UK's Capita sales growth hit by contract losses

Reuters12-12

UPDATE 1-UK's Capita sales growth hit by contract losses

Rewrites with details on revenue growth at units and cost savings from paragraphs 1-4, details on cash flow in 6

Dec 12 (Reuters) - British outsourcing firm Capita CPI.L said on Friday its sales growth eased in the second half of the year due to contract losses and revenue delays at key units.

Revenue at its largest division Capita Public Service grew 4% in the 11 months to November 30, but moderated slightly in the second half compared with the first. Adjusted revenue in the Contact Centre division fell 18.3%.

Capita now expects full-year Public Service growth to come in just below mid-single digits, a high-teens decline in Contact Centre revenue and low-single-digit growth in Pension Solutions.

It, however, kept its guidance on margin improvement and free cash flow.

It said it delivered 250 million pounds ($334.63 million) in annual cost savings and saw its contract pipeline surge 41% from the first half to 16.5 billion pounds.

Separately, the group agreed to hand back its final two legacy Life & Pensions (L&P) contracts to Royal London in a deal worth 52.5 million pounds.

The migration of the contracts is expected to take five years and result in a free cash outflow of 20 million pounds per year during that period, totalling 100 million pounds.

($1 = 0.7471 pounds)

(Reporting by Raechel Thankam Job in Bengaluru; Editing by Rashmi Aich and Subhranshu Sahu)

((RaechelThankam.Job@thomsonreuters.com;))

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