Capita forecasts 7% dip in 2011 organic growth

Capita, the business outsourcing company, says it expects to see organic revenue growth decline 7% in 2011.

Just to put that into perspective, if a major retailer reported a like-for-like sales drop of 7% investors would not be happy at all.

Capita has, however, derived 14% growth from acquisitions which will boost the reported revenue figure by 7%.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

The company, which runs Britain's TV licensing system and the Criminal Records Bureau, also says margins will remain stable on 2010.

Capita claims its bid pipeline is strong and describes 2011 as likely to be its best ever in terms of contract wins, surpassing the £1.89bn delivered in 2007.

This year some of its new contracts include the administration of the Teachers Pension Scheme for 7 years and managing vehicle tax and insurance evasion for the DVLA.

The firm does admit, however, that "progress is somewhat counterbalanced by the prevailing pressure on spending which continues to affect adversely a small number of our trading activities and is also constraining discretionary additional revenue from existing clients."

In the year to date Capita shares are down 4.2%, in the last five years the stock has grown 11%.

BS