Government cost-cutting is proving to be good business for outsourcer Capita. Demand from local authorities and central government helped drive a 7 per cent increase in underlying pre-tax profit during the period to £174m. That's largely in line with analysts' forecasts, although acquisitions flattered the revenue figure. Strip out the £134m contribution from acquisitions and organic revenue actually fell 7 per cent, following a subdued performance from the HR and property consultancy businesses.
Still, big contract wins and renewals doubled to £1.1bn following deals with Zurich, MetLife and the DVLA, and the bid pipeline now stands at a hefty £4.7bn. Of the 30 bids the company is involved in, chief executive Paul Pindar expects decisions to be made on at least 15 this year. A big army recruitment contract and a plethora of local and central government deals are among the prizes. There's also more life and pensions business to snatch, especially in Europe where Dutch players are already interested. Hopes are also high that Capita will benefit from police and Ministry of Defence cuts.
Peel Hunt expects full-year adjusted pre-tax profit of £386.1m, giving adjusted EPS of 48.1p (from £364.2m and 44.5p in 2010).
CAPITA (CPI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 687p | MARKET VALUE: | £4.2bn | |
| TOUCH: | 686-687p | 12-MONTH HIGH: | 803p | Low: 633p |
| DIVIDEND YIELD: | 3% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 86p* | NET DEBT: | 199% | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 1.36 | 132 | 16 | 6.6 |
| 2011 | 1.40 | 141 | 18 | 7.2 |
| % change | +3 | +7 | +13 | +9 |
Ex-div: 31 Aug Payment: 12 Oct *Includes intangible assets of £1.5bn, or 249p a share | ||||
