Capita – ever ‘Boring’

(By Anthony Miller – Thursday, 26 Feb 2009 7:30am). For as many years as we have been tracking the company, Capita just never fails to be ‘boringly predictable’ – in the very best sense – whatever the economic climate. Today’s prelims (see here) once again show Capita’s mastery of the UK BPO market, with 18% revenue growth, more than double the market rate, and similar EPS growth. The only signs of weakness CEO Paul Pindar alluded to were in their recruitment businesses and property consultancy. Although together these two divisions comprise around 20% of group revenues, Pindar assessed the high-risk parts at less than 10%. But it is the very portfolio nature of Capita’s services and the heavy weighting towards long-term contracts that provides such great resilience. Management’s sharp eye for bolt-on acquisitions (12 last year for a total of £147m) keeps Capita at the forefront of emerging opportunities with no risk of the dreaded ‘acquisition indigestion’. In our just-released MarketViews report, we forecast that the UK BPO market will grow 8% this year, the fastest growing segment in the UK software and IT services marketplace. At current course and speed it’s hard to imagine that Capita will not yet again increase the distance between itself and its competitors as organisations look to cut costs by outsourcing their back offices. I’m off to the investor briefing now and will update you later today.