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 £355m.
Full year results to 31 December 2021 were published on 10th March and we were delighted to have Stuart Morgan, Director of Investor Relations present and talk about the company’s prospects. A recording of the webinar is available here.
Stuart opened the presentation with the message that the transformation started in 2018 was now complete despite the challenges of the Covid backdrop. The resulting business is now clearly separated into two business units: Public Service and Customer Experience. The Public Service division is further ahead in its transformation and the Experience division is probably 18 months behind but has plenty of opportunity. The business model in place should also create opportunities for further margin progression. A number of business units have been sold and over £700m of proceeds have been received ahead of expectations providing the required liquidity for the group and improving the balance sheet. The pension fund is also now in accounting surplus and there will be further disposals during the current year and depending on the pace of disposals debt will be materially lower at the end of the year.
In terms of the 2021 results for the first time in 6 years revenues grew, albeit not by very much, but more encouragingly the value of contracts won increased by 31%, the order book grew by £260m and the pipeline of potential new business now stands at £9.4bn. The goal of positive FCF is targeted in 2022 which would mark an impressive turnaround.
Whilst the transformation is complete there is still a lot of work to be done and there is now a platform in place to achieve this. Their two divisions operate in large markets growing at 5% and Capita enjoys market leading positions, being the number 1 supplier of software and IT to the UK government and the number 1 supplier in the customer experience market in the UK and Ireland. Capita also had good digital expertise and are more client focussed around appropriate market verticals.
Stuart then walked through the financial slides in more detail and highlighted a few points. Although it was only a small increase revenues grew for the first time…
