Capita slumped the most in 24 years after its new chief executive announced plans for a rights issue and suspended dividend payouts.
The London firm, which provides customer services functions for firms like Telefonica's O2 and retailer Marks & Spencer Group, will seek to raise as much as £700 million ($993.8m), and said it plans to sell some non-core assets. The stock fell as much as 41 per cent, the most since February 1994.
“Significant change is required for Capita’s next stage of development,” chief executive Jon Lewis, who started in the role on December 1, said in a statement. “Capita is too complex, it is driven by a short-term focus and lacks operational discipline and financial flexibility,” he added.
Jefferies analyst Kean Marden said in a note that the “kitchen sink” plan echoes similar steps by other outsourcing firms Serco Group and Mitie Group, as well as energy company Amec Foster Wheeler where Lewis worked previously. Consensus earnings per share estimates, once analysts have included rights issue and bonus factor adjustments, could fall by about 40 per cent, Mr Marden said.
Capita’s warning comes at a time when British outsourcing companies face increasing economic uncertainty, and follows the collapse of construction and services firm Carillion earlier this month.
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Capita has warned of reduced spending by corporate clients several times since the UK voted to leave the European Union in 2016. It said on Wednesday that it now expects adjusted pretax profit for 2018, before significant new contracts and restructuring costs, to be between £270-300m.
Mr Lewis dismissed similarities between the firm and other outsourcers on a call with analysts. “We should not be compared to the ‘G4Ss and Interserves’ of the world,” he said. “We are not a blue collar firm, we are a tech-enabled digitally focused company.” He declined to confirm if the company had government contracts worth £600m.
Capita shares were trading down 40 per cent at 9.16am in London. G4S, Interserve, Mitie and Serco also declined in early trading.
“We are taking very positive steps to address sins of the past,” Mr Lewis said, “which is better than kicking the can down the road and hoping that the markets are just going to turn around.”
The company has now identified a small number of businesses that are considered non-core, including ParkingEye and Constructionline, and said a disposal programme for these assets will commence shortly.
Capita’s plan to focus on a smaller number of better positioned business, with a strengthened balance sheet, allowing appropriate levels of investment, “are welcome steps in the right direction,” Peel Hunt analyst Christopher Bamberry wrote in a note.
Capita chief financial officer Nick Greatorex said the firm continued to experience delays in decision making by clients, contributing to weaker overall sales. That includes a significant contract and volume attrition in its IT services divisions, he said on the call.
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The specs
Engine: 3.0-litre six-cylinder turbo
Power: 398hp from 5,250rpm
Torque: 580Nm at 1,900-4,800rpm
Transmission: Eight-speed auto
Fuel economy, combined: 6.5L/100km
On sale: December
Price: From Dh330,000 (estimate)
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
Cryopreservation: A timeline
- Keyhole surgery under general anaesthetic
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The specs: 2018 Bentley Bentayga V8
Price, base: Dh853,226
Engine: 4.0-litre twin-turbo V8
Transmission: Eight-speed automatic
Power: 550hp @ 6,000pm
Torque: 770Nm @ 1,960rpm
Fuel economy, combined: 11.4L / 100km
THE SPECS
Engine: 6.75-litre twin-turbocharged V12 petrol engine
Power: 420kW
Torque: 780Nm
Transmission: 8-speed automatic
Price: From Dh1,350,000
On sale: Available for preorder now
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Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
More on Coronavirus in France
The specs
AT4 Ultimate, as tested
Engine: 6.2-litre V8
Power: 420hp
Torque: 623Nm
Transmission: 10-speed automatic
Price: From Dh330,800 (Elevation: Dh236,400; AT4: Dh286,800; Denali: Dh345,800)
On sale: Now
APPLE IPAD MINI (A17 PRO)
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Main camera: 12MP wide, f/1.8, digital zoom up to 5x, Smart HDR 4
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In the box: iPad mini, USB-C cable, 20W USB-C power adapter
Price: From Dh2,099
How to join and use Abu Dhabi’s public libraries
• There are six libraries in Abu Dhabi emirate run by the Department of Culture and Tourism, including one in Al Ain and Al Dhafra.
• Libraries are free to visit and visitors can consult books, use online resources and study there. Most are open from 8am to 8pm on weekdays, closed on Fridays and have variable hours on Saturdays, except for Qasr Al Watan which is open from 10am to 8pm every day.
• In order to borrow books, visitors must join the service by providing a passport photograph, Emirates ID and a refundable deposit of Dh400. Members can borrow five books for three weeks, all of which are renewable up to two times online.
• If users do not wish to pay the fee, they can still use the library’s electronic resources for free by simply registering on the website. Once registered, a username and password is provided, allowing remote access.
• For more information visit the library network's website.
COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding