Capita’s turnaround continues

Capita has said its overhaul is on track although it still has “some way to go” as Britain’s biggest outsourcer returned to profit but reported a fall in revenue.

On a statutory basis the group – which has more than 4,000 staff in Scotland – swung to a profit of £272.6 million, recovering from losses of £513.1m in 2017.

However, underlying pre-tax earnings dropped 26 per cent to £282.1m, while revenues fell 5 per cent to £3.9 billion.

Chief executive Jon Lewis said: “We’ve successfully completed year one of our multiyear transformation, fixed the basics and are firmly on track. Our transformation still has some way to go. But I am very pleased with our progress.”

Capita expects broadly flat profits in 2019, guiding for between £265m and £295m.

Lewis has said the group will centralise its procurement, consolidate its UK footprint and exit leases on properties as he seeks to slash costs.

Capita also raised £700m through a recent rights issue, as well as £400m by selling off units. Its order book at the end of the year stood at £7.1bn, down from £8.2bn in 2017.

David Madden, analyst at CMC Markets, said the group’s “painful turnaround plan” is paying off.

Meanwhile, fellow outsourcing heavyweight Interserve faces a crunch shareholder vote over its future this morning as it looks to avert administration.

Investors in Interserve – whose major Scottish projects include the £22m redevelopment of the National Gallery in Edinburgh – must decide whether to approve a restructuring proposal tabled by the group. The plan, aimed at slashing almost £650m of debt, proposes a debt-forequity swap with its lenders. If approved, existing investors would see their holdings cut to 5 per cent and lenders plus Emerald Asset Management and Davidson Kempner Capital, would seize control of the remaining equity.