Capita to raise 拢700m as losses deepen

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Capita has reported a 拢513m annual loss as the outsourcing firm set out plans to revive its indebted business.

The company was hit by 拢850m of one-off costs, mainly from writing down the value of acquisitions made under its previous management.

However, underlying pre-tax profits, which exclude restructuring costs and one-off items, rose by 23% to 拢401m.

The company said it would raise 拢701m through a rights issue to fund a reorganisation of the business.

Capita's shares closed 13% higher at 180.8p in London, valuing Capita at just over 拢1.2bn.

It operates the London congestion charge and runs an electronic tagging service for the Ministry of Justice,

The loss compares with a 拢89.8m deficit in 2016, while revenues last year fell by 4% to 拢4.2bn

However, new chief executive Jonathan Lewis dismissed any comparison to Carillion, the services and outsourcing group that went bust earlier this year.

"I get frustrated with that comparison - we are a completely different business," Mr Lewis said.

"We have 拢1bn in liquidity, strong cash flow and a new strategy with investor support. We are not in PFI contracts and have nothing like the risk profile."

Mr Lewis has announced a major overhaul of the company which has debt totalling 拢1.7bn. The rights issue will reduce borrowings as well as fund investment.

'Fundamentally strong'

Under its new strategy, Capita plans to raise about 拢300m disposals this year and is targeting cost savings of 拢175m by the end of 2020.

Capita's share price jumped by 12.7% to 180.1p in early trade.

The company collects the licence fee on behalf of the 大象传媒 and recently won a five-year extension to provide audience services to the broadcaster.

Commenting on Capita's future, Mr Lewis said the business was "fundamentally strong" but "needs to evolve".

He added: "We need to simplify Capita by focusing on growth markets and to improve our cost competitiveness. We need to strengthen Capita and plan to invest up to 拢500m in our infrastructure, technology and people over the next three years."