Results for the year ended 31 December 2016 Capita plc 2 March 2017
Agenda Introduction Ian Powell, Chairman Capita repositioned Andy Parker, Chief Executive Financial results Nick Greatorex, Group Finance Director Business development Chris Sellers, Group Business Development Director Summary & outlook Andy Parker, Chief Executive 2 | 2016 financialresults
Introduction Ian Powell Chairman 3 | 2016 financialresults
Capita repositioned Andy Parker Chief Executive 4 | 2016 financialresults
Summary of 2016 A challenging year Flat organic revenue growth and profits down • BPM market subdued, decisions deferred – with lower win rate across our major bids • Some specific businesses and contracts under-performed • Experienced weakness in discretionary services toward year end • Achieved better cash performance and leverage than we expected in December • Fundamentals of our business and drivers behind our large addressable markets remain strong Maintained position as BPM market leader and increased market share • £1.3bn of major contract wins and extensions • Unique breadth of complementary capabilities • Decisive actions taken to position us better to return to profitable growth 5 | 2016 financialresults
A challenging year, decisive action taken New management and organisation structure implemented Comprehensive business review undertaken Performance improvement initiatives commenced Renewed focus on organic growth 6 | 2016 financialresults
A challenging year, decisive action taken New management and organisation structure implemented Repositioned Executive Board: increased transparency and oversight, with renewed focus on consistent operational and customer service excellence Clear and simple structure: 6 divisions, client facing, shorter reporting lines 7 | 2016 financialresults
A robust management structure Clear strategic leadership, greater transparency, shorter reporting lines, renewed focus on operations and customer service excellence and growth generation across the Group. Group Board Chief Executive Group Business Group Operations & Group Finance Development Performance Director Director Director Operational Sales directed consistency, and overseen customer service centrally to drive Major Divisional excellence and Executive organic growth Business Finance employee Officers throughout the Development Directors advocacy x6 Group Team x6 Business Sales Teams Reporting directly to Chief Focused and Executive targeted on key financial metrics 8 | 2016 financialresults
A simplified, focused business PRIVATE SECTOR PARTNERSHIPS Business process and customer management services for corporates, primarily across telecoms, retail, automotive, travel and insurance and retail banking sectors. Includes UK & European operations and near and offshore centres DIGITAL & PUBLIC SERVICE PARTNERSHIPS SOFTWARE Business process and customer management specialist services for IT SERVICES public sector organisations including defence, health and welfare benefit SOLUTIONS Specialist network administration and real estate and property services solutions, IT Sector and task management and specific software infrastructure and services, services and IT digital data and PROFESSIONAL SERVICES equipment emerging High growth commercial businesses and partnership models and solutions technology services to attract develop and retain workforces solutions * ASSET SERVICES Shareholder solutions, fund solutions, trust and corporate services and debt and banking solutions External & internal facing External facing External & internal facing * Disposal in progress 9 | 2016 financialresults
A challenging year, decisive action taken Comprehensive business review undertaken Clear focus on core service offering: technology enabled business process management (BPM) and customer management services Strategic disposals: Commenced disposal process - the majority of Capita Asset Services division and specialist recruitment businesses 10 | 2016 financialresults
A simplified, focused business Strategic disposals in progress to re-focus business on core BPM Majority rity of Cap apita ta Asse set t Services s divisi ision on Specialist ialist recruit uitment nt Stand-alone, with little integration or synergies with • Disposal process to exit our education, health and • other divisions, growing into areas at the edge of social care businesses our risk appetite Main brands are CER, Monarch, Team24 and • Disposing of shareholder, fund, debt and corporate, • Medicare First private client and trust services Well positioned businesses in their markets, • Retaining mortgage administration and retail • received unsolicited approaches banking Around £160m revenue and £8m operating profit in • Around £300m revenue and £60m operating profit • 2016 in 2016 Expected to complete mid-year • Good initial interest, with potential buyers meetings • Remain committed to our other workplace service • commencing, disposal process on track and businesses expected to complete in H2 2017, post regulatory approvals 11 | 2016 financialresults
