Trading Update

11 December 2015

Capita plc - trading update

Capita plc (‘Capita’), the UK’s leading technology-enabled customer and business process management company, is today issuing a pre close trading statement covering performance to date in 2015.

Summary
Capita has continued to make good progress in 2015, announcing significant contract wins in the health and science sectors, our largest ever acquisition, avocis in Northern Europe which is performing well, and disposing of a number of small businesses which lack strategic fit. We are on track to deliver low double digit underlying revenue growth in the full year, including organic growth of around 4% net of attrition, and continue to expect organic growth to accelerate in 2016.

Bid pipeline and major sales
The Group is pleased to announce today that it has been awarded a contract to deliver customer management services for Unitymedia, Germany’s second largest broadband and cable provider. The contract is worth [€88] million (£62 million) over seven years and starts immediately. Capita will deploy a number of service improvement initiatives to help Unitymedia adapt to the changing demands of its customers and reduce its costs. These services will be delivered from a new 250-seat customer services facility, which Capita is establishing in Cologne. This demonstrates the strong customer service presence we have developed in Northern Europe, having brought together the expertise of avocis, acquired earlier this year, with the Group’s wider capabilities.

Our bid pipeline currently stands at £5.1bn (July 2015: £5.4bn), comprising 29 bids (98% new business and 2% renewals) on which decisions are expected within the next 12 months. The pipeline remains slightly weighted to the private sector. Capita has secured £1.77bn (Nov 2014: £1.63bn) of major new contracts and extensions to date, including the Fera joint venture with a 10 year Defra contract, NHS England Primary Care Support Services, Sheffield City Council, Central London Community Health NHS Trust, Rabobank owned ACCLM and Unitymedia. Our mortgage servicing contract with The Co-operative Bank, which was announced in November 2014, started on 1 August 2015 and is progressing to plan.

Acquisitions
Capita has acquired 16 companies to date in 2015 for a total consideration of £375m before deferred and contingent considerations, enhancing and expanding our geographic footprint, software capabilities and sales propositions. Since the first half results, our largest transactions have been the acquisition of Electranet for a cash consideration of £37m and the disposal of National Dental Plan (NDP) for a cash consideration of £31.7 million, both on a cash free, debt free basis.

On 9th December we announced that we would not revise our cash offer of 160 pence for each share in Xchanging, following the offer announcement made by CSC Computer Sciences International. Capita continues to believe in the strategic logic and potential benefits of its Offer for Xchanging. However, the Group assesses many acquisition and organic investment opportunities and applies strict financial discipline to these assessments. If the Offer lapses, Capita will be subject to Rule 35.1 of the Code, save that it reserves the right, with the consent of the Takeover Panel, to approach Xchanging with respect to a possible offer in the event that CSC's offer for Xchanging is withdrawn, lapses or does not otherwise complete.

Financial performance
Capita is on track to deliver low double digit underlying revenue growth in the full year, including organic growth of around 4% net of attrition, despite somewhat softer market conditions in our specialty nursing and supply teacher staffing businesses toward the year end. We expect our underlying operating margin to be within our target range of 12.5% to 13.5% and comfortably ahead of the H1 2015 underlying operating margin of 12.7%. The conversion rate of operating profit to operating cash is expected to meet our target of being at or around 100%.

With the continued growth of Capita across our target markets and a greater focus on technology-enabled solutions, we have reviewed and have disposed, or are in the process of disposing, of a number of small profitable or low growth businesses which lack strategic fit. We have also reviewed the future benefit associated with intangible and other assets in our Insurance division.  The impact of these initiatives will be included within non-underlying items and are likely to result in a number of non-cash charges in our full year results.

Outlook
Capita is on track to deliver low double digit underlying revenue growth in the full year and continues to expect organic growth to accelerate in 2016, supported by the conversion of our bid pipeline. The market for customer services and business process management remains active and provides a strong platform for growth in the UK and Northern Europe over the medium to long term.

-Ends-

Conference call
Capita will be holding a conference call in London at 8:00am UK time today hosted by Andy Parker, Chief Executive and Nick Greatorex, Group Finance Director. Please dial into the call in time to allow for registration.

Dial in numbers:  UK Toll Number: [phone] / UK Toll-Free Number: 0808 237 0030.
Pin code:  80823892#.

Audio Playback (available for 7 days): UK Toll Number: [phone] / UK Toll-Free Number: 0808 237 0026.  Reference: 665151#.

For further information:

Capita plc	Tel: [phone]
Shona Nichols, Corporate Communications Director Andrew Ripper, Head of Investor Relations
Capita press office	Tel: [phone] or 020 7654 2399 out of hours

About Capita

Capita is a leading UK provider of technology-enabled customer and business process services and integrated professional support services. With 74,000 people at over 400 sites, including 80 business centres across the UK, Europe, India and South Africa, Capita uses its expertise, infrastructure and scale benefits to transform its clients' services, driving down costs and adding value. Capita is quoted on the London Stock Exchange (CPI.L), and is a constituent of the FTSE 100 with 2014 revenue of £4.4 billion. Further information on Capita can be found at: http://www.capita.co.uk/.