Capita confounds bears

The operating margin had been the subject of some concern, following a lowering of expectations at the first-half results. But coming in at 13.4 per cent, they were at the upper end of company guidance and down only a touch on the 13.9 per cent achieved in 2012. This was reassuring, as it indicates Capita can handle bigger contracts without depressing profitability. Two of the largest contract implementations in the group's history kicked in last year - a customer management contract with Telefonica and an educational support contract with Staffordshire County Council.

Capita notched up £3.3bn of contract wins last year, only a fifth of which were extensions. The new business wins included the £400m prisoner-tagging contract scooped from troubled rivals Serco (SRP) and G4S (GFS). Although 2013's contract tally was lower than the £4bn won in 2012, any disappointment was tempered by growth in the pipeline of potential bids - up almost a third to £5.5bn. Capita has already notched up £588m of new contracts so far this year, with key wins, including the operation of London's congestion charge with Transport for London and a large Scottish public services project.

There was also good news on cash performance, with more than 100 per cent of underlying operating profits converted into cash. This helped support the acquisition of 13 bolt-ons for a total spend of £271m during the year.