Establishing the platform for growth
In 2021, Capita made further progress towards becoming a sustainable, profitable business capable of delivering positive free cash flow.
The fundamentals needed to build a successful company are in place – strong service delivery, a stronger balance sheet, and a simpler, more efficient and stable structure. We have addressed the major financial and operational debt that the business faced. The business is now more predictable, and operates with the values and behaviours that align with Capita’s purpose.
The effort and investment required to achieve all this should not be underestimated, but it has been essential to create a business that has a future and that people want to work for and with. Despite the progress made to improve so many aspects of the business, the year was disappointing for our shareholders who have been patient and supportive, attributes which we do not take for granted. They now need to experience the benefits of the company’s completed transformation.
I would like to thank all of Capita’s people for their total commitment in a year of disruption caused by external forces and the final stages of operational restructuring which now provides the platform to achieve the key goal of meaningful growth.
"The completion of Capita’s transformation has resulted in a clear, improved and simpler operating model. The fundamentals needed to build a successful company are in place."
Sir Ian Powell, Chairman, Capita PLC
Chief Executive Officer's review
"We now have a foundation in place to deliver sustainable, improving financial performance and look forward to delivering this as we move into 2022 and beyond"
Jon Lewis, Chief Executive Officer at Capita plc
Chief Financial Officer’s review
Strengthening the balance sheet
Adjusted revenue was broadly in line with the prior year. Contract losses halved compared with 2020 benefiting from our sustained focus on retention and service delivery. Contract wins reflect the commencement of the Royal Navy training contract, Job Entry Targeted Support (JETS) contract and the annualised impact of the Defence Fire and Rescue Project (DFRP) contract.
The increase in adjusted profit before tax reflects the benefit of stable revenues, cost savings from our transformation programme and the reduction in the holiday pay accrual in 2021 compared with 2020, offset by other cost increases, including the impact of the reinstatement of the employee bonus scheme. The adjusted profit before tax in 2021 excludes the financial impact of a closed book Life & Pensions contract termination, which by virtue of size has been excluded from adjusted results as later described in this report. The Group continued to participate in the job retention scheme made available by the Government to help ease the employment impact of Covid-19 and furlough related income of £4.9m (2020: £21.3m) was recorded in the period which was offset against the associated payroll costs.
"We have already exceeded the target we set of £700m in total disposal proceeds to be delivered by June 2022."
Tim Weller, Chief Financial Officer
We report our financial performance across three operating divisions.