A turnaround in our underlying financial performance, with increased adjusted revenue growth, profitability, free cash flow and a material reduction in net debt.
Revenue is growing with increasing momentum (adjusted growth 4% in H2 2022, 1% in H1 2022):
• Increase in adjusted revenue1 growth. Revenue increased 2.4% to £2.8bn (2021: 0.1% growth)
• Capita Public Service grew by 2.5%, Capita Experience grew by 0.9%, a strong turnaround following the 10% decline in 2021; Portfolio increased by 10.3%
• Strong sales performance in Capita Experience, 71% growth in TCV from prior year; Capita Public Service pipeline increased as contract awards delayed from 2022 into 2023 - expect sales acceleration in 2023
• Order book of £5.8bn; book to bill at 1.0x (2021: 1.2x); strong weighted pipeline (£2.2bn) with 50% of pipeline from growth with existing and new clients
• Customer net promoter score +6 points improvement to +35; employee net promoter score +15 points improvement
• Group well positioned for sustainable revenue growth
A step change in profitability
• £197m increase in adjusted profit before tax1 reflecting revenue growth and reduction in restructuring costs, contract-related provisions and impairments
• Reported profit before tax of £61m (2021: £286m) as a result of reduced profits associated with disposals and current year non-cash goodwill impairment
Positive free cash flow and material reduction in net debt
• Positive free cash flow before the impact of business exits¹ of £29m (2021 outflow: £219m); strong increase in cash generated by operations from increased operating profit, reduced pension contributions and cessation of deferred VAT repayments
• £397m reduction in net financial debt and leases (IFRS 16) to £482m (2021: £880m) funded by operating cash flow and disposals
• Net financial debt (pre-IFRS 16) of £85m as a result of our successful disposal programme; net financial debt/adjusted EBITDA (pre-IFRS 16) 0.5x (2021: 3.7x)
• Gross proceeds of c.£485m achieved in 2022, total receipts from disposal programme now over £1.3bn
Year ended 31 December 2022
Financial highlights - continuing operations | Reported 2022 | Reported 2021 | Reported YOY change | Adjusted1 2022 | Adjusted1 2021 | Adjusted1 YOY change |
Revenue | £3,014.6m | £3,182.5m | (5.3%) | £2,845.8m | £2,777.8m | 2.4% |
EBITDA | £235.7m | £222.3m | 6% | £238.8m | £143.0m | 67% |
Profit/(loss) before tax | £61.4m | £285.6m | (79%) | £73.8m | £(122.8)m | n/a |
Earnings/(loss) per share | 4.47p | 13.33p | (66%) | 6.20p | (7.74)p | n/a |
Cash generated from/(used by) operations2 | £117.8m | £(148.5)m | n/a | £116.5m | £(109.7)m | n/a |
Free cash flow2 | £24.5m | £(264.3)m | n/a | £29.0m | £(218.6)m | n/a |
Net debt | £(482.4)m | £(879.8)m | £397.4m | £(482.4)m | £(879.8)m | £397.4m |
Net financial debt (pre-IFRS 16) | £(84.9)m | £(431.4)m | £346.5m | £(84.9)m | £(431.4)m | £346.5m |
¹Capita reports results on an adjusted basis to aid understanding of business performance.
²Cash generated from operations adjusted results and free cash flow adjusted results are free cash flow before business exits and cash generated from operations before business exits respectively. (refer to note 9)
Capita plc
Outlook - Core Capita
• In 2023 we expect further acceleration of revenue growth in Capita Public Service based on strong pipeline and continued revenue stability in Capita Experience. Medium term outlook of mid-single digit revenue growth in both divisions
• Core Capita (excluding Capita Portfolio businesses) EBIT margin (2022: 2.9%) expected to at least double over the medium term helped by revenue growth and mix coupled with ongoing efficiency delivery
• Expect cash generated by operations in 2023 to be broadly in line with 2022. Increasing investment in digital solutions in a disciplined and focused manner - capital expenditure expected to be £50-60m in 2023.
• Incremental growth in free cash flow over the medium term from continued profit growth, reduction in pension deficit payments and interest costs
• Net financial debt (pre-IFRS 16)/EBITDA target remains ≤1.0x (2022: 0.5x) and expect reduced level of net financial debt following completion of disposal programme
Jon Lewis, Chief Executive Officer said:
“This was an important year for Capita in which we demonstrated the financial benefits of our strategy to focus on the two core markets we serve best.
"Revenue growth accelerated, we improved profitability and generated positive free cash flow; and our successful disposals programme has meant we have significantly strengthened the balance sheet.
“Amid a challenging macroeconomic environment, we believe we have a resilient business. We expect to continue to deliver improving financial performance, while providing excellent operational performance for our clients.
“None of this would have been possible without the considerable contribution of our 50,000 colleagues around the world, whom I would like to thank for all their continued hard work, commitment and professionalism.”
¹Capita reports results on an adjusted basis to aid understanding of underlying business performance, for example adjusting for business disposals. Refer to alternative performance measures (APMs) in the Appendix.
Investor presentation
A presentation for institutional investors and analysts hosted by Jon Lewis, CEO and Tim Weller, CFO, will be held at 65 Gresham Street, London EC2V 7NQ at 09:00am UK time, 2 March 2023. There will also be a live audio webcast (link below) which 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 following day.
Participant webcast:
https://webcast.openbriefing.com/capfy22/
For further information:
Capita
Helen Parris, Director of Investor Relations T +44 (0) 7720 169 269
Capita press office T +44 (0) 20 7654 2399
LEI no. CMIGEWPLHL4M7ZV0IZ8
