Capita gets fat slower as government slims down

Subdued 2011, looking good for 2012

The government's austerity program has meant tightened belts at Capita, with the services giant citing reduced public sector revenues as a key reason for subdued revenue growth and a slight dip in pre-tax profits in 2011.

However, the firm said it had succeeded in grabbing new business and it was again seeing organic growth from existing clients, which underpins "confidence in good growth prospects and performance for 2012 and beyond".

Total turnover was £2.9bn for the year ending 31 December, a 7 per cent rise on the previous year. Pre-tax profits were £302.9m, a slight dip on the previous year's £309.8m.

As is the vogue among services companies these days, the firm chose not to emphasise pre-tax profits - ie, what it reports to Companies House - but instead trumpeted "underlying" pre-tax profits of £385.2m, which were up 6 per cent once intangible amortisation, release of contingent consideration and a number of other charges were excluded.

IT services and consulting turned in third party revenues of £600.3m, generating operating profits of £33.1m – compared to last year's £453.2m with operating profits of £44.7m.

CEO Paul Pindar said last year was "challenging" but that Capita had achieved "reasonable revenue growth and maintained our underlying operating margin".

He added: "We already have good visibility of stronger revenue growth [in 2012]", thanks to renewed organic growth and new business.

The 2011 figures had been hit by the "more challenging economic environment including a range of austerity measures implemented across government".

This had particularly hit Capita's property and IT and resourcing business. Organic revenues in 2011 actually dropped by 7 per cent. ®