Capita H1 trading in line with expectations

(Sharecast News) - Business process outsourcing and professional services company Capita said on Wednesday that its first-half performance had been in line with expectations, with further revenue growth, important contract renewals and wins, and ongoing strengthening of the group's balance sheet. Capita stated that in the five months to 31 May, its public service division grew 2% as previously high growth rates started to annualise, while its experience division posted a 3% drop in revenues and its portfolio division grew by 5% as the businesses recovered from Covid-related impacts.

As a result, Capita now anticipates that interim revenues will grow 1% year-on-year.

Capita also noted that it had won a number of "significant contracts" in the first half, including the renewal of its BBC TV licencing contract, an extension of its PCSE contract, and further work for the Northern Ireland Education Authority. It also won a new contract with ScottishPower worth £63.0m over a five-year period.

The London-listed group said: "We expect the revenue growth in the first half of 2022 of up to 1%. With a solid platform of secured revenue, a strong pipeline of contract opportunities and markets driven by demand for cost-effective digital solutions, we remain confident of delivering revenue growth in 2022.

"As outlined during the 2021 full-year results, we expect profits in 2022 to be significantly weighted to the second half, with a reduced EBITDA margin reflecting the full-year impact of prior-year contract losses, structural decline in our closed book life & pensions business, and operational changes in the army recruitment contract. We remain on track to deliver positive free cash flow in 2022. We continue to expect a material reduction in net debt by the end of the year."

As of 0845 BST, Capita shares were down 4.11% at 27.08p.

Reporting by Iain Gilbert at Sharecast.com