Capita plc
On 31 January 2018, the Capita plc suffered a 40% drop in their share price after it issued a surprise profit warning. The group’s net worth fell to £1.3 billion, only slightly more than their estimated debt of £1.15bn.
Coming just a fortnight after the liquidation of Carillion, the latest shock down-turn in the fortunes of a major outsourcing company was accompanied by confirmation from Capita that it was undergoing a ‘transformation programme’ to try to avoid a similar fate.
With shares falling to just 190p each, their lowest level since January 2003, the group warned that underlying profits in 2018 were likely to be £270-300m; a long way from the £406m predicted by City analysts.
Capita's public sector contracts include; running London’s congestion charge scheme, operating and promoting the Gas Safe scheme, running a number of government helplines and the auto-enrolment of staff into workplace pension schemes. Capita employs around 70,000 people in the UK.
CEO Jonathan Lewis unveiled a radical overhaul of Capita’s finances, saying that the group’s operations had become ‘too complex’ and had placed ‘too much emphasis on acquisitions to drive growth’.
The overhaul includes; a £700m rights issue, the suspension of shareholder dividend payments, the disposal of non-core assets, cost-cutting and the sale of Constructionline, a provider of procurement and supply chain management services to the construction industry, which Capita purchased from the government in 2015 for £35m.
Capita Chief Executive Officer Jonathan Lewis said; “An immediate priority is to strengthen the balance sheet through a combination of cost savings, non-core disposals and new equity. We have identified a small number of quality businesses that do not fit with our core skills for which there will be better owners and a process to maximise value will commence shortly.”
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