Capita: We are on track to deliver low double digit revenue growth
Capita has issued a pre-close trading statement covering performance to date in 2015. It confirmed it is on track to deliver low double digit underlying revenue growth in the full year, including organic growth of around 4% net of attrition, despite somewhat softer market conditions in its specialty nursing and supply teacher staffing businesses toward the year end. It expects its underlying operating margin to be within its target range of 12.5% to 13.5% and comfortably ahead of the H1 2015 underlying operating margin of 12.7%. The conversion rate of operating profit to operating cash is expected to meet our target of being at or around 100%.
It continues to expect organic growth to accelerate in 2016, supported by the conversion of its bid pipeline. The market for customer services and business process management remains active and provides a strong platform for growth in the UK and Northern Europe over the medium to long term.
Capita has acquired 16 companies to date in 2015 for a total consideration of £375m before deferred and contingent considerations. Since its first half results, its largest transactions have been the acquisition of Electranet for a cash consideration of £37m and the disposal of National Dental Plan (NDP) for a cash consideration of £31.7m.
In the health and science sectors, its largest ever acquisition is avocis in Northern Europe. It has also has disposed of a number of small businesses which lack strategic fit. The Group has been awarded a contract to deliver customer management services for Unitymedia, Germany’s second largest broadband and cable provider. The contract is worth [€88] million (£62 million) over seven years and starts immediately.
Our bid pipeline currently stands at £5.1bn (July 2015: £5.4bn), comprising 29 bids (98% new business and 2% renewals) on which decisions are expected within the next 12 months. It continues to expect organic growth to accelerate in 2016.