Good morning, everyone. Thanks very much for joining us. It's rather nice to be here in person and to see friends of Capita with us in physically for the first time in a couple of years. I think we're all a little bored of presenting results and trading updates virtually. I'm joined this morning by Tim, our CFO, as well as members of the executive committee of Capita, all of whom will be more than welcome to chat after our prepared remarks. If we could have the next slide, please. As usual, I refer you to our disclaimer.
After the significant impact of COVID in 2020, a lost year in which we focused all of our energy on protecting our colleagues, our clients, and the business, 2021 was a year in which we got back to completing the transformation process we started in 2018. We have now addressed a long-term concern regarding Capita. Capita is now a much simpler business to understand, two core divisions with strong leadership positions in attractive markets, clearly defined growth markets. The Public Service division has already turned a corner, delivering strong results in 2021. Importantly, we also expect the Experience division's performance to improve in 2022. Both divisions are now focused on providing clients integrated solutions as opposed to selling a disparate range of products and services.
On the back of order book growth in 2021, a strong pipeline for 2022, and improving win rates, we expect to accelerate our growth into the year. Our new operating model also offers opportunities to leverage the simplicity of our new structure, to do things more efficiently and to improve productivity. You'll also be aware that we have exceeded our target of GBP 700 million in disposal proceeds well ahead of schedule, some 12 months ahead of when we originally said we would deliver that. This has allowed us to meet our cash and debt obligations, which 12 months ago, you remember, presented a significant hurdle. I'm also very pleased that from an accounting perspective, our pension fund is now in surplus following GBP 300 million in deficit funding contributions over the last four years.
As we continue to dispose of the businesses in the non-core portfolio division, we expect net debt to be materially lower at the end of the year. Having established that platform, revenue growth is now the key driver of Capita's ability to drive margins, cash conversion, and cash flow. We grew in 2021 for the first time in six years. Yes, it was not by much, but it was an inflection point after years of persistent revenue decline, driven primarily, of course, by poor service delivery. The amount of contracted work won in year increased by 31%, pointing to our ability to offer our clients competitive and attractive solutions. As a result, we added GBP 260 million to our order book, delivering order book growth for the first time since 2017. Perhaps more importantly, it is also an order book of much higher- quality contracts.
Our book-to-bill ratio at 1.2x is the strongest it has been for several years and now reflects a business that is pivoting to growth. We have a healthy pipeline of new opportunities this year. We've already agreed a GBP 456 million five-year extension with the BBC, and we expect to announce some exciting new wins with new clients in the next few weeks and months. Year to date, we have won almost GBP 700 million in contract value. With the return to growth achieved in 2021, we now expect to pivot to positive free cash flow in 2022. Now, those of you who have been following our transformation will be very familiar with this slide, but this is the last time we will present it. Today, we're announcing that our transformation has ended.
We have the platform in place now to drive revenue growth and improve financial performance. Our transformation focused, you remember, on simplifying and strengthening the business, what was an overly complex, failing, underinvested, and overburdened group. We had a poor reputation with clients, a huge amount of financial debt, significant organizational debt, and a significant pension deficit. Four years later, Capita is now simpler, more focused, and more predictable. We have invested in leadership and governance, systems and processes, and our go-to- market capabilities. We have significantly reduced the financial and organizational debt in the business. As a result, we're now starting to see the signs of success. Our focus on being a purpose-led business has been instrumental in creating a strong culture of doing the right thing for our people, our clients, and their customers.
We are delivering on our contracts, which in turn is leading to high retention rates and growing scopes of new work from existing clients. Perhaps even more importantly, we're now starting to win more work from new clients. Perhaps most importantly, we are winning more of the right sort of work, aligned to strategy, our purpose on the right commercial terms, and based on increasingly standardized, scalable platforms. There's still a way to go. There's lots more to improve, but we now have a platform to deliver competitive financial returns. While we have delivered for the majority of our stakeholders, we have not delivered, of course, for our shareholders. With the transformation phase behind us, this now has our utmost focus. Now, none of this would have been possible without the remarkable commitment, tenacity, and resilience of our colleagues, particularly as we navigated through the pandemic.
Their support has candidly been humbling, and I would like to publicly thank all of our Capita colleagues for the fundamental role they have played in getting us to where we now are. What do I mean by having established a platform? Well, first, our legacy challenges are behind us, and we are now focused on growing our two core divisions, one focused on public services, the other on customer experience. We're the market leaders in the U.K. in both divisions through our delivery of BPO and increasingly BPS solutions. Both divisions serve large markets that are growing at around 5% per annum, although segments are growing at multiples of that. Within these two markets, we're focused on a finite number of verticals, industry segments or parts of government where Capita has deep levels of expertise and understanding built up over years, if not decades.
We now serve these verticals with dedicated client partners, senior Capita executives who have a deep understanding of the challenges and opportunities in our clients' businesses, and importantly, also well-established relationships with their clients in these markets. With their understanding of clients' needs, they work with colleagues in their division and our technology software services organization to craft solutions that help our clients solve their business challenges through a powerful combination of our own IP, together with that from third parties such as Microsoft or Amazon Web Services for cloud solutions, Salesforce for digital platforms, or Raytheon for specialist training capabilities for the Royal Navy training contract.
