Embracing
change
Capita plc Annual Report and Accounts 2023

Capita is a leading provider of business
process services, driven by data, technology
and people.
We operate in the UK, Europe, India and South Africa – and across two core divisions:
Capita Public Service and Capita Experience.
Every day our 43,000 colleagues touch the lives of millions of people, by delivering
innovative, digitally enabled solutions to transform and simplify the connections between
government and citizens, businesses and customers.
Under new leadership our priorities for 2024 and onwards will be to:
• Define and refine Capita’s formula for winning in its markets;
• Ensure we deliver efficiently and effectively for our customers each and every time;
• Capture greater economic value from our core business;
• Deliver sustainable free cash flow and improving shareholder returns; and
• Rally our leadership team, motivate our colleagues and reset our culture.
We will embrace the changes we need to deliver on our objectives.

Contents
CEO’s review Responsible business
Strategic report Corporate governance Financial statements
66 Chairman’s report
68 Governance at a glance
70 Board members
72 Corporate governance report
79 Nomination Committee report
84 ESG Committee report
87 Audit and Risk Committee report
96 Directors’ remuneration report
119 Directors’ report
125 Independent auditor’s report
147 Consolidated financial statements
153 Notes to the consolidated financial statements
218 Company financial statements
220 Notes to the Company financial statements
229 Additional information
230 Alternative performance measures (APMs)
Cautionary statement
The directors present the Annual Report for the year ended
31 December 2023, which includes the strategic report,
corporate governance reports and audited accounts for
the year. Pages 1 to 123 of this Annual Report comprise
a report of the directors which has been drawn up and
presented in accordance with English company law, and
the liabilities of the directors in connection with that report
shall be subject to the limitations and restrictions provided
by such law. Where the directors’ report refers to other
reports or material such as a website address, this has
been done to direct the reader to other sources of Capita
plc information which may be of interest. Such additional
materials do not form part of this report.
2 Financial and non-financial highlights
4 Capita at a glance
5 Investment case
6 Chairman’s statement
8 Chief Executive Officer’s review
13 Our markets
14 Operating review
14 Public Service
19 Experience
22 Chief Financial Officer’s review
29 Responsible business
30 At a glance
32 Our people
38 Community
40 Planet
43 Operating responsibly
45 Engaging with our stakeholders
49 NFSIS
50 TCFD
57 Risk management and internal control
64 Viability statement
This Annual Report, other corporate publications, our
latest news and announcements, and more information
about us is available on our website, www.capita.com
Read our CEO review on pages 8 to 13
Read more about our approach to being a responsible
business on pages 29 to 56
Capita plc Annual Report and Accounts
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Strategic report

Reviewing our performance
The Group delivered further progress in 2023 in terms of adjusted revenue and profit growth and new contract wins/
extensions. These were supported by positive customer and employee feedback as measured by cNPS and eNPS,
respectively. The Group’s balance sheet has been strengthened by the final disposals under the portfolio programme
but, with a substantial cash outflow in 2023 and a further, albeit smaller, outflow expected in 2024, significant cost
saving programmes are being implemented to underpin the goal of sustainable positive free cash flow generation.
Reported (loss)/profit before tax
£(106.6)m
(2022: £61.4m)
Reported basic earnings/(loss)
per share
(10.60)p
(2022: 4.47p)
Adjusted profit before tax
1
£56.5m
(2022: £49.8m)
Adjusted basic earnings per share
2
1.70p
(2022: 2.64p)
Free cash flow
3
£(154.9)m
(2022: £(31.5)m)
Free cash flow before the impact of
business exits
3
£(115.5)m
(2022: £(42.4)m)
Reported revenue
£2,814.6m
(2022: £3,014.6m)
Adjusted revenue
1
£2,642.1m
(2022: £2,609.0m)
1. Capita reports results on an adjusted basis to aid understanding of business performance. Refer to alternative performance measures (APMs) on pages 230 to 233.
2. Refer to note 2.7 to the consolidated financial statements.
3. Refer to note 2.9 to the consolidated financial statements.
Read more in the Chief Financial Officer’s review on pages 22 to 28
2023 financial highlights and KPIs
Highlights Financial
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Read more in the Responsible business section on pages 29 to 56
Customer net promoter score
4
+16pts
(2022: +26pts)
Diversity: gender F/M/other and did
not disclose
50:49:1%
(2022: 49:51%)
Suppliers paid within 60 days
5
99%
(2022: 99%)
CO
2
emissions (location-based)
Scope 1, 2 and 3 (tCO
2
e)
40,456
(2022: 39,287)
Reduction in carbon footprint
7
(location-based)
37%
(2022: 47%)
Total shareholder return (TSR)
(9.3)%
(2022: (33.5)%)
Voluntary employee turnover
24%
(2022: 30%)
Diversity: ethnicity
6
37:22%
(2022: 37:24%)
Reduction in carbon footprint
8
(market-based)
58%
(2022: 65%)
Employee net promoter score
-4pts
(2022: -9pts)
Employee engagement index
67%
(2022: 65%)
4. 2022 comparative restated to exclude the disposed of Portfolio businesses.
5. Data includes invoices paid through Capita UK companies.
6. White:Black, Asian and minority ethnic. 41% of people chose not to respond or not to specify.
7. Reduction in carbon footprint based on emissions per headcount from 2019 baseline. See pages 40 to 42 for more information.
8. Scope 3 for business travel only. See pages 40 to 42 for more information.
2023 non-financial highlights and KPIs
Highlights Non-financial
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Striving to create better outcomes for all our stakeholders.
At a glance
Understanding Capita today
Capita Public Service
2023 progress
• Strong delivery in our chosen
market verticals
• Focus on partnering and
customer centricity
• Maintained our operational delivery
with average KPI performance of 94%
• Won total contract value of £1,924m,
an increase of 57% from 2022
• Established second client advisory
board in Central Government vertical
• Customer net promoter score +27
2024 strategic priorities
• Maintaining our consistent delivery
to clients
• Partnering effectively with customers
• Building on growth momentum
• Improving margin achievement with
efficient delivery
• Right-sizing of business and reduction
in overhead costs
Capita Experience
2023 progress
• Experience is recognised by
Everest Group at the top of the
Major Contenders group in their
2023 EMEA Customer Experience
Management Services PEAK Matrix
• Reduced annual voluntary employee
attrition by 5%
• Operational delivery consistently
high with average KPI performance
of 94%, excluding the pensions
administration business. 82%
including pensions
• Won total contract value of £1,112m,
a decrease of 19% from 2022
• Customer net promoter score +10
2024 strategic priorities
• Right-sizing cost base
• Expanding our geographical footprint
in Europe
• Continuing to partner with technology
providers to deliver effective IT
transformations for customers
Capita Group
Our purpose
Group governance, support services and risk management
Key growth levers
Technology and
digital innovation
Effective customer delivery
and strong relationships
Talent and
market expertise
Capita Public Service Capita Experience
Adjusted revenue
1
contribution:
55%
2022: 56%
1. Refer to alternative performance
measures (APMs) on pages 230
to 233.
Adjusted revenue
1
contribution:
45%
2022: 44%
1. Refer to alternative performance
measures (APMs) on pages 230
to 233.
Individual structural growth markets
Public Service is the number one
2
strategic supplier of software and
IT services (SITS) and business
process services (BPS) to the
UKGovernment.
2. TechMarketView
Experience is one of Europe’s
leading customer experience
businesses. It is the market leader
in the UK
3
and ranks fourth in
Germany
3
and Europe
3
.
3. NelsonHall
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Driving change to create value
How we will create value
We will
create value
by embracing
change through:
Ensuring we deliver
efficiently and
effectively for our
customers each
and every time
2
Clear growth
strategy; defining
and refining Capita’s
formula for winning
in its markets
1
Leveraging our
expertise and
relationships with
our broad, deep and
loyal customer base
3
Embracing digital
solutions and
turbocharging
relationships with
technology partners
5
Capturing greater
economic value from
the business
4
Rallying our
leadership team,
motivating our
colleagues and
resetting our culture
6
Continuing our
disciplined approach
to corporate
governance and
risk management
Strengthening
commitment to
achieve sustainable
positive free
cash flow
7 8
Creating a compelling investment case to deliver value for all ourstakeholders.
How we measure outcomes
Employee net promoter score (eNPS)
-4
2022: -9
Free cash flow before the impact of
business exits
£(115.5)m
2022: £(42.4)m
Customer net promoter score (cNPS)
+16
2022: +26*
Supplier payment compliance in 2023
99%
2022: 99%
Penta score 90-day average at
31 December 2023
+37
2022: +60
* 2022 comparative restated to exclude
the disposed of Portfolio businesses
For more on our performance see highlights and KPIs on pages 2 and 3 For more on how we engaged with our stakeholders see pages 45 to 48
Better stakeholder outcomes
Our people
by providing an environment in which
they can thrive and develop.
Investors
by delivering sustainable positive free
cash flow and improving returns.
Clients and customers
by delivering efficient and effective solutions,
transforming businesses and services
through expertise and technology.
Suppliers and partners
by treating them fairly and working
in partnership to deliver.
Society
by acting as a responsible business
for the communities we serve.
Investment case
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Chairman’s statement
David Lowden, Chairman
Committed to delivering value
“ We appreciate the
patience and support
of allshareholders, and
we remain committed
to delivering long-term
value creation for all
our stakeholders”
Overview
In 2023, Capita continued on its journey to
delivering the medium-term priorities that were
outlined in 2022.
I am pleased to note a number of positive
achievements this year. The total value of new
contracts won has continued to grow strongly,
up by 17%. Top line revenue growth was positive
but impacted by contract award delays and some
specific contract losses. We are delivering for our
clients and their customers, and we have an
engaged and talented workforce.
The cyber incident in March was a very
challenging period for the Group and some
of our customers, although the majority were
unaffected. The Group’s management team
acted swiftly during this period and we continue
to bolster defences and governance in this area.
In July, Jon Lewis announced his intention
to retire from Capita. On behalf of the Board,
I would like to express our sincere thanks to Jon
and pay tribute to his significant commitment and
achievements at Capita over the past six years.
I’d also like to commend him for his leadership
throughout the period following the cyber incident
in March, during which he decided to delay his
possible retirement.
In early 2024, we welcomed Adolfo Hernandez
as the CEO of the Group and to the Board.
Adolfo has a strong track record in accelerating
revenue growth driven by digital services over his
c.30-year career, which has included senior
leadership roles at Amazon Web Services (AWS)
and SDL plc. His appointment is testament to the
exciting potential for the Group.
As with all organisations, in 2023 we were faced
with a difficult macroeconomic backdrop of high
inflation and tight labour markets, particularly at
the start of the year. While the Group has managed
these challenges, there is still more to do to
ensure that we maximise our revenues, minimise
costs and reduce employee attrition to ensure
we can continue to deliver for our clients.
We recognise that our financial performance is not
where it needs to be and our investors have not
yet seen improved returns and financial benefit
from the strengthened Group. We appreciate the
patience and support of all shareholders, and we
remain committed to delivering long-term value
creation for all our stakeholders.
I’d like to thank our colleagues across the entire
organisation for their professionalism and
dedication throughout a challenging year.
2023 performance
Capita is focused on putting clients first, and
despite wider challenges in 2023 we continued
to deliver for our clients. The Group’s customer
net promoter score (cNPS) remains competitive
at +16.
While we saw modest adjusted revenue
1
growth
and a step up in adjusted profit before tax
1
, we
continue to lag behind our peers in revenue
growth and profit margins. Our free cash flow
performance was disappointing and we are
focused on improving the Group’s financial
performance and delivering sustainable positive
free cash flow.
In November 2023, we announced an employee
redundancy programme to underpin delivery of
sustainable positive free cash flow. This phase
was finalised in early 2024 and will result in
annualised savings of £60m from Q1 2024.
While this process involved a number of difficult
decisions, it will help deliver a leaner organisation
which will improve margin performance. In the
December trading update, we also noted that
we were continuing to evaluate additional cost
saving opportunities to underpin our margin
improvement plans and we have identified
further efficiency opportunities as outlined
in Adolfo’sreview.
Importantly, the maturity profile of the Group’s
funding position was enhanced in the year, with
the extension of the revolving credit facility to
2026 in June and issuance of private placement
notes in July. We have now completed our
Portfolio disposal programme with completion
of the People, Software, Business Solutions and
Travel pillars in 2023 and Fera in January 2024.
In November 2023, the Group reached agreement
with the Trustees of its main defined benefit
pension scheme in respect of the March 2023
triennial funding review. Given the improved
funding position of the scheme, we have
agreed with the Trustees that no further deficit
contributions will be required other than the £21m
already committed to be paid in 2024 under the
2020 funding agreement. With effect from 2025
onwards the Group will no longer be required to
pay substantial pension deficit contributions.
The delivery of our cost efficiency plans, together
with the cessation of pension deficit contributions
from 2025 onwards, are key enablers of the
Group’s journey to sustainable positive free
cash flow generation.
1. Refer to APMs on pages 230 to 233.
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Chairman’s statement continued
Cyber incident
In March, the Group experienced a cyber
incident, which affected some client services,
particularly in the pension administration
business, although the majority of clients
and customers were unaffected.
We have naturally taken the opportunity to
bolster our defences and our governance in this
area. We are continuing to invest in our systems
and processes. This has enabled us to improve
the Group’s cyber maturity as measured by
reference to the National Institute of Standards
and Technology cyber security framework.
This cyber incident, and the management of
its consequences, was a challenging experience
for Capita, but I’d like to thank our customers for
their patience and support as well as the Group’s
management team and colleagues across the
business for their professionalism and dedication
throughout the period.
The Board and governance
2023 was my first full year in role, and it is
my privilege to be Chairman of Capita.
As previously announced, in March 2023,
non-executive director John Cresswell stepped
down from the Board and in December, non-
executive director Claire Miles announced she
would be stepping down, following appointment
to the Board in May, due to her executive role at
Stagecoach which she was offered shortly after
appointment to the Capita Board. I’d like to thank
John and Claire for the valuable contribution they
both made during their time on the Board.
In December, following a review of the Board’s
constitution, it was agreed that employee
non-executive director Janine Goodchild would
step down from the Board at the end of 2023.
I’d like to thank Janine for her contribution
since joining the Board earlier in the year.
Nneka Abulokwe will take the lead role in
employee engagement through our Board
ESG Committee to ensure we maintain our high
level of workforce engagement going forward.
Culture and responsible business
Being a responsible business is key for the
Group. I’m pleased with the improvement made
in our gender pay gap and our improving diversity
and inclusion trend, which continued this year.
We continue to run a virtual-first working model,
offering employees hybrid working, which is
extremely important to us and has helped to
create a more engaged and motivated workforce.
It was pleasing to see employee engagement
improve a further 2% in 2023 to 67% and
employee NPS increase by a further five points.
Looking forward
In the short term, the Board’s priority is to ensure
Adolfo is successfully onboarded and embedded
within the Capita Group. It is natural to expect
that 2024 will be somewhat of a transitional year
as Adolfo builds on what has been achieved over
the past few years and as he leads the final stage
of Capita’s turnaround, implementing his strategic
priorities to underpin the long-term success of
the business.
The Board and management team are committed
to delivering on the Group’s priorities, and
ensuring our progress generates returns to
our shareholders as well as delivering for all
stakeholders. I am confident we have the
foundations and team in place to do so.
David Lowden
Chairman
“ The Board and
management team are
committed to delivering on
the Group’s priorities, and
ensuring our progress
generates returns”
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Introduction
I am delighted to have joined Capita in the middle
of January 2024. Capita plays an essential role
in underpinning how millions of people’s lives
operate – every single day – and I am honoured
to have been appointed as leader of this business.
Much has been achieved in the transformation
of the Group under Jon Lewis’s leadership, with
improvements in client satisfaction and contract
delivery, the simplification of the business, with
multiple unfocused business units reduced to
two market-focused divisions, and significant debt
reduction. This has created a solid foundation to
build on. We are now refocusing our operations
and strengthening our execution capabilities,
defining our future strategy and transforming
into a more agile, client centric business, that will
ultimately deliver profitable cash-backed growth.
Over the last few weeks, I have spent time
embedding myself within the organisation,
meeting with stakeholders, the leadership
team and colleagues around the world to better
understand the strengths of Capita today and
where there are opportunities to create value
in the future.
It is clear that Capita is at an exciting point in its
journey with attractive offerings in many segments,
client satisfaction scores we can be proud of and
a very talented and diverse workforce. Capita has
a rich client base with multifaceted and deep
relationships. I’m pleased to see that we have
high quality people across the organisation who
understand how to deliver complex services and
are passionate and committed to our clients and
their needs.
The evolving digital landscape (automation and
generative AI) pose both a challenge and an
opportunity that we intend to take advantage of
in order to deliver better, more efficient services
Getting the basics right
to our clients. Through our partnership with
technology hyperscalers we will co-create and
innovate solutions that solve our clients’ needs
for today and the future.
As we take the company to the next stage of
its evolution, we have challenges we need to
tackle. Our immediate focus is to deliver a rapid
improvement in the financial performance of the
business and, in particular, to realise our goal of
sustainable positive free cash flow generation.
To win in our marketplace, we must ensure:
our cost base is appropriate for the size of our
business; our clients are advocates for Capita;
we deliver and execute with precision; and,
importantly, our colleagues throughout the
Group are aligned with our vision, can grow
their careers with Capita and are proud to
be part of our organisation.
We need to grow our revenue by acquiring new
clients and expanding our relationships with
existing clients. But this revenue growth must
generate an appropriate cash-backed financial
return. Key to this is maintaining our contract
bidding discipline and ensuring we execute
for our clients with precision when it comes to
delivery. We recognise that we will also need to
curtail some existing activities that do not deliver
this objective. To this end, we are conducting
a review of our operations to help us identify
these particular activities and an implementation
plantoensure continuity for our clients and
theircustomers.
Over the next few months, I will work with the
Board, my leadership team and our colleagues
across the organisation to develop a clear
roadmap to:
• Define and refine Capita’s formula for winning
in its markets;
• Ensure we deliver efficiently and effectively
for our clients each and every time;
What made you want to join Capita?
Capita has a client base that is second to
none, with longstanding trusted relationships.
The market is moving at pace, and our clients
will demand a shift where our human-to-
human interactions are augmented by
technology, to deliver more efficient services.
There is a huge opportunity to take advantage
of this and Capita is well placed to be a
winner in this space.
As a new CEO, what are
your priorities?
My focus is on accelerating profitable,
cash-backed growth. We need to get leaner
and more agile as a prerequisite for growth.
To do that, we will need to be clear on our
areas of focus, leverage technology and
partnerships with the hyperscalers, manage
our cost base more effectively, execute and
deliver for our clients with precision, and
create and embed a culture that drives the
right behaviours and empowers and motivates
our people.
What is your outlook for the
year ahead?
We are focused on developing our medium-
term strategy which will enable us to grow and
win in the future. My intention is for 2024 to
be a year of stability where we move Capita
in the direction of becoming a business that
grows, generates cash-backed profits, with
good and improving customer relationships,
and where people are proud to work for our
organisation – and importantly where our
shareholders see an improving return on
their investment.
Q&A
Chief Executive Officer’s review
Adolfo Hernandez, Chief Executive Officer
“ It is clear that Capita is atan
exciting point in its journey
with attractive offerings
in many segments, client
satisfaction scores we
can be proud of and
a very talented and
diverse workforce”
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Chief Executive Officer’s review continued
• Expand our current services to capture greater
economic value from our core business;
• Identify opportunities where we can work with
partners to develop and deliver technology
solutions that will create cost efficiencies
and a better customer experience;
• Enhance productivity through standardisation,
replication and better use of tools and data;
• Rally our leadership team, motivate our
colleagues and evolve our culture, see
page 32; and
• Embrace the changes we need to deliver on
our objectives.
I am planning to set out our vision, strategy
and associated medium-term financial and
non-financial targets in detail at a Capital
Markets Day in June 2024.
The rest of this CEO review summarises what
has been achieved across the business in 2023.
I’d like to thank my new colleagues for their hard
work, dedication and professionalism through
what has been a challenging year for many.
I am very much looking forward to leading
Capita on the next stage of its journey.
Summary of achievements in 2023
As a Group, we continue to put our clients and
their customers first. Our customer net promoter
score (cNPS) remains strong at +16 (+25, excluding
the pensions administration business where a
number of clients were impacted by the cyber
incident in March 2023). While this is a ten-point
reduction from 2022, it remains a creditable
performance bearing in mind the impact of
the cyber incident.
During 2023, we focused on creating a
compelling working environment and meaningful
careers for our colleagues across every geography
and saw positive improvements in employee
engagement, inclusion and wellbeing scores.
Our financial performance for the year was not
where it needed to be. Revenue growth, profit
margins and free cash flow remain behind our
peers. We are committed to delivering a financial
performance that enables us to achieve our goal
of delivering sustainable positive free cash flow
over the medium term.
Despite significant rationalisation over the
past few years, our cost base is too high.
In November 2023, the Group announced
that it had launched a significant cost reduction
programme expected to deliver annualised cost
savings of £60m from Q1 2024. We have identified
further material efficiency improvements which
are essential to ensuring our competitive position
in the market and during the remainder of 2024
we will be taking steps to realise a further
£100m of annualised cost savings by mid 2025.
A proportion of these further savings will be
reinvested in the business to develop the
Group’s technology, service delivery and pricing.
We expect to provide further detail about this
at our Capital Markets Day in June 2024.
During 2023, the Group significantly extended
its funding maturity profile. In June we extended
our revolving credit facility to 2026 and in July we
issued £101.9m of US private placement notes
with a mixture of three and five-year maturities.
We finalised our c.£500m Portfolio disposal
programme with the announcement of the
sale of Fera in December, a transaction
that completed in January 2024.
The Group’s contract growth momentum across
2023 remained strong. We won contracts with
a total contract value (TCV) of £3,036m, up by
£443m from £2,593m in 2022, and saw a major
improvement in the Group’s win rate for new
scopes of work and expansions of existing
scopes to 70%, up from 32% in 2022.
Our people
During 2023, we focused on creating a compelling
working environment and meaningful careers for
our colleagues across every geography and saw
positive employee engagement, inclusion and
wellbeing scores.
In 2023, we saw a major improvement in the
Group’s voluntary employee attrition rate which
on a rolling 12-month basis reduced from 30%
at the start of the year to 24% by year end. We
implemented specific Group and local measures
to reduce attrition including a Capita-wide
induction programme to improve the employee
onboarding process and a global line manager
training programme to ensure consistent
induction experiences. At a divisional level, we
increased communications with all employees
via newsletters and divisional town hall events
to improve employees’ sense of belonging.
Our hybrid, virtual-first organisation continues to
be an important factor in our ability to attract and
retain talent, including in locations where we do
not have a physical office location. In our annual
people survey, 88% of respondents who work
from home stated that the flexible working
arrangements are a key motivator for them
to stay with Capita.
At the end of 2023, we took the difficult decision
to withdraw from the UK’s real living wage. Since
2020, the Group has increased the salaries of our
lowest earners by 22% and the 2024 real living
wage increase of 10.1% was not something we
could commit to given the need for Capita to
remain cost competitive and that this is not
a cost we are able to pass on to our clients.
We continue to apply global fair pay principles
across all geographies to ensure we are able
to attract and retain the colleagues we need to
deliver our business commitments. In the UK,
those paid a real living wage previously will
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Chief Executive Officer’s review continued
continue to be paid higher than the national
minimum wage.
We have supported colleagues through the
cost-of-living challenges which each of our
geographies has faced this year. In our annual
salary review at the start of 2023, we prioritised
salary increases to our lower earning colleagues
with our highest earners asked to forgo a
payincrease.
Diversity remains a key focus for the Group and
at year end we had 40% female senior leadership
(globally) and 14% ethnic diversity. At year end
our Board was 56% female and our Executive
Team at year end was 29% female, rising to
44% in early 2024. At year end, our Board and
Executive Team were 22% and 14% ethnically
diverse respectively.
In October, Capita was recognised as one of the
top companies for women by Forbes, ranking 18
out of 400 global companies. This is a testament
to our commitment to diversity, inclusion and
equality in our workplace.
We continued with our roll out and embedding of
the career path framework (CPF) in 2023, helping
employees across every level and geography in
the organisation build a meaningful, long-lasting
career with Capita. CPF provides clarity about
the skills and experience required for roles
across the organisation – and ensures salaries
are benchmarked to appropriate market rates.
We are building advocacy in Capita and are
focused on ensuring that our people are proud
to work for the organisation. This was evidenced
in our annual people survey, where 84% of
respondents said they can be themselves at
work, higher than the global average, while 63%
stated they feel proud to work for Capita, lower
than the global average and something we are
working to improve.
We continue to support community initiatives to
help the most disadvantaged and vulnerable in
society. Globally, colleagues completed nearly
21,000 hours of volunteering, almost three times
the hours completed last year. We were pleased
to retain our status as a gold award employer
under the Armed Forces Covenant.
Cyber incident
In March 2023, a threat actor gained
unauthorised access to certain of our systems
which caused disruption to client services in
some parts of our business. We worked closely
and at speed with specialist advisers and forensic
experts to investigate and resolve the incident.
Based on the forensic work performed, we
confirmed that some data had been exfiltrated
during the incident. Consequently, we took
extensive steps in the immediate period after
the incident to recover and secure the exfiltrated
data. We continue to monitor the dark web and
can confirm that we have seen no evidence,
subsequent to our recovery activities, that any
of the exfiltrated data is in circulation there
or elsewhere in the online environment. As a
precautionary measure, we offered a 12 month
subscription to Identity Plus, a monitoring
service provided by UK credit reference agency
Experian. Our investigation is now complete and
all affected clients, suppliers and employees are
in the process of being contacted and we continue
to support those whose data was exfiltrated.
As a result of the incident, we incurred net costs
of £25.3m, comprising specialist professional
fees, recovery and remediation costs and
investment to reinforce Capita’s cyber security
environment.
We have accelerated our previously planned
investment to improve our cyber security maturity
which has improved and is subject to external
audit with reference to the National Institute
of Standards and Technology cyber
security framework.
The incident was a challenging experience for
the Group, and we have taken steps to share
our experience and learnings with our clients,
suppliers and other companies and plan to
continue this good practice in the future. Since
the incident we have continued to see good
contract growth momentum with a 17%
increase in TCV secured in 2023.
Growth
The Group’s contract growth momentum across
2023 remained strong. We won contracts with
a TCV of £3,036m, up £443m from £2,593m in
2022. There was a particularly strong performance
in Public Service, where a number of deals
previously scheduled to close in 2022 were
delayed into 2023. While a number of these
contracts have now been signed, the delays
affected the division’s revenue growth in 2023.
The book to bill ratio for the Group remains
above 1.0x at 1.1x, with 1.3x in Public Service
and 0.9x in Experience. As we look to build our
revenue growth, maintaining this metric above
1.0x is a priority.
We saw a major improvement in the Group’s win
rate for new scopes of work and expansions of
existing scopes to 70%, up from 32% in 2022.
Significant new scopes of work in Experience
include: the Civil Service Pension Scheme, which
will start in 2025; the City of London Police,
which will begin later in 2024; and the National
Transport Authority of Ireland and Santander,
which have now commenced. In Public Service,
the Group won material expanded scopes of
work with the Department for Work and Pensions
to deliver Functional Assessment Service (FAS)
and the Department for Education delivering
Disabled Students Allowance (DSA).
Despite our strong TCV performance, revenue
growth continues to be impacted by previously
announced contract losses, particularly in Local
Public Service and the Co-operative Bank. In
addition, consistent with our drive to ensure all
contracts are bid at an appropriate margin, we
saw a reduction in the Group’s contract renewal
rate to 52% from 96% in 2022. This decrease
reflected the loss of the administration of the
Teachers’ Pension Scheme contract in Experience
and the Electronic Monitoring Service and
Standards and Testing Agency (STA) contracts
in Public Service, all of which were lost on price
and which will have a dampening impact on
revenue growth. Material renewals secured in
2023 include Virgin Media O2 and the extension
of the Recruiting Partnering Project (RPP)
contract with the British Army.
Reflecting the strong TCV performance
across 2023 and increased rigour across the
qualification process, the unweighted pipeline for
2024 is at a lower level than at the start of 2023,
with a total unweighted pipeline of £10,381m.
Material contracts within the pipeline include
opportunities with the Department for Work and
Pensions, the Ministry of Defence, and a number
of contracts within our International Markets
inExperience.
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Strategic report

