REG-Capita Plc: Trading update for the five months ended 31 May 2025

CapitaAnnouncement

Today 07:02

17 June 2025

Trading update for the five months ended 31 May 2025

Capita plc (“Capita”)

Continued progress and growing momentum in AI solutions. On track to deliver
full year expectations

Summary:
* Re-iterating full year 2025 financial guidance of broadly flat revenue,
operating margin improvement weighted to the second half of the year
* Continue to expect the Group to be free cash flow positive from the end of
2025
* Strong focus on driving product innovation, to deliver scalable and
repeatable solutions for clients and Capita around evolving market
opportunities
* First use of ‘Agents’ (Agentic AI1), with Agentforce AI, powered by
Salesforce
* Over 200 AI use cases identified within Capita AI Catalyst Lab to drive
efficiencies and higher quality; number of products launched in H1 with
further launches planned in the second half
 

Adolfo Hernandez, Chief Executive Officer, said:

“At our Capital Markets Day in June 2024, we laid out our strategy to
improve profitability and cash generation. We also set out a vision of
partnering with technology hyperscalers to improve the agility of the business
around client needs. We are making good progress on these initiatives and our
operational momentum continues to grow.

“In recent months, client interest in agentic AI1 solutions has grown
exponentially. We are reinvesting a portion of our efficiency savings into new
technology solutions, particularly those underpinned by AI and we are focused
on bringing these technology solutions to more clients. I’m pleased to see
the positive response and impact our new AI solutions are having and look
forward to sharing more detail at our H1 2025 results presentation on 5
August.”

 

Financial update:

In line with expectations, the Group’s adjusted revenue2 was 4.5% lower in
the five months ended 31 May 2025.
* Capita Public Service grew 2.3%, with growth from contracts in Central
Government more than offsetting the impact of previously announced prior year
losses including Electronic Monitoring Service and contracts in Local Public
Service
* Contact Centre was 21.1% lower, reflecting the impact of previously
announced losses and subdued volumes on contracts in the telecommunication
vertical. We expect the impact of the subdued telecommunications contracts to
annualise in the second half of the year
* Pension Solutions was 1.1% lower, reflecting the completion of some
short-term contracts which more than offset the benefit from a number of wins 
* Finally, the Regulated Services business, which we are actively engaged in
exiting, increased 6.4% reflecting the one-off benefit from a termination exit
fee and deferred income release from a contract in the Mortgage Software
business, which more than offset the impact of contract hand backs in this
area
In the five months to 31 May, the Group won contracts with a Total Contract
Value (TCV) of £969m, up 24% from the same period in 2024, with year to date
TCV won up over 70% in Capita Public Service which more than offset the 49%
reduction in TCV won in the Contact Centre business.

Material wins include renewals with Southern Water, Education Authority
Northern Ireland, Primary Care Support England (PCSE), where our PCSE Online
self-service platform continues to drive transformational opportunities and
operational efficiency. There were expansions of scope with the Royal Navy,
which was operationally effective in May, and with a client within Pension
Solutions.

 

Embedding technology, including transformative AI, to drive efficiency:

We continue to make progress against our strategic pillars as set out a year
ago at our Capital Markets Day and we are making good operational progress to
future-proof the business in line with our expectations. AI is driving a
significant technological revolution, and our refreshed operating model allows
us to be at the forefront of these changes for our clients.

Our first priority is to improve the Group’s operating margin, while
maintaining cost consciousness. We are building a leaner organisation,
reinvesting in the technology core of the business and deepening our own AI
skills, developing products and forging new partnerships. Examples include our
internal use of Microsoft Copilot, with around 150,000 interactions every
month, and our Multiverse AI apprenticeship partnership. As at 13 June, the
Group has achieved £185m of annualised cost savings and is on track to
deliver the target of £250m annualised savings by December 2025.

We are using Capita as ‘client zero’ to test solutions before rolling them
out to our customers in some cases. For example, we have transitioned to
ServiceNow for our internal IT and people support for 25,000 colleagues, as
the first step to delivering more efficient colleague support.

This year we were one of the first companies in Europe to utilise Agentforce
AI, powered by Salesforce, to drive volume recruitment and reduce the employee
recruitment process from weeks to hours. This forms the first use of AI
‘Agents’ or agentic AI1 across the Group, which is an area we will be
expanding on going forward. So far we have identified over 100 agentification
opportunities across the Group.

We have also launched the Capita AI Catalyst Lab, a dedicated internal team
focused on identifying, testing and scaling AI solutions, both internally and
externally. Since inception, over 200 use cases have been identified across
all areas of the Group, with five products now launched and an additional five
products in the detailed testing stage.

We are investing in and upskilling our people with our AI, Data and Technology
Academy. So far this year, over 10,000 digital learning courses in the Academy
have been completed by colleagues across the organisation and over 600
individuals have commenced a Management and Leadership apprenticeship to
continue their professional development.

 

Financial guidance unchanged

As previously outlined within the Group’s 2024 Full Year Results, we expect
Group adjusted revenue2 to be broadly flat in 2025, with an improvement in
operating margin driven by the ongoing £250m cost reduction programme.

We are on track to deliver the cost reduction programme by December 2025 and
continue to expect the margin benefit to be weighted to the second half of the
year, reflecting the Contact Centre revenue reduction and cost pressures in
the first half driven by the timing of the Group’s pay review and additional
National Insurance Contributions.

We continue to expect a free cash outflow3 of between £45 - £65m for the
full year, which includes £55m cash cost to deliver the cost reduction
programme. We expect the free cash outflow3 across the Group to be weighted to
the first half of the year, with an increase in net financial debt
accordingly. We continue to expect the Group to be free cash flow positive
from the end of 2025.

We remain confident of delivering the Group’s medium term adjusted operating
margin target of 6 – 8%.

 

Notes:
1. Agentic AI refers to artificial intelligence systems capable of autonomous
decision-making and adaptive behaviour to perform actions.
2. Adjusted revenue = revenue on a like-for-like basis, as outlined in the
Group’s alternative performance measures note.
3. Free cash flow, before the impact of business exits.
 

For more information, please contact:

Investor enquiries
Helen Parris, Director of Investor Relations
Tel: 07720 169 269
Email: IRteam@capita.co.uk

Stephanie Little, Deputy Head of Investor Relations 
Tel: 07541 622 838
Email: IRteam@capita.co.uk

Media enquiries
Capita external communications
Tel: 0207 654 2399
Email: m (mailto:media@capita.co.ukm)edia@capita.co.uk 

 

About Capita plc

Capita is a modern outsourcer, helping clients across the public and private
sectors run complex business processes more efficiently, creating better
consumer experiences. Operating across eight countries, Capita’s 34,000
colleagues support primarily UK and European clients with people-based
services underpinned by market-leading technology. We play an integral role in
society - our work matters to the lives of the millions of people who rely on
us every day.



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