Another (smaller) profit warning
Companies: Capita plc
Following its profit warnings in mid-September and early December, Capita announces another set of impairments this morning.
Management has impaired assets by £50m in a non-underlying write-down. It has also impaired accrued income by £40m which will feed into underlying results for 2016:
"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"
Back in December, the Group forecast a lowered PBT expectation of £515m. This now comes down to incorporate the accrued income impairment:
"Excluding the impact of accrued income written down, our guidance regarding trading performance for 2016 remains as last stated"
Last year Capita guided for 2017 to be at a similar level to 2016 as the troubles spill into H1 2017 but then things beginning to improve in H2 2017.
The writedowns are non-cash and mainly relate to contracts won between 2012 and 2014. Nonetheless, it is a further knock to investors coming not long after the last profit warning.
Shares opened down c.5% in early trading this morning as the market digested the news, but have since rebounded to broadly flat compared to last night's close. Over the last 12 months the successive bad news has driven the share price down 53%.
The company is currently trading on relatively low multiple at c.8x consensus earnings of 62p, according to the FT, although broker forecasts will surely come down to adjust for this morning's profit warning.
