Results for 2000
Results for the year ended 31st December 2000 show that the Group has enjoyed another record year. Turnover increased by 39% to GBP453 million and net profit before taxation and amortisation of goodwill increased by 41% to GBP51.2 million. Earnings per share before amortising goodwill advanced by 38% to 5.60p. Operating margins widened from 10.9% to 12% and the Group generated positive operating cashflow of GBP68.9 million during the period. In its 12 years as a public company, Capita has grown turnover at an annual compound rate of 47% and net profit before tax at 42%.
Current trading
The Board is delighted by current trading and at the end of the first quarter the Group is significantly ahead of the corresponding period in 2000. We are also encouraged by the level of major sales wins and the growth being achieved across the business.
Major contracts
Our major contract wins continue to be strong. In addition to the GBP700 million of new contracts secured in 2000, we announced in January the signing of a 10-year contract with Abbey National Plc worth GBP323 million to develop, manage and administer the systems development and core processing activities of its general insurance business. This contract started on 1st March and more than 500 employees have now transferred to Capita.
On 23rd March, we announced the conclusion of our discussions with Blackburn with Darwen Borough Council. When we confirmed our preferred bidder status in November 2000, it was expected that the initial partnership scope was worth GBP80 million over 10 years, but through our subsequent discussions with the authority, both the scope and the term of the contract have been extended. The contract is now worth GBP190 million over 15 years. We believe this to be the longest contract yet agreed across the local government market. The strategic partnership will deliver services including digital technology, human resources, financial services, revenues and benefits, property and administrative support for services including Education and Social Services.
Today I am pleased to announce further successes worth approximately GBP62 million. We have agreed an extension to our contract with NAAFI to provide financial and accounting services for a term of up to five years, a five year partnership with BAA as sole provider of all BAA’s IT resourcing requirements and a partnership with the London Borough of Haringey to provide strategic education management services and support.
Accordingly, our major new contract wins in the current year are some GBP500 million and over the past 15 months the Group has won major contracts worth some GBP1.2 billion. We continue to have an excellent bid list and I expect to be in a position to make further announcements before the half year results.
Organic growth
The organic growth across our businesses continues to be strong. We have set ourselves demanding internal growth targets for both business from existing and new clients and we are comfortably exceeding these in the first three months of 2001. The decision to increase our business development resources within the business during last year has proved to be timely.
Progress with acquisitions
The major acquisitions we made in 2000, Capita IRG and Capita Eastgate, are both performing strongly. These companies are providing a major springboard for the Group’s services into the private sector. Indeed, BAA with whom we have announced a major contract today, is one of Capita IRG’s largest clients. 30 clients of Capita IRG are now customers of other Capita services, particularly within the HR area, including the provision of payroll and pension administration services.
Our markets
Activity across both the public and private sectors is high. In the public sector, including local authorities, central government and the education sector, the requirement for our wide range of services and capabilities remains considerable. In the case of the private sector, particularly within financial services and insurance, the increasing pressures on these organisations to reduce cost and to improve services means that there are now excellent opportunities for the outsourcing of the services that we provide. The Group’s position in these markets as a leader and shaper of opportunities means that we are well positioned to benefit from the enormous changes taking place in the way that services are now being delivered. We estimate that our target public and private sector markets are potentially worth GBP30 billion per annum in the UK and the greatest competition continues to be the in-house option.
Prospects
I am positive about the outlook for the year as a whole and am confident that shareholders will be pleased with our performance for the year. The high forward visibility of our earnings means that just 16 weeks into the new year, we already anticipate revenue growth of 43% for the full year. This position and the new opportunities that are emerging for the Group give us considerable confidence that we are well positioned to continue our growth into the future.