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IQ Real Return ETF Stock Price: Quote, Forecast, Splits & News (CPI)

Perplexity Finance

Company Profile

Capital Properties, Inc. Price & Performance (CPTP)

Stock Performance

Updated Apr 25, 8:00 PM UTC

Capital Properties, Inc.

$9.30USD

-$0.35 (-3.63%)

Open

$9.65

Market Cap

$61.38M

Year High

$10.95

High

$9.65

P/E Ratio

26.6

Year Low

$8.89

Low

$9.30

Dividend Yield

3.01%

Volume

100.00

Latest News

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What's Happening

Earnings

Report Date

—

Rev Estimate

—

Avg 1d Change

—

Report Period

H2 2024

EPS Estimate

—

Implied Move 1d

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Transcript

4m 47s

Thank you very much for making it to this busy room today. But also thank you very much to those of you who are listening or watching remotely. As we present the 2024 financial results, These are my sort of first full set of results as such. I joined the company an eternity ago, it seems. It's only the middle January of twenty twenty four. So besides sort of doing the normal reporting, I'm still hoping to share some more of my learnings and recommendations and things that we're doing over this past year. Also in the room, we're going to have Pablo, our new CFO, who took over from Team Weller in the summer. He's had a very busy six months of induction into the company. And just really excited to get going with this. But before we do that, I'd like to sort of draw your attention to the disclaimer slide And start with a little recap of the better capital slide is I think it's a good framework to remember So I said when I joined back in January, I went into it was a very ambitious onboarding plan. And I travel extensively to meet our colleagues, our customers, our operations, our call centers, have really wanted to get under this game of what we did at Capita and how we did it and why we did it and how much money we made or not as the case might be.

6m 22s

And I really wanted to understand where we were winning and why and how often. And why we were not winning and why and where we were making money and where were we delighted [indiscernible] And we did a true three sixty degree analysis of the company, we formulated as an executive team and the Board a strategy we signed off at the May and then we came out with a Capita markets update back in in June where we just sort of presented what we wanted to do with Capita. And for many of you who might be new to the Capita story and you might have not been there, let me just quickly recap that part of my wow on the onboarding was to see the strength of the relationships and the customers and the understanding of the business processes that our colleagues had. That was a really solid foundation. It was something I was hoping to find, but there's never certainty until you really get there. That was a really strong foundation but the disappointment was at the time we hadn't managed to translate that value that great work we did into financials. And the financial performance was very disappointing.

7m 33s

So when we said we wanted to build a better capital, what's about building on the strong foundations the company had really just making sure that we get a more operational [indiscernible] NIMBLA capital building a better company for and with our colleagues and one that was able to produce financial results that were commensurate with the great work we did. So that was the strategic agenda that we embarked upon. We've been super busy. 2024 has been I think you can call it, a deep root and branch transformation of Capita has been a pivotal year very foundational year. I'm really looking forward to sharing with you now everything that we've done in this sort of four pillars, the technology, the efficiencies, the delivery and the better company. But before we do that, I think it would be more appropriate if we let Pablo introduce himself, run us through the numbers, and then I'll come back and do the rest of the session. So bear with me a second, and Paolo will take us through the numbers. So Thank you very much, Adolfo.

8m 43s

And good morning to everyone And to those of you in the room, actually, thank you for making your way across to Bovington. Starting by introducing myself. Pablo Andres, joint capital in July, August 2024 and born in Spain, as you can see, but I've been in finance roles in The U. K. Since for twenty years already. The most relevant and recently at G4S. Throughout my career, I've enjoyed working in exciting transformational roles, where I can apply my energy and transparency to drive shareholders value.

9m 15s

And when I looked at Capita from the outside, what attracted me was a company that was close to finishing its restructuring with a new CEO with the right strategy, and the experience to transform it, and the opportunity to be a key member of the team delivering that strategy and delivering the value I know this business is capable of. Now that I'm in the inside, well, actually, what I have observed even with more clarity, is that the ability that Capita has to deliver this transformational strategy is huge. It has a high caliber and hardworking team willing to succeed [indiscernible] and I believe we can help this business to achieve its potential. The first thing I have done is [indiscernible] I thought that the increased transparency would allow stakeholders to better understand the performance of each business, and the intrinsic value of each business. I'm also seeking to provide further clarity on other areas. Such as key changes in operating profit by segment, and working capital by segment separating deferred income and CFA, to show cash back profits. I trust that by starting with the actions above, the market will better understand our business and will be able to measure our progress we deliver our strategy.

10m 47s

So now moving into the financial highlights. The group revenue declined by 8% reflecting the impact of prior year contract losses and delayed mobilizations the exit of low margin contracts together with the progress we have made exiting close book life and pensions and the reduction of volumes in the contact center telecoms vertical. Operating profit increased by 5.5%. Reflecting in year savings of €90,000,000 from our cost efficiency program offset by the revenue reductions I have described and the non repeat of positive prior year one offs of around $34,000,000 This delivered 50 basis points operating margin improvement in 2024. Free cash flow was an outflow of €122,000,000 similar to 2023. However, it reflects the end of the pension deficit payments and cost associated with the cyber incident. Costs of €45,000,000 in delivering our cost efficiency program. And a more sustainable approach to working capital management. We have delivered ahead of schedule annualized cost savings of EUR140 million. Our net financial debt gearing has reduced to 0.5 times EBITDA. And our leased debt including sublet lease receivables, is around €250,000,000 So now moving on to the profit reconciliation. As you can see, the key items between our adjusted profit and reported profit the €171,000,000 gain on the disposal of Ferrant Capital One the investment in our cost reduction program of $28,000,000 following $54,000,000 of P and L costs in the prior year.

12m 49s

And goodwill impairment €75,000,000 Codewell impairment relates to the contact center business. And is mostly driven by the lower revenue base for the projections made in 2024 including lower volumes in our telecoms vertical, which are expected to remain subdued in 2025. Now before we dive into the detail segment by segment, I thought it would be helpful to show the overall picture of the group with the most material items in each division. The table shown on this slide shows adjusted performance for each of the divisions. And summary of the key movements within each division. I am not intending to cover financial performance here. In this slide. I will provide the details in the following slide. However, in here, what you can see is firstly, public service. Which had a significant top line and profit headwinds during 2024, but has made overall good progress on margin, supported by cost saving initiatives. This business delivered an EBITDA of $136,000,000 with a 73% cash conversion.