A challenging year, decisive action taken Performance improvement initiatives commenced Short and longer term initiatives to address our cost base Cost action: c£60m identified and in progress Addressing IT Services division: new management and turnaround plan 12 | 2016 financialresults
A challenging year, decisive action taken Renewed focus on organic growth Big addressable BPM and customer management markets remain Group Business Development teams re-shaped to evolving needs of clients in their dynamically changing markets Renewed focus on driving divisional growth across trading businesses 13 | 2016 financialresults
A challenging year, decisive action taken Repositioned Executive Board: increased transparency and oversight, with renewed focus on consistent New management and • operational and customer service excellence organisation structure • Clear and simple structure: 6 divisions, client facing, shorter reporting lines implemented Comprehensive business Clear focus on core service offering: technology enabled business process management (BPM) and • customer management services review undertaken Strategic disposals: Commenced disposal process - the majority of Capita Asset Services division and • specialist recruitment businesses Performance improvement Short and longer term initiatives to address our cost base • initiatives commenced Cost action: c£60m identified and in progress • Addressing IT services division: new management and turnaround plan • Big addressable BPM and customer management markets remain Renewed focus on organic • Group Business Development teams re-shaped to evolving needs of clients in their dynamically changing • growth markets Renewed focus on driving divisional growth across trading businesses • Capita is reposit ition oned to exploit it our fundame ment ntal al strengths hs and return n to s sustainable nable, , profit itable able growth h 14 | 2016 financialresults
Financial Results Nick Greatorex Group Finance Director 15 | 2016 financialresults
Underlying income statement £m £m Year Year ended ended Change December December 2016* 2015** Underlying revenue increased by 4.8% • Revenue 4,898 4,674 4.8% Underlying profit before tax of £475m • Operating profit 541 639 (15.3)% after accrued income write-down of £40m Interest (66) (53) 24.5% Final dividend 20.60p, total dividend in • Profit before tax 475 586 (18.9)% line with 2015 Profit attributable to 377 468 (19.4)% shareholders Basic eps (pence) 56.67 70.73 (19.9)% Final dividend (pence) 20.60 21.20 (2.8)% Total dividend (pence) 31.70 31.70 - *Excludes non-underlying items which include: intangible amortisation, impairments, net contingent consideration movements, other non-recurring items, non-cash mark to 16 | 2016 financialresults market finance costs **The 2015 comparatives include the results from businesses disposed in 2016 and exclude the results from a justice business which was held for sale in 2015 and moved back into underlying in 2016 following an incomplete sale process
Revenue £m £m Year to Year to 31 31 Change December December 2016 2015 3.4% growth from continuing activities • Total reported revenue 4,909 4,837 1.5% 0.1% underlying organic growth • 2015 disposals (35) 5 year underlying compound growth 11% • Available for sale in 2015, (3) (56) disposed in 2016 2016 disposals (8) (10) Revenue from continuing 4,898 4,736 3.4%* activities 2015 acquisitions (76) - (1.6)% 2016 acquisitions (82) - (1.7)% Organic revenue on 4,740 4,736 0.1% continuing basis 17 | 2016 financialresults *Like-for-like revenue growth includes a justice business which was previously held for sale in 2015, on which the disposal process ceased and was moved back into underlying reported revenue in 2016
Revenue guidance H1 2016 v H2 2016 FY guidance at Interim H2 movement FY actual Business Development 6.0% (1.2%) 4.8% Attrition (3.4%) -% (3.4%) Divisional Organic 1.4% (2.7%) (1.3%) Organic growth 4.0% (3.9%) 0.1% Acquisition 3.9% (0.6%) 3.3% Total 7.9% (4.5%) 3.4% 18 | 2016 financialresults
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