28th Jul 2005 07:02
Capita Group PLC28 July 2005 28 July 2005 THE CAPITA GROUP PLC Interim Results for the six months to 30 June 2005 Pleasing progress in first Six months Financial Highlights (restated for IFRS) Six months ended Six months ended Change 30 June 2005 30 June 2004 Turnover £687m £617m* +11%Operating profit** £81.0m £68.8m +18%Profit before tax** £74.5m £63.3m +18%Earnings per share** 8.06p 6.75p* +19%Interim dividend per share 2.10p 1.75p +20% Key points • Operating margins** increased to 11.8% (2004: 11.1%)• Operating cash flow of £95.4m (2004: £81.9m)• £240m major contract wins and renewals in first 7 months of 2005• Bid pipeline of £3.4bn• Active public and private sectors markets• Offshore BPO capabilities enhanced with second business centre opened in Mumbai * excluding discontinued operations** before share based payment charge, intangible amortisation and one-off items Rod Aldridge, Executive Chairman of The Capita Group Plc, commented: "Capita has made encouraging progress in the first 6 months of the year,reflected in another period of strong financial results. "The components for a highly successful 2005 are in place and we believeshareholders will be pleased with Capita's results for the year as a whole.Furthermore, the ingredients are also in place for delivering strong growth in2006. Our businesses are in excellent shape for generating incremental growthand the market for BPO opportunities across both the private and public sectorscontinues to be buoyant. We are confident we will make the most of theseopportunities while continuing to maintain high levels of selectivity." For further information: The Capita Group Plc Tel: 020 7799 1525Rod Aldridge, Executive ChairmanPaul Pindar, Chief ExecutiveShona Nichols, Corporate Communications DirectorCapita Press Office Tel: 0870 2400 488 Financial Dynamics Tel: 020 7269 7291Andrew Lorenz/Richard Mountain THE CAPITA GROUP PLC Interim Results for the six months to 30 June 2005 Chairman's Statement Results Capita has made encouraging progress during the 6 months to 30 June 2005. Thisis reflected in both the strengthening of our position as the UK's market leaderin providing business process outsourcing (BPO) services to the public andprivate sectors and in the delivery of another period of strong financialresults. Capita now prepares accounts in accordance with International FinancialReporting Standards (IFRS). Consequently, in the results below, the comparativeshave been restated to reflect this change. During the period, turnover increased by 11% to £687m (half year to 30 June2004: £617m excluding discontinued operations). Operating profits before theshare based payment charge and before amortisation of separately identifiableintangible assets ("intangibles") and one-off items rose by 18% to £81.0m (2004:£68.8m) and net profits before taxation, share based payment charge, intangibleamortisation and one-off items increased by 18% to £74.5m (2004: £63.3m).Earnings per share before share based payment charge, intangibleamortisation and one-off items grew by 19% to 8.06p (2004: 6.79p excludingdiscontinued operations). We are committed to the continued development of the Group, building sustainablevalue for our stakeholders, primarily our shareholders, customers and ouremployees. Building value for shareholders We focus on a number of key measures to ensure that we are creating value forour shareholders: * we have continued our long-term trend of improving operating margins, which have again increased during the period to 11.8% (2004: 11.1 per cent). For the year as a whole, we expect operating margins to be comfortably ahead of the level achieved in 2004 of 12.5% * the strength of Capita and its business model is reflected in our cash flow, with £95.4m generated by operations, representing an operating profit to operating cash conversion rate of 118% (2004: 119%). * we aim to contain capital expenditure at or below 4% of revenue, although there may be rare occasions when we exceed this where our financial strength can be used to our competitive advantage. During the period, capital expenditure rose slightly to 4.1% of revenue, following investment in advanced IT platforms to support future growth across our insurance and life and pensions businesses * we focus on driving a steadily increasing return on capital, which in turn should exceed our cost of capital. Over the last 12 months, the post tax return on average capital employed (including debt) has improved to 17.2% (12 months to 30 June 2004: 15.5%). This compares to our weighted average cost of capital which is 8.5% * we have continued with our strategy of acquiring small, realistically priced businesses which complement or develop our current service offerings. Total committed spend on 5 acquisitions to date this year has been £44.3m (net of cash acquired). Further information is provided later in the statement * a core plank in the creation of shareholder value is a progressive dividend policy. The Board has declared an interim dividend of 2.1p net per ordinary share (2004: 