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Northern Ireland job fears as Capita shares take a pounding following profit warning

Changes: Jonathan Lewis
Changes: Jonathan Lewis

By John Mulgrew

Capita staff in Northern Ireland face uncertainty after the company issued a major profits warning.

It comes just weeks after fellow outsourcing giant Carillion collapsed amid a debt mountain.

Capita employs around 1,600 people here, and has hundreds of millions of pounds worth of public and private sector contracts in a range of services including IT.

Among them is a five-year deal with the Education Authority which began in 2012. A £50m extension was signed last year.

And it has a huge £88.3m contract with the Department for Communities for its personal independence payment (PIP) assessment services.

It also has public sector contracts with North West Regional College, Northern Regional College and Belfast Met.

Capita's shares plunged 42% to a 15-year low after the profit warning and its announcement of an investor cash-call as part of a major overhaul.

It said 2018 profits would now fall short of expectations, at between £270m and £300m, as cost actions taken so far would not be enough to offset lost contracts and wider woes in the business.

And it is to sell off its Constructionline business, which is used by Northern Ireland building firms to give them a form of accreditation to bid on big public sector contracts.

It is now not known whether it will be "business as usual" in the construction sector as a result.

Capita's new chief executive Jonathan Lewis, who took up the role on December 1, last year admitted the group had become "far too complex".

He said that "significant change" was needed to get the company back on track.

The UK Government has said it is monitoring all its "strategic suppliers", including Capita, and that it does not believe any are in a comparable position to Carillion, which went into liquidation last month following severe financial difficulties.

However, experts have warned that there are clear parallels with Carillion, given the string of profit warnings from Capita and its admission the company has become too unwieldy.

The situation prompted calls from Labour and the trade unions for the Government to act urgently "to avoid another Carillion".

Mr Lewis said an "immediate priority" was to strengthen the group's balance sheet, with plans to raise as much as £700m in a rights issue, as well as slashing costs and selling off unprofitable businesses.

Meanwhile, Carillion's Northern Ireland business is back on the market just a fortnight after the construction giant went into liquidation.

The work includes Northern Ireland Housing Executive contracts.

Belfast Telegraph