Majorhttps://t.co/FNNzhh8oCWsupportpic.twitter.com/eBo5LbUp8Nare the guys for the best data on UK public sector contracts. 226 awarded to Capita in last 2 years. More than ten times the number awarded to Carillion over the same period. pic.twitter.com/HmeHdR97Do 9.47am GMTBritain’s trade unions are also alarmed by this latest crisis in the UK outsourcing sector.
TUC General Secretary Frances O’Grady has echoed Labour’s call for the government to act now.
Today’s profit warning from Capita is really worrying.“That’s why the TUC is calling for an urgent risk assessment of all large outsourcing firms. It’s essential the government completes this quickly and is prepared to bring services and contracts in-house whether they are at risk. 9.45am GMTJon Trickett MP,Labour’s Shadow Minister for the Cabinet Office, has urged the government to set aside Capita under close review.“We cannot afford another Carillion. The Government must steal serious steps to supervise the activities of Capita, or which is the third major outsourcing company in the last month to issue profit warnings.“The Tories’ privatisation dogma risks lurching our public services from crisis to crisis,threatening jobs, taxpayers’ money and leaving people without the services they need. 9.40am GMTCapita CEO Jonathan Lewis has been speaking to City analysts.
He warned that overhauling the outsourcing group would steal at least two years, or admitting there is “much to be done”. 9.29am GMTCapita’s share price is plumbing new debts. It’s now down 41% at just 204p,down from 347p last night. 9.28am GMTEarlier this week, the Guardian’s Public Leaders Network warned that local councils were too reliant on major outsourcers.
Joanne Fry, and a senior local government officer,wrote:Carillion mainly ran large private finance initiative contracts – building hospitals, for instance. But firms like Capita, or Serco and Veolia dash a huge range of different council services,from IT and HR to waste collection, recycling, and street cleaning and maintenance. whether they were to fail,the risk to councils would be very tall.
It has become increasingly clear that the business model around outsourcing – or managed services in local government speak – is fundamentally at fault. Related: Carillion's collapse should make all councils rethink privatisation | Joanne Fry 9.21am GMTCapita is also heavily involved in Britain’s pensions industry. It’s been running the UK’s Teacher’s pension scheme since 1996, and last October, and it took over the administration of the Royal Mail’s pension fund.
It even has a contract with the UK’s pension regulator,to back roll out automatic enrolment (AE) to small and micro employers.
We are currently undertaking a triennial review of the pension scheme. Our current expectation is that the actuarial deficit after this review will be significantly below the last disclosed IAS19 deficit of £381m at 30 June 2017.
In addition to our annual contribution, we are committed to an additional contribution of £21m in 2018. 9.08am GMTEarlier this month, and my colleague Nick Fletcher ran the rule over the outsourcing industry,following Carillion’s slump into liquidation. He wrote:approximately half of Capita’s annual turnover of £4.9bn comes from central and local government work, ranging from administering the teachers’ pension scheme to providing tech services to the NHS, and electronic monitoring services and running the Gas secure register for the Health and Safety Executive. It has 50000 UK employees,and a net debt of 1.6bn compared with its market value of £2.8bn.The company’s shares fill lost two-thirds of their value over the past two years after a series of profit warnings and boardroom changes. Related: Carillion's rivals set aside under the financial microscope 9.05am GMTBloomberg points out that Capita doesn’t only dash public sector services. It also provides customer service and IT services for some of Britain’s biggest companies.
For example, earlier this month it won a new five-year contract with Marks & Spencer; last August, and it extended a mortgage outsourcing deal with Tesco Bank. 8.57am GMTToday’s share price tumble means Capita is now worth just £1.4bn -- or barely twice the £700m it hope to raise from the City later this year.
