Capita (LSE:CPI) has reported a solid operational performance during the first half of 2026, with adjusted revenue increasing by 1.6% as its Public Service and Pension Solutions businesses continued to expand. The company secured £1 billion of new contracts during the period, maintained strong key performance indicators and strengthened its financial flexibility by extending its revolving credit facility to £325 million. Capita also continued to simplify the business through the planned disposal of its private sector contact centre operations while expanding partnerships in artificial intelligence and cloud computing to support its strategy of becoming an AI-led outsourcing provider.
Despite this progress, difficulties linked to the Civil Service Pension Scheme contract are expected to have a significant financial impact this year. Higher costs associated with clearing service backlogs and delivering remediation measures are now forecast to reduce adjusted operating profit by between £25 million and £40 million in 2026, while free cash flow is expected to be lower by £35 million to £50 million. Capita said it is working closely with the Cabinet Office to improve service levels, although the additional work is also creating disruption across parts of its wider pensions business. As a result, the company now expects group free cash flow to return to positive territory in 2027, excluding the effects of planned business disposals.
Capita’s outlook continues to be constrained by weak underlying financial metrics, including losses reported in 2025, pressure on profit margins, inconsistent free cash flow generation and relatively high leverage alongside a limited equity base. While the shares have benefited from positive technical momentum and continue to trade above key moving averages, overbought indicators suggest some short-term risk. Valuation also remains challenged due to the absence of positive earnings and no stated dividend yield.
More about Capita plc
Capita plc is a UK-based provider of business process outsourcing and professional services, working predominantly with public sector organisations and pension schemes. The company delivers technology-enabled customer services, administrative support, pension administration and consulting services, while increasingly investing in artificial intelligence capabilities through partnerships with leading cloud and data platform providers.
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