The markets that Capita Group Plc feeds off are looking ripe for rich pickings, and consequently, the Westminster-based management services company is looking to capitalise on its already fairly healthy position. Although the company, which began life in 1987 as a management buyout of the Chartered Institute of Public Finance & Accountancy and has grown hugely since it came to market, has won a significant number of old-style private sector contracts, it is the local authorities and the recently privatised public utilities that Capita is banking on over the next few years. Interim pre-tax profits to June rose 48% to ú4.0m from turnover up 43% at ú43.4m. The facilities management division, the largest, has had a busy first half, with CMS Capita Managed Services forming a joint venture with Yorkshire Water Services Ltd to develop a range of revenue collection services. Yorkshire has awarded a contract to manage its revenue collection in Bradford and Sheffield for seven years said to be worth initially ú14m. This is expected to rise to ú54m within two years when the joint venture assumes responsibility for the whole of Yorkshire Water’s revenue collection.
Incentive management fee
Yorkshire is working on an incentive management fee basis: the more business it generates, the more it gets. Capita reckons that the local authority facilities management market in the north of England will be worth more than ú350m over the next three years, and the new venture with its base in Yorkshire will enable it to get its share of the pie. The other companies in the division, Academy Information Systems and SIMS Holdings Ltd have won orders worth more than ú2m in the half. SIMS also completed the acquisition of Timetable Systems Ltd in February for ú300,000. The addition of SIMS to the group in 1994 has boosted its first half cash flow, with ú6m generated from operations in the half, as opposed to a deficit this time last year. The transfer of John C rilley Ltd, which Capita bought in April 1994, to Madagans Plc means that Capita now has 20.4% of the enlarged Madagans, the UK’s largest government bailiff. Turnover at the facilities management division was up 38% to ú29.1m and profits by 60% to ú2.4m. The property services division boosted its profits by 146% to ú1.5m and turnover by 104% to ú10.2m. The largest part of the division, Beard Dove is heading to exceed its budgeted revenue this year, according to the company. The expansion in Capita’s markets has passed the third division by somewhat, and the company is not satisfied with the trading performance of the advisory division. Management and structural changes have been made and are expected to bear fruit by the year-end. But the largest part of the division, Capita Management Consultancy, goes into the second half with record order books. Managing director Paul Pindar has been freed of his financial responsibilities by the appointment of Simon Stock, formerly of Electron House Plc, as finance director. Pindar put the slide in the share price throughout yesterday down to profit-taking by smaller investors, since the stock has risen by around 50% since April. The interim dividend goes up by 18% to 1.3 pence. Chairman Rod Aldridge declared in his statement that the company was expecting a pleasing performance for the full year outturn.
