Capita hit by economic headwinds

Outsourcing group Capita said continued spending pressure on cash-strapped clients meant it would only deliver "reasonable" 2011 revenue growth, although a strong bid pipeline left it more positive for 2012.

Capita, which runs the Teachers' Pension Scheme and the Criminal Records Bureau in the UK, said on Friday it expected full-year revenue growth to be around seven per cent, as acquisitions helped offset a 14 per cent decline in organic revenue growth generated from contract wins.

The group, which in September signed a £105m contract with the pensions regulator to provide staff enrolment support, has spent £334m on acquisitions this year to help sustain growth in tough UK markets hampered by budget cuts and delays to the awarding of contracts.

Capita said it had won £1.26bn worth of work in the year to date but progress was being hit by the tough economic climate.

"This 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," the company said in a statement.

Capita, which said in July it had a bid pipeline of £4.7bn, said it expected a number of major bid decisions in the final quarter of 2011 and that "significant pressure on both public and private sector organisations to explore alternative service delivery models" would support future growth.