Shares in UK government contractor Capita plunge 40% after profit warning

https://www.theguardian.com/business/2018/jan/31/shares-in-uk-government-contractor-capita-plunge-40-after-profit-warning

Shares in UK government contractor Capita plunge 40% after profit warning

Shares in government contractor Capita plunged 40% after it issued a shock profits warning and suspended its dividend payments just weeks after the collapse of construction firm Carillion. In the latest blow to the outsourcing sector, Capita’s new boss unveiled a radical overhaul of the group’s finances, giving a damning assessment of a company that he said had become “too complex” and lacking in discipline.

Jonathan Lewis, who took over as chief executive in December, said the company needed to raise up to £700m through a cash call on shareholders, scrap dividend payouts, and sell non-core parts of the business

Capita counts the government among its major clients with contracts that include running London’s congestion charge scheme, tagging prisoners, operating the Jobseekers Allowance helpline and administering the teachers’ pension scheme. It also manages the licence fee for the BBC. The group has debts of about £1.15bn and employs about 70,000 people in the UK.

The group warned underlying profits in 2018 were likely to be between £270m and £300m, well below the £406m predicted by City analysts.
(snip)