Capita plc 2017 Full Year Results

Financial summary

As previously announced, Capita has early adopted IFRS 15, the new revenue recognition standard, and this report on our performance in 2017 is under the new standard.
Underlying revenue declined by (4.3)%. Underlying revenue fell on a like-for-like basis¹ by (0.6)% including (1.5)% organic decline.
Underlying profit before tax¹ increased by 43% to £383.0m (2016: £268.5m) and underlying profit before tax before significant new contracts and restructuring costs increased by 23% to £400.9m (2016: £325.7m), in line with expectations.
Reported loss before tax of £(513.1)m was impacted by £850.7m of specific non-underlying items, including £551.6m goodwill impairment and a number of other asset impairments and provisions. The events and circumstances leading to the goodwill impairment are summarised in the financial review overleaf.
There was a £445.4m gain on the disposal of the Capita Asset Services businesses, which has been treated as a discontinued operation and, as such, is not included in the below table.
Free cash flow from continuing operations before non-underlying expenses was £38.0m (2016: £397.3m). Free cash flow was constrained by the partial normalisation of cash management activity to avoid June and December peaks and a reduction of deferred income in the second half of the year.
Net debt at end December 2017 was £1,117.0m (2016: £1,778.8m).

Strategy and transformation plan

Today, Capita is separately publishing an update on its strategy and transformation plan, which includes the announcement of the launch of a rights issue to raise gross proceeds of £701m, which is fully underwritten by Citigroup Global Markets Limited and Goldman Sachs International.

Current trading

Capita continues to expect that its underlying pre-tax profits¹, before significant new contracts, restructuring costs and implementation costs of the strategy, will be between £270m and £300m for the year ending 31 December 2018. Trading in the first quarter was in line with our full year guidance.

¹ Refer to appendix for calculation of Alternative Performance Measures