12th Dec 2025 12:17
(Alliance News) - Capita PLC on Friday said it has exited from its closed book Life & Pensions business as it reached a transition agreement for its remaining contracts, and said revenue was "broadly consistent" with the first half.
The London-based outsourcing company said it will make an initial payment to Royal London Mutual Insurance Society Ltd of approximately GBP22.5 million.
Royal London's legacy business is Capita's last client in Life & Pensions, marking the exit of the two remaining legacy closed book contracts in this segment.
The agreement provides an option, exercisable by either Royal London or Capita, for the initial payment to be settled through the issue to Royal London of 5.7 million ordinary shares, representing approximately 5.0% of the group’s issued share capital, Capita said.
The company added that, if this option is exercised, the newly issued shares will be subject to customary lock-up arrangements during the migration period, which is expected to last five years.
Capita will also pay Royal London a further contribution towards its costs, consisting of three payments, each of GBP10 million, which are expected in 2031, 2032 and 2033.
Capita said the closed book Life & Pensions business has been "challenging". Since 2023, it said it has has entered into a number of transition agreements for the other contracts within this business which are being migrated over the coming years.
Along with the progress made in the other contract transition agreements, Capita expects a free cash outflow of GBP20 million per annum during the five-year migration period.
"Resolving the challenges in the closed book Life & Pensions business was a key priority for 2025 and we are extremely pleased to have reached a settlement with Royal London to migrate the remaining two evergreen contracts within this business in a smooth and collaborative manner," said Chief Executive Adolfo Hernandez.
"This marks the completion of a key element of our 'manage for value' strategy, eliminating a significant future annual cash outflow from the group and enabling us to focus fully on areas where we can deliver sustainable value."
Capita on Friday also said its adjusted revenue performance was "broadly consistent" with the first half in a trading update for the 11 months to November 30. The company reported GBP1.16 billion in revenue in its first half results.
For financial 2025, the company said it expects growth in Public Service to be slightly below mid-single digit, with a high-teen digit reduction in Contact Centre and low single digit growth in our Pension Solutions business.
Last year, Capita reported an adjusted revenue of GBP1.39 billion in Public Service, GBP650.9 million in Contact Centre and GBP179.0 million in Pension Solutions.
"While some challenges remain, we are making good progress and continue to work hard to build a better Capita," CEO Hernandez added.
Shares in Capita rose 2.9% to 407.94 pence on Friday afternoon in London.
By Roya Shahidi, Alliance News reporter
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