Chief Executive Officer’s review continued
Operational delivery
Throughout 2023, we continued to maintain
our focus on operational delivery for clients. By
striving to deliver well for our clients and getting
it right first time, we should reduce excess cost
and avoid financial penalties. While we have
made progress in this area, there is still work
to do. We will be building on what has been
achieved to date through strengthening and
standardising our operational processes.
Our cNPS remains strong at +16 (+25, excluding
the pensions administration business where a
number of clients were impacted by the cyber
incident in March).
Within the cNPS survey, our promoters spoke
highly of our employees, citing the knowledge
and relationships with the teams they work with
at Capita and the quality of services delivered.
However, we also received feedback from some
clients around project delay and delivery issues
and comments suggesting that certain teams
could be more agile in service delivery. We will
focus on improving in these areas in 2024, in line
with our goal of ensuring we deliver efficiently and
effectively for our clients each and every time.
Our KPI performance across 2023 remained
above 90% in both divisions. Where KPI
performance was not met at any point over the
year, for example in respect of the particularly
challenging 99.7% of exam scripts marked
and returned in our contract for the STA,
and recruitment targets in the RPP, we are
implementing specific remediation action to
ensure wemeet the high standards Capita
expects todeliver.
Notable achievements across the contract
portfolio in 2023, included:
• Within Public Service, on our Royal Navy
training contract, we met our final milestones
as set out in the original contract, concluding
the transition of multiple legacy contracts.
• On the Job Entry Target Support contract in
Scotland, we completed more than 200% of
the targeted number of job starts across the
contract period.
• Within the Experience division, on our Virgin
Media O2 contract, we significantly increased
the size of our offshore delivery team, with
1,000 full-time employees added, providing
additional optionality to the client to service
customers with digital enablement.
• Within the Energy & Utilities vertical of
Experience, we successfully delivered a
significant step up in available hours around
peak demand in Q4 to ensure efficient
outcomes for clients and their customers.
As we move into 2024, we are focused on
delivering the complex transition and mobilisation
requirements of our new contracts with the
Cityof London Police, DSA and National
Transport AuthorityIreland.
Consistently delivering for our clients is the
cornerstone of our success. Effective, efficient
client delivery and getting it right first time, reduce
excess cost and allow us to grow revenue.
Digital transformation and
artificial intelligence
We are taking a measured approach to artificial
intelligence (AI) and generative AI (gen AI),
working with our clients and partners to deliver
effective and efficient solutions as the technology
continues to evolve. We expect that gen AI will
allow us to be more productive and offer our
clients superior solutions.
We plan to turbocharge our relationships with a
number of trusted hyperscale partners, including
Microsoft, AWS, Salesforce and ServiceNow.
We also plan to partner to develop and deliver
solutions across a wider span, creating a more
digital Capita, delivering an efficient and higher
quality service and experience for our clients
and their customers.
We have already integrated digital and AI
solutions into a range of clients. For example
in the Public Service division, we have utilised a
new Metaverse virtual reality tool for submarine
qualification training within the Royal Navy.
This modernised solution improves the learning
experience and enables better trained
submariners to be on the front line faster.
Within the Experience division, AI and gen AI will
augment our agents, upskill our people, provide
critical information quickly, and enable our people
to be more competent and capable, which will
in turn deliver better customer experiences. AI
has been implemented in the division across a
number of contracts in four key capability areas:
chatbot/conversation AI; conversation analysis;
data observatory and analytics; and
correspondence digitisation.
We are continuing to develop further AI and gen
AI pilots across both divisions, for example on
our BBC and Transport for London contracts.
Cost efficiency
In November 2023, the Group announced it had
commenced employee redundancy programmes
expected to deliver an annualised £60m of
cost savings from Q1 2024. The organisational
changes that we have implemented primarily
affected around 900 indirect support function
and overhead roles.
We have identified further material efficiency
improvements which are essential to ensuring
our competitive position in the market and during
the remainder of 2024 we will be taking steps
to realise a further £100m of annualised cost
savings by mid 2025, which will be partially
reinvested in growth.
In February 2024, Experience secured an
extension and expansion with an existing client in
the European telecoms business worth £220m.
At 31 December 2023, the Group’s order
book was £5,883m, an increase of £77m from
31 December 2022 with £2,417m order book
additions, indexation and scope changes, offset
by £2,101m revenue recognised and a £239m
reduction from business disposals and
contract terminations.
Capita plc Annual Report and Accounts
11
Strategic report

Chief Executive Officer’s review continued
We expect to provide further detail about this at
our Capital Markets Day in June 2024.
Our property footprint continues to reduce as
we benefit from our virtual first working model.
We are targeting savings by managing capacity
around demand for office spaces across our
geographies. We permanently closed 19 properties
and consolidated a further 14 during 2023. This
year we reduced the square footage of our total
property portfolio by a further 9%.
The total footprint of the Group’s property
portfolio has now reduced by 31% in the last
three years. The IFRS 16 lease liability associated
with our property portfolio reduced by £30m
across 2023, reflecting the continued reduction
in our leased property estate.
Financial results – revenue and results
before tax
Adjusted revenue
1
growth for the year was
1.3% with adjusted revenue of £2,642.1m
(2022: £2,609.0m). This reflects underlying growth
in contracts such as Personal Independence
Payments, benefit from indexation and a
commercial settlement in the closed book Life &
Pensions business in Experience. This was partially
offset by contract losses including the Co-operative
Bank in Experience and in our Local Public Service
business in the Public Service division.
Reported revenue declined by 7% to £2,814.6m
as core business growth was more than offset
by the disposal of non-core businesses.
Adjusted profit before tax
1
improved by £6.7m
to £56.5m (2022: £49.8m). Profit benefited from
revenue growth, in particular the commercial
settlement in Experience noted above and a
reduction in bonuses and variable pay, offset
by increased financing costs.
The reported loss before tax was £106.6m as a
result of the £38.8m loss incurred on business exits
during the year, the goodwill impairment of £42.2m
(recognised in respect of businesses in the Portfolio
disposal programme), the expense associated
with the Group’s cost reduction programme
with £23.3m incurred in respect of employee
consultation programmes, £31.1m of associated
property related charges, and £25.3m of costs
incurred in respect of the March 2023
cyber incident.
Financial results – free cash flow and
net debt
The free cash outflow
1,2
, before the impact of
business exits was £115.5m, (2022 outflow:
£42.4m). The 2023 outflow was driven by an
increased working capital outflow, principally
reflecting a reduction in the in-period usage of
the Group’s non-recourse invoice discounting
facility and the non-cash nature of the commercial
settlement in Experience. There were additional
outflows reflecting the cash cost of the cyber
incident and the expected increase in capital
expenditure on technology investment across
theGroup.
The free cash outflow
1,2
for the Group was
£154.9m (2022 outflow: £31.5m), reflecting the
in-year cash impact of businesses exited or being
exited of £23.1m and £16.3m of pension deficit
contributions triggered by disposals.
We have now completed our c.£500m Portfolio
non-core business disposal programme. In 2023
we completed the disposal of our People,
Software, Business Solutions and Travel pillars
realising net proceeds of £63.4m in the year. In
December 2023, we announced the sale of Fera,
our joint venture with DEFRA which completed in
January 2024, realising gross proceeds of £62m
(£51m net proceeds, after cash held by Fera at
completion and disposal costs).
Net financial debt (pre-IFRS 16) was £182.1m
(2022: £84.9m) reflecting the free cash outflow,
which more than offset the net proceeds
realised on disposals. Proforma net financial
debt (pre-IFRS 16) including the Fera net cash
proceeds at 31 December 2023 would have
been £132.0m, resulting in a year-end leverage
of 0.9x
1
had the sale been completed in 2023.
Net debt, including the impact of property leases
accounted for under IFRS 16 was £545.5m in
2023 (2022: £482.4), reflecting the free cash
outflow across the year. Our IFRS 16 lease
liability has reduced to £363.4m from £397.5m,
as we continue to optimise our property footprint.
We significantly extended our funding maturity
profile in 2023 through the extension of the
Group’s revolving credit facility to 2026 and
issuance of £101.9m equivalent of US private
placement notes with a mixture of three and
five-year maturities.
Outlook
Capita has a significant impact on the lives of
citizens and we understand the importance of
our impact on society. While we still have work
to do to complete the turnaround of the Group,
we have made progress over the last few years
and are committed to improving our operations
across the board in 2024 and beyond.
We will develop our offerings and drive
operating efficiency by leveraging technology and
through the cost reduction programmes being
implemented in 2024. Through rigorous project
management we will be focused on delivering
complex client requirements on time and budget.
For 2024 as a whole, on an adjusted basis, we
currently expect that revenue will be broadly in
line with 2023, and that operating profit margin
and free cash flow will show modest
improvement year on year.
We expect the Public Service division to deliver
revenue growth in 2024 reflecting the significant
contracts won in 2023 moving into their
operational phase later this year whereas
we expect the Experience division to show
a reduction in revenue reflecting the non-
recurrence of 2023’s closed book Life &
Pensions commercial settlement coupled
with ongoing revenue attrition in the rest
of the Life & Pensions business.
Notwithstanding our revenue expectations, the
cost reduction programmes being implemented
in 2024 are expected to result in a modest
improvement in adjusted operating profit margins
and free cash flow, albeit in the latter case, the
cash flow benefit in the year will be reduced as a
result of the redundancy and other costs required
to deliver the cost reduction programmes.
We will be setting out our vision, strategy and
associated medium-term targets in detail at a
Capital Markets Day in June 2024.
Adolfo Hernandez
Group Chief Executive Officer
“ We significantly extended
our funding maturity
profile in 2023 through the
extension of the Group’s
revolving credit facility to
2026 and issuance of
£101.9m equivalent of US
private placement notes”
1. Refer to APMs on pages 230 to 233.
2. From 1 January 2023 free cash flow and free cash flow excluding business exits are presented after deducting the capital
element of lease payments and receipts. Comparative amounts have been re-presented.
Capita plc Annual Report and Accounts
12
Strategic report

We were recognised for
leadership in corporate
transparency and performance
on climate change by CDP,
securing a place on its annual
‘A List’. Only 346 companies
scored an A out of 21,000
disclosures
Overview of our markets
Capita operates in markets with
attractive structural growth trends.
Enterprises and governments will
increasingly need more services
to manage complex outcomes.
Numerous enterprises have shifted
their priorities and investment to
areas where they believe they can
be distinctive and many government
departments are looking at how they
can augment their delivery capability.
So whether we consider telecom
companies, energy companies,
financial institutions or government
agencies, the demand for having
a trusted partner to deliver these
complex outcomes is only going to
grow. That demand is also shifting
from ‘human only’ to ‘human,
augmented by technology’. This
means there is a huge opportunity
for the companies that can intercept
those trends and are able to
introduce digital transformation
in the delivery of those outcomes.
Our markets
Core addressable SITS market
2
£15bn
European customer experience market
3
$33bn
Market growth across both markets per annum
c.4%
Number one
2
strategic
supplier of Software
and IT Services (SITS)
and business process
services (BPS) to the
UK Government
2. TechMarketView
One of Europe’s leading
customer experience
businesses – market
leader in the UK
3
and
ranks fourth in Germany
3
and Europe
3
3. NelsonHall
We have been awarded a
Silver EcoVadis medal for our
sustainability performance,
reaching the 92
nd
percentile
in 2023; Gold medal is
95
th
percentile
Capita plc Annual Report and Accounts
13
Strategic report

Financial performance
Divisional financial summary 2023 2022 Change %
Adjusted revenue
1
(£m) 1,458.6 1,454.8 0.3
Adjusted operating profit
1
(£m) 89.3 93.7 (4.7)
Adjusted operating margin
1
(%) 6.1 6.4
Adjusted EBITDA
1
(£m) 133.3 131.9 1.1
Operating cash flow excluding business exits
1
(£m) 107.1 102.3 4.7
Order book (£m) 3,546.0 2,985.0 18.8
Total contract value secured (£m) 1,923.8 1,222.5 57.4
Adjusted operating profit
1
£89.3m
(2022: £93.7m)
Adjusted revenue
1
£1,458.6m
(2022: £1,454.8m)
1. Long-term contractual
2. Short-term contractual
3. Transactional
83%
13%
4%
Adjusted revenue by type
1. Health & Welfare
2. Justice, Central Government
&Transport
3. Local Public Services
4. Defence, Fire, Security &
Learning
18%
23%
24%
35%
Revenue by market
3
Operating review Public Service overview
Public Service is the number one
2
strategic supplier of Software
and IT Services (SITS) and business process services (BPS) to
the UK Government .
Business units (new split from 2024)
– Local Public Service
– Central Government
– Defence, Fire, Security & Learning
Employees
– 12,000
Client distribution
– UK
Competitors
– Atos
– G4S
– Sopra Steria
– CGI
– Tata Consultancy
Services
– Cognizant
– Accenture
– Serco
– Maximus
Major contract wins and renewals
– £565m across two five-year contracts with
the DWP to deliver Functional Assessment
Service (FAS) across the Midlands and Wales
– A two-year extension on the Recruiting
Partnering Project working with the British
Army worth £172m
– Two of four lots to deliver the Disabled
Students Allowance services with the student
loans company which is expected to be worth
£250m over five years
– A new contract with the City of London
Police on the action fraud contact centre for
potential victims of fraud worth £50m over
the initial five-year contract period
2023 overview
Capita Public Service
1. Refer to APMs on pages 230 to 233.
2. TechMarketView.
3. Revenue by market refers to the 2023 business split.
1
2
3
4
1
2
3
Capita plc Annual Report and Accounts
14
Strategic report

Markets and growth drivers
In 2024, the division changed its structure to
focus on three market verticals: Local Public
Service; Central Government; and Defence, Fire,
Security & Learning with these market verticals
delivering to their respective client groups.
Our current core addressable SITS market is
c.£15bn
2
, growing at approximately 4%
2
per
annum. Digital BPS is a fast-growing area,
while traditional business process outsourcing
(BPO) is currently shrinking, reflecting the UK
Government’s focus on digital enablement, as
it looks to ensure the delivery of high-quality,
cost-effective services to its citizens.
In 2022, the UK Government published the
Roadmap for Digital and Data outlining its
intention to spend up to an additional £8bn by
2025 to accelerate digital, data and technology
transformation so that it can better respond to
future macroeconomic challenges.
Public Service operates within a highly
fragmented market. Across the varied services
that it delivers we operate against a number of
other providers including, but not limited to: Atos,
G4S, Sopra Steria, CGI, TCS, Serco, Accenture
and Maximus.
Strategy and digital transformation
Public Service is seen as a trusted delivery
partner by its clients, with a high-quality offering
and deep sector process knowledge in our
chosen market verticals.
The division is focused on working with trusted
technology partners such as Microsoft and AWS
to harness digital ways of working and accelerate
the transformation of our services, leveraging AI
alongside the skills and capabilities of our people.
We develop solutions around client needs and are
progressing a number of digital proof of concepts
where we’ve aligned digital transformation to
future growth opportunities.
We have continued to simplify our operating
model, removing organisational layers to improve
efficiency and effectiveness across the division.
We launched a second client advisory board in
the Central Government sector, in addition to
thepreviously established Defence client advisory
board, to improve our understanding of Government
bid processes and delivery priorities to help us
become an even more effective serviceprovider.
We continue to invest in our coverage of
Government frameworks, through which
companies are able to bid for Government
contracts. We are included on a wide range of
frameworks representing market access of up
to £9.5bn including frameworks with the Crown
Commercial Service, the Department for Work
and Pensions and the NHS.
Looking forward, there is a significant growth
opportunity to be the partner of choice – to drive
efficiency, where the UK Government requires
more cost-effective and efficient delivery solutions
as the Public Sector invests more widely in digital,
data and technology transformation.
Total contract value secured
£1,924m
(2022: £1,223m)
Book to bill
1.3x
(2022: 0.8x)
Average KPI performance
94%
(2022: 94%)
Operating review Public Service continued
“ The division is focused
on working with trusted
technology partners such
as Microsoft and AWS to
harness digital ways
ofworking”
2. TechMarketView.
Capita plc Annual Report and Accounts
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Strategic report

