(Corrects to remove reference to acquisitions in second para)
* Posts 16 pct rise in first-half pretax profit
* Bid pipeline at a record 5.7 bln stg
* Achieved 66 pct win rate on big business pitches
* CEO says could spend another 100 mln stg on acquisitions
By Li-mei Hoang
LONDON, July 23 Britain's Capita expects
a buoyant outsourcing market to keep the company on track to hit
its full-year revenue target, it said after announcing a 16
percent rise in first-half profit.
The company is targeting organic revenue growth of 8
percent. The consensus forecast in a Thomson Reuters poll of 15
analysts was for full-year revenue of 4.33 billion pounds ($7.38
billion), which would represent a 12.5 percent increase on the
company's 2013 revenue.
"We are confident it's going to be at least 8 percent,"
Chief Executive Andy Parker told Reuters after Wednesday's
results announcement sent the company's shares nearly 4 percent
higher, making Capita the biggest gainer on the blue-chip FTSE
Parker, who took over from industry veteran Paul Pindar in
March, said Capita had achieved strong trading since the second
half of 2012 and that the outlook remains buoyant after its 1.3
billion pounds of major contract wins in the first half of this
Capita, one of the sector's market leaders in Britain, has
benefited as central and local government and private sector
companies have outsourced work to cut costs in the face of
tighter budgets. It has also avoided the scandals over the
private provision of public services that have damaged rivals
G4S and Serco.
Founded 30 years ago, the company has grown rapidly over the
past 15 years from a local authority contractor that now
operates in 11 different markets across Britain.
Pretax profit rose 16 percent to 238 million pounds in the
first half and the group's bid pipeline - representing potential
orders from new business pitches - stood at a record 5.7 billion
PITCH WIN RATE
Capita said its pipeline typically reflects the health of
the outsourcing market and can be a useful indicator of its
potential growth. The company's win rate on big pitches during
the first half of the year was above 66 percent.
The company has also spent 240 million pounds on
acquisitions this year and Parker said it could spend an
additional 100 million pounds if the right opportunities arise.
"I think the maximum for the rest of the year would be up to
another 100 million pounds ... If a really good opportunity
came, then we'd look at it, we'll assess it, we'd make a
decision then. Probably top end, we might get to 350 million,"
Capita recently completed a small acquisition in Germany as
a first step to expand beyond its domestic market, which
accounts for 96 percent of its revenue.
Parker told Reuters in a interview on Friday that the
company is considering expanding a customer management business
in Germany after speaking to existing customers with German
parents, such as energy group RWE.
"A number of our customers have a German link and its partly
a very small acquisition ... to give us a base, to see if we can
extend our market reach into that German customer management
business and customer management market," Parker said on
Wednesday's results were welcomed by Whitman Howard analyst
Stephen Rawlinson, who said: "Half-year numbers released this
morning show a great start to Andy Parker's reign as CEO.
"Revenue is up 13.9 percent to 2.1 billion pounds, 11
percent organic growth we are told, and the margins are a tad
higher with operating profit up 14.7 percent to 260 million.
"We turned buyers on Capita six months ago and have no
reason to alter that view."
($1 = 0.5868 British Pounds)
(Editing by David Goodman)