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Strong demand for public sector outsourcing during the recession has led to soaring profits at Capita, Britain's biggest support services firm. Preliminary business results, published by the Capita Group on 26 February, show the company benefited from bleak economic conditions in 2008 by securing a steady stream of business from councils and public bodies seeking to reduce in-house costs. Turnover at the company increased by 18% to £2.45bn last year, while Capita's underlying profit increased by 18% to £321m. Paul Pinder, Capita chief executive, said: ‘Capita delivered strong performance in 2008. Organic growth was excellent, with a wide range of major new contracts secured in the year, and with business across the group delivering robust results.' Mr Pinder also revealed Capita stood to benefit from continued economic uncertainty, as local authorities and central government sought to shed further costs and encourage shared services operations. As well as providing standard outsourced functions, Capita currently collects payments from TV licence holders. It also manages London's congestion charge – but will hand over the contract to US technology firm, IBM, in 2009. Kevin Lapwood, equity specialist at analyst Seymour Pierce, said the results were a ‘typical reiteration from Capita of the buoyancy of its markets, and its optimism for the future'. Capita's results reflect the fact that several dominant providers to each sector of the public services have bucked the financial trend during the early part of the recession. Construction firm, Morgan Sindall, buoyed by its dominance in regeneration and development projects, recently posted record annual profits of £63m. As private sector income has fallen, most development firms have struggled, but Morgan Sindall has also secured long-term revenues across regulated sectors, such as transport and utilities.

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BUSINESS

Capita's profits soar with recession boost

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