REG-Capita PLC: Capita plc first half in line with expectations

CapitaAnnouncement

29/06/2022 07:15

Capita plc

29 June 2022

MARKET UPDATE

Capita plc (Capita) first half in line with expectations and on track for the
full year

Trading performance

The Group’s first-half performance has been in line with expectations, with
further revenue growth, important contract renewals and wins, and ongoing
strengthening of the balance sheet. As noted at the full-year results, we
continue to expect further strong progress in the second half of the year in
revenue, profit and cash flow generation.

In the five months to 31 May 2022 the Public Service division grew by 2% as
previously high growth rates started to annualise, the Experience division
revenues reduced by 3%, showing an improving trend from 2021, and the
Portfolio division grew by 5% as businesses recovered from Covid-related
impacts. As a result we expect Group revenue growth at the half year of up to
1%.

We have won a number of significant contracts in the first half, including the
renewal of the BBC TV licencing contract (£456m), an extension of our PCSE
contract (£94m) and further work for the Northern Ireland Education Authority
(£51m). We also won a new contract with ScottishPower worth £63m over five
years. The Experience division has already seen particularly strong total
contract value performance this year. The pipeline for both divisions remains
strong, underpinning our ability to drive future sustainable revenue growth.

The Portfolio business is also benefiting from ongoing recovery after a slow
start to the year reflecting Covid variant-related constraints.

Our operational performance has been good, with consistent delivery across our
client base. Notably to date we have delivered on all of the key milestones
with the Royal Navy training contracts and have now started running the Royal
Navy’s Maritime Composite Training System and launched the Aviation Fire
Programme at the Fire Service College. We successfully went live on the
ScottishPower contract on 6(th) June.

We are targeting further cost savings and efficiencies as we begin to leverage
the benefits of our new operating model and more focused corporate structure.
In particular, our property costs continue to reduce, helped by our ‘virtual
first’ approach to office working.

Balance Sheet and non-core business disposal programme

We continue to execute on our plan to reduce debt through the disposal of
non-core businesses.

Since the beginning of 2022, we have launched three further processes and we
expect to have launched the disposal processes of all our remaining Portfolio
businesses by the end of the year.

This year we have completed the disposal of four businesses: Secure Solutions
and Services, AMT Sybex, Specialty Insurance, and Trustmarque. As a result, we
have received total proceeds of over £750m from previously announced
disposals, exceeding our £700m target, six months earlier than originally
announced.

Outlook

We expect the revenue growth in the first half of 2022 of up to 1%. With a
solid platform of secured revenue, a strong pipeline of contract opportunities
and markets driven by demand for cost-effective digital solutions, we remain
confident of delivering revenue growth in 2022.

As outlined during the 2021 full-year results, we expect profits in 2022 to be
significantly weighted to the second half, with a reduced EBITDA margin
reflecting the full-year impact of prior-year contract losses, structural
decline in our closed book Life & Pensions business, and operational changes
in the Army Recruitment contract.

We remain on track to deliver positive free cash flow in 2022. We continue to
expect a material reduction in net debt by the end of the year.

Jon Lewis, Capita Chief Executive Officer said:

“I am pleased with the progress we have made across Capita since the start
of the year.

“Our operational performance remains strong, with impressive levels of
delivery across our client base; and we have secured important contract
renewals and new work.

“Our financial performance has remained in line with our expectations, as we
have maintained revenue growth in 2022, while continuing to reduce debt and
strengthen the balance sheet.

“We continue to expect further strong progress in the second half of the
year in revenue, profit and cash flow generation.”

For more information, please contact:

Investor enquiries
Stuart Morgan
Director of Investor Relations
Tel: 07989 665484
Email: IRteam@capita.co.uk

Media enquiries
Capita external communications
Tel: 0207 654 2399
Email: media@capita.co.uk 

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