Member Info for GoCPI

Decent note, with an update from Citi included at the end.

https://finance.yahoo.com/news/capita-shares-rise-outsourcer-says-072717772.html

@Voli - Overhead is already reduced quite a bit, and is still being reduced as we speak. The office lease footprint would've fallen more in H2 and as stated in the report today, will continue to be reducved in 2023 as they firmly pivot to a Virtual First model for their emnployees - what do we think that does to expenses? They'll keep coming down too.

And not to mention the Post IFRS-16 debt will drop as these leases keep getting dropped. I'm not expecting miracles in the near term - I know we need to see dividends come back before these really take off!!! That'll show undeniable progress.

OK - so was I. Capitalizer. I kept adding in the past few days with the hope that the market receives this update positively, but there's always the magging feeling that something could derail the price. I'm convinced that until they announce a dividend, there won't be a true multi-year breakout highs...I keep hoping that they could do this in March or August next year!!!

@Voli - "@Capitalizer: I understand your concern that, unlike last year, they didn't include the key figures. I also hold long enough to remember that 10% up and then 10% down the next day is not unusual for Capita." It sounds like you're with Capitalizer and sold a good chunk thinking this baby is going to the teens.. Lol,. :-)

What do you think happened to the SP year when they released all those numbers/metrics that they didn't release this time? I'd buy back if I were you, and quickly!!! ;-)

Sure - and I won't be surprised to see 30p before the year end. Revenues still growing and profits still coming in...Recession or not!!!

"But claiming they're a holder lol imho" - I'm no psychic to validate whether Capitalizer is IN or OUT - but, hanging on to or looking at negatives are personality traits that exist with abandon with some people. It could juist be that?

I'm not sure why we would head into a loss though? Certainly at a reported profit level, we'll be solidly in the green with the excess sale price of Pay360 over the net asset valuation in the balance sheet, and higher profits and cash flow for H2 was already telegraphed in the H1 release. Maybe Capitalizer is one of those nervous nellies that sold out 90% of their holding heading into the release and now kicking themselves that they need to buy back higher? You can still claim that you're in it when you have 10% of your holding. ;-)

US CPI was cool as dry ice - Dow futures jumping!!! CPI to follow.. :-)

And this time around, we should me receiving some good interest income on the cash in hand (with rates being a lot higher now than in the last 15 years) that should cancel out interest payments on the gross debt. What a delightful place to be in !!! :-)

Net cash receipts will be circa £220 million, I'd suspect - net from Pay360 and WSP is £210 million (out of a £225 million gross). The net cash realised will go on the balance sheet as a cash in hand/bank item to be used for 1. Retiring debt when it comes due (£75 million in 2023) 2. To make pension deficit contributions and they've already stated they did this in H2 2022 ahead of the Triennial valuation in March 2023 3. Ongoing investments 4. Dividends

More details to be available on March 2nd. It's looking good for dividends though!!!

"chuckling about the 'Capita Experience' euphemism" - that's a sea change from the old 'Crapita' monicker..

Slow and steady progress is always welcome...bring on the dividends in 2023!!!!

Spot on, Culley01. That's precisely the investment thesis. Restructuring out of the way, financial debt is more or less non-existent, revenue growth kicking in, cost base is a lot lower after the restructuring, improved focus on the higher profitable sectors, higher % EBITDA runrate, dividend reinstatement - will eventually push it higher.

I didn't expect anything spectacular - improved revenue growth is always a positive. And the 'Portfolio' disposals should be complete by h1 2023. Here's additional colour from the update. From below, it looks like they've accelerated some pension deficit contributions, and with Gilts yielding a lot higher than they did even 6 months ago and inflation expectations reducing over the medium/longer term, you'd think we won't need to make any substantive pension contributions from 2023 onwards. All pointing nicely to Dividends in 2023 - they could still announce a token dividend with the 2nd of March FY results annoucement - I know that's very optimistic, but if the trajectory is positive and the debt runway looks clear, what's stopping JL?

ATB

Net debt and balance sheet

The final steps of our Portfolio disposal programme are progressing well. We have now completed the Pay360 disposal and announced the disposal of the CTI business, part of our Business Solutions pillar. We have launched processes on the majority of the remaining assets and expect to have completed the disposal of our Portfolio businesses in H1 2023, as expected.

As a result we expect the balance sheet to be in a strong position at 31 December 2022 and to have a very low level of financial net debt2 at 30 June 2023.

