Capita is starting to show signs of recovery, but its IT services division did not get the memo.
For the year ending 31 December, 2018 Capita reported sales of £3.9 million down 7.7 percent on the previous year. Its operating income, however, improved from a £420 million loss to £34.9 million as it continues its radical restructuring.
CEO Jon Lewis, who slammed the business when he took over last year, said: “We’ve successfully completed year one of our multi-year transformation, fixed the basics and are firmly on track. We’ve strengthened our balance sheet, achieved cost savings, and invested in our people. On top of that, we’ve improved our governance, introduced a ‘One Capita’ operating model, and started turning around challenging contracts. I am particularly proud of our new corporate purpose and refreshed values. “Our transformation still has some way to go. But I am very pleased with our progress. Our targets remain on track, and I’m excited about the prospects for a simplified and strengthened Capita.”
Capita groups its main IT businesses into two – Software, and IT and Networks – while other divisions, for example, Government Services, also hold an element of IT. The Software division – which develops specialised applications – adjusted revenue declined 1.3 percent to £396.4 million, but adjusted operating profit climbed 0.6 per cent to £112.4 million.
Capita said it is “transforming what was a division of 29 siloed businesses into a single software business”.
The IT and Networks division saw adjusted revenue drop 2.7 percent to £404 million, while adjusted operating profit plummeted 26.9 percent to £45.3 million.
Capita said that revenue dropped as a result of contract losses and lower managed services business, while profit was hit by a £9 million “supplier settlement” and tightening margins.
