Capita swings to first-half loss

Outsourcer Capita said on Tuesday that it swung to a loss in the first half as revenue took a significant hit from the coronavirus pandemic.

In the six months to the end of June, the company swung to a reported pre-tax loss of £28.5m from a profit of £31.2m in the first half of last year, with revenue down 9% to £1.65bn, mainly due to 2019 contract losses and the impact of the Covid-19 crisis.

Capita said it had been a "challenging" six months and that the impact of the pandemic had come "in a pivotal year" when it expected to see revenue growth. Profit was significantly affected, it said, and the delay in the return to growth means it will not generate sustainable cash flow for one to two years.

Based on expectations of a slow economic recovery throughout the next six months, the company said revenue in the second half is expected to be flat to slightly down on the first half.

Capita also said net debt is expected to return towards end of December 2019 levels, as some of the first-half benefits reverse in the second half of 2020.

Chief executive Jon Lewis said: "We expect to make further disposals which, alongside other measures, will strengthen the balance sheet and help build towards a more focused, sustainable Capita for the long term.

"These are unprecedented times and we need to adapt but our strategy remains the right one."

At 1020 BST, the shares were down 10.4% to 32.15p.