Six employees of Capita, the blue-chip support services group, have been charged after a police investigation into the alleged theft of savings from investors.

The Financial Services Authority yesterday fined Capita Financial Administrators 300,000 for poor anti-fraud controls, the Times reports.

ooPs, News worth factoring Into any research you do on these.

From another board:

Consultancy company Capita CPI announce their interims on Thursday, and they have certainly been receiving some interest, gaining 7.25p to 456.5p, as investors hope to hear some good news with the figures.

never heard of them before but obvious why they fell from grace ...... what was the aftermath? ..... were all charges dropped or what?

cynic
What or who havn't you heard of.

Congestion Charge

on GTL thread you made some comment about this company, so i assumed, seemingly wrongly, that you wanted my view.

My point was no one likke what CAPITA does (Congestion Charge) but they make plenty and the sp reflects this as with GTL in time.

oh .... well i happen to have now fallen out of love with GTL though it must surely be a racing certainty that biofuels have a great future, but not (imo) through creating ethanol from maize, being a key foodcrop ...... at least sugarbeet is not though sugarcane is also a notorious wrecker of soil fertility.

Good recovery since losing the congestion charge contract.

Ex divi wed 16th Apr (17.8p)

Capita Group.

Lovely bullish bowl pattern formed on CPI.

Investec note today:
"A strong set of interims from Capita, revealing both double-digit organic growth and operating margins. The group is sitting on a record bid pipeline at £5.7bn, with a major contract win rate above 2 in 3. Whilst the current valuation (18x FY14E PE) clearly reflects the positive growth momentum in the business, it is difficult to ignore the strength in underlying trading and the premium this warrants. We therefore upgrade our forecasts and move to Add from Hold. Our multiples-based TP increases to 1230p (from 1100p).
Highlights: Revenues were up 13.9% to £2,071m (11% organic), with £1.3bn of major contract wins secured in H1. Underlying PBT climbed 16% to £238m, with an underlying operating margin of 12.6% (H1 2013: 12.5%). Operating cash flow was up 21.6% to £291m, representing cash conversion of 112%. As a sign of confidence in trading, the interim dividend increased 10.3% to 9.6p.
Divisional view: Operationally, the 11 divisions within Capita appear to be all trading well. There was a particularly strong performance in its Workplace Services and Customer Management businesses. It is also encouraging to see improved sales and trading performances from its Property & Infrastructure and IT businesses – reflecting management changes and improving macro.
Forecasts: We are encouraged by today’s statement and therefore upgrade our forecasts to now be more in line with current consensus. At the headline level, we increase FY14E PBT by 3% to £521.1m (old: £507.4m) and EPS by c.4% to 64.3p (old: 61.9p). FY15E PBT climbs 5% to £566.9m (old: £540m) with EPS moving up 6% to 69.9p (old: 65.6p).
View: Whilst the current valuation is not compelling, it is equally difficult to ignore the strong momentum in this business, which sets it apart from its other outsourcing peers in terms of organic growth levels, operating margins and cash performance. We therefore move to Add and lift our target price to 1230p. Key risks: level of new contract wins and the upcoming UK General Election."

May be a buy early next week.

Appears over done the fall.

I think 500p on the horizon...


Outsourcing group Capita down another 27p or nearly 4% to 671p as analysts issued negative notes in the wake of Thursday’s shock profit warning which lead to a near 27% slump in the shares. The company blamed Brexit jitters, problems with the London congestion charge contract and a contractual dispute with the Co-operative Bank. Analysts at Stifel said:

It is clear from the profit warning that some of Capita’s woes are deep-rooted and structural in nature. This will take time to rectify. On our revised estimates and at the intraday price, the shares are trading on little more than 10 times 2017 estimated earnings, at a deep discount to the 10 year through the cycle average of 16.8 times. However, given the scale of Capita’s problems, the risk of litigation, restructuring costs still to be defined and possible action to strengthen the balance sheet, we think this is reasonable with the share price likely to be volatile.

Investec said:

Given the sharp de-rating, instinctively we want to turn more positive on the stock, particularly as on our forecasts the company will delever. However, the lack of top-line visibility and possible risk of a capital raise gives an asymmetric pay-off and we remain at hold with a lower 750p target price.

Shore Capital moved from hold to sell:

Whilst we have harboured concerns in our research for some time over the level of growth driven by acquisitions, sustainable margins and growing debt levels, we were nonetheless surprised by the timing of yesterday’s profits warning. The specific’s and ‘one-offs’ that Capita point to as being primarily responsible only point to some of the issues that the group faces in our view, but these still point to some worrying strategic failures. We are particularly concerned by what we consider to be under-investment in organic development, such as in the education platform and addressing the digital opportunity in recruitment and sourcing – has this been at the expense of prioritising acquisitive growth? We view Capita as a services conglomerate following the disparate acquisitive activity of the last several years (we note the group has acquired around £2.0bn in revenue since 2010, with revised revenues forecast for this year now at £4.9n, group revenues in 2011 were £2.9bn). We believe that effective service delivery needs focus, but it can be scaled, as Capita has shown in the past. Looking to ‘Brexit’ as being a cause of Capita’s woes, our view is that this has likely hasted and accelerated trends already in play in the business.

