Capita shares slide on coronavirus-triggered first-half loss
Shares in outsourcer Capita fell more than 10 per cent today after it said it had fallen to a first-half loss because of the effects of the coronavirus pandemic.
The company said its turnaround planned had been torpedoed by the economic effects of the virus outbreak.
Shares in Capita, which provides consulting and digital services to the public and private sector, have lost around 80 per cent of their value so far this year and were down 10 per cent in morning trade at 32p after falling as much as 21 per cent.
Its pre-tax loss in the six months to 30 June compares with a profit of £31.2m a year earlier and Capita said it would not generate sustainable cash flow for one to two years.
“This crisis has come in a pivotal year for Capita when we had expectations of beginning to generate revenue growth and sustainable cash flow,” chief executive Jon Lewis said.
“Instead, we have had to focus on managing our way through the crisis.”
Capita said it had launched the sale of its standalone Education Software Solutions and would use the proceeds to strengthen its balance sheet.
“We do see the potential offered by a material cash inflow from the disposal of the Education franchise as material in turning the Group’s fortunes around,” Shore Capital analysts said.
Second-half revenue is seen flat to slightly down from the first half, the company said. First-half adjusted revenue fell nine per cent to £1.65bn.
Net debt came in at nearly £1.1bn as of 30 June, slightly lower than last year. But the group said it expects it to return towards December 2019 levels.
Capita’s results contrast with rival Serco, which reported a jump in profit earlier this month.
It also comes at a time when Mitie scooped up Interserve’s support services arm for £271m, flexing its financial muscle.