On almost every measure these were good results from outsourcing giant Capita (CPI). Organic revenue growth was a respectable 5 per cent while the underlying operating margin rose pleasingly to 13.2 per cent from 12.9 per cent. Cash was another strong point, with the underlying cash conversion ratio (the proportion of profits that are converted to cash) up to 122 per cent from 104 per cent last year.
But this solid showing was overshadowed by a subtle, but important, change in the group's guidance. Previously, Capita had promised organic revenue growth of "at least 4 per cent" this year. Now the wording has changed to "around 4 per cent".
This is because uncertainty created by the UK's vote to leave the EU has hit business from the financial services sector. "Brexit has definitely caused a softening, we have seen a number of delays," says chief executive Andy Parker. He says customers have put company flotations and fund launches on hold as they wait for the dust to settle.
In the longer term, though, Capita sees Brexit opportunities. There could be a backlog of financial services assignments and more work for Capita helping companies adjust to regulatory changes, and the government to manage its withdrawal from the EU.
Analysts at Deutsche Bank forecast adjusted pre-tax profit of £619m for the full year, giving EPS of 73.8p, compared with £586m and 69.9p in 2015.
| CAPITA (CPI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 966p | MARKET VALUE: | £6.4bn | |
| TOUCH: | 966-966.5p | 12-MONTH HIGH: | 1,317p | LOW: 839p |
| DIVIDEND YIELD: | 3.3% | PE RATIO: | 76 | |
| NET ASSET VALUE: | 94p* | NET DEBT: | £1.9bn | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 2.29 | 146 | 17.7 | 10.5 |
| 2016 | 2.43 | 186 | 22.4 | 11.1 |
| % change | +6 | +27 | +27 | +6 |
Ex-div: 20 Oct Payment: 30 Nov *Includes intangible assets of £2.93bn, or 439p a share | ||||
