- 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).
|Year ended 31 December
|Financial highlights - continuing operations
|Profit/(loss) before tax
|Earnings/(loss) per share
|Total dividend per share
|Free cash flow
The following table sets out the main differences between reported and underlying profit for 2017
|2017 reported operating loss bridge to underlying operating profit
|Reported operating loss
|Impairment of goodwill
|Impairment of other non-current assets
|Impairment of life and pension assets
|Claims and litigation provisions
|Amortisation and impairment of acquired intangibles
|Underlying operating profit
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.
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
View the full results release