Underlying half-year pre-tax profit at outsourcer Capita grew 10 per cent year-on-year to £191m, and the group reported that a robust looking £1.3bn-worth of contracts had been signed in the half - up from £1.1bn a year ago. Although management says that organic growth is beginning to return, the shares are rated at a premium to those of peers and look up with events.
Indeed, management is confident that Capita will hit market expectations for organic growth of over 6 per cent in the second half. That will bolster acquisition-led expansion- which has been fairly ambitious. Capita raised a net £271m though a placing in April to fund further acquisitions and, to date this year, the group has acquired 10 companies for a total of £129m. However, there are signs of increasing competition within Capita's outsourcing markets and the group's operating margin slipped 0.3 percentage points in the period to 13.5 per cent - driven in part by rising finance costs. The company's bid pipeline weakened from £4.6bn in February, to £4.1bn, too.
Broker Panmure Gordon expects full-year adjusted EPS of 51p (2011: 48.36p).
CAPITA (CPI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 705p | MARKET VALUE: | £ 4.6bn | |
| TOUCH: | 704-705p | 12-MONTH HIGH: | 775p | LOW: 600p |
| DIVIDEND YIELD: | 3.1% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 121p* | NET DEBT: | 151% | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 1.40 | 141 | 18.0 | 7.20 |
| 2012 | 1.61 | 144 | 18.7 | 7.90 |
| % change | +15 | +2 | +4 | +10 |
Ex-div:12 Sep Payment:15 Oct *Includes intangible assets of £1.91bn, or 292p per share | ||||