1.75p), a 20% increase. Over the last five years, we have grown Capita's annual dividend at a compound rate of 33%. The dividend will be payable on 7 October 2005 to shareholders on the register at the close of business on 9 September 2005. The interim dividend is covered 3.8 times by earnings per share before share based payment charge, intangible amortisation and one-off items * at our Annual General Meeting in April, shareholders renewed our authority to repurchase up to 10% of our issued share capital. To date this year, the Group has bought back 5 million shares (representing 0.8% of the issued share capital) at an average price of 373p. Creating organic growth We have two complementary approaches to creating organic growth. First, ourcentrally managed major sales team seeks to secure contracts typically with avalue of £10m or above. These contracts are complex, integrated projects thatrequire a wide range of the Group's skills and which generate high quality,recurring revenues. Secondly, each of our businesses employs sales teams focusedupon securing growth from both new and existing customers, including developingour major contract relationships. Across the Group, we have more than 20,000customers and our retention rate remains excellent. Organic Growth: securing major contracts Securing and renewing major contracts is an important component of our growth.This year, we have announced £140m of major contract wins and renewals,comprising a 3 year contract with eircom, a 10 year contract with Chester StreetInsurance, a 21 month extension to our Office Services contract with theDepartment for Work and Pensions ("DWP"), a 3 year extension to our NorwichUnion Clubline contract and a 12 year contract extension with Mendip DistrictCouncil. I am pleased to report today that Capita has been selected to deliver a majorservice transformation programme for Harrow Council in a proposed 10 yearpartnership, estimated by the Council to be in the region of £100m, with initialworks in excess of £45m over the first 3 years. Consequently, this makes a totalof £240m additional business announced in the first 7 months of 2005,representing £154m in new business and £86m in contract extensions. Harrow Council has selected Capita as its preferred partner in the Council'sBusiness Transformation initiative. Key elements of this innovative, incrementalpartnership will involve the support and development of a contact centre and'one stop shop', a programme to enhance its internal operational systems andprocesses, integrated Management Information Services and associated ICTinfrastructure and systems management. In the 4 1/2 years to 31 December 2009, we have only 3 material contracts(defined as having annual revenue in excess of 1% of 2004 turnover) due forrenewal. The first of these falls due on 1 August 2006. We are now involved inbids to extend all 3 of these contracts. Recent progress in converting our bid pipeline into secured contracts has beenaffected by two specific factors. First, the May General Election had a minorimpact on delaying central government opportunities. Secondly, the possibilityof VAT becoming chargeable on the provision of certain outsourcing services tothe financial services sector has resulted in a pause in some of our bids in thelife and pensions and insurance markets. We have relegated a small number ofthese opportunities to our prospects list due to the current uncertaintyregarding speed of bid progression. However, we believe the position regardingthe application of VAT in these markets is becoming clearer and that the levelof savings we are able to provide for the finance industry is sufficiently largethat a more normal rate of progress will prevail in the second 6 months. Our major contract bid pipeline remains at a substantial level, having beenreplenished at a healthy rate. We are currently working on live major bids witha total value of £3.4bn across the public and private sectors. This total onlyincludes bid situations in which Capita is shortlisted as one of 4 or fewercompetitors and caps our largest bids at £500m. Organic Growth: developing major contracts Client satisfaction with high levels of service across our major contracts isenabling us to expand these partnerships. For example: * as an addition to our TV Licensing contract, we have agreed funding with the BBC for field generated sales, which is worth up to £7.5m over 2 years. Together with the BBC and its other partners, we have introduced measures to make payment easier and more efficient and further reduced the evasion rate from 5.7% to 5% (31 March 2004 to 31 March 2005; of the 0.7% reduction, 0.3% is due to the downward revision by BARB of the estimate of the number of households with televisions). As a result, improvements in licence fee collection have increased revenue to the BBC by £19m for the year ended 31 March 2005 * our revenues administration contract for Westminster City Council, initially awarded in 1994, has been extended for a further 31 months to the end of October 2008 * we have been, subject to contract, awarded