Capita withdraws guidance; working with govt on Covid-19 response
By Michele Maatouk
Date: Friday 27 Mar 2020
(Sharecast News) - Outsourcer Capita said on Friday that it is working with the government to supports its Covid-19 response but that the rest of the business is expected to take a hit from the pandemic, which it described as a "net negative" for the company.
Capita said it was withdrawing its financial guidance for 2020 "in light of the unpredictable level of disruption" caused by the outbreak.
It is exploring more than 100 situations to support the government response with additional services. This includes contributing resource to healthcare call centres as well as being part of an initiative to set up health testing centres. Some private sector clients have also asked for additional help to respond to higher demand from their customers, the company said.
Nevertheless, the rest of the business is expected to be more adversely impacted by Covid-19, including significant, albeit temporary, impact in areas such as face-to-face training, resourcing, contact centres for retail and leisure clients, consulting and the corporate travel agency.
As a result, it outlined a number of measures to protect its financial position "in this unprecedented situation", including cost-saving measures to offset the impact of expected revenue reduction. In addition, senior management and the board will take "significant temporary" reductions in their salaries.
All in all, the measures are expected to mitigate any profit impact by more than ?100m in 2020 before taking into account the furlough support from government.
In the last few weeks, the group has secured new work including a three-year extension to a Ministry of Justice contract worth ?114m. It also won new projects for a high street bank and a healthcare contract win in the software division.
Chief executive Jon Lewis said: "We serve millions of people every day at Capita, for our private sector clients and through our work in partnership with the government which has intensified in recent days as we support efforts to combat the coronavirus outbreak.
"We are committed to making sure we run our business as seamlessly as we can during this very difficult period.
"We are taking some tough, but prudent, cost-cutting decisions to protect our financial position and ensure we remain resilient as a business for the long term."
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