Capita trading in line as revenue and profits fall in first half
Capita reported half-year results in line with its expectations on Thursday, with revenue coming in at £1.85bn on an adjusted basis, down 6.3% year-on-year, and profit before tax falling 3.6% to £126.1m.
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The FTSE 250 outsourcing giant said its order intake in the period was £830m, while its order book stood at £6.65bn as at 30 June.
It maintained its full-year guidance for the 2019 financial year, with profit before tax expected to be between £265m and £295m.
The board said it was on plan to deliver cumulative cost competitiveness savings of £175m by the end of 2019, adding that it had won a £525m Defence fire and rescue project and a £145m extension to its PIP assessment contract with the Department for Work and Pensions in the third quarter.
For 2020, the firm said it was still on track to achieve double-digit operating profit margins, and “at least” £200m of sustainable free cash flow.
On the strategic front, Capita said its “transformation” was also going to plan, as it was in the second year of its multi-year project.
It explained that its investment in people was yielding benefits, with reduced employee turnover and higher employee satisfaction.
The firm’s corporate governance had been “strengthened”, with two employee directors appointed to the board, and the company also said it had strengthened its client relationships.
Further progress was reported on improving the performance of contracts, with Capita making increased investment in growth, systems and digital capability.
The board said the foundations for growth were now in place.
“Capita is now in the second year of a multi-year transformation and we remain on track to hit the targets we set in 2018,” said chief executive officer Jon Lewis.
“Having addressed the balance sheet and made disposals last year, we have continued to strengthen the business in 2019.
“We are beginning to see the benefits from: strengthening our functions; changing the culture and enhancing governance; improving relationships with our clients; recruiting significant talent to key roles; and investing in people and new client propositions.”
Lewis said the company had made “significant progress” in a short period of time, but added there was still “much work” ahead, with the foundations being laid now set to put the firm in a position to succeed and grow.
“There is huge potential for our business as companies invest more in digital transformation.
“With Capita’s credentials and client-base, the long-term opportunity for growth is significant.”