a £5m contract extension to handle additional customer calls for Dixons Group plc, following our success in swiftly raising the service performance of its customer contact centre * the Criminal Records Bureau ("CRB"), which has met all its Public Service Standards for issuing Disclosures since June 2003, continues to increase its capacity and capability. It issued the one millionth Disclosure after 10 months of operation, the second million in 6 months and the third in only 5 months. It is anticipated that the CRB will issue in excess of 2.7m Disclosures in 2005. One key enhancement to the service is the I-PLX (Interim Police Local Cross-Referencing) database, developed and maintained by Capita in conjunction with the CRB Agency. I-PLX will help to improve the sharing of information across the Criminal Justice Service * our contract to administer Transport for London's Central London Congestion Charging Scheme has met in excess of 90% of its Key Performance Indicators every month this year. Over 50% of all charge purchases are now made via the web or SMS texting, the two most cost effective channels. The public consultation exercise regarding the extension of the charging zone to the West of London ended on 15 July 2005 and the Mayor's decision on whether the Western Extension will go ahead is currently scheduled for autumn of this year. Organic growth: Divisions The businesses across our divisions are delivering pleasing organic growth froma loyal and growing client base. They focus on continuously evolving theirproduct and service offerings to position themselves at the leading edge oftheir marketplaces. In the period, Capita Symonds has secured some key roles delivering multidisciplinary property consultancy services across a number of significantprojects for clients including the Ministry of Defence, the Highways Agency,Lansdowne Road Stadium Development Company and South Lancashire Council. Theprojects, worth a total £1.52bn, will generate estimated fees of £16m to CapitaSymonds. The company was also involved in supporting London's 2012 Olympic andParalympic Games Bid, providing a full range of environmental, planning,transport and engineering support. Following the Bid's success, Capita Symonds is now bidding with partners toparticipate in initiatives to ensure that London has all facilities and anappropriate transport infrastructure in place for the Games. Other parts of the Group may also benefit from the increased requirement foradministration, customer services and resources in the run up to 2012. Our Resourcing businesses have strengthened their performance in the period,gaining positions on a number of framework and master vendor agreements andincreasing market share across many areas. Veredus has secured integratedcommissions worth nearly £1m to recruit and develop executive teams to deliverimproved services across central and local government organisations, includingthe Serious Organised Crime Agency, the Department for Education and Skills,Northamptonshire and Bedfordshire County Councils. Our software businesses have performed well, particularly our local governmentbusiness which has established a strong position in the market with its abilityto build supportive partnerships with councils who join forces to benefit fromshared IT and software infrastructures and e-government services. For example,Adur and Horsham District Councils are being provided with Academy revenuesystems running on a shared platform, even though the Councils are notgeographically neighbouring. In the period, Capita Software Services secured newcontracts worth £3.7m, including a contract worth in excess of £1m over 5 yearswith Glasgow City Council, the largest Scottish local authority in the UK. Thecontract is to provide new council tax and benefits software and support,including Academy Streetwise Mobile Computing and Citizen self-service modules. Capita Consultancy continues to not only play an integral role in supporting ourmajor BPO contracts, but also in delivering transformation programmes acrosscentral and local government. For example, in the period, the consultancysecured and extended contracts worth a total of £3m for the DWP, the GeneralMedical Council, Bolton Metropolitan Council and Poole District Council. It wasalso awarded the 2005 Management Consultancies Association Gold Award for ChangeManagement for our work with DWP on Pension Credit. We have experienced strong trading conditions across our financial servicesoffering. Our life & pensions operations continue to deliver cost efficienciesand high levels of customer service by using effective business processes andproprietary IT infrastructures. Our pensions administration operation, Capita SIP Services (formerly CapitaPPML), is undertaking a £7m investment programme to position the business at theforefront of the self invested pensions market. The business will haveunparalleled online capabilities, including a new investment administrationplatform for improved asset recording and fund accounting, and will therefore bewell positioned to benefit from opportunities in the run up to pensionssimplification next year. Capita Hartshead has performed particularly well,securing over 30 new contracts and extensions worth in excess of £8.6m with arange of clients across the public and private sectors, including Alliance &Leicester, BP Oil, AWG Plc, Baring Asset Management, British Shipbuilders andthe House of Commons. Our operations focused on financial and HR administration secured over £9.3m ofnew contracts and extensions. New contracts for our share plan, investorrelations and unit trust administration businesses were secured with clientsincluding ITV, easyJet, PartyGaming plc, Admiral Group plc and Banco Santander.Capita Registrars secured nearly half of all company flotations over the period,equating to 63% of flotations by market capitalisation. We continue to developnew and innovative services in this area, for example, our Director's Interestsand Monitoring Service (DIMS), which helps companies to comply with theCompanies Act 1985 and the new Disclosure Rules. Our HR & payroll businessperformed strongly in the first half of the year with new and extended contractssecured with clients including NAAFI, Royal Bank of Scotland andGlaxoSmithKline. Apart from our volume loss adjusting operation, our insurance businesses havegrown strongly in the period, particularly the legal and assistance services,London Markets and our integrated claims administration offering. As volume loss adjusting services are increasingly being displaced by in-house, desktop adjusting services, we have repositioned our adjusting operation to focus on specialised major and complex loss working with commercial insurers. Capita's combined insurance services offering now establishes us as an independent insurance intermediary focused on delivering the core, added value elements of end to end claims handling. We have also achieved clear market differentiation by developing the most advanced claims administration SAP platform in the industry. This provides clients with increased flexibility to meet peaks and troughs in demand and introduces claims casework management which enhances transparency of claims management, increasesfraud detection and accelerates the settlement of claims. Organic Growth: Offshore Capabilities To meet the increasing requirement to offer offshore delivery options in ourmajor contract bid proposals and to add further value to existing clients andour own businesses, we are rapidly building our offshore BPO capabilities. Wehave recently established a second, modern business centre in Mumbai, comprising100,000 square feet of space, bringing our total space in India to 120,000square feet. To service our current flow of offshore work, we are increasing thenumber of employees from 130 to 300 by the year end. The business centres focus on delivering back office administration processesand infrastructure. With Capita's ability to deliver strong project management,business process re-engineering and change management, these lower costfacilities provide an alternative service delivery model to clients wishing tomaximise efficiency whilst maintaining high levels of service performance. Weare currently providing both standalone offshore processes in India and alsoseamlessly combining offshore and UK onshore outsourced services for clients andthe Group. Acquisitions We are enjoying a healthy flow of acquisition opportunities, with the pricingenvironment more favourable than 6 months ago. Our approach remains cautious andwe continue to focus on smaller opportunities, which are priced at a level whichadds value to the Group. During the period, we completed 3 acquisitions, investing a total of £8.3m (netof cash acquired), including: * In February, we invested £4m to acquire Buchanan Consulting Engineers a leading development and transport planning consultancy. The business has been successfully integrated into Capita Symonds and reinforces its position as one of the leading transport and infrastructure planning consultancies * In June, we acquired Randall Lyons, a leading UK provider of web based information management solutions and bureau scanning services, for an initial consideration of £4.2m and a potential deferred element of up to £3m dependent upon performance. The products and expertise of Randall Lyons combined with Capita's existing services enable us to offer a comprehensive web-enabled solution to the storage, retrieval and handling of all types of documents and images, assisting customers to move efficiently to a paperless environment. In July 2005, we have announced a further 2 acquisitions: * On 12 July, we concluded the acquisition of BMI Health Services for £10m. This business will be merged with Capita's existing health solutions company which we acquired from Aon in 2004. This business has already grown successfully under Capita's ownership in the last 12 months and we believe a strong occupational health offering has significant market potential going forward. The combined business will be positioned as the leading and largest provider of