Capita ‘positive start’ to 2013

UK business process services market leader Capita said it has made a ‘positive start’ to 2013 securing four major contracts worth £660m in the first 19 weeks of the year. Although slower than this point last year when it had won six new contracts totalling £823m, this shouldn’t really cause any major concerns.

With 2012 proving a cracking year with record sales worth £4bn including its largest ever deal with Staffordshire County Council (see Capita delivers 3% organic growth in FY12), it’s not surprising management expects to deliver ‘strong growth’ in 2013.

The contracts signed in 2013 to date include a £160m 10-year customer management deal with Carphone Warehouse, a £40m 5-year ICT deal with the University of Strathclyde, an extension of its Civil Service training contract (see Capita wins £100m+ Civil Service training contract) worth at least £60m over the two year period to March 2016, and most recently, an ITIL and Prince2 commercialisation contract with the Cabinet Office (see Capita signs joint venture with Cabinet Office). Although Capita hasn’t explicitly revealed the value of this last deal, it is clear now it is worth £400m to Capita over the ten year term.

Capita is still one of the most acquisitive players in the UK SITS market. Since the start of the year, it has acquired seven companies for £165m in cash, to broaden its reach into target sectors such as justice and emergency services (see Capita acquires gamification player G2G3); customer management (see Capita acquires BBC partner iQor), education (see Capita buying Northgate MS puts spotlight back on ITS); and workplace services, via managed learning and training provider KnowledgePool Group.

Capita's continued focus on M&A and large new deal wins should ensure both the top line and organic growth remain on track in 2013.