Capita chief executive falls on his sword as profits drop by a third
Shares in troubled outsourcing giant Capita fell today after its chief executive, Andy Parker, stepped down – and profits fell by a third.
Shares were down 7.9 per cent at 520.1p in late morning trading after the company, which administers the London congestion charge and TV licencing among many other things, said today Parker will step down later this year, once the company has found someone to replace him.
The news came as pre-tax profits at the troubled company fell 33 per cent to £475.3m in the year to the end of December, although revenues inched up by one per cent, to £4.9bn. Last night it emerged Capita had been booted off the FTSE 100, thanks to its falling market cap.
In what it called a "challenging year" the company said it had taken a £39.6m writedown after a review of contracts in 2016. However, it held its dividend at 31.7p.
In December shares in the outsourcer fell to their lowest in 10 years as it issued its third profit warning in a year, saying it expected underlying pre-tax profits to come in at £515m, compared with a previous forecast of £535m to £555m. Today's figure, £475.3m, is another seven per cent lower than that.
At the time, it also announced plans to shake up its structure, reorganising its 11 divisions into six, and flogging its asset services arm.
Today it said the sale was on track, with "good interest", and it expected to sell off that and its specialist recruitment arm by the end of this year.
"2016 was a challenging year and Capita delivered a disappointing performance," admitted Parker today.
"We are determined to turn this performance around. We have taken quick and decisive action to reduce our cost base, increase management accountability, simplify the business, strengthen the balance sheet, and return the group to profitable growth.
"We remain very confident that our target markets continue to offer long-term structural growth. Capita is well placed in these markets with our unique set of complementary capabilities and the talent of our people. The bid pipeline of major contract opportunities remains active, and we are also seeing success in providing additional new, high value, replicable services to clients."