occupational health services to the public and private sectors in the UK. * On 25 July, we announced the acquisition of BDML Connect Ltd from the insurance group BDML, subject to final FSA approval. The business will be acquired for an initial cash consideration of £26m with a deferred consideration of up to £9m, dependent on future business performance in the 30 months to 31 December 2007. BDML Connect delivers personallines insurance services on behalf of major affinity brands such as NorwichUnion, Admiral Insurance and RAC. The acquisition enhances Capita's insurancecapabilities, positioning us strongly in the affinity market with the ability toprovide end to end services, from sales and claims administration to policy,across a broad range of personal lines products. Our pipeline of potential businesses to be acquired is encouraging and it islikely there will be further acquisitions in the second half. Divisional structure In our statement in February 2005, we announced the appointment of two newDivisional Executive Directors. These appointments were made to support Capita'sgrowth going forward. We now operate Capita through 7 divisions, comprising 5operating divisions and 2 support divisions (being major sales & marketing andcentral support functions). As a consequence of this and the requirement tocomply with the new International Financial Reporting Standards, we are nowproviding shareholders with increased detail regarding the performance ofindividual parts of Capita's business. Accordingly, these results analyse ourperformance across the 5 operating divisions and additionally, our BusinessServices Division is reported financially as 2 separate business segments, beingour Property Consultancy and Resourcing operations. Therefore, we are reportingacross 6 areas of business as opposed to the 4 areas reported last year. Valuing our people Yet again, our people have made an enormous contribution to Capita's continuedprogress. We have a stable and consistent management team, a low turnover ofsenior people and an excellent team spirit and attitude throughout the company.I would like to thank our staff for the vital part they play in Capita'scontinued success. Future prospects The components for a highly successful 2005 are already in place and we believeshareholders will be pleased with the results for the year as a whole. Furthermore, the ingredients are also in place for delivering strong growth in2006. Our businesses are in excellent shape for generating incremental growthand the market for BPO opportunities across both the private and public sectorscontinues to be buoyant. We are confident that we will make the most of theseopportunities while continuing to maintain high levels of selectivity. Rodney M Aldridge, OBEExecutive Chairman Interim 2005 under IFRS - the Capita Group Plc Consolidated income statementfor the six months ended 30 June 2005 2005 2004 Before Amortisation amortisation share-based share-based payment and Before payment and loss on amortisation Amortisation loss on disposal of and share- and share- disposal of discontinued based based discontinued operation payment payment Total operation Total Notes £Million £Million £Million £Million £Million £Million------------------------------------------------------------------------------------------------------------------Continuing operations:Revenue 1 687.3 - 687.3 617.3 - 617.3==================================================================================================================Operating profit 1 81.0 (4.4) 76.6 68.8 (3.0) 65.8 Finance costs (6.5) - (6.5) (5.5) - (5.5)------------------------------------------------------------------------------------------------------------------Profit from continuingoperations before tax 74.5 (4.4) 70.1 63.3 (3.0) 60.3 Income tax expense (20.9) 1.3 (19.6) (17.9) 1.0 (16.9)------------------------------------------------------------------------------------------------------------------Profit for the period from continuingoperations 53.6 (3.1) 50.5 45.4 (2.0) 43.4------------------------------------------------------------------------------------------------------------------Discontinued operations:Loss for the period from discontinuedoperation - - - (0.3) (0.7)* (1.0)------------------------------------------------------------------------------------------------------------------Profit for the period 53.6 (3.1) 50.5 45.1 (2.7) 42.4==================================================================================================================Attributable to:Equity holdersof the parent 53.4 (3.1) 50.3 45.1 (2.7) 42.4Minority interest 0.2 - 0.2 - - ------------------------------------------------------------------------------------------------------------------- 53.6 (3.1) 50.5 45.1 (2.7) 42.4==================================================================================================================Earnings pershare (EPS) - Basic 4 8.06p (0.47)p 7.59p 6.75p (0.40)p 6.35p================================================================================================================== - Diluted 