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 £500m.
Full year results to 31st December were published on 2nd March 2023 and we were delighted to have Helen Parris, Director of Investor Relations, and Stephanie Little, Investor Relations Manager, present the FY22 results and talk about the company’s prospects. A recording of the webinar is available here.
For those new to the story, Capita is a much simplified business now with just two core divisions (down from 10) in Public Service and Experience. Both enjoy strong market positions. The public service division is the no.1 supplier of software and IT services to the UK Government and the Experience division is the largest player in the UK customer experience market and is the no.5 player in Germany and Europe. The group employs 50,000 employees across 4 countries. The markets Capita operates in are large and have the potential to grow at c5% per annum. Digital expertise is helping the company manage the transition from Business Process Outsourcing (BPO) to Business Process Services (BPS). Another of the big changes under the leadership of CEO Jon Lewis is the transformation of the balance sheet to one which has seen net financial debt reduced to £84.9m at the end of December 2022 with Net debt/EBITDA at 0.5x.
Capita’s Public Service division serves the UK government in a number of niche areas and touches the lives of a large proportion of the population. By way of a few examples, it manages the ULEZ for Transport for London, recruits officers and soldiers for the British Army, manages the collection of council tax for a number of authorities and helps 50k students access the Disabled Students Allowance every year.
Capita’s Customer Experience division works across the Telecoms, Media & Technology, Financial Services, Retail and Energy & Utility sectors in the main and again delivers services to a large number of individuals. Within Telecoms they manage the customer care on behalf of one of the UK’s leading telecoms providers and with the financial services division they manage one of the largest pension businesses in the UK. They also manage a legacy closed book life and pension business which has proven to be a drag on profitability.
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