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The UK’s largest outsourcing company, which has previously offered consultancy and other services to the States of Guernsey, has seen its share price fall by around 80% in two years.
Capita, which advised the island on the Financial Transformation Programme, as well as supplying IT systems used by the emergency services, was reported this week as cancelling dividend payments to shareholders.
The States has used Capita for a number of different services in the past, most notably for work to change a number of structures within the government which came under the Financial Transformation Programme. The FTP was a programme designed to make recurring annual savings worth millions of pounds every year to the tax payer. It succeeded in doing that but Capita charged large fees for its consultancy work. Some of those fees were waived when it was realised that money had been moved and not saved.
Currently the States are not using Capita for any consultancy programmes but the island continues to use a number of other services designed by the organisation.
These include IT systems for internet payment systems and a system that records attendance and achievement for all school children in States schools.
Capita installs these systems and integrates them with other systems with ongoing licensing and maintenance contracts in place.
Capita was founded in 1984 as a for-profit consultancy arm of the Chartered Institute of Public Finance and Accountancy (CIPFA). Since then it has grown to become a national leader in business process outsourcing and it continues to work with a number of councils and counties across the UK.
The firm's latest annual report and accounts on its website relate to 2016. It's Non-Executive Chairman, Sir Ian Powell, is quoted in that:
"Capita had a challenging 2016. After many years of strong profit growth, the Group underperformed against its targets. We have made a number of key changes to seek to return the Group to acceptable levels of performance."
His Chairman's introduction also says:
"It is apparent that, despite the difficult year the Group experienced in 2016, the fundamentals of the Group are compelling. It is systemically important to the UK economy and its core proposition has not changed, Capita exists to improve the efficiency and productivity of its clients so that they can provide superior services to their own customers and end-users" adding "We have announced the decision to sell the majority of our Asset Services division and our specialist recruitment businesses. It is intended that these transactions will complete in 2017. The disposals bring more clarity to the Group and help reposition the balance sheet."
His outlook for 2017 was more positive: "2017 will be a transitional year for Capita; it will be a period of stabilisation in order to strengthen the Company’s position. The Board has tasked the management team with a number of strategic challenges, which they will report on regularly."
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