Capita Plc · LSE:CPI

Capita — H1 2011 Earnings Presentation

47 slides from Capita's earnings presentation, Jun 30, 2011

  1. Slide 1: Results for the six months ended 30 June 2011

    Results for the six months ended 30 June 2011 Paul Pindar Chief Executive

  2. Slide 2: Highlights

    Highlights  Good growth in profits and margin  9% dividend increase  Increasing market activity in 2011  £4.7bn bid pipeline  Major contract wins to date of £1.1bn  11 acquisitions completed to date for £194m  Indian operations continue to thrive  Poland implementation ahead of plan Well pos

  3. Slide 3: Financial results

    Financial results Gordon Hurst Group Finance Director

  4. Slide 4: Financial results – revenue

    Financial results – revenue Comparative growth 3% 5 year H1 compound growth 11% 1/2 Year 845 2006 Full Year 1,739 985 2007 2,073 1,182 2008 2,441 1,311 2009 2,687 1,361 2010 2,744 1,400 2011 0 500 1,000 1,500 2,000 2,500 3,000 £m

  5. Slide 5: Financial results – revenue by market

    Financial results – revenue by market Private sector 50% (2010: 50%) Public sector 50% (2010: 50%) Local government 19% (20%) Central government 9% (9%) Education 12% (15%) Health 5% (4%) Transport 2% (2%) Police 3% (-) Life & pensions 19% (18%) Insurance 5% (7%) Financial services 6% (5%) Other cor

  6. Slide 6: Financial results - half year revenue growth

    Financial results - half year revenue growth £m 6 months to £m 6 months to £m 2008 Growth 30 June 2011 30£m 2007 June 2010 £m 2008 Growth Turnover 1400 1361 3% 2011 acquisitions (21) - (2%) 2010 acquisitions 2001 (113) (36) - 2003 2004 (8%) Disposals Growth excl. acquisitions [] 1266 [] 1361 [ ]% (7

  7. Slide 7: Financial results - underlying profit before tax

    Financial results - underlying profit before tax* Comparative growth 7% 5 year H1 compound growth 15% 1/2 Year 88.3 2006 200.1 Full Year 103.8 2007 238.4 120.2 2008 277.2 141.7 2009 325.1 163.1 2010 364.2 174.0 2011 0 100 200 300 400 £m * excluding intangible amortisation, acquisition expenses and n

  8. Slide 8: Financial results – underlying operating profit

    Financial results – underlying operating profit* Comparative growth 8% 5 year H1 compound growth 14% 1/2 Year 99.1 2006 225.1 Full Year 118.9 2007 271.3 140.6 2008 320.9 159.6 2009 357.7 178.4 2010 395.1 193.0 2011 0 100 200 300 400 £m * excluding intangible amortisation, acquisition expenses and no

  9. Slide 9: Financial results – underlying operating margin

    Financial results – underlying half year operating margin Full year 15 Half year 14.4 14 13.2 13.3 13.0 13.1 13.8 13 13.1 12 12.2 12.1 11.9 11.7 11 10 2006 2007 2008 2009 2010

  10. Slide 10: Financial results – underlying earnings per share

    Financial results – underlying earnings per share* Comparative growth 12% 5 year H1 compound growth 17% 9.96 1/2 Year 2006 23.10 Full Year 12.13 2007 28.10 14.46 2008 33.26 16.92 2009 38.75 19.60 2010 44.98 21.95 2011 0 10 20 30 40 50 Pence * excluding intangible amortisation, acquisition expenses a

  11. Slide 11: Financial results – dividends

    Financial results – dividends Comparative growth 9% 2.7 1/2 Year 2006 9.0 Full Year 4.0 2007 12.0* 4.8 2008 14.4 5.6 2009 16.8 6.6 2010 20.0 7.2 2011 0 5 10 15 20 Pence * excluding 25p special dividend

  12. Slide 12: Financial results – cash flow statement

    Financial results – cash flow statement £m 6 months to £m 6 months to 30 June 2011 30 June 2010 Cash flow from operating activities 180 216 Net interest paid (18) (15) Taxation paid (27) (23) Capital expenditure (38) (38) Free cash flow 97 140 Acquisitions and disposals (135) (104) Equity dividends

  13. Slide 13: Financial results – cash flow from operations

    Financial results – cash flow from operations Comparative H1 attrition 17% 5 year H1 compound growth 8% 122 1/2 Year 2006 279 Full Year 145 2007 334 174 2008 392 198 2009 437 216 2010 442 180 2011 0 100 200 300 400 500 £m exceptional additional pension contribution £10m (2008), £40m (2009)

  14. Slide 14: Financial results – working capital movement

    Financial results – working capital movement Analysis of reduced cash conversion: £m Service Birmingham 12 Ramesys (Building Schools for the Future) 6 National Strategies 11 Other 4 Movement in receivables & payables 33

  15. Slide 15: Financial results – half year capex as % of turnover

    Financial results – half year capex as % of turnover 7 6 5 % 4 3.9% 3 3.2% 2.8% 2.8% 2.8% 2.7% 2 1 0 2006 2007 2008 2009 2010 2011