14m 3s

The contact center business has had a more difficult year With the impact of prior year contract losses and one offs, and the reduction of volumes related to the telecoms vertical during the year. All of this together [indiscernible] benefit of the cost savings with results showing a net loss of €6,000,000 On an underlying basis, through the benefit of our further efficiencies, and strategy, this business should be able to deliver market comparable margins. As we execute our strategy set out in the Capital Markets Day. Our pensions business is an attractive growing business. It's managing defined benefit schemes, and pension consultancy services. It is winning new mandates and improving margins. And it's delivering solid cash conversion with an EBITDA of €34,000,000 Finally, regulated services. It is made up of businesses we identified in the Capital Markets Day as Managed for Value. It includes our closed book life and pensions business, that we have signaled our intention to exit. We made good progress during the year with one remaining customer to agree exit And we are working hard to agree a resolution. As previously disclosed, we expect overall cash outflows of €20,000,000 per annum until we exit this segment.

15m 33s

And finally, we have the cost of running the PLC separately reported with its working capital showing the reduction of usage in the factoring facility this year. So now moving to the details for each segment, I'm starting with Capital Public Service. Revenue saw a reduction of 0.9%. As we saw the impact of contract losses in previous years, we exited some low margin contracts and we had a more disciplined, lean approach to bidding at appropriate margins. We also faced the impact on the revenue line from the delayed mobilization of two contracts, one in 2023 and these were mostly offset by new wins and indexation. Operating profit increased by almost 20,000,000 or 28%. And this was mainly driven by the results of our cost reduction program, partially offset by the previously announced contract losses and the impact of 15,000,000 that we had in the Smart DCC business. The year on year impact into the Smart DCC was mostly driven by project work that concluded in 2023 and the twenty twenty three-twenty twenty four Ofgem price determination, that delivered significant cost disallowances. During the year, we have tightened our commercial and operating controls in the Smart DCC business. Ensuring a more robust evidence trail is kept supporting the efficiency of all costs.

17m 8s

As well as meticulously documenting all activities undertaken at the request of our client. Cash conversion during the period reduced to 73%. Mainly reflecting the overspend on the contracts that had a delayed mobilization, and a more sustainable approach to working capital management. Onto the contact centers.

17m 36s

Before I dive into $20.24 per you will recall that at the Capital Markets Day, we gave indicative margin for contact centers in 2023 zero point seven percent positive. Reflecting significant opportunity versus our peers. You will see in the slide that margin for 2023 has been restated to a negative 0.5%. This has been updated following a more detailed calculation of overhead allocations. But most importantly, this does not change the key message. We have lots of work to do and there is a significant opportunity in this business to get margins in line with peers. Going back to the top then, revenue in 2024 saw a decline of 18% reflecting previously mentioned one off benefit of our BMO2 contract Prior year contract losses and lower volumes within our telecoms vertical. That are expected to remain subdued in 2025. Operating losses were $6,000,000 compared to $4,000,000 losses in the prior year. As prior year losses of 4,000,000 benefited from the exit of the previous VMO2 contract, that delivered a one off accelerated DI release of $10,000,000 and a further DI of 8,000,000 Without this, the business would have made losses of €22,000,000 in 2023. So during the year, [indiscernible] material cost savings by significantly reducing our footprint in property and increasing our nearshore and offshore activities through the opening of new global delivery centers in Bulgaria and South Africa.

19m 29s

However, these savings were partly offset with the reduction of volumes the continued investment on new technology products with our hyperscaler partners and on a year on year basis the non repeat of the twenty twenty three one offs. Operating cash flow was close to nil during the year, reducing from €20,000,000 in the prior year that benefited from timing of payments BMO2. Moving on to our pensions business in Capita Experience. During 2024, revenue increased by 5.1% Volume increases So we saw volume increases with clients like PIK. Together with some benefit of indexation. Operating profit improved by 8.5%. Supported by the savings from our cost reduction program and operational leverage from growth. Cash conversion also improved to 98% as we worked hard to improve our billing cycles to drive what should be more appropriate level of cash conversion for this business. Turning the page to our largest remaining managed for value business, regulated services is mostly our closed book life and pensions business. Where we have made significant progress agreeing to exit contracts during 2024. Including the agreement to exit a client signed last month. And we will deliver these exits the coming years. Exits are now agreed with all but one customer.

21m 12s

With whom we remain in active dialogue. As a result of these exits, as expected, we saw a decline in revenue and profit in 2024. Additionally, you remember that 2023 included a $24,000,000 one off commercial settlement and a cash one off from a contract termination. Cash consumption of this business during 2024 was 40,000,000 reflecting payments from customers as we exit them. And we continue to expect cash cost of around €20,000,000 per annum. As you well know, this is one of our highest priority areas to resolve We have made [indiscernible] progress during 2024, and the beginning of 2025. And we have good engagements in discussions to exit our last customer. We will provide an update when we get to our resolution. Moving on now to cash flow on the next slide. Our EBITDA was €186,000,000 €10,000,000 lower than the previous year. And this was mainly driven by lower depreciation and amortization due to the continued progress in our property rationalization program. We then see the net of deferred income on CFA 2020 showing a more normalized level of around EUR 50,000,000. Dollars compared to $100,000,000 in previous years. Other working capital shows a €53,000,000 negative outflow reflecting more sustainable working capital management approach in 2024, and the non repeat of payment phasing on the VMO2 contract in 2023.

23m

Non cash and other adjustments include mainly movement from provisions That get us to operating cash flow of $72,000,020.24. Operating cash conversion in the round mostly reflects the reduction of DI and CFA to a more normalized level. And the adjustments to a more sustainable working capital in 2024. I expect cash conversion in 2025 to be around 55% to 65%. We then have the end of the pension deficit contributions, remaining costs associated with the cyber incident, and the cost to achieve our cost reduction program that delivered EUR140 million euros of annualized savings 2024. Well ahead of schedule. All of this left us with €16,000,000 of cash generating from operations, excluding business exits. So now turning to the remaining parts of the cash flow. On net debt, We start at the top of the left it in the prior slide. With a 16,000,000 cash generated from operations.

24m 10s

With an invested €50,000,000 in CapEx in contract delivery [indiscernible] [indiscernible] We paid our interest and taxes for $41,000,000 and we saw the steady reduction of lease payments at 48,000,000 as we continue our property rationalization program All of this resulted in free cash flows excluding business exits, 122,000,000 outflows And we expect this number to become positive from the end of twenty twenty five through the delivery of our strategy and cost savings. We now continue below free cash flow excluding business exits. We generated $258,000,000 from trading and proceeds on the disposal of Ferra and Capital One, and other cash flows and non cash movements reflect our new leases of the London headquarters and the global delivery center in South Africa. Our closing net debt was $450,000,000 That includes €66,000,000 of financial debt dollars $349,000,000 of IFRS 16 leased debt But let's not forget that the headline debt Net debt excludes €96,000,000 of lease receivables shown in the balance sheet. Liquidity and net debt is on our next slide. As you can see, the year end position shows almost €400,000,000 of total including $250,000,000 of the RCF available for use. Considering the maturities in 2025 and 2026, including those repaid in January, we have announced this morning the issuance of a $94,000,000 private placement.

