Government officials have met with Capita following a profit warning from the company which is a major employer in the county.
The outsourcing giant, which has a life and pensions centre at Bishops Cleeve, has seen its shares tumble. Cabinet Office Minister Oliver Dowden told the House of Commons last week that his officials met senior executives of Capita on Wednesday.
In a statement Capita has announced that it requires “significant change” because it believes the business is too widely spread across multiple markets.
Jonathan Lewis, chief executive officer of Capita, said: “In my first two months I have begun a thorough review of Capita – its structure, its leadership, its contracts and its financial position. “There is a lot to be excited about: talented people, a blue-chip customer base, great technology and the ability to deliver value adding services.
“We have completed the budgeting process for 2018 from which we have set a prudent plan. Since our December update, we have also decided to invest in people, sales and our transformation programme for the long-term benefit of the Group.
“However, significant change is required for Capita’s next stage of development. We are now too widely spread across multiple markets and services, making it more challenging to maintain a competitive advantage in every business and to deliver world class services to our clients every time. “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 consistently to new customer demands. Since December, we have continued to experience delays in decision making and weakness in new sales. “Today, Capita is too complex, it is driven by a short-term focus and lacks operational discipline and financial flexibility.
“Capita needs to change its approach. I have initiated a transformation programme, appointed a Chief Transformation Officer and formed a new executive committee to drive this change. I believe that this transformation programme can significantly improve the performance of Capita.” He added: 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 across a number of areas but also the need to spend more where there has been underinvestment.
“We have identified a small number of quality businesses that do not fit with our core skills for which there will be better owners and a process to maximise value will commence shortly. “Cost savings and non-core disposals alone will not be enough. We have also taken the significant decision to suspend the dividend and seek equity.
We have the building blocks to create a great business; one that consistently delights its customers, has operational discipline and generates sustainable cash flow. My team and I are now working hard putting in place the plan to deliver it.”