Capita shares took a beating this morning, falling nearly four per cent, despite its posting strong prelim results.

For the year ended 31 December, 2006, the company increased turnover by 21 per cent (16 per cent organic and five per cent thanks to acquisitions) to £1.74bn, and profits before tax were £200.1m an increase of 18 per cent on the year ended 31 December 2005.

Capita will pay a dividend of nine pence per share, up 29 per cent on last year.

Operating margins grew slightly from 12.8 per cent in 2005 to 12.9 per cent in 2006.

Capita chief executive Paul Pindar said progress in early 2007 means the ingredients for a successful year are already in place.

The company claims the top spot in the business process outsourcing market, which it estimates to be worth £4.6bn in the UK and Ireland. This is split 35 to 65 per cent between the public and private sectors but Capita's revenues are split 52 per cent to 48 per cent in favour of the public sector. It expects to move closer to the overall market split over time.

Capita's full statement is here. ®