It has been a tough few years for Capita (CPI). In the week preceding the release of these results, the group wrote off £50m-worth of contract assets after a widespread review, and wrote down £40m of accrued income. This meant non-underlying charges taken in the period came in at £401m, cutting a scythe through pre-tax profit, although they were less than 2015's figure of £473.4m.
The group grew underlying revenue by 3.4 per cent, driven overwhelmingly by acquisitions made in 2015 and 2016. Organic growth sales growth came in at just 0.1 per cent, and the group intends to supplement future growth by picking up further small and medium-sized businesses. The net debt to cash ratio grew to 2.9 times, above last year's figure of 2.5 times and the target range of 2-2.5 times.
Business development is weaker, too. New and extended contracts reached £1.34bn in 2016, down from £1.8bn in 2015. The bid pipeline was flat at £3.8bn, with an average contract length of seven years, but the group's contract win rate slipped to one-in-three from two-in-three last year, including a missed opportunity for a mortgage administration contract in the first half.
Analysts at Numis forecast pre-tax profit of £419m and EPS of 49.8p in 2017, compared with £475m and 56.7p last year.
| CAPITA (CPI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 516.5p | MARKET VALUE: | £3.45bn | |
| TOUCH: | 516.5-517p | 12-MONTH HIGH: | 1,101p | LOW: 431p |
| DIVIDEND YIELD: | 6.1% | PE RATIO: | 93 | |
| NET ASSET VALUE: | 61p* | NET DEBT: | £1.78bn | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 3.40 | 281 | 36.0 | 23.5 |
| 2013 | 3.90 | 215 | 27.1 | 26.5 |
| 2014 | 4.38 | 292 | 35.8 | 29.2 |
| 2015 | 4.84 | 112 | 8.0 | 31.7 |
| 2016 | 4.90 | 75 | 5.6 | 31.7 |
| % change | +1 | -33 | -30 | |
Ex-div: 25 May Payment: 3 Jul *Includes intangible assets of £2.75bn, or 413p a share | ||||