  16. Slide 16: Financial results – % net return on capital

    Financial results – % net return on capital (debt plus equity) – 12 months to 30 June 2011 24 Actual 20.0 20.2 20.2 18.6 18.8 WACC 20 17.9 % return 16 12 8 7.8 8.1 8.2 7.9 7.8 7.8 4 2006 2007 2008 2009 2010 2011 2006 2007 2008 2009 2010 2011 PBIT (normalised) 204 245 293 340 377 410 Avg capital (£m)

  17. Slide 17: Financial results – balance sheet gearing

    Financial results – balance sheet gearing £m £m £m 30 2008 June 2011 3030 June £m 2007 2007 June (£m) 2010 Net debt † Bond debt 934 834 (Cash in hand) / overdraft facilities drawn 75 (112) Loan notes/leases 4 4 Total net debt 1013 726 Interest cover 14.6x 12.5x Net debt to EBITDA 2.1 1.5 † Underlyin

  18. Slide 18: Financial results – debt profile

    Financial results – debt profile 30 June 2011 debt profile:  £934m of private placement bond debt with maturities from 2012 to 2020 46:54 fixed/floating mix  £123m matures between June 2012 and August 2015  £425m revolving credit facility maturing in Dec 2015  Net overdraft at 30 June 2011 of £7

  19. Slide 19: Generating growth: organic & acquisitions

    Generating growth: organic & acquisitions Paul Pindar Chief Executive

  20. Slide 20: Generating organic growth – major contracts

    Generating organic growth – major contracts Contract Value (£m) Duration Type Teachers’ Pension Scheme 80 7 years Extension MetLife 149 10 years New & extension Zurich 570 15 +11 years New & extension DVLA 100 5 years New Lambeth Council 60 10 years New & extension 7 contracts £10m - £50m Aggregate

  21. Slide 21: Generating organic growth - Zurich Life

    Generating organic growth - Zurich Life £570m over 15 years  Providing customer service, policy administration and claims activity for Zurich’s life business: – £220m/11 year extension to deliver operational services for UK life business – £350m/15 year new work to support development of European a

  22. Slide 22: Generating organic growth – DVLA

    Generating organic growth – DVLA £100m over 5 years + 2 year option  Provide a national Vehicle Excise Duty (VED) service that includes provision (at DVLA’s option) for a Continuous Insurance Enforcement (CIE) service  Manage enforcement notifications, vehicle removals and disposal of unclaimed ve

  23. Slide 23: Generating organic growth - Lambeth Council

    Generating organic growth - Lambeth Council £60m over 10 years + 5 year option  Extension to existing revenues collection contract + expansion of services in new collaborative partnership contract  Deliver range of additional services: call centre operations, ICT support services, benefits resilie

  24. Slide 24: Generating organic growth – bid activity

    Generating organic growth – bid activity %  Bid pipeline of £4.7bn comprising 40 30 bids (Feb 2011: £4.7bn, 30 Life & bids)* pensions  Win rate 1:2 30  Average contract length in bid pipeline – 9 years  Prospect and suspect lists buoyant 20 Other Defence Local government  Increased resources in

  25. Slide 25: Existing major contracts due for rebid

    Existing major contracts due for rebid Year Contract Original value per annum (£m)* 2011 None 2012 TV Licensing 50 CRB 40 2013 None 2014 None 2015 None Criteria: more than 1% of 2010 turnover *Revenues based on original contract value National Strategies programme ended in March 2011 & will not be r

  26. Slide 26: Fuelling growth through acquisitions – 2011

    Fuelling growth through acquisitions – 2011 acquisitions to date Capabilities Acquisition Value (£m) Customer services capacity & Ventura 65 technology CCT 15 IT services Technophobia 6 Beat Systems (police) 8 (+4) Software services Talis 19 (+3) Document management Right Document Solutions 30 (+10)

  27. Slide 27: Generating growth through acquisitions

    Generating growth through acquisitions  Acquisitions play an integral role in Capita’s business model: – Provide platforms for growth – Generate further shareholder value Customer  Clear criteria: 45 service – Provide footprint into new market 40 % – Strengthen existing capability 35 – Extend mark

  28. Slide 28: Establishing a position for growth in new markets: Police market

    Establishing a position for growth in new markets: Police market  2010: Entered market via acquisition of SunGard Public Sector Holdings  Supplier of ICT, blue light radio network services, communication systems to emergency services, central and local government  April 2011: Acquisition of Triba

  29. Slide 29: Creating scale in a new market: Business travel

    Creating scale in a new market: Business travel 2011: 2011: SANTANDER CONTRACT WIN Capita Business Travel Secured contract to deliver is one of the 5 largest 2008: full travel management business travel ACQUISITION OF service for Santander administration HARRY WEEKS TRAVEL companies in the UK, Acqui

