Capita (CPI) H2 2025 earnings summary

Executive summary

• Achieved significant progress in 2025, transforming into a leaner, more efficient, and technology-driven organization, with AI now a core operational reality.

• Delivered £250m annualized cost savings, improved operating margin by 140bps to 5.2%, and launched AI Catalyst Lab and Stack.

• Over 60% of revenue now served from public cloud; 300 AI agents live across the group, boosting productivity.

• Employee engagement and Net Promoter Scores reached all-time highs, with CNPS at +31 and total contract value won up 36% to over £2bn.

• Addressed longstanding legacy issues, including closed book life and pensions and ICO settlement, streamlining the business.

Financial highlights

• Revenue: £2,199.5m, down 1.2% year-over-year; operating profit: £113.5m, up 34.2%.

• Group operating margin increased by 140 basis points to 5.2%, driven by a £250 million cost reduction program.

• Profit before tax improved by 84% year-over-year, with cash conversion rising to 74%.

• Free cash outflow halved to £54 million, including £53 million for cost reduction and £40 million ICO settlement.

• Net debt increased to £461.6m, with financial net debt to EBITDA at year-end at 1x.

Outlook and guidance

• Positive free cash flow of £20–40 million expected in 2026, with low single-digit group revenue growth.

• Margins expected to see a small reduction due to Contact Centre challenges and contract mobilization costs, with benefits in H2 2026.

• Cash conversion forecasted at 70–80%, with improvements anticipated in the second half of 2026.

• Net debt to remain broadly aligned with 2025; revenue and margin growth weighted to H2.