Switch to IFRS 15 hits Capita’s 2016 profits

Outsourcing specialist Capita, which dropped into the FTSE 250 in March, has re-stated its underlying operating profit for 2016, which is now down from £481m to £335m, as a result of early adoption of IFRS 15 Revenue from Contracts with Customers, the new revenue recognition standard, which has had a significant impact on Capita’s long-term contracts and software business.

In a regulatory statement the company said the changes reflected in the 2016 results predominantly relate to the timing of revenue recognition, with revenues now recognised later across the life of contracts.