29th Sep 2016 06:09
LONDON (Alliance News) - Outsourcer Capita PLC on Thursday trimmed its profit guidance for 2016 as the group suffers a slowdown in some of its divisions, costs incurred on a contract with Transport for London, and delays in client decision-making.
The FTSE 100 company said trading in the second half of 2016 has been weaker than expected thus far. It has been hit by a slowdown in trading in its IT Enterprise Services unit, particularly its technology reseller business, and its specialist recruitment arm in its Workplace Services division.
In addition, Capita said it faced delays in implementing new IT systems for Transport for London, the body which handles transport services in the UK capital. This will result in Capita incurring GBP20 million to GBP25 million in one-off costs in 2016.
It is also in a dispute with the Co-op Bank regarding its obligations under a contract with the UK lender.
Revenue from major contract sales in the second half has been weak, Capita said, due to continued delays in client decision-making which have resulted in a lower conversion rate for its order pipeline.
Capita said it now expects its underlying pretax profit for 2016 to be GBP535 million to GBP555 million, compared to the current company-compiled consensus of GBP614.0 million. This outlook excludes the cost of potential restructuring the group may undertake and is subject to its dispute with the Co-op Bank being resolved in a satisfactory manner.
By Sam Unsted; [email protected]; @SamUAtAlliance
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