Summary
We have made good progress with the transformation
- Creating a purpose-led organisation to drive long-term sustainable success
- Significant progress in fixing legacy issues and reducing ‘cost of poor quality’
- Rebuilding trust with our colleagues and clients
- More investment needed than initially thought
Positioning ourselves for growth
- Focusing investment on software products and in-demand transformation capabilities
- Launch of Capita Consulting to drive origination, pipeline and pull-through revenue
2019 results
- Revenue decline reducing: revenue growth in H2 in four out of six divisions, order intake of £2.2bn in 2019
- Profit before tax of £275m: underpinned by strong cost-saving programme and one-offs
- Cash generation impacted by investment in delivering operational improvements
2020 outlook updated
- Generating modest organic growth and sustainable free cash flow(1) of at least £160m - both in line with current market expectations(2)
- Exploring non-core disposals to further simplify the portfolio and recycle capital
Confidence in long term unchanged
- Continue to build a more focused, sustainable business for the long term with growing free cash flow
Jon Lewis, Chief Executive Officer, said:
“Over the past two years, we have made significant progress with our multi-year transformation at Capita to create the foundations for long-term, sustainable success.
“We have continued to simplify and strengthen the business, fix legacy issues, rebuild trust with clients, take out cost, reduce risk, and invest in our growth capability.
“Transforming an organisation of Capita’s size is a complex challenge; there remains more to do and it is requiring more investment than we had expected in 2018.
“But our plan is the right one and remains unchanged. I am confident that, with the work done to date and investment made in 2019, we can deliver organic revenue growth for the first time in five years in 2020.”
Financial outlook
Year ended 31 December 2019 | |||||
|---|---|---|---|---|---|
Financial highlights | Reported | Reported | Adjusted(1) | Adjusted(1) | Adjusted(1) |
Revenue | £3,678.6m | £3,918.4m | £3,647.4m | £3,814.7m | (4)% |
Operating profit | £0.4m | £34.9m | £306.1m | £334.4m | (8)% |
(Loss)/profit before tax | (£62.6m) | £272.6m | £275.0m | £281.2m | (2)% |
(Loss)/earnings per share | (4.18)p | 17.99p | 13.09p | 16.33p | (20)% |
Free cash flow | (£213.0m) | (£260.5m) | (£61.3m) | (£78.8m) | 22% |
(1) Capita reports results on an adjusted basis to aid understanding of business performance. In 2019, International Financial Reporting Standard 16 Leases (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. Refer to appendix for calculation of alternative performance measures.
(2) Market consensus for Revenue growth of 0.4% and Adjusted Free Cash Flow(1) of £150m at 4 March 2020.
Board responsibility
Lyndsay Browne will be appointed a member of the Remuneration Committee and Joseph Murphy will be appointed as a member of the Audit and Risk Committee, effective from 6 March 2020.
Investor presentation
A presentation for institutional investors and analysts hosted by Jon Lewis, CEO and Patrick Butcher, CFO, will be held today, starting at 08:30am UK time. There will be a live audio webcast of the presentation and subsequently available on demand. The presentation slides will be published on our website at 07:00am and a full transcript will be available by midday the following day.
