FINANCIALS: Capita sees profit and revenue fall

Business outsourcing provider Capita has seen underlying revenue fall 4% year-on-year, according to results for H1 2018.

Results reveal the group posted underlying revenue of £1,978m, down from £2,065.9m, with underlying profit down from £228.4m to £108.1m and underlying profit before tax down from £195m to £80.5m over the same period.

The group’s People Solutions business saw underlying revenue fall from £256m to £251.9m in H1 2018.

The group attributed People Solutions’ fall in revenue to a small decline in revenues in Capita Resourcing and Learning Services, which was impacted by a significant decline in the apprenticeship market after changes in legislation. The group added the fall in revenue also reflects investment to strengthen the business and transition to a new public sector training framework, which have yet to be offset by cost cutting measures. Its Contingent Labour One (CL1) public sector resourcing contract transfers to a new provider H2 2018.

Meanwhile, Capita’s government services business also saw underlying revenue fall from £424.3m to £387m over the period. The group attributed the fall to the re-shaping of its Defence Infrastructure Organisation (DIO) contract, which benefited from the recognition of previously deferred income in the previous year but a decline in local government long-term strategic partnerships.

However, the group did manage to cut net debt from £1,595.5m to £729.5m and is on track to realise £70m cost savings in 2018 and £175m by 2020. The group also strengthened its balance sheet having completed a £701m rights issue and expects to generate £416m from the sale of group businesses.

CEO Jon Lewis hailed the group’s strategy to strengthen its balance sheet that it set out in April: “Since then, we have continued to make good progress on the plans we set out to simplify and strengthen the business. It is still early days, but my team and I are very focused and confident in our ability to deliver those commitments.”

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