26m 4s

Which strengthens our maturity profile to deliver our strategy and transformation. At a cost below that of our RCF currently. We expect net debt to EBITDA remain below one times at the end of twenty twenty five. So now turning to our summary for 2025% outlook, You will see we are providing quite a bit of granularity on this slide. In terms of revenue, we expect the group to be, as a whole, broadly flat. With low to mid single digit growth in public service, mid single digit growth in pensions, offset by high single digit reductions in contact centers, driven by the volume reductions described previously and the continued conscious reduction in our closed book life and pensions. We expect operating margin of the group to show modest improvement in 2025. With progress both in public and contact centers, through the delivery of the cost efficiencies, stable margin in pensions, and a significant deterioration regulated services as we make progress on agreed exits and continue our negotiations with our last customers, [indiscernible] closer alignment with profit and cash flows than in previous years. In terms of free cash flows, we are pushing hard in H1 with our efficiency program.

27m 36s

To ensure we deliver the committed annualized savings of €250,000,000 from the end of twenty twenty five. For 2025, we expect cash conversion of around 55% to 65% delivering a free cash outflow before business exits of €45,000,000 to €65,000,000 and this number already includes €55,000,000 associated with the investment on delivering the efficiency program this year. That means that we will be turning into a positive free cash flow from the end of this year. We have also continued with housekeeping activities this year. And subject to relevant approvals, we will be completing a 15 for one share consolidation and a share premium reduction. So summarizing based on everything I have seen since joining Capita, we remain confident on delivering the medium term targets And as set out in the Capital Markets Day, With this, I will hand over to Adolfo.

28m 48s

Right. Thank you. Thank you, Pablo. [indiscernible] [indiscernible] sets you welcome the additional sort of transparency, housekeeping, and definitely the focus on the different business units, I think it's good to see everything and see everything with the right numbers, so that everybody can see what is it that we're trying to drive and where I think it does highlight both the progress that we've made in 2024, but very importantly, what I said at the top, the mandate we have to do better. I think there's still a significant opportunity to get to first of all to that medium term guidance and then go from there.

29m 31s

So in terms of plan, and again sort of for those of you who have just sort of joined Capita story Obviously, we are one of the largest business process services providers in The UK, Ireland and Central Europe and what we do is deliver extremely complex outcomes for our customers. Right? It's just if it's complex and it requires business process understanding and excellence, if it requires the best possible technology and if it requires the best possible humans in the loop. That combination is what we do to deliver those outcomes in the countries where we operate. And we will do that whether it's delivering to the city sense or of local government or whether it's providing services in partnership with central government departments or helping across national preparedness, defense, space, or addressing hundreds of millions of queries from end users and consumer in telecommunications, utilities, financial services or dealing with vulnerable citizens across the board. We're extremely proud of what we do And what we do is an integral part of the social fabric of the countries where we operate. And we aim to continue doing just that but doing better and getting a better financial return [indiscernible] A year ago, I stood here And one of the things I was saying with you is when I'm joining from the tech industry, I've got very much of a tech career.

31m 7s

In my last assignment before coming here, I was at Amazon Web Services And as you said, I was sharing to everybody like what I had seen in the tech wall led me to believe that technology was going to fundamentally transform this market. And that if there was one market where we're going to see a significant reconstitution of components and value creation, was this market. As you've probably said, it is very, very clear that that's the way this industry is going. I am very pleased that we made that call a year ago and that we really and doubled in into that approach. Because that's just there. We have seen probably more change in this in the makeup the strategic makeup of the BPS market, in twelve months than we have probably seen in the last twelve years. Put together. These are definitely happening now. As we have embarked upon this transformation, we're taking advantage of saying, okay, what do we know about our business processes? From our customers? And let's try to map those business processes into tech opportunities, whether it's user registration to use new services, whether it's processing of medical records, whether it's getting automation of debt collection, whether it's driving efficiencies and supporting better calls and better experience in our call centers, there is a lot that we know about our business processes.

32m 36s

Let's just map that into tech, into AI, into augmentation.

32m 42s

The second thing that we needed to do is not just do it for the sake of a [indiscernible] and not for the sake of just ticking a box, but deploying it at scale. So that it matters. It's still early days, but you're going to see later, right? By the end of this year, over half of the revenue of our call center will be supported and augmented by EA. So we're doing this not just to prove that it works, but to really have a material impact in our operations. The other thing that I said a year ago was I didn't believe we could reshoot we wouldn't. Build all of these technologies ourselves. Coming from the world of tech, understanding what hyperscaler technology partner can do, understanding this sort of the wagon of innovation, the click and the fast innovation that they do, the amount of very general purpose innovation that they bring it didn't make sense to build it.

33m 36s

What we needed to do was to partner [indiscernible] and orchestrate the best experience based on them. And I think you're going to see a lot of what we've done in terms of hyper scale, our partnering, and repurposing our tech efforts and organizations and talent to sort of add that orchestration level and bringing in the our Capita special source on top of the partnering solutions. It was really important to start shifting from service as FTE to service as software. Now this industry has been service as FTE and it's been about labor out of the trash for way too long, So now as we have embedded into recruitment and we've been looking at high volume recruitment as an opportunity I mean, last year alone, we hired 10,000 people.

34m 25s

Right? So we do a lot of high volume recruitment, and a lot of our customers do high volume recruitment. Instead of going about it in the traditional way, we have gone with AI agentic, and we have created a software capability from the back of Agentforce. To create that type of innovation. We we're doing now bid generation, we're doing bid generation on the back of AI. When we're looking at providing user registration services for new services that are going live, for example, in Transport for London, We're doing that now instead of just throwing hundreds and hundreds of people in there. We're just doing it with tech. And lesser people that are more equipped. So that's part of our implementation. And human in the loop AI, I believe this is sort of attempt that was going by MIT, and I believe it describes really, really well the future of this industry. Because even though the press would love to arbitrate that there are start ups, that there are capabilities that are going to be agents that are going to take over the world, the reality is that it's always going to require to have a human in the loop.

35m 23s

Let's let technology do what technology does best, fast, processing of information, high volume information, automation, repetitive tasks, And let's just make sure that we got the right humans with the expertise the empathy, and getting the two of them working for one another.