Operating review Public Service continued
“ We expect improvements
in margin performance in
2024 and the medium term,
as the division captures
greater economic value
from its business through
economies ofscale”
Growth performance and key wins
Public Service won contracts with a TCV of
£1,924m in 2023 (2022: £1,223m), a year-on-
year increase of 57%. The TCV performance
was in part driven by a small number of material
contracts where award dates moved from 2022
into 2023, following a number of changes within
the UK Government in 2022. The book to bill
ratio for the year was 1.3x.
At 31 December 2023, the total unweighted
pipeline for the division was £7,525m, a decrease
of £333m from 2022 reflecting the anomalously
high balance at the end of 2022 resulting from
the award slippages noted above. The year end
weighted pipeline was £1,266m (2022: £1,652m).
The division saw an improved win rate on new
and expanded scopes at 78% from 53% in 2022.
New scopes of work include City of London
Police and expansions include those with the
Department for Work and Pensions to deliver
Functional Assessment Service (FAS) and the
Disabled Students Allowance (DSA) contract
for the Department for Education.
The renewal rate for the division reduced to 41%
in the year from 91%, principally reflecting the
loss of the Electronic Monitoring and Standards
and Testing Agency contracts as the division
maintained its pricing discipline. Material
renewals in the year included with the British Army
on the Recruiting Partnering Project. Across all
opportunities bid for, the win rate was 65%
(2022: 66%).
The order book at 31 December 2023 was
£3,546.0m, an increase of £561.0m since
31 December 2022 reflecting the strong
TCV performance in the year.
Operational excellence and
cost efficiency
The division’s operational delivery across the year
has been good, with an average in-month KPI
performance of 94%. The division’s standalone
cNPS decreased six points to an overall score
of +27, which remains competitive.
Operational highlights across the year included:
• Delivery of the remaining service
commencement dates on the Royal Navy
training contract. We have now delivered
all milestones under the original contract and
continue to expand our scope on this contract;
• Completion of more than 200% of the targeted
number of job starts across the contract period
on the Job Entry Target Support contract
in Scotland;
• Supporting major events in London, including
the King’s coronation, the London Marathon
and London Pride, as part of our Transport
for London contract; and
• In our Electranet business, more than 1,000
projects were delivered across 2023, including
defencesecure wi-fi infrastructure across
130 militarysites.
Our consistent delivery performance continues to
drive expansions of existing scopes with clients
such as with the Department for Work and
Pensions, Transport for London and the
Royal Navy.
Financial performance
Adjusted revenue
1
at £1,458.6m was marginally
up on 2022 reflecting price indexation across
the contract portfolio, growth in the Royal Navy
training contract and additional volumes on the
Personal Independence Payments contract offset
by contract losses and hand-backs in Local Public
Services, with this vertical 14% down year on year.
Adjusted operating profit
1
decreased by 4.7% to
£89.3m reflecting contract losses in Local Public
Service offset by the flow through of revenue
growth across the wider contract portfolio as
noted above.
Operating cash flow excluding business exits
1
increased by 4.7% to £107.1m reflecting the
contract performance noted above and tight
working capital management.
Outlook
Reflecting the strong TCV performance in 2023,
we expect low to mid-single digit percentage
revenue growth in 2024, as the division begins
delivery of the FAS and DSA contracts. This growth
is despite the continued revenue reductions in
Local Public Service from previously announced
contract losses.
We expect improvements in margin performance
in 2024 and the medium term, as the division
captures greater economic value from its
business through economies of scale from
revenue growth, curtailing low margin work
and our ongoing efficiency programmes.
1. Refer to APMs on pages 230 to 233.
Capita plc Annual Report and Accounts
16
Strategic report

Optimising technology
Capita expanded its longstanding collaboration with
Microsoft to build upon existing digital and AI capabilities
and further improve services for clients and colleagues.
The agreement is centred on creating better outcomes for
clients and their customers by combining Microsoft’s cloud and AI
services with Capita’s operational customer and delivery know-how.
This includes the use of gen AI to support agents in summarising
disparate customer information at a significantly faster pace.
The integration of automation and gen AI-driven processes will
increase productivity and efficiency. Clients can expect faster
service delivery turnaround times, improved accuracy, and a
smoother end-to-end experience.
Capita’s expanded collaboration with Microsoft is already delivering
value for its customers and will help to accelerate opportunities for
growth through the creation of joint propositions for public sector
and customer experience clients, particularly in financial services.
These centre on providing simplified operations and experiences
for Capita and its customers.
Capita plc Annual Report and Accounts
17

Building strong client
relationships
Capita signed two contracts to deliver functional assessment
service (FAS) assessments in the Midlands and Wales for the
Department for Work and Pensions, and in Northern Ireland
for the Department for Communities.
The two contracts are worth a combined £565m and will run for five
years from 2024, with an option to extend for a further two years.
FAS is a new service that will bring together existing assessment
services, for disabled people and people with health conditions,
under a single provider in each geographical region. This will make
accessing support simpler and easier for some of society’s most
vulnerable people.
Capita will deliver assessments for Personal Independence Payment
(PIP), Employment and Support Allowance and Universal Credit, as
well as a number of specialist benefits including Child Disability
Living Allowance and Veterans UK assessments.
Capita has been delivering PIP assessments in the Midlands
and Wales since 2013, and in Northern Ireland since 2016.
Capita plc Annual Report and Accounts
18

Financial performance
Divisional financial summary 2023 2022 Change %
Adjusted revenue
1
(£m) 1,183.5 1,154.2 2.5
Adjusted operating profit
1
(£m) 50.9 35.7 42.6
Adjusted operating margin
1
(%) 4.3 3.1
Adjusted EBITDA
1
(£m) 111.3 109.9 1.3
Operating cash flow excluding business exits
1
(£m) 32.7 36.1 (9.4)
Order book (£m) 2,299.4 2,526.7 (9.0)
Total contract value secured (£m) 1,112.3 1,370.6 (18.8)
Adjusted operating profit
1
£50.9m
(2022: £35.7m)
Adjusted revenue
1
£1,183.5m
(2022: £1,154.2m)
Adjusted revenue by type Revenue by market
Operating review Experience overview
Experience is one of Europe’s leading customer experience
businesses. It is the market leader in the UK
4
and ranks fourth
in Germany
4
and Europe
4
Business units
– Financial Services
– Telecoms, Media & Technology
– Energy & Utilities
– Retail (including charities)
Employees
– 27,000
Major contract wins and renewals
– A five-year renewal with Virgin Media O2,
worth £366m, with services delivered across
a number of Capita geographies
– £239m over ten years on a new contract to
administer the Civil Service Pension Scheme,
one of the largest public sector pension
schemes in the UK
– A new contract with the National Transport
Authority of Ireland worth £35m over
ten years
2023 overview
Capita Experience
1. Refer to APMs on pages 230 to 233.
4. NelsonHall.
Competitors
– Atento
– Teleperformance
– Accenture
– Concentrix &
Webhelp
– Foundever
– TTEC
– Tech Mahindra
– Firstsource
– Tata Consultancy
Services
– In-sourced
1
2
3
1
2
3
4
1. Long-term contractual
2. Short-term contractual
3. Transactional
1. Telecoms, Media &
Technology
2. Financial Services
3. Energy & Utilities
4. Retail (including charities)
Client distribution
– UK
– Ireland
– Germany
– Switzerland
74%
24%
2%
39%
41%
11%
9%
Capita plc Annual Report and Accounts
19
Strategic report

Operating review Experience continued
Markets and growth trends
The division is structured around four market
sectors: Financial Services; Telecoms, Media
& Technology; Energy & Utilities; and Retail
(including charities). We have strong industry
expertise and presence, with clients in the UK,
Ireland, Germany and Switzerland, and services
delivered across these geographies and in India,
South Africa, Poland and Bulgaria. We operate in
markets where we have a strong track record
and where we see potential for growth.
The European customer experience market is
worth $33bn
4
a year and the market is expected
to grow at approximately 4% per annum. The
outsourced element of the global customer
experience market represents around 30%
4
of the overall market.
We are the largest provider of customer
experience services in the UK and Ireland, with
a market share of around 13%. Our competitors
are mostly global and include entities such as
Teleperformance, Concentrix & Webhelp,
Tata Consulting Services and Foundever.
The customer experience market is trending to
self-service with increasing levels of automation
for less complex services. Increasingly clients are
looking to use omnichannel offerings in a number
of languages with agents working in onshore,
nearshore and offshore locations.
Strategy and digital transformation
The Experience division is a customer experience
business driven by data and technology powered
by people, delivering services through a client
centric environment. We operate as a leading
regional player with global quality standards, and
an ambition to become the partner of choice for
companies in our chosen geographies.
The division’s core activity is the provision of
cost-effective customer experience contact
centres, delivering services including voice and
non voice; end-to-end customer management;
collections; and sales and retention. Our services
are supported by a wide range of capabilities,
including conversational AI and real time
feedback and automation to ensure customers
get the best outcomes, efficiently.
We equip and empower our colleagues across all
our geographies to deliver to the highest level of
service for our clients and their customers.
Within the customer experience market, as
technology plays a bigger role in delivery, we
have seen an increase in volumes through our
automated delivery methods such as chat bots.
We are leveraging technology to enhance the
effectiveness and efficiency of our customer
facing colleagues, particularly for complex
customer experience activities such as
sales as a service.
We operate in a number of geographies which
offer service delivery optionality to suit client
needs. In 2023, we expanded our capability in
South Africa, India and Poland, which together
enable us to offer flexible 24/7 delivery to our
clients, across their chosen delivery methods.
Wealso expanded our Bulgarian operations,
particularly in support of the Telecoms, Media
& Technology vertical. In 2024, we will further
expand our operations in Bulgaria and Poland,
opening additional offices in both geographies,
expanding our multilingual capabilities and
offerings to clients.
We are exploring opportunities in other nearshore
international locations to underpin our growth
ambitions and expansion of our existing client base.
This allows flexibility to use onshore, nearshore
or offshore delivery models when it comes to
delivering our clients’ service requirements.
“ We are leveraging
technology to enhance
the effectiveness and
efficiency of our contact
centre operatives,
particularly for complex
customer experience
activities such as sales
as a service”
Total contract value secured
£1,112m
(2022: £1,371m)
Book to bill
0.9x
(2022: 1.2x)
Average KPI performance
94%*
(2022: 93*%)
* excluding pensions administration
4. NelsonHall.
Capita plc Annual Report and Accounts
20
Strategic report

Operating review Experience continued
Growth performance and key wins
In 2023, the division won TCV of £1,112m, a
decrease of £258m from 2022. The division’s
book to bill ratio was 0.9x. Material wins in the
year included contracts for the Civil Service
Pension Scheme, National Transport Authority
Ireland, and Santander, as well as a key renewal
with Virgin Media O2.
At 31 December 2023, the division’s unweighted
pipeline was £2,856m, a decrease of £1,226m
from 2022. The weighted pipeline at 31 December
2023 stood at £560m (2022: £1,114m) and,
following the sales success achieved in 2023, we
are devoting significant resources to growing our
pipeline of opportunities, particularly for new and
expanded scopes of work.
The renewal win rate reduced to 61% from 99%
in the prior year principally reflecting the outcome
of the Teachers’ Pension Scheme contract
tender process where we continued to maintain
our commercial discipline. Our win rate for the
division across all opportunities was 57%, up
from 51% in 2022.
At the start of 2024, the division secured an
extension and expansion with an existing client in
the European telecoms business worth £220m.
The order book at year end was £2,299m, a
decrease of £227m since 31 December 2022,
reflecting the fact that the Virgin Media O2
contract is a framework agreement not meeting
the accounting criteria for order book recognition.
Operational excellence and
cost efficiency
Across the year, Experience has continued
to deliver well operationally for clients with
an average KPI delivery of 94%, excluding the
pensions administration business. The average
KPI delivery including the pensions administration
business was 82%. The division’s cNPS decreased
by 11 points to +10 with the reduction largely in
the pensions administration business which was
heavily impacted by the cyber incident. Excluding
the pensions administration business, the division’s
cNPS was +24, a three-point reduction from
2022 with a strong performance in account
management and subject matter expertise.
In 2023, we focused on cost efficiency and right
sizing of the business and are continuing to drive
this efficiency programme as we progress
into2024.
In the Telecoms, Media & Technology vertical,
we saw success in the year selling the services
of our customers through peak sales periods.
For one client, Capita employees sold more
during Black Friday trading promotions than
the telecoms provider’s own employees. Within
the Energy & Utilities vertical, we successfully
delivered a significant step up in available hours
around peak demand in Q4 to ensure efficient
outcomes for clients and their customers.
Elsewhere, in the European Telecoms business we
were selected as sole provider of one of our key
client’s customer experience activities reflecting
our consistently strong operational delivery.
As expected, we have seen volume attrition
within our closed book Life & Pensions business
in the Financial Services vertical. We maintain our
strong operational delivery in respect of these
closed book contracts, but are actively engaged
in discussions to resolve the challenges in this
area with a view to mitigating the ongoing cash
cost from the business.
Financial performance
Adjusted revenue
1
grew by 2.5% to £1,183.5m,
benefiting from the one-off effect of a commercial
settlement in our closed book Life & Pensions
business. There were wins within the division’s
international markets which offset contract losses
and volume attrition in the Financial Services
vertical, including the previously announced
loss of our contract with the Co-operative Bank.
Adjusted operating profit
1
rose to £50.9m
(2022: £35.7m). The division benefited from
the profit impact of the commercial settlement
noted above and higher interest receipts in
the pensions business, which more than offset
contract losses and continued attrition in the
remaining closed book Life & Pensions business.
Operating cash flow excluding business exits
1
decreased by 9.4% to £32.7m, reflecting the
non-cash nature of the commercial settlement,
partially offset by timing of payments on the
Virgin Media O2 contract.
Outlook
We expect a low to mid-single digit percentage
revenue reduction in 2024 reflecting the non-
repeat of the one-off revenue benefit in 2023
and ongoing attrition in the closed book Life
& Pensions business.
We expect operating margins in 2024 to be
broadly flat year on year as cost efficiencies
offset the non-recurrence of the profit benefit
from 2023’s commercial settlement.
“ In 2023, we focused on
cost efficiency and right
sizing of the business and
are continuing to drive this
efficiency programme as
we progress into 2024”
1. Refer to APMs on pages 230 to 233.
Capita plc Annual Report and Accounts
21
Strategic report

Chief Financial Officer’s review
Overview
Adjusted revenue
1
growth of 1.3% reflected
underlying growth on contracts such as the
Personal Independence Payments contract
in Public Service, increases in indexation, and
the one-off benefit relating to a commercial
settlement in the closed book Life & Pensions
business in Experience, partly offset by the
impact of a number of contract losses.
Public Service revenue growth was underpinned
by indexation, scope increases on the Royal Navy
Training contract and increased volumes on the
Personal Independence Payments contract,
offset by contract hand-backs and losses
in Local Public Services and a step down in
revenues in Northern Ireland, which in 2022
benefited from the teachers’ laptop contract.
Experience revenue growth was driven by
improved trading in its international business,
indexation and the one-off benefit relating to a
commercial settlement in the closed book Life
& Pensions business, partly offset by contract
losses including with the Co-operative Bank.
The 13.5% step-up in adjusted profit before
tax
1
reflected the revenue trends noted above,
in particular the commercial settlement in
Experience, and a reduction in bonuses and
variable pay, offset by increased financing costs.
Adjusted basic earnings per share
1
reduced to
1.70p (2022: 2.64p) as the increase in adjusted
profit before tax
1
was offset by an increase
in the adjusted current tax charge to £30.4m
(2022: £6.4m). The adjusted current tax charge
Delivering efficiency and improved funding
in 2023 reflects an £18.1m charge mainly in
respect of losses not recognised for tax purposes
which is shown in the income statement. There is
an offsetting current tax credit arising on pension
deficit contributions which is recognised in other
comprehensive income rather than the income
statement. While the adjusted earnings per share
are impacted by a particularly high effective tax
rate in 2023’s income statement, the underlying
rate of cash tax for the Group is much lower
and we anticipate cash tax payments in 2024
of less than £10m.
The reported loss before tax of £106.6m
(2022: profit £61.4m), reflects exceptional
costs incurred in resolving the March 2023 cyber
incident (£25.3m), costs incurred to deliver the
significant cost reduction programme announced
in November 2023 (£54.4m) and lower gains on
the sale of businesses (2023: loss £2.4m; 2022:
gain £166.9m). These negative year-on-year
impacts were partially offset by the increase
in adjusted profit before tax
1
(£6.7m) and
lower goodwill impairment (2023: £42.2m;
2022: £169.0m).
Summary of financial performance
Financial highlights
Reported results Adjusted
1
results
31 December
2023
31 December
2022
Reported
YoY change
31 December
2023
31 December
2022
Adjusted
1
YoY change
Revenue £2,814.6m £3,014.6m (6.6)% £2,642.1m £2,609.0m 1.3%
Operating (loss)/profit £(52.0)m £(79.6)m 35% £106.5m £78.0m 37%
EBITDA £144.5m £235.7m (39)% £214.6m £204.4m 5%
(Loss)/profit before tax £(106.6)m £61.4m n/a £56.5m £49.8m 14%
Basic (loss)/earnings per share (10.60p) 4.47p n/a 1.70p 2.64p (36)%
Operating cash flow* £81.2m £156.4m (48)% £97.4m £128.4m (24)%
Cash generated from
operations* £8.7m £117.8m (93)% £41.2m £98.4m (58)%
Free cash flow*
,2
£(154.9)m £(31.5)m (392)% £(115.5)m £(42.4)m (172)%
Net debt £(545.5)m £(482.4)m £(63.1)m £(545.5)m £(482.4)m £(63.1)m
Net financial debt (pre-IFRS 16) £(182.1)m £(84.9)m £(97.2)m £(182.1)m £(84.9)m £(97.2)m
Tim Weller, Chief Financial Officer
“ The steps taken to
improve the Group’s
funding position and the
efficiency programme
launched at the start of
2024 are key underpins
forCapita’s future”
1. Refer to APMs on pages 230 to 233.
2. From 1 January 2023 free cash flow and free cash flow excluding business exits are presented after deducting the capital
element of lease payments and receipts. Comparative amounts have been re-presented.
* Adjusted operating cash flow, cash generated from operations and free cash flow exclude the impact of business exits
(refer to note 2.9)
Capita plc Annual Report and Accounts
22
Strategic report

Chief Financial Officer’s review continued
The reduction from reported basic earnings per
share to a reported loss per share reflects the
reduction in reported profit before tax noted
above, compounded by the swing from a
reported income tax credit to an income tax
charge. The reported income tax charge in 2023
reflects changes in the accounting estimate of
recognised deferred tax assets, unrecognised
current year tax losses and non-deductible
goodwill impairment. The reported tax credit
in the prior period reflected an increase in the
recognised deferred tax asset.
Cash generated from operations excluding
business exits
1
decreased, as expected, from
£98.4m to £41.2m, driven by the cash costs of
the cyber incident and higher working capital
outflows partly offset by reduced outflows in
respect of provisions.
Free cash flow excluding business exits
1,2
in the
year ended 31 December 2023 was an outflow
of £115.5m (2022: outflow £42.4m). This reflects
the reduction in cash generated from operations
and increased capital expenditure from
technology investment across the Group.
The decrease in free cash flow
1,2
reflects the
above reduction in free cash flow excluding
business exits
1,2
, a cash outflow from business
exits, and an increase in pension deficit
contributions triggered by disposals.
As part of our drive for simplification of the
business, and strengthening the balance sheet,
we have continued to dispose of non-core
businesses. During 2023 we completed the
disposal of the Resourcing, Security Watchdog,
PageOne, Enforcement, Software, and Travel
businesses, realising total proceeds net of
disposal costs of £96.8m (including settlement
of intercompany balances on completion) with
net cash proceeds of £63.4m reflecting the cash
held in the disposed entities on completion. On
4 December 2023, we announced the disposal
of the Group’s 75% shareholding in Fera Science
Limited (Fera), realising gross proceeds of £62m.
The Group received net cash proceeds of £51m
reflecting the total proceeds less cash held in
the entity when the disposal completed on
17 January 2024, and disposal costs.
These disposals completed the Board-approved
Portfolio c.£500m business disposal programme.
The Group is using the proceeds from this
disposal programme to repay debt, to make
further deficit reduction contributions to the
Group’s defined benefit pension scheme and
to invest in driving growth in the remaining core
businesses. In 2023, we repaid £112.5m of
private placement loan notes and made pension
deficit contributions of £46.3m (£30.0m regular
contributions and £16.3m acceleration of agreed
contributions triggered by disposals).
We have incurred costs associated with the
cyber incident detailed in the Chief Executive
Officer’s review. These costs comprise specialist
professional fees, recovery and remediation
costs and acceleration of investment to reinforce
Capita’s cyber security environment. A charge of
£25.3m has been recognised in the year ended
31 December 2023 and has been excluded
from adjusted profit. This excludes any potential
insurance recovery as this had not yet met the
criteria for recognition at the year end. The cash
outflow in respect of the cyber incident in the
year was £20.1m which is included within free
cash flow and cash generated from operations
excluding business exits
1
.
We announced the implementation of a cost
reduction programme in November 2023 which
is expected to deliver annualised efficiencies
of £60m from Q1 2024. Following the
announcement, we commenced employee
consultation programmes, and exited a number
of leased properties. As a result, a charge of
£54.4m has been recognised in the year ended
31 December 2023. As noted in November 2023,
we have continued to evaluate additional cost
saving opportunities and have identified further
efficiency actions which we intend to take and
which are expected to deliver an additional
£100m of annualised cost savings by mid 2025.
We expect to reinvest a proportion of these
further savings back into the business to enhance
the Group’s technology, service delivery and
pricing proposition.
The Group’s committed bank facilities provide
liquidity for the cash fluctuations of the business
cycle and an allowance for contingencies. In
June 2023, the Group’s revolving credit facility
(RCF) was extended to 31 December 2026 at
£284m, reducing to £250m by 1 January 2025
as a consequence of specified transactions. As
such at 31 December 2023 the RCF commitment
had been reduced to £260.7m (2022: £288.4m)
and was subsequently reduced to £250.0m on
23 January 2024 following receipt of proceeds
from the Fera disposal. The RCF was not drawn
upon at 31 December 2023 (2022: undrawn).
In July 2023 the Group issued £101.9m equivalent
of US private placement loan notes across three
tranches: £50m maturing 25 July 2026, USD45m
maturing 25 July 2026 and USD23m maturing
25 July 2028.
The RCF extension and private placement
loan note issuance are a demonstration of debt
providers’ confidence in Capita and have enabled
us to extend significantly the average maturity of
our debt funding.
The Group reached agreement with the Trustees
of the Group’s main pension scheme (the Scheme),
in respect of the March 2023 triennial funding
review. Given the healthy funding position of the
Scheme, the 2023 agreement does not require
any further deficit contributions from the Group
other than those already committed as part of
the 2020 triennial valuation. In accordance with
the 2020 agreement, we have paid £30.0m
of regular deficit contributions and £16.3m of
contributions triggered by business disposals in
2023 and will pay a further £21m of contributions
in 2024, with no further deficit contributions in
2025 and beyond.
Summary of financial performance
Adjusted results
Capita reports results on an adjusted basis
to aid understanding of business performance.
The Board has adopted a policy of disclosing
separately those items that it considers are
outside the underlying operating results for the
particular period under review and against which
the Group’s performance is assessed internally.
In the directors’ judgement, these items need to
be disclosed separately by virtue of their nature,
1. Refer to APMs on pages 230 to 233.
2. From 1 January 2023 free cash flow and free cash flow excluding business exits are presented after deducting the capital
element of lease payments and receipts. Comparative amounts have been re-presented.
“ The RCF extension
and private placement
loan note issuance are
a demonstration of debt
providers’ confidence in
Capita and have enabled
us to extend significantly
the average maturity of
our debt funding”
Capita plc Annual Report and Accounts
23
Strategic report