On the back of our reestablished reputation for delivery, this structure provides a means to drive revenue growth, continuously improve efficiency, and as the core business starts to generate more cash inflect to positive free cash flow, all based on what is now a stable and de-risked capital structure. On that note, I will pass you to Tim to talk you through the numbers. Tim?
Thanks, Jon. Morning, everyone. As Jon said, we've made good progress on our priorities and in particular, the strengthening of the balance sheet with delivery of our GBP 700 million disposal target ahead of schedule. Turning to slide seven for our financial highlights. As in previous presentations, we show our results on an adjusted basis, which excludes the impact of businesses exited and the trading of those businesses shown as held for sale at the year-end. Of course, to enable a like-for-like comparison, the 2020 numbers have been represented to exclude the 2021 business exits. Now, despite the ongoing impact of COVID-19, adjusted revenue has shown marginal organic growth for the first time in six years. We've seen significant improvement in adjusted PBT and EBITDA, which reflects the benefit of stable revenue and cost savings.
Cash generated from operations reduced by 37% compared with the prior year, reflecting the unwinding in 2021 of accelerated public sector payment cycles and advanced receipts which you benefited from in 2020. Free cash flows decreased by 54% as a result of the reduction in cash generated by operations and higher tax payments, partly offset by lower capital expenditure and interest. We made good progress in strengthening our balance sheet by delivering a step reduction in our net debt, which principally reflects proceeds received from the disposal of ESS and AXELOS, offset by pension deficit contributions and the reversal of deferred VAT payments. In summary, we delivered a solid performance in 2021, having turned the corner on revenues and delivered step changes up in profitability and down in net debt. Now turning to revenue on slide 8.
The puts and takes that led to the revenue growth in the year are shown in the chart. Contract losses halved year-on-year, reflecting sustained focus on retention and service delivery. The net reduction from scope and volume changes is primarily due to 2020 pandemic-related work and other projects in Capita Experience which did not repeat in 2021. We've seen marginal improvements in our transactional revenue, which are primarily driven by Experience and Portfolio. Contractual one-offs include the impact of the early termination of our contracts with the Co-op Bank and Carphone Warehouse within Experience, and an agreed reduction in scope on the electronic monitoring contract with the Ministry of Justice in Public Service. Wins in the year include the commencement of the Royal Navy training contract, the Job Entry Targeted Support contract, and the annualized impact of the defense fire and rescue contract within Public Service.
There were some smaller wins in Experience, such as our contract with Irish Water. Moving on to the profit before tax bridge as shown on slide nine. Firstly, to ensure a like-for-like starting point, we've adjusted for the 2021 one-offs totaling GBP 24 million, which included an onerous contract provision, contract asset impairments, and deferred income releases arising from the contract terminations in that year. The margin effect of revenue losses, scope and volume, transactional changes and contract wins was a net reduction of GBP 26 million. This, however, was a significant improvement over the prior year, which saw a net GBP 160 million reduction. We've also shown the GBP 12 million impact of contractual one-offs in 2021.
This includes the release of deferred income and write-off of contract assets arising from contract terminations and settlements, including the mortgage services contract with the Co-op Bank and the electronic monitoring scope change I mentioned earlier. The transformation program continues to deliver substantial savings with a GBP 123 million year-on-year benefit through continued focus on operational excellence, property footprint reduction, and supply chain efficiency. We also started seeing the benefit of the move to the new divisional structure and the leaner corporate overhead, although the main benefit of these changes will fall into 2022. The transformational savings were partly offset by increases in other costs of GBP 11 million, reflecting higher general inflation as well as prior year one-off cost reduction initiatives not repeating.
The final two blocks show the year-on-year impact of the reinstatement of the bonus scheme in 2021 with GBP 31 million expensed in the year compared with the GBP 17 million release of the 2019 accrual in 2020. This has been partly offset by the reduction in the holiday pay accrual as our colleagues have used their rolled over holiday entitlement during the year. Overall, the focus on driving efficiency and Capita's cost base over the last few years, coupled with the stability we are now seeing in the group's revenues, has underpinned the substantial growth in profits delivered in the year. Slide 10 summarizes the divisional financial performance. In Public, the strong revenue growth was underpinned by the major contract wins I've mentioned earlier. Public's profit increase reflects a step up from 2020, which included first-year losses on the DFRP contract and contract-related provisions and impairments.
More broadly, there was significant overall improvement in operational and financial performance across public contract portfolio during the year. In Experience, the division's declining revenue and profit is driven by contract expiries and losses, including Tesco Bank and the Phoenix closed book Life & Pensions contract. The reduction in operating profit is amplified by prior year COVID-19 savings, which have not been repeated in 2021, partly offset by one-off benefits in the year. The division continues to achieve high contract renewal rates, and we're particularly pleased to see the extension of our contract with the BBC, which was announced towards the end of February. In Portfolio, revenue has grown in several businesses, including areas such as resourcing, technology and enforcement. However, overall divisional revenue is broadly in line year on year, primarily reflecting the ongoing impact of COVID-19 on businesses such as Agiito, our travel and events operation.
