Another privatisation domino wobbles …

“Capita has suspended its dividend and put plans in place to raise up to £700 million as it became the latest company in the troubled outsourcing sector to hit investors with a shock profits warning.

The group, whose public sector contracts include working with the emergency services, in healthcare and with the police and justice systems, said that it would auction off non-core assets over the coming two years.

Capita, which also works in the private sector for banks, insurers, retailers and telecoms groups, said that it would press ahead with a cost-cutting drive, including reducing its administrative expenses and centralising its contract procurement processes.

Companies in the outsourcing sector, particularly those with large government contracts, face wafer-thin profit margins and cutbacks in Whitehall spending. Private sector clients are also cutting costs.

Capita’s warning comes weeks after Carillion, whose main customer was the government, collapsed into liquidation, triggering a string of investigations into the circumstances of its demise.

Shares in Capita had fallen by 46 per cent to 188p by late afternoon trading in London today valuing the group at £1.3 billion. They have dropped 30 per cent over the past year during which the company issued several profit warnings.

The outsourcer said it plans for a “multi-year transformation programme” just over two months after Jonathan Lewis was appointed as its new chief executive. Capita said today that under its new boss, it had initiated a process of change that covered “strategy, cost competitiveness, sales IT and our capital structure, to improve the performance of Capita over the medium to long term”.

Mr Lewis said: “Capita has underinvested in the business and there has been too much emphasis on acquisitions to drive growth. As our markets have evolved, the group has not responded. Today, Capita is too complex, it is driven by a short-term focus and lacks operational discipline and financial flexibility.”

Capita’s decision to suspend its dividend payments so promptly stands in contrast to Carillion, however, which has come under fire for continuing to reward shareholders even when it was in financial difficulties.

Capita said today that although trading in its 2017 financial year had been in line with its expectations profits before tax in 2018 were now likely to come in between £270 million and £300 million.

Before today’s warning, analysts had pencilled in profits for 2018 of about £400 million.

The company said that it would be raising cash through a rights issue this year. It said that the precise amount it needed to raise was not yet clear but that it had agreed a standby underwriting facility with banks for up to £700 million. When banks underwrite a capital raising it means they guarantee that the money will come in even if it means they have to buy up unwanted shares.

Mr Lewis said: “An immediate priority is to strengthen the balance sheet through a combination of cost savings, non-core disposals and new equity. My initial review of our cost base highlights that over the next few years there is significant scope for cost efficiencies but also the need to spend more where there has been underinvestment.

“We have identified a small number of quality business that do not fit with our core skills for which there will be better owners and a process to maximise value will commence shortly.”

Among the businesses Capita plans to offload are Parkingeye, a car park management company, and Constructionline, a register for contractors and consultants in the UK.

Capita forecast that its net debt at the end of 2017 would be around £1.15 billion and that it would aim to reduce its gearing.

The company is also in the process of a review of its pension scheme. Capita currently expects that the deficit in the scheme will be below the most recently disclosed figure of £381 million.

Analysts at Jefferies said that their “initial calculations” suggested that consensus forecasts for Capita’s earnings per share this year would probably be cut by about 40 per cent today. “In the medium term, cost savings should help (we think £85 million to £90 million could be achievable) but the revenue environment remains lacklustre,” they added.”

Source: The Times, paywall

TV tonight: “The New Builds Are Coming: Battle in the Countryside”

BBC 2
9 pm TONIGHT:

“Richard Macer explores the controversial decision by the government to free up the green belt to developers. In the tiny charming village of Culham he finds residents furious at plans to supersize their village to three and a half thousand new homes.”

“Javid: Hoarding developers will lose land”

Is Owl the only cynic who thinks developers are, at this moment, working on a new definition of “hoarding”? !!!

“Housing Secretary Sajid Javid says compulsory purchase powers will be used more widely to drive up the supply of new homes, with developers set to lose planning permission on unused land if they fail to hit construction targets. Mr Javid told the Times: “We’ve got a housing crisis. We’ve got no time for anyone who is just antidevelopment for the sake of it.”

He added that the Government will not “be your friend” if you are a nimby as ministers are “on the side of people who want more homes.” With Shelter analysis showing that planning permission was granted on 1,725,382 housing units in England between 2006 and 2014 but only 816,450 had been completed after three years, Mr Javid said there is “definitely some hoarding of land by developers” and insisted the Government must “play a more active, more muscular role.”

