Capita appears to be turning a corner after a year of debt, cyber attacks, job cuts and sell-offs
Government contractor Capita has reaped the rewards of a major restructure and sell off, with a boost in revenue and efficiency.
The debt-laden firm boasted of a huge boost in contracts won in the second half of the year, as it recovered from a major cyber attack which impacted its pensions arm in particular — and its share price.
It said there was revenue growth of 2.1 per cent this year, and a boost in its total contract value to £2.89bn, an increase of 47 per cent on last year. It attributed this to a “significant improvement in win rate”.
Capita also heralded improved efficiency savings with cost reductions of £60m planned for next year, as it looks to double its operation margin to almost six per cent.
Among these savings, were a reported 900 job cuts.
This comes after Capita has sold its travel and events businesses Agiito, messaging and alerting service Pageone and its employment screening firm Security Watchdog.
Last week the company said it will sell its majority stake in environmental testing and research firm Fera, once fully finished, completes the firm’s disposal programme of its non-core businesses for the year.
Its share price is up more than nine per cent in the last month, but still down more than 36 per cent in the last six months, as it continues to reel from the cyber incident.
The overhaul of its portfolio came as the debts mounted for Capita during the year, after in its half-year update in August, the company confirmed debt was coming down, reducing its net best by £165.8m to £544.6m.
It isn’t only debt that Capita was looking to improve, however. It was still reeling from a major cyberattack in March as well as a further data breach in May.
Capita said the cost attributed to the cyber incident is expected to be between £20-25m, and that its pension business was “substantially impacted” by the attack.
It said in a statement this morning, that it had reached an agreement with trustees of its benefit pension scheme following a March funding review, and that a healthier position showing a surplus of £51m, means no more deficit recovery contributions are needed.
Adolfo Hernandez will be made CEO and a director on 17 January, at which point Jon Lewis will step aside gradually.
The outgoing boss Lewis said: “We have continued to make good progress against our core priorities and remain on track to deliver our medium-term guidance of mid-single digit revenue growth, doubling our operating margin and delivering positive free cash flow.
“Capita is a growing business with a materially stronger balance sheet, reflecting the reductions in financial debt and pension deficit.”