Capita (CPI) Investor update summary

Strategic rationale and transformation

• Disposal of the commercial/private sector contact center business to Inspirit Capital enables a sharper focus on core strengths, AI-led BPO, and technology-enabled transformation in public sector and pensions markets.

• The transaction supports a shift toward complex middle and back office opportunities, with the divested business better positioned for growth under new ownership.

• Significant transformation progress achieved, including cost base improvements, digital investments, and resolution of legacy issues.

• Margin expansion and material overhead reduction expected post-transaction, with a leaner, more resilient business model.

• The deal is expected to benefit shareholders, customers, and employees, aligning with a vision for a focused, growth-oriented business.

Transaction details and financial impact

• Sale price is £1, with £6.5m cash retained in the business for working capital; potential contingent consideration up to £61.5m based on future performance and cash availability.

• Transaction perimeter includes 2025 adjusted revenue of £398.1m and an adjusted operating loss of £34.9m.

• The sold perimeter contributed £35m losses and £16m cash outflows in 2025, while retained contracts were profitable.

• Net lease benefit of £26.2m, with three underutilised properties and £10m annual lease cost retained.

• £25m–£36.4m of group costs remain, offset by £40m in annualised savings from simplification; £20m in restructuring and separation costs expected.

Cost savings and operational simplification

• £40m in annualised cost savings targeted by 2027, with £25m from stranded costs and the remainder from further simplification.

• Savings expected to be phased over three six-month periods post-completion, with efforts to accelerate where possible.

• Confidence expressed in full delivery of the £40m savings, building on previous successful cost reduction programs.

• Opportunity exists to restructure £65m in retained lease liabilities for further cost efficiency.

• Expected to deliver approximately 200bps improvement in adjusted operating margin by 2027.