Capita confirms trading on track, shares spark

(Sharecast News) - Shares in Capita rallied on Monday, after the outsourcing specialist reaffirmed annual guidance following a solid start to the year.

Updating on trading ahead of the annual general meeting, Capita said adjusted group revenues in the four months to 30 April had grown 2.9% year-on-year, in line with expectations.

Within that, public service saw revenues rise 5.8%. The division - Capita's largest, accounting for around 81% of group revenues - benefitted from increased volumes on contracts in central government and a one-off benefit from higher volumes on a contract in Northern Ireland.

Pension solutions also performed robustly, with revenues up 23.4%. It benefited from the annualised impact of the Civil Service Pension Scheme contract and higher volumes from the Teachers' Pension Scheme contract. The division is responsible for around 12% of group revenues.

The total contract value won across the group in the four-month period was more than £750m, up 20%.

As a result, the firm said it remained on track to deliver low to mid-single digit revenue growth in public service this year and mid-teen revenues in pension solutions.

Adolfo Hernandez, chief executive, said: "We have made positive progress in the first four months of year.

"We continue to make excellent progress against our strategic objectives to deliver a better Capita, with innovation both internally and for clients."

Capita announced in March plans to sell its private sector contact centre business to investment firm Inspirit Capital for a nominal £1. The deal includes up to £61.5m of future additional payments related to the ongoing financial performance of the business.

Hernandez said there had been "positive and deep engagement" with Inspirit, with the deal set to complete ahead of Capita's interim results in early August. The company said the sale was an "important milestone" that would allow it to "significantly" streamline operations and investments.

As at 0945 BST, shares in Capita were up 6% at 333.25p, in contrast to the wider FTSE All-Share index, which was little changed.

Dan Coatsworth, head of markets at AJ Bell, said: "Capita bucked the market trend, as trading stayed in line with forecasts and the company's restructuring efforts remained on track. After a miserable decade for the share price, investors will be glad of some relief over the last 12 months."

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