Source The Times, Page: 1 The Times, Page: 13 (pay wall)

Fight for your country, pay taxes, marry – but you are too “immature and irresponsible” to vote says Tory Deputy Leader

“Young people aged 16 and 17 lack the “maturity and responsibility” needed to vote, the de facto deputy prime minister has said.

In a move likely to anger young people demanding the right to vote, David Lidington dismissed calls for the voting age to be lowered to 16.

The Cabinet Office minister and unofficial deputy prime minister was stepping in for Theresa May, who is in China, at Prime Minister’s Questions.

He was responding to a question from Emily Thornberry, standing in for Labour leader Jeremy Corbyn, about why the Government refuses to reduce the voting age to 16.

In response to his answer, Ms Thornberry accused the Government of being a “coalition of cavemen”. …”

http://www.independent.co.uk/news/uk/politics/voting-age-theresa-may-david-lidington-under-18-pmqs-maturity-responsibility-tory-a8187091.html

“Special scrutiny meeting may be held over set up of shady Accountable Care System in Devon”

Again, Martin Shaw (East Devon Alliance Independent)and Claire Wright (Independent)to the rescue! From Claire Wright’s blog:

“A special health scrutiny session may be held in the next few weeks, if it transpires that a controversial Accountable Care System is to be established in Devon in April, it was agreed at last Thursday’s Health and Adult Care Scrutiny Committee meeting.

My Independent colleague, Martin Shaw, put together an excellent and very well researched paper on the subject – found here:

http://democracy.devon.gov.uk/mgConvert2PDF.aspx?ID=13776 and presented it to the committee last week.

He asked for an urgent special meeting of the committee as the pace of change is looking very fast.

The main concerns about ACS’s (Accountable Care Systems) and ACOs (Accountable Care Organisations) are that they are the very opposite that their name implies, that they would not be set up in statute and may not be subject to the usual checks and balances that legally constituted NHS organisations are.

The language is the same as used in the United States healthcare system, which is quite understandably worrying many people.

There is also a great fear that such organisations will source much more work from the private sector over much longer contract periods.

Any such organisation or system may not be able to be held to account by the only legal check on health services – Devon County Council’s Heath and Adult Care Scrutiny Committee.

I formally proposed that the committee holds such a meeting in February preferably. This was agreed subject to the date when the Devon Accountable Care System may be established.

I am delighted to see that nationally, a judge has granted permission for a campaign group to pursue a high profile judicial review against the government on this issue.

So we will see.”

http://www.claire-wright.org/index.php/post/special_scrutiny_meeting_may_be_held_over_set_up_of_shady_accountable_care

How different the approach to redundant quarries can be – with East Devon the loser

North Devon:
https://www.devonlive.com/news/devon-news/devon-quarry-set-transformed-multi-1137602

East Devon:
https://eastdevonwatch.org/2018/01/26/woodbury-business-park-expansion-would-be-morally-and-ecologically-wrong/

Claire Wright and Martin Shaw fighting heroically for our NHS

Thank heavens we have Claire Wright and Martin Shaw fighting so hard for our NHS on a daily basis and don’t have to leave the fight to Swire, Diviani, Sarah Randall-Johnson and East Devon Tories – or there would be no fight at all!!!

Holding NHS Property Services to account:
http://www.claire-wright.org/index.php/post/nhs_property_services_and_nhs_managers_requested_to_fully_engage_over_commu

Getting those winter performance figures that Randall-Johnson was happy to wait months for:
http://www.claire-wright.org/index.php/post/new_devon_ccg_to_provide_performance_winter_pressures_reports_within_days

Social care not working:
http://www.claire-wright.org/index.php/post/latest_devon_social_care_survey_reveals_concerns_among_people_about_service

Ambulance service under intense pressure due to cost-cutting:
http://www.claire-wright.org/index.php/post/devon_county_council_health_scrutiny_committee_records_its_concerns_over_am

Decisions on community hospitals:
Health Scrutiny hears there will be no precipitate decisions on community hospitals – local conversations with CCG and RD&E offer chance to shape ‘place-based health systems’ around towns

Declining performance:
Devon’s health system’s declining performance over last 12 months – and Health Scrutiny still waiting for winter crisis evidence