Trustmarque staff reassured amid 'immediate' spending review

Capita issued profit warning last week, partly due to its reseller business

Staff at Capita-owned Trustmarque have been reassured in an email about the "underlying strength" of the business as the firm prepares to initiate an immediate spending review across the whole group.

Capita, which bought Trustmarque for £57m in June, issued a profit warning last week, partly blaming its resale business. The outsourcing giant's shares crashed 20 per cent after it warned that underlying pre-tax profits for its full year to December 2016 will come in between £59m and £79m behind its previous estimate.

On the same day the trading update was issued, staff at the firm were emailed with further details. In the note, which has been seen by CRN, the firm said that a spending review will happen immediately.

"While the group achieved good results in the first half of 2016, current trading in specific businesses has slowed down since the half year, there has been a continued delay in client decision making, and we have incurred some one-off costs in the second half," the email said. "As a result we have revised down our expected profit for 2016.

"To this end we will be initiating an exercise to review all expenditure across the whole group in the coming weeks. This immediate initiative is necessary to ensure the continued success of the group going forward."

CRN understands that some staff in the Trustmarque business are looking to make an exit, with some suggesting CVs are circulating around the channel. Further, rumours surfaced before the profit warning about redundancies in IT, finance and back office, but Trustmarque could not be reached for comment, and Capita said it does not comment on rumours or speculation.

In the email, staff were thanked for their commitment and urged to be optimistic.

"The breadth of our services and skills means we are well placed to weather this period of trading uncertainty," said the note. "However, we will need to continue working strongly together as a cohesive team and remain nimble and flexible in our response to this challenging period.

"...The board thank you all for your continued support and hard work and we remain confident in the underlying strength of our business."