Capita Plc · LSE:CPI
Capita — Investor Day (January 2019)
44 slides from Capita's investor day presentation, Jan 24, 2019
Slide 1: Software investor event
Software investor event 24th January 2019 Simplify Strengthen Succeed 1 | Capita Software investor event
Slide 2: Disclaimer
Disclaimer This presentation and the commentary provided with it is prepared for and addressed only to the Company's shareholders as a whole and to no other person. The Company, its Directors, employees, agents and advisers accept and assume no liability to any person in respect of this presentation
Slide 3: Contents
Contents 1. Introduction 4. Financial profile and measuring success 2. History and 5. Summary business today and Q&A 3. Markets and 6. Capita’s software growth opportunity business in action 3 | Capita Software investor event
Slide 4: Introduction
Section 1 Introduction 4 | Capita Software investor event
Slide 5: Our management team
Our management team Chris Baker Stefan Maynard Alistair Scullion Executive Officer, Finance Director, Strategy & Marketing Director, Capita Software Capita Software Capita Software • Joined end of 2016 • Joined end of 2013 • Joined end of 2016 • Previously Executive Director • Previously VP Finance
Slide 6: Key messages from today
Key messages from today Well established products Specialist, need deep domain with market leading positions expertise to win Divisional transformation Creating a single programme now in 3rd year software company Stronger operational platform will >1,000 software developers in India, support growth
Slide 7: Capita strategy recap
Capita strategy recap Transformation driven by things that we control • Fix the basics Specialist Tech-led Offshore software • Cost out IT services Data analytics • Improve challenging contracts Digital and AI transformation Rights issue and disposals raised £1.1bn in 2018 • Reduced leverage People-
Slide 8: Scalable, repeatable products and digitally-enabled BPO
Scalable, repeatable products and digitally-enabled BPO 1 2 Software products Digitally-enabled BPO Enterprise software products Capita proprietary or third party software Built once and sold many times Create the best outcome for our customers a b Configured Capita BPO enabled by bespoke software d
Slide 9: Capita Software provides a significant profit and opportunity contribution to Capita
Capita Software provides a significant profit and opportunity contribution to Capita Capita Software and Capita Software division Digitally-enabled BPO Capita Capita Software Software products products 1 Configured 1 Capita 2a software delivering 2a 2b BPO BPO Configured enabled by Capita bespoke so
Slide 10: Capita Software – a snapshot
Capita Software – a snapshot What we do Financial metrics Market areas • Pure-play specialised enterprise software Education business £112m profit £402m • Serving sector specific and cross-sector with 27.8% Emergency revenue* services markets - UK and overseas margin* • Forms a differentiating compo
Slide 11: History and our business today
Section 2 History and our business today 11 | Capita Software investor event
Slide 12: History – siloed businesses
History – siloed businesses 1990–2010 2010–2016 2017 / 2018 • Bought SIMS (Education) • Acquired SunGard secure • New management team in place information systems • Built leading Local Government (Emergency services) • Transformation programme software business commenced • Acquired AMT-Sybex (Utilit
Slide 13: Capita Software's transformation journey
Capita Software’s transformation journey 18 months ago… … January 2019… … by 2020 • 29 siloed businesses • One, pure-play, cloud- Target operating model enabled business • Sub-scale Shared IT support centre • Benefits of scale • No standard processes Digital development centre • Standardised, best •
Slide 14: Innovation hubs: One for each division and one group-wide
Digital Softwaredelivery centre delivery – a–world-class centre development a world-class capability development capability Digital delivery Software deliverycentres centres Client Industry One for each division and one group-wide needs needs Product Portfolio Collaboration Management Management Inn
Slide 15: Campaign-led, fully metricated, demand generation marketing capability
Campaign-led, fully metricated, demand generation marketing capability Marketing Sales campaigns growth Marketing Marketing Sales Sales Confirmed Qualified Qualified Closed Opportunity Lead Lead Lead Nurture to Recycle One CRM Real-time KPIs Maximising ROMI 15 | Capita Software investor event
