Capita swallows £50m blow after writing down historic contracts

A fabulous start to the year!

By Paul Kunert

Posted in The Channel, 21st February 2017 14:03 GMT

Everyone's favourite cuddly outsourcing corp Capita is writing off a cool £50m worth of assets related to certain deals with customers after a "comprehensive review across its major contracts" base.

The listed firm today told the London Stock Exchange that top brass had decided to "impair, at the year end 2016, a number of historic assets relating to a few specific contracts, which were being amortised over their contract life."

Some of the assets pertained to fiscal 2009 but the majority relate to 2012-2014. Capita didn't say which customers were linked to the amortisation.

"Assets amounting to around £50m will be written off as a non-underlying charge consistent with prior year treatment. Accrued income of around £40m will be written down as a charge to underlying results," the statement continued.

This write-off comes after a particularly crappy calendar year for Capita, in which it reported a string of profit warnings, largely caused by a sales slide in the IT Enterprise Services and Workplace businesses.

A subsequent restructure was initiated that chopped down the org chart from eleven divisions to six. Inevitably included in the company's recovery plan was a job-hack process that saw the removal of a layer of middle management. A more expansive programme of cost cutting was initiated in early December when 2,250 staff were put at risk of redundancy.

Capita is expected to report full-year 2016 numbers in March.

Sign up to our NewsletterGet IT in your inbox daily


More from The Register

M&S extends customer support contract with, er, Capita

Web chat? On the phone? Online? That'll be UK IT's Mr Nasty you are talking to

Caption this: Capita staff picket a bunch o'er pickled pensions

It's day 2 at Reading Bridge House picket line. Make 'em laugh

Capita screw-ups are the pits! Brit ex-miner pensioners billed for thousands in extra tax

Outsourcer blames HMRC's new PAYE portal

Capita contract probed after thousands of clinical letters stuffed in a drawer somewhere

It was not contractually obliged to forward them so...

Wave Tata, Capita: You've lost mega-contract to rival outsourcer

Man from Pru tears up £722m deal five years ahead of time

Capita data centres hit by buttload of outages

Exclusive '60 is not a high number,' says press handler. O rly?

Oh good. Transport for London gives Capita £80m for WAN, LAN and Wi-Fi

As if commuters in Big Smoke don't have enough to put up with...

Capita appoints back bencher baroness as non exec director

Could it be eyeing up more public sector deals?

Capita still hasn't found what its looking for: A CEO

Current boss leaves this weekend, no perm replacement yet found

Capita forced to pay out £66m to investors over Connaught fund farce

Watchdog finds outsourcer's oversight severely lacking