MARKET REPORT: Capita crashes 20% as pandemic takes its toll 

TV licensing collector Capita plunged into the red after admitting that the coronavirus has thrown its turnaround plans off course.

The outsourcer, which also operates London’s congestion charge, slid to a £28.5million loss in the first half of the year compared to a £31.2million profit over the same time in 2019.

TV licensing collector Capita, which also operates London’s congestion charge, slid to a £28.5m loss in the first half of the year compared to a £31.2m profit over the same time in 2019

That sent shares down by 20 per cent, or 7.18p, to 28.7p.

Investors had been assured by management that this would be the year the troubled outsourcer would buck up its performance, and boost its revenues.

But this goal has been pushed back a year, while a key cash flow target has been delayed by up to two years.

Chief executive Jon Lewis said: ‘This crisis has come in a pivotal year for Capita when we had expectations of beginning to generate revenue growth and sustainable cash flow. Instead, we have had to focus on managing our way through the crisis.’

The amount of money Capita collects on some of its contracts depends on how busy they are.

Units such as the customer service call centres it operates for mobile phone carriers, and the debt collection businesses it operates for councils, have suffered as priorities shifted to dealing with the pandemic.

Stock Watch – Gaming Realms 

Online casino firm Gaming Realms is one of the few businesses which has been boosted by the pandemic.

The company, which creates real-money gambling games for mobile phones, said that revenue hit £5million in the first half of the year, up from £3.1million last year.

As more Britons seemed to find time to play Gaming Realms’ casino-style apps, it swung from a loss of £100,000 to a profit of £1.2million.

Shares edged up 5.6 per cent, or 1.2p, to 22.5p.

Capita also noted that while it was still taking on new contracts, they were less profitable.

Lockdown also prompted fewer of its 60,000 staff to go on holiday, adding to the company’s woes as it had to book a £42.6million charge.

Although the charge is mainly theoretical, as Capita would only have to pay the money if swathes of its staff resigned without taking their annual leave, it still pushed down profits.

In order to help pay down the debt, which now stands at £1.1billion compared to the entire company’s £494million market value, Capita is planning to sell off its Education Software Solutions arm, which is used by around 21,000 schools to manage their administration.

It is understood that a number of companies have already been eyeing the business.

Smaller outsourcer Mears Group, which mainly provides housing management and maintenance services for Government, reported a sunnier set of half-year results, swinging from an £18.1million profit to a £6.7million loss, as the pandemic meant customers only paid for emergency maintenance.

But it is confident that activity will pick up in the second half of the year. Shares climbed 8.2 per cent, or 9.5p, to 125p.

On Wall Street, the S&P hit a record high of 3393.52 points during morning trading, boosted by tech giants such as Amazon which have prospered during the pandemic. 

UK stocks were unloved in comparison, with analysts at Jefferies likening the FTSE 100 to ‘an orphan left out in the cold’.

The blue-chip index edged down 0.83 per cent, or 50.82 points, to 6076.62 – Jefferies blaming the pessimism on a ‘perfect storm’ of Brexit, coronavirus worries, and swingeing dividend cuts. 

The FTSE 250 also slipped – by 0.84 per cent, or 148.86 points, to 17623.02.

Amigo Holdings was back on the rise after its controversial founder James Benamor told followers on Twitter that he was plotting a comeback. 

Benamor has already quit the firm twice before and last time accused its management of committing ‘slow motion suicide’, accusing the board of making poor decisions and not being straight with shareholders. 

Shares surged 6.3 per cent, or 0.55p, to 9.3p.

While most retailers have been struggling through lockdown, Angling Direct revenue rose £32.1million in the first six months of the year, as online sales jumped 43 per cent to £17.9million. Shares leapt 12.2 per cent, or 6p, to 55p.

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