Slide 16: Deep domain expertise drives our value proposition
Deep domain expertise drives our value proposition Critical customer process Deep domain expertise not easily replicable Re-invest in Domain product expertise High friction cost for customers makes these products sticky Sector- specific Provides high visibility and strong margin market License and E
Slide 17: Multiplier effect at the intersection of sector-specific and cross-sector products
Multiplier effect at the intersection of our sector-specific and cross-sector products ONE School admissions Payments SIMS Digital MIS UX/CX Messaging Local govt ERP gateway SIMS Pay Education ERP Sector- specific Case market Resource workflow planning SIMS Finance Social E.g. 1 – Education: E.g. 2
Slide 18: When we innovate well, we make a big difference
When we innovate well, we make a big difference “ 911eye will change policing in the United “ … software reducing ‘claim to pay’ from 23 days to 9 days States Chief Mark Tinitigan South River Police Department, New Jersey “ Its propelled our digital offering into the 21st century - we can’t wait to
Slide 19: Markets and growth opportunity
Section 3 Markets and growth opportunity 19 | Capita Software investor event
Slide 20: The enterprise software market presents significant opportunity for growth
The enterprise software market presents significant opportunity for growth +7% software market size p.a. 23.4 and growth £bn UK enterprise 17.7 • Strong inherent growth as organisations seek customer and cost advantage 2017 2021 • New waves of growth driven by technological innovation – including cl
Slide 21: Historic performance too reliant on mature products
Historic performance too reliant on mature products Emergency Local Utilities & Education Services Government transport Market position #1 #1 Top 2 Niche Market stage Mature Mature Mature Mature 21 | Capita Software investor event
Slide 22: Full portfolio includes growing markets
Full portfolio includes growing markets Professional Emergency Local Utilities & Education Healthcare & Financial Payments Cross-sector Services Government transport Services Market position #1 #1 Top 2 Niche Niche #1 Challenger Niche Market stage Mature Mature Mature Mature Growth Growth Growth Gro
Slide 23: Plan is in flight to leverage all growth opportunities
Plan is in flight to leverage all growth opportunities Professional Emergency Local Utilities & Education Healthcare & Financial Payments Cross-sector Services Government transport Services Market position #1 #1 Top 2 Niche Niche #1 Challenger Niche Market stage Mature Mature Mature Mature Growth Gr
Slide 24: Multi-pillar growth plan
Multi-pillar growth plan Simplify Strengthen Drive commercial Refresh Market share gain & operational proposition excellence Extend footprint Shift resources to into adjacent Market growth best growth areas of the momentum opportunities market Investment in Investment in new re-usable products and I
Slide 25: Focused product and new market investments
Focused product and new market investments US entry 911eye New Commonwealth markets Public safety platform Payments Markets Retain next generation Payments Existing SIMS Primary SIMS Finance Roll out ‘cross-sector’ products Parental engagement Existing New Products 25 | Capita Software investor even
Slide 26: Multi-pillar growth plan
Multi-pillar growth plan Simplify Strengthen Succeed Drive commercial Refresh Disrupt our Market share gain & operational proposition business model excellence Extend footprint Shift resources to into adjacent Step out into Market growth best growth areas of the white space momentum opportunities ma
Slide 27: Starting to consider ideas for accelerating growth post 2020
Starting to consider ideas for accelerating growth post 2020 Succeed Disrupt our business model Step out into AI and ML to create a: white space • Hyper personal learning experience • Across the ‘student-parent- school-tutor’ engagement Portfolio Joint ventures / partnerships eco-system management •
Slide 28: Financial profile and measuring success
Section 4 Financial profile and measuring success 28 | Capita Software investor event
Slide 29: Revenue mix
Revenue mix Prof & Financial Non UK Services 3% 5% • ~80% sector specialised enterprise Healthcare Education software, with ~20% in the private 5% 26% sector 2017 revenue split (%) Utilities & • ~20% cross-sector, functional Transport software 8% Local • Only ~3% revenues are non-UK Government 15% E
Slide 30: Highly repeatable and predictable revenue profile