Chief Financial Officer’s review continued
size and/or incidence for users of the financial
statements to obtain an understanding of the
financial information and the underlying in-period
performance of the business. In general, the Board
believes that alternative performance measures
(APMs) are useful for investors because they
provide further clarity and transparency of the
Group’s financial performance and are closely
monitored by management to evaluate the
Group’s operating performance to facilitate
financial, strategic and operating decisions.
Following feedback from investors, the Board has
revised its definition of free cash flow
1
and free
cash flow excluding business exits
1
alternative
performance measures. From 1 January 2023,
both these metrics have been presented after
deducting the capital element of lease payments
and receipts, as this provides a more relevant
and comparable measure of the cash generated
by the Group’s operations and available to fund
operations, capital expenditure, non-lease debt
obligations, and potential dividends. Comparative
amounts have been re-presented.
In accordance with the above policy, the
trading results of business exits, along with
the non-trading expenses (including the income
statement charges in respect of major cost
reduction programmes) and gain or loss on
disposals, have been excluded from adjusted
results. To enable a like-for-like comparison of
adjusted results, the 2022 comparatives have
been re-presented to exclude 2023 business
exits. As at 31 December 2023, the following
businesses met this threshold and were classified
as business exits and therefore excluded from
adjusted results in both 2023 and 2022: AMT
Sybex, Secure Solutions and Services, the
Speciality Insurance business, Trustmarque, Real
Estate and Infrastructure Consultancy, Optima
Legal Services, Pay360, Capita Translation and
Interpreting, Resourcing, Security Watchdog,
PageOne, Software, Enforcement, Travel and Fera.
Reconciliations between adjusted and reported
operating profit, profit before tax and free cash
flow before business exits are provided on
thefollowing pages and in the notes to the
financial statements.
Adjusted revenue
Adjusted revenue
1
growth was 1.3% year-on-
year. The adjusted revenue
1
was impacted by
the following:
• Public Service (0.3% growth): growth was
underpinned by indexation, scope increases
and improved trading on a number of contracts
including the Royal Navy Training contract and
the Personal Independence Payments contract.
This was offset by contract hand-backs and
losses in Local Public Services and non-
recurrence of the contract to provide laptops
to teachers in Northern Ireland in 2022; and
• Experience (2.5% growth): growth was driven
by improved international trading, indexation,
and the one-off benefit relating to a commercial
settlement in the closed book Life & Pensions
business, partly offset by contract losses,
primarily the loss of the Co-operative
Bankcontract.
Order book
The Group’s consolidated order book
was £5,882.6m at 31 December 2023
(2022: £5,805.2m). Additions from contract wins,
scope changes and indexation in 2023 totalled
£2,417.5m. This includes in Experience new wins
with the Civil Service Pension Scheme and the
National Transport Authority of Ireland, as well
as the renewal with Vattenfall. Public Service
Adjusted revenue
1
bridge by division
Public Service
£m
Experience
£m
Total
£m
Year ended 31 December 2022 1,454.8 1,154.2 2,609.0
Net growth 3.8 29.3 33.1
Year ended 31 December 2023 1,458.6 1,183.5 2,642.1
Adjusted profit before tax
1
bridge by division
Public Service
£m
Experience
£m
Capita plc
£m
Total
£m
Year ended 31 December 2022 93.7 35.7 (79.6) 49.8
Net growth/(reduction) (4.4) 15.2 (4.1) 6.7
Year ended 31 December 2023 89.3 50.9 (83.7) 56.5
1. Refer to APMs on pages 230 to 233.
won new contracts including the Functional
Assessment Service for the Department of Work
and Pensions and a significant contract with the
City of London Police, as well as an extension to
the Recruiting Partnering Project with the British
Army and expanded scope on the Transport for
London contract.
These additions were offset by the reduction
from revenue recognised in the year (£2,101.0m),
contract terminations (£174.7m) and business
disposals (£64.4m).
The Group’s order book does not include those
contracts which are framework agreements such
as the new Virgin Media O2 contract as these
donot meet the accounting criteria for order
book recognition.
Adjusted profit before tax
Adjusted profit before tax
1
increased in 2023.
The adjusted profit before tax
1
was driven by
thefollowing:
• Public Service: the beneficial impact of the
scope increases and improved trading on
a number of contracts discussed above,
offset by the impact of contract exits in
Local Public Service;
• Experience: the flow through of the revenue
benefits noted above, in particular the closed
book Life & Pensions contract settlement, as
well as higher interest receipts in our pension
business partly offset by flow through of prior
year contract losses in particular the Co-
operative Bank and continued attrition in
the remaining Life & Pensions business; and
• Capita plc: the impact of the reallocation of
central costs previously allocated to Capita
Portfolio to Capita plc in 2022, increased
financing cost and the non-recurrence of
gains on investments in 2022.
Capita plc Annual Report and Accounts
24
Strategic report

Chief Financial Officer’s review continued
Adjusted tax charge/(credit)
The adjusted income tax charge for the year
was £31.1m (2022: £4.4m) including £30.4m
of current tax (2022: £6.4m). There is a current
tax credit arising on pension deficit contributions
recognised in other comprehensive income (OCI)
rather than the income statement. If the current
tax that is flowing through OCI is taken into
account, the total current charge is more closely
aligned to the current tax payable in respect of
the year.
Cash generated from operations and free
cashflow
Adjusted operating cash conversion
1
decreased
to 45% (2022: 63%), driven by:
• the reduction in working capital, which reflects
the £28.0m benefit in 2022 of a step-up in the
usage of the Group’s non-recourse facilities
in 2022 whereas in 2023 there was a £9.3m
reduction in usage, a reduction in the accrual
for management bonuses and variable pay,
and the non-cash nature of the commercial
settlement in the closed book Life & Pensions
business in Experience; and
• the lower outflow related to provisions in 2023
reflected in the movement in non-cash and
other adjustments.
Cash generated from operations excluding
business exits
1
reflects the above and the direct
cash flow impact of the cyber incident (£20.1m).
The £30.0m of pension deficit contributions are in
line with the deficit funding contribution schedule
previously agreed with the scheme trustees as
part of the 2020 triennial valuation.
Free cash flow before business exits
1,2
for the
year ended 31 December 2023 was an outflow
of £115.5m (2022: outflow £42.4m). This reflects
the reduction in cash generated from operations
and increased capital expenditure on technology
across the Group.
Reported results
Adjusted to reported profit
As noted above, to aid understanding of our
underlying performance, adjusted operating profit
1
and adjusted profit before tax
1
exclude anumber
of specific items, including the amortisation and
impairment of acquired intangibles and goodwill,
the impact of business exits, and, in 2023,
the impacts of the cyber incident and cost
reduction programme.
Impairment of goodwill
In preparing its half yearly condensed
consolidated financial statements at 30 June 2023,
and these consolidated financial statements at
31 December 2023, the Group undertook
detailed impairment reviews.
At 30 June 2023 a goodwill impairment of
£42.2m was recognised. This comprised:
• £35.3m: in respect of CGUs in the Group’s
Portfolio division where the disposal processes
of the businesses aligned to these CGUs
were sufficiently advanced that the Board’s
judgement was that for impairment testing
purposes the value in use of these CGUs
should be determined based on the future
cash flows of the CGUs from continuing use,
up to the estimated date of disposal, plus
an estimate of the sale proceeds less cost
of disposal. The impairments arose primarily
due to the expectation of acquirers factoring in
additional investment and costs required to run
the businesses outside the Group, and general
macroeconomic conditions; and
Adjusted operating profit to free cash flow excluding business exits
1,2
2023
£m
2022
£m
Adjusted operating profit
1
106.5 78.0
Add: depreciation/amortisation and impairment of property, plant and
equipment, right-of-use assets and intangible assets 108.1 126.4
Adjusted EBITDA
1
214.6 204.4
Working capital (110.7) (30.7)
Non-cash and other adjustments (6.5) (45.3)
Operating cash flow excluding business exits
1
97.4 128.4
Adjusted operating cash conversion
1
45% 63%
Pension deficit contributions (30.0) (30.0)
Cyber incident (20.1) –
Cost reduction programme (6.1) –
Cash generated from operations excluding business exits
1
41.2 98.4
Net capital expenditure (58.9) (38.0)
Interest/tax paid (45.1) (47.5)
Net capital lease payments (52.7) (55.3)
Free cash flow excluding business exits
1,2
(115.5) (42.4)
1. Refer to APMs on pages 230 to 233.
2. From 1 January 2023 free cash flow and free cash flow excluding business exits are presented after deducting the capital
element of lease payments and receipts. Comparative amounts have been re-presented.
Adjusted
1
to reported results bridge
Operating (loss)/profit (Loss)/profit before tax
2023
£m
2022
£m
2023
£m
2022
£m
Adjusted
1
106.5 78.0 56.5 49.8
Amortisation and impairment of acquired
intangibles (0.2) (5.1) (0.2) (5.1)
Impairment of goodwill (42.2) (169.0) (42.2) (169.0)
Net finance costs/(income) – – (2.2) 3.4
Business exits (36.4) 16.5 (38.8) 182.3
Cyber incident (25.3) – (25.3) –
Cost reduction programme (54.4) – (54.4) –
Reported (52.0) (79.6) (106.6) 61.4
Capita plc Annual Report and Accounts
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Strategic report

Chief Financial Officer’s review continued
• £6.9m: in respect of a business in the Business
Solutions group of CGUs in Portfolio. The
impairment arose primarily due to a negotiated
exit of an end customer, which has negatively
impacted the forecast financial performance of
the business.
At 31 December 2023, no further goodwill
impairment was identified.
Refer to note 3.4 to the consolidated financial
statements for further details.
Business exits
Business exits include the effects of businesses
that have been disposed of or exited during the
period and the results of businesses held for sale
at the balance sheet date.
In accordance with our policy, the trading results
of these businesses, along with the non-trading
expenses and gains/(losses) recognised on
business disposals, were classified as business
exits and therefore excluded from adjusted
results. To enable a like-for-like comparison
of adjusted results, the 2022 comparatives
have been re-presented to exclude the 2023
business exits.
In addition to the disposals set out in the table to
the right, the Group decided to exit a small
business in Public Service in the second half of
the year, and the trading result and non-trading
expenses of this business have been excluded
from adjusted results.
Cyber incident
The Group has incurred exceptional costs
associated with the cyber incident, reflecting the
complexity of the forensic analysis of exfiltrated
data. These costs comprise specialist professional
fees, recovery and remediation costs and
investment to reinforce Capita’s cyber security
environment. A charge of £25.3m has been
recognised in the year ended 31 December
2023. This charge excludes any potential
insurance recovery, as this had not yet met
the criteria for recognition at the end of the year,
and no provision has been made for any costs in
respect of potential claims or regulatory penalties
in respect of the incident as it is not possible,
at this stage, to reliably estimate their value.
Further detail of the specific items charged in
arriving at reported operating profit and profit
before tax for 2023 is provided in note 2.4 to
the consolidated financial statements.
Cost reduction programme
We announced the implementation of a major cost
reduction programme in November 2023 which is
expected to deliver annualised efficiencies of £60m
from Q1 2024. Following this announcement, we
commenced employee consultation programmes
and exited a number of leased properties.
The organisational changes primarily impacted
indirect support function and overhead roles.
At 31 December 2023 business exits primarily comprised the following
business disposals:
Business Disposal completed on
Resourcing 31 May 2023
Security Watchdog 31 May 2023
Page One 31 July 2023
Software 31 July 2023
Enforcement 31 July 2023
Travel 14 November 2023
Fera 17 January 2024
1. Refer to APMs on pages 230 to 233.
A charge of £54.4m has been recognised in
the year ended 31 December 2023, comprising
£23.3m of redundancy and other costs, and
impairments of right-of-use assets and property,
plant and equipment, and provisions of
unavoidable running costs in respect of the
property exits totalling £31.1m. The cash outflow
in 2023 in respect of the cost reduction
programme was £6.1m which is included within
free cash flow and cash generated from
operations excluding business exits
1
. The Group
continues to evaluate additional cost saving
opportunities and expects to implement further
cost reduction initiatives expected to deliver
annualised efficiencies of £100m by the middle
of2025. These further cost reduction initiatives
are expected to result in a step up in cost
reduction programme cash costs in 2024 from
£21m arising from the programme announced in
November 2023 to an estimated £50m for the
overall programme.
Net finance costs
Net finance costs increased by £20.5m to
£52.2m (2022: £31.7m), primarily attributable
to the higher interest rate environment and
run-off of low-coupon debt.
Reported tax charge/(credit)
The reported income tax charge for the
year of £74.0m (2022: credit £14.6m) reflects
the changes in the accounting estimate of
recognised deferred tax assets, unrecognised
current year tax losses and non-deductible
goodwill impairment. The prior period credit
reflected an increase in the recognised
deferred tax asset.
Capita plc Annual Report and Accounts
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Strategic report

Chief Financial Officer’s review continued
Free cash flow to free cash flow excluding
business exits
Free cash flow
1,2
was lower than free cash flow
excluding business exits
1,2
reflecting free cash
outflows generated by business exits, and
pension deficit contributions triggered by the
disposal of Pay360 and Capita Translation
and Interpreting in the second half of 2022
and Resourcing in 2023.
Movements in net debt
Net debt at 31 December 2023 was £545.5m
(2022: £482.4m). The increase in net debt over
the year ended 31 December 2023 reflects the
free cash outflow noted above offset by the
continued reduction in our leased property
estate. Net financial debt (pre-IFRS 16) at
31 December 2023 was £182.1m
(2022: £84.9m).
Net financial debt (pre-IFRS 16) increased by
£97.2m to £182.1m at 31 December 2023,
resulting in a net financial debt to adjusted
EBITDA
1
(both pre-IFRS 16) ratio of 1.2x.
Over the medium term the Group is targeting
a net financial debt to adjusted EBITDA
1
(both
pre-IFRS 16) ratio of ≤1.0x. If the sale of the
Group’s investment in Fera had completed
at 31 December 2023, the ratio would have
been 0.9x
1
.
The Group was compliant with all debt covenants
at 31 December 2023.
Capital and financial risk management
Liquidity remains an area of focus for the Group.
Financial instruments used to fund operations
and to manage liquidity comprise US private
placement loan notes, RCF and overdrafts.
Net debt
2023
£m
2022
£m
Opening net debt (482.4) (879.8)
Cash movement in net debt (9.0) 438.2
Non-cash movements (54.1) (40.8)
Closing net debt (545.5) (482.4)
Remove closing IFRS 16 impact 363.4 397.5
Net financial debt (pre-IFRS 16) (182.1) (84.9)
Cash and cash equivalents net of overdrafts 67.6 177.2
Financial debt net of swaps (249.7) (262.1)
Net financial debt/adjusted EBITDA
1
(both pre-IFRS 16) 1.2x 0.5x
Net debt (post-IFRS 16)/adjusted EBITDA
1
2.4x 2.0x
The Group’s committed bank facilities provide
liquidity for the cash fluctuations of the business
cycle and an allowance for contingencies. In June
2023, the RCF was extended to 31 December
2026 at £284m, reducing to £250m by 1 January
2025 as a consequence of specified transactions.
As such at 31 December 2023 the RCF
commitment had been reduced to £260.7m
(2022: £288.4m) and was subsequently reduced
to £250m on 23 January 2024 following
receipt of proceeds from the Fera disposal.
The RCF was not drawn upon at 31 December
2023 (2022: undrawn).
In addition, the Group has in place non-recourse
trade receivable financing, utilisation of which
has become economically more favourable than
drawing under the RCF as prevailing interest
rates have increased. As such, the Group has
continued its use of the facility across the year
with the value of invoices sold under the facility
at 31 December 2023 of £35.2m (2022: £44.4m).
In July 2023 the Group issued £101.9m
equivalent of US private placement loan notes
across three tranches: £50m maturing 25 July
2026, USD45m maturing 25 July 2026 and
USD23m maturing 25 July 2028.
In 2023, the Group repaid £112.5m of private
placement loan notes including £30.3m of
Euro private placement loan notes which were
originally due in 2027, following which the next
debt maturity is January 2025.
At 31 December 2023, the Group had £67.6m
(2022: £177.2m) of cash and cash equivalents
net of overdrafts, and £262.5m (2022: £285.5m)
of private placement loan notes and fixed-rate
bearer notes.
1. Refer to APMs on pages 230 to 233.
2. From 1 January 2023 free cash flow and free cash flow excluding business exits are presented after deducting the capital
element of lease payments and receipts. Comparative amounts have been re-presented.
Free cash flow
1,2
to free cash flow excluding business exits
1
2023
£m
2022
£m
Free cash flow
1,2
(154.9) (31.5)
Business exits 23.1 (19.5)
Pension deficit contributions triggered by disposals 16.3 8.6
Free cash flow excluding business exits
1,2
(115.5) (42.4)
Available liquidity
1
2023
£m
2022
£m
Revolving credit facility (RCF) 260.7 288.4
Less: drawing on committed facilities – –
Undrawn committed facilities 260.7 288.4
Cash and cash equivalents net of overdrafts 67.6 177.2
Less: restricted cash (46.0) (60.4)
Available liquidity
1
282.3 405.2
Capita plc Annual Report and Accounts
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Strategic report

Chief Financial Officer’s review continued
The valuation of the Scheme liabilities (and
assumptions used) for funding purposes (the
actuarial valuation) is specific to the circumstances
of the Scheme. It differs from the valuation and
assumptions used for accounting purposes,
which are set out in IAS 19 and shown in these
consolidated financial statements. The main
difference is in assumption principles being
used, which is a result of the different regulatory
requirements of the valuations. Management
estimates that at 31 December 2023 the net
asset of the Scheme on a funding basis (ie the
funding assumption principles adopted for the
full actuarial valuation at 31 March 2023 updated
for market conditions at 31 December 2023) was
approximately £81.0m (2022: net asset £40.0m)
on a technical provisions basis. The Trustee of
the Scheme has also agreed a secondary more
prudent funding target to enable it to reduce the
reliance the Scheme has on the covenant of the
Group. On this basis, at 31 December 2023, the
funding level was around 99% (or a net liability of
£6m). The deficit of £6m is expected to be met
by the remaining deficit contributions.
The net defined benefit pension position of all
reported defined benefit schemes for accounting
purposes decreased from a surplus of £39.6m
at 31 December 2022 to a surplus of £26.8m at
31 December 2023. The main reasons for this
movement are the reduction in the discount rate
applied to the schemes’ liabilities following the
fall in corporate bond yields in the final quarter
of 2023 and assets returning less than expected
over the period, partially offset by the above
deficit funding contributions.
Consolidated balance sheet
At 31 December 2023 the Group’s consolidated
net assets were £114.9m (2022: net assets
£352.7m).
The movement is predominantly driven by the
reported loss before tax for the year as explained
above, the actuarial loss on all reported defined
benefit pension schemes and the reduction in
the amount of deferred tax assets recognised.
Parent company balance sheet
The company’s market capitalisation continues
to be significantly less than the net assets of the
parent company at 31 December 2023 and the
directors gave consideration as to why this might
be the case and whether assets on the parent
company balance sheet might be impaired. The
factors considered included: the differing basis of
valuations (including that third parties value the
services sector on income statement multiples
versus long-term view using a discounted cash
flow for the basis of impairment testing under
accounting standards), sum-of-the parts view
and the multiples achieved on recent disposals,
general market assumptions of the sector which
can ignore the liquidity profile and specific risks
of an entity, and other specific items impacting
the market’s view of the Group at the moment.
Management’s estimate of the fair value less
costs to sell of the Group used in the testing
of goodwill and intangibles for impairment at
31 December 2023 gave a value for the Group that
exceeded the market capitalisation at that date,
and supported the parent company net assets.
An impairment test was performed at
31 December 2023 in respect of the parent
company’s investments in subsidiaries and
amounts owed by subsidiary undertakings.
A net impairment reversal of £1.7m was identified
in respect of the parent company’s investments
in subsidiaries, and a net impairment of £0.4m
was recognised in respect of amounts owed
by subsidiaries.
Going concern
The Board closely monitors the Group’s
funding position throughout the year, including
compliance with covenants and available facilities
to ensure it has sufficient headroom to fund
operations. In addition, to support the going
concern assumption, the Board conducts a
robust assessment of the projections, considering
also the committed facilities available to the Group.
The Group and Parent Company continue to
adopt the going concern basis in preparing these
consolidated financial statements as set out in
Section 1 to the consolidated financial statements.
Viability assessment
The Board’s assessment of viability over the
Group’s three-year business planning time
horizon is summarised in the viability statement
on page 64.
Pensions
The Group reached agreement with the Trustees
of the Group’s main pension scheme (the Scheme)
in respect of the March 2023 triennial funding
review. Given the healthy funding position of the
Scheme, the 2023 agreement does not require
any further deficit recovery contributions from
the Group other than those already committed
as part of the 2020 triennial valuation.
In accordance with the 2020 agreement, the
Group paid £30.0m of regular deficit funding
contributions in 2023 and will pay a further £21m
of contributions in 2024, with no further deficit
contributions in 2025 and beyond. In addition,
the Group paid £16.3m of accelerated deficit
reduction contributions triggered by the disposal
of certain businesses in the second half of 2022
and in 2023.
“ The Group reached
agreement with the
Trustees of the Group’s
main pension scheme in
respect of the March 2023
triennial funding review…
with no further deficit
contributions in 2025 and
beyond”
Capita plc Annual Report and Accounts
28
Strategic report

The commitment to being a responsible
organisation continues to be a priority for Capita.
This means a constant, Group-wide focus on how
we operate for all our stakeholders – employees,
shareholders, clients, end-users and communities.
Our ESG (environmental, social and governance)
Committee, continued their work in 2023, focusing
on responsible business challenges, and providing
additional strategic oversight, accountability
and guidance.
Our approach to being a responsible business has
ensured that we remained focused on supporting
the United Nations’ Sustainable Development
Goals (UNSDGs) as well as addressing the issues
where we can have the biggest impact – through
our own operations, and the products and
services we provide to our clients.
In 2023, our activities continued to be focused
on: building a more inclusive organisation and
supporting our colleagues’ wellbeing; tackling
economic inequality; reducing our environmental
impact; and operating responsibly.
Among the significant range of activities
delivered, we are most proud of:
• our science-based climate targets, including
the collaborative work we have undertaken
with our suppliers;
• the substantial progress towards our diversity
goals including a decrease in our pay gap of
more than 5% compared with 2022, and being
Prioritising what matters
Being a responsible organisation is a priority for Capita
ranked 18 out of 400 on the Forbes global list
of top employers for women;
• our flexible working commitment;
• our continuous focus on wellbeing, health
and the safety of our colleagues; and
• supporting our communities with our
volunteering, payroll giving, apprenticeship
levy, gifting and fundraising programmes.
We also need to respond to a rapidly changing
external environment and difficult economic
situation, which affect the way we operate.
At the end of 2023, we took the difficult decision
to withdraw from the UK’s real living wage. Since
2020, the Group has increased the salaries of
our lowest earners by 22% and the 2024 real
living wage increase of 10.1% was not
something we could commit to given the need
for Capita to remain cost competitive, and
reflecting the fact that this is not a cost we are
able to pass on to clients.
We are, therefore, refreshing our responsible
business principles to ensure they prioritise the
areas of greatest concern for our organisation,
which includes the right governance, reporting
and risk management framework.
We will publish our updated principles and
responsible business progress report on our
website later in 2024.
Responsible business Highlights
Inclusion index (2022: 74%)
77%
Women on the Board** (2022: 56%)
56%
Colleagues feel safe at work (2022: 90%)
90%
Colleagues who feel they can be
themselves at work (2022: 83%)
84%
Ethnic minority representation on theBoard**
(2022: 22%)
22%
Colleagues supported through the SafetyNet*
process (2022: 219)
246
Volunteering hours logged (2022: 7,800)
21,000
Achieved
‘A’
CDP (Carbon Disclosure Project) score in 2023,
up from D in 2019
Cabinet Office compliance in the modern
slavery assessment tool
96%
Reported breaches of human rights or
modern slavery legislation (2022: zero)
Zero
Capita plc awarded
EcoVadis Silveraward
Payroll giving (2022: £180,000)
£141,000
Wellbeing index (2022: 71%)
72%
Of our senior leaders are women** (2022: 26%)
40%
2023 performance highlights
* see page 37 for further information on SafetyNet
** see page 36 for further information on gender and ethnicity representation
Capita plc Annual Report and Accounts
29
Strategic report

