Results for the year ended 31 December 2013 Delivering sustainable growth Full year results presentation 27 February 2014
Agenda Introduction Paul Pindar Chief Executive Financial results Gordon Hurst Group Finance Director Andy Parker Positioning Capita for continued growth Deputy Chief Executive Major sales update Maggi Bell Group Business Development Director Andy Parker Outlook Delivering sustainable growth 2
Key highlights � £3.3bn of major new contracts secured including largest win by annual value � Delivered full year organic growth of 8% � Pipeline swiftly replenished, £5.5bn as at February 2014 � Strong financial performance, profit before tax and earnings up 14% � Total dividends up 13% � Cash conversion of 106% � £271m spent on 13 acquisitions* � Swift resolution of two underperforming areas within our Insurance & Benefits division � Smooth transition to new CEO; strongest ever team � Excellent start to 2014: 5 contracts worth £588m secured � Strongly positioned for future growth High degree of confidence for 2014 * As announced previously, excluding Axelos, Entrust and Fire Service College 3
Financial results Gordon Hurst Group Finance Director
Financial results – underlying revenue Annual growth 15% 5 year compound growth 10% 2008 2,441 2009 2,687 2010 2,744 ½ year 2011 Full year 2,930 2012 3,352 2013 3,851* 0 1,000 2,000 3,000 4,000 5,000 £m Continued revenue growth * Revenue excluding Insurance Distribution and SIP businesses of £45m 5
Financial results – underlying revenue by market Private sector 52% (half year: 52%) Public sector 48% (half year: 48%) Other private sector 21% (19%) Local government 16% (17%) Life and pensions 13% (15%) Education 10% (8%) Central government 10% (11%) Retail, telecoms, utilities 8% (7%) Financial services 7% (8%) Health 5% (5%) Justice and emergency services 4% (4%) Insurance 3% (3%) Defence 3% (3%) Diverse market spread 2013 year end (half year) 6
Financial results – underlying revenue growth £m 2013 £m 2012 Growth Underlying revenue 3,851 3,352 14.9% Insurance Distribution and SIP business 45 - 1.3% Total revenue including Insurance Distribution 3,896 3,352 16.2% and SIP business 2012 acquisitions (117) - (3.4)% 2013 acquisitions (167) - (5.0)% Total organic revenue growth excluding 3,612 3,352 7.8 % acquisitions Insurance Distribution and SIP business (45) (69) Organic revenue growth on continuing 3,567 3,283 8.7% business Strong organic growth 7
Financial results – underlying operating profit* Annual growth 11% 5 year compound growth 11% 2008 311.7 2009 352.4 2010 386.4 ½ year 2011 Full year 417.0 2012 466.7 2013 ** 516.9 0 100 200 300 400 500 600 £m Continued increasing profitability *Adjusted for new pension standard IAS 19 (R). Excludes non-underlying items which include: intangible amortisation, acquisition expenses, net contingent consideration movements, impairments, non-cash impact of mark to market finance costs. 8 **The 2013 operating profit of £516.9m excludes the trading operating loss of the Insurance Distribution and SIP businesses of £14.4m.
Financial results – underlying profit before tax* Annual growth 14% 5 year compound growth 12% 2008 269.1 2009 321.7 2010 355.7 ½ year 2011 Full year 376.6 2012 417.0 2013 475.0** 0 100 200 300 400 500 £m Continued increasing profitability *Adjusted for new pension standard IAS 19 (R). Excludes non-underlying items which include: intangible amortisation, acquisition expenses, net contingent consideration movements, impairments, non-cash impact of mark to market finance costs. **The 2013 underlying profit before tax of £475.0m excludes the trading loss before tax of the Insurance Distribution and SIP businesses of £14.4m. 9
Financial results – underlying operating margin* Annual decrease 50 bps Operating margin 15.0 Organic growth 15.0 12.0 14.2 14.1 13.9 14.0 10.0 8.0 13.1 Organic growth % Operating margin % 13.4** 13.0 5.0 12.8 5.0 3.0 12.0 - 11.0 (5.0) (5.0) (7.0) 10.0 (10.0) 2008 2009 2010 2011 2012 2013 12.5 – 13.5% range for foreseeable future *Adjusted for new pension standard IAS19 (R). Excludes non-underlying items which include: intangible amortisation, acquisition expenses, net contingent consideration movements, impairments, non-cash impact of mark to market finance costs **The 2013 operating margin of 13.4% excludes the Insurance Distribution and SIP businesses, including them the operating margin is 12.9%. 10
