25th Feb 2016 11:04
LONDON (Alliance News) - Capita PLC on Thursday said it is looking for organic revenue growth of at least 4.0% in 2016, as the outsourcer's annual pretax profit was hit by impairment charges.
In addition, Capita revealed that Chairman Martin Bolland wants to step down by the end of the calendar year. The appointment of a successor before then would allow him to step down earlier. External headhunters have been appointed to find a successor to Bolland, who has been chairman since January 2010 and a board director since 2008.
Pretax profit fell to GBP112.1 million in 2015, from GBP292.4 million in 2014. Capita lifted its dividend for the year as a whole to 31.7 pence from 29.2p. On an underlying basis, which is stated before the cost of business exits and other items, pretax profit rose to GBP585.5 million from GBP535.7 million.
Non-underlying charges included an impairment of assets in the company's life and pensions division of GBP76.7 million as a result of legislative changes. Other charges included a GBP28.3 million impairment of goodwill in the company's insurance business, and a further GBP17.2 million provision in relation to settlements in its asset services arm.
"The impairment is probably not as large as we had feared, but the risk now is that further impairments in other divisions will further occlude what is already an increasingly incomprehensible set of accounts," Michael Donnelly, an analyst at Panmure Gordon, said in a note. He has a Sell rating and 1,000 pence price target on the stock.
Andy Parker, chief executive of Capita, said: "Our largest ever acquisition, avocis, has provided a strong growth platform in Europe. We have re-positioned the business away from certain non-core lower growth businesses and enter the current year in a strong strategic and financial position, enabling us to raise our margin target range to between 13.0% and 14.0%."
The company's underlying operating margin was 13.7% in 2015, up from 13.5% the prior year on a like for like basis.
Parker said the group will target organic revenue growth of at least 4.0% in 2016, driven by the combination of growth from the group's divisional businesses and conversion of its bid pipeline.
Capita said underlying revenue grew by 11.8% on a like for like basis in 2015, including 4.3% organic growth. Those figures excluded businesses exited and held for sale from both 2015 and 2014.
Shares in Capita were down 6.8% at 999.50 pence on Thursday morning.
By Samuel Agini; [email protected]; @samuelagini
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