Shares in Capita Group, which runs London's congestion charging scheme, rose more than 3 per cent yesterday after the company unveiled a better-than-expected 16 per cent rise in profits for 2005.
Rod Aldridge, Capita's executive chairman, said the strong results had been driven by a fast-growing order book last year, as well as an increase in margins. "A lot of that has been because of the huge economies of scale we have now," he said.
Much of the growth in the company came in the fourth quarter, when it won contracts worth more than £1.1bn. Mr Aldridge added that 2006 hadstarted well, with £360m of new business take on to the books during the first seven weeks of the year.
Capita is the UK's largest administrative outsourcing group, running hundreds of contracts for the public and private sector. Although Government contracts account for the largest part of Capita's revenues, Mr Aldridge said the private sector was catching up - representing some 47 per cent by the end of last year.
Shareholders were rewarded with a 31 per cent increase in the company's final dividend, as well as a cut in the company's dividend cover. Mr Aldridge said there was also the possibility of additional cash being returned to shareholders this year if the order book continued to swell.
"There's no doubt we generate cash - and we've already upped dividends, taken our dividend cover down and made some small acquisitions," he said. "Our capital expenditure is only around 4 per cent a year and we don't expect it to rise. So if after all of these are paid for, and we still need to return cash to shareholders, then we will."
He said growth looked strong for the next few years, pointing to a recent report by Ovum that claims the UK outsourcing market is worth a £95bn a year - of which only 5 per cent is currently outsourced. Ovum predicts the market will grow at about 12 per cent a year. Mr Aldridge said he believes Capita's growth will be faster.Reuse content