LONDON: Capita plc (CPI.L) reported solid progress against its strategic transformation objectives in the first half of 2025, maintaining its full-year guidance despite a 4% decline in adjusted revenue and a 22% drop in adjusted operating profit.
CEO Adolfo Hernandez said the company’s Public Sector division delivered a “particularly strong performance,” with contract wins and scope expansions driving 4% revenue growth in that segment, which now accounts for 62% of Group revenue.
“The total value of contracts won increased by 17% year-on-year, with growing customer interest in our AI-driven solutions,” Hernandez said. “We are on track to deliver £250 million in cost savings by December and expect to generate positive free cash flow from the end of 2025.”
Strategic Transformation and AI Integration
Capita said it had achieved £205 million in annualised cost savings by July, up from £190 million at the end of June, with £21.5 million in cash costs incurred during H1 to deliver these savings. The company highlighted productivity gains from its technology investments, including the launch of the Capita AI Catalyst Lab and the deployment of Agentforce AI, powered by Salesforce, to support volume recruitment.
Employee engagement also improved, with a 10-point increase in the Group’s net promoter score.
Segment Performance and Financials
While Capita Public Service posted growth, the Contact Centre business saw a 20% revenue decline due to previously announced contract losses and subdued volumes in the telecommunications vertical. Pension Solutions and Regulated Services remained broadly flat, with minor declines attributed to contract handbacks and timing effects.
Adjusted operating profit fell to £42.6 million from £54.5 million a year earlier, impacted by lower revenue in Contact Centres, reinvestment in the Group, and increased payroll costs. The Group reported a statutory loss before tax of £9.5 million, compared to a £60 million profit in H1 2024, reflecting £23.4 million in restructuring costs and the impact of prior-year business exits.
Free cash outflow improved to £26.1 million from £52.5 million, supported by better operating cash flow and reduced capital expenditure. Capita also extended the maturity of its £250 million revolving credit facility by 12 months to December 2027.
Contract Wins and Outlook
Total contract value (TCV) won rose to £1.04 billion, up 17% from H1 2024, driven by strong performance in Public Service, including expansions with the Royal Navy and renewals with the Education Authority Northern Ireland and Primary Care Support England. The Group’s unweighted pipeline stands at £11.7 billion, with £4.4 billion in higher-tech opportunities.
Capita reaffirmed its full-year outlook, expecting flat adjusted revenue, mid-single-digit growth in Public Service, and a mid-teen decline in Contact Centre. Free cash flow before business exits is projected between £45 million and £65 million, with improved cash conversion of 55% to 65%.