Chairman's introduction
A challenging year
As for so many businesses, 2020 was a tough year for Capita and its people. The organisation is part-way through a complex, multi-year transformation which, despite continuing progress, was already proving harder than we had originally envisaged.
The impact of the Covid-19 crisis disrupted some of our plans; and it proved to be a disappointing year for our investors, of which we remain acutely conscious. I would like to thank our shareholders for their patient and continued support.
Our purpose – to ‘create better outcomes’ for all stakeholders – remains fundamental to the transformation of the company. Underpinned by our commitment to that purpose, the professionalism of our 55,000 people has allowed us to navigate our way through the pandemic – and we ended the year with evidence of renewed momentum.
I would like to thank all our colleagues for their hard work and commitment during such difficult times, and also our clients for working with us so collaboratively to help counter the exceptional challenges of the Covid crisis.
Our purpose – to ‘create better outcomes’ for all stakeholders – remains fundamental to the company’s transformation.
Sir Ian Powell, Chairmanat Capita plc
Chief Executive Officer's review
Maintaining progress
We started 2020 expecting to continue to strengthen the business operationally and to deliver more evidence of improvement – to be reflected in modest revenue growth and significant free cash flow generation.
We continued to make progress with many aspects of our transformation, but the impact of Covid-19 set us back and increased some of the challenges we faced.
I am pleased with our operational response to the pandemic, prioritising our colleagues and ensuring we could continue to deliver for our clients. The majority of our revenue has beenresilient and we took decisive cost and cash action to manage the impact where it affected us. I do not believe we would have achieved this without the progress made in strengthening Capita over the preceding two years.
Capita is a much better business than it was at the start of the transformation, with stronger positions and improved growth prospects.
Jon Lewis, Chief Executive Officer at Capita plc
Chief Financial Officer’s review
Focused on the balance sheet
The onset of the Covid-19 crisis interrupted the pace of our ongoing transformation at Capita, as well as planned disposals and refinancing plans.
A small decline in adjusted revenue1 was expected in the first half of 2020 due to contract losses reported in 2019 and the first quarter of 2020 was broadly in line with expectations. However, the economic impact of Covid-19 resulted in lower revenue in a number of businesses through the rest of the year. The weaknesses in transactional revenue and volume-related framework contracts related to businesses such as travel and events, resourcing, face-to-face training, and the payment services software we use to collect the London congestion charge. We continued to see resilient revenue performance in the majority of our operations from long-term contracts with a stable government and blue-chip customer base, and saw contract wins with the DWP and the NHS.
Our priority for 2021 is to address the short-term debt maturities through extending our committed credit facilities and issuing new long-term debt instruments, while continuing to strengthen the balance sheet.
Gordon Boyd, Chief Financial Officer (interim)
Financial highlights
£3,181.2m
Adjusted revenue
2019: £3,501.0m
£238.6m
Adjusted free cash flow
2019: £(23.2)m
(0.41)p
Reported loss per share
2019: (4.18)p
£65.2m
Adjusted profit before tax
2019: £197.7m
£3,324.8m
Reported revenue
2019: £3,678.6m
£303.8m
Reported free cash flow
2019: £(213.0)m
4.19p
Adjusted earnings per share
2019: 9.30p
£(49.4)m
Reported loss before tax
2019: £(62.6)m
Divisional performance
We are currently reporting our financial performance across six separate operating divisions.
Software
£246.0m
Revenue
71% public sector | 29% private sector Profit: £43.4m Employees: 3,500
People Solutions
£472.0m
Revenue
50% public sector | 50% private sector Profit: £52.5m Employees: 4,900
Customer Management
£1,139.7m
Revenue
15% public sector | 85% private sector Profit: £105.9m Employees: 31,300
Government Services
£723.8m
Revenue
100% public sector | 0% private sector Profit: £11.1m Employees: 8,600
Technology Solutions
£385.0m
Revenue
67% public sector | 33% private sector Profit: £34.9m Employees: 3,500
Specialist Services
£196.5m
Revenue
49% public sector | 51% private sector (Loss)/profit: (£4.4m) Employees: 2,900
Key performance indicators
Financial KPIs
£65.2m
Adjusted profit before tax
Our aim: Achieve long-term growth in profit. 2019: £197.7m
£238.6m
Adjusted free cash flow
Our aim: Achieve sustainable, long-term free cash flow growth. 2019: £(23.2)m
3.5%
Adjusted operating margin
Our aim: Maintain adjusted operating margin. 2019: 7.3%
3.8%
Return on capital employed (ROCE)
2019: 7.8%
4.19p
Adjusted earnings per share
2019: 9.30p
3.1x
Headline gearing: headline net debt to adjusted EBITDA
2019: 2.7x
Non-financial KPIs
95%
Suppliers paid within 60 days
Our aim: Treating suppliers and partners fairly and encouraging them to deliver. (2019: 97%)
+7pts
Employee net promoter score
2019: +14pts
+17pts
Customer net promoter score
2019: +22pts
40%
Carbon footprint reduction
Our aim: Acting as a responsible business for the communities we serve. (2019: 5.9%)
Key downloads
The full 2019 Annual Report and key sections are available to download below.
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