Member Info for Cesna

Confirms its a defensive share, current course and speed fine imho. May get a chance to trade a few but not letting go of my dream yacht ;-)

 'I think it will be Y/E figures that revitalise this '
Yes, paying down £0.2bn debt in November and possiblly no debt in 2023 if non core business is sold. The established contract pipeline conversion will increase earnings ( or Lewis is out?). Expecting H1 to be something like the guidance given in April.

Fingers crossed Lewis didnt use all his ammo in the 2021 FY report (transformation) and has judged momentum into 2022 right with a conservative outlook. Any sane CEO would be thinking about their next delivery so any upside to a conservative H1 outlook would be good news imo

'target is as you say a 2/3p dividend initially rising to 10p'
Maybe a swinging mooring for the yacht at 2/3p div and move onto a marina berth on the hamble or lymington at 10p ;-)

@sharehead,I like your thinking 'A current £25k investment could if dividends went to 10p a share'

To put it another way, a £50k investment, sell half at £1 plus and buy a small cesna or a family yacht and use the dividend income to pay running cost/ maintenance/ marina fees...

The 1st half [2022] was always about collecting and applying the business disposal proceeds and in the 2nd half, driving out earnings from the continuing business.

Overall, lewis said:

In 2022, we expect to deliver revenue growth [note in 2021 it was over £3,182,500,000], positive sustainable free cash flow and to continue to strengthen the balance sheet [note net assets improved £377.6m YoY]. Our revenue growth is built on strong contract performance in 2021, our order book, lower attrition, a growing pipeline of new business in both Public Service and Experience, as well as ongoing recovery from Covid-affected businesses. Notwithstanding the margin benefit from revenue growth and the flow through of the cost benefits from the divisional restructure implemented in 2021, we expect operating profit margins to reduce slightly in 2022. This reflects the full-year impact of prior-year contract losses and the structural decline in the closed book Life & Pensions in Experience, operational changes in the Army recruitment contract in Public Service, as well as the cost of recruiting and training staff to support our growth. Next year, we will include restructuring, pension deficit contribution and VAT payments within our adjusted free cash flow. With higher cash-backed profit and the significant decrease in the payments noted above, we expect to deliver positive sustainable adjusted free cash flow in 2022. As we continue to make disposals, we expect net debt to decrease materially.
Medium term
Beyond 2022, we expect core Capita to continue to build on the platform we have established today. We will target revenue growth at least in line with the mid single-digit range of our core markets and deliver high single-digit Group
EBITDA margins. We expect to grow free cash flow, as cash conversion increases to between 70% and 80% and additional cash commitments fall away.
We will maintain a prudent approach to our capital structure, and will target a leverage ratio of around 1x net debt:EBITDA on a pre-IFRS 16 basis [note CPI has reduced headline net debt to adjusted ebitda pre IFRS 16 from 2.7x (2020) to 1.7x (2021)].

@panama, ' suggest you try a Montecastro from Waitrose @ £25.99'
Yes will give that a go ;-)

Coincidentally I have just opened a bottle of 'journeys end' £14.99 waitrose..and raise a glass to a higher weekly close 25p (24.7p last week). Slow recovery I agree, but relentlessly up in a market nexus warming the cpi golden egg.

about £750m would get back in 250 ie SP c 44.5p imho

@cashola, aimho :-)

reposted to correct typos

@cashola, 'Barclays revision'
You could say the net asset value on the balance sheet is its 'realisable value' if you sold those assets at the balance sheet date and, in a perfect world = the market value/ SP.

All things being equal, inflation reduces the future realisable value of those net assets and this is reflected in a lower SP.
Very low interest rates inflate the value so if interest rates rise, this will be reflected in a lower SP.
Earnings growth increases the net assets/ realisable value and, as CPI is growing its earnings, so the SP should increase for this component.

Inflation is reducing the value of all FTSE company net assets. However, CPI is growing earnings and it will increase net assets at a faster rate than some other other companies because it is also clearing debt from asset sales, so the SP should increase for this component and may carry CPI back into the FTSE 250.

Each incremental contract win confirms earnings growth and the SP should increase incrementally.
In H2 there is a 25%+ reduction in debt/ increase in net assets and the SP should increase significantly.
In 2023 it is expected CPI will sell the Public Services division and clear all debt and so the SP should increase materially.

In 2023 it is possible inflation will have peaked and may have decreased materially so the SP would increase significantly.
In 2023 earnings growth should be motoring having already demonstrated growth in 2021 over 2020.
While interest rates are likely to be higher in 2023, the impact on SP will be offset by the benefit of lower inflation and earnings growth.

In the cycle of things, CPI will probably raise debt end of 2023 for new initiatives, perhaps even under new, post transformation management.

reposted to correct typos

@cashola, 'Barclays revision'
You could say the net asset value on the balance sheet is its 'realisable value' if you sold those assets at the balance sheet date and, in a perfect world = the market value/ SP.

All things being equal, inflation reduces the future realisable value of those net assets and this is reflected in a lower SP.
Very low interest rates inflate the value so if interest rates rise, this will be reflected in a lower SP.
Earnings growth increases the net assets/ realisable value and, as CPI is growing its earnings, so the SP should increase for this component.

