RE: New FT Papers - The sale of Capita ESS suffers glitch with Montagu28 Nov 2020 16:46
FINAL [PART 2]
But at its half-yearly results in August, Capita reported an underlying pre-tax profit of £30m, down from £117m a year earlier.
Last week Patrick Butcher, the chief financial officer, resigned after almost two years at the FTSE 250 outsourcer. The company said Gordon Boyd would step in as interim CFO and executive director from November 16.
Shares in Capita, which have lost 73 per cent of their value during the past year, rose 5 per cent in early trading on Friday but fell back to 44p. Stephen Rawlinson, analyst at Applied Value, said that even if they sold the business it was not a “get out of jail free card”. “They need to sell this business but it still leaves them with a lot of debt,” he said.
The sale is one of several disposals planned by Capita, which is keen to avoid raising more money on the markets.
In June the company sold its legal process software product Eclipse Legal Systems to Access UK Ltd for £56.5m while sales of other businesses in its specialist services division, including a travel and events arm, have been put on hold as a result of the Covid-19 crisis.
The pandemic has increased pressure on Capita, although work running call centres for the NHS and the Department for Work and Pensions has helped to offset stalled contracts in its travel and face-to-face training sectors.
UK outsourcers have had a difficult few years following the collapse of Carillion in January 2018. Interserve, another large contractor, is in the hands of its lenders and in the process of being broken up, while G4S is at the centre of a bidding battle with private equity.
The companies ran into trouble after borrowing heavily to grow through acquisitions, which were often poorly integrated. A series of problem contracts piled pressure on their balance sheets at the same time as banks became more wary of lending to the sector in the wake of Carillion’s collapse.
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