(Alliance News) - Capita PLC reported an accelerated financial performance and strong growth momentum for its adjusted half-year results, although statutory earnings were less positive.

The London-based provider of business process services on Friday said it swung to a statutory pretax loss of GBP67.9 million in the first half of 2023, from a GBP100,000 profit the previous year. Adjusted for items like business exits and amortisation, its pretax profit increased 34% to GBP33.1 million from GBP24.7 million.

Capita said the reported loss was due to business exits, non-core portfolio goodwill impairment, and costs associated with a cyber attack in March which disrupted some clients' services. However Capita said that the incident only had a minimal impact on its growth momentum.

In June, the company said it will sell five non-core software businesses to London-based acquisition vehicle AdvancedAdvT Ltd for GBP33 million, in what the latter said will constitute a reverse takeover. The transaction is part of Capita's disposals programme to "materially" reduce its debt, Chief Executive Officer Jon Lewis had explained.

Reported revenue meanwhile decreased 2.6% to GBP1.48 billion from GBP1.52 billion. Adjusted revenue increased 5.8% to GBP1.40 billion. Capita attributed the increase to growth in underlying trading and one-off benefits related to a contract transition with Virgin Media O2 and a commercial settlement.

Capita also made a statutory loss per share of 5.06 pence, compared with 1.10p earnings; adjusted earnings per share decreased 16% to 3.34p from 3.98p.

Capita's reported free cash flow loss widened to negative GBP84 million from negative GBP16.6 million, while the adjusted loss widened to GBP53.4 million from GBP16.5 million.

For the whole of 2023, Capita said its expectations remain unchanged, and that it is on track to deliver an accelerated financial performance this year. It hopes to double its earnings before interest and tax margin over the medium term, and save about GBP40 million in costs by the end of next year.

"Our strategy, focused on two core, growing markets is working," commented Chief Executive Officer Jon Lewis. "We have delivered increased adjusted revenue growth for the fourth successive reporting period, improving profitability, winning an increasing amount of work with new clients, and remain on track to deliver on our full-year expectations.

"Our strong client relationships, long-term contracts, increasingly competitive and digitised solutions, engaged colleagues and reputation for delivery mean we have a resilient business, well positioned for further growth."

Capita declared no dividends for the period, but said it expects to introduce them in the next couple of years with "a modest initial payout" to start.

Shares in Capita were down 12% at 23.70p on Friday morning in London.

By Emma Curzon, Alliance News reporter

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