Capita PLC (LSE:CPI) said it expects to have begun the final disposal processes of its remaining non-core businesses by the end of the year as it looks to complete its financial turnaround.
The outsourcer said its performance in the first half of 2022 was in line with expectations and that it remains "on track" for positive free cash flow this year and to effect a "material reduction" in net debt.
For the first five months of the year, its Public Services division achieved revenue growth of 2%, its Experience arm declined 3% and the Portfolio group of non-core businesses grew 5% as its transactional focus recovered from the pandemic.
Capita guided to lower margins for Public Services and Experience, reflecting prior contract losses.
A "number" of significant contract wins were reported, including the renewal of the BBC TV licensing contract, worth £456mln, an extension of the PCSE contract (£94mln) and further work for the Northern Ireland Education Authority (£51mln), plus a new contract with ScottishPower worth £63mln over five years.
The pipeline for both main divisions was said to remain "strong".
Shares in the group fell 4.8% to 26.87p in early trading on Wednesday.
Broker Shore Capital said: "Capita still needs to complete the sale of the remaining businesses in the Portfolio division to become a self-financing and sustaining business."
It added: "The likelihood of dividend payments or other shareholder capital returns is minimal in our analysis until at least FY27F driven by the continuing need to retain capital within the business and the low (exhausted) distributable reserves in the company balance sheet.
"We continue to see light at the end of the tunnel for Capita and believe that a fundamental valuation analysis is now emerging. We anticipate the revenue and profit base should begin to gain some momentum in FY23F with growth returning more strongly into FY24F – but the disposal programme needs to be completed."