Language Industry Financial News: Capita TI
On July 1, 2016, UK-based language service provider (LSP) Capita TI, a subsidiary of giant Capita plc, filed its KPMG-audited financial statements for the year ended December 31, 2015.
Revenues grew around 9% to GBP 34m in 2015 (2014: GBP 31.3m). Gross profit took a bit of a hit, decreasing from GBP 9.6m in 2014 to GBP 7.9m in 2015. But Capita shaved over GBP 2m off admin costs and managed to increase EBITDA by over GBP 0.5m to just over GBP 2m in 2015 (2014: GBP 1.5m).
The big news for Capita TI going into 2016 is its exit from the burdensome Ministry of Justice (MoJ) contract. Before issuing the RFP, the MoJ decided to divide the contract into four lots with Lot 1 for face-to-face, telephone, and video interpreting being, by far, the largest piece.
As we reported back in April, Capita TI decided not to bid for Lot 1. In a regulatory filing, Capita TI pegged 2015 revenues from Lot 1 at GBP 23m. For a company with GBP 34m in the business, that is two thirds.
Capita TI will emerge from the contract exit as a much smaller (estimated GBP 11m in annual revenues) yet presumably more profitable company. According to the filing, management will seek to reduce costs to ensure the exit’s impact on profits is minimal. Asked by Slator if the exit meant layoffs, a Capita TI spokesperson did not comment.
Furthermore, the Capita TI spokesperson would not comment on speculations by Rupert Soames, CEO of GBP-3bn outsourcing company Serco, that Capita “may be getting out of its translation services business.” Serco, of course, is key Capita competitor. The company even has an interpretation side business. On July 21, 2016, New Zealand’s Department of Internal Affairs announced the renewal of a phone interpretation contract for Serco worth nearly USD 1m per year.