Capita (CPI:LSE), the provider of business process outsourcing solutions and professional support services, provided a trading update in which the company announced that it hopes to improve profitability in the second half of 2017 following last year’s results in which they dropped out of the FTSE.

Earlier this year, Capita also announced that chief executive Andy Parker would step down later in 2017 after a replacement has been found. Capita stated that is making good progress in the search to select a new Chief Executive and the selection process is moving forward with a shortlist of candidates.

In its trading update, the company stated that it continues to expect 2017 to be a transitional year for the business and expects a return to growth in 2018.

Capita also stated that it will continue its restructuring in 2017 with the aim of achieving growth, its plans include ‘reductions in overhead, offshoring of IT applications support, centralising more of our procurement and rationalising our property estate.’

“We are making good progress on executing the strategic initiatives laid out at the end of 2016 to reposition the group and create a simpler business better placed to return to profitable, sustainable growth,” the Board said in its trading update.

“Creating a simpler business and addressing leverage: We have completed the disposal of our stand-alone, transactional specialist recruitment businesses to Endless,” the Board stated. “We are committed to our remaining Workplace Services businesses which include our public and RPO, executive search, vetting, employer branding agency and learning services businesses. The larger disposal of the Capita Asset Services businesses is proceeding well and is on track to conclude in the second half of 2017. Together, these disposals increase the group's focus on technology-enabled BPM and should result in a significant reduction in leverage by the end of 2017. At the half year results these businesses will be reported as non-underlying.”

Capita also announced that it is seeing improving profitability in its IT Services division and better trading in Germany and Switzerland, however trading across its property, employee benefits and learning services operations was yet to improve.

The company also stated that the majority of its major private and public sector contracts are continuing to perform well as well as new contracts with mobilcom-debitel and Three UK. The group also stated that the UK’s Ministry of Defence is reviewing how it worked with Capita which would result in lower than expected profits from this contract in this year and going forwards, and the possible early termination of the contract in June 2019.

Capita has secured £318 million aggregate major contracts and extensions in the year to date and currently has a bid pipeline of£3.8bn.

The company also confirmed that they have entered a period of exclusive engagement with British Airways to explore forming a potential partnership to support its global customer contact operations, however no final decisions regarding the outcome of this engagement have been made.

On 30 May 2017 Capita re-confirmed its intention to early adopt the new revenue standard IFRS 15 from 1 January 2017, ahead of mandatory adoption on 1 January 2018.

“We continue to expect profitability to improve in the second half, reflecting the cumulative benefit from performance improvement initiatives and lower attrition, and our current view that the trading businesses will continue to steadily improve,” Capita stated.

“We remain confident that the decisive actions we commenced in 2016 will make Capita a simpler business, better positioned to exploit our fundamental strengths and generate renewed sales performance, supporting a clear pathway to return to sustainable profitable growth in 2018 and beyond,” Capita stated.

In trading today, Capita traded at £629.00, up 14.2% on the day and 45.8% above the 52 week low of £431.30 set on 9 December 2016. Based on its current share price the company has a market value of £3.67 billion.