Capita shares tumble amid profit warning

As part of a restructuring of its business, Capita also plans to sell off its Constructionline business, which is a register for pre-qualified contractors and consultants. It was established in 1998 by the government but sold to Capita in 2015.

The Constructionline website claims it is used by 60% of local authorities and 50% of large housing associations.

According to data from market analysis firm Tussell, Capita has been awarded 226 public sector contracts in the past two years, including 109 from local government and seven from housing associations.

Jonathan Lewis, who was appointed chief executive of the company in October, said: “Significant change is required for Capita’s next stage of development. We are now too widely spread across multiple markets and services, making it more challenging to maintain a competitive advantage in every business and to deliver world-class services to our clients every time.

“Capita has underinvested in the business and there has been too much emphasis on acquisitions to drive growth. As our markets have evolved, the group has not responded consistently to new customer demands. Since December, we have continued to experience delays in decision-making and weakness in new sales.

“Today, Capita is too complex; it is driven by a short-term focus and lacks operational discipline and financial flexibility.”

The contracting sector has struggled in the past 12 months, with Carillion going into liquidation, Mitie issuing several profit warnings and Interserve being targeted by short sellers.

Update: at 17.27 on 31.01.18 This story was updated to make clear that Capita has sold its asset services business to Link Group.