Mark Whitehead 23 April 2018

Outsourcing giant Capita warns of £500m losses

Outsourcing giant Capita warns of £500m losses image

Capita - the outsourcing company responsible for providing services to local authorities throughout the UK - has reported losses of more than £500m.

Capita says it wants to raise £701m through a rights issue to fund a major reorganisation of its business which is currently £1.7b in debt.

Its profit was wiped out by one-off costs totalling £850.7m mainly from writing down the value of acquisitions made under previous management.

The company, born from a buyout of the Chartered Institute of Public Finance and Accountancy's computer services arm in 1987, has become the UK's biggest outsourcing company.

Nearly half its £4.2bn income last year was accounted for by work in the public sector including central government and the NHS as well as councils where it provides software and management services in several areas including payroll, HR, social care, housing and education.

Its customers are mainly in the UK and Ireland but it also has operations in India, South Africa and Dubai.

Chief executive Jonathan Lewis today dismissed any comparison to Carillion, the services and outsourcing group that went bust earlier this year.

'I get frustrated with that comparison - we are a completely different business,' he told journalists. 'We have £1bn in liquidity, strong cash flow and a new strategy with investor support. We are not in PFI contracts and have nothing like the risk profile.'

In its latest annual report published today the company's chairman Sir Ian Powell says: 'Capita has lacked a clear strategy and operated with a short-term focus.

'This focus has resulted in short-term decisions to pursue near-term growth and in-year profitability at the expense of planning for long-term sustainability.

'Capita has taken on too many low-margin/ high risk contracts and has amassed too much debt in support of acquisition-led growth.

'At the same time, it has under-invested in its infrastructure (especially in those functions that provide the oversight that a business of Capita’s complexity requires) and as a result has made insufficient investments in financial and operational controls for a business of its scale.'

Unjust enrichment?  image

Unjust enrichment?

Housing authorities should take care when relying upon valuations that will feed into section 125 notices, says Amy Rogers, of the disputes team at Cripps.
Highways jobs

Director, Governance and Improvement

City of York Council
£85-95k plus relocation package
We are looking for an exceptional individual to be appointed to the position of Director of Governance and Improvement. York, North Yorkshire
Recuriter: City of York Council

Casual Cleaning Assistant

Chelmsford City Council
Grade 2 - Currently £9.00 per hour
It's exciting times at Riverside Leisure Centre with a brand-new centre opening in June 2019 and we need you to get on board and help us make this ... Chelmsford, Essex
Recuriter: Chelmsford City Council

Senior Team Leader

Redbridge London Borough Council
£35,992 to £38,994 per annum inclusive
Looking for individuals with initiative, evidence of experience in managing a street cleansing service and motivating... Redbridge, London (Greater)
Recuriter: Redbridge London Borough Council

Junior Service Desk Analyst

Chelmsford City Council
Full Time, 37 Hours, 12 Month Fixed Term Contract
We are seeking an enthusiastic, adaptable and proactive analyst to join our Service Desk team to provide customer focused first line IT technical s... Chelmsford, Essex
Recuriter: Chelmsford City Council

Part Time Receptionist

Chelmsford City Council
Grade 3 - Starting at £17,931 per annum, pro rata and rising to £19,131 per annum, pro rata
Join our friendly team welcoming our customers to the South Woodham Ferrers Leisure Centre. You will be flexible, self-motivated and able to deal c... Chelmsford, Essex
Recuriter: Chelmsford City Council

Local Government News

Latest issue - Local Goverrnemnt News

The March issue of Local Government News explores alternative funding channels that are available to councils beyond the Public Works Loan Board, what hurdles merging councils face in coming together, and how local government is handling GDPR.

This issue also has a special highways and street lighting section exploring how councils can use lighting to embark on their smart city journey and using IoT technology to weather the storm.

Register for your free magazine