Annual Financial Report
3 April 2013
Capita plc
(the "Company")
Annual Financial Report
Capita plc will hold its Annual General Meeting at 11.00am on Tuesday 14 May
2013 at Deutsche Bank, 1 Great Winchester Street, London EC2N 2DB.
Pursuant to Listing Rule 9.6.1, copies of the following documents have been
submitted to the National Storage Mechanism and will shortly be available for
inspection at http://www.hemscott.com/nsm.do:
- Annual Report and Accounts for the year ended 31 December 2012
* Notice of Meeting for the 2013 Annual General Meeting
* Form of Proxy
These documents are available on the Company's website: www.capita.co.uk.
Contact: Francesca Todd, Deputy Group Company Secretary, 020 7202 0641
A condensed set of the Company's financial statements and information on
important events that have occurred during the financial year and their impact
on the financial statements, were included in the preliminary results
announcement released on 28 February 2013. That information, together with the
information set out below, which is extracted from the Annual Report and
Accounts 2012, is provided in accordance with the Disclosure and Transparency
Rule 6.3.5. This information should be read in conjunction with the Company's
preliminary results announcement. This announcement is not a substitute for
reading the full Annual Report and Accounts 2012.
Principal risks and uncertainties
Managing our risks
Effective risk management not only acts to protect and maximise the financial
performance of the business, it also offers the opportunity to safely undertake
more complex, operationally challenging projects and attract the higher reward
that comes with the ability to effectively manage risk. The Group Board is
responsible for ensuring that an appropriate risk management framework is in
place, with relevant systems and controls to identify, assess and mitigate
major business risks that could impact the delivery of our growth strategy.
The Capita Risk Appetite Statement, is subject to regular review as the Group's
plans, controls and level of risk maturity develop over time. It provides a
consistent reference point for the alignment of risk taking and risk management
throughout the organisation and is reviewed and adopted at divisional and
business unit level as applicable.
Implementation of risk management is aligned with Capita's decentralised
business model. Each Divisional Director and/or senior management of the
underlying business unit, is responsible for establishing processes and
procedures to capture, manage, and report on the risks for which they are
accountable in accordance with the agreed Group framework.
Capita operates the `three lines of defence' model, with line management
responsible for the first line, Risk and Compliance for the second line, and
Group Internal Audit for the third line.
Key risk Potential impacts Mitigating activities include
categories
Financial - Adverse effect on - Financial performance of each business
financial performance unit is monitored monthly
and brand reputation.
- Capital expenditure is subject to
rigorous monitoring and budgetary
controls.
Delegates and - Reputation risk and - Rigorous risk-based due diligence
counterparty financial loss e.g. processes for the selection of key
failure disruption to supply delegates and wider counterparties
chain; service monitoring
interruption.
Operational - Failure to meet - Operating frameworks and business
risks contractual service resilience arrangements in place
level agreements
- Operating performance indicators
- Financial penalties reviewed by line management
- Potential loss of - Risk committees and Group Board
contracts escalation as appropriate
- Brand reputation - Risk based independent assurance
impacted.
- Business resilience arrangements in
place
- Centralised proactive and reactive PR
team provides full issues management
communications support
Acquisitions - Planned synergies - Rigorous risk-based due diligence
and organic not achieved
growth - `Black Hat' process:
- Adverse impact on
financial growth and - Fit with strategy and pricing is
performance subject to review and approval by the
Group Board
- Financial penalties.
- Appropriate contractual terms to ensure
fair risk/reward profile
- Robust integration and transition
process.
Economic - Weaker economic - Focus on 10 diverse public and private
landscape conditions are a key sector markets
driver for
outsourcing, however, - Focus on widening scope of existing
extreme economic contracts to help clients save money
uncertainty can result
in a delay in buying - Supply of services that support
decisions and lower essential client functions rather than
discretionary spend discretionary activities
across some market
segments. - Initiatives to increase the efficiency
of Group operations.
Attract and - Lack of appropriate - Training and development
retain resources may lead to
employees inability to develop - Continual development through objective
and execute business setting and appraisals
plans
- Competitive incentive and bonus plans
- Poor employee morale
- Succession planning
- Competitive
disadvantage. - Comprehensive vetting process in line
with roles.
Loss of - Contractual and - Appropriate policies and procedures
sensitive or regulatory penalties
confidential - Robust information security framework,
data - Adverse media including policies and processes
comment and reputation
impact on brand. - Escalation to risk committees and
subsidiary boards
- Training and monitoring programme
across businesses
- Swift adoption of Group policies and
protocols by newly acquired businesses
- Sharing of best practice and issues
through cross-Group forums
- Regular monitoring through risk-based
audits and follow-up of actions
- Centralised proactive and reactive PR
team.
