Capita shares were down 4.6% to 26.9p in early morning trading on Wednesday following a reported 1% revenue growth estimation in HY1 2022.
The company attributed its expected rise to a 2% climb in its public service division, alongside a 3% fall in its experience division revenues and a 5% growth in its portfolio division as businesses recovered from Covid.
Capita announced several significant contract wins in HY1, including the renewal of its BBC TV licensing contract valued at £456 million, an extension of its PSCE contract for £94 million and additional work for the Northern Ireland Education Authority for £51 million.
The firm also reported a new contract with ScottishPower worth £63 million over five years.
The group mentioned strong total contract value performance for its education sector throughout the period, with its pipeline remaining strong heading into the coming financial term.
Capita noted it had delivered on all its key milestones to date for its Royal Navy contracts, and highlighted the commencement of its Royal Navy Maritime Composite Training System, along with the launch of its Aviation Fire Programme at the Fire Service College.
The business commented it would continue to target cost savings, including a reduction in its property expenses assisted by its ‘virtual first’ approach to office work systems.
The company said it would further continue to reduce its debt via the disposal of non-core businesses, and drew attention to its three additional processes launched since the start of 2022, with the remaining portfolio businesses scheduled for disposal by the end of the year.
Capita confirmed the disposal of Secure Solutions and Services, AMT Sybex, Speciality Insurance and Trustmarque so far in 2022, resulting in over £750 million from previously announced disposals, in excess of its £700 million target and six months ahead of schedule.
The group commented it expected its profits for FY 2022 to be significantly weighted in HY2, with a reduced EBITDA margin reflecting the FY impact of previous contract losses, structural decline and its closed book Life and Pensions business, alongside operational changes in its Army Recruitment Contract.
Capita mentioned it remained on track to deliver positive free cash flow in 2022, with a continued material reduction in net debt expected by the end of the year.
“I am pleased with the progress we have made across Capita since the start of the year. Our operational performance remains strong, with impressive levels of delivery across our client base; and we have secured important contract renewals and new work,” said Capita CEO Jon Lewis.
“Our financial performance has remained in line with our expectations, as we have maintained revenue growth in 2022, while continuing to reduce debt and strengthen the balance sheet.”
“We continue to expect further strong progress in the second half of the year in revenue, profit and cash flow generation.”
