# Capita maintains revenue, profit and margins increase & net debt reduced

- Link: https://www.directorstalkinterviews.com/capita-maintains-revenue-profit-and-margins-increase-net-debt-reduced/4121015114
- Published: 2021-08-06T07:25:11+01:00
- Author: Amilia Stone

**Capita plc** (LON:CPI) has announced its half year results 2021.

**Summary**

 * H1 financial results in line with expectations: revenue maintained, profit and
   margins increased, net debt reduced
 * Inflecting to growth: Total Contract Value won of £2.6bn in H1; In Year Revenue
   won up 13% half-on-half
 * Strengthening balance sheet: £536m disposal proceeds generated year to date, 
   liquidity of £693.7m at 30 June 2021
 * New operational structure implemented
 * Expect to deliver revenue growth this year and sustainable free cash flow^(2)
   in 2022

**H1 2021 Financial outcome**

 * Adjusted revenue^(1) in line with last year at £1,584.7m (H1 2020: £1,582.1m)
   despite the ongoing impact of Covid-19
 * Adjusted profit before tax^(1) increased by £56.4m to £45.3m (H1 2020: loss £
   11.1m) reflecting stabilised revenue and ongoing efficiency delivery from the
   cost transformation programme
 * Net debt (IFRS 16) reduced by £182.7m to £894.4m (31 December 2020: £1,077.1m)
   reflecting adjusted free cash flow^(1) growth, with disposal proceeds partially
   offset by catch-up pension deficit contributions. Pre-IFRS 16 net debt reduced
   to £427.8m (31 December 2020 £569.0m)

**On track for revenue growth in 2021**

 * Won Total Contract Value of £2,576m, an increase of 70% on prior year (H1 2020:
   £1,513m)
 * In Year Revenue won in H1 of £769m, up 13% on prior year (H1 2020: £680m), supporting
   our positive outlook for growth in the full year and the medium term

**Strengthening the balance sheet**

 * 75% of targeted £700m in proceeds to address short-term maturities already achieved
    - Completed the disposal of ESS in February for initial £299m, with a further
      £45m received in July and AXELOS completed in July for £182.2m
    - Targeting further £175m of proceeds from subsequent disposals by end of H1
      2022
 * RCF extended, triennial pension valuation completed

**Outlook**

 * Expect full year revenue growth in 2021, driven by new contracts and recovery
   in Covid-affected businesses
 * Operational performance and cost savings driving operating leverage
 * Continue to strengthen balance sheet through ongoing disposal programme
 * Building a more focused, sustainable business for the long term, delivering sustainable
   free cash flow^(2) in 2022

**Six months ended 30 June 2021**

| **Financial highlights – continuing operations** | **Reported 2021** | Reported 2020 | **Adjusted^(1) 2021** | Adjusted^(1) 2020 | **Adjusted^(1)**
**YOY change** | 
| **Revenue** | **£1,619.4m** | £1,682.7m | **£1,584.7m** | £1,582.1m | —% | 
| **Profit/(loss) before tax** | **£261.1m** | (£28.5m) | **£45.3m** | (£11.1m) | 508% | 
| **Cash (used) / generated by operations** | **(£22.5m)** | £355.7m | **£176.2m** | £189.8m | (7)% | 
| **Free cash flow** | **(£71.6m)** | £277.7m | **£130.7m** | £116.4m | 12% | 
| **Net debt** | **(£894.4m)** | (£1,096.6m) | **(£894.4m)** | (£1,096.6m) | 18% |

^(1) Capita reports results on an adjusted basis to aid understanding of business
performance.

^(2) Sustainable free cash flow = reported free cash flow excluding the impact of
disposals

**Investor presentation**

A presentation for institutional investors and analysts hosted by Jon Lewis, CEO
and Tim Weller, CFO, will be held at 08:30am UK time, Friday 6 August 2021. This
will be a live audio webcast on our website [www.capita.com/investors](http://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/capita-hy21/](https://webcast.openbriefing.com/capita-hy21/)

Participant Conference Call dial-in details:

United Kingdom 0800 640 6441

United Kingdom (Local) 020 3936 2999

All other locations +44 20 3936 2999

Access code 804478

> **Jon Lewis, Capita Chief Executive Officer, said:**
> “I am pleased with the progress we have made with our strategy and the priorities
> we set out in March. We have maintained revenue; increased profit; strengthened
> the balance sheet; and implemented our new, simpler, more client-focused divisional
> structure.
> “We have continued to deliver a good operational performance, won significant 
> new business and have a strong pipeline of opportunities to come in the second
> half. We have also reduced our net debt, completing £536m of disposals already
> this year – with more to come.
> “We are delivering on our plans and remain on track to deliver organic revenue
> growth this year for the first time in six years and generate sustainable free
> cash flow^(2) in 2022.
> “This performance has only been made possible by the outstanding commitment of
> our talented colleagues, whom I am so honoured and proud to work alongside. I 
> would like to thank all of them for their hard work and professionalism.”

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