Capita rewards investors after sales increase

Major new contracts provide a cash boost to outsourcing firm’s profits, reports Dave Friedlos

z UK outsourcing firm Capita is returning more than £155m to investors after a robust half year that has seen sales increase by 17 per cent to £985m.

Profits were up 20 per cent to £119m, says the FTSE100 company that provides managed IT services primarily to the public sector, such as Transport for London’s congestion charge.

The firm has also doubled the number of new deals signed compared with last year. It has won £1.15bn of major business, and has bids worth a further £3bn outstanding.

‘The year is progressing strongly,’ said Capita chief executive Paul Pindar. ‘Our markets generate opportunity, our sales prospects are exciting, operational performance is strong and we remain positive about future growth.’

Capita has signed six major deals since January this year,

including agreements worth more than £100m with Swindon, Southampton and Birmingham councils and insurance group Resolution.

The firm is also seeing some success with a strategy to improve its global presence, says Ovum analyst Phil Codling.

‘Capita is increasing use of offshore delivery, with plans to have 1,500 people in India by the end of the year,’ he said.

‘Assuming the company keeps growing this capability, it has

effectively rectified its competitive Achilles heel around global sourcing.’

But the plan to return such a significant chunk of cash to investors is a source of concern. The £155m could instead be used to open up new opportunities for Capita with its existing business and through acquisition, says Codling.

Birmingham’s outsourcing deal

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