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Markets nervous ahead of Capita finals, is it ‘the next Carillion’?

Capita will be a focus on Thursday, others include Bovis House, Cobham, and National Express.

Capita
The outsourcer issued a profit warning last month

Capita Plc (LON:CPI) posts its finals on Thursday amid concerns it could face a similar – if not worse – fate than collapsed contractor Carillion.

Last month the outsourcer issued a profit warning and announced plans for a £700mln rights issue and to scrap its dividend.

Jonathan Lewis, who started as Capita’s chief executive two months ago, said the company was “too complex” and “too widely spread across multiple markets and services” so needed to sell non-core parts of the business. Capita plans to use the proceeds of asset disposals to pay down net debt, which stands at £1.15bn.

The announcement came in the wake of the collapse of fellow contractor Carillion earlier this month.

A potential collapse of Capita could create an even more of a headache for the public sector than Carillion since it is the biggest supplier of local government services in the UK, according to Tussell data.

Analysts believe the company is taking the right steps to turn around the business but think it is too soon to tell if the plan will work.

“Capita could be an interesting recovery story but it is too opaque to model with conviction, management guidance has been unreliable, and perpetual UK political turmoil continues to weigh on the revenue outlook,” said Jefferies.

Thursday March 1:

Finals: Melrose PLC (LON:MRO), Allied Irish Banks PLC (LON:ALBK), Bovis Homes Group PLC (LON:BVS), Cobham PLC (LON:COB), Costain Group PLC (LON:COST), Capita PLC (LON:CPI), CRH PLC (LON:CRH), Grafton Group PLC (LON:GFTU), Hastings Group Holdings PLC (LON:HSTG), Hunting Plc (LON:HTG), Howden Joinery Group PLC (LON:HWDN), Laird PLC (LON:LRD), Merlin Entertainments PLC (LON:MERL), National Express Group PLC (LON:NEX), Nichols plc (LON:NICL), RPS Group PLC (LON:RPS), Rentokil Initial PLC (LON:RTO), Robert Walters PLC (LON:RWA), STV Group PLC (LON:STVG), Synthomer PLC (LON:SYNT),  Vesuvius Plc (LON:VSVS), WPP PLC (LON:WPP), XP Power Ltd. (LON:XPP)

Interims: Haydale Graphene PLC (LON:HAYD), Redde Plc (LON:RED)

Ex-dividends: To knock 8.48 points off FTSE 100 index - Barclays PLC (LON:BARC), Berkeley Group PLC (LON:BKG), easyJet PLC (LON:EZJ), Rio Tinto PLC (LON:RIO), RSA Insurance PLC (LON:RSA)

Economic data: UK manufacturing PMI; UK consumer credit, mortgage approvals; US weekly jobless claims; US personal income, outlays; US construction spending; US ISM manufacturing; US PMI manufacturing

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