REG-Capita PLC: Market Update

CapitaAnnouncement

21/06/2021 07:05

This statement includes inside information

Capita plc

21 June 2021

MARKET UPDATE

Capita plc (Capita) remains on track to deliver growth and strengthen its
balance sheet

Trading

We have seen an improving trend in our trading performance in the first half
of the year, in line with our expectations.

Capita remains on track to deliver revenue growth in 2021, for the first time
in six years, despite the ongoing impact of COVID lockdowns, in particular in
its Specialist Services division.

We have won a number of significant contracts this year, including the Royal
Navy Training contract through our Government Services and People Solutions
divisions (Total Contract Value £925m), the extension of a European telecoms
client (TCV £528m) and an extension for Tesco Mobile (TCV £58m), both in
Customer Management.

As a result, we currently expect Half Year adjusted revenue to be flat on
prior year adjusted revenue.

Our operational performance has been good, with a positive start to our Royal
Navy Training contract and successful ‘go-lives’ for Irish Water in April
and on GP Payments and Pensions in May.

We continue to make good progress with our cost saving programme which,
together with an improving mix from new contract wins and stronger operational
performance, will see the initial benefits of operating leverage at the half
year, as expected.

Cash collection has improved in line with underlying trading performance and
benefited from better than anticipated customer payments. Liquidity remains
strong at £689m on 17 June, ahead of the scheduled repayment of c.£160m of
private placement notes in July.

Non-core disposals

We continue to deliver on our plans, set out in March, to strengthen the
balance sheet over the course of 2021.

We are making good progress with our planned disposals, and we remain on track
to realise combined proceeds of at least £200m in 2021 (in addition to the
£299m initial payment received from the sale of ESS in February).

The first of these, the sale of Axelos for an enterprise value of £380m,
which will generate total cash proceeds to Capita of £184m, was announced
this morning.

Preparation for the sale of other non-core businesses, which will be held in
our new division Capita Portfolio, is also progressing well. We will provide
further updates as appropriate.

Future Capita

We are well advanced in our plans to implement the next phase of our
transformation.

In August we will move to the new structure of two core divisions, Capita
Public Service and Capita Experience, and the third division holding our
non-core assets, Capita Portfolio.

Capita remains on track to deliver £50m of annualised cost savings from 2022
onwards, associated with this structure, as announced in March.

Our half year 2021 numbers will be reported under the current operating
structure, with Full Year 2021 being reported in the new structure.

Jon Lewis, Chief Executive Officer said:

“I’m pleased with the progress that we have made so far this year. We
remain on track to meet our priorities for 2021: to deliver revenue growth for
the first time in six years, improve operating cash flow, strengthen the
balance sheet, and implement our new organisational structure. Looking
forward, we are confident of delivering positive sustainable free cash flow in
2022”.

For further information:

Capita                               

Stuart Morgan, Investor Relations Director          T +44 (0) 7989 665
484

Capita press office                       
                             T +44 (0) 20 7654
2399

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