Portfolio's profit increased in 2021, driven by an improvement in margin mix and continued benefits from actions taken to right size the division as the disposal program has progressed. Turning now to slide 11, which reconciles our adjusted PBT measure with reported PBT. Business exits reflect the ESS and AXELOS disposals and classifications as businesses held for sale. It's worth noting here that Trustmarque's results are included in adjusted results as it did not meet the held for sale threshold at 31st December 2021. We saw a step up in restructuring costs during the second half as we implemented our new divisional structure. In addition, an impairment of GBP 54 million has been reflected in the year end accounts following the decision to cease the implementation of a replacement ERP system. As we said previously, 2021 will be the last year of below- the- line restructuring investment.
As indicated in our pre-close trading update, we've recognized provisions and impairments of GBP 43 million for contracts in our closed book Life & Pensions business. We've highlighted previously the structural challenges associated with the contracts in this business and reflected those challenges in the position we've taken for provisioning purposes at year-end. As you'll appreciate, the closed book Life & Pensions activities are one of the more significant drivers behind the ongoing suppressed operating cash conversion of the group, given that the annual net cash cost of service delivery in 2021 amounted to just shy of GBP 20 million. Overall, we're now carrying provisions totaling GBP 55 million in respect to the closed book Life & Pensions contract portfolio, and we continue to look at opportunities to reduce the ongoing cash flow impact on the group.
For the year as a whole, we've seen a GBP 335 million swing from last year's losses to this year's GBP 286 million profit, driven by the disposal program and the step change in underlying trading profits. Moving to slide 12, which summarizes the group's cash flow and net debt movements. Operating cash flow conversion fell to 63% in 2021, reflecting the shorter public sector payment cycles and advanced receipts in 2020, which I mentioned earlier and which have unwound in 2021. Capital expenditure reduced, reflecting transformation projects completed in 2020, such as our customer relationship management tool. There have been a number of other significant cash flow movements in the period, including the repayment of the majority of the VAT deferred in 2020.
We made substantial payments to the group's pension schemes totaling GBP 156 million in the year. We received four hundred and eighty-three million in net proceeds on disposals, including GBP 336 million on the sale of ESS and GBP 137 million on the sale of AXELOS. Overall net debt has fallen by around GBP 200 million to GBP 880 million at the end of the year. Turning to slide 13, we show the impact of the cash flow headwinds that we identified at the half- year. As you can see, the outturn for all three of the main headwinds are in line with the expectations provided previously.
As mentioned on the last slide, we've paid off the majority of the VAT deferral, made significant pension deficit reduction payments, and incurred restructuring costs related to the transformation plan, including the move to the new divisional organization structure. Overall, the reduction in cash flow headwinds expected as we move into 2022 is one of the key factors which underpins our expected transition to sustainable free cash flow. Now turning to slide 14, where we set out the group's liquidity position and summarize some of the key steps taken to strengthen the group's balance sheet. Our existing RCF expires on August 31, 2022. We've entered into a new RCF for GBP 300 million covering the period from 31st August 2022 to 31st August 2023.
Disposal proceeds of GBP 483 million received in 2021 in respect of the ESS and AXELOS and a further GBP 95 million received to date in 2022 from the disposal of AMT- SYBEX and SSS. Further proceeds are expected over the next few weeks, with GBP 115 million from the disposal of Trustmarque and additional proceeds in respect to the specialty insurance businesses. We therefore exceeded the GBP 700 million target for disposals that we set out in March last year ahead of schedule. We've also commenced the disposal process in respect to a number of other businesses in our portfolio division. Before the benefit of the post-year-end disposals, we had liquidity of almost GBP 400 million. As I just noted, we're no longer confronted with substantial restructuring, VAT, and pension-related cash drags.
We therefore have ample headroom to address the debt maturities arising over the next three years. Now turning to slide 15 and the outlook for 2022 and beyond. Our expectation for revenue growth in 2022 is built on strong contract performance in 2021 and a growing pipeline of new business supported by a recovery in transactional business from COVID-19. In 2022, notwithstanding the margin benefit from revenue growth and the flow-through of cost benefits from the divisional restructure, we expect profit margins to decrease slightly. This reflects the full-year impact of prior contract losses and the structural decline in the closed book Life & P ensions business in Experience, operational changes in the Army Recruitment contract in Public Service, as well as the cost of recruiting and training staff to support our growth.
Overall, given the phasing of contract revenues and the effective date of contractual indexation clauses in our core divisions and the timing of recovery of the COVID-19-impacted businesses in Portfolio, we anticipate that revenues and profits for the group as a whole will be significantly weighted towards the second half of the year. Please note also that our reported results will be materially impacted as we continue to execute the disposal program. At a group level, the rapid reduction in cash flow headwinds is expected to underpin our transition to being free cash flow positive in 2022. We anticipate a further substantial reduction in net debt as we push to complete the majority of the remaining portfolio disposals in the year. Looking into the medium term, we will target revenue growth at least in line with the mid-single-digit range of our core markets.
