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By | Kat Hall 29th July 2015 12:42

Capita cracks open the bubbly after 10 per cent sales jump

Frenchy rival Atos also celebrates big growth despite DWP contract boot

This year's huge Capita spending spree boosted the company's sales by 10 per cent to £2.28bn, according to the outsourcing giant's first-half results for 2015.

During that period, the outsourcer splashed a total of £279m on 11 businesses, most recently snapping up Scottish business intel outfit Barrachd.

Profits before tax surged 11 per cent to £265m. However, it's not clear from the results how much of that was also due to squeezing margins – such as its policy of charging employees to use cutlery in its canteens.

For the half-year, Capita gobbled £1.6bn in contract wins, including its place on the £1bn NHS England Primary Care Support Services framework.

Of the group's bulging £5.4bn pipeline, 61 per cent comprises private sector wins – particularly in telecoms and financial services – and 39 per cent will come from public sector deals.

John O’Brien, analyst at TechMarketView, said Capita is the biggest outsourcing player in the UK, with 90 per cent of its sales derived from Blighty.

"There is a risk that it might be biting off more than it can chew and getting acquisition indigestion, as it can be difficult to integrate and consolidate. But the opportunities of entering new markets are often worth that risk," he said.

Meanwhile, UK sales at French rival Atos rose 22.5 per cent to €995m (£704m).

Georgina O'Toole, analyst at TechMarketView, noted that Atos excluded the impact of the early termination of the controversial Department for Work and Pensions Work Capability Assessment BPO contract.

"Nonetheless, the strong performance in the UK was put down to the Managed Services business, and most notably growth in public sector BPO. The UK was also instrumental in improving Group operating margin," she said. ®

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