

To put this performance into context, the Group has won new contracts to the
value of £1.42bn over the past 18 months.  This total is three times larger
than assumed in our business model and will result in annualised revenues of £
150m in 2002.  In a number of these contracts we also have the opportunity to
increase revenues when service demand exceeds the contracted level and through
additional commercial opportunities.  This level of wins means that our
turnover for 2001 will be at least £690m, showing growth of 52%, of which 27%
is organic excluding acquisitions in 2000 and 2001.  Since many of these
contracts do not start until next year, our targeted revenues for 2002 are now
substantially underpinned.  The Group has also extended all major contracts
due for renewal to 2002 and has only one material re-bid in 2003.  No customer
provides more than 6% of our revenue.

We have won four significant long-term contracts in the period.  In January,
we were awarded a £323m, 10-year contract with Abbey National Plc to develop,
manage and administer the systems development and core processing activities
of its general insurance business.  The transfer and development of services
are progressing to plan.

In May, we were awarded preferred bidder status for a £110m agreement spanning
seven years by the Department for Education and Skills (DfES) to manage its
programme to introduce the Connexions card for 2.4 million 16-19 year olds
throughout England.  We recently signed the contract and the service will be
administered from our Business Centres in Blackburn and Darlington.  The
regional rollout of the service will start in October in the North East with
the whole of England being covered by autumn 2002.  This is one of the largest
smart card projects in Europe at a time when the UK Government wishes to
extend smart card technology to the NHS and other public services.

In June, we signed a 15 year contract worth £205m with Blackburn with Darwen
Borough Council, representing the longest contract agreed in the local
government market.  The strategic partnership is responsible for the delivery
and modernisation of services including digital technology, customer relations
management, human resources, financial services, revenues and benefit
administration and property management.  600 employees transferred to Capita
on 1st July.

Also in June, we were appointed the preferred strategic partner to the London
Borough of Croydon to lead the development of an integrated gateway for the
public to access services to the Authority.  The seven year contract worth
approximately £107m will involve the transfer of a number of existing services
and the creation of an advanced customer contact centre.  It will be a
forerunner for many other e-government projects.

Incremental New Business

The investment we made in 2000 to increase materially the business development
personnel within each of our three business areas has paid handsome dividends,
contributing significantly to our organic growth.    Across our businesses the
percentage of customers on medium to long-term contracts has also increased

We are in the enviable position of having a 95% client retention rate across
the Group's businesses, reflecting customer service satisfaction.  This stable
customer base enables us to extend and develop these relationships, resulting
in an increasing number of our customers receiving additional services from
across Capita's three divisions.

Key developments across the business in the period include the establishment
of Capita Strategic Education Services to spearhead the expansion of our
education business.  The team of 16 top class education managers, many
national leaders in the service, gives Capita the capacity to manage Local
Education Authorities and provide LEA specialist support services to schools.
From a standing start, the team has won contracts worth £10m and has a strong
pipeline of opportunities.

The Capita Education Portal will be launched in September.  The initial focus
of this Portal, Capita Education Direct, is to provide an effective channel to
school managers, which will enable us to market, sell and deliver the full
range of our services directly to schools.  This strategy fits well with the
Government's agenda to channel funds direct to schools, enabling them to make
purchasing decisions regarding the many services which Capita already provides
to the sector, for example, HR, Property, ICT and Professional Development.
At the same time, we will be delivering the Parents Gateway to schools; this
will enable pupil level data to be presented through the internet to parents,
allowing us to create a communication channel to the home.  Our track record
of organic growth in the education sector is outstanding and the launch of
this comprehensive IT infrastructure, supporting sales and services to
schools, will provide the foundations to continue this growth over the coming

Further enhancements to the Portal and our wider education offering are
planned and I am pleased to announce today that we have entered an agreement
to collaborate with Granada Learning to develop and deliver our extensive
services together.  By combining Capita's strong position in school management
services and our sales and delivery infrastructure with Granada's market
leadership position in high quality curriculum content (used by 95% of UK
schools), standardised tests (used by 75% of UK schools) and development
skills, we will be able to deliver a unique offering to schools.  This new
relationship builds on a successful track record of the two companies working
together across a number of projects over the past three years.

