Statement re Capita plc implementing significant cost reduction programme

Capita plc (Capita) implementing significant cost reduction programme

In its Half Year Results, Capita outlined that its medium-term target to double its operating margin to 6% was underpinned by cost savings of £40m per annum on an annualised basis by the end of 2024. Based on an extensive organisational review, the Group will shortly commence employee consultation programmes which are expected to deliver cost savings of £60m on an annualised basis from Q1 2024. The organisational changes proposed primarily impact indirect support function and overhead roles which mean that approximately 900 roles are at risk of redundancy. We expect to recognise exceptional costs in respect of this programme in the order of £27m in the income statement for the year ending 31 December 2023 with the cash impact expected to fall into Q1 2024.

The group continues to trade in line with its expectations, delivering positive operational and financial performance and has won contracts with a total contract value (TCV) of £2.85bn year to date (2022 full year TCV: £2.59bn).

The Group will make a pre-close statement on 14 December 2023 and the Full Year Results announcement is planned for 6 March 2024.

Jon Lewis, Chief Executive Officer, said: “We are, today, announcing the accelerated delivery of the efficiency savings announced in our Half Year Results with a £20m increase in overhead cost reduction to £60m on an annualised basis from Q1 2024.

As part of the organisational review which underpins the programme we are announcing today, we continue to identify further areas of cost efficiency and will pursue these during 2024.”