Half year results for the 6 months to 30 June 2017 Capita

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."