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21 September 2017

Half year results for the 6 months to 30 June 2017

Creating a simpler business well positioned for the future.

Financial highlights - continuing operations

Underlying 20171

Underlying 20161

YOY change 

Reported 2017

Reported 2016

Reported YoY change

Revenue £2,066m £2,131m (3%) £2,127m £2,156m (1%)
Operating profit £228m £166m +38% £63m £87m (28%)
Profit before tax £195m £134m +46% £28m £37m (26%)
Earnings/(loss) per share 22.92p 16.12p +42% (0.11)p 4.66p (102%)
Interim dividend per share 11.1p 11.1p - 11.1p 11.1p -
Free cash flow £179m  £214m  (16%)  £182m  £199m (9%)

Highlights:

Strategic initiatives: re-positioning going to plan

  • Disposal of our Asset Services businesses for £888m to Link Group, expected to complete in Q4 2017
  • Completed disposal of transactional specialist recruitment businesses
  • Cost initiatives on track to realise around £57m savings by the end of 2018
  • Implemented new simplified market facing organisation structure. 

2017 H1 financial summary: trading broadly in line with expectations

  • Early adopted IFRS 15 from 1 January 2017 on a fully retrospective basis
  • Underlying revenue declined by 3%. Growth on a like for like basis1 was 1% including 0.5% organic decline
  • Underlying profit before tax1 up 46% to £195m (H1 2016: £134m)
  • Underlying earnings per share1 up 42% to 22.92p (H1 2016: 16.12p)
  • Maintained interim dividend of 11.1p (H1 2016: 11.1p)
  • Free cash flow before non-underlying items1 £179m (H1 2016: £214m) and after non-underlying items £182m (H1 2016: £199m)
  • Net debt at end June 2017 of £1,596m (H1 2016 £1,901m)
  • Reported profit before tax £28m (H1 2016: £37m)
  • Reported loss per share (0.11)p (H1 2016: 4.66p). 

Major sales: win rate improved in quiet market

  • £403m of major contract wins (H1 2016: £879m)
  • Major contract win rate 1 in 2 (2016: 1 in 3)
  • Bid pipeline £3.1bn (March 2017: £3.8bn), with a weighted average contract length of 5.5 years (March 2017: 7 years). Annual value of bids maintained. 

Outlook

  • Underlying pre-tax profits before significant new contracts and restructuring to rise modestly in the second half, compared to the first half of 2017
  • Leverage at the end of 2017 around the bottom of our 2.0 to 2.5 times range, prior to the impact of IFRS 15 and potential unwind of receivables financing
  • We remain confident that the actions we commenced last year are making Capita a simpler business, well positioned for the future under new leadership. 

(1) Refer to appendix 1 for calculation of Alternative Performance Measures. Capita Asset Services has been treated as a discontinued operation.

Nick Greatorex of Capita plc, commented:

“In the first half of 2017, we made good progress on executing the plans laid out at the end of last year to reposition the Group: we announced the sale of our Asset Services businesses, completed the disposal of our specialist recruitment business and commenced a number of cost initiatives. We remain confident that these actions are making Capita a simpler business, well positioned for the future under new leadership."

Analyst & investor presentation

Ian Powell Chairman and Nick Greatorex Interim CEO and Group Finance Director of Capita plc will host a presentation of our results in London at 08:30 UK time today.

There will also be a live video webcast and a telephone dial-in facility of the presentation on the day, at 08.30am UK time, with an on-demand version available on our website www.capita.com/investors later that day.

Please find the webcast link and dial-in details below:

Webcast link

http://www.investis-live.com/capita/594d0292e8adb21200ac6f59/hsre

To register for the webcast please paste the link above into your browser and follow the on-screen instructions.

Telephone dial-in

United Kingdom: 020 3059 8125
All other locations: + 44 20 3059 8125

Participant password: Capita - this must be quoted to the Operator in order for participants to gain access to the conference.

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