Capita says overhaul on track but ‘some way to go’ as profits fall

Outsourcing giant Capita insisted its overhaul is on track but has “some way to go” as it reported a 26% fall in annual profits.

The group – Britain’s biggest outsourcer – reported underlying pre-tax profits of £282.1 million for 2018 after revenues fell 5% to £3.9 billion.

Chief executive Jon Lewis said: “We’ve successfully completed year one of our multi-year transformation, fixed the basics and are firmly on track.”

He added: “Our transformation still has some way to go. But I am very pleased with our progress.”

On a statutory basis, Capita swung to a profit of £272.6 million against losses of £513.1 million in 2017.

Shares eased 1% as Capita said it was expecting broadly flat profits in 2019, guiding for between £265 million and £295 million.

It said the successful delivery of its ongoing overhaul was “critical to the future performance” of the group.

Capita has been undergoing a large-scale transformation under Mr Lewis.

The boss has said Capita will centralise its procurement, consolidate its UK footprint and exit leases on properties as he seeks to slash costs.

Capita also raised £700 million through a recent rights issue, as well as selling off units to garner £400 million.

The company’s order book at the end of the year stood at £7.1 billion, compared with £8.2 billion in 2017.

It said it was on course to meet its 2020 targets for £175 million cost savings.