Responsible business at a glance
We are committed to being a responsible business – in how we operate, serve society, respect
our people and the environment, and deliver improving returns to our investors.
Responsible business
Our people – see pages 32 to 37 for more information. Also read ourgender and
ethnicity pay gap reporting online.
We want to make Capita a place that people want to join and where they want to stay –
a workplace that delivers on our four employee value proposition themes: be yourself; make
an impact; expand your horizons; and shape our future. We recognise the contributions of all
colleagues, supporting and paying them fairly for the work they do.
Key metrics 2023 2022
eNPS (points) -4 -9
Voluntary turnover (%) 24 30
Employee engagement index (%) 67 65
People survey response rate (%) 69 72
Our customers and clients – seepages 43 and 44 for moreinformation.
Also read our supplier charter and human rights policy online.
Our reputation depends on delighting our customers and clients. We are committed
to working with our supply-chain to ensure that together we can achieve wider social,
economic and environmental benefits.
Key metrics 2023 2022
cNPS (points) +16 +35
Supplier payment within 60 days (%) 99 99
Our investors – see page 47 for more information.
Input and feedback from our investors form important elements of our decision making and
strategic planning.
Key metrics 2023 2022
TSR (%) (9.3) (33.5)
Number of institutional contacts met in the year 86 98
The environment – see pages 40 to 42 and the TCFD section for more information.
Also read our achieving net zero report online.
Our three-phased approach aims to reach operational net zero by 2030; operational and
business travel net zeroby 2035; and full net zero by2045.
Key metrics 2023 2022
Change in carbon footprint (tCO
2
e)
1
+1,169 (4,322)
1. Units have been corrected to tCO
2
e from prior reporting in million gross tonnes.
Capita plc Annual Report and Accounts
30
Strategic report

United Nations Sustainability Development Goals
Goal 3:
Ensure healthy lives and promote well-being for all at
allages
Goal 5:
Achieve gender equality and empower all women and girls
Goal 10:
Reduce inequality within and among countries
Goal 8:
Promote sustained, inclusive and sustainable economic
growth, full and productive employment and decent work
for all
Goal 13:
Take urgent action to combat climate change and
itsimpact
We prioritise the wellbeing, safety, and health of
our workforce
We are committed to retaining female and
ethnically diverse talent as well as increasing
the proportion of diverse hires at all levels of
our business
We operate as a responsible, ethical business
and continuously strive to create a great in-work
experience for all our people
We are tackling climate change, reducing our
environmental impact, and working with our
clients and suppliers to help them do the same
How we support realisation of these goals
1. We promote wellbeing, health and safety throughout
our policies and standards
2. We keep our employees safe and healthy at work
3. We have comprehensive safeguarding standards
and procedures
4. We continuously work to understand, support and
improve the wellbeing of our global workforce
5. We offer occupational health to all employees as
required, and provide targeted health support for
employees in high-risk business areas
6. We offer an employee assistance programme or
similar for all our employees globally
7. We are committed to virtual first and flexible work
wherever possible
1. We promote inclusion, diversity and equity throughout
our policies and standards
2. We are committed to our recruitment, retention and
progression action plan, which includes:
a. Licence to hire – inclusive recruitment training
b. Internal first policy – vacancies advertised internally
initially to focus on internal growth
c. Members of the Moving Ahead programme
d. Mutual mentoring programmes for female and Black,
minority ethnic colleagues
e. RISE (reduce inequality and strive for equality)
development programmes
3. We aim to increase gender balance in leadership, senior
level roles and across our organisation
4. We provide access to an independent Speak Up process
to raise a concern
5. We work closely with our gender and EmbRACE
employee network groups to evolve and adapt our
policies, procedures and standards to be as inclusive
as possible
1. We have a clear code of conduct on which every
employee is trained, and has the opportunity to
independently and anonymously raise any breaches
or concerns
2. We are a good citizen, paying taxes in line with fair tax
mark as well as paying our suppliers on time, adhering
to the prompt payment code
3. We operate with fiscal responsibility, maintaining
appropriate debt levels
4. We are proactive in the prevention of bribery, corruption,
fraud tax evasion and anticompetitive practice
5. We perform consistently against recognised ESG
metrics, verified by accreditations such as EcoVadis,
the Dow Jones Sustainability Indices and Sustainalytics
6. We listen to employees’ views, and act on their
feedback, aiming to create a consistently great
employee experience for everyone
7. We work with our employee network groups to evolve
and adapt our policies, procedures and standards to
be as inclusive as possible
8. We operate on an internal-first talent model, aiming
to grow our own people, build skills and create
great careers
1. We promote climate change mitigation and
environmental matters throughout our policies
and standards
2. We engage with our suppliers through CDP supply
chain membership, and ask them to disclose to CDP
and set science-based targets
3. We work with our clients to drive decarbonisation and
help them to achieve their net zero goals
4. We have continued the consolidation of our property
portfolio, asking landlords to increase the percentage of
renewable energy used and implementation of energy
efficiency initiatives and solutions
5. We are accelerating the move to hybrid and electric
vehicles with supporting infrastructure
6. We are committed to virtual first and flexible working
wherever possible
7. We have introduced incentives, linked to net zero for
our executives and management
8. As part of our business review process, we report
quarterly on carbon emissions against target at
divisional level
Responsible business UNSDGs
Delivering against the United Nations Sustainable Development Goals
For more information about our workforce practices on
wellbeing, safety and health, see page 37
For more information about our commitment to people, see
pages 32 to 37 and our gender and ethnicity pay gap report
For more information about our commitment to growth
and people, see pages 32 to 37 and 43 and 44
For more information about our work to fight climate
change, see pages 40 to 42
Capita plc Annual Report and Accounts
31
Strategic report

Creating a compelling people experience
Workforce
43,000
people employed in 11 countries
2023 saw a continued commitment to creating
a workplace that delivers on our four-employee
value proposition (EVP) themes: be yourself;
make an impact; expand your horizons; and
shape our future. These themes were augmented
by our #bebrilliantbeyou campaign which was
received well externally and internally.
We were therefore particularly pleased to see
continuing improvements in our employee net
promoter score (eNPS), our engagement index,
and our wellbeing and inclusion indices. These,
combined with a reduction in our voluntary
attrition levels and recruitment of the resources
we need to meet the needs of our customers,
evidences an improving colleague experience.
We continued with our commitment to internal
mobility with more roles than ever being filled
bytalented internal colleagues through people
processes that are now simpler and
appliedglobally.
Other headline activities included the rollout
of our career path framework, supported by
a fair and consistent global reward framework.
We remain committed to providing equitable
opportunities through diversity and inclusion,
evidenced by our strong representation statistics
throughout Capita and the improvement in our
gender pay gap. More colleagues than ever
engaged with our digital training modules
and 2023 saw the launch of both our global
all colleague induction programme and a line
manager induction offering. Our virtual first,
hybrid working model remains an important
pillar in providing flexible working solutions for
our colleagues and continues to receive a
positive response from colleagues.
2024 will see us continuing to focus on engaging
and inspiring all our colleagues globally. Providing
clarity on career opportunities, developing skills
and investing in the leadership skills of our
managers and leaders are key deliverables
to meet the expectations of everybody who
works at Capita.
As part of our future strategy, we will also reset
our culture. Our culture is a critical enabler to
ensuring our people can deliver on our objectives.
We have identified key themes which include:
accountability and ownership; moving at pace;
a One Capita mindset; honesty; empathy and
compassion; and a cost-conscious mindset.
These themes will evolve over the coming
months but the sentiment will remain. We will
launch a new set of values and behaviours in
the coming months to support the culture reset.
Building an engaged workforce
We appreciate the importance of a highly engaged
workforce and we continue to implement measures
and interventions to ensure we achieve this.
In 2023 we continued with our pulse survey,
on top of our annual employee survey, to better
understand how our employees were feeling,
and ensure we were listening to, and acting
on their feedback.
Responsible business Our people
We were pleased to see that in our annual people
survey, completed in October by more than
30,000 employees globally, 73% of respondents
said their manager had both shared and acted
on survey results. We will work to continue
increasing this score in 2024.
In overall engagement, we saw positive
movement in 2023: our eNPS increased by five
points, while our employee engagement index
increased by 2%, wellbeing index by 1% and
inclusion index by 3%. In addition, 2023 was
the fifth year in which employees were able to
rate their line manager’s performance against
our manager commitments. These commitments
set out the additional behaviours we expect from
all our leaders and managers and affirm our
commitment to be a values-driven organisation.
In 2023, across all 10 commitments, more than
92% of respondents agreed that their manager
demonstrated our values and behaviours, 92%
of colleagues confirmed that they have open and
honest communication with their line managers
and 90% agreed that their manager helps
everyone to succeed to their full potential.
Thefeedback is fed into annual development
discussions and can inform managers’objectives.
“ I am proud of our
continued progress
in creating a consistent,
rewarding and engaging
experience for every
colleague globally at
Capita. 2023 saw us
continue to deliver on
our people goals with
notable successes in
attracting and retaining
talented colleagues”
Scott Hill
Chief People Officer
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Responsible business Our people continued
Our commitment to flexible,
remote working
In a market where many companies are now
expecting all employees to return to the office
post-Covid, we took a clear stance at Capita to
offer flexible and remote work, wherever client
and business needs allow, as part of a virtual-first
working approach.
We believe offering this flexibility will help us to
attract and retain high-quality and increasingly
diverse talent. For the second time, we asked
about working arrangements in our annual
people survey, and the data showed us that
those who work in a hybrid model, or from home,
are on average 5% more engaged than those
who work solely from an office or the field. 81%
of these individuals also say it is a key motivator
for them to remain working at Capita, an increase
of 2% compared with last year.
However, we acknowledge that fully remote
working does not suit everyone, and we encourage
colleagues to work from a local office when
needed, or to get together for team events.
We will continue to evaluate the impact of
this approach in 2024.
Performance and development
During 2023, we continued the development
of our career path framework (CPF). This is
a Capita-wide tool designed to enable our
colleagues to plan and develop their careers.
It provides a map of the whole organisation,
enabling colleagues to view the role they
are in, behavioural, leadership and technical
competencies for roles across the organisation
and identify what they need to do to progress
and move to another position in the organisation.
This framework forms the foundation of many of
our development and people processes.
We continue with our annual appraisal process
which includes a discussion based on the
colleague’s achievement against their objectives,
values, strengths, areas for development,
feedback, future targets as well as learning
needs, and plan for career progression. Reviews
are multidimensional with a focus on both the
‘what’ in terms of performance against objectives
and the ‘how’ performance against our Capita
Values. Employees are encouraged to seek 360
degree feedback and focus on their development
areas. For 2023 end of year appraisals, 98%
(2022: 91%) of our employees had a performance
review documented in our HR system.
Training
We continue to see positive engagement with
our diverse training opportunities. Our focus
is to ensure our colleagues are trained and well
equipped to perform their roles and deliver on
our client commitments. We also continue to
provide broader training resources to enhance
learning and support career development. Our
focus has been on a global delivery approach to
ensure consistency and building a suite of flexible
resources delivered through multiple channels.
We introduced a new suite of resources to
enhance leadership capability including a focus
on leading oneself, leading others and leading
the organisation. Included in this is a coaching
framework to enable consistency and encourage
more meaningful career conversations. We
continue to be agile and adapt learning resources
to meet the needs of the business. In 2023, we
introduced a new global induction programme,
which supports colleague retention through
demonstrating why people are proud to work
forCapita.
“ I highly recommend
the RISE programme to
anyone who is looking for
a personal and professional
transformation. Working
through the modules
I have discovered the value
of my own experiences
and being able to share
those among women who
can relate on all different
levels has been invaluable
to my learning. Being
vulnerable is one of the
hardest skills to master yet
this programme provides
you with a platform, to
not only be vulnerable and
open, but to feel accepted
and heard. As a result of
this programme, I have
developed a clear vision
for my career and a plan
to achieve it”
Katie Wheeler
Talent Acquisition Partner,
Process & Continuous Improvement
Lead, Public Services
We developed new resources within our Academy
to support colleagues’ skills development in areas
such as sales and data, both of which bring in
external expertise to share industry best practice
and help to ensure specialist knowledge is shared
across our specialisms.
We are proud to have successfully continued
our RISE (reduce inequality strive for equality)
and RISE for women programmes which are
specifically designed for Black, Asian and
minority ethnic and female colleagues to help
them transform their careers in Capita. We saw
high levels of engagement in these programmes
and many of those who have undertaken
the learning have expanded their role, been
promoted, or are now leading a project to
drive our inclusion, diversity and equity agenda.
We launched mandatory safeguarding policy
training, to raise awareness of the issues around
safeguarding adults and children and most
importantly how to escalate cases to get the
right help. This training is aligned to our Speak Up
and SafetyNet policies and is supported by our
employee relations hub, helping all colleagues
navigate difficult circumstances.
We are proud of our learning hub shared services
model, which has enabled us to streamline our
processes and aims to ensure we are utilising
training resources effectively. This has also
promoted our shift to a self-service for learning
model, providing a wider choice of options for
colleagues, moving away from a more traditional
learning structure.
We will continue to focus on colleague
needs, aligning learning solutions to our CPF,
helping our colleagues make career choices,
understanding how to upskill and prepare
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Responsible business Our people continued
Given the challenging external economic
backdrop, our focus in 2023 continued on
employee retention initiatives, ensuring the
best talent was nurtured and developed, and
on mitigating voluntary turnover, which was
24% in 2023 down from 30% in 2022.
Our strengthened Capita-first policy saw more
than 2,000 roles filled internally, just over 8%
of total recruitment. We not only rolled out an
internal mobility mandate, ensuring complete
transparency to Capita employees on all
opportunities but also achieved a reduction
overall in our time to offer from 64 days in
2022 to 58 days in 2023. We ensured a focus
on aged vacancies, a greater level of reporting,
governance and streamlining our interview and
assessment process to achieve this improvement.
Over the course of 2023, the talent acquisition
resourcing function continued to enhance our
operating model, heightening our candidate
centric approach, driving value, quality and
efficiency. We also continued to build on the
refresh of our employer brand, developing new
campaign material and capitalising on our EVP
to attract and retain talent.
In 2024 we will continue to build on our internal
mobility strategy, and further focus on retention
activities in support of future growth.
HR operations
Our people hub, which provides direct HR
support to all employees, continued to deliver
excellent results, with 99% of calls being
answered within eight seconds. Our internal
chatbot, Herbot, continued to manage high
volume multi-functional transactional queries
from employees, on demand. Across our people
hub channels, we successfully managed more
than 500,000 enquiries, incidents and data
transactions throughout the year.
As an extension of our apprenticeship offering,
and in alignment with our social value and
responsible business activity, we are proud to have
been recognised in 2023 for gifting our apprentice
levy to charities in partnership with Corndel.
Supporting future leaders
In 2023, we enhanced our processes designed
to facilitate internal mobility through our approach
to talent and succession. Succession planning is
an integral process helping us to identify potential
in individuals and develop future talent to support
organisational effectiveness and success. We
conducted a comprehensive succession process
for our Executive Team and top 100 leadership
roles, assessing the potential of 385 colleagues
and challenging ourselves on the diversity and
inclusion of our talent pipelines. 44% of this
population who were identified as high potential
and suitable for succession are female.
To improve diversity at senior levels, we also
continue to support high-potential women
and individuals from underrepresented groups
through cross-company mentoring opportunities.
In 2023, a further 80 colleagues were enrolled in
these programmes. We were delighted to win the
Moving Ahead Most Dynamic Mentoring
Organisation of the Year Award.
Talent acquisition and turnover
Despite a highly competitive global talent market,
in 2023 Capita continued to attract large volumes
of applicants, with more than 17,000 new starters
in the year, and continued the onshore, nearshore
and offshore hiring strategy to leverage the global
talent marketplace.
We continued to see positive levels of
engagement with our learning resources
over the past year, for example:
c.810,000
digital learning modules completed –
an increase of more than 240,000 on 2022
c.202,000
mandatory training modules completed –
compared with c.356,000 in 2022
c.25,000
managers passport digital modules completed
– an increase of almost 15,000 on 2022
c.13,700
colleagues attended live development
workshops delivered by the Capita Academy
c.50,000
resources have been accessed as part of
Capita’s e-library, including e-books, audio
learning and virtual classrooms
c.11
hours of learning completed on average by
each employee, excluding technical training
delivered locally
themselves for future roles. We will continue to
enhance the Capita management and leadership
academy to help to ensure our managers
continue to be the best version of themselves
and can help lead our organisation to success.
Globally, we will continue to be curious about how
technology can lend itself to help us provide a better
suite of resources and help us to retain talent.
We will continue to focus on simplification,
organising our resources and providing easy
access for all colleagues so they can self-serve
and self-develop. We will continue to build our
learning suite and provide clear alignment to our
career pathway framework, supporting attraction,
diversity and inclusion, competency development,
and retention of our talent globally.
Professional development
At the end of 2023, we had 58 different
professional development programmes available
across England funded by our apprenticeship
levy. We had more than 549 learners on the
apprenticeship programmes and 212 learners who
had successfully completed their professional
development programme during the year. At the
same time, the development of our managers
remains a significant priority, as we continue
to grow our Accelerate, Advance and Ascent
programmes to upskill our line managers aligned
to our Management and Leadership Academy.
At the end of 2023, we had 186 managers on
one of these development pathways.
During the year, we designed and launched a
data apprenticeship pathway which aims to help
colleagues develop their professional data skills
at varying levels. The Discover, Empower, Enable
and Innovate programmes are designed to
expand colleagues’ skills in their current roles
and widen the pool of future opportunities.
Capita plc Annual Report and Accounts
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Strategic report

Responsible business Our people continued
Reward
Our fair pay agenda continues to underpin all our
remuneration decisions. We continued to develop
our career path framework which now covers
more than 80% of our colleagues globally. This
includes market informed job pay ranges and pay
progression guidelines that help our managers
make effective decisions. We help our managers
to review salaries globally each year following
these consistent principles and guidelines.
We launched tools to help govern pay decisions
and check for unconscious bias, ensuring that
we are recognising the contributions of all our
colleagues, supporting and paying all colleagues
fairly for the work theydo.
Our colleagues can also choose from a range
of additional benefits such as private medical
insurance, cycle to work schemes and will writing
as well as having access to savings and discounts
from major brands through our Extras platform,
which this year included the option of purchasing
electric/hybrid cars through salary sacrifice.
At the end of the 2023, we took the difficult
decision to withdraw from the UK’s real living
wage. Since 2020, the Group has increased the
salaries of our lowest earners by 22% and the
2024 real living wage increase of 10.1% was
not something we could commit to given the
need for Capita to remain cost competitive.
We publish our gender and ethnicity pay gap
report annually on our website.
Building a more inclusive organisation
At Capita, we are committed to creating an
environment where diversity is valued, respected
and included in everything we do, and where we
benefit from all colleagues sharing their different
perspectives and bringing their whole selves to
work. In this way, each person can do their part
to create better outcomes. We are committed to
this goal not just because it helps us deliver
better for our clients and end-users, but
because we believe it’s the right thing to do.
During 2023, we continued to build on our
previous work to create a more inclusive
workplace for all our people. Achievements and
external recognition during the year included:
• Being ranked 18 out of 400 on the Forbes
Global list of top employers for women, an
assessment that cannot be nominated for, but
is determined following anonymous interviews
with thousands of employees across the globe.
• Showing a 5% reduction in our gender pay gap
compared with 2022, the largest improvement
since we started reporting.
• Winning Most Dynamic Mentoring Organisation
award for our Moving Ahead mentoring
programmes which work to equip our diverse
talent with the right tools to develop their
careers. So far 82% of participants have been
promoted, changed roles, or their current role
has expanded while on the programme.
• Continuing to support our eight global
employee network groups which had more
than 12,000 network members at the end
of the year.
• Continuing with our mutual mentoring
programmes for female, and Black and
minority ethnic colleagues to raise awareness,
forge relationships, create better allies and
shape an inclusive culture.
• Running regular, virtual ‘get involved’ sessions
to build awareness and understanding of
our similarities and differences as well as
responsible business in general. Topics
covered included: inclusive communications;
disability and accessibility; and neurodiversity.
This was in addition to our ongoing celebration
of awareness events such as: Pride; International
Women’s Day; International Men’s Day; Racial
Equality Week; Black History Month; Mental
Health Awareness week; International Day
of People with Disabilities; and more general
responsible business events such as Charity
and Community Day, Earth Day and Anti
Slavery Day.
We also celebrated our Black colleagues with our
third annual Black employees awards held during
Black History Month. This year was a global
event sponsored by our CEO.
During the year, we undertook the Employers
Network for Equality and Inclusion’s industry-
recognised TIDE benchmarking and were granted
a Silver Tidemark. This is testimony to our ongoing
diversity and inclusion commitments and practices.
In 2023 we continued with our three diversity
focus areas: women in senior leadership; ethnic
diversity in middle and senior leadership; and
supporting colleagues with a disability.
We are pleased to say that at 31 December 2023
our overall workforce was 50% female, and in our
senior management roles 40% were female. In
addition, our Board was 56% female and our
Executive Team was 29% female.
At 31 December 2023 our workforce was
19% ethnically diverse, including 7% Black, and
our senior leaders were 10% ethnically diverse
(in the UK) and 2% Black. In addition, our Board
and our Executive Team were 22% and 14%
ethnically diverse respectively.
In 2022 we were recognised as Disability
Confident Employer (level 2) status across the
Group and throughout 2023 continued to work
with the Capita ability network to strengthen
understanding as well as support our colleagues
with a disability. We also increased our disability
declaration level by 3%.
Capita plc Annual Report and Accounts
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Strategic report