4 7.92p (0.46)p 7.46p 6.71p (0.40)p 6.31p================================================================================================================== EPS excludingdiscontinuedoperations: - Basic 4 8.06p (0.47)p 7.59p 6.79p (0.29)p 6.50p================================================================================================================== - Diluted 4 7.92p (0.46)p 7.46p 6.75p (0.29)p 6.46p ================================================================================================================== \* This amount represents the loss on the disposal of business of £1.0m (asdisclosed in the previous UK GAAP financials) net of tax of £0.3m Consolidated balance sheetat 30 June 2005 (Restated under IFRS) 30 June 30 June 31 December 2005 2004 2004 Notes £Million £Million £Million-------------------------------------------------------------------------------ASSETS Property, plant and equipment 138.3 119.9 129.1Intangible assets 6/7 516.4 481.0 500.2Available for sale financialassets 0.2 0.2 0.2Deferred taxation 36.6 29.1 32.6-------------------------------------------------------------------------------Total non-current assets 691.5 630.2 662.1-------------------------------------------------------------------------------Trade and other receivables 167.2 150.9 150.4Prepayments and accrued income 116.1 120.1 98.7Cash at bank - 4.8 --------------------------------------------------------------------------------Total current assets 283.3 275.8 249.1-------------------------------------------------------------------------------TOTAL ASSETS 974.8 906.0 911.2===============================================================================EQUITY AND LIABILITIESEquity attributable to equityholders of the parentIssued capital 9 13.5 13.4 13.4Share premium 9 251.5 246.2 248.1Treasury shares 9 (13.3) - (0.2)Capital redemption reserve 9 0.1 0.1 0.1Foreign currency translation 9 (0.1) - 0.1Retained earnings 9 120.0 88.8 98.4------------------------------------------------------------------------------- 371.7 348.5 359.9-------------------------------------------------------------------------------Minority interest 9 0.6 0.3 0.4-------------------------------------------------------------------------------Total equity 372.3 348.8 360.3-------------------------------------------------------------------------------Non-current liabilitiesInterest-bearing loans andborrowings 145.2 145.1 145.2Provisions 4.8 6.3 5.5Employee benefits 54.6 76.8 44.1------------------------------------------------------------------------------- 204.6 228.2 194.8-------------------------------------------------------------------------------Current liabilitiesTrade and other payables 109.4 130.8 87.8Accruals and deferred income 203.0 161.2 196.1Interest-bearing loans andborrowings 2.3 6.8 6.8Income tax payable 24.6 30.2 28.4Overdraft 58.6 - 37.0------------------------------------------------------------------------------- 397.9 329.0 356.1-------------------------------------------------------------------------------TOTAL LIABILITIES 602.5 557.2 550.9-------------------------------------------------------------------------------TOTAL EQUITY AND LIABILITIES 974.8 906.0 911.2=============================================================================== Consolidated cash flowfor the six months ended 30 June 2005 Notes June June 2004 2005 (restated) £m £m-------------------------------------------------------------------------------Cash flows from operating activitiesOperating profit before interestand taxation 76.6 65.5Depreciation 16.5 16.7Amortisation of intangible assets 1.2 0.7Share based payment expense 3.2 2.3Increase in provisions 0.1 0.9Provisions utilised (0.7) (0.5)Decrease in debtors (35.3) (36.4)Increase in creditors 33.8 32.7-------------------------------------------------------------------------------Cash generated from operations 95.4 81.9-------------------------------------------------------------------------------Interest paid (6.5) (5.5)Income tax paid (22.4) (12.4)-------------------------------------------------------------------------------Net cash generated from operatingactivities 66.5 64.0-------------------------------------------------------------------------------Net cash used in investingactivitiesPurchase of fixed assets (24.1) (23.7)Purchase of intangible fixed assets 6 (4.0) -Purchase of subsidiary undertakingsand businesses (net of cashacquired) 7 (22.1) (31.4)------------------------------------------------------------------------------- (50.2) (55.1)Net cash used in financingactivitiesIssue of ordinary share capital 3.5 1.1Share buybacks (13.1) (0.9)Dividends (23.8) (18.0)Repayment of loans notes and longterm loans (4.5) (6.1)------------------------------------------------------------------------------- (37.9) (23.9)Net decrease in cash and cashequivalents (21.6) (15.0)Cash and cash equivalents at thebeginning of the period (37.0) 19.8-------------------------------------------------------------------------------Cash and cash equivalents at 30June (58.6) 