Capita unit reports rising IT costs

The investment trust arm of Capita, the UK's leading business process outsourcing company, is reeling from having to fork out more on compliance and IT.



In a trading update, the group said Capita Financial Mangers was still under pressure from increased regulatory obligations and IT costs.



It also warned that CFM may be liable to claims from investors over the suspension of two (OEIC) investment funds it administers after they were hit by high redemptions.



Chief executive Paul Pindar said he was 'not losing any sleep' over the issue, but Capita later emerged as the largest faller when the FTSE100 closed on Wednesday.



The shares tumbled in spite of CFM's revenues making up just £50m of the group's £2.4billion in total revenues, though other parts of the business have also dipped.



In particular, Capita secured only £186 million of new business since June 30, against £814 million in the preceding six months. Acquisitions were also down.



But the number of deals were the same (10), indicating a slump in business valuations over the last year, analysts said, and the profit forecast was unchanged.