Capita Share Discussion Threads

[yellowstoneadvisory] 21/3/2024 06:56

Capita are holding a webinar for private investors today at 12.00pm. Meet new CEO Adolfo Hernandez, who along with Stephanie Little Deputy Director of IR will provide an update on performance following the publication of the FY23 results which were released on 6 March.

Register:

[sailorsam1] 20/3/2024 20:34

Agreed. Gone in heavy at avge of 18. Rekon this could pay back well. Risk is how the margins are structured on legacy deals and inflation covered off

[heatseek77] 20/3/2024 15:34

Cheers al101uk good summary set out below

What we know for 2025:

1. £30 million in pension contributions ends.
2. £60 million cost savings flows through.
3. £100 million of second wave flows through.
4. Legacy property leases will continue to reduce.

That's a £200 million improvement for the business without taking in to account any "potential positives" like improved margins & continued book building which would merely be the continuation of the current trend.

It also ignores the end of one off restructuring costs and the costs and write downs associated with selling parts of the business.

If you look at the operating margins, they increased from 3% to 4% last year and EBITDA improved from 7.8% to 8.1%.

These are adjusted numbers and exclude areas where the business has exited through a sale.

Revenue has declined in absolute terms by £200 million, but again if you adjust for businesses exited revenue is actually up 1.3% and was up last year by 1.7%.

Margins are improving, the business is growing and there are numerous one offs that will fall away over the next year or two.

I think the new CEO has spun the narative in a way that benefits him, he's reset expectations, but the trajectory has not changed and 2025 remains the pivotal year for Capita.

I don't think these results change my thesis in any way. I'd just hoped to see more incremental improvement this year than tyhe company actually achieved.

[heatseek77] 20/3/2024 14:27

David B totally agree... he does have the knowledge and drive 👍🏻

davidbennett20 Mar '24 - 10:13 - 13491 of 13494
0 4 0
Bookbroker

Well all I can say is that Adolfo has got a huge incentive to make sure that doesn’t happen… apart from investing £100k of his hard earned cash he also has options on 12m shares. If that’s not an incentive then I don’t know what is and he has the passion and knowledge to sort Capita out (once and for all)

[the imperialist] 20/3/2024 12:28

An excellent post al101uk.

[al101uk] 20/3/2024 12:23

What we know for 2025:

1. £30 million in pension contributions ends.
2. £60 million cost savings flows through.
3. £100 million of second wave flows through.
4. Legacy property leases will continue to reduce.

That's a £200 million improvement for the business without taking in to account any "potential positives" like improved margins & continued book building which would merely be the continuation of the current trend.

It also ignores the end of one off restructuring costs and the costs and write downs associated with selling parts of the business.

If you look at the operating margins, they increased from 3% to 4% last year and EBITDA improved from 7.8% to 8.1%.

These are adjusted numbers and exclude areas where the business has exited through a sale.

Revenue has declined in absolute terms by £200 million, but again if you adjust for businesses exited revenue is actually up 1.3% and was up last year by 1.7%.

Margins are improving, the business is growing and there are numerous one offs that will fall away over the next year or two.

I think the new CEO has spun the narative in a way that benefits him, he's reset expectations, but the trajectory has not changed and 2025 remains the pivotal year for Capita.

I don't think these results change my thesis in any way. I'd just hoped to see more incremental improvement this year than tyhe company actually achieved.

[davidbennett] 20/3/2024 10:13

Bookbroker

Well all I can say is that Adolfo has got a huge incentive to make sure that doesn’t happen… apart from investing £100k of his hard earned cash he also has options on 12m shares. If that’s not an incentive then I don’t know what is and he has the passion and knowledge to sort Capita out (once and for all)

[heatseek77] 20/3/2024 10:13

Think we went through the debt yesterday with your other alias 🤡

[heatseek77] 20/3/2024 10:12

bookbroker 🤡😂🤣 a.i pretty big for most companies ....

As per HP email last week the company has the cash income clearly you've never worked on / had a government contract, anyway big Mac and fries please chop chop

[bookbroker] 20/3/2024 09:46

Suggests the company going out of business, nothing more to sell and rising debt levels. Only salvation A.I. and more redundancies.

[davidbennett] 20/3/2024 08:38

Edison research note:

[sailorsam1] 19/3/2024 20:11

Good analysis

[dexterburt1] 19/3/2024 19:31

Agreed and some good points. I'm wading through to try and understand what exactly is left after the disposals. This business has been selling assets and initiating cost reduction programmes since 2017 that never quite hit the mark. You'd hope they'd be less smoke and mirrors now the disposals are through and the background of the CEO does fit well what is left and market needs. A lot hinges on the capital markets day! :)

[strawberry alarm clock] 19/3/2024 19:28

The clueless thick The Imperialist needs over 50% rise to reach his 20p prediction He is a weapons grade bellend BWAHAHAHA

[al101uk] 19/3/2024 19:19

Ticked up a perfect explanation of the accounts:

"it's messy!" :-)

It's not going to be any clearer next year either with the costs of the additional restructuring while the first wave is still bedding in.



Slide 15 is a useful guide to cashflow, it shows the one offs and how they affected cashflow.

Slide 16 shows expectations for next year which will probably look pretty similar at a headline level... hopefully with a better outlook.

The positive signs are on page 17:

No pension defecit payments from 2025
£60 million of cost savings from 2024
£100 million of further cost savings in progress.

Temper the 2024 cost savings with the cost of implimenting the £100 million cost savings and we won't really see the benefits until 2025.

Cashflow should improve in 2024 according to the presentation, but non-cash items will increase.

Book to bill value is at 1.1x (they are writing more business than they are completing), while margins on the business they are writing is improving. Order book bridge is on page 27.

I still think 2025 is the year Capita starts to see the results of the work of seven years previous. I think the share price will move on the first indication of this. I think we saw that when the price breached 40p back in March 2023, unfortunately that turned out to be premature.

I think the results were disappointing, but not unexpected with a new man in charge. It wasn't terrible for a resetting of expectations, but certainly less ebullient than JL's parting comments.

... just some mixed up thoughts from me.

[dexterburt1] 19/3/2024 18:22

Deferred income swing was c£80m... it's messy!

[strawberry alarm clock] 19/3/2024 18:13

That geezer spent 100k of his own cash and it's fallen again BWAHAHAHA

[s34icknote] 19/3/2024 17:23

Free cash outflow1,2, before the impact of business exits, of £115.5m (2022 outflow: £42.4m), including £30m pension deficit contribution, £20m cyber incident costs and £20m step up in technology investmentThat's 70 million above plus they had a credit from excellence of 20 million ?So 50 million ! Sold business approx 112 m ? Just trying to get my head round these figures ?

[dexterburt1] 19/3/2024 16:31

Have you read the result announcement? Clearly articulates this is due to unwind of deferred income, cyber attack and pension deficit.

[s34icknote] 19/3/2024 14:54

Net financial debt (pre-IFRS 16) ?(182.1)m ?(84.9)m So last year debt was 84.9 One year later with 12 months trading its 182.1 Profit figures ? Disposals anyone ?

[s34icknote] 19/3/2024 14:21

What is your figure on disposals ?

[s34icknote] 19/3/2024 14:20

I'm assuming they are breaking even and haven't allowed for any profit to offset pensions deficit ?

[s34icknote] 19/3/2024 14:19

From last accounts ?