Capita shares sink as outsourcing giant swings to £107m loss

Capita’s share price fell as much as 16 per cent on Wednesday morning after the outsourcing giant reported a huge loss and announced that it would be ramping up its cost-cutting programme.

The group, which runs key local government, military and NHS services, posted a pretax loss of £106.6m for 2023, compared with a £51.4m profit in 2022.

Capita said the loss was driven by business exits, cost reduction programme expenses and a £25.3m hit from a “cyber incident” in March 2023.

The incident saw a ransomware group hack Capita’s Microsoft Office 365 software and access staff and clients’ personal data. Capita said on Wednesday that “some data had been exfiltrated during the incident” and it was working closely with regulators and those affected.

Capita said the £25.3m hit included specialist professional fees, recovery and remediation costs and increased cyber security investment.

The group has sold off numerous non-core businesses over the last few years as it worked to reduce its massive debt pile.

It has been gradually stripping back its operations to two core businesses – Capita Public Service and Capita Experience, which provides customer support services to firms.

The firm has also looked to slash costs, announcing 900 job cuts in November. It said on Wednesday that it had “identified further material efficiency improvements which are essential to ensuring our competitive position in the market”.

It said it would take steps to make a further £100m in savings by the middle of next year.

Capita’s total contract value won came in at £3bn, up from £2.6bn in 2022. The increase was driven by a strong performance in Capita’s public service division, which is a major supplier of IT and business process services to the UK government.

Capita said its current core addressable market in this area was around £15bn, growing at some four per cent each year.

It noted that digital business process services is a “fast-growing area” as the government looks to deliver “high-quality, cost-effective services to its citizens”.

Capita’s adjusted pretax profit was £56.5m, up from £49.8m in 2022, including around £20m in profit from a one-off commercial settlement.