Capita is a consulting, transformation and digital services business listed on the premium segment of the London Stock Exchange. The company is a constituent of the FTSE All Share index and has a market capitalisation of approximately £225m.
Full year results to 31 December 2023 were published on 6 March 2024 and we were delighted to welcome new CEO Adolfo Hernandez and Deputy Director of Investor Relations Stephanie Little, to present the FY23 results and talk about the company’s prospects. A recording of the webinar is available here.
Adolfo joined earlier this year and has now been in the post for 9 weeks. He was previously at AWS as VP of Global Telecoms. He has 30 years’ experience in software and services at companies including IBM, Alcatel and Lucent and believes he has the skills and capabilities to unlock the huge value opportunity at Capita. Indeed, Adolfo describes his no.1 mission to unlock value for society, for customers and for employees and to get this to translate into stronger financial performance. The starting point, he admitted, is challenging but he is excited to take this on.
Looking at the financial performance for FY2023 the results delivered were in line with the trading update given in December 2023 but the company admitted that this performance was disappointing. They also commented that these results are “the results” and it’s not been a question of “kitchen sinking” these figures to make the recovery look better. In terms of top level highlights the £500m portfolio disposal programme was completed in January and the debt facility was extended until 2026. The triennial pension scheme valuation was agreed with the trustees which will mean that no further deficit contributions will be made from 2025 onwards. The first wave of £60m of cost savings is on track to be achieved in Q1 2024 and a further £100m of cost savings will be achieved by mid-2025.
The financial performance of the company reported in 2023 showed a modest improvement on the performance in 2022. On an adjusted basis Revenue rose 1.3% to £2642.1m, operating profit rose 36.5% to £106.5m, PBT rose 13.5% to £56.5m and EPS fell 34.6% to 1.7p. However, free cash flow deteriorated to an outflow of £115.5m, net debt (pre IFRS16) increased to £545.5m and net financial debt grew by 114.5% to £182.1m.
Within the divisions, Capita Public Services saw flat revenues and…
