Capita seeking to raise £701m

Outsourcing giant Capita is to tap investors for £701 million and embark on a new strategy after booking a hefty annual loss.

The group said yesterday that pre-tax losses for 2017 came in at £513.1m as the firm counted the cost of impairments and provisions linked to acquisitions. It compares with an £89.8m loss in 2016 and comes as Capita detailed £850.7m of “specific non-underlying items” which dragged on its performance.

Revenue fell 4% to £4.23 billion in the year to December 31 and the firm also announced a £701m rights issues 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 also targeting annualised cost savings of an initial £175m by the end of 2020 and around £300m from disposals in 2018.

The group, which has 3,500 employees in Scotland, was hammered on the stock market earlier this year after warning over profits.

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

Mr Lewis said Capita will centralise its procurement, consolidate its UK footprint and exit leases on properties as the chief executive seeks to cut costs.

But he also dismissed comparisons with Carillion.

He said: “We are not in PFI contracts and have nothing like the risk profile.”

The outsourcing giant has 3,500 employees in Scotland