Outsourcing group Capita has enjoyed a strong start to the year recording a 16 per cent increase in profits.
The company stated that its profits now stand at £238 million driven by contract awards totalling £1.3 billion over the course of the period. It is now confident that it will be able to reach its goal of delivering full-year revenue growth of at least eight per cent. Like-for-like revenues were also up by 11 per cent highlighting a strong performance in the opening half of 2014.
Capita has won numerous contracts with government departments in the past such as running the Ministry of Defence pension scheme, while it recently secured a six-year prisoner tagging agreement from the Ministry of Justice (MoJ). The company takes over from Serco and G4S that were stripped of the contracts following an investigation which found they were overcharging the MoJ for their services.
The two firms had been billing the government for prisoners that were either dead, in prison or had never been tagged in the first place. As part of the £228.8 million contract Capita will work alongside a number of companies to deliver the service. Steatite has been selected for the development and manufacture of equipment while Airbus and Telefonica will provide satellite-mapping and the supply of the network.
Capita's profit growth is another positive sign following the company's appointment of Andy Parker as chief executive. Analysts agreed that the half-year performance bodes well for Capita going into the rest of the year.
Speaking to Reuters, Stephen Rawlinson, an analyst at Whitman Howard, said: "Capita’s half-year numbers released this morning show a great start to Andy Parker’s reign as chief executive officer.
"Revenue is up 13.9 per cent to £2.1 billion, 11 per cent organic growth we are told, and the margins are a tad higher with operating profit up 14.7 percent to £260 million."
Shares in Capita were 2.7 per cent up at 08:40 BST on Wednesday (July 23rd).
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