What is Capita’s share price, what does the outsourcing company do, why has a profit warning been issued and who owns it?
Outsourcing firm denies warnings it could be 'the next Carillion'
OUTSOURCING firm Capita's share price plunged almost 50 per cent following a fourth profit warning in 16 months.
It prompted fears the troubled company - which has billions in public sector contracts - could collapse like Carillion. Here's what we know.
What is Capita? Who owns it?
Capita Plc is a publicly listed company, meaning it is owned by shareholders, with headquarters in London.
Founded in 1984, it provides outsourced services to other companies and public bodies such as government departments.
The firm has more than 70,000 employees, with around 50,000 in the UK, and turnover of nearly £5billion a year.
Its biggest contract is running call centres for O2 in a ten-year deal worth £1.2bn.
It runs IT and administers the London congestion charge for TfL, and collects TV licence fees on behalf of the BBC.
Capita also has a £752million contract to run recruitment for the Ministry of Defence but has failed to deliver promised savings of £100million.
The company runs backroom services in GP practices and the government's Jobseekers Allowance helpline and administers teachers' pensions.
It provides software to emergency control rooms and runs for the Ministry of Justice.
Last year Scotland Yard handed Capita a £50million deal to run "digital policing" in London.
Other clients include Marks & Spencer and local councils. It also administers mortgages for the Co-op Bank.
What is Capita's share price and what was the profit warning?
On Wednesday, January 31, £1.1bn was wiped off Capita's stock market value as shares plunged to their lowest level since 2002.
Shares on the London Stock Exchange fell from 347.8p to 182.5p, down 47.5 per cent in one day. And they fell by another 5p when trading opened on Thursday morning.
On Friday, February 2, the stock opened at 160.5p.
Plans for drastic action to shore up the company have been drawn up by new chief exec Jonathan Lewis.
He said profits in 2018 will be around £270million to £300million - well below forecasts of £400million.
It was the fourth such warning in just over a year.
Capita has faced rising costs and a slow-down in the awarding of new contracts.
Mr Lewis, brought in to overhaul the troubled company in December, admitted it had become "too widely spread across multiple markets and services".
He axed dividends to shareholders and said he will cut costs and raise up to £700million from investors.
He added there is "much to be done" to turn the group around but his announcements were the "first steps on the road to recovery".
What happens next? Is Capita about to go bust?
Capita said its measures would ensure the company is not in danger of going bust.
But Labour's shadow minister Jon Trickett said the government needed to take "serious steps to oversee the activities of Capita", adding: "We cannot afford another Carillion."
Construction and outsourcing giant Carillion went into liquidation last month under mounting debts and a pensions black hole.
It had scores of public sector contracts including maintaining hospitals and Army bases and providing 32,000 school meals every day.
And officials continued to sign off contracts despite warnings Carillion was in trouble.
Last night it emerged Capita had been awarded 193 public service contracts worth £200million since its first profit warning 16 months ago.
Frank Field, chairman of the Commons work and pensions select committee, which is investigating Carillion, said: "Another day, another outsourcing firm with massive debt, a huge pension deficit, a KPMG audit and the Big Four popping up at every turn in the company's chequered history."
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Today junior cabinet office minister Oliver Dowden said officials had met Capita bosses to "monitor the execution of its plan, and of course to ensure the continued delivery of public services".
A government spokeswoman said: "We monitor the financial health of all of our strategic suppliers, including Capita.
"We are in regular discussions with all of these companies regarding their financial position.
"We do not believe that any of our strategic suppliers are in a comparable position to Carillion."