Capita Business Services Ltd

The principal activity of the Company continued to be that of the provision of outsourcing services. These services consist of: taking complete responsibility under long term contracts for a range of integrated comprising customer services, IT, business support and consultancy ; and providing administration and related services Review of business As shown in the Company's income statement on page 16 , revenue has increased from £ 1,341.4m in 2024 to £ 1,443.8m in 2025 and the Company's operating profit has increased from £68.1m in 2024 to £98.5m in 2025. The increase in revenue reflects the benefit from the Health Assessment Advisory Service contract win, the Disabled Students Allowance contract, growth on the contract with Transport for London, including the opening of the Silvertown Tunnel, and scope expansion on the Royal Navy training contract and extension of the Primary Care Support England contract, partly offset by the flow through of contracts lost in previous years. The Group implemented a multi-year cost reduction programme in November 2023 to deliver annualised savings of £60m by Q1 2024. The programme was extended in March 2024, to deliver further annualised savings of £100m by mid-2025. In December 2024, reflecting on the progress made ahead of schedule with £140m annualised savings already delivered, and increased confidence in the level of efficiencies that can be delivered, the cost reduction target increased from £160m to £250m, which was achieved by the end of 2025. A charge of £9.0m (2024: £1.6m) has been recognised by the Company in the year ended 31 December 2025 for the costs to deliver the cost reduction programme. This includes redundancy and other costs of £7.7m (2024: £5.4m) to deliver a reduction in headcount and a charge of £1.3m arising from the rationalisation of the Group's property estate (2024: a credit of £3.8m reflecting the successful exit of a number of properties which had been provided for previously). The cumulative cost recognised since the commencement of the cost reduction programme is £40.4m (2024: £31.4m), which is included within administrative expenses. Since the targeted savings were delivered by the end of 2025, no further expenses to deliver this cost reduction programme are expected beyond the end of 2025. On 26 March 2026, the Group agreed to sell its private sector contact centre business to Inspirit Capital for £1 with £6.5m cash retained in the business upon completion for normal working capital purposes. In addition, there is potential contingent consideration payable to the Group up to a cap of £61.5m, expected to be paid in 2027 and 2028; with £50.0m based on future financial performance of the disposed business and £11.5m based on cash availability. The sale is expected to be completed in June 2026, subject to regulatory approvals. The Company’s direct investment in Capita Business Support Services Ireland Limited forms part of the sale perimeter, and the Company will receive potential contingent consideration payable to the Company of up to £7.5m expected to be paid in 2027 and 2028 which is based on future financial performance of the disposed investment. Accordingly, the investment in Capita Business Support Services Ireland Limited was impaired by £1 as at 31 December 2025 in advance of its planned disposal. The increase in operating profit is a reflection of net benefit from the revenue flow-through on new and expanded contracts and material savings delivered through the cost reduction programme, partly offset by continued reinvestment in technology solutions, and a £5.8m impact from the rise in National Insurance introduced in April 2025.