Capita announces £513m annual loss

Capita, the provider of outsourcing services to the public sector, including a number of local authorities, has reported a £513.1m annual loss. This compares with a £89.8m deficit in 2016, while revenues last year fell by 4% to £4.2bn.

The firm says its profit was wiped out by £850.7m of one-off costs, mostly from writing down the value of acquisitions made under its previous management. As a result, it is to raise £701m through a rights issue to fund a reorganisation of the business. Details of the full year report can be found here.

Capita operates the London congestion charge and runs an electronic tagging service for the Ministry of Justice. Overall, nearly half its £4.2bn income last year was accounted for by work in the public sector.

New chief executive Jonathan Lewis has announced a major overhaul of the company which currently has £1.7bn in debt. The rights issue will reduce borrowings as well as funding investment in the business.

The company’s chairman Sir Ian Powell said in the annual report: “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.”

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