Capita rejects comparison with failed rival

Shares in outsourcing giant Capita jumped yesterday despite it booking a pre-tax loss of more than half a billion pounds last year.

The £513.1 million plunge into the red came as the firm counted the cost of impairments and provisions linked to acquisitions.

The figure compares with an £89.8m loss in 2016 and comes as Capita detailed £850.7m of “specific non-underlying items” which dragged on performance.

However, the firm – which saw revenues fall 4% to £4.23 billion in the year to December 31 – saw shares take a double-digit leap in morning trading as it announced a £701m rights issue as part of a transformation strategy under new chief executive Jonathan Lewis.

The proceeds of the rights issue, part of a major overhaul, will be used to reduce Capita’s debt and make investments.

Under the new strategy, the outsourcer is targeting annualised cost savings of an initial £175m by 2020 and around £300m from disposals in 2018.

The group was hammered on the stock market earlier this year after warning over profits.

Capita’s woes comes after construction group and outsourcing rival Carillion collapsed into liquidation in January, leaving the taxpayer on the hook for billions of pounds of projects and pension liabilities.

However, Mr Lewis moved to dismiss comparisons with Carillion with the failed group.

Shares in Capita closed up 21p at 180.80p following trading last night.

Capita has set out a new strategy for long-term growth