Reporting table on gender representation at Board and Executive Team level at 31 December 2023
Gender
Number of
Board members % of Board
Number of
senior positions
on the Board
Number
in executive
management
% of executive
management
Male 4 44 3 5 71
Female 5 56 1 2
◊ 29
Other categories 0 0 0 0 0
Not specified/prefer not to disclose 0 0 0 0 0
Reporting table on ethnicity representation at Board and Executive Team level at 31 December 2023
Ethnicity Group
Number of
Board members % of Board
Number of
senior positions
on the Board
Number
in executive
management
% of executive
management
White British or other White (including
minority white groups) 7 78 4 6 86
Mixed/multiple ethnic groups 0 0 0 0 0
Asian/Asian British 1 11 0 1 14
Black/African/Caribbean/Black British 1 11 0 0 0
Other ethnic group, including Arab 0 0 0 0 0
Not specified/prefer not to disclose 0 0 0 0 0
Gender balance of senior management at 31 December 2023
Gender
Male 61 59%
Female 41
◊ 40%
Not specified/prefer not to disclose 1 1%
Gender balance of total workforce at 31 December 2023
Gender
Male 21,637 49%
Female 22,129 50%
Other categories 10 0.1%
Not specified/prefer not to disclose 393 0.9%
Responsible business Our people continued
At 31 December 2023 (being the reference
date selected by the Board for the purposes
of this disclosure), the Company complied,
as detailed below, with the Financial Conduct
Authority (FCA) regulatory targets, set out in
Listing Rule 9.8.6R (9).
• The Board was 56% female (43% female
at 6 March 2024, the date of this Annual
Report, following Claire Miles and Janine
Goodchild stepping down from the Board
on 31 December 2023);
• The Senior Independent Director
(Georgina Harvey) is female; and
• The Board had two Directors from
a minority ethnic background.
Capita collects the data used for the
purpose of making the gender and ethnicity
representations from Board members,
Senior Management and the Executive Team
on a voluntary basis. The data for Senior
Management and the Executive Team is
extracted from the HR management system,
Workday. The data for Board members is
obtained via email from each member in
which they are asked to declare which of
the gender and ethnicity categories they are.
Capita defines Senior Board positions as:
Chairman, Chief Executive Officer (CEO),
Chief Financial Officer (CFO) and, Senior
Independent Director (SID); and Senior
Management, as those at CEO-2 within the
Group plus subsidiary legal entity directors,
as per requirements of the Companies Act
section 414C(8)(c)(ii) and 414c(10)(b). The
Executive Team is considered to be the
Company’s executive management as
defined by the Listing Rules.
◊ KPMG, our independent assurance provider, has
provided limited assurance over the selected information
in this table denoted by the symbol (◊) using the assurance
standard ISAE (UK) 3000. The assurance report as well
as the reporting criteria and full methodology can be
found in full on our website: https://www.capita.com/
about-capita/resources-and-reports.
Capita plc Annual Report and Accounts
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Strategic report

Responsible business Our people continued
Supporting our colleagues’ wellbeing
Focusing on the wellbeing, safety and health of
all Capita employees has been a priority during
2023. Our mid-year pulse survey included eleven
new wellbeing-related questions, providing
valuable insight into how our colleagues are
feeling and enabling teams to better support
and care for our colleagues.
Our overall wellbeing index increased to 72% in
2023, 1% higher than in 2022.
Capita has continued to sustain health, safety
and environment (HSE) metrics between 94%
and 96% throughout 2023 and was recognised
by the British Safety Council by being awarded
the International Safety Award.
In 2023, we increased the intensity of our suicide
awareness initiatives and became members of the
National Suicide Prevention Alliance to demonstrate
our commitment to continue to tackle this
difficult subject.
We continued with our mandatory safeguarding
training with 98% completion for level 1 and
99% for level 2, which exceeds our internal
compliance targets of 95%. Our safeguarding
framework is embedded within our divisions
and Group functions. In 2023, 630 safeguarding
reports were made with 234 needing further
external referral support from local authorities
or the emergency services.
Our SafetyNet initiative continues to provide
much needed expert guidance to human
resources representatives and line managers
supporting colleagues with complex issues
related to wellbeing, safeguarding or vulnerability.
As a multidisciplinary group, SafetyNet provides
independent views and advice, recommends
additional interventions, and supports managers
and colleagues through extremely difficult situations.
In 2023, SafetyNet supported 246colleagues.
We also have employee assistance programmes
or similar support services available to all
colleagues globally, which provide access
to counselling and online resources.
Reimagining our workplaces
We continued to transform and simplify our
property footprint with further consolidation
during 2023, with 19 locations closed globally.
We continue to create more flexible and better
equipped space, providing our colleagues with
improved technology to complement our ways
of working. This allows us to come together, both
face-to-face and virtually, to collaborate and to
meet with clients and stakeholders.
We also recycle as much furniture and equipment
as possible from the sites we closed, with more
than 2,000 items being relocated internally. As
part of our responsible business commitment, we
also donated more than 1,300 items of furniture
to charities, nurseries, schools and food banks.
Capita plc Annual Report and Accounts
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Strategic report

Tackling economic inequalities
Helping to support and grow strong communities
in the current economic climate is important
forCapita.
In 2023 we continued our partnership with
Business in the Community (BiTC). Capita has
been working with BiTC, the UK’s largest and
most influential responsible business network,
since 2019.
In 2023 our then CEO, Jon Lewis, continued
his work as Chair of the Employment and Skills
Leadership team, which brings together senior
leaders from across industry to build solutions to
support access to and growth in employability
and skills.
We also continued our work as part of the
cross-industry cost-of-living taskforce, which
brings together a group of senior executives
to support those most disadvantaged and
vulnerable in society.
In 2023, we gifted more than £800,000 of our
apprenticeship levy to charities and SMEs to
support their investment in skills development.
We continued to support our employees as
they fundraised more than £227,000 and were
pleased to donate more than £24,000 in matched
charity funding.
In partnership with Hands On Payroll Giving, we
were able to significantly increase our charitable
impact. Our collaboration enables Capita
employees to support their chosen charities and
communities. In 2023 we raised almost £141,000
through payroll giving activities.
The majority of our employees globally are granted
one day per year for volunteering activities, almost
21,000 hours of volunteering were recorded in
2023, nearly three times more than in 2022.
Capita supported Social Shifters Global
Innovation project with 279 volunteers acting as
judges and taking part in the 2023 programme.
Social Shifters is a social innovation challenge
designed to accelerate young (18 – 30 years)
social innovators, to explore, start and grow their
ideas to tackle the social or environmental issues
that matter to them most. To enter the Social
Shifters Global Innovation Challenge, young
people must present an idea that is unique and
contributes towards at least one of the United
Nation’s 17 Sustainable Development Goals.
We also entered a new partnership with South
Nottingham College. The ability initiative aims
to give 16 – 25 year olds with a disability or
complex learning need an opportunity to enter
paid employment and to support them with their
future career choices. Following a successful
work placement, three young people were
offered and accepted permanent roles at Capita.
We will continue this partnership in 2024.
Project Selborne sponsored an event at
London Docklands where 30 young people aged
between 9 and 14 tried out rowing, kayaking
and sailing on the Thames. This was part of the
Sea Cadets On The Water programme, which
provides thousands of young East Londoners
from low-income families with the chance to
experience water sports, learn something new
and earn qualifications. An additional focus was
on increasing diversity and inclusion in the Sea
Cadets and Royal Navy.
Responsible business Community
Supporting our communities
Community investment
c.£1.4m*
(2022: c.£1m)
* excluding £800,000 gifted as apprenticeship levy
“ Alzheimer’s Society would
like to say a huge thank
you to Capita for your
donations, allowing us
to provide help and hope
to more people affected
by dementia. Regular
donations are so important
to us and are the backbone
of our work. Monthly income
generated through Payroll
Giving allows us to budget
and plan for the future, as
well as help those who
need it right now. Sadly,
dementia is the UK’s
biggest killer with over
900,000 people currently
living with it – and if we do
nothing, 1 in 3 people born
today will go on to develop
dementia. That’s why we
need supporters like you
to help end the devastation
of dementia”
Charley O’Hara
Individual Giving Assistant,
Alzheimer’s Society
Capita plc Annual Report and Accounts
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Strategic report

In 2023 we continued with our commitment
to upholding the Armed Forces Covenant and
creating a culture that honours and empowers
those in the armed forces community. We
developed a podcast series that shares powerful
stories of resilience and dedication from veterans,
reservists and military spouses and can be found
on our website.
Our partnership with Meadow Well Connected
was recognised at the annual North-East Charity
Awards as we won the Corporate Charity
Partnership award. Since becoming partners
in 2018, we have supported a wide range
of activities and services for Meadow Well
Connected, which included donating 216
volunteering hours, providing Christmas lunches
for more than 100 local people and installing
around 4km of new pathways in the
charity’sgardens.
Responsible business Community continued
Our partnership with Meadow Well
Connected was recognised at the annual
North-East Charity Awards as we won
the Corporate Charity Partnership award.
Since becoming partners in 2018, we
have supported a wide range of activities
“ Capita’s support really
does means so much to
us. We absolutely love
payroll giving here at
Macmillan. By giving
through your salary each
pay day we are able to
provide essential services
for people with cancer
throughout the UK from
our Macmillan Support
Line to our incredible
Macmillan nurses. The fact
that we know how often
and how much you will
donate each month means
that we can plan ahead
and spend your hard-
earned money where we
know it is needed most”
Ollie Lashbrook
Senior Corporate Partnerships
Operations Manager at Macmillan
The majority of our
employees globally are
granted one day per year
for volunteering activities,
almost 21,000 hours of
volunteering were recorded
in 2023, nearly three times
the amount in 2022
Capita plc Annual Report and Accounts
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Strategic report

Responsible business Planet
Planet
Our three-phased approach aims to reach
operational net zero by 2030; operational and
business travel net zero by 2035; and full net
zero by 2045.
Following our commitment to be net zero by
2045, the challenges we believe will be most
difficult to address are: the decarbonisation of
our heating systems; and collecting, monitoring
and managing the reduction of emissions from
nearly 18,000 suppliers.
Driving down GHG emissions
As a result of our virtual-first meeting strategy and
hybrid working culture we continue to manage
business travel emissions, standing at only 22% of
pre pandemic levels in the current reporting year.
Our electricity emissions also reduced, through
efficiency, sourcing more renewable power and
reducing the property portfolio.
The net zero property refit plan continued in 2023
with upgrades to heating and cooling systems,
controls, lighting and building fabric. We plan to
pilot heat pump technology in selected properties
over the next few years to begin migration from
fossil-fuelled heating systems and are in
the process of identifying and agreeing
suitablelocations.
Our highly successful building energy monitoring
programme continues to identify energy savings.
Our Facilities Management team review half
hourly energy data for our larger properties
quarterly, leading to efficiency action and plant
and controls upgrades. We also use this process
to monitor the success of plant replacement
programmes and refurbishments, checking
that expected energy efficiency and
emissions reduction are achieved.
Fighting climate change
Capita has updated its target to become fully net
zero to 2045. A significant amount of our carbon
emissions originates from our supply chain, and
we extended our target to achieve full net zero
by ten years to allow us more time to engage
with our suppliers and support them to reduce
their environmental impact. We are working to
validate our revised targets with the Science
Based Target initiative (SBTi).
Near-term targets
Capita has committed to reduce absolute Scope
1 and 2 greenhouse gases (GHG) emissions and
absolute Scope 3 GHG emissions covering
business travel by 46% by 2030 from a 2019
base year. Capita has also committed to 50%
of its suppliers by spend – covering purchased
goods and services, and capital goods – having
science-based targets by 2025.
Long-term targets
Capita has committed to reducing absolute
Scope 1 and 2 GHG emissions, and absolute
Scope 3 GHG emissions (covering purchased
goods and services, capital goods, business
travel and employee commuting) by 90% by
2045 from a 2019 base year.
We are committed to these challenging targets
at every level of our organisation, setting
decarbonisation as our overarching objective.
Our goal is for all residual emissions from 2045
to be neutralised in line with SBTi criteria to reach
net zero emissions.
Engagement with our top 265 suppliers through
the Carbon Disclosure Project supply chain
membership gives us access to supplier climate
risk and compliance data and CO
2
equivalent
(CO
2
e) emissions target and policy data, as well
as opportunities to identify impact reduction
initiatives. These insights help us transition from
spend-based calculation to actual CO
2
e data to
decouple emissions from spend.
In addition to our emissions savings achieved
through plant replacement in 2023, we have
also installed 34 electric vehicle chargers across
seven locations, and have further installs planned
for 2024 to support electric vehicle users. Energy
Savings Opportunity Scheme (ESOS) surveys
carried out in 2023 have identified a number of
further initiatives which we are now exploring to
drive further energy reductions. Post pandemic
travel emissions have increased, but remained
significantly below our short-term SBTi target
for 2030. We have set a revised 2045 net zero
target to augment our short term 1.5 degrees C
science-based targets for greenhouse gas
reduction. This target covers our full value chain
and we are working to have it verified with SBTi.
In 2023 functions and divisions set net zero
targets, linked to incentive plans to drive
progress against our net zero milestones and
plan. Capita maintained CDP ‘A’ list in 2023.
We have already achieved our 2025 and 2030
near-term science-based targets except for Scope
1 which we expect to achieve by the end of 2024.
With more than 43,000 colleagues across the
globe, we are all too aware of our own internal
responsibilities. We therefore launched a new
environmental standard, setting out Capita’s
environmental commitments and responsibilities
and incorporating an environmental training
module for all employees to support the
environmental standard and net zero commitment.
In 2023 we published our fourth disclosure
statement against the recommendations of
the Financial Stability Board’s Task Force on
Climate-related Financial Disclosure (TCFD),
see pages 50 to 56.
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GHG emissions (tCO
2
e) and energy use (kWh) for period 1 January 2023 to 31 December 2023
Data source Current reporting year 2023 Comparison reporting year 2022 Comparison reporting year 2021
UK and offshore
Global excluding
UK and offshore Total UK and offshore
Global excluding
UK and offshore Total UK and offshore
Global excluding
UK and offshore Total
Energy used to calculate emissions (kWh)
Gas and fuel
Energy Bureau, UK est energy,
FSC burn, int. est energy,
Capita Europe 58,451,965 1,276,761 59,728,726 58,561,431 2,443,394 61,004,825 65,139,586 1,726,618 66,866,204
Electricity and district heat 61,520,201 15,030,765 76,550,966 65,813,485 15,405,065 81,218,550 93,211,777 26,513,142 119,724,918
Business travel – cars SAP expenses 7,208,314 2,276,310 9,484,624 12,211,032 3,836,579 16,047,610 12,502,976 2,271,999 14,774,974
Total energy used 127,180,480 18,583,836 145,764,316 136,585,947 21,685,038 158,270,986 170,854,338 30,511,758 201,366,097
% of total energy used 87% 13% 100% 86% 14% 100% 85% 15% 100%
Emissions from combustion of gas and fuel for heating
tCO
2
e (Scope 1) Energy Bureau, Capita Europe 10,373 246 10,619 9,281 405 9,686 11,620 320 11,941
Emissions from combustion of fuel in company vehicles
tCO
2
e (Scope 1)
Fleet, FSC, fleet Germany, India,
South Africa 1,224 63 1,287 1,851 67 1,918 1,845 71 1,916
Emissions from fugitive refrigerant gas tCO
2
e (Scope 1) Fugitive refrigerant gas 339 2 341 445 0 445 1,466 0 1,466
Emissions from purchased district heat tCO
2
e (Scope 2) Energy Bureau, Capita Europe 30 68 98 34 264 298 40 157 198
Emissions from purchased electricity (location based) tCO
2
e
(Scope 2)
Energy Bureau, UK est energy,
int. est energy, Capita Europe,
South Africa, India 12,553 8,714 21,267 12,827 8,012 20,839 23,891 6,853 30,744
Emissions from purchased electricity (market based) tCO
2
e
(Scope 2) Energy Bureau 1,044 2,411 3,455 2,247 1,836 4,083 10,328 8,132 18,460
Emissions from business mileage, air, rail, tube tram and light
rail, taxi, bus, coach, ferry, hotel, waste tCO
2
e (Scope 3) SAP, Agiito 5,475 1,369 6,844 4,857 1,244 6,101 3,860 640 4,500
Total gross tCO
2
e Scope 1 and Scope 2 (locationbased) 24,519 9,091 33,611 24,438 8,748 33,186 38,863 7,401 46,264
Total gross tCO
2
e emissions (location based) 29,995 10,460 40,455 29,294 9,992 39,287 42,722 8,042 50,763.93
Total gross tCO
2
e emissions (market based) 18,486 4,158 22,644 18,680 3,552 22,233 29,119 9,163 38,282.35
Intensity ratio: gross Scope 1 and 2 tCO
2
e (locationbased)
per £1m turnover 8.1 3.0 11.2 8.1 2.9 11.0 10.0 2.3 12.3
Intensity ratio: gross Scope 1 and 2 tCO
2
e (locationbased)
per headcount 0.56 0.21 0.77 0.77 0.48 0.66 0.91 0.39 0.73
Methodology: Carbon emissions have been calculated following the GHG protocol using the operational control approach. Estimated energy figures have been used for buildings where direct meter data is not available, using Cibse guide F
benchmarks (or previous years’ consumption outside UK if available). Any fuel figures provided in litres have been converted into kWh or tCO
2
e using Gov.UK and Defra conversion tables. Mileage provided has been converted into tCO
2
e using Defra
conversions for the relevant engine size and fuel type. kWh figures for air, rail, taxi and other public transport have been omitted as not practical to convert from passenger km or passenger fares but CO
2
e emissions have been calculated using Defra
conversion factors.
Scope 1, Scope 2 and Scope 3 business travel are verified to ISAE 3000 by SLR Consulting in each year.
Responsible business Planet continued
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Responsible business Planet continued
Our disclosures cover sources of our GHG emissions from our operations in the UK, Ireland, Central
Europe (Germany, Switzerland, Poland and Bulgaria), India and South Africa. Capita converts the
consumption data into a carbon footprint with consideration for the World Business Council for
Sustainable Development and World Resources Institute’s Greenhouse Gas Protocol, together
with the latest emissions factors from the UK Department for Environment, Food and Rural Affairs,
Association of Issuing Bodies and International Energy Agency.
Annual GHG emissions
2023 2022 2021 2020
Scope 1 (tCO
2
e) 12,247* 12,049* 15,021* 18,980*
Scope 2 (tCO
2
e) (location-based) 21,365* 21,137* 24,088* 28,359*
Scope 2 (tCO
2
e) (market-based) 3,553* 4,083* 10,328* 23,526*
Scope 3 (tCO
2
e) (business travel and waste) 6,844* 6,101* 4,500* 7,881*
Total gross tonnes of CO
2
e (location-based) 40,456 39,287 43,609 55,220
Total gross tonnes of CO
2
e (market-based) 22,644 22,233 29,848 50,387
Total gross tonnes of CO
2
e/£1m revenue (location-based) 13.5 13.03 13.70 16.60
Total gross tonnes of CO
2
e/headcount (location-based) 0.92 0.79 0.73 0.85
Table of progress against SBTi verified short-term targets
2023 actual 2023 target 2030 target
Scope 1 (tCO
2
e) 12,247 15,775 10,201
Scope 2 (tCO
2
e) (market-based) 3,553 23,006 14,876
Scope 3 (tCO
2
e) (business travel and waste) 6,844 25,578 16,540
Progress against SBTi verified short-term engagement target
2023 actual 2023 target 2025 target
Scope 3 supply chain spend covered by science-based targets % 54% 33% 50%
Other metrics 2023 2022 2021
100% renewable power progress (as % of total power) 90% 85% 80%
Transition from internal combustion to low emission vehicles:
Diesel 43% 47% 62%
Hybrid electric 52% 48% 32%
Pure electric 4% 4% 5%
Average CO
2
e 96g/km 96g/km 96g/km
Fleet vehicle energy source
Notes:
Total gross tonnes of CO
2
e/£1m revenue (location-based) in 2023, 2022 and 2021 has been calculated using statutory revenue.
Scope 1: emissions from Capita sources that are controlled by us, including the combustion of fuel, company-owned
vehicles and the operation of our facilities.
Scope 2: emissions from the consumption of purchased electricity, heat or steam.
Scope 3: emissions from non-owned sources related to Capita’s activities, including business travel and waste.
Milestone 1
Emissions data above covered by limited external assurance to ISAE 3000
Energy efficiency action 2023
We invested in energy-efficiency measures across our estate in 2023 to deliver savings below.
Building plant upgrades and initiatives (tCO
2
e reduction per annum)
Replacement LED lighting 89.7
Replacement chillers and air conditioning units 158.7
Replacement heating plant 65.8
Updated building management controls 2.8
Installation of sub-metering 139.7
Total 456.7
In addition to our emissions savings achieved through plant replacement in 2023, we have also
installed 34 electric vehicle chargers across seven locations, and have further installations planned for
2024 to support electric vehicle users. Energy Savings Opportunity Scheme (ESOS) surveys carried
out in 2023 have identified a number of further initiatives which we are now exploring to drive further
energy reductions. Post-pandemic travel emissions have increased, but remained significantly below
our short-term SBTi target for 2030. We have set a revised 2045 net zero target to augment our short
term 1.5 degrees C science-based targets for greenhouse gas reduction. This target covers our full
value chain and we are working to have it verified with SBTi. In 2023 functions and divisions set net
zero targets, linked to incentive plans to drive progress against our net zero milestones and plan.
Capita maintained CDP ‘A’ list in 2023.
Net zero milestones
We are working to reach operational net zero by 2030 (Scopes 1 and 2); operational and business
travel net zero by 2035 (Scopes 1 and 2, Scope 3 business travel); and full net zero by 2045,
including our supply chain.
Methodology
We measure our environmental performance by reporting our global carbon footprint annually in terms
of tonnes CO
2
equivalent (tCO
2
e), an absolute measure, tonnes CO
2
equivalent per £1m revenue and
per person (intensity measures). The data relates to Capita’s owned and leased facilities and business
travel under its operational control across all geographies. We report separately on our direct emissions
from Capita-controlled and owned sources (Scope 1), indirect emissions from consumption of electricity,
heat or steam (Scope 2), and emissions from third parties (Scope 3). This ensures our compliance
with Part 7 of The Companies Act 2006 (Strategic Report and Director’s Report) Regulations 2013
which requires certain disclosures in respect of GHG emissions (the Strategic Report GHG
Emission disclosures).
We engaged an external agency, SLR Consulting Ltd, to provide independent limited assurance
over the selected GHG emissions data (highlighted in the table opposite with an *) using the
assurance standards ISAE 3000 and 3410. SLR Consulting Ltd has issued an unqualified
opinion over the selected data; its full assurance statement is available at
www.capita.com/responsible-business/resources-and-reports.
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Responsible business Operating responsibly
Ensuring we align with our purpose
cNPS score for 2023
+16
Spend with c.18,000 direct suppliers in 2023
1,2
£1.83bn
In
77
countries
1. Excludes intercompany spend.
2. Data includes Smart DCC (DCC) spend (£0.6bn)
as under the terms of the licence Capita administers
DCC’s accounts payable function. Under the terms of
the licence Capita does not control the DCC legal entity
and therefore this spend is not consolidated into the
consolidated financial results.
Client relations
We actively seek the views of our clients through
an annual customer net promoter score (cNPS)
survey. In the survey we ask for feedback on our
current performance, key drivers and encourage
comments on areas that they would like us to
focus on in future. We feed this information
back to our teams who then take the time to
understand any root causes of issues raised and
set actions which are monitored via our customer
relationship management platform, Salesforce.
In 2023, Public Service and Experience received
feedback from 384 individuals across 234 clients
– a 51% response rate. The results give Capita
a cNPS score of +16 for 2023, continuing the
positive cNPS feedback within both divisions.
Supplier engagement
Almost 92% of our total supply chain are small
and medium-sized enterprises (SMEs), including
sole traders and micro-businesses. We continued
to recognise the effect that the current economic
situation is having on many of these suppliers,
with both high inflation and the cost-of-living
crisis in the UK. We endeavour to ensure payment
to agreed terms with our vendors and seek to
make payments to small suppliers more quickly
in accordance with the Prompt PaymentCode.
As signatories to the Prompt Payment Code, we
report our payment practices and performance
to the UK Government every six months; 99%
of our suppliers were paid within 60 days. 92%
of SMEs were paid within 30 days.
We value the business relationships we have with
our suppliers and seek to build lasting relationships,
treating our suppliers and partners fairly and
paying promptly. We want to work with suppliers
who share our values and support us in delivering
our purpose.
Our supplier charter, which is available on our
website, remains at the core of strengthening
our commitments and sets out how we conduct
business in an open, honest and transparent
manner, and what we expect of our suppliers.
This year, it was refreshed and relaunched.
It applies to all new and renewing suppliers.
As a minimum, we expect our suppliers to comply
with all applicable laws and regulations. This
includes the provision of safe working conditions,
treating workers with dignity and respect, acting
ethically and being environmentally responsible.
Our aim is to work together to achieve the highest
standards in our supply chain, while achieving
wider social, economic and environmental
benefits aligned to the Social Value Act.
To mitigate ESG risk within our supply chain,
40% of suppliers by spend are monitored
through EcoVadis scorecards and there is a plan
to expand this monitoring more widely across our
supply chain. Less than 5% of spend is incurred
in countries deemed to be high risk as per the
Global Slavery Index (www.walkfree.org). All
suppliers are subject to Capita’s supplier risk
management framework to identify and
mitigaterisk.
To support our net zero goals, the ESG
Committee approved the strategy to decarbonise
our Scope 3 Supply Chain Emissions and to have
2023 business aligned objectives for suppliers to
have science-based targets in place.
To understand Capita’s Scope 3 carbon
footprint, a supplier engagement programme
was also undertaken with suppliers accounting
for £1bn annual spend (over 50% of the supply
chain by spend) to ask them to disclose their
carbon emissions to CDP.
Our 2025 goals are that 55% of our suppliers
by spend will have committed to having science-
based targets (SBTs) in place and, by 2030, 85%
of our suppliers by spend will have committed
to having SBTs in place. By 31 December 2023,
54% of our suppliers by spend had committed to
having SBTs in place.
In 2023, we maintained our focus on responsible operations by: continuing to support clients and communities; engaging and
working closely with our suppliers; understanding our colleagues’ needs; and dealing with wider societal challenges, such as
the cost-of-living crisis.
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Responsible business Operating responsibly continued
Targeting bribery and corruption
We do not tolerate bribery or corruption in any
form. Our anti-bribery and corruption set of
policies apply to all Capita businesses, employees
and suppliers. The Risk & Compliance team
monitors compliance, with a view to ensuring
all parts of the business are aware of their
responsibilities in terms of charitable donations,
sponsorships, facilitation payments, gifts and
hospitality. All employees must complete
financial crime trainingannually.
Upholding human rights
We are committed to playing our role in society
by ensuring that we have the systems, policies
and processes in place to identify any potential
instances of exploitation and, if found, eradicate
modern slavery in all its forms from our business
and supply chain.
Our updated human rights policy details our
commitments to upholding the principles of
human rights, as set out in the UN Declaration
of Human Rights and the International Labour
Organization core labour principles. We comply
with all relevant legislation, including the UK
Modern Slavery Act and our compliance
statement can be found on our website. We
outline expectations and compliance to the
standards we set out for suppliers, working with
them to ensure they operate in accordance with
this policy, and upholding the principles of human
rights in their operations and supply chains.
We are taking appropriate steps to ensure that
everyone who works for Capita benefits from a
working environment in which their fundamental
human rights are respected and anyone that we
do business with also upholds these principles.
If any client, employee, supplier or other
stakeholder becomes aware of any potential
breach of human rights (or any other ethical
concern) they may report this confidentially to
our Speak Up hotline. This hotline is externally
managed for independence and confidentiality
and made available across multiple channels.
Protecting privacy
Our clients and our colleagues expect us to keep
their data safe and secure, and to respect their
privacy. We take this responsibility very seriously,
with a view to ensuring we only process personal
data in line with all applicable laws, including how
we collect, store, use, retain, transfer and delete
personal data.
Our privacy policy details how we expect
everyone to take responsibility for privacy,
including the protection of data, applying our
privacy standards, procedures and guidance in
their areas of the business. These requirements
include maintaining information asset registers,
following a comprehensive incident management
process, ensuring privacy by design, and data
protection impact assessments.
We continue to improve our privacy and
data management practices, and we recently
appointed a Chief Data Officer to work alongside
our Group Data Protection Officer. During 2023
we also launched new mandatory privacy
training for our colleagues and continued to
raise awareness of the importance of privacy
through tailored training initiatives and ongoing
communication programmes.
Privacy training
c.29,000
privacy training modules completed
For more information on our anti-bribery, corruption and human rights policies, see page 49
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Engaging with our stakeholders
Section 172 statement
Capita’s Directors are fully aware of and understand their statutory
duties under Section 172 of the Companies Act 2006 (the Act).
The Board has a clear framework for determining the matters within
its remit and has approved Terms of Reference for the matters
delegated to its Committees. When making decisions, each
Director ensures that they act in the way they consider, in good
faith, would most likely promote the Company’s success for the
benefit of its members as a whole, and in doing so have regard
(among other matters) to section 172(1)(a) to (f) as detailed below.
a. The likely consequences of any decision in the long term.
b. The interests of the Company’s employees.
c. The need to foster business relationships with suppliers, clients
and others.
d. The impact of the Company’s operations on the community and
the environment.
e. The desirability of the Company maintaining a reputation for
high standards of business conduct.
f. The need to act fairly towards all members of the Company.
This section 172 statement forms the directors’ statement required
under section 414CZA of the Act and describes how the Directors
have taken into account wider stakeholders in their decision making
and also the principal decisions taken during the year.
Our people
Why they are important
They deliver our business strategy;
they support the organisation to build
a values-based culture; and they deliver
our products and services ensuring
client satisfaction.
What matters to them
Flexible working; learning and
development opportunities leading to
career progression; fair pay and benefits
as a reward for performance; and two-way
communication and feedback.
How we engaged
• People surveys
• Regular all-employee communication
• Employee director on the
Capita plc Board
• Employee focus groups and
network groups
• Workforce engagement on remuneration
• Regular ‘breakfast’ sessions with the
Executive Team for our colleagues
Topics of engagement
• Creating an inclusive workplace
• Health and wellbeing
• Speak Up policy
• Directors’ remuneration
• Acting on survey feedback
• The career path framework
• The redundancy consultation
programme announced in
November 2023
Outcomes and actions
The 2023 employee survey showed key
indices had either improved or remained
steady with a five-point increase in the
eNPS compared with 2022. 63% of
colleagues who responded felt proud to
work at Capita. We are developing and
delivering a range of action plans, including
ensuring our leaders feel confidence in,
and ownership of Capita’s strategy, plans
and successes, developing inclusive
opportunities for internal career mobility.
In December 2023, the Board agreed
that while the appointment of employee
directors had been successful, it was
appropriate for the Board to consider a
wider level of engagement with colleagues,
including site visits arranged for individual
directors to meet with local management
and colleagues at Capita’s businesses. In
addition, the Board has appointed Nneka
Abulokwe as the designated non-executive
director to engage with colleagues.
Adolfo Hernandez, our new CEO, has
also commenced a series of breakfast
sessions to meet with colleagues of
differing seniority and at different locations
throughout the Group. Janine Goodchild
stepped down from the Board as an
employee director on 31 December 2023.
The UK real living wage increase was
applied from 1 April 2023. At the end
of 2023, we took the difficult decision to
withdraw from the UK’s real living wage.
Since 2020, the Group has increased the
salaries of our lowest earners by 22%
and the 2024 real living wage increase
of 10.1% was not something we could
commit to given the need for Capita to
remain cost competitive and reflecting the
fact that this is not a cost we are able to
pass on to clients.
The global career path framework which
defines career levels, career job content,
and reward framework within Capita was
rolled out during the year.
In October 2023, Capita was recognised
by Forbes, as being one of the top
companies for women, ranking at number
18 out of 400 global companies on their list.
We continued to promote our Speak Up
policy throughout the organisation.
Risks to stakeholder relationship
• Our ability to recruit due to the national
and global labour market demand
for resources
• Our ability to retain and develop people,
impacting our quality of service and our
financial performance
• Our ability to evolve our culture and
practices in line with our responsible
business agenda
Key metrics
Voluntary attrition, eNPS, employee
engagement index and people survey
completion level.
Further details
Responsible business section on pages 32
to 37. Directors’ remuneration report on
page 96.
Clients and
customers
Our people
Suppliers and
partners
Investors
Society
Creating better
outcomes
Responsible business Engaging with our stakeholders
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45