We're targeting for divisional EBITDA margins to increase to high single digits to low double digits, which translates to high single- digit EBITDA margins at a group level. We're targeting to increase cash conversion to between 70% and 80%, and as a result, grow free cash flow. We'll also maintain a prudent approach to our capital structure and target a leverage ratio of net debt to EBITDA of around 1x on a pre-IFRS 16 basis. In summary, Capita's transformation has established the platform and strategic focus needed to drive the group's revenue growth and improving financial performance into 2022 and beyond. With that, I hand back to Jon.
Thank you, Tim. Next slide. Thank you. When we set out to transform Capita, we unapologetically put our purpose, creating better outcomes, at the very heart of everything we did. It was then, and is perhaps even more so now, the right thing to do. It's much more than just the mark of a progressive stakeholder-focused business. It is our license to operate, which is why ESG metrics now constitute key non-financial metrics in our management bonus plan. We would not be doing business with government today unless we had a plan to get to net zero, in our case by 2035, and accredited by the Science Based Targets initiative. All elements of our purpose contributed, contribute to our social value score in government tenders, where we continue to aspire to be the government's most progressive, purpose-led strategic supplier with the highest social value credentials.
As a direct result of our high social value scores, we have won work such as the Job Entry Targeted Support Scheme in Scotland and the U.K.-wide Turing Scheme, over GBP 30 million of revenue, where other bid selection criteria, such as price, did not differentiate us. We remain committed to being a real living wage supplier and became fully accredited for being so in 2021. We continue to encourage all our clients to recognize this important commitment. I'm proud of where we have got to on gender and ethnic diversity, particularly with our board and executive team. We are now redoubling efforts to improve our diversity and inclusion across middle management, where we still have more work to do. We continue to achieve high NPS scores with our clients, albeit marginally down year-on-year.
We're committed to paying our suppliers promptly and saw a further 3% improvement in our performance against the Prompt Payment Code in 2021. However, following two years of significant improvement, we were disappointed with the significant reduction in our employee net promoter score last year. While we were pleased to see our employees rate their managers on average 87% across our 10 manager commitments, which form a key part of our purpose, values, and behaviors, we did not anticipate the degree to which a second year of pandemic and the final year of our significant internal transformation program would impact overall employee engagement. As you would imagine, we're now undertaking a comprehensive program of measures to ensure we address the issues raised, including the incorporation of employee engagement as a score in our management bonus plan, as a metric in our management bonus plan.
We have now de-risked the business and established a strong platform for growth, as I mentioned earlier. Two years ago, I said it was costing more and taking longer than we expected. Candidly, we underestimated in Q1 2018 the quantum of change and remediation required. There have been significant additional challenges along the way, of course, not least of which was COVID. When we started, we had over GBP 1.5 billion of debt and a significant pension deficit. Capita was failing its clients and failing its shareholders by bidding for contracts that it could never deliver at the price being committed to. The company was not investing in the management systems, the integration and the governance necessary to manage what was an increasingly complex portfolio of acquired businesses. We've now fixed this.
We have repaid over GBP 1 billion of debt and contributed over GBP 300 million to the pension fund, which is now in surplus, as I mentioned. We have spent around half a billion pounds fixing contracts, investing in people, and appropriate management systems, as well as upgrading the resilience and competitiveness of our IT systems. As a management team, we are now delighted to be at a point where we are no longer having to focus on preventing value destruction, but can pivot to value creation. Operational delivery for our clients is now a core strength of Capita. As a fundamental part of the transformation, we focused on fixing failing contracts and reestablishing our clients' trust as a prerequisite to renewing existing contracts and winning new scopes of work.
Our service delivery, as measured by our performance against client-defined contract service level agreements, is now consistently high and has earned us a much- improved reputation, one of the reasons why our client net promoter score remains so high at + 29 points. It has also stemmed the drain of cash from those contracts where we were not delivering on our promises and where we were having to take very costly remedial action. We are renewing contracts, often with improved commercial terms and winning significant scopes of new business from our client base. Our revenue momentum is improving, and the sheer number of positive statistics on this page gives us confidence for the future. 2021 was an inflection year in which we demonstrated we can win large scopes of work with competitive, attractive solutions that meet our customers' needs.
We won GBP 3.8 billion of work last year, an increase of 31%, as I mentioned. Interestingly, over 60% of this was from our key accounts, from whom we achieved a very high renewal rate and won material new scopes of work. We have renewed a number of those contracts over the last 12 months with improved margins and reduced execution risk. 56% of the total contract value we won last year represented growth from new or existing clients. As a result, our order book has grown for the first time since 2017 by GBP 260 million. Our book-to-bill, as I mentioned, is now 1.2x , again demonstrating a healthier platform for growth.
We continue to maintain a very high level of discipline around our approach to bidding, ensuring opportunities are deliverable at the price bid and represent an appropriate balance between margin and execution risk. Again, the average net margin on major contracts since we started the transformation remains in low double digits. As a result, Capita has a higher quality portfolio of long-term contracts and is today, therefore, a better quality business. What does this mean for revenue growth in 2022? On the back of our order book growth last year, our stable framework contracts, i.e., work that does not, for accounting definition purposes, get added to our order book, but that we know we will realize, we have already secured around 65% of our expected revenue for the year.
