Britain's biggest outsourcer, Capita, reported underlying pre-tax profits up 6 per cent at £385m and signs that activity is picking up again in the sector mean its shares are looking good value again.
Chief executive Paul Pindar said: "It was a successful year for Capita with record major sales wins of £2bn in new and extended contracts (£0.8bn in 2010)." And, despite the level of contract wins, the bid pipeline remains healthy at £4.6bn, down marginally from £4.7bn in July last year. The momentum has carried into this year with £620m-worth of new and extended contract wins already. The new business didn't come soon enough to halt an organic revenue decline of 7 per cent, but Mr Pindar expects the company to return to generating organic growth in the current year. Operating margins inched up to 14.59 per cent.
After the early shock of budget cuts and austerity measures the business opportunities are starting to come through again. Even so, operating cash flow slipped from £442m to £364m, which, combined with the bolt-on acquisitions made throughout the year, increased net debt to £1.3bn, from £950m.
Broker Investec forecasts adjusted pre-tax profits of £428m and EPS of 52.6p (£385m and 48.1p in 2011).
CAPITA (CPI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 721p | MARKET VALUE: | £4.3bn | |
| TOUCH: | 721-722p | 12-MONTH HIGH: | 797p | LOW: 603p |
| DIVIDEND YIELD: | 3% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 85p* | NET DEBT: | 248% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 2.07 | 229 | 27.1 | 12.0 |
| 2008 | 2.44 | 227 | 27.3 | 14.4 |
| 2009 | 2.69 | 258 | 30.8 | 16.8 |
| 2010 | 2.74 | 310 | 38.4 | 20.0 |
| 2011 | 2.93 | 303 | 39.2 | 21.4 |
| % change | +7 | – | +2 | +7 |
Ex-div: 18 Apr Payment: 28 May *Includes intangible assets of £1.8bn, or 298p a share. | ||||