We have successfully concluded the renegotiation of our contract with the
London Borough of Lambeth.  We will continue to provide the IT and call centre
support for the Housing Benefits service and retain responsibility for the
collection of Council Tax and NNDR.  However, we have handed back the
administration of Housing Benefits to the Council.   During our control the
service improved significantly but, under the contracted relationship, we were
constrained from implementing the changes required to make the step
improvement we considered necessary.  The renegotiation will enhance the
Group's earnings in the current year and for the remaining period of the

Across our HR businesses, we have both extended and won several significant
contracts in the period, involving payroll, pensions and HR outsourced
administration, worth an aggregate £10m over three years.  This includes new
payroll and integrated HR administration contracts with Pipeline Integrity
International and 24seven and extensions with NTL and Glaxo SmithKline (GSK).
In the case of GSK, we have been appointed preferred supplier to provide
payroll services to all of GSK's 43,000 employees, due to the high level of
service we delivered to 10,000 staff under our previous contract.  Our wins
across pensions include new contracts with clients such as the House of
Commons, First Choice Holidays and Twyford Bathrooms and extensions with
Gillette and AT&T ISTEL.  HR outsourced administration and resourcing
contracts include new work with the Department for Work and Pensions, the
Meteorological Office and the NHS.


The major acquisitions completed in 2000 of Capita IRG and Capita Eastgate
have performed superbly during the period.

Capita IRG Plc, one of the UK's leading share registration and shareholder
services companies, has demonstrated excellent growth with revenues 26% ahead
of the corresponding period.  Margins have also increased and there are
further efficiencies to be gained from the business as our investment in
technology bears fruit.  In 2001, 56 newly listed companies have appointed us
as registrar and 243 of our 1,500 clients now buy more than one of our
services, compared to 190 clients a year ago.  We have further enhanced our
service offering through the acquisition of the Royal & Sun Alliance Trust
Companies, providers of corporate trustee services, which have now been
integrated within Capita IRG.  In the same month, we acquired the remaining
68.5% shares in MyShares Ltd, a company that develops and sells software used
in administering Employee Share Option Schemes (ESOPs), a core existing
business of Capita IRG.

Indeed, our employee share plan business has grown by 40% with 45 new plans
won since the beginning of the year.  We have also been appointed to
administer 31 new All-Employee Share Ownership Plans (AESOPs) including the
first approved AESOP to go live.  With Abbey National, we have been appointed
not only to administer their own AESOP, but also any third party AESOP client
contracts they win, a relationship estimated to be worth at least £2m over the
next three years.  Companies are increasingly looking to outsource AESOP
administration and to integrate it with other employee services, such as
payroll and pensions.  This opens up a rich vein of cross selling
opportunities across the Group and, already, 30 Capita IRG customers have
contracted with the Group for pay and pensions administration.

Capita Eastgate, the UK's leading provider of outsourcing services to the
insurance industry, has been substantially restructured over the last six
months.  The business has enjoyed an excellent period, trading materially
ahead of budget.  On the sales front, we have generated substantial
incremental new business.   Capita has secured a five year contract with
Affinitas, the group which sells services to the armed forces, to provide a
member service centre.  Commencing with personal insurance products for UK
personnel, Capita will provide full 'end to end' service delivery from
purchase through to claims handling.  The products are supported by a 'panel'
of leading insurers.  Other services and financial products will be launched
by Affinitas in the autumn expanding the service provided by Capita.  Capita
Assistance, our legal and medical help-line service, has seen a 12% increase
in volumes in all of its personal lines of business operated for clients
including CGNU, AXA, Direct Line, Zurich and Abbey National. Across the
business, we now have many significant relationships with the potential for
substantial development.

In June, we acquired for £33m the UK business of McLarens Toplis, the UK's
second largest loss adjuster and provider of outsourced services to the
insurance industry.  The client base of McLarens has universally welcomed this
move.  We are already undertaking some immediate actions to improve the
company's cost structure and its management information.  Over the coming
months, we intend to integrate the business with Capita Eastgate to form one
insurance services company, providing a wall-to-wall client offering.  We are
also investing in developing our sales and marketing infrastructure to meet
the increasing trend to outsource in this industry.

From a negligible position some 12 months ago, Capita is now the clear market
leader in insurance outsourcing services with our business enjoying proforma
revenues of £160m per annum.  This is an outstanding position from which to

Managing Growth

As a consequence of our sales successes, there are several major
implementations either recently completed or still in progress.

Of those completed, it is noteworthy to report that the Individual Learning
Accounts project which helps promote the Government's 'lifelong learning
culture', now has over 1.4 million members registered and is operating 12
months ahead of targets set by the Department for Education and Skills (DfES).
The implementation has clearly demonstrated the speed at which Capita can
set up new operations.  In less than two months from contract award, a 90-seat
call centre became operational in Coventry, supplemented by a dedicated
help-line in Darlington to support Learning Providers.  In addition, a new
web-based IT solution was developed to cater for the public's response and the
reimbursement of incentives and discounts under the scheme, for up to 20,000
Learning Providers.