35m 40s

To deliver that. And I think in Capita, we've got a big advantage there. And then we've got to build this at scale. Right? These things can't be examples. There have to be the menu, and you've heard me talking about the menu and the menu is growing. [indiscernible] Chief AI and Product Officer, is on the back. We're going to be talking about him and the mission he's taken on. We are going to be building this at scale. This is going to be the full menu. So this is happening to us. It's happening to all of our industries, probably happening more to those that have a high content on professional services than it's happening to others. And I'm really, really excited because this is going recreate the value chain And I believe that by doubling down early on and doing it with purpose and intention, we're going to be really well [indiscernible] So the next sections I'm going to show you some early fruits, some early green shoots, some early validations of what we're doing. Obviously, this will take time. We can't expect to see twelve years of change materializing into the financials. And so twelve years of of the old walls materializing into the financials in one year, I am confident that we're starting to see now that, so you start looking at the business over a compounded year view, we're going to start seeing that that evolution there.

37m 1s

The other thing that's happened in the market particularly in our largest and and most important market, which is The U. K. Public sector, So over the last couple of months, we've seen certainly from the Prime Minister down everywhere in government, an absolute drive to not just distrust AI as it probably was until recently. By looking at AI as a Enabler. To solve some of the challenges that we've got to deliver citizen service, to deliver the services that the civil service is trying to do. And to do that within the new realities of the budget situation in the government. And I think the playbook, the AI playbook is ambitious, It's still up to play for. It needs to be mapped into particular legislation and projects and this work to do in contracting, but it's certainly a fantastic start and I think one that should help us move the country forward and one where I believe that as a national trusted partner, a sovereign trusted partner for the government, we're in a better position to leverage going forward. So quickly back on the four betters. I mentioned Samir, side on the back. Samir joined us from Amazon In November, and he's inherited and he's putting together a new organization whose job is to deliver This AI as a service to our organization and do that at scale.

38m 37s

He's inherited the best of the people that we already had Capita. We did have a lot of people that were just buried into into contracts that were buried into different organization There were somewhat hinted back by our sort of broken approach in the past to go about these things is also bringing in successful entrepreneurs, bringing people from Amazon, people from Salesforce. Into the organization to really just go and orchestrate people who are cloud native, people who are digitally native, people who have been working on AI already, and are able to orchestrate all of these solutions work in a very agile form, somewhat different from the rest of Capita. Leaving closer to the customer, a lot more faster cycles, less bureaucracy, a lot more faster innovation and always thinking back from what is the I'm walking backwards from what is the customer value I mean that. And I think he's got it's got to be job, but he's got the easiest job in the planet because all he has to do is to choose from the best of the sort of $1,000,000,000,000 investment innovation that the hyperscalers are putting out there and figuring out what is relevant to each of our customers' business process when And how And why?

39m 51s

So we're hoping that we will be able to derisk lot of what we do in there. And as a good example of the derisking and acceleration of AI, when I mentioned an announcement we made last week of the Capita AI Catalysts as a process where Samir's and Samir's team will go into customers initially and will do for free exploration, pilots on where AI can have a transformational effect. And start running those. And then if they are successful, then we can go and transform into a project. So really excited about what we're doing there. Obviously, we didn't wait for Samir to arrive. We did a lot of work since the beginning of the year I've mentioned the privilege it has been to be one of the first companies in Europe working with Salesforce on the Agentforce implementation but we still need to stop there. We've launched the Capita contact solution on top of Amazon Connect, [indiscernible] AgentSuite, which we presented in July and Karim, who's also at the back of the bar, is busy deploying across all the call centers. It's something that we built with as well on top of Bedrock platform. We are deploying aggressively, co pilot in turn [indiscernible] groups and operations Teams can come and page on how they think they're going to use Copilot internally what benefit are they going to get, what is the return on investment and based on that return investment, we will fund them the project.

41m 27s

We will give them the technology. And we're really just making sure that this innovation, this fever sort of happens not only top down, but it's also happening bottoms up. And we're really quite encouraged for what we're seeing there. And then very importantly, in the area of IT, managed services, a lot of our customers have big complex heterogeneous and sometimes out of date. IT stacks. So IT managed services is very important. I'm very pleased to report that not only we've now moved our internal IT operations onto ServiceSource, but we're now in a position as well to take the market leading platform to market to do managed ITMS for our customers on top of ServiceNow. So this is just a few examples and just you got a quote there from Zara and SaaS, which to show you that this is happening. But some of you might be saying, well, where do I see these other operations? Well, if Corinne was here, as in here versus the back of the room, she will be quickly telling you well, I'm really, really busy deploying all of these in contact centers, right, because if whether it's my support staff that are already using these I plan to have by the second half over 5,000 agents already being augmented in the day interactions with customers by Gen AI through the use of of the agent suite.

42m 44s

And having that at play across 20 campaigns. And I referred to in excess of $350,000,000 of revenue of call centers already being augmented to do that by the end of the year. So this is a really important thing and we're seeing value already as you can see from [indiscernible] our customers are trying to see that it really works Very importantly for us is also our colleagues is starting to see the value. They can see how the quality of their engagement the day to day is improving, how they are just doing more high value work And when you talk to them, they absolutely love it. And those who still don't have it are now just lobbying internally to also get the wrong AI assistant, which is fundamental change for some of this sort of fear and and stuff that you read on the press. So really impressed about what we're doing. Similarly, in our public sector business, Richard Saultser being like really busy, and we've been talking about how we've been using AI and simulation, some of the great work we do for the Royal Navy. We've been talking about some of the work we're doing for number plate recognition and some of that we do for user registration, [indiscernible] Probably less known some of the great new work that we've been doing with local public authorities, where we have created and APM base automation that allows you to effectively have a very efficient workflow to enable a local authority to go after that very unpopular task called H debt.

44m 13s

And give us that responsibility. It's an outcome based service fully delivered by Capita on the back of this technology, which is we're quite hopeful for. And then similar, when you're dealing with something as critical as medical records, this particular case in the context of recruitment, how you're able to remove going from twenty nine to twelve days really removing a lot of elapsed time and cost and inefficiency out of the system by deploying digitally trusted, and I'm going to underline the word trusted, because not everybody everybody could do the technology, but can you do it trusted? And verify it [indiscernible] of medical records and getting sort of digital consent so your information can securely move from the source, normally the UGP practice, [indiscernible] safely, securely But it's also happening in pensions, right? Because pensions is another market that is changing, is moving. And as we said, it's we see there is more potential opportunity if the government brings some additional legislation there. But already the move to digital is there is very real. We've got now over 1,000,000 people who are engaging on the online portal, we've got 37% increase in online engagement as a whole Most importantly, we've created a new tool called Digital Mover This actually allows over 6,000,000 people to stay in touch with their address and their pension and sort of avoid a number of problems that have been associated with sort of discontinuity.