Why they are important
They are recipients of Capita’s services; and
Capita’s reputation depends on consistent
and timely delivery of the services they need
from us.
What matters to them
High-quality service delivery; delivery
of transformation projects within agreed
timeframes; and responsible and sustainable
business credentials.
How we engaged
• Client meetings and surveys
• Regular meetings with government
stakeholders and annual review with the
Cabinet Office
• Through our customer advisory boards
• Through our senior client partner programme
which provides an experienced single point
of contact for key clients and customers
• Introductory meetings and correspondence
with the new CEO and new CEO, Public
Service
Topics of engagement
• Current service delivery
• Transition and mobilisation of services
• Capita’s digital transformation capabilities
• Possible future services
• Co-creation of client value propositions
• The cyber incident
• Ongoing benefits of hybrid working on
client services
Outcomes and actions
Feedback provided to business units to
address any issues raised; client value
proposition teams supporting divisions with
co-creation ideas; direct customer and sector
feedback; and senior client partner programme
undertaking client-focused growth sprints to
build understanding of client issues and
ideas to help address them.
Risks to stakeholder relationship
• Loss of business by not providing the
services that our clients and customers want
• Damage to reputation by not delivering to the
requirements of our clients and customers
• Loss of customers for our clients
Key metrics
Customer NPS; specific feedback on
client engagements.
Further details
Chief Executive Officer’s review on pages 8 to 12.
Responsible business section on pages 30, 43
and 44.
Clients and customers Suppliers and partners
Why they are important
They share our values and help us deliver
our purpose; maintain high standards in our
supply chain; and achieve social, economic
and environmental benefits aligned to the
Social Value Act. Our suppliers and partners
provide additional expertise, skill and
technology, elevating our offering.
What matters to them
Payments made within agreed payment terms;
clear and fair procurement process; building
lasting commercial relationships; and working
inclusively with all types of business.
How we engaged
• Supplier meetings throughout source
to procure process
• Regular reviews with suppliers
• Supplier questionnaires and risk
assessments
Topics of engagement
• New digital offerings for clients
• Supplier payments
• Sourcing requirements
• Supplier performance
• Science based targets (SBTs)
• Supplier charter
• The cyber incident
Outcomes and actions
Our supplier charter, which is available on our
website, remains at the core of strengthening
our commitments and sets out how we
conduct business in an open, honest and
transparent manner, and what we expect
of our suppliers. This year, it was refreshed
and relaunched.
To understand Capita’s Scope 3 carbon
footprint, a supplier engagement programme
was also undertaken with suppliers accounting
for £1bn annual spend (over 50% of the supply
chain by spend) to ask them to disclose their
carbon emissions to CDP.
During 2023, 99% of our suppliers were paid
within 60 days.
Risks to stakeholder relationship
• Environmental issues
• Commitment to tackling SBTs
• Supply chain resilience
Key metrics
99% of supplier payments within agreed
terms; SME spend allocation; and supplier
diversity profile.
Further details
Supplier engagement section on page 43.
Responsible business Engaging with our stakeholders continued
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Strategic report

Why they are important
They own the business and provide essential
capital; and their input and feedback is
considered when making tactical and
strategic decisions.
What matters to them
Reporting on strategic, operational and
ESG factors; financial performance; directors’
remuneration, access to the Board and senior
management; and regular communication.
How we engaged
• Financial and other reports and
trading updates
• Investor meetings with CEO, CFO and
Investor Relations
• Dedicated webinar for retail shareholders
• Regular investor programme with the Board,
including meetings with the Chairman and
Remuneration Committee chair and
feedback throughout the year
• At the Company’s AGM
• Discussions around AGM on resolutions
and governance topics
• Dedicated Investor Relations contacts and
email inbox
Topics of engagement
• Disposal programme
• Medium-term targets and outlook
• Social: attrition and engagement
• Balance sheet and liquidity
• Appointment of the new CEO
• Governance: remuneration and remuneration
policy proposed for shareholder approval
in 2024
• The cyber incident
• Environmental: net zero target
Outcomes and actions
Frequent market communication; and
active engagement with largest shareholders
including with the Chairman and Remuneration
Committee chair, including shareholder
consultation on the remuneration policy to be
proposed to shareholders at the 2024 AGM.
Risks to stakeholder relationship
• Delivery of strategic and financial objectives
• Key aspects of governance eg remuneration
Key metrics
Revenue; profit; free cash flow; net debt and
gearing; valuation; and AGM voting.
Further details
Principal decisions table on page 48.
Why it is important
Capita is a provider of key services to
government impacting a large proportion of
the population.
What matters to it
Social mobility; youth skills and jobs; digital
inclusion; diversity and inclusion; climate
change; business ethics; accreditations
and benchmarking; and cost of living crisis.
How we engaged
• Membership of non-governmental
organisations
• Charitable and community partnerships
• External accreditations and benchmarking
• Working with clients, suppliers, and the
Cabinet Office
Topics of engagement
• Youth employment
• Workplace inequalities
• Diversity & inclusion
• Climate change
Outcomes and actions
Youth and employability programme such
as Social Shifters; ranked 18 on the Forbes
Global list of top employers for women; a 5%
reduction in our gender pay gap (compared
with 2022); awarded Employer’s Network
for Equality and Inclusion; achieved a silver
Tidemark and an A CDP (Carbon Disclosure
Project) score as well as a silver medal by
EcoVadis for Capita plc.
Risks to stakeholder relationship
• Lack of understanding of the issues
important to them
• Insufficient communication or involvement in
shaping and influencing strategies and plans
Key metrics
Community investment, workforce diversity
and ethnicity data, including pay gaps.
Further details
Responsible business: Planet section on pages
40 to 42.
Responsible business: Community section on
pages 38 to 39.
Investors Society
Responsible business Engaging with our stakeholders continued
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Responsible business Engaging with our stakeholders continued
Principal decisions: consideration of stakeholders and outcomes
Examples of some of the principal decisions that the Board has taken during 2023 and how s172 considerations have been factored into the Board’s decision making are set out below:
Principal decisions considered by the Board Impact on long-term sustainable success Stakeholder considerations Further details
Finance:
• In June 2023, the Board approved the extension of the
revolving credit facility (RCF) to 1 December 2026 at £284m,
reducing to £250m by 1 January 2025 due to specified
transactions.
• In July 2023, the Board approved the issuance of £101.9m
equivalent of new US private placement loan notes.
• In H2 2023, the Company settled £30.3m of Euro private
placement loan notes which were originally due in 2027.
• During 2023, the Board approved the remaining disposals
of the companies within the Portfolio division.
The RCF extension and private placement loan
note issuance demonstrates debt providers’
confidence in Capita and has enabled us to
extend the average maturity of our debt funding.
Together with the receipt of additional funds
from the disposal of businesses within the
Portfolio division these actions significantly
extended the Group’s funding maturity profile.
All our stakeholders: the strengthening of the Group’s
funding position has made Capita a more sustainable
business which is in the interests of all stakeholders.
Chief Executive Officer’s
review on pages 8 to 12.
Chief Financial Officer’s
report on pages 22 to 28.
Governance – Board changes:
Approving the appointment of Adolfo Hernandez as
Chief Executive Officer.
The chief executive officer is a critical role
in implementing and delivering the strategy
approved by the Board and ensuring that the
Company upholds its values and purpose.
All our stakeholders: all our stakeholders have an
interest in the successful delivery of our strategy and the
way it is delivered. Adolfo Hernandez, CEO has a critical
role in ensuring that our strategy is delivered in line with
our purpose and values.
Nomination Committee
report on pages 79 to 83.
Significant cost reduction programme: on 21 November
2023, the Company announced that, following an extensive
organisational review, the Group would be commencing
employee consultations programmes which are expected
to deliver cost savings of £60m on an annualised basis
from Q1 2024.
The organisational changes principally impacted
indirect support function and overhead roles.
The changes were proposed to ensure Capita’s
business is more efficient and sustainable for
the longer-term.
Colleagues: the Board recognised the impact on
colleagues whose roles were at risk of redundancy.
A consultation process was undertaken, and support
offered to affected colleagues.
All our stakeholders: the proposed efficiency savings
will increase the Group’s operating margins, maintain our
competitiveness and contribute to a more sustainable
future for Capita, in the long-term interests of the
Company and its stakeholders as a whole.
Chief Executive Officer’s
review on page 9.
Chief Financial Officer’s
report on pages 22 to 28.
Cyber incident: on 31 March 2023 Capita experienced
a cyber incident. Following forensic work it was confirmed
that some data was exfiltrated. Following this incident, it
was agreed to accelerate the Company’s previously planned
investment to improve Capita’s cyber security maturity.
It is intended that our maturity level will be
audited with reference to the National Institute
of Standards and Technology cyber security
framework on an annual basis by a third party.
The acceleration of the investment and the
expected improvement in Capita’s cyber
security maturity will help underpin Capita’s
long-term success.
All our stakeholders: the accelerated improvement in
Capita’s cyber security maturity and the annual audit will
be of benefit to all stakeholders.
Chairman’s statement
on page 7.
Chief Executive Officer’s
review on page 10.
Capital allocation policy: during the year the Board
considered its capital allocation policy.
The Board agreed to maintain a prudent
approach to Capita’s capital structure, with
a medium-term target of net financial debt to
EBITDA at or below 1x. The Board expects to
achieve sustainable positive free cash flow
generation over the medium term.
Shareholders: the Board is mindful that shareholders
have not yet seen improved returns and financial
benefit (including shareholder distributions) from
the strengthened Group.
All our stakeholders: the Board ensures that its capital
allocation policy is appropriate for the Company’s
financial position.
Chief Financial Officer’s
review on page 27.
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48

