Capita has performed very strongly in 2006.
We have secured record levels of new business,
thereby strengthening our position as the UK’s market leader in providing business process outsourcing (BPO) services to the public and private sectors.

Our performance in 2006
In the year ended 31 December 2006, turnover
increased by 21% to £1,739m. Operating profit before
amortisation and after share based payment charge rose by 23% to £225.1m and profit before taxation and amortisation and after share based payment charge increased by 18% to £200.1m. Earnings per share before amortisation and after share based payment charge grew by 24%to 23.1p. Operating cash flow rose by 20% to £279m.

The Board is recommending a final dividend of 6.3p
per ordinary share making a total of 9.0p for the year,
a 29% increase on 2005. We returned a further £245m to shareholders through purchasing our own shares. In total, including the proposed final dividend, we will be returning £301m (2005: £96m) to shareholders in respect of the 2006 financial year.

Board changes
Rod Aldridge, Capita’s founder and Chairman, retired
from the Board on 31 July 2006. Rod played a major
role in building and developing the Group for over
20 years and the Board and employees across Capita wish him every success with his new interests. A strong and dedicated Board and management team, focused on the needs of all our stakeholders, continues to lead and profitably grow the Group. The Board was further strengthened in the year with the appointments of Simon Pilling as an Executive Director on 1 August 2006, having served on Capita’s Divisional Executive Board, and Bill Grimsey as Non-Executive Director with effect from 9 October 2006.

Valuing our people
The value that we have created for our stakeholders
in Capita is a direct result of the competence and
commitment that our employees give to the Group. The culture within Capita is a key differentiator from our competition. We have a stable and consistent management team, a low turnover of senior people and a tremendous spirit throughout the Group. I would like to thank everyone for the role they play in Capita’s success. I also welcome the employees that have joined us since the beginning of 2006. We now employ 27,800 people in the UK, Ireland, the Channel Islands and India.

Future prospects
Capita enters 2007 with confidence. Our markets
continue to generate opportunity, our sales prospects
are exciting and our operational performance is
consistently strong. Our successes in 2006 and progress in early 2007 mean that the ingredients for a successful year are already in place. The Board anticipates delivering strong growth in 2007.

Eric Walters
Non-Executive Chairman