Member Info for Chanz

We need to wait until August for the H1 update rather than getting one in June as usual. We know full year positive free cash flow from trading will be a low number and likely to be negative after the impact of business exits. Profit numbers are a bit if a mystery, but wouldn't be surprised if they are expecting a group loss this year but how big a loss who knows. Feels like they are buying time to try and find a way recover from a more negative position... Sorry being a capita investor can make you a bit pessimistic.

I think I recall that margin improvement and positive free cash flow will be weighted towards H2, so the H1 results might not be so great.

Am I reading the release right? £40m of annualised cost savings to be taken out across 2026 & 2027, will be just £40m over the two years rather than £40m in both years?

But then it does say the £40m is enough to offset the £25m of overhead costs allocated to the contact centre which will stay with capita, but I am assuming the overheads are an annual cost. Then another £20m to be spent to achieve the savings so really not that great for 2026. H1 results will be impacted i.e reduced turnover and costs associated with exit & finding the savings and FY not much better, so will be a wait and see if margin % improves in 2027.

So we are expecting the group to report a loss for FY25 given what we know about free cash outflow and exceptional costs but we don't know how big or small. None the wiser really except for promises for the future.

Can't believe the share price is back to 16p (old money)

Does anyone have any thoughts about where Capita might land net profit wise for year end. I am assuming they will report a loss reading into the negative free cash flow and expenditure on the cost saving programme numbers we are expecting in H2.

Link to register for the 9am webcast

https://webcast.openbriefing.com/capita-fy24/

They have said end of year debt position will be lower but I have no idea what they are expecting it to be.

Thanks Hexam, reassuring to know. If we have no exceptional items or balance sheet write downs in H2 and the H2 operating profits are similar to H1 Capita could recover the H1 reported loss to report breakeven for FY. I live in hope, but would significantly improve the perceived risk for investors and improve the share price.

So I guess we are expecting another loss on disposal / goodwill write down to affect the H2 reported profit.

I'm sure JL had said previously that he wouldn't retire until the transformation was complete and dividends were reinstated. Hopefully we will find out on Friday in half year results about dividends. I will be really disappointed if he is jumping ship because the restructing was a disaster and they can't generate a profit still despite all the cost cutting programmes. Hopefully some good news to come on Friday, although I am preparing myself to be disappointed.

And just before H1 close...I doubt that was a coincidence.

Capita is expected to be profitable in Q4 with the half year annual leave accrual also expected to reverse so I am hopeful of improved results for the full year. Profit margins are forecast to increase steadily through 2021, but won't be until 2022 that they can settled all debts and cash liabilities to be both profitable and cash positive. By then the share price will be closer to £2, so is a great time to buy now.

A little bit frustrating that the share price has been affected by the Brexit uncertainty. This is one of the lowest risk stocks in my opinion right now. Capita are fortunate to have a large number of multi year contracts and are heavily weighted towards public sector/government revenues where there will be an element of protected budgets, or necessity to outsource to reduce cost or leverage technical/consultancy expertise to improve services and innovate. I do believe they have a sound plan which will deliver improved margins and profits next year. They are forecasting a steady increase in profits which will be evident before they return to being cash positive which in itself is a good thing in that these profits will used to sure up the business during 2021. This is a safe bet regardless of the brexit uncertainty.