FT - web site3 Aug 2018 10:41
Capita’s repeats of profit guidance are no cause for complaint
Market’s dim view of results suggest they weren’t paying attention to earlier warnings
MATTHEW VINCENT
Matthew Vincent AUGUST 1, 2018 Print this page0
BBC “Audience Services” is a euphemism. It is basically the TV complaints department. Years ago, the worst it had to deal with was a chaotic broadcast of the Brit Awards. Lombard knows this having spent five hours (in a former career) logging phone calls about sweary pop stars. Nowadays, though, it has to field criticisms of BBC News coverage of Brexit. And Lombard cannot think why outsourcer Capita (or anyone else) would want to do that job for five minutes, let alone five years.
In fact, all of the contract wins listed in Capita’s interim results on Wednesday seemed a tad challenging: customer service for British Airways; billing for Southern Water; claims handling for the Financial Services Compensation Scheme. However, they only served to demonstrate Capita’s priorities: rebuilding its order book after warning in January that contract attrition would cut pre-tax profit by £130m and require a £700m rights issue to reduce debt; and focusing on work where there is scope for technology-led improvement — rather than a tarnishing of its brand.
As the results presentation showed, such a transformation will take time — and chief executive Jon Lewis had already told those watching to expect lower revenues and earnings. But when Capita’s share price duly fell 11 per cent, he will have realised how “duty log” telephonists often feel at the BBC: sometimes, your audience just doesn’t want to know.
Certain viewers appeared to complain about a 4 per cent fall in underlying revenue, to £1.9bn, and guidance that organic growth would be “weaker in the second half”. They had evidently forgotten that, in April, Mr Lewis said organic growth would not return until 2020, and these numbers were in line with expectations.
Some viewers harrumphed at an order book that was down to £7.7bn from £8.2bn in December. They clearly missed the previous warning on attrition and the £921m of new orders, not including the BBC and BA.
Other viewers seemed to be offended that full-year underlying pre-tax profit was now forecast at £250m-£275m, having been £270m-£300m before. They were evidently out of the room making a cup of tea when Mr Lewis explained this measure would be adjusted downwards to
Sign In
Follow the stocks