Our project to manage the Winter Fuel Payments Scheme for the Benefits Agency
has also been implemented successfully and as a consequence, has recently been
extended for a further year.  The Prime Minister has cited this project an
example of excellent partnering between the public and private sectors.

The major implementation of the new Criminal Records Bureau (CRB) is well
underway.  The CRB's Disclosure service will be an important facility in
helping to safeguard children and vulnerable adults from those who would wish
to harm them, by helping organisations to identify unsuitable candidates
during the recruitment process.  The first major system release, to enable the
automatic processing of applications from organisations wishing to use the
service, was successfully completed in July.  Early applications from the
several thousand organisations which have indicated their intention to use the
initial service have already been received and processed.  The initial
service, Higher Level Disclosures, is planned to be available later this year.

More recently, we have assumed responsibility for Cumbria County Council's
design and business services operation involving the transfer of 600 personnel
to Capita.  This operation is already trading ahead of expectations having
grown by 10% since transfer.  The team mirrors and enhances Capita's skills
delivering a wide range of business services including HR, payroll and
pensions, and financial services.  It also has a substantial track record in
property services and infrastructure consultancy.  Indeed the Highways Agency,
which is responsible for taking forward the enhanced road building programme,
has recently appointed us as one of the consultancies chosen to handle all
major work in the north of England over the next five years.  We believe this
could be worth up to £5m over the period.  From this Business Centre, we now
administer services to 600 clients including 16 other local authorities, 500
schools, 20 HE and FE colleges, nine health trusts and a number of private
sector organisations.

The Group now has an established network of 20 Business Centres around the
country.  Many are multi-skilled whilst others are specialist processing
centres.  This network gives us enormous scope to grow and to implement new
contracts speedily.

In the light of Capita's continued strong growth, we have recently reviewed
our internal structure.  As a consequence, we have strengthened further our
Executive Operating Board, and have reorganised the business into three
operating divisions.  The first, Professional Services, encompasses our IT,
software, consultancy and property consultancy disciplines.  The second,
Commercial Services, contains our activities focused upon the financial
services and insurance markets and the third, Business Services, houses our HR
service offerings coupled with our customer services operations.

The revised structure will encourage further growth in each of our businesses
whilst maintaining our ability to offer an integrated service to our clients
and high visibility of our financial performance to our shareholders.

Market Review

Each of our four markets, consisting of Central Government, Local Government,
Education and the Private Sector, provide continued opportunities for growth
and the business drivers to outsource have never been stronger.  We have
previously sized the market for our services to be worth £30bn in the UK.  In
view of the changes and developments that we have seen over the past 12
months, we now believe the current market size is  £50bn.  In the public
sector, our previous estimates for central government included only four
government departments but we believe the current scale of opportunity is now
much greater across all of government.  In the private sector, we believe with
the present economic climate and the Group's increasing profile, the
opportunities for our range of services has increased enormously.

In the public sector, the Government has made it clear that it will continue
its programme to modernise public services and that it sees a significant role
for the private sector in the delivery of the programme.  Increased public
expenditure will be accompanied by new forms of service delivery including the
development of e-government solutions and service transformation.  The
Government is looking for accountable partnerships, ones which can deliver
step change in performance.  As the leading partner of local and central
government for business support services, Capita is strongly placed to take
advantage of the opportunities and to add value to public services, especially
by improving 'back office' support services.  Similarly, in education, the
Government is promoting and pursuing greater opportunities for public-private
solutions.  Capita has been involved with the education service for over a
decade and is uniquely placed to lead and to gain new business.

In the private sector, where Capita already has business relationships with
85% of the top 350 companies in the UK, we have chosen to initially focus on
the insurance, banking and financial services markets.  We believe the current
economic climate is a strong driver for organisations to outsource services.
There is a clear indication of a need to reduce costs, achieve high levels of
customer service, look for new ways of delivering services (particularly
involving e-business solutions) and to achieve this quickly.  Our commercial
services business model now enables us to deliver corporate services,
involving such areas as HR and finance; information services, covering IT and
desk top support; infrastructure services, covering every aspect of property
management and customer services, featuring customer contact centres.  In all,
this now enables us to address some 15% to 30% of an organisation's budget.
We believe this equates to a market opportunity of £7bn across the financial
sector and in excess of £14bn for the remaining industries.

Our People

Once again, I would like to give warm thanks to all our staff who contribute
to the Group's progress.  We have an outstanding team spirit throughout the
company and a culture that encourages a positive approach to business.  This
provides a real opportunity for all those involved to progress within the
Group and to play an active role in our continued success.