Our attrition rate has now also reduced to a lower normalized rate of around 3% with the public service exits behind us and experience losses mostly annualized. If you exclude the Royal Navy contract, which was effectively won in 2020, we have grown our unweighted pipeline 7% year-on-year to GBP 9.4 billion. We are getting better at opportunity origination. We have a number of large, high-quality pipeline opportunities, some with existing clients, for example, the DWP and NHS England in Capita Public Service, and some with new clients, for example, the utilities and financial services sector in Capita Experience. Through our sales incentivization plans, we're now targeting more new client work, which along with new scopes with existing clients, represents 68% of our 2022 pipeline. Winning new scopes and not just renewals is, of course, fundamental to sustaining revenue growth.
We're also originating opportunities with new clients in what are new key growth markets for us. Last year, the Experience division won a strategically important contract to support a European fintech business, and Experience are in the final stages of awards with two new clients in the tech and utility sectors, displacing competitors, I hasten to add, in both instances. With a material contribution from the recent GBP 456 million BBC contract renewal, we have now secured just shy of GBP 700 million in contract awards year to date. Now, throughout the transformation, we have delivered substantial cost savings and have a very strong track record of doing the same, which in 2021, as Tim mentioned, helped to drive the significant increase in profit.
Cumulative savings to date have been over GBP 425 million and focused on delivering services more efficiently, more effectively, reducing the cost of poor quality, reducing spans and layers in management, as well as reducing structural overhead costs, such as the 25% reduction in property footprint over the last two years. One particularly interesting stat is that our property cost per FTE, full-time equivalent, is now down 39% year-on-year as we've moved our expensive locations in the Southeast. However, we continue to focus on both variable and fixed costs. Our new structure provides further opportunities for margin expansion. The consolidation of our delivery capabilities in each division into a single organization lends itself to greater standardization, delivering both cost and efficiency benefits that will make us more competitive.
This will be further enhanced, of course, by the increased adoption of digital solutions. The flexibility provided by a hybrid homeworking environment is also expected to yield further gains. With our new operating model now in place, we can significantly reduce the costs associated with the previous complexity of the group, in particular, taking out legal entities and eliminating a cottage industry of intercompany transactions and charges, and ultimately, having a leaner group structure. This will take a year or two to be fully embedded, but it is a key driver of further improvement in margins and cash generation in the medium term. Now, in our December trading update, we talked about the prospective inflationary pressures we expected from the macro environment and the challenging labor market.
I will come onto our investment in people shortly, but first, I think it is important to stress that we are well protected against general cost inflation, as you would expect from a long-term contracting business. Around 2/3 of our contracts have indexation clauses as a cost- plus escalator built in. Another 22% are fixed price with indexation assumptions built into the contract terms, and we have just over 12% of our revenue that is transactional, where we are naturally hedged. In the limited number of cases where specific contracts lack an ability to recover wage increases, for example, or they're not reflective of the current rates of inflation, we are engaging directly with those clients to discuss the implications for service quality. As a result, we currently expect the impact of inflation on Capita to be minimal this year.
As a business, we're only ever as good as the people who deliver our services, and an engaged and motivated workforce delivers higher- quality services. This has been core to the transformation the last four-plus years. I mentioned in my introduction that we were disappointed with our overall employee engagement score in 2022, and have executed on a comprehensive program to ensure we address the issues raised. At the heart of this must be a compelling employee value proposition, one that provides training and development, career progression, flexible working wherever possible, as well as competitive rewards, of course. While there are challenges around certain competencies, we are still, however, a very attractive place to work. We hired 20,000 people last year globally.
That said, our single biggest risk currently, given the nature of the labor market, is our ability to attract and retain the talent required to execute on our strategy. Of course, there is a cost to this, primarily around hiring and training, which is one of the reasons why we are not seeing the improvement in margins in 2022 we would wish for. I'll now spend a few minutes on each of the core divisions, highlighting their potential and our strategy to generate significant more value from them. Capita Public Service is the number one strategic supplier of business process services and technology solutions to the U.K. government. With around 10% share of a market that's worth around GBP 12.5 billion and is growing at around 5% per annum.
It's a market that is shifting away from people-centric, lower-tech BPO solutions towards faster-growing digitally and data-enabled services. We're well-positioned to capitalize on this through a combination of our deep understanding of complex government processes and the technology capabilities we can bring to bear from our technology and software services organization and partners. As a result, we won GBP 2.4 billion of new work last year, delivering an order book at the end of year of GBP 3.3 billion. We were also successful last year in winning places on significantly more frameworks. We're now on 40 in total, giving us access to GBP 25 billion of spend over the next five years. The division's 2022 weighted pipeline is worth GBP 1.3 billion, and we expect healthy growth in 2022, with some particularly interesting opportunities in the health and welfare vertical.
Now, as I outlined earlier, our divisions are now focused on those vertical markets where we are growing and where we can leverage our specialist market knowledge and insights. Public Service is structured around five such vertical markets: Justice, Central Government and Transport, Defense, Fire and Security, Local Public Services, Health and Welfare, and Education and Learning. This slide summarizes some of our offerings across each vertical, as well as the revenues we derive from each. Having now resolved legacy contract challenges, and on the back of consistently strong service delivery, we've earned the respect of our clients and continue to win new scopes of work. An example of where we have done this, of course, is with Transport for London.
