Capita shares rose by almost a fifth on Tuesday after the London-listed outsourcing firm revealed the sale of its Capital One freelance software business.
The group expects to raise gross cash proceeds of £207m and a cash dividend of £4.8m from the sale of Capita One, which has been sold to property software company MRI Software.
This follows a strategy shift, announced in June, that will see the company refocus its energies on core segments to bolster its financial performance and cash generation.
Capita is refocusing its efforts on core operations
Capita One, which provides local authorities with tools to drive efficiency, maximise revenue collection and deliver services cost-effectively, generated a pre-tax profit of £19m last year.
Capita, which also manages the collection of BBC licence fees, posted a loss of £106.6m in 2023, “reflecting business exits, cost reduction programme expenditure and the costs of cyber incidents in 2023”.
The group said its standalone software businesses, including Capita One, are now being “value managed” as part of its strategic restructuring that also includes raising medium-term sales targets.
The sale of Capital One, which is expected to be completed in August, “will create material value for Capita shareholders and the net cash proceeds will provide the Group with additional cash resources to strengthen its financial position and further reduce indebtedness,” the firm said.
Chief Executive Adolfo Hernandez added: ‘As I outlined recently at our Capital Markets Event, Capita’s strategy is to become a more focused company, prioritising businesses where we can deliver material opportunities in the future, with further simplification and cost reduction.
‘Capita One is a high-quality business that has performed exceptionally well. Under its new ownership, it is well positioned to benefit from investment in its strategic growth.
‘We remain committed to the local utilities market, but we want to see Capita One set up for continued success with an owner who can deliver the investment it needs.’
Capita shares rose 18.8 percent to 18.42 pence by midday on Tuesday, bringing one-year losses to about 31 percent.
