Support services firm Capita (CPI) gained 6.7% to 40.15p as it said it remained on track to deliver revenue growth in 2021, for the first time in six years, led by performance in its specialist services division.
In August, the company will move to the new structure of two core divisions, Capita public service and Capita experience, and the third division holding its non-core assets, Capita portfolio.
Capita said it remains on track to deliver £50 million of annualised cost savings from 2022 onwards, associated with this structure, as announced in March.
The company also said it had agreed to sell its 51% stake in Axelos Limited to PeopleCert International Limited in a deal that values the joint venture at £380 million, representing an 11.5x multiple on 2020 EBITDA (earnings before interest tax, depreciation and amortisation) of £33.1 million.
Capita will receive net cash proceeds of £172.5 million upon completion. Prior to completion, Capita will also receive a cash dividend of £11.1m making total net cash receipts of £183.6m.
The sale proceeds would ‘provide additional liquidity to strengthen Capita's balance sheet, meet upcoming debt maturities and support the ongoing implementation of its transformation plan,' the company said.
Numis analyst David Brockton commented: ‘Capita is having a more stable and successful year with in-line trading, a material disposal reducing net debt by ~25%, and a run of contract renewals supporting management’s assertion that its turnaround is driving operational improvement.’
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