During 2021, we expanded TfL's Ultra Low Emission Zone significantly and delivered one of the U.K. public sector's largest and most complex cloud migrations ever on budget, on time, and to spec. We're now providing the ongoing monitoring, alerting, security, service, and system support for TfL under steady-state operations. As previously outlined, Capita Experience is behind Capita Public Service in its turnaround, but nevertheless, now has the platform in place from which to return to growth, improve margins, and cash conversion. As the number one U.K. player and in the top three in EMEIA, the business has a strong blue-chip client base, in particular in the financial services and TMT verticals, as well as utilities, travel, and retail.
The global customer experience market is worth around GBP 244 billion globally and growing at around 5% per annum, although sub-sectors again are growing significantly faster than that. There's also a market in which only around 1/3 of activities are outsourced, so there is plenty of additional opportunities as companies increasingly recognize how specialized the customer experience space is becoming. Our propositions are competitive and attractive. We would not be winning work if they were not. Perhaps more interestingly, both Everest Group and ISG, independent sector analysts, position Capita in the highest segment of customer experience digital operations, what they term the leaders category, placing us, of course, in very good company. Overall, Capita Experience won GBP 842 million of work last year, and our 97% renewal rate speaks to the high levels of trust and belief our clients place in us.
We renewed contracts with two of our largest telecoms clients and won increasing scopes of work in financial services. Experience has got off to a new start, a good start this year, of course, with the renewal of BBC TVL, and as I mentioned earlier on, new client contracts well advanced in the utilities and tech sectors. Capita Experience's consult, transform, and deliver client engagement model is strategically important and fundamental to the division's growth in revenue and margin. The insight we derive from the consulting phase of client engagement enables us to deliver superior, more value-added outcomes. For example, a consulting engagement at FSCS led us to embed an artificial intelligence solution into their customer response processes, which drove a 68% reduction in call times, a material cost benefit to the client, and a 13% improvement in overall response accuracy.
Of course, we're now able to leverage this platform with other clients. The strength of our capabilities in the transform and deliver phases have a similar track record of outcome-based value creation, as evidenced on this slide. Having now consolidated all delivery capabilities under single leadership, there is a significant prize associated with the standardization of an increasingly multilingual and digital capability, delivering improved customer experiences with a lower cost base. It may take another 12 months or so to properly embed the changes we're making in Capita Experience, but we are confident that there is significant upside to the current financial performance. Capita Portfolio comprises the non-core businesses that we plan to dispose of, with the majority to be completed by the end of this year. We started the program last year and exceeded, as I mentioned, our target of GBP 700 million ahead of schedule.
We received GBP 535 million of proceeds last year, and we received another GBP 80 million or so this year, with another GBP 130 million expected imminently, particularly given Basis' decision yesterday on Trustmarque. The multiples achieved were on average 6x EBITDA, which we believe was a good price collectively for these assets. With Trustmarque now agreed, we have remaining around GBP 340 million of revenue and GBP 27 million of profit to sell, with some recovery also expected in our COVID-impacted businesses through the year. Bringing this all together, the transformation is now done. Capita is a simpler business to manage and to understand. It is also a better quality business with a reestablished reputation for delivery.
We have addressed the financial, operational, and organizational debt that was endemic in Capita four years ago, and we now have a competitive platform with which to take the business forward. We have strong market positions in large and attractive markets, with opportunities to access faster-growing parts of those markets. Our expertise in the focused verticals in which we operate is helping us deliver the client-centric solutions that will drive revenue growth, at least in line with the growth rates in the markets we serve. Medium term, our operating model offers the increased efficiency and leverage with which to target growing EBITDA margins. As we finalize the disposal of the portfolio division, our debt will decrease further and materially so, enabling us to time a refinancing when terms are optimum.
Growing profits and cash conversion, as well as the elimination of our remaining few cash commitments, as Tim mentioned, will deliver increasing reported free cash flow. There is still plenty to do, particularly as the financial improvements lag the operational achievements. As I stated earlier, we are now keenly focused on delivering for the stakeholder group that has yet to benefit from the transformation, our shareholders. On that note, Tim and I will be delighted to take questions from the audience and then from those listening online. Thank you for your attention.
Morning. It's Rob Plant from Panmure. There was a newspaper story in January saying there've been quite a few senior departures recently, the head of corporate affairs, corporate development, chief transformation officer. Was that correct?
Yes, some of that is a direct result of where we are in the transformation process. When you've completed the transformation, you don't need a chief transformation officer.
Good morning. It's Suhasini from Goldman Sachs. Just a couple from me, please. If you think about the growth outlook for 2022, can you please discuss the inflation assumptions that you've baked into your guidance, specifically for the Public Service sector, where you are expecting growth to normalize to the mid-single-digit levels, and that's in line with the market growth. Given that majority of your contracts actually have some protection from inflation and given that inflation is in the U.K., you would have thought the number should be higher. Second one is on the EBITDA margin guidance in Experience for the medium term. It's high single digits to low double digits. Is that more for base case scenario? Because the peers in the market are obviously at much higher margins. Thank you.
