Capita confident despite contract delay warning

Outsourcing group Capita said it was confident of growing organic sales 4% in 2016 despite having secured less than half the amount of contracts as at the same time last year as some contract decisions take "a little longer than expected".

Capita secured £458m aggregate major contracts, acquired four companies for £23m and disposed of two businesses, versus £1.2bn secured and seven businesses acquired last May.

The bid pipeline, was stood at £4.7bn on 25 February, was said to remain "active" in private sector areas such as telecoms and financial services and the public sector, notably defence, local government, science and health.

But Capita warned: "Whilst some of these contract decisions are taking a little longer than expected to come through, we expect a flow of bid outcomes over the rest of this year and the prospect list of opportunities behind our pipeline remains strong."

Yet the FTSE 100 group, whose major contracts included with Volkswagen, Debenhams and five new UK district councils, said it was confident of achieving target organic revenue growth of "at least 4%" this year and that it was on track to meet consensus expectations for 2016.

It added: "Alongside major contracts, our renewed focus on new sales and client expansion across our divisional businesses will positively contribute to organic growth in 2016, helping to minimise the effect of the higher level of planned contract step downs and attrition this year, and will provide an underpinning platform for future growth."

Capital expenditure is expected to be lower than last year and the annualised net debt-to-EBITDA ratio, which was 2.5 in 2015, is expected be maintained in the range of 2 to 2.5 in 2016.