Capita announces restructuring as FY profits hit by pandemic

(Sharecast News) - Outsourcer Capita said on Wednesday that it was simplifying its business into three divisions, as it posted a decline in full-year pre-tax profit after taking a hit from the pandemic.
In the year to 31 December 2020, adjusted pre-tax profit fell to £65.2m from £197.7m in 2019, with adjusted revenue down 9% to £3.18bn.

Capital cited the impact of Covid-19, particularly on its transactional businesses such as Capital Travel & Events and Pay360, as well as prior-year contract losses in areas such as local government. This was partially offset by contract renewals and wins, and Covid-related work, mostly for the government, it said.

Capita also said on Wednesday that it was simplifying its structure from six divisions into two core divisions and a third division of non-core businesses. The company is looking to raise £700m from selling non-core assets.

The first division, Capital Public Service, will be one of Government's largest strategic suppliers and focused on six areas where the business already has strong positions, it said. The second core division, Capita Experience, will build on the group's share of the UK and European customer experience markets with a blue-chip client base. The third division will comprise a portfolio of non-core businesses from which it is targeting "significant" disposal proceeds.

"Our simpler new structure will support our inflection to sustainable cash generation in 2022 - as we continue to build a more focused, client-centric and streamlined business," it said.

Chief executive Jon Lewis said: "Despite the challenges, we have continued to make good progress, improving client relationships and winning significant new contracts. Capita is a much better business than it was three years ago when we began our transformation.

"We are planning a return to organic revenue growth this year and sustainable cash generation in 2022, as we continue to build a more focused, client-centric and streamlined Capita for the long term."

At 0815 GMT, the shares were up 5.6% at 48.76p.