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2. Controlling and measuring growth

Strong leadership and clear business practices are essential to creating a financially stable organisation capable of supporting sustained growth and delivering healthy investor returns. With Capita’s stable and inspiring management team and robust business practices in place we concentrate on delivering our long term contracts successfully and generating steady, controlled growth.

Our growth is underpinned by the following disciplines and these remain our priorities for 2009:

2.1 Maintaining strong structure and control
through robust management and operating structures.

2.2 Focusing on clear financial key performance indicators (KPIs)
with strong financial controls and effective governance.

2.3 Maintaining careful risk management
consistently throughout the Group.

Our principal financial KPIs Year end 2008  Year end 2007 
Operating margins
Maintain and strengthen margins
13.15% 13.09%
Free cash flow
Maintain strong free underlying cash flow
£219m £184m
Return on capital employed (ROCE)
Achieve ROCE which exceeds our cost of capital
20.4% 19.6%
Economic profit
Achieve steadily increasing economic profit
£140m £110m
Gearing - interest cover
Maintain efficent capital structure, with relatively low gearing
7.4x 8x
Capital expenditure
Keep at or below 4% of revenue
3.5% 3.5%