Six months to end-June revenue increased by 15% to £1.607bn (H1 2011: £1.4bn).
Organic growth was flat.
Acquisitions completed during 2011 and H1 2012 contributed 15%.
Underlying operating profit rose by 12% to £216.6m (H1 2011: £193.0m).
Underlying profit before taxation increased by 10% to £190.7m (H1 2012: £174.0m).
Underlying earnings per share (1) grew by 10% to 24.19p (H1 2011: 21.95p).
Reported operating profit is £169.2m (H1 2011 £159.2m).
Reported profit before tax is £143.8m (H1 2011: £141.4m).
Reported earnings per share is 18.70p (H1 2011: 18.01p).
Interim dividend of 7.9p per ordinary share (H1 2011: 7.2p) representing an increase of 10%.
Paul Pindar, CEO, commented: "With organic growth returning as expected, cash conversion improving and a good pipeline of potential acquisitions, Capita is positioned well for further growth. As a result of stronger major contract sales performance over the past 18 months, together with the contribution from recent acquisitions, we have clear visibility of revenue growth in 2012. These factors, coupled with the current buoyant sales environment, underpin our confidence in full year performance and provide a strong platform for further progression in 2013."http://www.moneyam.com/action/news/showArticle?id=4414392
And how about this for a headline?
Capita feasting on public sector business
The market for outsourcing remains buoyant, particularly across the UK public sector where the group is seeing a high level of sales activity. During the first half of 2012, Capita secured major long term contracts totalling £1.3bn (up from £1.1bn of contract wins in the corresponding period of 2011), of which 74% related to new contract wins and 26% to contract renewals, maintaining an average win rate of one in two. The all important bid pipeline is down to £4.1bn, however, from £4.6bn back in February.Capita_feasting_on_public_sector_business
Just about the only negative is that the bid pipeline is down, but there is clearly still plenty of money to be made on public sector contracts, especially if you are a preferred bidder.
However, to prove that relying on Government for contracts or subsidies right now can be a dangerous business when the market sees it as going wrong, you only have to look at FTSE250 energy group Drax. As of writing the share price which is normally quite steady for a FTSE250 company, is down over 20%. Bloomberg gives the reason.
Drax Group, owner of the U.K.’s largest coal-fired power station, fell by a record in London after the government offered less financial support than expected for a switch to burning low-carbon fuel.
So, if you are buying into companies that need Government contracts and subsidies you might get lucky if it's a Capita, or you might get a pig in a poke like Drax. Drax isn't necessarily a bad company, but Government austerity has caught up with it. It's a case of buyer beware.
Drax dropped as much as 128.5 pence, or 25 percent, to 390 pence today, the biggest decline since the company started trading in 2005. The shares were at 400 pence at 8:39 a.m. London time.
One difference between DRAX and C*apita possibly is that Drax are stuck providing a service and not going anywhere. C*apita are able to produce fancy spreadsheets showing how much (theortical) money they can save the Gov. Also C*apita work for other organisations such as Insurers.
ReplyDeleteGood point Dave. Drax have placed a lot of hope on getting in on the green energy subsidy and the Government seem to have chosen to cut back in this area despite making a big noise of their green credentials. They did the same with Eaga a while back which effectively knocked that company back until Carillion bid for it.
DeleteCapita are different. They had a close relationship with the previous Labour Government. They are up for contracts that in theory will save the Government money, because Capita say they can do it cheaper. However, Capita's reputation within the public sector isn't always as rosy as the city might want to believe.
The general point of these posts on the companies that do business with the public sector is that while austerity is on the agenda even the good ones may have difficulty convincing the city that it will be kept up and reflected in share price performance. Sentiment is largely negative to these companies and may be that way for a while, with the big price moves more towards the downside, like Drax, than up.
UK Analyst market report from today. At one stage was down around 120p so recovered a little.
ReplyDelete"Shares in Drax Group (DRX) crashed by 76.5p to 442p after the government announced that subsidies for fossil fuel power plants that switched to electricity generation from biomass would be done on a unit by unit basis, rather than on a power station wide basis. The power company said that it will initially convert three of its six units, with the goal of being predominantly biomass powered by 2015. The firm added that the cost of purchasing fuel for trial runs of the new systems cost 20 million pounds more than originally expected."
Cheers No6. One wonders if all is well with their insurance contracts also. Still there have been a lot of comings and goings at senior management levels with Insurance other certain companies.
ReplyDeleteWonders if the Drax falls are being overdone.
http://www.insuranceage.co.uk/insurance-age/news/2194436/capitas-head-of-gi-leaves-after-less-than-year-in-role
It's probably also worth noting that companies going up for contracts by tender in the public sector are in a slightly different situation then those looking for a subsidy. Government is more likely to cut back on the subsidy, whereas expectations will be that the private sector company will deliver the cost effective savings on a contract. While this is not always the case, Government can ensure that the company pays for its failings by a contract with penalties for failure, like G4S Olympics security.
ReplyDelete