14th Mar 2019 08:22
LONDON (Alliance News) - Capita PLC said Thursday its 2018 profit was "slightly ahead" of expectations as it completed the first year of its five-year transformation programme.
In 2018, the FTSE 250-listed outsourcer swung to a GBP272.6 million pretax profit from a GBP513.1 million loss the year prior. This was despite revenue falling 7.3% to GBP3.92 billion from GBP4.23 billion the year before.
In 2017, profit had been significantly impacted by a number of exceptional one-off charges. These were primarily due to a series of impairments, including a GBP551.6 million impairment of goodwill.
Adjusted pretax profit - excluding one-off costs - fell 26% to GBP282.1 million from GBP383.1 million the year before. This was, Capita explained, "slightly ahead" of its guidance.
"We've successfully completed year one of our multi-year transformation, fixed the basics and are firmly on track," Capita Chief Executive Officer Jon Lewis said. "We've strengthened our balance sheet, achieved cost savings, and invested in our people. On top of that, we’ve improved our governance, introduced a 'One Capita' operating model, and started turning around challenging contracts."
Capita did not propose to pay a dividend for 2018, in line with the year prior. The firm emphasised, however, that it "recognises the importance of regular dividend payments to investors" and will consider a return to the dividend register once they are generated "sufficient sustainable free cash flow."
"The lion's share of our business is providing digitally-enabled services and software solutions, using a combination of technology, data and insight to help deliver better outcomes for clients," Lewis added. "This gives us a strong platform for significant, long-term structural growth."
"Our transformation still has some way to go," Lewis continued. "But I am very pleased with our progress. Our targets remain on track, and I'm excited about the prospects for a simplified and strengthened Capita."
In 2019, the firm expects to continue to focus on achieving GBP175 million in cumulative cost savings by the end of the year. All told, it is targeting pretax profit of between GBP265 million and GBP295 million in 2019.
Shares in Capita were 3.5% lower at 115.68 pence on Thursday.
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