Capita (CPI: LSE) the UK-based provider of business process outsourcing solutions and professional support services reported revenue of £1.85 billion for the first six months ended 30 June 2019, down by 7.9% when compared to the previous year. 

The company said its results were in line with expectations.

The company said that its benefit from contract wins, including TfL and a number of smaller gains, was outweighed by contract losses, many of which occurred in 2018, and which the company chose not to re-bid. There was also a decline in the scope and volume of contracts and transactional revenue in Specialist Services and IT & Networks, which was partly off-set by growth in Government Services from the Smart Metering contract.

As announced in 2018, the Board launched a multi-year transformation plan to support the objectives of simplifying and strengthening Capita. The plan includes restructuring, property rationalisation, procurement centralisation, transformation of support functions and operational excellence. These activities are designed to improve the cost competitiveness of the group and secure Capita’s position in the markets it serves and strengthen governance and control. This policy will remain under review by the Audit and Risk Committee and the costs will be reported over the life of the plan. The costs incurred in 2019 so far totalled £56.5 million.

Jon Lewis, Chief Executive Officer, commented, "Capita is now in the second year of a multi-year transformation and we remain on track to hit the targets we set in 2018. Having addressed the balance sheet and made disposals last year, we have continued to strengthen the business in 2019. We are beginning to see the benefits from: strengthening our functions; changing the culture and enhancing governance; improving relationships with our clients; recruiting significant talent to key roles; and investing in people and new client propositions.”

“We have made significant progress in a short period of time,” Lewis said. “There is still much work to do but the foundations we are laying now will put us in a position to succeed and grow. There is huge potential for our business as companies invest more in digital transformation. With Capita’s credentials and client-base, the long-term opportunity for growth is significant."

The group also announced that Aimie Chapple will join Capita in October as Executive Officer, Customer Management, while Chantal Free will join the same month as Executive Officer, People Solutions.

Capita also announced that it has secured a two-year extension worth approximately £112 million to its contract to deliver Personal Independence Payment (PIP) assessments for the Department for Work and Pensions (DWP).

Looking ahead the company said “We continue to expect profit before tax (on an adjusted basis) to be between £265 million and £295 million and net finance costs to be in the region of £40 million in 2019, before the adoption of IFRS 16 (International Reporting Financial Standards).”

As of last trade Capita traded at £137.60, up 18.08% on the day and 14.51% below its 52-week high of 160.95, set on 1 August 2018. Based on its current share price the company has a market value of £1.94 billion.