Inflation is reducing the value of all FTSE company net assets. However, CPI is growing earnings and it will increase net assets at a faster rate than some other other companies because it is also clearing debt from asset sales, so the SP should increase for this component and may carry CPI back into the FTSE 250.

Each incremental contract win confirms earnings growth and the SP should increase incrementally.
In H2 there is a 25%+ reduction in debt/ increase in net assets and the SP should increase significantly.
In 2023 it is expected CPI will sell the Public Services division and clear all debt and so the SP should increase materially.

In 2023 it is possible inflation will have peaked and may have decreased materially so the SP would increase significantly.
In 2023 earnings growth should be motoring having already demonstrated growth in 2021 over 2020.
While interest rates are likely to be higher in 2023, the impact on SP will be offset by the benefit of lower inflation and earnings growth.

In the cycle of things, CPI will probably raise debt end of 2023 for new initiatives, perhaps even under new, post transformation management.

@cashola, 'Barclays revision'
You could say the net asset value on the balance sheet is its 'realisable value' if you sold those assets at the balance sheet date and, in a perfect world = the market value/ SP.

All things being equal, inflation reduces the future realisable value of those net assets and this is reflected in a lower SP.
Very low interest rates inflate the value so if interest rates rise, this will be reflected in a lower SP.
Earnings growth increases the net assets/ realisable value and, as CPI is growing its earnings, so the SP should increase for this component.

Inflation is reducing the value of all FTSE company net assets. However, CPI is growing earnings and it will increase net assets at a faster rate than some other other companies because it is also clearing debt from asset sales, so the SP should increase for this component and may carry CPI back into the FTSE 250.

Each incremental contract win confirms earnings growth and the SP should increase incrementally.
In H2 there is a 25%+ reduction in debt/ increase in net assets and the SP should increase significantly.
In 2023 it is expected CPI will sell the Public Services division and clear all debt and so the SP should increase materially.

In 2023 it is possible inflation will have peaked and may have decreased materially so the SP would increase significantly.
In 2023 earnings growth should be motoring having already demonstrated growth in 2021 over 2020.
While interest rates are likely to be higher in 2023, the impact on SP will be offset by the benefit of lower inflation and earnings growth.

In the cycle of things, CPI will probably raise debt end of 2023 for new initiatives, perhaps even under new, post transformation management.

In my time, I remember the MOD turning up every now and again to audit outsourced contracts. Some were more than 10 years old and if a document wasnt available to support a spend, they'd knock it off the bill. Its a dogs life working for the MOD.

On 9th November 2020 the discovery of a Covid vaccine was announced and EVERYTHING shot through the roof .

I suppose we can expect China to open up eventually and some of the inflation problem might just be the supply chain, not central banks. Could argue QE has been paying for public sector salaries and pensions so monetary tightening increases domestic fiscal pressure, taxation etc when the citizen/ consumer can least afford it due to energy costs etc. Windfall taxes in oil might be a short term political fix but monetisation of the public sector economy through commercial models such as CPI's is the way to go. Go Capita!

I think all the points below are fair. I'd add CPI contracts/ revenues are also indexed linked to varying degrees with inflation. This should resonate with defensive orientated investors in the year ahead. Higher interest rates against a nil debt glide path over the next 12 months should build interest from ii's for the next phase and valuation is on the cards for end of this year. Then there is a post transformation 5 or 10 year business strategy. On the 2021 webcast Lewis was excited about international whilst Weller was focused on the cash management this year for obvious reasons.

In the meantime, would like to see a major contract win/ RNS this or next month (on the April webcast Morgan mentioned *2). AGM next week may be a watershed for news, aspirations, delivery on the [new chairman's] watch.

Where does all the time go? Still not selling
https://invst.ly/y2q7r

'£500millions shared among with 27 suppliers including Capita Business Services'
A sign of things to come. Big recruitment infrastructure project to support a nation. Bid project to support big spend and national strategy, such as the Government promise to invest £39 billion in health and social care over the next 3 years

'It also highlighted recently that 2rds of contracts have inflation clauses included which allows them to pass on costs incurred due to higher inflation and therefore protecting margins- all looking very positive'

Relevant bits are:
£9.4Bn unweighted pipeline in 2022
BBC TV licensing -WON
Utilities sector - H1
Technology business - H1
NHS England - H1
Financial services - H1
Financial services - H2
DWP - H2
NHS Scotland - H2

66% of client contracts include inflation linked escalators
22% are fixed price with indexation assumptions built into contracts
12% of revenues are transactional so naturally hedged by updated pricing

So, in next 2 months we will see some contract wins followed by a firmed up H1 report in August and then the run into FY outturn with material debt reduction and when portfolio division is sold, debt free and dividend in 2023 on BoD recommendation. Might hear something from the new chairman after the may agm also.

'I think the talks of dividend by sm is to me positive. If they implement this in 2023 then I expect disposals to near enough by completed in the next 8 months..having said that, he said once portfolio division is sold to their plan, they'll be debt free. Imho'

I also heard noted H1 bid pipeline prospects likely to land in the short term and valuation will happen near year end/ into 2023 on debt pay down