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

Creating a simpler business well positioned for the future.

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."