By Tony Collins
Capita’s chief executive Andy Parker is to step down later this year. The company has today announced that full-year results for 2016 were “disappointing”.
The company reported a sharp fall in annual profit.
Underlying pre-tax profit – which strips out restructuring costs – was £475.3m, well below the group’s expectations despite two profit warnings late last year.
Capita had said in December it expected annual pre-tax profits in the current financial year to be at least £515m.
Reported pre-tax profit was £74.8m, down 33 per cent year-on-year on slightly higher revenues of £4.9bn.
The company is moving some jobs to India, where it already provides outsourcing services for UK companies.
Capita is being dropped from the FTSE 100 from 20 March 2017. Its share price has fallen sharply over the past year but has risen gradually from its low about three months ago. The company’s share price fell sharply this morning, at one point down nearly 10% on yesterday’s close.
The company has had problems on multiple contracts.
In a statement this morning Parker said,
“2016 was a challenging year and Capita delivered a disappointing performance. 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.
“The proposed sale of our Asset Services businesses and Specialist Recruitment businesses are on track. We have received good interest and, following regulatory approvals where required, we remain confident in concluding these transactions this year, which will leave us with a more focussed Group and significantly strengthen our balance sheet.
“We expect 2017 to be a transitional year for the business, as we complete our disposals, bed down the structural changes inside the business, and re-position Capita for a return to growth in 2018”.