After what has already been a trying six months for the UK Index outsourcing company, today the company is facing the four horsemen of the Capit-apocalypse. Total Capita-lation. A steaming pile of… you get the picture.

The highlights (or lowlights) of the company’s earnings report include pretax profits tumbling by 33%, while a series of one-off costs resulted in a net loss that seems unlikely to dissipate in the near future. Tack onto this the fact that the report also noted the company is seeing less in the way of contract wins, and that the first half of 2017 is seen to be even weaker than the second half of 2016, in which profits warnings (emphasis on the plural) caused the company’s share price to fall to a 10 year low, and the future doesn’t look too appetising for investors.

Further adding to the unfavourable outlook is the prospect of Chancellor Hammond hoping to shrink government spending to decrease the government’s budget deficit. This will likely lead to less contracts on offer for the outsourcing firm, having previously won contracts that include the overhaul of existing London congestion charge system. With that said, however, the aforementioned project was in fact one of the key causes of Capita’s September profits warning as delays resulted in a significant impact on the company’s financial standing.

Further controversies the company is currently embroiled in include accusations that employees targeted the vulnerable when collecting TV license fees on behalf of the BBC, an investigation into the possibility that employees were bribed in order to allow the loose fitting of ankle tags on former prisoners, while the delivery of a contract offering GPs back-office services on behalf of the NHS has also come under fire. The prospect of Brexit delaying deals both in the future and those Capita is already working on only adds further uncertainty to the coming months.

Today, the culmination of the above factors has seen the CEO Andy Parker announce that he is leaving the company after only three years at the helm, citing the poor performance of the shares as one of the primary contributions to his decision to cede control.

The final horseman – or perhaps elephant in the room – for Capita is of course the announcement of the company’s demotion from the UK 100 to the that was made after market close yesterday evening. After the profit warnings, fresh decade low share prices and the departure of the company’s boss, this final point really does add insult to injury on what has been a disappointing day for investors.

At the open of the London stock exchange this morning, the shares briefly traded in positive territory, however shortly afterwards, Capita soon found itself on the wrong half of the UK Index leaderboard. The shares traded at fresh 11-year lows of 502p (-12%) shortly before midday, however has since mounted a slight recovery to 520p (-8.2%), as of 3:30pm.

Henry Croft, Research Analyst, 2 March