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UK's Capita grabs rail franchise CFO in turnaround push

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By Reuters
UK's Capita grabs rail franchise CFO in turnaround push
FILE PHOTO: A woman walks past a sign welcoming visitors to Capita offices in London, Britain, January 31, 2018. REUTERS/Toby Melville/File photo   -   Copyright  Toby Melville(Reuters)

By Justin George Varghese

(Reuters) – Capita Plc <CPI.L> named bus and rail company Go-Ahead Group’s <GOG.L> Patrick Butcher as its chief financial officer, the latest step by its CEO to rebuild another of Britain’s big outsourcing firms.

Chief Executive Jonathan Lewis was appointed late last year after a series of profit warnings to reboot Capita, and raised 700 million pounds ($893 million) to prop up the business in April.

Like Carillion – which collapsed dramatically at the start of this year – Capita depends on a mix of public and private contracts, although it is focussed chiefly on IT services.

Butcher comes with almost 20 years of experience as head of finance at public companies, although during his tenure at Go-Ahead, which operates some of London’s much-maligned commuter rail lines, the company’s share price fell by almost 40 percent.

Go-Ahead confirmed Butcher’s resignation as its finance chief in a separate statement on Wednesday.

He replaces Nick Greatorex, who stepped down in July, after more than three years in the post, during which time Capita shares plummeted 80 percent as it failed to meet profit expectations.

A 60 percent drop in first half pre-tax profit earlier this month underlined the huge challenge still facing Capita and CEO Lewis.

The company said then that 2018 underlying pre-tax profit would now be between 250-275 million pounds ($360 million), less than the 270-300 million pounds it predicted earlier this year due to the sale of a number of businesses.

Carillion’s collapse at the start of this year prompted criticism from lawmakers over the risks of government using such outsourcing companies to cut the cost of public services.

Lewis took over in December after working for oil services company Amec Foster Wheeler. In April he said that many of Capita’s problems were self-inflicted and could be tackled by doing “fewer things better” after years of acquisitions turned it into a sprawling mass of separate service providers.

Butcher will stay on with Go-Ahead, best known for the Southeastern and GTR rail franchises that connect London to its suburbs, for the next few months and will start at Capita at the turn of the year.

Shares of Capita were down 0.4 percent, while shares of Go-Ahead were almost flat by 0717 GMT.

($1 = 0.7841 pounds)

(Reporting by Justin George Varghese and Arathy S Nair in Bengaluru; editing by Patrick Graham and Susan Fenton)