Capita PLC (LON:CPA) is to restructure around two divisions with more non-core businesses to be sold.
The move follows another year of heavy losses for the outsource specialist, which it said were exacerbated by the impact of Coronavirus (COVID-19) disruption.
Going forward Capita will have a public service arm and a separate blue-chip division with the non-core businesses shunted into a third arm for disposal.
Jon Lewis, chief executive, said the business is targeting proceeds of at least £700mln from the sale, comprising ‘£200m from three non-core disposals that are currently underway, ESS proceeds that we have now received of £299mln, with another £200mln to come thereafter’.
Lewis added that he expects Capita will return to organic revenue growth this year and achieve sustainable cash generation in 2022.
Revenues in the year to end-December 2020 fell 10% to £3.3bn with a loss before tax of £49.4mln (£62.6mln), though there was a cash inflow of £304mln helped by UK government relief and support measures that will reverse when conditions normalise. Net debt at the year-end fell to £1.08bn from £1.35bn.
Capita said its travel arm was hit hard by the pandemic, while contract losses and provisions for staff not taking holidays also affected the numbers.
Shares in Capita, the one-time star of the outsource sector, have shed more than 90% of their value over the past five years, but Lewis was optimistic this latest restructuring would turn things around.
“We are now building on that stronger foundation to move onto the next phase of our transformation by simplifying from six divisions to three.
“Two core divisions will be focused on the needs of our government and blue-chip customer experience clients, in growing markets where we know we can win.
Shares rose 2.4% to 48.5p.