As previously announced, Capita has early adopted IFRS 15, the new revenue recognition standard, and this report on our performance in 2017 is under the new standard.
Underlying revenue declined by (4.3)%. Underlying revenue fell on a like-for-like basis1 by (0.6)% including (1.5)% organic decline.
Underlying profit before tax1 increased by 43% to £383.0m (2016: £268.5m) and underlying profit before tax before significant new contracts and restructuring costs increased by 23% to £400.9m (2016: £325.7m), in line with expectations.
Reported loss before tax of £(513.1)m was impacted by £850.7m of specific non-underlying items, including £551.6m goodwill impairment and a number of other asset impairments and provisions. The events and circumstances leading to the goodwill impairment are summarised in the financial review overleaf.
There was a £445.4m gain on the disposal of the Capita Asset Services businesses, which has been treated as a discontinued operation and, as such, is not included in the below table.
Free cash flow from continuing operations before non-underlying expenses was £38.0m (2016: £397.3m). Free cash flow was constrained by the partial normalisation of cash management activity to avoid June and December peaks and a reduction of deferred income in the second half of the year.
Net debt at end December 2017 was £1,117.0m (2016: £1,778.8m).
Year ended 31 December
Financial highlights - continuing operations
Reported 2017
Reported 2016
Underlying1 2017
Underlying1 2016
Underlying YOY change
Revenue
£4,234.6m
£4,368.6m
£4,167.9m
£4,357.3m
(4)%
Operating profit/(loss)
(£420.1m)
(£16.1m)
£447.4m
£334.6m
34%
Profit/(loss) before tax
(£513.1m)
(£89.8m)
£383.0m
£268.5m
43%
Earnings/(loss) per share
(80.14)p
(14.27)p
45.61p
31.68p
44%
Total dividend per share
11.1p
31.7p
11.1p
31.7p
(65)%
Free cash flow
£37.7m
£367.3m
£38.0m
£397.3m
(90)%
The following table sets out the main differences between reported and underlying profit for 2017
2017 reported operating loss bridge to underlying operating profit
Reported operating loss
(£420.1m)
Impairment of goodwill
£551.6m
Impairment of other non-current assets
£63.5m
Impairment of life and pension assets
£61.2m
Claims and litigation provisions
£30.0m
Amortisation and impairment of acquired intangibles
£124.3m
Business exits
£14.7m
Other
£22.2m
Underlying operating profit
£447.4m
Strategy and transformation plan
Today, Capita is separately publishing an update on its strategy and transformation plan, which includes the announcement of the launch of a rights issue to raise gross proceeds of £701m, which is fully underwritten by Citigroup Global Markets Limited and Goldman Sachs International.
Current trading
Capita continues to expect that its underlying pre-tax profits1, before significant new contracts, restructuring costs and implementation costs of the strategy, will be between £270m and £300m for the year ending 31 December 2018. Trading in the first quarter was in line with our full year guidance.
1 Refer to appendix for calculation of Alternative Performance Measures
Attachments
Original document
Permalink
Disclaimer
Capita plc published this content on 23 April 2018 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 23 April 2018 07:26:08 UTC
Capita PLC is a United Kingdom-based company. The Company provides consulting, transformation and professional delivery services, drawing on its practical experience, and provide digitally enabled services and solutions. The Company operates through two divisions: Capita Public Service and Capita Experience in the United Kingdom, Europe, India and South Africa. Capita Public Service division provides applied digital transformation and Business Process as a Service to improve the productivity and citizen experience of public services. The division is focused on education and learning; local public services; health and welfare; defense, security and fire; justice and policing; transport and central government. Capita Experience Division is engaged in designing, transforming and delivering experiences for the life moments. Its serves various industry verticals: telecoms, media & technology; retail & consumer products; energy and utilities; government and transport and financial services.