4.8===============================================================================Cash and cash equivalents comprise:(Overdraft)/cash at bank (58.6) 4.8-------------------------------------------------------------------------------Total (58.6) 4.8=============================================================================== Statement of Recognised Income and Expensefor the six months ended 30 June 2005 Notes June 2005 June 2004 £m £m-------------------------------------------------------------------------------Profit for the period 50.3 42.4Exchange loss (0.2) -Actuarial (loss)/gain on pension schemevaluations (13.7) 0.6Taxation 4.1 1.0------------------------------------------------------------------------------- 40.5 44.0=============================================================================== Notes to the consolidated financial statementsat 30 June 2005 1. Segmental reporting Analysis of segment revenue Resourcing Commercial Corporate Integrated Professional Property services services services services services services Total------------------------------------------------------------------------------------------2005 £m £m £m £m £m £m £mContinuing 90.4 119.5 110.9 177.5 100.9 88.1 687.3------------------------------------------------------------------------------------------2004 - restated ------------------------------------------------------------------------------------------Continuing 88.0 115.8 87.1 155.7 96.9 73.8 617.3Discontinued - - - 1.9 1.0 - 2.9------------------------------------------------------------------------------------------Total 88.0 115.8 87.1 157.6 97.9 73.8 620.2------------------------------------------------------------------------------------------ Analysis of segment result Resourcing Commercial Corporate Integrated Professional Property services services services services services services Total------------------------------------------------------------------------------------------2005 £m £m £m £m £m £m £mContinuing 6.2 10.2 19.3 25.2 12.6 7.5 81.0------------------------------------------------------------------------------------------2004 - restated ------------------------------------------------------------------------------------------Continuing 4.5 9.5 14.4 21.6 11.3 7.5 68.8Discontinued - - - (0.1) (0.2) - (0.3)------------------------------------------------------------------------------------------Total 4.5 9.5 14.4 21.5 11.1 7.5 68.5------------------------------------------------------------------------------------------ The segments disclosed above differ from those disclosed in the group's mostrecent set of interim financial statements published for the period ended June2004. These statements were prepared under UK GAAP and thus are required to berestated to meet the disclosure requirements of IAS-14 Segmental reporting.These requirements mean that the group will now report six divisions. The impactof the changes due to adoption of IAS-14 and also changes due to an internalrestructure to better align businesses within the regulatory environment, are asfollows: Analysis of segment revenue Resourcing Commercial Corporate Integrated Professional Property services services services services services services Total------------------------------------------------------------------------------------------2004 £m £m £m £m £m £m £mAs reportedJune 2004 167.1 168.2 - 140.1 141.9 - 617.3Adjustmentsdue to IAS-14 (73.8) - - - - 73.8 -Adjustmentsdue torestructure (5.3) (52.4) 87.1 15.6 (45.0) - -------------------------------------------------------------------------------------------As reported June 2005 88.0 115.8 87.1 155.7 96.9 73.8 617.3------------------------------------------------------------------------------------------ Analysis of segment result As reportedJune 2004 11.4 20.1 - 19.2 18.1 - 68.8Adjustmentsdue to IAS-14 (7.5) - - - - 7.5 -Adjustmentsdue torestructure 0.6 (10.6) 14.4 2.4 (6.8) - -------------------------------------------------------------------------------------------As reportedJune 2005 4.5 9.5 14.4 21.6 11.3 7.5 68.8------------------------------------------------------------------------------------------ The major change in the year was the formation of Corporate Services whichincorporates the Life & Pensions business and the financial services businessesformerly within Commercial Services with the HR and payroll businesses formerlywithin Integrated Services. Congestion Charging and the insurance relatedbusinesses formerly part of Professional Services have been transferred toIntegrated Services and Commercial Services respectively. 2. The interim financial statements have been prepared on the basis of theaccounting policies set out in 'Restatement of Financial Information underInternational Financial Reporting Standards', a separate document that has beenpublished on the Capita website (www.capita.co.uk) and which is also availableupon request. Further disclosure concerning the impact of IFRS on the financialstatements of the group can also be found in that document including thereconciliations required by IFRS 1 'First Time Adoption of InternationalFinancial Reporting Standards'. The accounting policies are drawn up inaccordance with International Accounting Standards (IAS) and InternationalFinancial Reporting Standards (IFRS) as issued by the International AccountingStandards Board. 