One for you, I think.
Okay. Yeah, just in terms of inflation, you're right. If we're looking at most of the contract portfolio for our indexation clauses, they'll be based around CPI, RPI. Clearly, CPI and RPI are running higher than mid-single digits, depending on how you round to mid-single digits at the moment. To be clear, when we're talking about mid-single digits, we're very much guiding over the medium term. That's what we expect in the long run across our divisions in the round, the two main core divisions. In the short term, it would be reasonable to assume that you could see, for those contracts where we do have indexation, a higher level of revenue increase arising from those indexation clauses.
Of course, they cut in at different times of the year. There's quite a peak in terms of the timing in April and May, reflecting public sector year ends. There's some spread out. I think if you'd asked me that question six months ago, I would have said that mid-single digit seems perfectly reasonable. Sitting where we're sitting at the moment, you might argue it's looking a little bit prudent. Wouldn't disagree. EBITDA margin guidance, we're talking about the divisions, as in Public and Experience. You can see from the reported results that actually Experience's EBITDA margin is slightly higher than Public's already.
It'd be reasonable to assume that actually in terms of that high single- digit, low double- digit guidance, that actually Experience will probably be outperforming Public on a kind of enduring basis, particularly as it moves to enter into contracts with a greater technology content. It still means that at a group level, post the group overhead costs, that we expect to deliver high single-digit EBITDA margins for the group as a whole.
I think the only thing I'd add is that our assumptions on growth that we talk to today do not have the indexation built into them.
Good morning. Hi. It's David Brockton from Numis. Can I ask two and they are slightly related to the two questions that have already happened, so apologies for that. Given that you recruited 20,000 people in the year, that would imply a relatively high attrition rate. Can you just talk about that attrition rate and how it breaks down between sort of longevity within the business, so to speak, just to give some reassurance there and the measures you're taking to improve, I guess, the employee Net Promoter Score? Sorry, that's quite a few in the first question. The second question just relates to that EBITDA margin guidance. You've just delivered 9.8%.
Should one view that as the best that Capita can do, or is that a, you know, a medium-term aspiration that you hope to improve on?
I'll let Tim do the second one. I'll do the first one. I think as everyone in the company hopefully appreciates, I found the employee Net Promoter Score results last year deeply, personally, worrying and disappointing. I think we underestimated the impact of working from home and the fourth year of significant change in the company and the impact that that was having on people. We have taken a number of very significant measures to address that. They're all wrapped up in what we call our employee value proposition, but it's completely different levels of engagement. I sit down with a group of five or six people three times a week, Coffee with Jon, just to get the pulse of the organization. That's one example of many different forms of engagement we now have with the organization. We're offering pay awards.
We are spending more money on training and development, materially more so than the company has done historically, I hasten to add. We've put together a set of actions to directly address the employee Net Promoter Score. In terms of attrition, you have to remember that high attrition is a common feature of customer management businesses. We have a lot of people who are working students who may be working with us over the summer, or people who are between jobs. Typically that runs at a 30%, 35%, 40%, even when there isn't the tightness of the labor market we have today. Therefore, as you might expect, that 20,000 people hiring, by far the bulk of that, was in the customer experience business. We're not seeing the same levels of attrition in other parts of the business.
That does not say I'm not worried about attrition or I'm not worried about the attraction and retention of talent. I think I made that point quite clearly in the prepared remarks. We have the tightest labor market in this country since records began. That is going to be a challenge going forward. The good news is, of course, we can pass on the inflation pressures to the majority of our clients as it relates to salary, but there will be a cost impact as it relates to recruitment and training.
On the "Is 9.8% the best we're ever gonna deliver?" You'll appreciate the guidance we give here over the medium term has to kind of cater for what the group is going to become as opposed to what it currently is. EBITDA in the portfolio businesses in 2021 was 13.5%. That compares with 10.5% in Public Service and 11.9% in Experience. That medium-term guidance, you've got to reflect that there'll be a dilution once you've exited the high-margin portfolio businesses, and therefore there's a sawtooth here of getting back up towards high single-digit EBITDA over time in the two core divisions plus the group center.
All right, sir. Just to follow up, just when you say a winning work 10% net margin, is that an operating margin or a gross profit contribution or EBITDA margin?
It's an operating margin.
Yeah, hi. It's Paul Sullivan from Barclays. Just talking about COVID recovery, I mean, you know, your profits were really hard hit by COVID from memory, and it doesn't feel like a lot of that's come back. What is recoverable in your view? Just talking about CX, how much confidence do you have that the margin will bottom this year? Can you remind us of the revenue within CX that is not backed by cash?
How we think about that going forward. Thank you.
I'll let Tim deal with the second again, I'll deal with the first. Paul, as you know, the two key businesses that got pretty hammered by COVID were enforcement business in portfolio and Agiito, our travel and events business. Because of the fact that we were jumping in and out of lockdown last year, they never really recovered. We saw better recovery enforcement than we did in travel and events, but certainly not back to 2019 levels. This year, we're seeing more encouraging recovery, particularly in travel and events. Travel and events had a much stronger February than we were anticipating, and so long as we don't have any resurgence in the pandemic, then we do anticipate that those businesses will continue to improve through the course of the year.