Highly repeatable and predictable revenue profile Install, other License 19% 21% • >70% recurring revenue • Approximately 2/3rds of our licenses 2017 revenue split (%) are delivered under a SaaS or SaaS- like and the remainder perpetual • Over 80% of license revenues recognised over term of client r
Slide 31: Attractive financial profile
Attractive financial profile We have Building blocks Attractive, sustainable good visibility to grow margins and growing cash flow • £543m order book • Order intake improving • Quality products and benefits of scale • >70% recurring revenue • Significant investment - £80m of capital expenditure • Hi
Slide 32: How we will be measuring our own success
How we will be measuring our own success 2017 2020 Order book £543m Growing faster than revenue Revenue -2% Mid to high single digit growth Operating 27.8% Maintain or improve margins margin Free cash flow* Cash conversion below 100% Cash conversion at least 100% 32 | Capita Software investor event
Slide 33: Summary and Q&A
Section 5 Summary and Q&A 33 | Capita Software investor event
Slide 34: Key messages from today
Key messages from today Well established products Specialist, need deep domain with market leading positions expertise to win Divisional transformation Creating a single programme now in 3rd year software company Stronger operational platform will >1,000 software developers in India, support growth
Slide 35: Capita's software business in action
Section 6 Capita’s software business in action 35 | Capita Software investor event
Slide 36: We will bring these to life through a series of presentations
We will bring these to life through a series of presentations • Innovation • Adjacent growth • Transformation • Accelerated growth 36 | Capita Software investor event
Slide 37: Secure Solutions & Services – snapshot
Secure Solutions & Services – snapshot What we do Selected clients • Provider of mission-critical software to police, ambulance and fire • 95% of UK police forces and ambulance trusts • 75% of UK fire services service control rooms • Significant international presence for all 3 services • Manage all
Slide 38: Secure Solutions & Services – value proposition
Secure Solutions & Services – value proposition • Solutions support resolution of demand at the first point of contact Why is this • Identification of vulnerability important to • Transformation of operational processes and workflows the customer? • Significant cost and time savings through effectiv
Slide 39: Retain International – a snapshot
Retain International – a snapshot What we do Selected clients • Specialised resource planning software, with 25 years experience • Management Consultancy (including • Track record in delivering increased utilisation for our clients representation across the Big 4), • 360 view of resource allocation,
Slide 40: Retain International – value proposition
Retain International – value proposition Improve utilisation and profitability • “It’s important to us that we match the right • Smooth utilisation and manage peaks in demand person to the right project. Retain was the Why is this • Access a wider pool of resources best solution to meet our requirem
Slide 41: Capita Education Software Solutions – a snapshot
Capita Education Software Solutions – a snapshot What we do Selected clients • Provider of management information software to the education sector • SIMS used by 22,000 schools in 46 countries • 30+ years experience in schools, colleges & universities around the world and an 80% share of the UK mark
Slide 42: Capita Education Software Solutions – value proposition
Capita Education Software Solutions – value proposition • SIMS supports improved decision making, raising achievement for learners and providing actionable insights Why is this • SIMS Finance consolidates finance data in real time important to and reduces manual input and processes for schools the c
Slide 43: Payments software – snapshot
Payments software – snapshot What we do Selected clients • Provide market leading technologies for Payments, Fraud and Income Collection • Helps to introduce new payment channels for our customers • Improves customer choice, operational efficiency and payment security Markets we serve Selected compe
Slide 44: Payments software – value proposition
Payments software – value proposition • Multi-channel payment options • Grow with the customer and can be deployed alongside existing payment solutions “The Pay360 solution Why is this has provided us with • Gives full control over customer experience important to the greater flexibility to • Increa