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Capita chairman Rod Aldridge told the group's annual general meeting yesterday:...
Capita chairman Rod Aldridge told the group's annual general meeting yesterday:

'Capita's results for the year ended 31 December 2005 reflected the excellent performance made across the Group in the year. We continued to build on our position as the UK's market leader in providing BPO and professional services to the public and private sectors and returned record results for the 17th consecutive year.

Turnover increased by 12% to£1,436m. Operating profits before the share based payment charge and before amortisation of separately identifiable intangible assets ('intangibles') and impairment rose by 19% to£190.7m and profits before taxation, share based payment charge, intangible amortisation and impairment increased by 19% to£177.2m. Earnings per share before share based payment charge, intangible amortisation and impairment grew by 21% to 19.44p.

Operating cash flow was particularly strong, rising by 16% to£232m. We have increased dividends by 31% and during the year we returned a further£50m to shareholders through purchasing our own shares. In total, including the proposed final dividend, we returned£96m to shareholders in respect of the 2005 financial year. Over the 10 years to 31 December 2005, the value of the Group has increased from£160m to£2.7bn. Total shareholder return (excluding dividends) in this period has been 17 fold, equivalent to a 33% compound annual return.

2006 update

Current trading is materially ahead of the corresponding period in 2005. To date, we have announced a number of significant contract wins and re-awards:

In February, we announced a new shared services contract with South Oxfordshire and Vale of White Horse DCs worth£20m over 7 years, the re-tender of the contract to administer miners' personal liability claims on behalf of the Department of Trade and Industry, expected to be worth£120m over three years, a new HR outsourcing contract with the BBC worth in excess of£132m over 10 years and a further contract with DSG international plc to deliver telephone support services, worth£120m over seven years.

On 3 April, we confirmed that we had signed the contract with Birmingham City Council to create a joint venture to be officially known as 'Service Birmingham'. The joint venture will support the council's transformation programme for which Capita has signed an initial ICT contract worth£475m (originally valued at£424m) to the joint venture over a 10 year partnership.

We have also recently announced that we will be working with Fujitsu on a 15 year e-HR programme to modernise the delivery of personnel administration for the Northern Ireland Civil Service (NICS) and the Northern Ireland Office (NIO). Capita will provide all of the HR, payroll and recruitment services from a shared service centre in central Belfast. It is anticipated that the contract will generate revenues of around£100m to Capita over the term of the contract.

We are delighted to announce today additional contract news. Wehave undertaken a major investment programme in our life & pensions capability to ensure we are fully equipped to support clients' products relating to pensions simplification, which came into effect earlier this month. As a result, we are supporting six existing and new clients, including Zurich, Scottish Widows and Scottish Equitable, which will result in estimated revenues of£100m, dependent on volumes, over five years.

We have also won an extension to our existing ICT management contract with the Society of Motor Manufacturers and Traders (SMMT), the UK's largest automotive trade organisation. Under the extended contract, worth£11.7m over 5 .5 years, Capita will develop and manage a new Motor Vehicle Registration Information System (MVRIS).

Consequently, the total value of major contracts won and extended in the first four months of 2006 is£655m (April 2005:£140m). Over the last two months, we have also made considerable progress replenishing our bid pipeline after a number of significant contracts were announced in December 2005.

Operating cash flow continues to be very strong. We have invested a total of£13m in four small acquisitions since January and we have also continued to repurchase shares. In 2006, we have returned a further£124m (full year 2005:£50m) to shareholders at an average price of£4.60 per share, representing 4.1% of the issued share capital of the Group. Following these buybacks, there are 630.9m shares in issue, excluding shares held in treasury.


The UK BPO market continues to generate a wide range of opportunities to fuel Capita's future growth. A recent independent survey estimates that the total potential UK BPO market is£94.8bn per annum with expected compound annual growth rates of approximately 12% until 2009.*

Current trading is strong. We have already secured substantial revenue growth for 2006 and our efforts are now focused upon achieving a similar position for 2007. The Board is therefore confident that shareholders will be pleased by the Group's performance for the year as a whole. The prospects for future growth remain excellent.'

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