Capita announces major restructure alongside plans to raise £700m
Outsourcing giant Capita has announced a fresh restructuring plan alongside efforts to raise £700m from selling non-core assets, as it seeks to recover from a difficult year during the pandemic.
The group, which provides IT-led business services to the public and private sector, will simplify its six operations into three divisions.
Capita Public Service will focus on strategic supply for the government, Capita Experience will build on the firm’s UK and EU customer experience markets, and a third division will comprise a portfolio of non-core businesses.
Capita said the “new simpler structure supports inflection to sustainable cash generation in 2022”.
The group will seek to raise £700m from selling non-core assets as it looks to shore up its finances.
“To support the balance sheet, our focus remains on efficient cash management, realising non-core disposals of £700m and planning to put in place a longer-term financing solution,” Capita said in a statement.
The group plans to dispose of £500m assets this year, with the remaining £200m to be sold at a later date. Three non-core disposals worth £200m are already under way.
It comes during a year of “financial challenges” for Capita during the pandemic, despite it cashing in on a range of Covid contracts.
The group reported a 9 per cent slump in revenue to £3.18bn in the 12 months to 31 December, down from £3.5bn last year.
Operating profit plummeted 56 per cent to £111m over the year, while profit before tax slumped 67 per cent to £65.2m, down form £197.7m in 2019.
Capita’s earnings per share dropped 55 per cent over the year to 4.19p, as the group boosted its cash flow elevenfold to £238.6m.
The group raised eyebrows last week when it emerged that executives at the firm were being offered tailored advice from the business department on how to apply for New Years Honours, alongside companies such as Serco, McKinsey, PwC and Deloitte.
Jon Lewis, chief executive, said: ““Despite the challenges, we have continued to make good progress, improving client relationships and winning significant new contracts. Capita is a much better business than it was three years ago when we began our transformation.
“We are now building on that stronger foundation to move onto the next phase of our transformation by simplifying from six divisions to three.
“We are planning a return to organic revenue growth this year and sustainable cash generation in 2022, as we continue to build a more focused, client-centric and streamlined Capita for the long term.”