Capital plc swings to £28.15 million of loss due to COVID-19
- Capital plc swings to £28.15 million of loss due to COVID-19.
- In the first half, its revenue printed at £1.65 billion (adjusted).
- As of 30th June, Capita had close to £1.1 billion of net debt.
Capita plc (LON: CPI) acknowledged the impact of the Coronavirus pandemic on its financial performance on Tuesday as it revealed to have swung to £28.5 million loss in the first six months of the current fiscal year. The company also warned that it was unlikely to see sustainable cash flow in the next two years.
In the same period last year, Capita had recorded £31.2 million of profit. According to CEO Jon Lewis of Capita:
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“This crisis has come in a pivotal year for Capita when we had expectations of beginning to generate revenue growth and sustainable cash flow. Instead, we have had to focus on managing our way through the crisis.”
Capita will sell its Education Software Solutions
In a recent announcement, Capita also highlighted that it is seeking a potential buyer for its Education Software Solutions. The generated funds following the sale, it added, will help bolster its balance sheet.
As per Capita, its revenue in the second half is likely to remain flat or may even post a marginal decline. In the first half, its revenue printed at £1.65 billion on an adjusted basis that represents a 9% annualised decline. In a statement last week, Capita also revealed to have secured a five-year extension on its contract with Transport for London.
As of 30th June, Capita had close to £1.1 billion of net debt that was slightly lower on a year over year basis. The international business process outsourcing firm forecasts its net debt to return close to levels seen in December 2019.
Capita will cut its workforce by 200 jobs
The London-based company’s H1 results were in contrast with its peer, Serco, that registered a growth in its profit in the fiscal first half in July. Capita had warned in June that it will resort to slashing its workforce by 200 jobs to cushion the economic blow from COVID-19 that has so far infected more than 319 thousand people in the United Kingdom.
Share of the company tanked almost 18% in premarket trading on Tuesday. The stock recovered about 10% on market open to trade at 32.15 pence per share that translates to roughly an 80% decline on a year to date basis.
In comparison, Capita performed largely upbeat in the stock market last year with an annual gain of about 50%. At the time of writing, the professional services company has a market cap of £540.75 million.