Britain's Capita to raise cash after cutting profit forecasts

Capita announces overhaul as it warns on 2018 profits

In a statement, the firm's chief executive Jonathan Lewis said "significant change" to the business was required.

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.

Capita's shares were down 42 percent by 1113 GMT, wiping 970 million pounds off its market value and taking the stock down 85 percent since a peak in mid-2015.

"An immediate priority is to strengthen the balance sheet through a combination of cost savings, non-core disposals and new equity".

Capita operates the London congestion charge and collects the TV licence fee on behalf of the.

The company's dividend, he confirmed, would also be suspended.

It employs around 73,000 people.

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

"The government must take serious steps to oversee the activities of Capita, which is the third major outsourcing company in the last month to issue profit warnings".

But a Downing Street spokesman dismissed such suggestions, insisting that the government does "not believe that any of our strategic suppliers including Capita are in a comparable position to Carillion", which did much outsourcing for the United Kingdom government.

In October of the same year, the Central Bank fined the group's Capita Life and Pensions Services (Ireland) unit €1.15 million for acting as an investment business firm for nearly a decade without proper authorisations from the regulators in Republic.

Jon Trickett, Labour's shadow minister for the Cabinet Office, said: "We can not afford another Carillion".

"It's essential the Government completes this quickly and is prepared to bring services and contracts in-house if they are at risk".

It provides procurement and supply chain management services to the industry.

Speaking after the announcement, Mr Lewis said he had identified a "small number" of businesses that could be offloaded.

Neil Wilson, senior analyst at ETX, said signs of problems had been building at the firm, including the loss of "a lucrative and profitable contract with the Prudential" in January.

Net debt at the end of fiscal year 2017 was around £1.15bn.

"Capita has underinvested in the business and there has been too much emphasis on acquisitions to drive growth", he said.

The firm is also undertaking a triennial review of its pension scheme.

Field said: "Another day, another outsourcing firm with massive debt, a huge pension deficit, a KPMG audit and the Big Four popping up at every turn in the company's chequered history".

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