Chairman's introduction
Creating better outcomes
Capita is part-way through a multi-year transformation and, as we transform, we are guided by our common purpose. We defined this in 2019 as ‘we create better outcomes’ for all our stakeholders – our people, clients and customers, suppliers and partners, investors, and society. Our purpose sits at the heart of everything we do and informs all strategic decisions.
Capita employs more than 61,000 people and every day we touch the lives of millions through the provision of vital services. We aspire to use our position within society to be a force for good and, through our actions, drive progress for the individuals and communities we serve.
In 2019, we saw a positive shift in our reputation and how we are perceived. Increasingly, Capita is recognised as a changing, purpose-led company that is sincere in its commitment to responsible business and driven to make a positive contribution to society.
We continued to make good progress with the transformation at Capita in 2019 – and we achieved most of what we set out to do and was within our control. However, it has proved more challenging than anticipated, in terms of complexity and cost, due to the depth of the turnaround required. External factors have also affected our progress, including political uncertainty and testing trading conditions in our core UK market.
“Increasingly, Capita is recognised as a purpose-led company, sincere in its commitment to responsible business and driven to make a positive contribution to society.”
Chief Executive Officer's review
Better positioned for growth
Capita is two years into a multi-year transformation to become a truly progressive, purpose-led, responsible business. Over that period, we have made significant progress, laying the foundations for a more focused, predictable and sustainable business.
We have continued to work hard to deliver on the commitments of our strategy – to simplify, strengthen and succeed. But there is more to do to achieve our goals and, while we are convinced that the plan remains the right one, we have not had everything work in our favour.
We started to rebuild the organisation in 2018, reorganising our divisions and creating robust, accountable and centralised functions which define how we do things company-wide. We defined our purpose and launched an operating model. We deleveraged our balance sheet and agreed a pension deficit reduction plan.
In 2019, we continued to simplify and strengthen the organisation, fix legacy issues, invest in our people, rebuild trust with clients, cut cost, improve controls and reduce risk. We invested significantly in our growth capability and the organisation’s products and services, particularly in consulting, digital services and software. This will allow us to stimulate, and maximise, future higher margin growth opportunities in areas where Capita has a competitive advantage and where we can offer cross-sell opportunities within the Group.
“We have made significant progress over the last two years, laying the foundations for a more focused, predictable and sustainable business.”
Financial performance
Chief Financial Officer’s review: Building the platforms for growth
2019 was the second year in Capita’s multi-year transformation and a lot has been achieved. There are many signs of progress on our journey towards becoming a simpler, stronger, more successful company generating free cash flow in a sustainable, predictable manner. However, as these results show, progress has been slower and more expensive than we had hoped, partly because we have chosen to invest for the long term and partly because some of the challenges could not have been fully scoped in early 2018.
Revenue and profits are in line with expectations, with cost reductions offsetting investments and lower margins on renewals. Some of the benefits of the transformation work, such as profit improvements on the three ‘challenging’ contracts are reflected in the results. While our core businesses have largely shown growth in the second half, it has been slower than we had hoped. As in 2018, the results have been improved by some one-off items, as is to be expected in a complex group in transition.
“We have made progress this year, particularly on taking cost out, but there is more to do to deliver growth and complete our transformation.”
Financial highlights
Divisional performance
We are currently reporting our financial performance across six separate operating divisions.
Software
People Solutions
Customer Management
Government Services
Technology Solutions
Specialist Services
Key performance indicators
Financial KPIs
Non-financial KPIs
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Results and presentations
View our full library of financial results, reports and investor presentations.
Corporate governance
Capita is committed to maintaining high standards of corporate governance.