Capita seeks cash injection as losses hit

Has anybody got a spare £700m? If so, Capita would like to speak to you as it’s looking to plug some gaps in its finances. In exchange you can have some nice newly-issued Capita shares, as the BBC reports it’s going to do a rights issue to raise the money.

The news comes as the company publishes a loss of £513,1m for the year, but we’re actually going to stick our necks out and say buying into the shares issue might actually not be a bad idea (disclaimer: this does not constitute financial advice). Our reasoning is simple: the share price, although it’s lost around 70 per cent over the last year, actually rose on the announcement of the loss and rights issue.

This presumably means a lot of people in the know think the company has turned some sort of corner. It also means there is some recognition that it’s taking action rather than sitting on a problem.

It may also be a reflection that the business is being realistic; accounting regulations have changed so that it’s no longer possible to inflate profit figures by accounting for a large deal in one go, businesses now have to account for profits as they arise. So the loss might sound big (because it is) – but previous losses under the older rules might simply have been undeclared.

You must be logged in to post a comment Login

Leave a Reply

To Top