Capita runs outsourced services for UK government and regulated industries: pension schemes, training, road charging and customer contact. Since 2024 it has cut about £250m of annual costs and sold businesses to repair its balance sheet, but revenue has kept shrinking in contact centres. Its biggest new contract, the Civil Service Pension Scheme, has gone badly and pushed its cash-flow target out to 2027.
Back-office work for the state, now sold as AI-enabled
Capita calls itself an AI-enabled business services partner. It takes over processes that governments and regulated firms prefer not to run themselves. In 2025 Public Service was 66% of adjusted revenue, Contact Centre 24% and Pension Solutions 9%.
Public Service work includes Royal Navy training (a contract worth about £1.3bn in total), the Gas Safe Register, Transport for London's road user charging and the BBC's TV Licensing. It also covers NHS primary care support in England and IT for 1,104 schools in Northern Ireland. Pension Solutions administers schemes such as the Royal Mail and Civil Service pension schemes. The private sector contact centre business has just been sold. 10 Mar 2026 11 Feb 2025 29 Jan 2025 3 Aug 2026 27 Jan 2026 12 May 2025 1 Apr 2025 2 Jul 2024 4 Aug 2026
New chief executive, deep cuts and asset sales
Adolfo Hernandez joined as CEO in January 2024. In November 2023 the company announced a £60m annual savings programme with about 900 redundancies. In March 2024 it added £100m more, then raised the total to up to £250m by December 2025 in December 2024.
It sold the travel businesses (£17m), 75% of Fera Science (£62m) and the Capita One software unit (£180m net). It also began exiting the loss-making closed-book Life & Pensions unit. The proceeds cut net financial debt from £182m at end-2023 to £66m at end-2024. Revenue fell anyway, as contract losses and falling telecoms call volumes hit Contact Centre. Goodwill write-downs of £75m in 2024 and £74m in 2025 followed.
In June 2024 management set medium-term targets of low to mid-single digit revenue growth, a 6-8% operating margin, 65-75% cash conversion and debt of 1x earnings or less. Positive free cash flow was promised from the end of 2025. 21 Nov 2023 15 Nov 2023 18 Jan 2024 5 Sep 2024 6 Mar 2024 13 Jun 2024 17 Dec 2024 5 Mar 2025 10 Mar 2026
The savings land, but the old problems linger
Capita reported the full £250m of savings in December 2025. Adjusted operating profit for 2025 rose 34% to £114m, a margin of 5.2%. Contact Centre revenue fell 17.5%, and free cash flow stayed negative at £54m before business exits. The company paid a £14m penalty to the data regulator, the ICO, over its 2023 cyber attack.
In December 2025 it agreed to hand its last two Life & Pensions contracts back to Royal London. It paid £22m in new shares and expects about £20m a year of cash outflow during a five-year migration. A 15-for-1 share consolidation took effect in April 2025. The shares rose from about 183p in April 2025 to 405p in December 2025. 12 Dec 2025 10 Mar 2026 15 Oct 2025 12 Dec 2025 15 Dec 2025 28 Apr 2025
A pension contract goes wrong, and the contact centres go
Capita won the Civil Service Pension Scheme (a 10-year, £239m contract) in November 2023. It went live in December 2025 and inherited a backlog of 86,000 cases, far above forecast. Service has been poor since. Capita now expects a £25-40m hit to 2026 adjusted operating profit and a £35-50m hit to free cash flow. A ministerial statement followed in July 2026, and the National Audit Office is reviewing the administration.
In March 2026 Capita agreed to sell its private sector contact centre business to Inspirit Capital for £1, with up to £61.5m more depending on later performance. The unit had £398m of 2025 revenue. The sale completed on 31 July 2026. Management expects about 200bps of margin improvement by 2027 and £40m of extra annual savings. The shares fell from 399p in May 2026 to about 216p by October. 20 Nov 2023 10 Mar 2026 7 Jul 2026 9 Jul 2026 2 Oct 2026 26 Mar 2026 3 Aug 2026 4 Aug 2026
Costs came down faster than revenue stabilised
Cost cutting worked. Capita hit its £250m savings target and lifted margins. Revenue in telecoms-driven contact centres kept falling, and the company chose to sell the business rather than fix it. The Civil Service Pension Scheme shows the risk of mobilising a huge contract on an inherited backlog.
The free cash flow target has slipped. Positive free cash flow was promised from the end of 2025 in June 2024. In March 2026 the guide was £20-40m for 2026. By July 2026 the company expected positive free cash flow before business exits only in 2027. Regulators have also cost the group money. Ofgem cut its proposed disallowance of Smart DCC costs from £31m to £11m and fined Smart DCC £200k in July 2026. 13 Jun 2024 10 Mar 2026 26 Mar 2026 9 Jul 2026 11 Mar 2026 8 Jul 2026
A CEO who has cut deep, and an activist on the board
Hernandez succeeded Jon Lewis in 2024. Pablo Andres replaced retiring CFO Tim Weller in July 2024. In March 2026 Hernandez and Andres each bought about £100k of shares, and several senior executives bought shares too.
Oasis Management holds 15.2% and gained a board seat in May 2026 through Daniel Wosner. It has agreed to keep its stake between 10% and 20%. Schroders holds 12.9%. Several independent directors have left over the period, and Radhika Chadwick joined from September 2026. The record is mixed. Hernandez delivered the cost target but not the cash-flow date or revenue growth. 9 Nov 2023 2 May 2024 18 May 2026 11 Mar 2026 16 Mar 2026 3 Aug 2026 17 Aug 2026
Profit down sharply, wins up, debt costlier
In the first half of 2026 adjusted revenue rose 1.6% to £906m. Adjusted operating profit fell 32% to £32m because of extra costs on the pension contract. Net debt rose to £500m, and net financial debt before leases was £200m, against £87m a year earlier.
Capita won £998m of contracts, including a £425m Transport for London renewal signed in July. It extended its revolving credit facility to £325m to June 2029 and issued $55m of notes at 7.54%. Lenders agreed to a looser interest-cover covenant, 3.0-3.5x instead of 4.0x. In September it added £30m of bank facilities. Management says: "We recognise that the service delivered on the Civil Service Pension Scheme has not been good enough since the transition in December 2025." 4 Aug 2026 3 Aug 2026 22 Jul 2026 25 Sep 2026 9 Jul 2026
“We recognise that the service delivered on the Civil Service Pension Scheme has not been good enough since the transition in December 2025.” 4 Aug 2026
Positive cash flow pushed to 2027; new targets due 4 November
Management expects positive free cash flow, excluding business exits, in 2027. It targets £40m of extra annual savings by the end of 2027; £8m had been actioned by June 2026. Capita kept three underused properties in the sale, with a lease liability of about £65m and a cost of about £10m a year. It is in talks to cut that cost.
Capita will set new medium-term targets and capital priorities at a Capital Market Event on 4 November 2026. The refresh had earlier been promised for 17 June, then for after the summer. The Civil Service Pension Scheme backlog is the top priority. The Synergy contract for four government departments (£370m) goes live in summer 2027. The Teachers' Pension Scheme contract is due to move to a new provider within 12 months of May 2026. 4 Aug 2026 9 Jul 2026 18 May 2026 4 Mar 2026 26 Mar 2026
Written by AI from Capita's own announcements since Oct 2023 · every paragraph links to its sources