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Capita - H1 Update

Capita - H1 Update

Who Is This Quarterly Update For?
NelsonHall’s Half Year Update on Capita provides a snapshot of recent developments at the company. It accompanies NelsonHall’s more comprehensive Key Vendor Assessment program.

Both programs are designed for:
- Marketing, sales and business managers developing strategies to target service opportunities within the BPO/IT Services markets
- Sourcing managers monitoring the capabilities of existing suppliers of IT and BPO services and identifying vendor suitability for these services
- Consultants advising clients on vendor selection
- Vendor marketing, sales and business managers looking to benchmark themselves against their peers
- Financial analysts and investors specializing in the BPO/IT services sector.

Highlights
H1 2017 performance: starting to execute on turnaround plan; two major divestments; achieves significant margin improvement against a backdrop of declining topline. Bookings soft, primarily renewal activity
- Capita now has a significantly different divisional organization, now rationalized to just five. (Sale of Capita Asset Services agreed, being treated as a discontinued operation)
- Group revenues were down 0.5% organic but underlying operating margin was up over 3.3 pts y/y
- The strongest performing division was Capita IT Services (“better than expected”), under new management
- Sale of specialist recruitment units in Professional Services division
- Private Sector Partnerships division benefits from new CMS BPO contract and contract modification with BBC and Co-Op Bank
- Public Sector Partnerships revenues impacted by declines in central government and real estate sectors. DIO contract will now end in 2019, with no gainshare component
- H1 2017 bookings were under half the level of H1 2016
CEO Exit
Andy Parker has exited with no permanent CEO appointed. FD Nick Greatorex is interim CEO.

Progress in Turnaround Plan
- Has successfully restructured some contracts; others being terminated
- Group business development taking a broader role in working with divisions
- Cost initiatives remain on track to deliver cumulative benefit of £57m by end 2018
The report, available to subscribers of NelsonHall’s Quarterly Update
Program, is 11 pages.

Scope of the Report
The report provides a quarterly update on Capita, looking at financial performance and key developments during the period.

It accompanies NelsonHall’s Key Vendor Assessment program which looks at Capita’s IT and BPO offerings, capabilities, and market and financial strengths, including:
- Identification of the company’s strategy, emphases and new developments
- Revenue breakdowns
- Analysis of the company’s offerings and key service components
- Analysis of the profile of the company’s client base including the company’s targeting strategy and examples of current contracts
- Analysis of the company’s strengths, weaknesses and outlook.


Overview
Financials
Recent Contract Awards
M&A and Investments
Partnerships, New Offerings
Immediate Challenges
Appendix A: Financials
Appendix B: Bookings

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