Capita boss hails transformation as revenue grows for first time in years

Jon Lewis said the company has simplified over recent years.

Outsourcing giant Capita spent too much effort chasing higher dividends in the past (Andrew Matthews/PA) (PA Archive)

The boss of Capita hailed the transformation of the company as it posted its first rise in revenue in six years.

Jon Lewis said the business is paying down its debt, has dealt with its pension deficit, and has regained the trust of clients.

He told the PA news agency that, in the last four years, Capita has transformed from a company that was criticised as “overly complex and difficult to understand”.

“That is no longer the case,” he said.

It was not just Capita that needed transforming – only a few years ago the entire outsourcing sector was facing problems.

Mr Lewis said: “I think the sector got to where it got to through mismanagement, quite frankly. The race-to-the-bottom bidding, on contracts based on price, taking on scope which couldn’t be delivered, etc.

“What has happened over the last several years across the sector is new leadership teams have come in which have brought a much more disciplined approach to how we engage both in the public and private sector.”

He said the problems had in part been due to bosses trying to keep shareholders happy by pushing up dividends.

“I think management teams get into a situation where they come under considerable pressure to continue to deliver top-line growth and feed the dividend. Candidly, that resulted in some suboptimal decisions,” he said.

Last year revenue rose by 0.4% to £3 billion. It was modest growth, but ended six years of decline for the business.

Pre-tax profit swung to £286 million, from a loss of £49 million the year before.

The business won contracts worth £3.8 billion in 2021, an increase of nearly a third, while its order book grew for the first time since 2017.

Capita was especially helped by its public service division, which grew nearly 11%, while the experience unit dropped 9.4%.

The business won major contracts and extended deals with the Royal Navy and the RSPCA among others.

It has very little to do with Russia or Ukraine, but it has a large operation in Poland, where it will offer Ukrainian refugees employment and free accommodation while they settle in, Mr Lewis said.