45m 50s

But going forward, we are building now a very digital pension front end on the top of Microsoft Dynamics platform, is going to give us the ability to bring everything in that sits in the Dynamics platform. We're going to be able to do profiling. We're going to be able to do a lot of AI out of the box, Copilot, a number of things, mobility, mobility apps, to really make sure that we bring a really good experience, not only for the digital trustees, but also for for the end members. We're very excited about the work that we're doing here. We see a lot of acceleration. By the way, a lot of the Capita, digital pension platforms are now also going to be built on Amazon Connect.

46m 30s

For telephony. So again, we're bringing in the best of the different hyperscalers to get that benefit. Obviously, with the customer, recent a couple of weeks ago and they were just telling me how in awe they were, how the efficiency was of running now this platform on top of Amazon Connect, the amount of information that they had how much the customer service productivity had gone up and the insights that we're getting So really excited about this. And all of these things that I'm talking about are already making it into our go to market. They're a standard practice and a standard component. Of our value proposition as we engage. New customers.

47m 6s

So a lot happening in AI. A lot happening to take advantage of once in a generation opportunity and a lot happening in the time where this BPS segment That this will look like it wasn't anything by the time we're done with 2025. We have a really aggressive agenda really disrupting agenda here for 2025, and it's an area that we're spending a lot of my time on because I believe it's going to unlock a lot of the [indiscernible] locked away value in capital. But to do that, we also need to create space. Right? Were already spending too much money. I think I stood here a year ago, and I said we were spending £2,600,000,000 in cost to generate GBP 2,600,000,000.0 in revenue. And that doesn't add up. Certainly, when you then need to create the space, to do this thing. So we increased the €60,000,000 target to €160,000,000 and then the €160,000,000 we've increased it to $2.50. We were going to do the 160 by June, we ended up doing 140 by December, as you heard from Pablo. Netnet, we are ahead of time and we are ahead of quantum. And we're doing it because it's the right thing to do.

48m 23s

And we're doing it because as we're doing it, we're learning that there are opportunities to be nimbler. [indiscernible] There are opportunities to just reorganize. There are opportunities to look at things differently. And we are looking everywhere. Everywhere. From applications, where do they sit? What is the model of the application? What's on the cloud? What's not in the cloud? What's the organization level? Is the management ratio, we're looking at absolutely everything. And this is one area where we're not going to let go because I think our customers are demanding us continuous improvement in our pricing. We need to be more competitive every year, and this is not something that is just us talking, this is our customers asking us, So we have to become a lean organization. As you become leaner, and this is something that I learn in Amazon, Frugality makes you creative. Right? It will force us to think about things in a way that we haven't done that before. It will force us and it's already making us question some of the sacred cows because we just simply don't have the time or the money to waste. And we're going to be very, very driven on that.

49m 32s

On this one, I have to say New employee count at the end of the period is 34,500. And that just include a number of moves, as you've seen in the fair disposal, just in the Capital One disposal we had 2,000 people left the business under terminations, we hired close to 10,000 people this year as well, and we've had about 9,000 people attrition. So there's a lot of movement in people net net, we're getting smaller to get fita. To build the capabilities that we will need in the future.

50m 15s

So but it's not everything about cost cutting. It's a significant part. I think as we go to deliver that grows in profit and cash back profits. There is a lot of things that are in the mix. Just wanted to sort of highlight a number of things that we're doing So the sales pipeline is getting a lot of attention by our divisional CEOs, Corinne and Richard. We have now a pipeline of approximately €11,000,000,000 of which and this is an important number, of which €5,000,000,000 have a technology, or AI or a hyperscaler underpinned. That's a significant number. It's not the focus now is to focus on the right ones. I think Capita has had somewhat of unscattered approach in the past that is expensive. And is highly inefficient and it just doesn't yield the right numbers. So we've been more focused on where we're going after because we've got the opportunity to really increase a number of what I call important win rates. In the midsize deals in public sector, We've only winning like one in two. We've got to do better than that. So Richard's got [indiscernible] Deals, which are important for the profile of our business.

51m 39s

Similarly, has the mandate to improve the win rate. In the areas of gold centers. I think it's important as well to just think that you need to do that but at the same time, we need to deliver well. We talked about the 2023 projects that became part of 2024 it just doesn't help. When you don't deliver, when you mobilize late, when you have each We've had north of 20,000,000 headwind for bad projects from 2020, 2020, 2024. So we have to, let's say, really focus because I think as you win more and better, you win more and more margin discipline as you make less mistakes. And if you win in the right places, obviously, we've got the opportunity to compound that. We've less cost and more innovation, higher differentiation, that yields an improved margin. And obviously, it's sort of real margin, real profit backed by by cash. Actually, as I look at this, I look at it and I am confident. Right? We have to make this space and we are making this space. We have to fix the basics, and we're fixing the basics. But at the same time, you have to build the future.

52m 50s

So these are sort of the three waves of any successful transformation. And I think hopefully, this narrative and some of these proof points, you see we are doing all three themes at the same time. And we talk about the importance of customers and delivering to customers and winning I will let you read that at your leisure, but I will going to highlight one number, which I think is for me extremely important. It's probably the one thing and the most proud about I think our team is feeling good about which is the improvement on the customer net promoter score. Right? At times of change, at times of uncertainty, at times of people redactions, at times of news in the media When you are introducing a new value proposition and you get a new team it's really important that one learns how to protect the customer franchise. That once really gets close, a really customer sense that there is intensity customer sees that there is innovation, customer sees there is value, there is good hand holding. I'm really pleased to see that we nearly doubled our customer net promoter score in arguably really difficult situations. So I'm really hopeful that we will continue to do that as we go forward.

54m 7s

Talked about the importance of some of the poor win rates that we need to do there. We started well with an number of deals already won. Early in the year. So a lot to play out for and certainly encouraged by the focused out divisionals on the winning space by winning the right things. And to that example, I thought I would just share two examples of two what would have been bad stories. That we turn into good stories. The one on the left is in the public sector. The one on the right is in the call centers, just sort of give you a flavor. Right? So the one on the left is a project that isn't going too well where we weren't successful. We had an opportunity to retender for a variety of reasons. We retender introducing the new value proposition of Capita into lot more into automation capabilities and workflows in the back end. We introduced used some hyperscaler some consumer tech into the front end. We put up a valid, more cost competitive and we won the retender. That's We were hoping really, really, really well done by the team, really proud of them.

55m 21s

Similarly, Client B in the call center business, a loss making contract, one that we couldn't just get it to work under their own the old way of doing these contracts. We found a way to terminate the contract and walk away. So as the customer came out, to market We've reengaged, but we've reengaged with them now and the basis, okay, now that there is no contract this is how we would do it. This is how you would do it in 2024. And we engage with them with more innovation, automation, gamification, offshoring, putting in the right blend of ingredients that you would do today. And we want it. So [indiscernible] Might just be two, but I think it's just indicative that while it's still very early days, It's starting to work. Managed for value, I think, Paolo, you covered it really well. I just sort of want to sort of put it there graphically in the bucket. So we've done the disposals that we talked about Capita One, and mortgage already signed but not completed. We talked about very important reduction of these eight evergreen contracts that we had just two years ago down to just one Now, So 08/21, we need to work and can get them and resolve And both our network managed services and on IT managed services at all.

