Capita PLC Capita plc first half in line with expectations

 
TIDMCPI 
 
Capita plc 
 
29 June 2022 
 
MARKET UPDATE 
 
Capita plc (Capita) first half in line with expectations and on track for the 
full year 
 
Trading performance 
 
The Group's first-half performance has been in line with expectations, with 
further revenue growth, important contract renewals and wins, and ongoing 
strengthening of the balance sheet. As noted at the full-year results, we 
continue to expect further strong progress in the second half of the year in 
revenue, profit and cash flow generation. 
 
In the five months to 31 May 2022 the Public Service division grew by 2% as 
previously high growth rates started to annualise, the Experience division 
revenues reduced by 3%, showing an improving trend from 2021, and the Portfolio 
division grew by 5% as businesses recovered from Covid-related impacts. As a 
result we expect Group revenue growth at the half year of up to 1%. 
 
We have won a number of significant contracts in the first half, including the 
renewal of the BBC TV licencing contract (£456m), an extension of our PCSE 
contract (£94m) and further work for the Northern Ireland Education Authority 
(£51m). We also won a new contract with ScottishPower worth £63m over five 
years. The Experience division has already seen particularly strong total 
contract value performance this year. The pipeline for both divisions remains 
strong, underpinning our ability to drive future sustainable revenue growth. 
 
The Portfolio business is also benefiting from ongoing recovery after a slow 
start to the year reflecting Covid variant-related constraints. 
 
Our operational performance has been good, with consistent delivery across our 
client base. Notably to date we have delivered on all of the key milestones 
with the Royal Navy training contracts and have now started running the Royal 
Navy's Maritime Composite Training System and launched the Aviation Fire 
Programme at the Fire Service College. We successfully went live on the 
ScottishPower contract on 6th June. 
 
We are targeting further cost savings and efficiencies as we begin to leverage 
the benefits of our new operating model and more focused corporate structure. 
In particular, our property costs continue to reduce, helped by our 'virtual 
first' approach to office working. 
 
Balance Sheet and non-core business disposal programme 
 
We continue to execute on our plan to reduce debt through the disposal of 
non-core businesses. 
 
Since the beginning of 2022, we have launched three further processes and we 
expect to have launched the disposal processes of all our remaining Portfolio 
businesses by the end of the year. 
 
This year we have completed the disposal of four businesses: Secure Solutions 
and Services, AMT Sybex, Specialty Insurance, and Trustmarque. As a result, we 
have received total proceeds of over £750m from previously announced disposals, 
exceeding our £700m target, six months earlier than originally announced. 
 
Outlook 
 
We expect the revenue growth in the first half of 2022 of up to 1%. With a 
solid platform of secured revenue, a strong pipeline of contract opportunities 
and markets driven by demand for cost-effective digital solutions, we remain 
confident of delivering revenue growth in 2022. 
 
As outlined during the 2021 full-year results, we expect profits in 2022 to be 
significantly weighted to the second half, with a reduced EBITDA margin 
reflecting the full-year impact of prior-year contract losses, structural 
decline in our closed book Life & Pensions business, and operational changes in 
the Army Recruitment contract. 
 
We remain on track to deliver positive free cash flow in 2022. We continue to 
expect a material reduction in net debt by the end of the year. 
 
Jon Lewis, Capita Chief Executive Officer said: 
 
"I am pleased with the progress we have made across Capita since the start of 
the year. 
 
"Our operational performance remains strong, with impressive levels of delivery 
across our client base; and we have secured important contract renewals and new 
work. 
 
"Our financial performance has remained in line with our expectations, as we 
have maintained revenue growth in 2022, while continuing to reduce debt and 
strengthen the balance sheet. 
 
"We continue to expect further strong progress in the second half of the year 
in revenue, profit and cash flow generation." 
 
For more information, please contact: 
 
Investor enquiries 
Stuart Morgan 
Director of Investor Relations 
Tel: [phone] 
Email: [e-mail] 
 
Media enquiries 
Capita external communications 
Tel: [phone] 
Email: [e-mail] 
 
LEI no. CMIGEWPLHL4M7ZV0IZ88. 
 
 
 
 
END 
 
 

(END) Dow Jones Newswires

June 29, 2022 02:00 ET (06:00 GMT)