Capita has reported an increase of £13m to £3bn in adjusted revenue, following a six-years declining revenue.
Adjusted pretax profit saw a 1,631% growth from £5.4m in 2020 to £93.5m in 2021 due to increased revenues and savings in transformation costs.
Reported profit before tax increased from a loss of £49.4m in 2020 to a profit of £285.6m in 2021.
The main driver of Capita’s turnaround was a 31% increase in contract wins to £3.8bn in 2021 vs £2.9bn in 2020.
In 2021, the firm sealed contracts with the Royal Navy and made profits in their public service division which increased their revenues.
The fantastic growth in pretax profits allowed for the reinstatement of the employee bonus scheme.
Disposals
Yesterday, Capita was informed that the Department for Business, Energy and Industrial Strategy will not be penalising the firm for disposal of Trustmarque to One Equity Partners.
This disposal is expected to bring in £115m and be completed in March 2022.
As a result of the disposals, the net debt has decreased from £1,077m in 2020 to £879m in 2021.
The company met its target disposal of £700m in 2022. The income from these disposals will be able to pay off more debts that are maturing.
The company also reported cash outflow of £237.1m in 2021 due to pending obligations from 2020.
Deferred VAT from 2020 was £104m, restructuring costs accounted for £68.6m, pending pension payouts were £155.5m and other cash commitments amounted to £328m.
In 2020, the company had a cash inflow of £303.8m.
“It was a year of significant change at Capita as we completed our transformation by establishing a platform for growth, while continuing to strengthen the balance sheet,” said Jon Lewis, Chief Executive Officer, Capita.
“We grew our revenue in 2021, reversing six years of declines, and expect this trend to continue to improve, while we also expect to deliver positive sustainable free cash flow in 2022.
“Capita now has the foundations in place to deliver sustainable improving financial performance; our new simplified divisional structure will deliver significant benefits.
Capita shares are flying at 9% increase to 23.9p after disposal targets have been met and future net debt is expected to drop.