2019 half-year results in line with our expectations
- Revenue1 £1,851.6m; profit before tax1 £126.1m
- Order intake £830m; order book £6,650.6m.
2019 full-year guidance maintained
- Profit before tax1 expected to be between £265m and £295m2
- On plan to deliver cumulative cost competitiveness savings of £175m by end 2019
- £525m Defence Fire & Rescue Project and £145m DWP PIP extension wins in Q3.
2020 targets reiterated
- Achieve double-digit margins1
- At least £200m of sustainable free cash flow3.
Capita's transformation is on track
- Second year of multi-year transformation
- Investment in people yielding benefits - reduced employee turnover and higher employee satisfaction
- Corporate governance strengthened, with two employee directors appointed to the Board
- Strengthened client relationships
- Further progress made on improving the performance of contracts
- Increased investment in growth, systems and digital capability
- Foundations for growth now in place.
Jon Lewis, Chief Executive Officer, said:
"Capita is now in the second year of a multi-year transformation and we remain on track to hit the targets we set in 2018.
"Having addressed the balance sheet and made disposals last year, we have continued to strengthen the business in 2019. We are beginning to see the benefits from: strengthening our functions, culture and governance; improving relationships with our clients; recruiting significant talent to key roles; and investing in people and new client propositions.
"We have made significant progress in a short period of time. There is still much work to do but the foundations we are laying now will put us in a position to succeed and grow. There is huge potential for our business as companies invest in digital transformation. With Capita’s credentials and client-base, the long-term opportunity for growth is significant."
Our financial outlook for Capita remains unchanged.
Capita is in the second year of a multi-year transformation and the successful delivery of this programme remains a key focus area for the Group. We continue to expect profit before tax1 to be between £265m and £295m and net finance costs to be in the region of £40m in 2019, before the adoption of IFRS 162. We expect our net debt to EBITDA ratio to be in the top half of our stated range of 1.0 times to 2.0 times before adoption of IFRS 16.
We are on track to deliver our 2020 targets of £175m cost savings, double-digit EBIT margins1 and at least £200m of sustainable annual free cash flow, before exceptional and restructuring charges, additional pension contributions and the adoption of IFRS 16.
Capita reports profits on an adjusted basis to aid understanding of business performance. In 2019, IFRS 16, which has a material impact, has been adopted. However, to aid comparison with the prior year, the primary adjusted measures used by the Board for evaluating performance are before the impact of IFRS 16.
|Six months ended 30 June 2019
|Financial highlights - continuing operations
|Profit before tax
|Earnings per share
|Free cash flow
The following table sets out the main differences between reported and adjusted profit for half-year 2019:
|Six months ended 30 June 2019
||Profit before tax
|Amortisation and impairment of acquired intangibles
|Impact of IFRS 16
1 Adjusted - refer to alternative performance measures in Appendix 1.
2 Before the adoption of IFRS 16, which is expected to result in a £26.0m to £28.0m increase in net finance costs and a £12.0m to £14.0m decrease in profit before tax in the full-year to 31 December 2019. Refer to note 21 to the condensed consolidated interim financial statements for details.
3 Before exceptional and restructuring charges, additional actuarial pension deficit contributions and the adoption of IFRS 16 (refer to Financial Review).
A presentation for institutional investors and analysts hosted by Jon Lewis, CEO, and Patrick Butcher, CFO, will be held today, starting at 09.30 UK time. There will be a live audio webcast of the presentation on our website and subsequently available on demand. A dial-in facility is also available. The presentation slides will be published on our web site at 10.00am and a full transcript will be available by midday tomorrow.