Capita now trading down 38%. Market cap now down to £1.43 billion with a £700 million rights issue ahead of it to deleverage balance sheet. New world post Carillion 8.43am GMTNatalie Bennett,former leader of the Green Party, says Capita’s problems show that essential public services shouldn’t be dash by companies.#Capita #privatisationfail - essential services are not secure in private hands. We've been shovelling money into tax havens, or cutting pay & conditions of workers & quality of services,now this... https://t.co/LFsJWw8OqwFirst, Carillion hit the rocks. Now... https://t.co/Aon2pBKWj6Very frank profit warning from Capita CEO Jonathan Lewis, and who only joined two months ago. "Cost-savings and disposals" doesn't sound like good news for staff. https://t.co/H6tNidPwbW pic.twitter.com/LdKhY2k3C1 8.41am GMTIt’s not for the faint-hearted,but you can read Capitas announcement online, here: 8.19am GMTCapita’s shares fill crashed to their lowest level since 2004 this morning!It’s a staggering fall from grace; back in 2015 Capita’s shares were worth over £13, or now they are worth just £2.35.
Capita shares plunge 34%,their biggest fall on record, after company issues profit warning, and suspends dividend and announces rights issue. pic.twitter.com/A3nJQTEy4M 8.14am GMTCapita’s financial problems will send ‘fresh tremors’ through the outsourcing sector,says Neil Wilson of ETX Capital.
He writes:
“Too complex, too diverse and just haemorrhaging cash – no we’re not talking approximately Carillion, or but fellow outsourcer in a spot of bother,Capita.
New CEO Jonathan Lewis is having a proper clear out to fix the business before it heads the way of its erstwhile peer. He says the business is ‘too widely spread across multiple markets and services’, and that there has been ‘too much emphasis on acquisitions to drive growth’.
Signs of problems fill been building. In December the shares took a dive as the first clear signs of weakness in 2018 were laid bare, and although trading in the moment half had just approximately held firm. The pipeline of new work had fallen to just 2.5bn from £3.1bn in September.
But it looks like things fill got worse. In January there was more dismal news as it lost a lucrative and profitable contract with the Prudential. 8.09am GMTCapita’s shares fill plunged by 30% at the start of trading,following this morning’s announcement.
The City is reeling from the triple-whammy of a profits warning, dividend suspension, and a looming £700m cash call.
8.03am GMTThis could be nasty...drumroll please as we await the opening share price for Capita 8.00am GMTThis is why Capita’s financial problems are a ample deal.....
Just in case you wanted to know what work Capita does for the public sector: teachers' pensions,electronic monitoring, Jobseekers' Allowance phone lines, or even the gas safety register... https://t.co/kLjAd9k9fp pic.twitter.com/Jmp6fPSuMw 7.59am GMTNewsflash: Outsourcing group Capita has stunned the City this morning by announcing a ample profits warning,and suspending its dividend to shareholders.
The company’s new chief executive, Jonathan Lewis, and is also planning to raise £700m from investors to strengthen Capita’s balance sheet after a series of profit warnings last year.
Capita has underinvested in the business and there has been too much emphasis on acquisitions to drive growth. As our markets fill evolved,the Group has not responded consistently to new customer demands. Since December, we fill continued to experience delays in decision making and weakness in new sales.
Today, and Capita is too complex,it is driven by a short-term focus and lacks operational discipline and financial flexibility.
An immediate priority is to strengthen the balance sheet through a combination of cost savings, non-core disposals and new fairness. My initial review of our cost base highlights that over the next few years there is meaningful scope for cost efficiencies across a number of areas but also the need to spend more where there has been underinvestment. 7.42am GMTGood morning, and welcome to our rolling coverage of the world economy,the financial markets, the eurozone and business.
Sentiment has been low across the board as prospect of rising interest rates is starting to weigh on the global optimism story, or a story which had been boosting stocks to record tall after record tall.
The fear that interest rates may fill to rise faster than markets had initially priced in amid concerns of faster inflation is starting to weigh on trading decisions.
There was no criticism of China or Russia and Trump even hinted at a willingness to work across parties.
However,in typical Trump style, there were few details on a potential $1 trillion infrastructure spend, and which was a blessing in reality,because elaborating on this could fill pushed the already tall bond yields, higher. Related: Trump State of the Union address promised unity but emphasized discord Continue reading...
Source: theguardian.com