Capita’s still riding high
City Index February 27, 2014 9:16 PM
<p>Capita seemingly continues to shrug off some of the negativity surrounding the sector of late. The company’s shares got a lift of around 6.9% on […]</p>
Capita seemingly continues to shrug off some of the negativity surrounding the sector of late. The company’s shares got a lift of around 6.9% on Thursday, on the back of a relatively decent market update.
The UK-based outsourcing company reported a 15% increase in revenue at £3.9bn for fiscal 2013.
Reported pre-tax profit, however, declined around 23% at £215m, partly driven by an increase in administrative expenses and costs associated with disposals.
The company also boasted new contract wins for 2014; including a five-year contract – worth £145m – with Transport for London to deliver the congestion charging and traffic enforcement schemes; and a £325mn nine-year contract for Scottish Wide Area Network (an IT network to be used by public services organisations within Scotland).
And Capita continues to make way towards broadening its range of offering via a series of acquisitions; including its swoop on UK-based automatic number plate recognition system provider, ParkingEye, for around £58m last October.
All of this, while managing to strengthen its financial health.
As of December last year, the company had a net debt to earnings before interest, tax, depreciation and amortisation ratio of 2.02x – that’s certainly low by historical standards, and well within Capita’s target range of 2x to 2.5x.
The company seems to be on a roll, which contrasts somewhat from peers.
The likes of Serco, for instance, which has met with troubled times and a plummeting stock of late following widely-discussed allegations, subsequent profit warnings and analyst downgrades. Not to mention G4S and its own set of similar difficulties.
Meanwhile Capita, which has seen its stock soar some 39% over the last year alone, looks poised to continue to deliver.
That said, it’s true that the sector is subject to considerable scrutiny – and quite rightly so – that’s been exemplified by the recent issues surrounding Capita’s peers.
The next headline-grabbing scandal could well be around the corner, let’s just hope Capita isn’t in the midst.
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