OUTSOURCING firm Capita has warned over 2018 profits and announced a wide-ranging overhaul, including plans for a cash-call to investors, cost cutting, and a programme to sell off unprofitable businesses.

New chief executive Jonathan Lewis, who took up the role on December 1, said "significant change" was needed at Capita.

He said an "immediate priority" was to strengthen the group's balance sheet, with plans for a rights issue due this year, as well as cost actions after finding "significant scope for cost efficiencies".

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Capita, which employs about 450 staff at Darlington’s Lingfield Point who oversee pension administration and consultancy work, will also suspend its shareholder dividend payout as part of the raft of "self-help" measures.

It warned full-year profits for 2018 would be between £270m and £300m as cost actions taken so far would not be enough to offset lost contracts and wider woes in the business.

Mr Lewis said: "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."

On the overhaul plans announced, he added: "An immediate priority is to strengthen the balance sheet through a combination of cost savings, non-core disposals and new equity.

"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."

Speaking after the announcement, Mr Lewis said he had identified a "small number" of businesses that could be offloaded.

He said his overhaul would take at least two years but declined to reveal how long it would take for the group to recover.

While cutting costs, he said he would also address the "sins of the past" by spending in areas that had seen under-investment, such as IT, as well as putting resources into growth areas such as automation.

He added there is "much to be done" to turn the group around but the announcements were the "first steps on the road to recovery".

The business signed a new lease last year, which officials at the time said would keep it in Darlington until at least 2025.