  30. Slide 30: Enhancing our client proposition: Document management

    Enhancing our client proposition: Document management  Acquired leading provider of managed print services, Right Document Solutions, in April 2011  Good strategic fit with Capita's existing design, bulk print and document management capabilities  Clients with multi-office, multi-machine requirem

  31. Slide 31: Extending market position: Asset services

    Extending market position: Asset services Servicing business shows 2011: 35% revenue growth year Today, Capita Asset on year and retains highest Services business is European Servicer Rating Europe’s largest, independent, third- (Fitch, Standard & Poors) party commercial mortgage servicer 2009: ACQU

  32. Slide 32: Increasing capacity & reach: Contact centres

    Increasing capacity & reach: Contact centres Customer contact centre services  May 2011: acquired Call Centre Technology Limited, provider of voice telephony, applications & services for customer contact centres  July 2011: acquired Ventura, customer services management arm of Next plc with partic

  33. Slide 33: Fuelling future growth

    Fuelling future growth Maggi Bell Business Development Director

  34. Slide 34: Fuelling future growth – UK BPO market

    Fuelling future growth – UK BPO market Outsourced and potential UK BPO market  Addressable market - £117bn* p.a. £7.8bn currently  Total UK BPO market 2010 - outsourced £7.8bn* p.a. (2009: £7.5bn** p.a.)  Increase amount Capita can address  Expand the total market available Enormous potential fo

  35. Slide 35: Investing in creating addressable opportunity

    Fuelling future growth: Investing in creating addressable opportunity 1. 2. Expanding Developing capability in new solutions to existing markets meet customer requirements 5. Entering European UK Market markets £117bn 4. 3. Acquiring Creating new capability larger scale & new market BPO presence pro

  36. Slide 36: Growing our traditional markets - Local government

    Fuelling future growth: Growing our traditional markets - Local government Collaborative partnerships Lambeth • Guaranteed savings • Collaborative partnership - potential to increase • Revenue collection scope up to £300m by offering shared services • Demand reduction • Saving £10m/10 years • Improv

  37. Slide 37: Fuelling future growth – enhancing solutions

    Fuelling future growth – enhancing solutions Client data Increased revenue Targeted generation Industry data Analytics enforcement = Lower cost of Field force data delivery Stakeholder Increased customer consultation Targeted satisfaction and Customer Demographic data centric design and tailored = r

  38. Slide 38: Creating large scale BPO propositions – Central government

    Fuelling future growth: Creating large scale BPO propositions – Central government Focus on developing partnership models & delivery structures: Significant • JV’s/mutuals opportunities • SMEs forecast • 3rd sector to come to market in H2 2011 & H1 October 2010: 2012 £6bn savings p.a. required Exten

  39. Slide 39: Fuelling future growth: Innovative partnership structures

    Fuelling future growth: Innovative partnership structures • Standalone, public/private JV • JV with Salford City Council and • Like a mutual with ownership of Morrisons running costs, transparency & • 150 jobs created control of outcomes • £7.2m investment in IT/training and • Flexibility to add ser

  40. Slide 40: Harnessing expertise from all sectors

    Fuelling future growth: Harnessing expertise from all sectors • Administration of grants to help low income families gain access to a pc/internet • Worked with 11,000 stakeholder organisations including education, community, volunteer & faith groups Becta Home Access Grants • Flexible model to engag

  41. Slide 41: Retail financial services & banking - acquiring new capability

    Fuelling future growth: Retail financial services & banking - acquiring new capability  Large scale BPO, not traditional solution  Propensity to buy large volume, highly flexible customer service contracts  Ventura brings expertise, low cost operating model & excellent track record +  Capita bri

  42. Slide 42: Fuelling future growth: Entering the European market

    Fuelling future growth: Entering the European market Life & pensions market  Very buoyant Currently outsourced Continental  Significant engagement in European market Europe with current & new clients Capita Total UK 7 countries = 80% of  Netherlands – particular traction market volume/spend  Rec

  43. Slide 43: Building delivery capability for Europe

    Fuelling future growth: Building delivery capability for Europe  Signed agreement to lease a 500 seat shared services centre in Krakow city centre  Phase 1 expected to go live in Q4 2011, delivering services to existing clients  Fully operational from early 2012  Situated beside economic and lan

  44. Slide 44: Fuelling future growth: Investment in people

    Fuelling future growth: Investment in people Existing New Business Development Sales Market Solutions & +5 + Directors Development +4 Commercial Directors 25% Teams Local Financial Central L&P Retail Govt & Health Defence L&P (UK) Services Police Govt (Mutuals) Banking Education (Europe)

  45. Slide 45: Outlook

    Outlook Paul Pindar Chief Executive

  46. Slide 46: Outlook – ingredients for continued growth

    Outlook – ingredients for continued growth  Market leading position in the UK with diverse, high quality client base  Solid trading across the Group, positioned well for upturn  Renewed strong demand for outsourcing in all our target markets  Record bid pipeline and high level of prospects  Exp

  47. Slide 47: Results for the six months ended 30 June 2011

    Results for the six months ended 30 June 2011

Capita — H1 2011 Earnings Presentation on 6ix