Our post-IFRS 16 net debt3 is also expected to continue to decrease as we reduce our property leases. We are targeting further property footprint reductions over the next year as we continue to establish our ‘virtual first’ working model, which has successfully delivered good client service whilst creating job opportunities for our colleagues away from our legacy physical locations.

As part of the disposal process we have also accelerated scheduled pension deficit payments. This will further strengthen the pension fund’s position ahead of the next triennial valuation due as at 31 March 2023.

Full Year Results

Full Year results announcement is planned for 2 March 2023.

Summary

-- Capita has delivered adjusted revenue1 growth of 2% in the 11 months to
30 November 2022 in line with full year guidance:
o Consistent performance in Capita Public Service;
o Improved revenue trajectory compared with 2021 in Capita Experience;
o Capita Portfolio growth as businesses continue to recover from
Covid-19.
-- A stronger balance sheet:
o Disposal proceeds of £462m received to date in 2022:
-- Completion of disposals of the Property pillar and Pay360 for
a combined £239m in gross cash proceeds;
-- Agreed sale of Capita Translation and Interpreting (‘CTI’).
o Total of £221m of debt maturities now repaid in 2022;
o Significant reduction in FY 2022 net debt; very low level of financial
net debt expected on completion of remaining disposals.

Good news - cheers, Brass0. In the H1 update, we noted the following - "Major renewals include two existing telecoms clients, a financial services client, a second DWP contract and one for NHS Scotland." This must be the second DWP contract that was referenced and we may get an announcement tomorrow. It'll be great to see how the Experience contract wins are tracking, noting that there may be lots of small contracts beung won.

We did note the following too - " We have seen a couple of contracts move into 2023, having originally been expected this year, including one for the Department of Work and Pensions and one for a major financial services company." - There's more DWP contracts to be won next week/

And for those numerically minded, here's the gross debt numbers at the end of 2022.

GBP - £99.6 million - blended interest rate circa 3.3%
USD - $178.3 million ($39.4 million out of this to be repaid in January 2023) - blended interest rate 3.5%
EUR - €60 million due 2027 - interest rate 2.875%

The above is circa £295 million.

And the reason why I'm saying it should be closer to the £50 million number is the following.

Net Debt (pre-IFRS) on 30/06/22 - £289 million

WSP Acquisition proceeds - £60 million
Pay360 proceeds - £150 million
H2 Free Cash flow - Take a guess - realistically between £50 to £100 million.

Aggregate these and you can a pathway to net debt close to or even less than zero, at the end of 2022. We don't have too long wait now.

@Cashola - " I guesstimate that interest bearing debt should be between 150-250m". We know that Gross interest bearing debt will be circa £295 million, after the £139 million debt paydown last month. If you're referring to Net interest paying debt (Gross debt Minus net cash), I'd wager that'll be between £50 to £150 million at the end of December - maybe we'll get guidance from CPI tomorrow on that count and it'll be fantastic is they can land at the lower end of the range.

7 AM is typically when the RNS is released, although there's been the one occasion when the RNS landed on a US site at the time that Aim just pointed out.

Good luck all - some progress tomorrow will be welcome and I'm very optimistic we will. Poor NoFear is covering all his bases after all the misses (from a market viewpoint) in the recent updates/HY releases :-), but I feel we're at the cusp of sustainable cash flow. Let CPI bring dividends on and we'll get a breakout above the 55p mark that we couldn't penetrate since March 2020.
Tomorrow may not bring us all the answers we need, but it will set us on a good path. Will the market bite? I sure hope so, but I won't be disheartened if it doesn't - H1 23 should see us make more progress.

@Trenners - the only way Capita can fail is if profitability and cash flow from their business fall off a cliff and (interest bearning)net debt starts climbing from the current low levels. I agree that its currently priced to fail, which is a head-scratcher. Hey ho, that's how multi-baggers are made - provided they engineer a proper turnaround.

Peterrr had some great points laid down, and it sounds like he's a Capita insider (not in the top management sense). If some of the key points like top heavy management impacting margins, consulting clean-up and move away from too much woke focus and look to deliver tangible ROE, they could be off to the races. This is what the market ultimately is gappling with and we can only hope that progress can be seen on Tuesday.

"Maybe an institution is reducing?" - Unlikely, with the puny trading volumes this week. It's more likely that Nervous Nellies and PI shorters are selling!!!