56m 48s

We're doing some work transformational work at the core [indiscernible] just to figure out how what is the best partnering opportunity. Bottom one, obviously, the partnerings with ServiceNow. And we're still defining who we're going to do that in Networks. But as important as everything is around technology, efficiencies, delivery and customers, none of this would be possible without our colleagues. We have a really unique blend of skills in the company, multiple countries, multiple locations, multiple processes, a lot of very different job families. And this is really important that they sort of come together and they feel they want to go on fight every single day for this change, for this strategy. And, but all, for their customer And I think you've got there a number of metrics. The ones that I'm calling out in a difficult times geopolitically, I think diversity and inclusion is something that stands out for us that we'll be leaving And I think the numbers show that we are a good employer and that we are fostering and driving diversity and inclusion practices and something that we're really proud of. Across the board. And then is learning. I think the great work that we're doing in terms of learning and opening and creating data academies and AI academies and the work that we're doing with apprenticeships, opening to a lot of people, now going to 1,500 people enroll management academies It is important for everyone in the workplace to learn It is critical for everyone in Capita Capita.

58m 26s

To develop their career towards this new one. And we're putting a lot of investment into this and definitely to see that There are a couple of other numbers there. Obviously, net promoter score has gone down, which I do understand. Time of changes, at times of layoffs, at times of discontinuity, at times of difficult decisions with regards to salary increases and all of these things, It's hard to recommence your best friend to come and join you, when you look at engagement, and engagement is the one that really matters, to me in this part of the transformation is holding high. And I think ultimately, our attrition has gone down from being in the 30s to then go down to 30 to then now in the mid-20s. And is now in the early 20s. So it's definitely going in the right direction. Is a lot of more work to do We owe a lot to our colleagues, but I think that this trying to understand that it needs to be balanced. I actually quite like also the internal mobility, 20% up It's important that there are job opportunities inside the company. So as you can see, this has been a busy year.

59m 32s

I don't know how it comes across, but it's just been a lot going on. It's been a really pivotal year of one where we're putting a lot of the foundational work upon which we're going to be building this new capital that is going to take advantage of what the future is bringing to this segment. And as I said, this deep route and branch transformation, we are looking into everything, every Bingo process, every single area There is no area that we are not inspecting because I think it's important. And I think we've made a lot of progress across technology, efficiencies, delivery, and building a better company. But there is still a lot more to do. This is year one. And it's not going to just be immediate. So you'll be asking what about 2025? What are you going to be doing? Well, I think you've got it up here. These are the six key priorities that the executive team is working with the senior leadership team and across the company on We got obviously our cost transformation and efficiencies. That's That's there to stay. Got sales effectiveness, as we talked about, in terms of how do we generate the right deals, the right wins out of the existing opportunities.

1h 44s

Product and Innovation Engine that has to be accelerated. Then the underlying technology foundations everywhere else in the company, the underpinned our delivery and our day to day provision of services to our customers. The operating model that I've just described of how do we deliver to that strategy and how do we change both the front office, the tech office and the back office And then as we ramp up, How do we transform more and further the culture so the culture becomes a high performance culture driving the business forward. I think with all of these and all the things that we built in, we believe that we're in a good path to reiterate our medium terms objectives and guidance of 6% to 8% on operating margin The free cash flow conversion and the revenue, the low to mid single digits on the later period. So a summary, I would just say, remember that BPS market, BPO market are changing. It's not and it's not incremental change. It's a structural change. And technology is going to be the biggest accelerator. Is going to be the biggest disruptor. And we're doubling down on it. We started doubling down on it heavily a year ago.

1h 2m 4s

However, as important as technology, it is it's the human that is going to drive the difference. So you need to get both things right because I think the human and the expertise in the business process, it was really differentiated technology, technology and [indiscernible] won't be enough and it won't be trusted. And I believe that we can orchestrate that value proposition really, really well. We have to trust it relationships with our customers and they they were hoping for more innovation and now they're starting to get that innovation. So early days, modest financial progress in year one but I think we're well underway to build stronger foundations for a better business and a better capital. With that said, would just open [indiscernible] Hi, there. It's James Rose from Barclays here.

1h 3m 6s

I've got two if I may, and if I can do them one at a time. The first is on the pipeline. You have €5,000,000,000 related with sort of AI related projects in there, Is FY 2025 still a year of of sort of preparation and internal focus? Or are you now at the point where you can go to market with the right the right cost base, the right offerings and do you expect much higher win rates and conversion of that pipeline?

1h 3m 32s

Think it's both I think we still have to do some work to prepare in some areas. In some other areas, ready. And we're already engaging. I mean, we already have a more competitive cost base than we had a year ago. But not as competitive as we will have it right, as a function of what we announced From a technology perspective, we've built a number of areas. Right, and where we're ready. In a number of areas. But I know that come summertime, we will have a lot more AI agents available that we're building as we speak. That we will be able to take to market just then. So we are in a much better place for certain [indiscernible] Today, what we do really well and I think we are well equipped But for others, we still is work in progress, and this is where Sameer and the team are working hard to get to.

1h 4m 21s

Okay. And secondly, on the contact centers, and I appreciate the additional disclosure you've given there. [indiscernible] It's a question around the long term commitment you've got to to the business and the long term opportunities you see there. Volumes have been struggling for a while. It doesn't really generate that much cash. It's competitive. Is it worth taking up so much of your time and your cost savings or rather potentially other ways to realize value from that business?

1h 4m 48s

Yes. So So if you look at the contact center market, it's a market where people are making money. Right? We just didn't. And we didn't for what we discussed, I think, Karim presented in Capital Markets Day. We didn't do the right things at the time. We missed the boat on getting the right Offshoring, near shoring in country. And balance. We missed the boat on automation We missed the boat on MI. We missed the boat in a number of somewhat foundational things.

1h 5m 25s

Now that market, it's been transformed the fastest.

1h 5m 31s

Right?

1h 5m 31s

So a lot of the dynamics in that market are now about call avoidance, customer intimacy, apps and a number of things. So it proves an opportunity for us to play in the new market at the right time. So right now, I don't have to sort of this is an eye on the sky that I believe I can make money. What it is is I believe we can at least catch up with our competitors. And for the time being, all we're doing there is optimizing injecting in these capabilities, injecting in these new ways of working, changing how we go about it to market. And right now, we've turned around, I think, as you Pablo did a really good bridge, right? So I think that it was adjusted with losing money as significant in 2023. Something that is just on the CASB in 2024, I believe we can still have a platform to make more money there.

