Capita full year profit slides on business exits

Outsourcer Capita posted a drop in full year profit but said it was targeting organic revenue growth of at least 4% this year.

For the year ended 31 December, reported pre-tax profit fell to £112.1m from £292.4m in 2014, as the company was hit by business exits and impairment charges.

During the period, Capita exited a number of small businesses, which either lacked strategic fit or had limited growth potential. It has three further businesses for sale of which one disposal completed last month.

On an underlying basis, however, before the cost of business exits and other non-underlying items, pre-tax profit was up 9% to £585.5m.

Meanwhile, revenue grew 7% to £4.67bn and the company lifted its total dividend per share to 31.7p from 29.2p.

The underlying operating margin came in at 13.7% for 2015 compared to 13.5% the year before on a like-for-like basis.

Chief executive Andy Parker said: “We delivered good financial results in 2015, including 4% organic revenue growth, an improvement in our operating margin and a high level of cash generation.

“Our largest ever acquisition, avocis, has provided a strong growth platform in Europe. We have re-positioned the business away from certain non-core lower growth businesses and enter the current year in a strong strategic and financial position, enabling us to raise our margin target range to between 13.0% and 14.0%."

For 2016, Capita is targeting organic revenue growth of at least 4%, driven by the combination of growth from its divisional businesses and conversion of its bid pipeline.