Capita shares plummet after profits warning
British outsourcing group Capita lost 40 percent of its market value after its new boss slashed profit forecasts.
It has set out plans to raise cash to avoid the same fate as collapsed rival Carillion.
Just two weeks after Carillion perished under a pile of debt, Capita, which provides IT services to companies and governments to cut costs, said it needed a complete overhaul and to retrench.
The company cut its 2018 profit forecast by 30 percent only seven weeks after reiterating it following a string of warnings last year.
Under new Chief Executive Jonathan Lewis who arrived in December, Capita said it would raise around 700 million pounds ($992 million) in a rights issue in 2018, scrap the dividend and sell assets to enable it to boost investment, focus on contract profitability, and plug a hole in its pensions scheme.
Capita's shares were down 42 percent at 1338 GMT, wiping 970 million pounds off its market value and leaving the stock down 85 percent since mid-2015. The shares were trading at levels last seen in 2003.
"Capita needs to change its approach," said Lewis.
"We cannot continue to focus on the incredibly broad array of disparate businesses. The strategic review we're undertaking will cause Capita to shrink, cause Capita to focus."
Like Carillion, Capita provides vital services in Britain from running the system that pays National Health Service dentists to hospital triage support, collecting the congestion charge for driving in central London and helping retailers manage online shopping sites.
It employs 73,000 people and operates primarily in Britain over hundreds of separate contracts.Published: by Radio NewsHub