“Capita is now in the second year of a multi-year transformation and we remain on track to hit the targets we set in 2018.
“Having addressed the balance sheet and made disposals last year, we have continued to strengthen the business in 2019. We are beginning to see the benefits from: strengthening our functions; changing the culture and enhancing governance; improving relationships with our clients; recruiting significant talent to key roles; and investing in people and new client propositions.
“We have made significant progress in a short period of time. There is still much work to do but the foundations we are laying now will put us in a position to succeed and grow. There is huge potential for our business as companies invest more in digital transformation. With Capita’s credentials and client-base, the long-term opportunity for growth is significant.”
Capita is in the second year of a multi-year transformation and the successful delivery of this programme remains a key focus area for the Group. We continue to expect profit before tax1 to be between £265m and £295m and net finance costs to be in the region of £40m in 2019, before the adoption of IFRS 162. We expect our net debt to EBITDA ratio to be in the top half of our stated range of 1.0 times to 2.0 times before adoption of IFRS 16.
We are on track to deliver our 2020 targets of £175m cost savings, double-digit operating profit margins1 and at least £200m of sustainable annual free cash flow, before exceptional and restructuring charges, additional pension contributions and the adoption of IFRS 16.
2 Before the adoption of IFRS 16, which is expected to result in a £26.0m to £28.0m increase in net finance costs and a £12.0m to £14.0m decrease in profit before tax in the full-year to 31 December 2019. Refer to note 21 to the condensed consolidated interim financial statements for details.
3 Before exceptional and restructuring charges, additional actuarial pension deficit contributions and the adoption of IFRS 16 (refer to Financial Review).
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Capita reports profits on an adjusted basis to aid understanding of business performance. In 2019, 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.
A presentation for institutional investors and analysts hosted by Jon Lewis, CEO, and Patrick Butcher, CFO, will be held today, starting at 09.30 UK time. There will be a live audio webcast of the presentation on our website www.capita.com/investors and subsequently available on demand. A dial-in facility is also available. The presentation slides will be published on our web site at 10.00am and a full transcript will be available by midday tomorrow.
Conference callParticipant dial-in numbers:United Kingdom 0800 640 6441United Kingdom (Local) 020 3059 5841United States 1 646 787 9445All other locations +44 20 3059 5841Access code 199714Conference Call Viewer (to see attendees and moderate questions asked):https://www.incommglobalevents.com/viewer/2618/capita-announcement-of-half-year-results-2019/Enter your name and access code 1087873
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