18th Nov 2013 08:34
LONDON (Alliance News) - Business services company Capita PLC Monday said it is on track to post strong growth in the current financial year, but also said that Chief Executive Paul Pindar will leave at the end of February to pursue private equity opportunities and it sold a package of financial products businesses at a loss.
The company said Pindar will be replaced by Deputy CEO Andy Parker.
In its latest trading update, Capita said it remains on track to report 8% growth in organic revenues in 2013, up from 3% growth in 2012, after securing GBP2.9 billion of new contract wins so far with clients including the UK government, Carphone Warehouse and Telefonica. It also expects underlying operating profit margin to stay within its 12.5% to 13.5% long-term target, and to be above the 12.5% margin it reported for the first half of the year.
"Sales activity is buoyant and we are seeing high activity across the retail, utilities and telecoms sectors and in central government, particularly across defence and the justice areas," the company said in a statement.
It said its bid pipeline stands at GBP4.2 billion, the same level it was in July.
The company also said it has decided to sell small parts of its insurance and benefits services division, some insurance distribution businesses and its self invested pensions administration business to Markerstudy for an undisclosed sum. It said it had decided that it would take too long to turn the businesses around itself.
It expects to book net cash costs of about GBP35 million on the sale which will result in a goodwill writedown in its full-year accounts. Still, it expects pretax profit to be in line with market expectations as other parts of the business will make up for the writedown.
"Although these acquisitions generated healthy profits and cash over several years, we recognise that the recent performance of these acquisitions which cost in aggregate GBP70 million is disappointing. However, this should be viewed in the context of our GBP1.6 billion acquisition programme over the last 10 years, which has generated significant shareholder value," Capita said in a statement.
"As a consequence of the sales successes to date in 2013 and the acquisitions completed in 2012/2013, we are on track to deliver strong growth in 2013. Furthermore, 2014 has the foundations in place today to be a highly successful year," it added.
Capita shares were down 1.5% at 968 pence early Monday, the second-biggest decliner on the FTSE100.
By Steve McGrath; [email protected]; @SteveMcGrath1
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