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UPDATE 1-Capita shares slide after outsourcer writes down contracts
February 21, 2017 / 8:10 AM / 10 months ago

UPDATE 1-Capita shares slide after outsourcer writes down contracts

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LONDON, Feb 21 (Reuters) - Outsourcing group Capita, under pressure from a slowdown in demand from customers, said it had written off the value of a number of historic contracts, sending its shares down over 4 percent.

Capita, which downgraded profit forecasts twice in three months at the end of 2016, said on Tuesday assets amounting to around 50 million pounds ($62 million) would be written off as a non-underlying charge. Accrued income of around 40 million pounds will also be written down as a charge.

Shares in the group, which said it was otherwise trading in line with the guidance it gave in December, were down 21 pence at 491 pence at 0806 GMT.

The stock has fallen 63 percent since July 2015.

“Excluding the impact of accrued income written down, our guidance regarding trading performance for 2016 remains as last stated on 8 December 2016,” it said.

The assets, which were reviewed as part of the year-end close process, date back to 2009, with the majority relating to the period between 2012 and 2014.

Capita, which provides IT-enabled business services to banks and investors, the national health service, retailers and utilities, has been forced to cut costs and dispose of assets to make its debt more manageable as earnings come under pressure.

The group has been hit by lower than expected revenues coming through from its major contracts while Britain’s vote to leave the European Union has also resulted in a slowdown in new orders coming through.

$1 = 0.8031 pounds Reporting by Kate Holton; Editing by Mark Potter and James Davey

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