Capita (CPI) H2 2024 earnings summary

Executive summary

• 2024 was a foundational year marked by deep transformation, technology focus, efficiency, and leadership changes including a new CEO and CFO, with expanded segmental reporting for transparency.

• Revenue declined 8% year-over-year to £2,369.1m, mainly due to prior contract losses and lower Contact Centre volumes.

• Adjusted operating profit rose 5.5% to £95.9m, with margin up 50bps to 4.0%, driven by £90m in cost savings.

• The company leveraged AI and hyperscaler partnerships to drive operational improvements and innovation.

• Significant cost savings and organizational restructuring achieved, with a focus on sustainable growth and improved customer outcomes.

Financial highlights

• Group revenue declined by 8% year-over-year due to prior contract losses, delayed mobilizations, and exit from low-margin contracts.

• Operating profit increased by 5.5%, driven by £90m in cost savings, despite revenue reductions and non-repeat of prior year one-offs.

• Operating margin improved by 50bps to 4.0% in 2024.

• Free cash flow was an outflow of £122m, reflecting pension deficit payment end, cyber incident costs, and efficiency program investments.

• Net financial debt reduced to £415.2m from £545.5m, with net financial debt to EBITDA at 0.5x.

• £171m gain from disposal of Fera and Capital One; £75m goodwill impairment in contact centers.

Outlook and guidance

• 2025 revenue expected to be broadly flat, with growth in Public Service and Pensions offset by declines in Contact Centre and Regulated Services.

• Operating margin to show modest improvement; free cash outflow before business exits of £45m–£65m expected, turning positive by year-end.

• Committed to delivering £250m annualized cost savings by end of 2025.

• Medium-term targets reiterated: 6%-8% operating margin, low to mid-single digit revenue growth.

• Share premium cancellation and 15-for-1 share consolidation planned, subject to approval.