Michael Donnelly at Panmure Gordon said:

Our anti-consensus sell case on Capita in January 2016 was predicated on four concerns that, we contested, made the shares far riskier than at any point hitherto. We said that Capita felt “increasingly like the last man standing”. Not anymore. The shares fell throughout the first half of 2016, leading us, incorrectly, to believe that those concerns might be in the price. We were wrong. As, it would appear, was almost everyone else. We sat through the excruciating, hour-long analyst call post the profit warning yesterday; a call that addressed precisely none of these four issues.

The four issues, according to Panmure, are balance sheet concerns with possible write-downs and the prospect of a cash call; the quality of earnings; concerns about acquisitions including recent reseller purchase Trustmarque (Donnelly said: “The conference call led us to believe that the resellers causing the problem were those acquired since 2008 and not Trustmarque acquisition - so the Trustmarque warning, presumably, has yet to come.”); and a too-high valuation.

Capita shares fall to 10-year low

Shares in Capita fell to their lowest level in more than a decade after the outsourcing company was forced into its second profit warning in less than three months and cut more than 2,000 jobs.

Capita said it expected annual pre-tax profits in the current financial year to be at least £515m, compared with a September forecast of between £535m and £555m, sending the shares 11.8 per cent lower to 497p.

As part of a wider restructuring of the business, Andy Parker, chief executive, said it would sell several divisions, including one that sells assets to financial services companies as it seeks to reduce debt and simplify operations.

Capita will also move some jobs to India, where it already provides back-office processing services for UK companies, and introduce robotics and automation to parts of the business. This will reduce Capita’s 69,000 staff headcount by about 3 per cent, Mr Parker said.

Investors had already been unnerved by a profit warning in September that had blamed a slowdown in new contract awards as a result of Brexit, the cost of IT delays on the London congestion charge and a slowdown in its IT services and recruitment divisions.

But Mr Parker said he was “absolutely” confident the company’s actions would allay the need to raise capital or cut the company’s dividend. Net debt to earnings before interest, depreciation and amortisation is expected to be in the region of 2.9 times, up from a target already raised to 2.7 times in September. The ratio is expected to fall to less than 2.5 times after asset sales are completed.

Nevertheless, he admitted that next year would continue to be difficult and the “business had not delivered in some areas as well as we’d like”.

“We’ve also seen a general weakening in trade across a number of our businesses as clients cut back on discretionary spending,” he added.

Mike van Dulken, head of research at Accendo Markets, said the profits warning was “an unwelcome early Christmas present”.

“Shrinking the group may well lead to long-term improvements in profitability, but it also means more restructuring and more exceptional costs in the quarters to come. Further government-inspired Brexit uncertainty and clients shying away may also even mean that further profits warnings can’t be excluded either.”

Capita announced plans in November to overhaul its structure with six new divisions, each led by an executive reporting directly to Mr Parker. The new divisions range across Capita’s contract areas, including public sector work in defence, health and justice and private sector work in telecoms, insurance and retail.

Mr Parker said the company would focus on Capita’s core strengths — technology-enabled white collar outsourcing. “The strength of the company is that we will address the private and public sector so if there was a downturn in one we still have [the] strength of the other,” he said.

Capita has hired Goldman Sachs to sell its asset services business, which it expected to contribute about £70m in earnings before interest, tax, depreciation and amortisation and operating profit of £60m in the current financial year. The other businesses and assets for sale, which have not been identified, are expected to contribute operating profit of up to £10m in the current financial year. It will incur a £50m restructuring charge in 2016.

Capita said it would recommend a total dividend of 31.7p, unchanged on 2015, and it hoped to maintain the dividend in 2017.

Next year should be better.

Another Carillion?

Indeed.

Dividend cut to zero from 32p.

£700m rights issue.

Declining market.

Chief exec has saved the company through the underwritten rights issue, although I expect many will not realise it for a year.

MaxK, similar in that they both appear to be underbidding, in order to maintain their workers busy... and improve their "turnover"...
However, if you compare the sp graphs over 6months, CLLN was gradually falling, with a couple of minor stumbles until the last when sp became silly.
By contrast Capita fell sharply a couple of times, but was otherwise only "drifting-down" - maybe this is because more folks understand building contracts and sites were portrayed on the TV News, whereas Capita can only be discussed in a group and folks are somewhat guarded . . . and probably don't now the inner workings anyway.
If Capita can launch a rights issue, one wonder what price will it be? Will they have to make to offer "open" to get it away.... or will battered shareholders/institutions be willing to stump-up a rescue bundle. I can't see the City being keen, unless there is something "extra" so they won't become exposed if the Co. fails to recover.
-And what is "recovery?" - they will need to renegotiate contracts that are non-profitable and again Government may find itself pushing more money Capita's way
- which won't impress the Public - at a time when Parliament-building appears to b have been repaired by monkeys ( if at all 0. If Parliament can't organise its own building . . . makes you think they could be doing rather well on HS2 and Brexit also.

Today's RNS states rights issue is underwritten. So, it doesn't really matter other than the price may be low. Well it will have to be low, to ensure the underwriters don't have to stump up too much.

The underwriters probably spent all day shorting it anyway