3. These financial statements are prepared in accordance with theaccounting policies detailed in the 'Restatement of Financial Information underInternational Financial Reporting Standards' referred to above and were approvedby a duly appointed and authorised committee of the Board of Directors on 27July 2005. The full year accounts, on which the auditors gave an unqualifiedreport and which were prepared under UK GAAP, have been filed with the registrarof Companies. The figures for the six months ended 30 June 2004 and 2005 areun-audited. 4. Earnings per share have been calculated in accordance with IAS-33Earning per share. The average number of shares in issue during the period was662.8m (30 June 2004: 667.7m). The diluted earnings per share have beencalculated on the diluted profit for the period of £50.3m (30 June 2004 -restated: £43.4m before discontinued operations and £42.4m after) and an averagediluted number of shares of 674.6m (30 June 2004 - restated: £671.6m). As at 27July, there were 659.1m shares in issue. 5. The interim dividend of 2.10p per share will be payable on 7 October2005 to ordinary shareholders on the register at the close of business on 9September 2005. The dividend disclosed in the cash flow represents the finalordinary dividend of 3.60p per share as declared in the 31 December 2004financial statements and agreed at the group's AGM. 6. The Group made a final consideration payment to Aon, with regard to thecontract for the administration of miners' personal injury liability claims, of£4.0m. 7. During the year the group has made a number of acquisitions. In eachcase the group attained 100% control of the voting shares or control over thebusiness, assets and liabilities acquired. The fair value of the identifiable assets and liabilities of the acquisitions,in aggregate, was: Recognised on acquisition Carrying value ------------------------------------------------------------------------------- £m £mProperty, plant and equipment 0.1 0.2Trade receivables 3.0 3.1Taxation (0.2) (0.2)Trade payables (2.4) (2.2)Cash and cash equivalents 0.9 0.9-------------------------------------------------------------------------------Fair value of net assets 1.4 1.8 =============Goodwill arising on acquisitions 7.8-------------------------------------------------------------Cash consideration 9.2============================================================= An exercise to determine any intangible assets included within goodwill is yetto be undertaken, this exercise will be completed for the full year financialstatements. During the year the group settled final deferred consideration in relation tothe previous acquisition of the life and pensions business of Lincoln FinancialGroup with a payment of £13.8m on which £6.6m had been accrued, resulting in anincrease in goodwill of £7.2m. The acquisitions have been completely integrated within the existing businessesof the Group and consequently it is not possible to determine their postacquisition results. 8. Movement in net debt Debt at 1 Other cash flow Non cash January 2005 Debt repaid movements movements Total £m £m £m £m £m--------------------------------------------------------------------------------------Cash and cashequivalents (37.0) - (21.6) - (58.6)--------------------------------------------------------------------------------------Cash and cashequivalents (37.0) - (21.6) - (58.6)Loan notes (27.1) 4.4 - - (22.7)Bonds (124.7) - - - (124.7)Finance leases (0.2) 0.1 - - (0.1)-------------------------------------------------------------------------------------- (189.0) 4.5 (21.6) - (206.1)====================================================================================== 9. Statement of Changes in Equity Profit Capital Foreign and Share Treasury Share redemption currency loss Minority Total capital shares premium reserve reserve reserve Total interest equity £m £m £m £m £m £m £m £m £m-----------------------------------------------------------------------------------------------------------------------At 1 January 2004 13.4 (0.2) 248.1 0.1 0.1 98.4 359.9 0.4 360.3Profit for the period - - - - - 50.3 50.3 0.2 50.5Dividends - - - - - (23.8) (23.8) - (23.8)Exchange differences - - - - (0.2) - (0.2) - (0.2)Share buybacks - (13.1) - - - - (13.1) - (13.1)Issue of share capital 0.1 - 3.4 - - - 3.5 - 3.5Actuarial losses ondefined benefit schemes - - - - - (13.7) (13.7) - (13.7)Share based payment - - - - - 3.2 3.2 - 3.2Tax taken to equity - - - - - 5.6 5.6 - 5.6-----------------------------------------------------------------------------------------------------------------------At 30 June 2005 13.5 (13.3) 251.5 0.1 (0.1) 120.0 371.7 0.6 372.3======================================================================================================================= This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Capita