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Capita (CPI: LSE), a provider of business process outsourcing solutions and professional support services based in the UK, published a trading update for the 11 months ended 30 November 2022.
The group reported adjusted revenue growth of 2% in the 11 months, which was in line with the group’s full-year guidance. Capita defines adjusted revenue as like-for-like, adjusted for disposals and businesses held for sale as of 30 November 2022. Since 30 June 2022, this excludes results from the Property pillar disposals, including Optima, Pay360 and our Translation business.
Capita cited a consistent performance in Capita Public Service, improved revenue trajectory compared with 2021 in Capita Experience, and Capita Portfolio growth as businesses continue to recover from Covid-19.
Jon Lewis, CEO of Capita, said, "We have secured important contract renewals and new work. Proceeds from our ongoing disposal programme have helped us further reduce debt; by the middle of 2023, we expect to have completed the disposal of our Portfolio businesses resulting in a very low level of financial net debt."
Capita Public Service adjusted revenue increased by 2% in the period, in line with expectations. This has been delivered mainly by the full-year impact of the Royal Navy training contract and revenue growth in Justice, Central Government and Transport, offsetting previously announced Local Government contract exits.
In the second half of the year, the group secured a three-year extension to its PCSE (Primary Care Support England) contract for £94 million and a two-year extension worth up to £57 million for IT and back office services for Barnet council.
Meanwhile, Capita Experience, which is focused on Telecoms, Media & Technology; Retail & Consumer Products; Energy & Utilities; Government & Transport and Financial Services, has seen adjusted revenue stabilise through the year and is flat in the period. Compared with a 9% decline in 2021 across the same period.
The impact of prior year contract losses and the disposal of the fast-growing Pay360 business have started to be offset by positive revenue contributions. In particular, new client wins with Scottish Power, Irish Water and Trade Republic. In the second half, the group also noted that it renewed a contract with a UK high-street retailer with a total contract value of £35 million.
Capita Portfolio reported growth in its Travel and Enforcement businesses and FERA (focused on agri-food and environmental science), reflecting business growth and Covid-19 recovery. Adjusted revenue increased by 14% in the period.
Looking ahead, the group plans to announce full-year results on 2 March 2023.
Shares in Capita closed yesterday at £23.79, up 3.52% on the day. The company has a market cap of £400.62 million.
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