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July 26, 1994

CAPITA PROSPERS MIGHTILY IN THE COST-CUTTING CLIMATE OF THE UK PUBLIC SECTOR

By CBR Staff Writer

The Capita Group Plc, the management services group providing facilities management, advisory and property services to the public sector, has announced record interim results for the six months ended June 30. Pre-tax profits rose 33.0% to ?2.7m, on turnover of ?30.5m, up 37.9%, as the company saw strong growth in its facilities management division with turnover up 77.1% at ?21.1m and pre-tax profit at ?1.5m up 96.3%. In early 1994, the division increased its emphasis in selling to the central government and utilities markets, to complement its core local authority markets. At the moment the company is experiencing a slow down in the local government market as authorities implement the outcome of the Local Government Review. The company is not alarmed by the prospect of a change of government and would welcome a shift to voluntary competitive tendering away from compulsory competitive tendering. Capita Managed Services, the group’s facilities management division now collects over ?1,200m of public money and has expanded its presence by purchasing John Crilley & Son, one of the country’s leading collection agencies, in April for ?1.0m. Capita has also moved into the education sector with the acquisition of SIMS Holdings Ltd, (CI No 2,441), the supplier of software and support services to the education market, for an initial consideration of ?6.0m. The other limbs of Capita, however, enjoyed mixed fortunes. The Advisory Division saw revenues fall 5.3% while profits were up 43.0% at ?599,000, with its largest component, Capital Management Consultancy prospering in the market testing sector. On the other hand, the Property Services division saw revenue growth of 7.9% to ?5.0m, but a 14.3% slide in profit to ?601,000. The company attributes this fall to the poor performance of its property facilities management activities. The only blot on the group’s figures was a negative operating cash flow of ?2.0m, against a positive flow of ?5.3m last time. This the company blames on a rise in trade debtors coupled with faster payments to suppliers, but expects cashflow to return positive for the year as a whole. Capita will pay a dividend of 1.10p up 29.4% on last year.

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