* 2012 pre-tax profit up 10 pct
* 2012 organic revenue growth 3 pct
* Company expects fall in margins
* Shares down 2.95 pct
By Christine Murray
LONDON, Feb 28 Britain's largest outsourcing
firm Capita warned of pressure on margins this year
after the company reported a rise in full year profits and a
return to organic sales growth.
The company, which earns 47 percent of its revenue from the
public sector, produced a 10 percent rise in underlying pretax
profit to 425.6 million pounds ($644.11 million), slightly ahead
of expectations of 413.4 million shown in a Thomson Reuters poll
of 20 analysts.
But margins dipped to 14.07 percent from 14.59 percent and
Capita said that it expected a further fall in 2013 to levels
seen before 2010 and 2011.
Chief Executive Paul Pindar said this was because of
start-up costs associated with the high level of new contracts
won and not the result of increased competition in bids.
"I would accept that our margins are higher than others in
the industry but personally I feel that they are very
defendable," he said, pointing to the improved win rate on
contracts to better than one in two.
Shares in Capita were down 2.95 percent by 1300 GMT at 823
pence, against a 0.3 percent rise in the FTSE 100 index.
"The market's taken a little bit of a fright over that lower
guidance ... most people normally see lower margins as
competitive pressure, we just see it as part of the cost of
getting growth," said Mike Murphy, an analyst from Numis with an
"Add" rating on the shares.
The group, which runs a range of contracts from back office
IT to front line disability assessments, returned to organic
revenue growth of 3 percent, up from a 7 percent shrinkage last
year. Pindar said Capita was set to more than double that next
Analysts have been expecting Britain to pick up the pace of
outsourcing because the coalition government is trying to reduce
the public deficit.
Capita said that the big opportunities lay in defence,
health and justice as departments were under pressure to reduce
budgets while maintaining frontline services.
It is currently bidding on a record 5.2 billion pounds worth
of contracts and has signed more than 3 billion pounds of new
deals in the last four months.