Last year, we introduced a sharesave scheme, giving each of our employees the
opportunity to become a shareholder in Capita on attractive terms.  In its
first year, the scheme was an outstanding success and it is our intention to
renew this invitation on an annual basis.  We hope that a further proportion
of our 12,500 staff takes up the opportunity this year.


The Group has a proven and sustainable business model. It is focused on
customers whose changing needs we understand and with whom we have long-term
relationships.  The demand for the services Capita offers has never been
stronger.  Our credibility, capability and capacity built up over 14 years
gives us a real competitive edge.   We are well positioned in each of our
chosen markets enabling us to lead and to shape opportunities, rather than to
replicate and to follow others.  It also gives us real choice on where we bid
and how we bid.

This position, along with the substantial amount of work won over the past 18
months, means that the visibility of our earnings going forward is very
strong.  We are therefore very confident that shareholders will be pleased by
Capita's performance for the year as a whole.   The Board believes that the
prospects for future growth remain excellent.

Rodney M Aldridge OBE
Executive Chairman

        THE CAPITA GROUP PLC                                            
                              Six months                    Six months        
                                 to 30th                       to 30th        
                                    June                          June        
                                    2001                          2000        
                     Before     Goodwill   Total   Before     Goodwill   Total
                   Goodwill amortisation         Goodwill amortisation        
             Notes  £'000's      £'000's £'000's  £'000's      £'000's £'000's
  Turnover    1                                                               
  Continuing        314,532            - 314,532  207,803            -  207,803
  Acquisi             8,483            -   8,483        -            -        -

                    323,015            - 323,015  207,803            -  207,803
  Continuing         31,062      (7,760)  23,302   17,300      (2,543)  14,757
  Acquisi               239        (343)   (104)    1,898      (1,357)     541

  Group              31,301      (8,103)  23,198   19,198      (3,900)  15,298
  Share of                -            -       -      102            -     102
  profit in                                                                   
  Amortisation of         -            -       -        -        (773)   (773)
  arising on                                                                  
  acquisition of                                                              
  Total operating                                                             
  profit: Group                                                               
  share of    1      31,301      (8,103)  23,198   19,300      (4,673)  14,627
  Net               (2,244)            - (2,244)    (882)            -   (882)
  Profit             29,057      (8,103)  20,954   18,418      (4,673)  13,745
  Taxation            8,136            -   8,136    5,305            -   5,305
  Profit             20,921      (8,103)  12,818   13,113      (4,673)   8,440
  Minority               24            -      24       24            -      24
  Profit             20,897      (8,103)  12,794   13,089      (4,673)   8,416
  for the                                                                     
  Dividends           4,946            -   4,946    3,578            -   3,578
  Retained profit    15,951      (8,103)   7,848    9,511      (4,673)   4,838
  for the period                                                              
  Earnings    3       3.19p      (1.24)p   1.95p    2.06p      (0.74)p   1.32p
  per share*                                                                    
  Diluted     3       3.09p      (1.19)p   1.90p    2.00p      (0.71)p   1.29p
  per share*                                                                    
  Dividend    4                            0.75p                         0.55p
  per share*                                                                    

    * The comparatives have been adjusted for the bonus issue made in 2000. 
  THE CAPITA GROUP PLC                                                        
  SUMMARY BALANCE SHEET AS AT 30TH JUNE 2001                                  
                                                    30th June        30th June
                                                                 (As restated) 
                                                         2001             2000
                                                      £'000's          £'000's
  Fixed assets                                                                
  Intangible assets                                   359,466          202,477
  Tangible assets                                      53,677           27,980
  Investments                                           6,825           31,178
                                                      419,968          261,635
  Current assets                                                              
  Trade investments                                       966              254
  Debtors                                             160,841           97,103
  Cash at bank                                              -           30,945
                                                      161,807          128,302
  Creditors: Amounts falling due within one year      308,594          159,468  
  Net current liabilities                           (146,787)         (31,166)
  Total assets less current liabilities               273,181          230,469
  Creditors: Amounts falling due after more than        3,882            4,773
  one year                                                                    
  Provision for charges and liabilities                 3,217              973
                                                      266,082          224,723

