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@FrayaBentos - "Now, we see a different approach.
Proceeds from sales are indeed paying down the debt but alongside this is fiscal responsibility and putting right pension shortfalls, writing down goodwill, minimising tax liabilities etc.
The analysts need to look closely at Capita because the TU is heavily skewed towards putting right long standing problems and dealing with an adjusted financial report that is not an easy read due to the need to evaluate things now sold and thus lost from the BS."
Cheers and that is precisely the point that these financial writers and some analysts fail to decipher OR choose not to. If you see the cash headwinds that CPI had in 2021 - Pension deficit + VAT deferal + Restructuring - that was a solid £328 million versus the circa £50 million projected against these for 2022. This was where most of the disposals cash in 2021 went to - no such headwinds this time. Plus they are indeed doing it right by the balance sheet in H1 2022. If the players could only see past these, then they could make a lot of money in 2023 and onwards via dividends/buybacks - the market should start to price this in over the coming months, IMO.
Thanks for the forensic analysis. I suppose its the tipping point we are waiting for that pushes the SP over 30 and beyond (buzz lightyear)!
November debt pay down triggers a rerate?
Growing cashflows support a dividend and value?
Major contract wins confirm return to growth?
Large workforce is 'an off balance sheet asset' and a stepping stone for a bid from a large player?
In any event, the continuing businesses look to be going concerns. Any contracts coming up must be cost plus or loss making for the competition imho
Thanks Gocpi, I've been trawling through the TU to make sense of the strategy to turn the company around.
After reading through it, there is a lot that is actually happening and it is all to strengthen the balance sheet.
I have been quite critical of the lack of just paying off the debt but it's a lot more complicated than that.
Capita grew fast in the past and it borrowed loads to buy loads of companies and this appears to have grown the BS and increased revenues and brought a fat inflated value.
Now, we see a different approach.
Proceeds from sales are indeed paying down the debt but alongside this is fiscal responsibility and putting right pension shortfalls, writing down goodwill, minimising tax liabilities etc.
The analysts need to look closely at Capita because the TU is heavily skewed towards putting right long standing problems and dealing with an adjusted financial report that is not an easy read due to the need to evaluate things now sold and thus lost from the BS.
IMHO much better ahead Inc SP strength for the long suffering long investor and a bit of a steal for the enlightened.
GLA.
Totally agree with Capitalizer and GoCPI in reference to those posters that have of lately made a joke of this BB.
I couldn't said it better. (^_^).
Now, has anyone seen AimMaster2018?
Have they jumped or got thrown overboard off the great Capita Cruise Liner?
Who needs to have more evidence of their rhetoric negative posting that plagued this BB and their true intentions behind it all and why most that sided with them have gone quietly away?
Thank God for NoFear thick skin who kept them under their thumb for everyone benefit. Whether you liked NoFear posts or not, they did help in keeping the usual suspect off this BB for now. Come on Cpi, sail away out to sea and take us to greener pastures and better sceneries'.
Thanks.
Nice to see a bit of rational analysis ….
The bb has been pretty disappointing of late.
GoCpi - thanks for your excellent analysis and figures.
Moving away from the daily non-stop BS from Aim and NF - here's some fundamental analysis of cash generation and debt movements in H1 and thoughts on how it could play out in H2.
Capita had long guided that cash flow from in H1 would be lower than in H2, but we can already see improvements in that metric over 2021. Cash from Ops in H1 was £49.2 million versus a cash outflow of £22.5 million in 2021. This should be substantially higher in H2.
Some noise was made here about debt reducing lower than expected even with sale proceeds of £223 million. If you read the H1 report, these businesses had a lot of cashin hand - £59 million. CPI received net cash of £164 million and where did this go? Majority is paying down debt. We have £139M debt to be repaid in H2- there's plenty cash in hand to take careof this already.
£93M bonds + debt repayment
£40M RCF repayment
£25M cash increase
£20M pension payments
Looking forwards, the REI sale delivers NET cash of £60M and should close by end of September. WSP says 6 to 8 weeks to get reg approvals. Cash in bank by September.
https://www.wsp.com/en-GB/investors/press-releases/details/WSP-to-Acquire-Capita-plcs-Capita-REI-andGL-Hearn-Businesses-in-the-UK/2490331/2022
With Pay360 sale + potential portfolio sales = more cash in hand. Pre-IFRS net debt was £289M - I'm happy to wager that this will be closer to £50M by this year end. Don't yet rule out a net cash position even. Profitabiilty in H2 will be better too, as was already guided.
I'm accumulating at these levels - IMO, they're abargain and by the nature of their busines,should be pretty recession proof. Patience is key. Dividends next year are on, IMO.