Selected to form JV IP business with Cabinet Office

CAPITA PLC - Selected to form JV IP business with Cabinet Office

PR Newswire

London, April 25

Capita plc ("Capita") announces that it has been selected, following acompetitive procurement process, to form a joint venture ("JV") company withthe Cabinet Office to deliver and commercialise the Government's portfolio ofbest management practice training tools and services and create a growthbusiness in which both parties will share returns.

The Government has developed a proprietary portfolio of leading and globallyrenowned best management practice training tools, including PRINCE2®, anestablished and proven project management methodology, and ITIL®, the mostwidely accepted approach to IT service management in the world. The productsare widely used in the public sector and increasingly used across privatesector organisations and internationally. Revenues are currently generatedthrough royalties from training materials and fees from an ecosystem ofaccredited training, examination and certification organisations.

Through an innovative business partnership, Capita and the Cabinet Office haveestablished a 51%:49% JV organisation that will own the intellectual property("IP") of this portfolio of products and assume the management and support ofthe ecosystem of accredited service organisations. Capita was selected havingdemonstrated its strong track record of successfully acquiring, developing andgrowing small to medium sized organisations and transforming services. It willdraw on this expertise to create a new JV business capable of fully developing,commercialising and growing the portfolio of best practice training tools andachieving greater market penetration both in the UK and internationally.

Capita is paying the Cabinet Office an upfront cash payment of £10m and threedeferred cash payments of £9.4m over the first three years for a 51%shareholding in the joint venture, which will own in perpetuity the IP of theportfolio of products. It is anticipated that the joint venture will triple thecurrent revenues of approximately £40m per annum by year 10, through furthercommercialising and developing the product portfolio in existing and newmarkets, and generate healthy margins.

Paul Pindar, chief executive of Capita plc, stated: "We are thrilled to beselected as a partner in this innovative business model that uniquely combinesassets and capabilities from the Government, Capita, current employees and theecosystem of the existing and new SME service providers. The commercial,technical and innovation skills that we bring to the JV will help to create athriving business capable of delivering real value to all parties and releasinga secure and growing income to the Government.

"We have detailed plans in place to stimulate and support the strong growth ofthe ecosystem and create a successful and sustainable JV. We will develop thecurrent portfolio, including digitising services and introducing experientiallearning methods such as gaming and simulation, and broaden both the productsand the markets in which they are sold across the UK and worldwide.

"The JV will create a strong and growing market for learning, accreditation andexamination organisations, with the majority being SMEs, and provide anexcellent platform for helping to improve skills and employability.Additionally, the commercial success of the JV will not only be shared by thejoint shareholders but also the employees, who will share a performance bonuspot of 5% of the JV's pre-tax profits."

Francis Maude, Minister for the Cabinet Office said: "The state is litteredwith potential businesses which could be bringing in revenue, creating jobs anddriving economic growth. We are committed to getting Britain ahead in theglobal race, which is why we want to exploit these hidden gems and use theprofits to protect our frontline public services.

"It's a great endorsement of the Civil Service that major companies use PRINCE2and ITIL but business expertise and investment is needed to develop themcommercially. This partnership shows that business is ready to work with us ininnovative ways to make substantial savings to taxpayers and paves the way formany similar deals in future."

The existing products and services will maintain their current brands and theJV will be branded to support both the current and growing portfolio ofproducts and services. The JV will assume ownership and management of thecurrent portfolio from 1 July 2013 and full operational delivery from 1 January2014.

Notes to editors

Capita plc is the UK's leading provider of business process management andintegrated professional support service solutions. With 52,500 people at morethan 350 sites, including 70 business centres across the UK, Europe, India andSouth Africa, the Group uses its expertise, infrastructure and scale benefitsto transform its clients' services, driving down costs and adding value. Capitais quoted on the London Stock Exchange (CPI.L), and is a constituent of theFTSE 100 with 2012 revenue of £3.3 billion and profit before tax of £426million. Further information on Capita plc can be found at: www.capita.co.uk.