1h 6m 31s

My Chris Bambry, Peel Hunt. Three questions. I'll James can take them and turn Thank you. First of all, looking at the free cash flow, you came in towards the bottom end of the range of the €120,000,000 to €140,000,000 What determined that And how does that flow into your guidance for this year? I mean, I guess thinking about things like went to more sustaining working capital position Have you got there? And your thoughts on deferred income for this year as well would Great. Thanks.

1h 7m

So Thank you, Chris.

1h 7m 3s

So I'm going to say something which is not correct, but actually landing free cash flow in this company like a lottery. In that, in the last, it's a company with a very small free cash out. Cash flow number or a very small profit number But actually, We have $2,500,000,000 revenue [indiscernible] In the last five days or the last four days, I think we collected €50,000,000 So landing exactly a number of free cash flow, is a matter of a lot of planning, a lot of working hard with our clients, but also on how the last days of the month end up panning out in a period like Christmas.

1h 7m 40s

So we landed in the place where I like, where I expected to, to be honest. We I ended up comfortable but I was saying in four days, 50,000,000 of receipts where you don't have control, it could very easily have swung into into a different direction. And made the headlines without actually being a fundamental issue in the business. So from that perspective, what I think we've been is taking a more conservative approach, not wanting to go hard in cash flow management, And I think that that leaves us exactly where we wanted to be when providing the guidance, which is from now on, it's business as usual. And I think we've got the right platform to just continue through 2025. In terms of DI and CFA, that's another Complex one, in the roundover time. Again, every contract that you win, every contract you lose, every changing contract can affect the INCFA. It is true that we had a structural deficit of lack of CFA with a lot of DI, and that structural deficit is reducing from the €100,000,000 to €80,000,000 last year to €50,000,000 this year which I consider that with lots of ups and downs inside, it's broadly where it should be for 2024, twenty twenty five six, to after that continue reducing.

1h 9m 2s

But yet again, it depends on the contract you're managing, It's a live beast. And in the round, it's exact by chance again in a way, it's where it where I believe it is structurally in the right place. Subject to movements, but at a right new level.

1h 9m 18s

Second question, what are the major rebates you have this year and how confident are you in retaining them?

1h 9m 26s

Them? The major rebates A lot of the major rebates [indiscernible] We're dealing now with a number of extensions which I am very comfortable. With the extensions. Was a number I didn't mention, I think, but you probably saw it there, the north of 90% renewal rate And I think when I say the best attack is a good defense, first thing you have to do is just make sure that your rebates your base, you retain it really well. Because they know you and then you've got the value proposition. And then from there, you can go on to win new business. So I'm fairly confident about the deals that we got on the rebate. But a lot of the rebidding area particularly in Koreans, world in contact center, happened last year.

1h 10m 22s

And final question, of the €260,000,000 of gross cost savings, much do you actually have to expect to have delivered in year by the end of this year?

1h 10m 32s

We are working through it. I'm not going to commit to having a single number right now. I'm confident that we will deliver the full €250,000,000 absolutely.

1h 10m 39s

But it is work through. It's not as easy as the first phases of a transformation. It requires redesign of processes, redesign of IT, injecting Gen AI into our processes, and that is where I'm it's not as easy as if I don't want to commit to a number.

1h 10m 58s

Thank you.

1h 11m 2s

Thanks. It's David Broxton from Deutsche Nunez. Just one question area, please. In respect of the reinvestment of some of those cost savings, you're still earmarking GBP 50,000,000 reinvestment do you now know and have you identified where that 50,000,000 will go? Can you give any more insight into it? And also as you deploy that, how do you make sure it doesn't become 75, 100 or more?

1h 11m 29s

Well, the second part of the answer is really easy. It's management discipline. Right? It will not become more than it needs to become As a matter of fact, we will not invest reinvest the €50,000,000 unless we're 100% sure that we're going to get the right return. A lot of investment or the reinvestment is going to go into building those AI agent capabilities because that is what enables better service delivery more competitiveness, and then additional cost savings in the organization. That's going to be a significant part in there. To be able to get that scale Then there's going to be deployment of those innovations or whatever we will do to go and then deploy it across call centers, operations, customers, So it's what I would call last mile deployment of innovation. And then there is going to be some commercial investment there might be opportunities where we see that they might not [indiscernible] ideally, we come with it, but we know we need to win them. And because we have a good opportunity to be strategic about them, we can see how we can transform the cost base. We can see how inject and I want to have that ability also in the P and L So all three things together would sort of amount to a maximum of of 50 and provided everything has a positive return.

1h 12m 57s

I mean, we have talked about the copilot investment we've made that has a positive return. So in a perverse way, most of the reinvestment is actually coming out with a positive at the other end as well, which is really good. Question in the back. Hi, Sam. It's Helen.

1h 13m 18s

I've got some questions online, if I can forward them on. So the first one is from Andy Brook at RBC. Who's asking how much of a headwind is the Army recruitment contract in terms of revenue and margin perspective, when it drops out in 2027.

1h 13m 38s

Well, it's first of all, me just put this out there. We obviously the only outsourced our government, outsource our government contractor who knows how to do this. Because we're the only ones doing it. Today for someone [indiscernible] So when we beat for that contract and this was like in my first few weeks in all we had to make the decision very quickly We made a decision to just beat for quality. Not beat to win. There's too much at stake here. There's national returners. Is too important to the forces and too important to security. And it's too much risk for a company to just sort of go and beat to just [indiscernible] our commercial re. So we price to the lever based on our knowledge and obviously that obviously disqualified us and somebody else. That said, we're still working with the Army on Army recruitment really joined really closely. In theory, the transition should go in 2027, And I have to say in theory, because this is a major undertaking. As you know, right? So far, the Royal Air Force and the Royal Navy are doing this themselves. So there is a significant amount of normalizing, figuring out transitioning plan that needs to happen with them to with us, with the forces.

1h 15m 4s

So [indiscernible] that will be when it happens, but it's still to be seen. When it will happen. It's a it goes up and down based on [indiscernible] on scopes of work and additional pieces of things that we do. It could be between €70,000,000 and €90,000,000 from 2027, 2028, whenever happens.

1h 15m 28s

Okay. Thank you. As you know, we have a number of retail shareholders. So I think I'll just put this in one question, which is could you reinstate really what our dividend policy is and when dividends could be restored?

1h 15m 41s

Yes. Our dividend policy was set out very clearly in the Capital Markets Day, and it hasn't changed. So first, we want to deleverage the company. Then we need to invest in the business. And only after those are done, we will consider dividends and capital returns.