IT risks - Failure to support - Adoption, implementation and audit of
core services and industry recognised controls
business needs
- Regular and documented disaster
- Inability to provide recovery tests
adequate disaster
recovery services - Regular audit of services and systems
to validate adequacy of protective
- Failure to protect controls and processes
client and Capita
data.
Fraud, bribery - Potential for civil - Appropriate policies and procedures in
and corruption and criminal penalties place including a `speak up' policy
for business and/or
senior officers - Anti corruption culture and a zero
tolerance approach with a robust
- Potential disciplinary process
prohibition from
bidding for public - Risk assessments of vulnerabilities
sector contracts in EU
- Monitoring and audit
- Media comment and
reputation impact. - Centralised proactive and reactive PR
team.
Regulatory - Non-compliance with - Appropriate policies and procedures
landscape the requirements of
our regulatory bodies - Monitoring by Risk, Internal Audit and
in the UK or overseas Regulatory Compliance teams
(including the
Financial Services - Escalation of risks to risk committees
Authority in respect and subsidiary boards
of regulated UK
financial services - Risk-based assurance and actions for
business) improvement
- Regulatory, - Independent reporting to Group Audit
financial and Committee and Group Financial Services
contractual penalties Risk & Governance Forum.
- Adverse impact on
reputation.
Health and - Non-compliance with - Rigorously applied health and safety
safety health and safety policy and processes
regulations
- Health and safety training
- Adverse impact on
wellbeing of our - Comprehensive Group wide health and
employees. safety audits undertaken twice a year.
Environmental - As a low impact - Raising awareness of environmental
company our key issues and Group sustainability
environmental impacts initiatives
are energy use,
business travel, - Continue to measure and manage our
resource use and waste carbon footprint and achieve energy
management which we reductions.
manage proactively.
- Environmental management system in
place
- Environmental site audits carried out
twice a year
- Reduction of paper use and increase in
recycling.
Related party transactions
Compensation of key management personnel
2012 2011
£m £m
Short term employment 7.6 5.5
benefits
Pension 0.1 0.2
Share based payments 3.6 3.6
Total 11.3 9.3
Gains on share options exercised in the year by key management personnel
totalled £4.6m (2011: £5.8m).
Nigel Wilson, who was Senior Independent Director until his resignation from
the Board on 31 December 2012, was Group Chief Financial Officer of Legal &
General Group Plc until June 2012 when he was appointed as Chief Executive
Officer of that group. The Legal & General Group Plc had an interest in
23,279,554 shares in Capita plc as at 20 February 2013 and has a contractual
relationship with the Group. Nigel Wilson did not participate in any Legal &
General board discussions or decisions in respect of that company's dealings
with Capita plc which are conducted on an arm's length basis.
Pursuant to the Company's share placing which completed on 24 April 2012, funds
managed by Invesco Limited, a substantial shareholder in the Company and
therefore a related party of the Company (in each case, for the purposes of the
Listing Rules of the UK Listing Authority), subscribed, pro rata to their
previously existing holdings, for an additional 8,000,000 shares in the Company
at the placing price of 685p representing an aggregate further investment of £
54.8m. In addition, Invesco acquired a further 16,459,384 shares during the
year at market value.
Statement of Directors' responsibility
The Directors confirm that, to the best of their knowledge:
a) the consolidated financial statements in this report, which have been
prepared in accordance with International Financial Reporting Standards (IFRS)
as adopted by the European Union, IFRIC interpretations and those parts of the
Companies Act 2006 applicable to companies reporting under IFRS, give a true
and fair view of the assets, liabilities, financial position and profit of the
Group taken as a whole;
b) the parent company financial statements in this report, which have been
prepared in accordance with United Kingdom Accounting Standards (UK GAAP) and
applicable law, give a true and fair view of the assets, liabilities, financial
position and profit of the Company; and
c) the management report contained in this report includes a fair review of the
development and performance of the business and position of the Company and the
Group taken as a whole, together with a description of the principal risks and
uncertainties that they face.
By order of the Board
P R M Pindar G M Hurst
Chief Executive Group Finance Director
27 February 2013
Latest directors dealings
- 1 hour ago Legal & General Group
- 3 hours ago Schroder Income Growth Fund
- 3 hours ago Velocity Composites
- 3 hours ago Luceco
- 4 hours ago Artemis Alpha Trust