Now, whether they get back to 19 levels of performance in travel and events in particular is really dependent upon, you know, how society, how companies wish to travel, how businesses wish to operate. There's a question mark over that, but we will certainly see stronger performance from that business without another pandemic, another phase of the pandemic than we saw last year or the year before.
On Experience in 2022, as we've called out in the announcement, as I mentioned in the script of the slides, there's a couple of contractual effects that are actually driving down margin between 2021 and 2022 in Experience, in particular from the closed book Life & Pensions business and some of the contract losses where the impact in the income statement follows in subsequent years. Those aren't cash effects. They're effectively P&L debits without a big hit in cash flow. Out of the total group working capital drag in 2021 of GBP 125 odd million, GBP 85 million was in Experience. That's where there is a big differential between the EBITDA and the operating cash generated.
Over time, as some of those income statement impacts flow through, and in particular, as we complete contracts that had big transformation programs a number of years ago, where we're recognizing profits where cash flows were received in previous years, we would expect the cash drag and working capital and experience to reduce. I said it was GBP 85 million in 2021. We'd expect that to significantly reduce over time, or put another way, experiences cash backed profits will increase over time. That is one of the key factors behind the expectation we've got of improving positive free cash flow over the next three years.
Morning, Christopher Bamberry, Peel Hunt. On the cash flow front, you know, you're talking about a target 70%-80% in the future. What are the assumptions behind that with regard to things like the cash backing in, experience, maybe CapEx against depreciation? And are we assuming deferred income is not, you know, kind of flattened out by that point? Some of those moving parts would be helpful. Thank you.
Yeah. Tucked away in it is the very last slide in the entire pack, slide 37. We've tried to. Well, they're called modeling assumptions. A bit directive, but we tried to kind of spell out some of the things that you might also want to build into your model over the next two to three years. Moving up towards 70%-80% from the 63% we delivered in terms of cash conversion in 2021. Once again, that 70%-80% will be future Capita after having sold the more cash generative portfolio businesses. There's a degree to which it'll go down before going back up again. Implicitly, it is assuming a reduction in the working capital drag or an increase in cash- backed profits.
At the moment, we've kind of quantified in the past, effectively about GBP 100 million a year of structural negative working capital from those old transformational contracts. Over time, that will reduce and more than halve over the next two to three years. There is still a job to be done, though, by management in respect of the closed book Life & Pensions business, which, as I said, in 2021, had a negative cash flow impact of GBP 20 million. We need to resolve that issue to get beyond that 70%-80%.
We've got some online questions. Going forwards when the portfolio is being disposed of, what's Capita's capital allocation policy? Is there any financial impact from the Ukraine? Finally, is Capita growing or shrinking its offshore delivery?
You want to talk capital allocation, I'll talk Ukraine. Let me deal with the Ukraine question first. You know, obviously, immediately after events of a couple of weeks ago, we did a thorough review of our presence in Russia, Ukraine, and Belarus. We have de minimis exposure. We have a few individuals who, for whom we pay pensions that have now been resolved. I think more importantly, we made a material donation to the Red Cross appeal for Ukraine and also supporting our management in Poland, which is where the bulk of the refugees are coming in, of course, with humanitarian support, including, I hasten to add, where Ukrainians are coming in with competencies that we require, given everything I said about the tightness of the job market a few moments ago.
Offering these people free accommodation for a period of time and offering them jobs within Capita.
On capital allocation or capital investment, the guidance we're given to outlined at the back of the pack is for CapEx in 2022 to be between GBP 65 million and GBP 75 million. A couple of percent of revenue. Quite naturally, as we exit the portfolio businesses, we are assuming we will continue to invest at that level in absolute terms and therefore de facto will be putting more money into the remaining core businesses than has been the case over the past couple of years. That is a step up from the CapEx that we saw in 2021, and we believe will enable us to perform in line with the expectations we've got. There was a sort of third question around the international footprint and the potential for that to expand or otherwise.
Really what we're looking at in terms of international is much more on the delivery side of things, making sure that we are optimizing where we have delivery resources, using an international footprint and international thought process, to make sure that we are as cost- effective as we can be.
Yeah, I'll just build on that last point. We're expanding in some geographies. We've had a very successful franchising capability out of our Cape Town operations in South Africa. We've just opened an office in Durban. Actually, it was the tail end of COVID, but also the tightness of the labor market, we're seeing greater propensity on the part of our U.K. clients to shift work to those geographies. We have had a substantial position in India for many years. We will continue to maintain that, and I suspect for the same reasons that could well grow over time as well. India is both in our technology and software services, as well as our customer experience capability.
Lastly, because of tightness of the European market, we're looking at other European countries where we can establish multilingual, sorry, not bilingual, multilingual capability. We have been looking very closely at Bulgaria as one geography where we will do that. I think you can expect our international footprint to become actually a growing part of our delivery capability over the next several years. I'm being gesticulated at by our head of IR to say we're done. Thank you very much for attending. It's great to see you all in person. Look forward to catch up conversation subsequently. Thank you.