1h 15m 57s

Thank you. Then the final one from online is, could you update us on the international sales effort? Which I think is probably a contact center related question.

1h 16m 7s

Yes. Well, we are there was so let me just there's two sides to it. So from a public sector perspective, there is also an international corporation work that we are starting and where we're working with the forces who are are sort of facilitating enabling some engagement with friendly nations where they want to participate in some of the work that we're doing for them in The United Kingdom. Some of our offerings are already offered internationally, like you look at our Fire Service College a lot of the service we provide out of our service colleagues in the Cotswolds is for international firefighters. As well there. So there is that angle. There is an emerging angle. And then in internationally, where it goes to Ireland, we're seeing a better progress in Ireland than we have seen in Germany. We've had a good time. We have a successful campaigns in Switzerland. But yes, it's sort of varied. There is an international [indiscernible] But some areas are going well and others are still challenged. Germany is still challenged.

1h 17m 26s

Thank you. So I've got from Michael Brown. You said at the December RNS, I believe that the incremental GBP 90,000,000 of cost savings will be H1 weighted Is this still the case? [indiscernible] We're working hard to be able to deliver the full 90,000,000 we really the more you action in the first half, the higher chances you get to deliver the €250,000,000 in total exit run rate. And therefore, yes, we're working hard [indiscernible] finding the solutions and putting them into implementation, ensuring that at least by June, we do have line of sight of how that builds month by month to deliver the year savings.

1h 18m 6s

Thank you. Then secondly, how much of the £140,000,000 cost savings identified in 2024 will annualize in full year 2025.

1h 18m 16s

The full of them?

1h 18m 17s

The full of them Perfect. Of the GBP 50,000,000 reinvestment or is it likely that this will be annualized number that falls into full year 2026?

1h 18m 31s

So right now, the way the business models have been win have been built is that they are assuming that this is flowing into the baseline for the next few years, It's something that we're figuring out as we speak depending on where we choose to invest. So if we invested on commercial terms in a contract that we think is the right thing to do, it will flow through. We are not taking an aggressive stand in our models or in our expectations. Trying to say that we're going to bank it as a one off.

1h 18m 56s

We will work through it and deliver what's right for the company.

1h 19m

Thank you. No further questions. Thank you.

1h 19m 3s

Okay. But that's the case. Thank you very much for your interest. Thank you very much for the support. And look forward to seeing you in the next Event.

Key Insights

Group revenue declined by 8% in 2024, mainly due to prior year contract losses, delayed mobilizations, exit of low margin contracts, and reduced volumes in the contact center telecoms vertical; however, operating profit increased by 5.5% and operating margin improved by 50 basis points.
The company delivered €140 million in annualized cost savings ahead of schedule, with a target to achieve €250 million in annualized savings by the end of 2025; free cash flow was an outflow of €122 million, expected to turn positive from the end of 2025.
Segment performance: Public Service saw a slight revenue decline but a 28% increase in operating profit due to cost reductions; Contact Centers had an 18% revenue decline and a €6 million operating loss, but management expects margin improvement as efficiencies and technology are implemented; Pensions business grew revenue by 5.1% and improved cash conversion to 98%; Regulated Services continued to wind down with expected annual cash outflows of €20 million until exit.
The company is aggressively investing in technology and AI, with over half of call center revenue expected to be supported by AI by year-end; a €5 billion sales pipeline includes significant AI and technology-driven opportunities, and management is focused on improving win rates and operational delivery.
2025 outlook: Group revenue expected to be broadly flat with low to mid single digit growth in Public Service and Pensions, offset by high single digit declines in Contact Centers; operating margin to show modest improvement; free cash outflow before business exits expected at €45–65 million (including €55 million investment in efficiency programs), with positive free cash flow anticipated from year-end; medium-term guidance reiterated for 6–8% operating margin and low to mid single digit revenue growth.

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Headline earnings up 30% with strong diversification and scalable growth across business lines.

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Capita is undergoing a deep transformation with cost savings and tech-driven efficiency, but revenue declined 8%.

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Now that market, it's been transformed the fastest.

1h 5m 31s

Right?

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1h 7m

So Thank you, Chris.

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Second question, what are the major rebates you have this year and how confident are you in retaining them?

1h 9m 26s

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And final question, of the €260,000,000 of gross cost savings, much do you actually have to expect to have delivered in year by the end of this year?

1h 10m 32s

We are working through it. I'm not going to commit to having a single number right now. I'm confident that we will deliver the full €250,000,000 absolutely.

1h 10m 39s

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Thank you.

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Thank you. Then the final one from online is, could you update us on the international sales effort? Which I think is probably a contact center related question.

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1h 18m 6s

Thank you. Then secondly, how much of the £140,000,000 cost savings identified in 2024 will annualize in full year 2025.

1h 18m 16s

The full of them?

1h 18m 17s

The full of them Perfect. Of the GBP 50,000,000 reinvestment or is it likely that this will be annualized number that falls into full year 2026?

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We will work through it and deliver what's right for the company.

1h 19m

Thank you. No further questions. Thank you.

1h 19m 3s

Okay. But that's the case. Thank you very much for your interest. Thank you very much for the support. And look forward to seeing you in the next Event.

Key Insights

Group revenue declined by 8% in 2024, mainly due to prior year contract losses, delayed mobilizations, exit of low margin contracts, and reduced volumes in the contact center telecoms vertical; however, operating profit increased by 5.5% and operating margin improved by 50 basis points.
The company delivered €140 million in annualized cost savings ahead of schedule, with a target to achieve €250 million in annualized savings by the end of 2025; free cash flow was an outflow of €122 million, expected to turn positive from the end of 2025.
Segment performance: Public Service saw a slight revenue decline but a 28% increase in operating profit due to cost reductions; Contact Centers had an 18% revenue decline and a €6 million operating loss, but management expects margin improvement as efficiencies and technology are implemented; Pensions business grew revenue by 5.1% and improved cash conversion to 98%; Regulated Services continued to wind down with expected annual cash outflows of €20 million until exit.
The company is aggressively investing in technology and AI, with over half of call center revenue expected to be supported by AI by year-end; a €5 billion sales pipeline includes significant AI and technology-driven opportunities, and management is focused on improving win rates and operational delivery.
2025 outlook: Group revenue expected to be broadly flat with low to mid single digit growth in Public Service and Pensions, offset by high single digit declines in Contact Centers; operating margin to show modest improvement; free cash outflow before business exits expected at €45–65 million (including €55 million investment in efficiency programs), with positive free cash flow anticipated from year-end; medium-term guidance reiterated for 6–8% operating margin and low to mid single digit revenue growth.

Capital Properties, Inc. Price & Performance (CPTP)

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