Capita plc AGM statement and trading update
In the full year results statement issued on 26th February, the company remains on track to deliver low double digit revenue growth and meet consensus expectations for the full year.
Mid-single digit organic growth in 2015 is expected, net of attrition, driven by the combination of new contracts announced in the year to date, the full benefit from 2014's contract wins and growth from the divisional businesses.
The bid pipeline, last reported at £5.1bn on 26th February, remains buoyant in both the private and public sector. Behind this is a substantive prospect list, with a number of bids which will reach their short list phase and feed into the pipeline over the course of the year. There are no material (defined as 1% of group revenue) contracts up for renewal until 2019.
To date in 2015, Capita has secured contracts with an aggregate value of £1.2bn including a contract to deliver services to the Department for Environment, Food & Rural Affairs (Defra) as part of a joint venture with Defra to operate the Food and Environment Research Agency (Fera), being selected as preferred bidder by Central London Community Health Trust and the extension and expansion of the existing service delivery contract with Sheffield City Council.
Capita announced that it has been selected as preferred bidder to provide corporate services for Central London Community Health Trust, including ICT, HR (payroll and recruitment), estates and facilities management, followed by the planned delivery of finance services. The contract is expected to be worth £80m over 10 years.
Capita formed the Fera joint venture with Defra in March, which includes a 10 year service agreement with Defra, a 10 year sole supplier framework for other Crown bodies worth up to £150m per annum and a sizeable opportunity to grow the business by providing more high end science services to the commercial sector.
Fera is expected to achieve £700m revenue over its first 10 years.
In February, Capita was approved by NHS England to join the new Lead Provider Framework for commissioning Support Services, under which £3-5bn of services such as finance, HR and GP IT are expected to be procured. A number of procurement opportunities have already commenced under the Framework.
Value enhancing acquisitions
Capita has acquired 7 companies to date in 2015 for a total consideration of £215m, including avocis and Scholand & Beiling in DACH (Germany, Switzerland and Austria) and Constructionline.
The DACH businesses have made a good start since we completed the acquisitions.
Capita is in early discussions with a number of potential clients in the region, confirming its view that there is significant growth potential there for customer contact management services.
Capita has acquired four smaller companies to enhance capabilities since the full year results, with combined annual revenue of £35m, for an aggregate consideration of £22m. Voice Marketing is an outbound customer management business which complements our current inbound and customer care services in Customer Management & International.
Sigma Seven is a specialist provider of mobile field worker software which complements AMT Sybex. ThirtyThree is a leading employer branding, communications and digital media specialist, which enhances its managed services recruitment offering within Workplace Services.
Finally, BCS specialises in the design of civil and structural engineering projects and expands its existing transport specialism within Property & Infrastructure.