Capita (LON:CPI) executives outlined the strategic rationale and financial terms of the group’s announced disposal of its commercial contact center business, describing the move as a further step in simplifying the company and sharpening its focus on complex middle- and back-office services.
Speaking alongside finance leadership during a webcast, management said the contact center operation has been significantly improved in recent years—better equipped, retaining customers, and delivering higher-quality solutions—but now requires a different set of capabilities and investment dynamics in the commercial market. Capita said it believes the business is better suited under different ownership, while the group concentrates on areas where it “wins often,” including public sector and pensions-related work that relies on Capita’s middle- and back-office strengths.
Transaction terms and consideration structure
- Headline sale price: GBP 1, with GBP 6.5 million of cash left in the business for normal working capital needs.
- Potential additional consideration: Up to GBP 61 million in total, including GBP 11.5 million payable based on future cash availability in the sold business and up to GBP 50 million as an earn-out tied to future financial performance.
- Value-sharing mechanism: A mechanism applies if the business is sold within five years.
When asked about the performance conditions, management said the contingent consideration is based on delivering the business plan for 2026 and 2027, with payments “at the beginning of the next period.” On expectations for the contingent proceeds, executives said they were being prudent, but added that the GBP 11.5 million portion is based on liquidity and is not described as dependent on achieving the business plan, while the GBP 50 million earn-out is tied to plan delivery.
Financial perimeter and contact center results
Management provided context on the scope of what is being sold versus retained, referencing 2025 results and how the transaction perimeter aligns with those figures. The commercial contact center perimeter being sold was described as loss-making in 2025, contributing GBP 35 million of losses and GBP 16 million of cash outflows.
By contrast, Capita said the contracts retained outside the sale perimeter were profitable, contributing GBP 17.9 million of profits and GBP 23.1 million of positive free cash flows. The company also highlighted that GBP 36.4 million of group costs are retained, including GBP 25 million of overhead costs that it expects to be offset through a cost savings program, plus GBP 11 million associated with retained leases.
Leases, separation costs, and timing
Capita said net leases of GBP 26 million are transferred with the sold perimeter, comprising GBP 18.1 million of lease liabilities for operational facilities plus an additional operational facility sublet by Capita for GBP 8.1 million.
The group will retain three large underutilized properties with a stated lease liability of GBP 65 million. Management said these retained properties carry P&L and cash costs of around GBP 10 million per annum—described as half of the GBP 20 million underutilized property cost referenced at year-end—adding that there may be an opportunity to restructure the leases in the future. Executives said they may explore ways to work with landlords or other companies to replace some IFRS 16 lease debt with financial debt at similar levels, potentially reducing ongoing costs such as rent-related expenses, rates, security, and maintenance.
Capita expects to incur GBP 20 million of transaction restructuring and separation costs in the current year. Management said roughly half relates to transaction costs and half to complex separation costs, with Capita funding up to GBP 10 million of those separation costs. Completion is expected before the half-year results, subject to regulatory approvals. On regulatory concerns, the company said it does not anticipate issues and characterized the process as administrative.
Cost savings program and profitability outlook
Management said the transaction enables further simplification and supports a GBP 40 million savings program to be delivered by the end of 2027. The company explained that GBP 25 million of the savings relates to “stranded” group overhead costs previously allocated to the contact center business, with the balance reflecting additional simplification as the group becomes more focused.
On phasing, management said it was still working through the plans, but suggested that if completion occurs on July 1, a “third, a third, a third” approach across three six-month periods would be a reasonable initial assumption, while also stating an intent to accelerate delivery where possible. Executives also expressed high confidence that the GBP 40 million savings would flow through to profit, citing previously delivered savings programs.
Capita also stated that after simplification and addressing stranded costs, it expects a 200 basis point improvement in operating profit from 2027. Management referenced a “before and after” view and discussed moving “from 5.2 to 7.2 by 2027,” while noting it viewed additional opportunity beyond that but considered it premature to outline further.
Strategic focus: AI-led BPO and retained capabilities
Executives said the group’s strategy remains to become an “AI-led business process outsourcer,” but with increased emphasis on complex middle- and back-office opportunities. Management described this as a growing market where complexity provides differentiation, allowing Capita to deploy its AI services capabilities. The company said the majority of what remains is public sector and pensions, which it characterized as well-performing businesses.
In Q&A, management said Capita is not exiting contact center capabilities entirely, noting it will continue to perform contact center work embedded within broader contracts. Executives cited examples including work connected to the BBC and other citizen-support services, stating that certain contracts historically sat in the wrong bucket and are being realigned. Management said the technology capability and “agent suite” capabilities it built would remain within Capita, along with hyperscaler investments, and that Capita would support the separated contact center business through post-separation arrangements.
The company said it plans to provide more detail on strategy, targets, and implications at a Capital Markets Day scheduled for 17 June.
About Capita (LON:CPI)
Capita is a modern outsourcer, helping clients across the public and private sectors run complex business processes more efficiently, creating better consumer experiences. Operating across 8 countries, Capita’s colleagues support primarily UK and European clients with people-based services underpinned by market-leading technology. We play an integral role in society – our work matters to the lives of the millions of people who rely on us every day.