Financial results – underlying earnings per share* Annual growth 14% 5 year compound growth 13% 2008 32.3 2009 38.3 2010 43.9 ½ year 2011 Full year 47.4 2012 52.1 2013 ** 59.4 0 10 20 30 40 50 60 70 pence Continued growth in earnings *Adjusted for new pension standard IAS19 (R). Excludes non-underlying items which include: intangible amortisation, acquisition expenses, net contingent consideration movements, impairments, non-cash impact of mark to market finance costs **The 2013 number excludes the Insurance Distribution and SIP businesses; included underlying earnings per share would be 57.6p 11
Financial results – dividends Annual growth 13% 5 year compound growth 13% Dividend cover* 2.24x Dividend yield 2.4% 2008 14.4 2009 16.8 2010 20.0 ½ year 2011 Full year 21.4 2012 23.5 2013 26.5 0 5 10 15 20 25 30 pence Dividend growth broadly in line with earnings growth *Adjusted for new pension standard IAS 19 (R). Dividend cover is calculated using underlying earnings per share excluding the Insurance Distribution and SIP businesses 12
Financial results – cash flow statement £m 2013 £m 2012 Cash flow from operations before business disposal/planned 515 546 closure* Net interest paid (37) (46) Taxation paid (53) (62) Capital expenditure (100) (144) Free cash flow before business disposal/planned closure 312 307 Free cash flow of Insurance Distribution and SIP businesses (9) - Free cash flow after business disposal/planned closure 303 307 Acquisition costs (including debt paid) (232) (172) Purchase of public sector subsidiary partnerships (48) - Contingent consideration (14) (12) Cash disposed with business (6) - Equity dividends paid (138) (159) Share option proceeds/share issue 17 282 Net debt issued/(repaid) 2 (20) Other financing (11) (2) (Decrease)/increase in cash in the period (148) 245 Strong operational cash flow *Adjusted for new pension standard IAS19 (R) 13
Financial results – cash flow from operating activities £m 2013 £m 2012 Operating profit before business disposal/planned closure* 517 467 Depreciation 73 78 Share based payment 11 9 Pensions 2 (7) Movements in provisions (12) (18) Movements in working capital (50) (9) Cash flow from operations 546 515 Operating cash conversion before business disposal/ 106% 110% planned closure Confident of maintaining annual cash conversion of around 100% *Adjusted for IAS19 (R). Excludes non-underlying items being: intangible amortisation, acquisition expenses, net contingent consideration movements, impairments, non-cash impact of mark to market finance costs 14
Financial results – capital expenditure as a % of turnover 7 6 5 4 % 3.7 3.6 3.5 3.5 3 2.9 2.5 2 1 0 2008 2009 2010 2011 2012 2013 Controlled capital expenditure 15
Financial results – underlying net return on capital* 24 Actual 20 WACC 20.3 19.7 19.5 16 % return 16.1 15.8 15.5 12 8 8.2 7.9 7.7 7.7 7.5 7.0 4 2008 2009 2010 2011 2012 2013 2008 2009 2010 2011 2012 2013 Operating profit 312 352 386 417 467 517 (£m) Avg capital (£m) 1,155 1,271 1,491 1,976 2,348 2,701 Tax (%) 27.0 26.8 24.5 23.5 20.5 19.0 Maintaining healthy returns *Adjusted for new pension standard IAS 19 (R). Excludes non-underlying items which include: intangible amortisation, acquisition expenses, net contingent consideration movements, impairments, non-cash impact of mark to market finance costs and excludes the Insurance Distribution and SIP businesses for 2013. 16
Financial results – post tax economic profit* 5 year compound growth 9% 210 211 207 190 170 176 171 £m 150 158 130 Economic profit 133 110 90 2008 2009 2010 2011 2012 2013 2008 2009 2010 2011 2012 2013 PBIT 312 352 386 417 467 517 Average capital 1,155 1,271 1,491 1,976 2,348 2,701 Tax (%) 27.0 26.8 24.5 23.5 20.5 19.0 WACC (%) 8.2 7.9 7.7 7.5 7.0 7.7 95 100 115 148 Capital charge (£m) 164 208 Tax (£m) 84 94 95 98 96 98 *Adjusted for new pension standard IAS 19 (R). Excludes non-underlying items being: intangible amortisation, acquisition expenses, net contingent consideration movements, impairments, non-cash impact 17 of mark to market finance costs and excludes the Insurance Distribution and SIP businesses for 2013
Financial results – balance sheet gearing £m 2013 £m 2012 Net debt Bond debt † 1,134 1,148 Net bank facilities drawn - - Cash in bank (158) (307) Term debt 200 185 Other 27 3 Total underlying net debt 1,203 1,030 Interest cover* 12.3x 9.4x Net debt to EBITDA* 2.02 1.91 At lower end of our 2.0x – 2.5x EBITDA target range † Underlying net debt after impact of currency and interest swaps * Underlying EBITDA adjusted for IAS 19(R) excluding Insurance Distribution and SIP businesses for 2013 18
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