Tag: Carillion

Capita’s share price plummets after profit warning

2408Capita shares have plunged by 50 percent after the outsourcing firm issued a profit warning and announced a major restructuring

Chief executive Jonathan Lewis said the company had become “too complex” and “driven by a short-term focus” and needed to change its approach.

This is the second year in a row Capita has issued profit warnings. This time it has revealed plans to raise £700 million by issuing new shares.

Life should be good for Capita after its outsourcing rival Carillion collapsedlast  month, but it seems to be suffering from similar problems.

Capita operates the London congestion charge, runs the government’s Jobseekers Allowance helpline and administers the teachers’ pension scheme. It also collects the TV licence fee on behalf of the BBC.

A Cabinet Office spokeswoman said as a “strategic supplier” Capita was always monitored by the government and called for the government to make sure that it does not go the same way as Carillion.

The firm employs 70,000 people, about 50,000 of whom are in the UK.

CEO Mr. Lewis, who took over two months ago, said a review had found the company worked across too many markets and services, meaning it was difficult to “maintain a competitive advantage” in every business.

Capita had relied too much on acquisitions to drive growth and had also seen weakness in new contracts, he added.

The company does have some financial strengths. It can call on £one billion in cash and credit facilities, has a significantly higher profit margin than Carillion did and has been taking steps to reduce its debt burden.

KBR’s defence project unaffected by Carillion liquidation

FILE PHOTO: A Carillion sign in Manchester, Britain July 13, 2017. REUTERS/Phil Noble/File Photo - RC1FB056E500KBR announced today that it expects no disruption to its project being executed through a joint venture with Carillion as a result of Carillion’s announced liquidation yesterday.

 KBR operates a stand-alone Joint Venture with Carillion on Project Allenby Connaught through its Aspire Defence entities, providing design, construction and maintenance services to the British Army for living and working accommodation. The Joint Venture has been performing services for the Ministry of Defence since 2006, and the management and workforce are “mature and stable”. whatever that means.

In a statement, the company said it had been undergoing contingency planning for the last three months and was well placed to continue operating this contract.

” We do not expect any disruption to the delivery of services, the performance of the contract or the cash-flow from the contract because of Carillion’s liquidation.”

KBR President and CEO Stuart Bradie said: “We’ve been aware of Carillion’s challenges for some time and have taken necessary steps to facilitate a seamless transition and we are operating business as usual. We will continue to work closely with the Ministry of Defence, and the administrator to explore options to ensure the continued long-term success of MoD programmes.”