Half year results 2022 Capita | Capita

Half Year results in line with management expectations
Pipeline growth and organisational structure give confidence in future growth
Continuing strong operational delivery for our clients
Stronger balance sheet as we continue to make progress with disposals
Expected to continue revenue growth trend and deliver positive free cash flow in FY 2022

H1 2022 Financial outcome

Adjusted revenue1 increased by 0.6% to £1,480.1m (H1 2021: £1,471.9m) with growth in contractual and transactional business offset by prior year losses
Adjusted profit before tax1 increased by £35.9m to £37.0m (H1 2021: £1.1m) reflecting cost efficiencies and cessation of major restructuring spend
Reported profit before tax of £0.1m (H1 2021: £261.1m) reflecting business exits and Portfolio goodwill impairment
Positive free cash flow before business exits2 delivered; improving by £71.9m to £12.7m (H1 2021 outflow: £59.2m) underpinned by improvement in underlying cash generation and reduced pension deficit contributions
Net debt reduced by £169.4m to £710.4m (31 December 2021: £879.8m) reflecting positive free cash flow and proceeds from four disposals

Building our growth pipeline

Strong contract win performance driven by the Experience division, with Public Service division opportunities weighted to the second half
Total Contract Value won of £1,611m (H1 2021: £2,472m) impacted by Royal Navy win in H1 2021; Experience £808m, Public Service £571m, Portfolio £232m
In Year Revenue won of £686m (H1 2021: £686m); Experience £201m, Public Service £311m, Portfolio £174m
Unweighted pipeline increased to £14,354m (31 December 2021: £13,947m) with significant growth in Public Service and Portfolio divisions and good progress to replenish opportunities in Experience
Targeting new scopes of work and new clients: represents 26% of TCV won in the first half; and 64% of opportunities in the remainder of this year Strengthening the balance sheet
Proceeds received year to date of £223m, taking total receipts from the disposal programme to over £750m
AMT Sybex, Secure Solutions and Services, Speciality Insurance and Trustmarque
Agreed disposal of property businesses for £60m ◦ Three further processes currently in progress, including our Pay360 business unit, with all disposals expected to have been launched by the end of the year
RCF extended to 31 August 2024

Outlook

We are focused on delivering our expectations for FY 2022
Accelerated revenue growth in the second half of the year despite the uncertain macro environment, with positive momentum in all divisions, supported by a strong pipeline of opportunities
Continuing to strengthen the balance sheet through the disposal programme of non-core assets; all disposal processes launched by the year end
On track to deliver positive free cash flow before the impact of business exits for full year 2022
We continue to make material progress in our strategy to build a more focused, sustainable business for the long term

Jon Lewis, Chief Executive Officer, said:

"I am pleased with the progress we have continued to make across Capita so far this year. “Our performance has been in line with our expectations. We have increased adjusted revenue, profit and free cash flow; and further reduced debt and strengthened the balance sheet. “Operationally, we have remained strong, continuing to deliver successfully for our many clients in both the public and private sectors.

“As our reputation for delivery and digital transformation services increases, we have secured a series of important contract wins and renewals, as well as growing the amount of work won with new clients.

“We are well positioned for growth in the second half of the year and beyond; and our full-year commitments remain on track.

“All of this has been achieved against the ongoing backdrop of Covid-19 and increasing economic challenges; and I would like to thank all our colleagues for their continued hard work, commitment and professionalism."

Investor presentation:
A presentation for institutional investors and analysts hosted by Jon Lewis, CEO and Tim Weller, CFO, will be held at 09:00am UK time, Friday 5 August 2022. This will be held at Capita offices at 65 Gresham Street, London EC2V 7NQ. A live audio webcast will also be available (www.capita.com/investors) and will subsequently be available on demand. The presentation slides will be published on our website at 07:00am and a full transcript will be available the next working day.

Webcast link: https://webcast.openbriefing.com/capita0822/