29th Jul 2015 12:28
LONDON (Alliance News) - Capita PLC on Wednesday said its pretax profit fell in the first half of 2015 thanks to higher administrative costs and said its organic revenue growth weakened in the period and is only expected to improve slightly in the second half.
The FTSE 100-listed outsourcing company said its pretax profit in the half to the end of June was GBP146.1 million, down from GBP152.3 million a year earlier, despite revenue rising to GBP2.29 billion from GBP2.07 billion. The profit was dragged lower by higher administrative costs in the first half. It will pay an interim dividend of 10.5 pence, up from 9.6 pence a year earlier.
Capita said its organic revenue growth in the first half was 3%, with a further 7% being driven by acquisitions. The organic growth, which came in behind the 8% growth it posted in the second half of 2015, was driven by contracts the company won last year, including the Defence Infrastructure Organisation and Transport for London Congestion Charging deals, along with good underlying performances in its asset services and workplace services divisions.
In line with the company's expectations, revenue from its insurance and benefits services division fell in the half due to contract step-downs.
But Capita said that its organic growth, which slowed from the second half of 2015, in line with Capita's expectations, is only set to deliver a slight improvement in the second half due to a the delayed start of new contracts. It expects organic growth to recover in 2016 as it converts its bid pipeline.
The group said won GBP1.6 billion in major contracts in the first half, up from GBP1.3 billion a year earlier, including contracts in the health and sciences sectors. Its bid pipeline at the end of June was GBP5.4 billion, up from GBP5.1 billion when it posted its 2014 results in February and replenished well after the significant gains made in the first half, it said..
Among the key contract wins secured in the first half was a GBP1 billion single-provider framework for administrative support services with NHS England Primary Care Support Services, along with a place on the NHS England Support Services Framework, which is expected to be worth GBP3 billion to GBP5 billion to the companies on the preferred bidder list.
Capita also secured a contract from the UK Department for Environment, Food & Rural Affairs to create a joint venture to operate the UK's Food and Environment Research Agency, which will be worth GBP700 million in revenue over ten years, and extended existing deals with the likes of Marks & Spencer Group PLC and the Home Office.
"Capita has had a productive first half year, announcing significant contract wins in the health and science sectors and our largest ever acquisition, avocis in Northern Europe, all of which will contribute substantially to growth going forward," said Andy Parker, Capita's chief executive.
"We continue to expect to deliver low double-digit revenue growth in 2015, with a slight increase in organic growth in the second half of the year, following the delayed start of some new contracts. We expect organic growth to accelerate in 2016, supported by the conversion of our bid pipeline," Parker said.
By Sam Unsted; [email protected]; @SamUAtAlliance
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