Capita shares slide as pension contract costs weigh on H1 profit

4th Aug 2026 14:33

(Sharecast News) - Shares in Capita fell sharply on Tuesday after additional costs associated with its troubled Civil Service Pension Scheme contract drove a steep decline in first-half adjusted profit.

The stock finished down 5.6% at 251p after adjusted operating profit was reported to have fallen 31.6% year-on-year to £32.2m in the six months ended 30 June, as the adjusted operating margin narrowed to 3.6% from 5.3%. Adjusted profit before tax dropped 57% to £12.5m.

The decline primarily reflected further expenditure on the Civil Service Pension Scheme contract, alongside the non-repeat of a £6m contract-exit benefit recorded in the prior year. Capita expects the contract to reduce full-year adjusted operating profit by between £25m and £40m.

Reported revenue declined 1.3% to £948.3m. Growth in the Public Service and Pension Solutions divisions was offset by a decline in Regulated Services, a marginal decline in the retained Contact Centre business and lower revenues from contracts in closed book Life & Pensions as the company exits this business.

Free cash flow swung to an outflow of £23.6m from an inflow of £1.1m a year earlier, while net financial debt increased to £200.4m.

Capita maintained its full-year financial guidance, forecasting broadly flat adjusted revenue and a lower adjusted operating margin. Free cash flow excluding business exits is expected to be an outflow of between £35m and £50m.

Chief executive Adolfo Hernandez said: "While the operational challenges on the Civil Service Pension Scheme remain our immediate priority, we are confident that we have the right processes, technology and leadership in place to achieve service levels and deliver for members."

The outsourcing group secured contracts worth £998m during the half, up 15%, while its unweighted sales pipeline increased to around £24.4bn from £18.6bn at the end of 2025.

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