Investment case

Capita is the leading provider of technology-enabled customer management and business process management services in the UK, with a presence in Europe. We sell into 11 target markets across the private and public sectors and are organised into 6 market-facing divisions which deliver our services on a day-to-day today basis.

Investment characteristics
Value creation
Consistent execution with low volatility

Our business model is straightforward, with 60% of revenue supported by long-term contracts, and 40% from short-term contractual and trading businesses. We have high, stable margins and have consistently generated strong free cash flow through the economic cycle.

Strong performance culture

Capita has a strong open people and service based culture, with clear operational and financial key performance indicators, which helps to systematically drive our performance.

Large addressable growth market growing at

Capita operates in a large addressable market which is growing at a rate of around 3% per annum (source: Ovum 2016). Structural drivers of growth include clients’ need to commercialise and maximise the value of their assets, the transformation and modernisation of services, digitisation, regulation and competition.

Competitive advantage

Our scale, unique breadth of capabilities and track record of delivery are competitive advantages when bidding. We also benefit from scale in procurement, operations and our use of technology.

Good returns from acquisitions

Capita makes acquisitions to build capability in existing markets, enter new markets and enhance our future organic growth potential. We seek to achieve a 15% post tax ROCE after integration into the Group. We expect a limited amount of activity over the next 12 to 18 months.

Dividend growth

over 5 years

8%

compound annual growth

EPS growth track record

over 5 years

4%

compound annual growth

Good returns on capital

on a continuing basis

12.7%

post tax return 2016

Consistently strong cash flow

100%

cash conversion rate target