Capita sees short term Brexit worries as H1 pre-tax profits rise

Services group Capita said the UK decision to leave the European Union had increased uncertainty, particularly in the financial services sector, and it was “continuing to experience some delays in decision making in the short term”.

Reporting interim results, the company added that it expected this to be “more than offset in the medium-term by incremental opportunities that arise as clients respond to the impacts of the UK leaving the EU”.

Capita made first half pre-tax profits of £186.1m from £146m last year boosted by contract expansion and growth from trading businesses.

The group increased underlying revenue by 5% to £2.4bn and underlying revenue on a like for like basis by 8.8%, comprising 5% organic growth net of attrition and 3.8% from acquisitions. Organic growth was driven by the benefit from new contracts started in the second half of 2015 and good underlying performances from Capita's divisions.

Underlying operating profit rose by 10% to £317.6m and underlying profit before tax by 8% to £285.3m. Underlying earnings per share were up 7% to 34.2p and the dividend was increased to 11.1p a share from 10.5p in 2015.

“The structural drivers for our services remain strong and Capita has a good track record of operating through political and economic cycles. We are making steady progress towards achieving around 4% organic growth in 2016 and remain confident of the strength of our business model in creating continued profitable growth into the future,” the company said.