Capita Shares Struggling
Shares in the outsourcing company Capita, which is listed on the FTSE 250, fell by more than 14 percent in a morning’s trading, after the company warned that it had seen subdued market conditions.
In an update this morning, the company said that while trading had been in line with expectations, the market had been relatively subdued for the duration of 2017.
Capita had secured contracts to a value of £471 million over the year to date, and seen improved profitability for its public services partnerships arm. However, one expected contribution of £22 million from the Defence Infrastructure Organisation is not going to be repeated next year.
The company expects to see a record number of asset impairments throughout 2017, including the recognition of a number of goodwill impairment charges. It stressed, however, that these will not affect the company’s future cash flow. They added that the restructuring programme that they had announced in 2016, which includes some reductions to overheads and sales of property assets, is expected to net £57 million by the end of the year, and that the company will incur charges of £18 million in 2017.
The plans include a shift of resource allocation towards the markets that have better growth prospects, as well as some optimisations to improve cost competitiveness, and to recharge the company’s sales performance. In the long term, the company want to deliver better value to customers and improve the environment for employees and shareholders as well. Many investors appear to feel that the shift is too little, too late.
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