REG-Capita PLC: Pre-close trading update

CapitaAnnouncement

13/12/2022 07:15

Capita plc

13 December 2022

Pre-close trading update

Capita plc (Capita) continues to perform well, with further revenue growth and
a stronger balance sheet

Summary
* Capita has delivered adjusted revenue(1) growth of 2% in the 11 months to 30
November 2022 in line with full year guidance: * Consistent performance in
Capita Public Service;
* Improved revenue trajectory compared with 2021 in Capita Experience;
* Capita Portfolio growth as businesses continue to recover from Covid-19.

* A stronger balance sheet: * Disposal proceeds of £462m received to date in
2022: * Completion of disposals of the Property pillar and Pay360 for a
combined £239m in gross cash proceeds;
* Agreed sale of Capita Translation and Interpreting (‘CTI’).

* Total of £221m of debt maturities now repaid in 2022;
* Significant reduction in FY 2022 net debt; very low level of financial net
debt expected on completion of remaining disposals.
Jon Lewis, Chief Executive Officer, said:

“I am pleased with the progress we have continued to make across Capita in
the second half of the year.

“We are building on the platform we created, performing well and delivering
further revenue growth, while continuing to strengthen the balance sheet.

“We have maintained our consistently good client service delivery, reflected
in a rise in our already strong customer net promoter score. We have secured
important contract renewals and new work.

“Proceeds from our ongoing disposal programme have helped us further reduce
debt; by the middle of 2023, we expect to have completed the disposal of our
Portfolio businesses resulting in a very low level of financial net debt.”

Trading

Adjusted group revenue(1) for the 11 months to 30 November 2022 grew 2%.

Capita Public Service adjusted revenue(1) increased by 2% in the period in
line with expectations. This has been delivered mainly by the full year impact
of the Royal Navy training contract as well as revenue growth in Justice,
Central Government and Transport, offsetting previously announced Local
Government contract exits. In the second half of the year we have secured a
three-year extension to our PCSE contract for £94m and a two-year extension
worth up to £57m for IT and back office services for Barnet council.

Capita Experience has seen adjusted revenue(1) stabilise through the year and
is flat in the period, compared with a 9% decline in 2021 across the same
period. The impact of significant prior year contract losses and the disposal
of the fast-growing Pay360 business have started to be offset by positive
revenue contributions in particular from new client wins of Scottish Power,
Irish Water and Trade Republic. In the second half we have renewed a contract
with a UK high street retailer with a total contract value of £35m.

Capita Portfolio has seen good growth in its Travel and Enforcement businesses
as well as FERA – reflecting business growth and Covid-19 recovery. Adjusted
revenue(1) increased by 14% in the period.

Our contract delivery and operational performance has remained consistently
good across the year and group customer Net Promoter Score (‘NPS’) has
increased by six points as a result. Specific achievements across 2022 include
strong performance in the Royal Navy training contract (generating additional
revenue opportunities such as the Future Submarine School) and accelerated
funding applications with the Department for Education for 38,000 applicants
on the Turing Scheme. Within the Experience business, we have embedded a suite
of technologies such as Assisted Customer Conversations (‘ACC’) on a
number of clients which has improved both client and end customer
satisfaction.

Across the year, colleague turnover has reduced as a result of significant
management focus and employee NPS has improved by 15 points compared with the
2021 score.

Net debt and balance sheet

The final steps of our Portfolio disposal programme are progressing well. We
have now completed the Pay360 disposal and announced the disposal of the CTI
business, part of our Business Solutions pillar. We have launched processes on
the majority of the remaining assets and expect to have completed the disposal
of our Portfolio businesses in H1 2023, as expected.

As a result we expect the balance sheet to be in a strong position at 31
December 2022 and to have a very low level of financial net debt(2) at 30 June
2023.

Our post-IFRS 16 net debt(3) is also expected to continue to decrease as we
reduce our property leases. We are targeting further property footprint
reductions over the next year as we continue to establish our ‘virtual
first’ working model, which has successfully delivered good client service
whilst creating job opportunities for our colleagues away from our legacy
physical locations.

As part of the disposal process we have also accelerated scheduled pension
deficit payments. This will further strengthen the pension fund’s position
ahead of the next triennial valuation due as at 31 March 2023.

Full Year Results

Full Year results announcement is planned for 2 March 2023.

Notes

1 Like-for-like adjusted revenue, adjusted for disposals and businesses held
for sale as at 30 November 2022.  Since 30 June 2022, this excludes results
from the Property pillar disposals, including Optima, Pay360 and our
Translation business.

2 Pre-IFRS 16 net debt at 30 June 2022 was £289.3m.

3 Post-IFRS 16 net debt at 30 June 2022 was £710.4m.

For further information:

Capita                               

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

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

LEI no. CMIGEWPLHL4M7ZV0IZ88.



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