Capita – profits despite adversity

‘Four bosses at cock-up kings Capita have shared a £3.8m payout,’ screamed the Daily Mirror last month. ‘The firm, which banks billions of pounds of taxpayers’ money running public services, let its execs buy two million shares at knockdown prices. They immediately sold the shares, making a tasty profit on top of their already bumper salaries.

‘Chairman Rod Aldridge paid 76p each for 750,000 shares and flogged them for 305p, netting an instant £1.7m profit. Chief exec Paul Pindar made £1.03m, ops director Paddy Doyle made £409,170 and finance boss Gordon Hurst made £681,950.’

Ouch. But it will be familiar stuff to the more assiduous readers of the business pages. Capita-knocking is something of a national sport.

All that was unusual in this case is that Pindar, Doyle and Hurst were roped in alongside Aldridge.

But what can you expect when you are in charge of running one of the UK’s biggest companies? And one of its most controversial to boot.

It is Capita, of course, that was blamed for delays in the roll-out of the Criminal Records Bureau system in 2002. It was Capita whose administration of the government’s individual learning accounts scheme was condemned by Whitehall as ‘deeply flawed’. And it is Capita that runs London’s controversial congestion charge scheme.

It is, for better or worse, a company run by accountants. Aldridge is the CIPFA accountant who famously led the MBO of the business from the institute 17 years ago and built it into the outsourcing giant it is today.

Pindar, his right-hand man for much of that time, is a chartered accountant who qualified with Coopers & Lybrand in 1984.

As FD, Hurst is of course an accountant, and while Doyle has an IT background he has worked for Hoskyns, which became Cap Gemini Ernst & Young. Two of three non-execs on the group board, meanwhile, are also chartered accountants.

Capita has grown exponentially over the last 15 years, so much that it re-enters the FTSE100 this month, mainly through contracts with central and local government and their agencies.

According to the league table produced last month by our sister title Management Consultancy, its fee income for 2003 was £160m, a 10% increase on 2002, helping it rise above McKinsey in the rankings for UK fees.

Much of the credit must go to Pindar – he was the venture capital adviser to Capita on its MBO from CIPFA.

And Pindar is not alone in believing Capita is getting better. Customers are likely to agree, as its education resourcing division has just won a contract to supply recruitment services to the department of education.

It has also just announced a new six-year, £22m extension to its contract with the Driving Standards Agency.

The critical headlines might well continue – but they are unlikely to stop Capita’s growth.

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