  Shareholders' funds                                                         
  Called up share capital - Ordinary                   13,184            4,337
  Shares to be issued                                   4,310                -
  Share premium and other reserves                    247,988          219,786
  Minority interests                                      600              600
                                                      266,082          224,723
        THE CAPITA GROUP PLC                                            
                                                     Six months     Six months
                                                   to 30th June   to 30th June
                                                           2001           2000
                                                        £'000's        £'000's
  Cashflow from operating activities                     36,220         19,558
  Returns on investment and Servicing of finance        (1,075)          (657)  
  Taxation paid                                         (7,800)        (3,103)
  Capital expenditure and Financial investment         (15,517)        (8,412)  
  Acquisitions and disposals                           (45,691)       (74,201)
  Equity dividends paid                                 (7,214)        (5,426)
  Net cash flow before financing                       (41,077)       (72,241)
  Financing                                             (8,539)        101,476
  (Decrease) / Increase in cash in the period          (49,616)         29,235
  FOR THE SIX MONTHS ENDED 30TH JUNE 2001                                     
                                           Six months to 30th       Six months
                                                         June     to 30th June
                                                         2001             2000
                                                                (As restated) 
                                                      £'000's          £'000's
  Profit attributable to the members                                          
  of the Parent undertaking                            12,794            8,442  
  Prior period adjustment (see note                         -             (26)
  Profit attributable to the members                                          
  of the Parent undertaking,                                                  
  as restated                                          12,794           8,416   
  Exchange adjustment                                     (5)              (2)
  Total recognised gains and losses                    12,789            8,414
  THE CAPITA GROUP PLC                                                        
  NOTES TO THE FINANCIAL STATEMENTS                                     
  1.              Analysis of turnover by division:   Six months    Six months
                                                         to 30th  to 30th June
                                                            2001          2000
                                                         £'000's       £'000's
                  Continuing         Business            145,896       114,124
                  Activities         Services                                 
                                     Commercial           65,034        10,206
                                     Professional        103,602        83,473
                  Acquisitions       Business              2,079             -
                                     Commercial            6,354             -
                                     Professional             50             -
                                                         323,015       207,803
                  Analysis of operating profit                                
                  before goodwill amortisation:                               
                  Continuing         Business             11,349         8,875
                  Activities         Services                                 
                                     Commercial            8,729         1,617
                                     Professional         10,984         8,706
                  Acquisitions       Business                242             -
                                     Commercial              151             -
                                     Professional          (154)             -
                  Associated undertakings                      -           102
                  Operating profit before goodwill        31,301        19,300

       The results of the Group are reported under three divisions which      
       differ from those reported in the full year accounts. The Commercial   
       Services division has been expanded to include Capita Eastgate. The    
       Customer Services and Human Resources divisions has been merged under  
       a new Business Services division to take advantage of synergies within 
       the businesses. A Professional Services division has been formed by    
       bringing the Property Services and Software, Systems and Strategic     
       Services divisions together and by including some businesses           
       previously reported under the Commercial Services and Customer         
       Services divisions. The effect of these adjustments has been firstly   
       to reduce the 2000 Commercial Services division, and correspondingly   
       increase the Professional Services division by turnover of £3,584,000  
       and operating profit of £696,000 and secondly, to reduce the 2000      
       Business Services division, and to correspondingly increase the        
       Professional Services division by turnover of £3,707,000 and operating 
       profit of £408,000.  
  2.   The interim financial statements have been prepared on the basis of    
       the accounting policies set out in the Group's 2000 statutory accounts.  
       The statements were approved by a duly appointed and authorised committee
       of the Board of Directors on 25th July 2001. The full year accounts, on  
       which the auditors gave an unqualified report have been filed with the   
       Registrar of Companies. The figures for the six months to 30th June 2000 
       and 2001 are unaudited.                                                  

  3.   Earnings per share have been calculated on an average number of shares 
       in issue during the period of 655,174,000 (30th June 2000: 635,259,000). 
       The diluted earnings per share have been calculated on the diluted profit
       for the period of £20,921,000 (30th June 2000 (restated): £8,440,000) and
       an average diluted number of shares of 677,507,000 (30th June 1999:      
       654,681,000). As at 25th July 2001, there were 659,405,000 shares in     

  4.   The interim dividend of 0.75p per share will be payable on 12th        
       October 2001 to Ordinary shareholders on the register at the close of  
       business on 14th September 2001.                                       

  5.   As reported in the 2000 Annual report and accounts the Group has       
       adopted Urgent Issues Task Force 27 'Revisions to estimates of the     
       useful economic life of goodwill and intangible assets' (UITF27).      
       Consequently the comparative figures for the period ended 30th June    
       2000 have been restated. The impact of these changes is to reduce      
       reported profit before tax for the period ended 30th June 2000 by      
       £26,000, and increase shareholders' funds as at 30th June 2000 from    
       that previously reported by £908,000.                                  


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