Responsible business NFSIS
NFSIS
This section of the report constitutes Capita’s non-financial and sustainability information statement (NFSIS), produced to comply
with sections 414CA and 414CB of the Companies Act 2006. The table below, and information it refers to, is intended to help
stakeholders understand our position on key non-financial and sustainability matters. This builds on reporting that we do under
the following frameworks: CDP, Dow Jones Sustainability Index and the EcoVadis Assessment.
Reporting requirement Policies and standards which govern our approach Where is this referenced in this report?
Environmental matters • Health, safety and environmental policy (E)
• Environmental standard (I)
• Supplier Charter (E)
• Procurement policy (E)
• Procurement standard (I)
• Travel and expenses policy (I)
• Risk management policy (E)
• Responsible business: fighting climate change pages 40 to 42
• Task Force on Climate-related Financial Disclosures (TCFD), pages 50 to 56
• Streamlined Energy and Carbon Reporting Regulation (SECR), page 41
• Responsible business: operating responsibly – supplier engagement page 43
Employees
• Code of conduct (E)
• Health, safety and environmental policy (E)
• Health, safety and environmental
standard (I)
• Diversity and inclusion policy (E)
• Wellbeing policy (E)
• Employee handbook (I)
• Our people section pages 32 to 37
• Responsible business: building an inclusive workplace pages 35 and 36
• Responsible business: diversity data page 36
Human rights
• Human rights policy (E)
• Supplier charter (E)
• Modern slavery statement (E)
• Information and cyber security policy (E)
• Privacy policy (E)
• Employment screening policy (I)
• Procurement policy (E)
• Speak Up policy (E)
• Safeguarding policy (E)
• Responsible business: operating responsibly – supplier engagement page 43
• Responsible business: community – tackling economic inequalities pages 38 and 39
• Responsible business: operating responsibly – upholding human rights page 44
Social matters
• Community and charity policy (E)
• Community and charity standard (I)
• Volunteering FAQ (I)
• Matched funding FAQ (I)
• Fundraising FAQ (I)
• Responsible business: community pages 38 and 39
Anti-corruption and anti-bribery
• Code of Conduct: Anti-bribery and corruption policy (E)
• Gifts and hospitality standard (E)
• Financial crime policy (E)
• Conflict of interest policy (E)
• Responsible business: targeting bribery and corruption page 44
Due diligence and outcome
• Risk management framework
• Annual internal audit plan
• Risk register
• Audit and Risk Committee report
• Risk management framework pages 57 and 58
• Audit and Risk Committee report pages 87 to 95
Business model
• Business model page 4
Non-financial KPIs
• Non-financial KPIs page 30
• Responsible business pages 29 to 56
Risk management
• Risk management and internal control pages 57 to 63
I – Group policies, guidance and standards published internally; E – Group policies, statement and reports published externally.
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Responsible business Task Force on Climate-related Financial Disclosures (TCFD)
TCFD
Governance
Capita recognises that climate change and wider environmental emergencies present significant risks
to society and the planet. Therefore, dedicated roles and responsibilities have been defined in line with
Capita’s risk management process.
The Board has ultimate accountability for these risks and their management, with delegated
responsibilities to both Board committees and the Executive Team, cascading to management for
day-to-day oversight. An overview of climate-related responsibilities and decision-making processes
across Capita is shown on page 51.
TCFD statement of compliance
Capita has made disclosures in accordance with the FCA Policy Statement 20/17 and listing
rule LR 9.8.6R(8), and the UK Companies Act requirement for large companies to include
climate-related financial disclosures.
This section of the Annual Report reports core information responding to the disclosure
elements outlined by the TCFD recommendations and supporting guidance. Supplementary
information for those interested in understanding more about our climate impact assessment
in more detail can be found on our climate change hub webpage, and pages 49 to 53 of the
2022 Annual Report.
Our disclosure is consistent with the TCFD recommendations, with the exception of the
following areas where we are working towards full disclosure.
1. Strategy B – financial and strategic planning: over the past few years Capita has
completed qualitative and quantitative climate scenario analysis, and integrated climate
change across risk management processes as part of Capita’s ESG principal risk.
However, the analysis has not yet been embedded into financial and strategic planning.
• Planned action: over the past year Capita has deepened its understanding of the
potential impacts and assumptions, and is now in a better position to identify ways to
incorporate the climate scenario analysis results in our financial and strategic planning
processes as part of our low carbon transition plan, expected in line with anticipated
government legislation.
2. Strategy B – transition plan: Capita has not yet consolidated its climate strategy and
response into a transition plan, but is committed to achieving net zero by 2045, with our
near-term and long-term science-based targets validated by the SBTi.
• Planned action: In response to the UK Transition Plan Taskforce guidance, we are
committed to developing a climate transition plan to expand and align our target action
plan with this guidance.
3. Metrics & targets A – TCFD cross-industry metrics: since the publication of
cross-industry climate-related metric categories from the TCFD in 2021, and with a
better understanding of climate risks and opportunities, we have been seeking ways
to introduce new reporting of climate KPIs.
• Planned action: this work is ongoing as we progress towards a climate transition plan.
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Responsible business TCFD continued
Responsibility: promoting long-term sustainable success, generating value for shareholders and contributing to wider society. The Board provides direction to the Executive Team by setting
the organisation’s risk appetite and identifying the principal risks facing the organisation, including ESG risk which incorporates climate change.
2023 actions and discussions: climate issues are raised to the Board on an ad-hoc basis as they arise resulting in multiple discussions throughout the year. Examples include the sign-off
scope of work to develop a climate transition plan at Capita in response to emerging guidance from the UK Transition Plan Taskforce.
Responsibility: accountable for implementing and operating effective governance, risk management and internal controls. This includes monitoring performance in line with climate change
targets and objectives.
2023 actions and discussions: quarterly review of progress against each business’ net zero plan.
• Chief Executive Officer: overall executive accountability for climate-related risks and opportunities and ensuring that climate issues are appropriately considered at Board and Executive
Team level.
• Divisional Heads of Risk: adopt Group-wide risk policies, identify climate-related risks for their division. Accountable for risk management, governance and control, quarterly reporting to
the Executive Team.
• Chief General Counsel: ownership of climate change within the ESG principal risk and managing development of Capita’s net zero strategy. Work closely with the Group’s Risk and
Compliance functions, particularly around the ESG principal risk.
2023 actions and discussions: management positions are responsible for providing regular updates to the Executive Team and developing processes such as reporting against net zero
targets through quarterly business review. Defining ownership of climate issues through environment standard.
Procurement supports the review and measurement of emissions and engagement with key suppliers.
Finance supports the quantification and reporting of risks and opportunities as part of Capita’s climate risk and opportunity assessment.
Responsibility: assists in managing risk systems.
2023 actions and discussions: review and approve the
2023 TCFD disclosure on an annual basis. Half-yearly review
of risks and controls.
Responsibility: strategic oversight and accountability for
climate-related issues, with membership from across
functions, chaired by the Chairman of the Board.
2023 actions and discussions: meeting on a regular basis,
this year the Committee signed-off on developing a UK
Transition Plan Taskforce-aligned transition plan, and
sustainable procurement plan to drive climate action
in supply chain.
Responsibility: setting policies for executive pay and
incentives and approving changes to existing remuneration
plans, including climate change as a metric.
2023 actions and discussions: Capita’s climate targets
remain part of its strategic remuneration metrics and
objectives. Targets, performance and objectives are
reviewed annually.
Capita Board
Executive Team
Audit and Risk Committee Remuneration CommitteeESG Committee
Management positions with key responsibilities
BoardBoard CommitteesExecutiveDivisional & Group
management
Climate-related responsibilities and decision making governance structure
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Responsible business TCFD continued
Strategy
Capita has used climate scenario analysis to identify, assess, and prioritise climate risks and
opportunities. This forward-looking assessment strengthens the Group’s understanding of the
possible impacts across different climate scenario outcomes to inform the overall business strategy,
build resilience and mitigate climate risk impacts. Capita is continually evolving its approach to climate
risk and opportunity assessment to increase depth and coverage over time, and better align with the
business’ strategic priorities.
Climate risk and
opportunity (R+O)
identification and
assessment.
• Identify range
of climate
R+Os and
impacts.
• Score R+Os
across climate
scenarios and
time horizons.
Forward-looking
financial impact
assessment of
select climate
issues.
• Select key
risks for
quantification
Identify range
of climate
R+Os and
impacts.
• Evaluate
potential
future financial
impacts.
Deep-dive into
a key risk and
further exploration
of mitigating
controls.
• Business
engagement
on risk drivers
and impacts,
specific focus
on increasing
climate
requirements
in bids.
Continued review
and update of
analysis to ensure
it is reflective of
the latest climate
science and
business
activities.
This includes
a review of
identified issues,
assessment
processes
and controls.
Climate scenarios
In designing our approach to climate scenario analysis, we engaged with climate consultants to
understand the appropriate parameters to use.
Timeframes: our climate assessment considers potential impacts across short-term (0–3 years),
medium-term (4–9 years), and long-term (10+ years) time horizons to reflect the longer-term impacts
of climate change. The time frames that have been selected align with those used in our risk
management processes.
Climate scenarios: across the phases of climate scenario analysis, Capita has referenced a range
of different climate scenario sources dependent on the suitability for analysing selected risks. Broadly
the Group has referenced scenarios under three categories shown in the following table: orderly
transition, disorderly transition, and hot house world. These scenarios were selected to explore
the potential worst-case impacts of transition and physical risks.
Scenario category Orderly transition Disorderly transition Hot house world
Storyline
Ambitious early
action increases risks
associated with low
carbon transition but
limits the effects of
global warming.
Delayed, or late
and sudden action
resulting in transition-
related shocks to
society alongside
higher impacts
from physical risks.
Limited action results
in significant warming,
and more severe
impacts from
physical risks.
Temperature outcome
1.4 – 1.6°C 1.4 – 1.6°C 2.6 – 4°C+
Scenario source/model
NGFS’s Orderly
Transition including
Net Zero 2050 &
Below 2°C.
IEA Net-Zero 2050
NGFS’s Disorderly
Transition including
Delayed Transition &
Divergent Net Zero
NGFS’s Hot House
World scenario
including Current
Policies & NDCs.
RCP 8.5
Climate risks and opportunities
The identification and assessment methodologies for each phase of analysis are described in more
detail in the Risk management section on page 55. The consolidated list of risks and opportunities
relevant to our business is disclosed on the following page. Over the years our continued assessments
have broadened our perspectives on the risks and opportunities that could impact Capita. To simplify
the list of risks and opportunities identified, we have categorised the risks and opportunities into four
groups. The following table lists the categories and associated risks, providing more detail on the
drivers and potential impacts to the business, including how we are or plan to respond. The four
categories include:
• Market shift for low-carbon solutions: increase in demand for low-carbon solutions which could
take a larger market share.
• Net zero transition: investment required to align with the transition and mitigate risk across the
value chain.
• Stakeholder expectation for climate action: mandates and requests for climate action and
disclosure to align with ambitious goals.
• Physical risk: increasing impact from extreme weather events across the value chain.
Phase 1: 2021 Phase 2: 2022 Phase 3: 2023 Ongoing
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Responsible business TCFD continued
Climate risks and opportunities table
Climate risks Potential financial business implications
Summary of climate
scenario analysis Management responses and opportunities
Transition risks and opportunities
Market shift for low-carbon solutions
and lack of skills required to respond.
• Increasing requests and demands for
low-carbon products and services which
are beyond typical services currently
provided by Capita.
• Loss of revenue and market share
if Capita is not able to capture
low-carbon opportunities.
• Investment required to develop strategic
capabilities and upskilling of workforce.
• Loss of profit margins if Capita must
outsource elements of service delivery
for low-carbon solutions where we do
not have capabilities.
Capita is already seeing an increased
demand for low-carbon solutions.
We expect this trend to increase in
an orderly scenario in the short-term
as solutions are required to meet
transition goals.
• Build strategic focus on growing service offerings of consulting and technical
low-carbon solutions.
• Raise awareness and capabilities across Capita to respond more quickly and
easily to increasing demand.
Opportunity: To grow our low-carbon offerings and access new markets to
raise revenues.
Net zero transition increases capex
requirements for decarbonisation as
well as higher opex related to carbon-
generating activities.
• Major investment may be required to
decarbonise business operations, eg
through upgrading boilers.
• Internal resources required to manage
and mitigate climate impacts.
• Introduction and expansion of carbon
pricing mechanisms to increase the cost
of carbon and incentivise the shift to
low-carbon operations.
• High upfront investment costs required
to decarbonise operations across the
value chain.
• Resource required to support value
chain engagement to drive climate
action across the value chain.
• Increased direct costs associated
with carbon taxation.
• Increased indirect costs associated with
energy procurement or passed through
from suppliers.
Capita is committed to achieving net
zero by 2045, which minimises its
exposure to transition risks. Without
effective controls, this risk would be
most prevalent in an orderly and
disorderly scenario where climate
policy is most advanced and would
be expected to increase over time.
• Assess viability and prioritisation of decarbonisation measures eg energy
efficiency, fuel switching, and renewable energy to reduce emissions which
can offer cost savings and minimise exposure to higher transition costs.
• Continue use of Capita’s sustainability procurement plan to work with
suppliers which are less carbon-intensive and aligned with the Group’s
decarbonisation goals.
• Increase flexibility of property portfolio to enable more agile response to
changing energy and transition demands.
Opportunity: Capita is planning to minimise its exposure to transition risks through
continued action against its net zero target eg energy efficiency measures, and by
developing a comprehensive transition plan to consolidate these actions.
Stakeholder expectations for climate
action could result in reputational damage
and financial implications if seen to be
insufficiently responding to climate action
or reporting requirements.
• Increasing customer demand to meet
climate-related requirements in bids.
• Legislation & compliance
requirements covering a range
of environmental issues.
• Increasing stakeholder concern around
the sufficiency of sustainability action.
• Increased exposure to financial
penalties, additional costs, or exclusion
from business activity if not meeting
customer or jurisdictional requirements.
• Potential loss of opportunities if unable
to respond effectively to climate-related
bid requirements.
• Loss of market share if competitors
gain competitive advantage from more
ambitious climate action.
• Risk of losing top talent and investment
if not seen to be taking sufficient action.
Capita is already responding to
mandatory and voluntary climate
reporting frameworks to promote
transparency for interested
stakeholders. Stakeholders are
already expressing high expectations,
which are expected to increase
significantly in an orderly scenario
over time.
• Raise awareness and continue to strengthen environmental credentials to
better respond to customer requests and align with the best practice of
reporting mandates.
• Continual monitoring, with defined accountability for net zero achievement
cascaded through the business.
Opportunity: to differentiate its technical solutions by better embedding climate
(and other ESG issues) into bid responses. In addition, the Group’s continued
action to reach net zero by 2045 and transition planning gives Capita a reputational
advantage as a climate leader. This will attract top talent and investment and
strengthen the business’ long-term resilience.
Physical risk
Physical climate risk results in disruption
across the value chain.
• Operational disruption of owned, leased
and supplier assets if impacted by
climate events, which are likely to
increase in frequency and severity.
• Increased frequency and cost of building
repairs, and/or adaptation measures.
• Increased cost of cooling data centres,
due to warmer temperatures and
water scarcity.
• Increased response costs to respond
to issues like power outages, water
sanitation etc, which are affected by
climate impacts on local infrastructure.
Capita has not experienced
significant disruption to date.
This risk is expected to manifest over
long-term time horizons and will be
most significant in a hot house world
scenario where the temperature rise
will be much higher.
• Capita’s flexible property and delivery strategy means we are agile and can
minimise overall disruption if a site is temporarily impacted. These response
options are outlined as part of our business continuity plans.
• Conduct in-depth risk assessments to understand the vulnerability to different
climate variables so controls are effective.
• Assess multiple physical climate hazards at key sites to strengthen
understanding and response to physical risks.
Opportunity: by carrying out an expanded assessment of physical hazards, Capita
can limit its exposure to potential future costs linked with physical climate events.
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Responsible business TCFD continued
Climate risks and opportunities table continued
In the process of our climate risk and opportunity assessment and scenario analysis, where we identified a need to understand the potential impact on the business, we conducted analysis to explore this in
more depth. The following case studies provide examples of our analysis focused on exploring the impacts from water stress and climate-related criteria in bids.
Case study: key physical risk (2022) Case study: key transition risk (2023)
Water stress at key operational sites causes disruption to operations and higher costs for water
supply and treatment.
What is the risk and the potential impacts?
• Capita recognises that with continued global warming, increasing water stress (where supply
does not meet demand) is expected to drive competition for available supply among
consumers and higher prices.
• We assessed the potential impact of water stress across 10 regions including 20 key sites
(office, residential, data centres and call centres). The two regions that scored the highest
impact rating were South Africa and India, covering several of Capita’s critical operational
sites. Moderate impact was identified across Germany, USA, UAE and Poland.
• The main impacts identified include power outages from water stress causing disruption
to business activities, as well as increased costs for water sanitation and hygiene facility
maintenance driven by increased cost and volatility of water supply.
What is the business doing about it?
Capita is exploring possible mitigation actions in South Africa and India that include short-term
lease agreements and employing work-from-home contracts to allow flexibility to maintain
business activities.
Future-facing ability to respond effectively to climate-related bid requirements.
What is the risk and the potential impacts?
• Capita’s bid process for new service contracts is increasingly subject to environmental and
specifically climate-related requirements as part of the scoring process determining bid
success. This applies both to public and private sector bids.
• In future, given the fast-changing nature of these requirements and anticipated increases in
score weighting for these across both the public and private sector, Capita is at risk of falling
behind and losing future business opportunities if it does not adequately prepare to respond.
What is the business doing about it?
Capita is engaging across the business to raise awareness of the potential for losing bids if
climate-related criteria are not sufficiently addressed. In doing so it has identified measures to
mitigate the risk and instead transform this into an opportunity for Capita to differentiate itself
among competitors and contribute to positive climate impacts through its services.
The focus areas for risk mitigation include continuing action on environmental performance,
strengthening bid governance including the contract review process, and building climate-
related capabilities and skills for those involved in the contract delivery lifecycle.
Overall water
stress
vulnerability
scores per each
region
Significant impact
Major impact
Moderate impact
Minor impact
No immediate impact
Factors used to quantify scale of potential financial impact from risk
Proportion of
bids subject to
climate-related
requirements
Proportion of
climate-related
criteria
ineffectively
responded to
Likelihood that
bid is won/lost
based on
climate-related
criteria
Scale of
future
opportunities
at risk of loss
if Capita
does not
effectively
mitigate this
risk
1 2 3
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Resilience and transition plan
In the near term, transition risks are deemed to
be more material to the business than physical
risks. While our decarbonisation action plan
reduces our exposure to transition risks associated
with energy and carbon costs, we are still sensitive
to changes in customer behaviour and markets.
As such, our engagement strategy with
stakeholders across the value chain is important
in ensuring we are proactive in minimising the risk
and seizing opportunities that align with a net
zero transition.
Our climate scenario analysis using hot house
world-related scenarios demonstrates how the
impacts on our business from physical climate
change could increase over time. As such, we
plan to conduct further analysis of the impacts
from a wider range of physical climate variables
across our portfolio and supply chain in
thefuture.
Capita has updated its target to become fully
net zero by 2045 and is working to validate
this target with the SBTi. Further details on
our targets and climate transition plan can be
found on our climate change hub webpage.
Risk management
Understanding the physical and transitional
climate-related risks and opportunities relevant
to our business means we are better able to
identify and respond to the most exposed
areas of ourbusiness.
Climate change is fully integrated into our risk
management system and in 2023 has been
categorised as part of Capita’s ESG principal
risk. As part of the ESG principal risk, climate
change risk is subject to oversight and quarterly
review by the Board’s Audit and Risk Committee,
and ownership is assigned to the Chief General
Counsel. We also undertook a separate climate
risk assessment to ensure the nuances of climate
issues are accounted for and understood by
the business.
Risk identification and assessment process
In 2021, Capita held several internal interviews to
understand how risks and opportunities manifest
for different divisions and functions. A longlist
of risks and opportunities relevant to the Group
was developed, cross-referenced against a peer
review and TCFD resources, and was qualitatively
analysed in 2021. The analysis provided Capita
with an understanding of which climate issues
were most significant to the business.
In 2022, we selected five climate risks to model
quantitative potential future financial impact.
These risks were selected based on their
perceived significance, as well as the feasibility of
quantification given data or methodology limitations.
The financial implications were derived by
extracting financial indicators from climate
scenario sources and overlaying this with our
business data eg applying a carbon price to
our emissions profile. The risks quantitatively
assessed included water stress under the
‘physical climate risk’ category, and ‘net zero
transition’ carbon pricing under the category
supply chain pass-through cost and carbon
credit pricing. The assessment results specific
to these risk drivers can be found on pages 51
and 52 of the 2022 Annual Report.
In 2023, we prioritised one key transition risk
associated with growing stakeholder pressure for
climate action, specifically exploring the potential
financial impacts of insufficient responses to
fast-changing climate requirements in bids. The
purpose of this was to develop understanding of
the potential future implications and to engage
the business on the matter, the outcomes are
disclosed on page 54. We developed an internal
quantification tool which models the potential
financial impacts of lost opportunities under
hypothetical scenarios, which is being used
to engage relevant divisional teams around our
response to this risk and associated opportunity.
Capita will adopt a similar approach for the
continued analysis of risks and opportunities
where it is recognised that there is a lack of
business awareness or a significant opportunity.
Risk controls
As with all Group-wide risks, the scoring process
applied to climate change within the ESG principal
risk identifies key controls and mitigating actions
to reduce risk from inherent to residual level
based on the risk appetite defined by theBoard.
Current climate risk controls include adopting
science-based emission reduction targets;
monitoring supply chain emissions; climate
factors integrated into due diligence when
onboarding new suppliers; business continuity
planning to ensure climate resilience; a travel
policy to reduce business travel; and ongoing
monitoring of health, safety and environment
legislation. These controls and their
effectiveness are reviewed regularly.
Risk integration approach
The results of the risk identification and
assessment process are integrated into Capita’s
Group-wide risk management framework, which
includes continuous monitoring of ongoing and
emerging risks across emerging legal, health,
safety and environmental regulations (such as
the UK Government’s PPN 06/21), using Capita’s
HSE legal register and an online compliance tool.
Assessments into required mitigation actions
will be carried out and integrated into Capita’s
investment planning and strategy.
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Responsible business TCFD continued
Metrics and targets
Climate-related metrics
The business is committed to developing
cross-industry, climate-related metrics in
accordance with the 2021 TCFD implementation
guidance update. Capita’s metrics link to risks
and opportunities categorised as market shift to
low carbon solutions and net zero in the climate
risks and opportunities table above. See the
annual GHG emissions table in the Planet
section for the movement in metrics and
progress against targets.
• Scope 1 to 3 emissions: we measure and
disclose our operational (Scope 1 and 2)
and business travel (Scope 3) GHG emissions
annually, see page 42, and our full value chain
emissions via CDP’s climate questionnaire in
accordance with the GHG Protocol’s
methodology.
• Exposure to climate-related risks: the
climate scenario analysis conducted under
strategy informs the significance of potential
exposure to climate impacts over time and
different climate scenarios.
• Proportion of executive remuneration
assigned to climate considerations: Capita
incorporated performance against Capita’s
climate targets in the 2021 remuneration policy
applicable for 2023 remuneration.
Other climate-related indicators monitored:
• % of supply chain spend with suppliers who
have science-based GHG reduction targets,
helping track supply chain emissions and
attainment of SBTs.
• Proportion of renewable electricity, tracking
our fossil fuels phase-out and adoption of
new energy sources.
• Emissions associated with business travel,
contributing to the attainment of climate
targets. Carbon intensity of business by
turnover and headcount.
Climate-related targets:
Capita has set a range of ambitious targets to
reduce the company’s impact on global warming,
and its exposure to climate-related risks. Capita
has updated its target to reach net zero by 2045
and is working with the SBTi to have this verified.
A description of our performance over the past
three years can be found on page 41.
• Near-term targets: Capita commits to reduce
absolute Scope 1 and 2 GHG emissions and
absolute Scope 3 GHG emissions covering
business travel 46% by 2030 from a 2019
base year. Capita also commits that 50% of
its suppliers by spend covering purchased
goods and services and capital goods will
have science-based targets by 2025.
• Long-term net zero target: Capita commits
to reduce absolute Scope 1 and 2 GHG
emissions, and absolute Scope 3 GHG
emissions covering purchased goods and
services, capital goods, business travel and
employee commuting by 90% by 2045 from
the base year of 2019, and neutralise any
remaining hard-to-abate emissions using
robust carbon removals.
• Capita’s plan to achieve these targets
across our global operation is addressed
under driving down GHG emissions, see
page40.
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Risk management and internal control
Risk management and internal control
We manage risks proactively
Capita is exposed to a wide range of risks that,
should they materialise, could have a detrimental
impact on our financial performance, reputation
or operational resilience. We recognise that
effective risk management and internal control
are fundamental to helping to protect shareholder
value and deliver our strategic objectives.
Risk governance and oversight
The Board is ultimately accountable for providing
strategic governance and stewardship of the
company. Throughout 2023, the principal and
emerging risks facing the company continued to
be reviewed by the Board, including those risks
that could threaten Capita’s business strategy
delivery, future performance, operational
resilience or financial position. The Board is
committed to the continuous improvement of our
governance and risk management processes, to
ensure that risks, including new and emerging
risks, continue to be identified and managed
effectively and in a timely manner.
The Audit and Risk Committee (the ARC), which
has delegated responsibility from the Board for
reviewing and assessing the risk management
and internal control systems, is responsible for
overseeing the Group’s principal risk profile and
ensuring management has developed effective
risk management strategies.
During 2023, the ARC continued to review
and brief the Board on the Group’s system of
risk management and internal control and on
the effectiveness of the procedures for internal
control over financial reporting, compliance and
operational matters.
The executive risk and ethics committee (the
EREC) is responsible for identifying, assessing,
overseeing and challenging principal risks across
all Capita’s unregulated businesses and provides
regular updates to the ARC. Capita recognises
the importance of its financial services businesses
and the need for specific oversight, to manage
and mitigate regulatory risks associated within
those businesses. This oversight is provided by
the financial regulated entities oversight committee
(the FREOC). The FREOC is chaired by an
independent non-executive director, supported
by specialist risk and compliance professionals
and provides regular updates to the ARC.
On a day-to-day basis, divisional and functional
leaders, senior leadership and business unit
teams identify, manage and monitor risks that
they are accountable for. Capita recognises that
risk cannot be fully eliminated and that there
are certain risks the Board and/or the senior
leadership will accept when pursuing strategic
business opportunities. However, these
risk acceptance decisions are made at
an appropriate authority level and reflect
the organisation’s defined risk appetite.
Cyber incident
On Friday 31 March 2023, a threat actor gained
unauthorised access to certain of our IT systems.
Capita was alerted to this via our security
capabilities and the access was duly interrupted,
which significantly restricted the potential impact
of loss of sensitive data. Prompt action was
taken to secure our systems and remediate
issues arising from the incident. Despite the
setback, we continued to deliver our contractual
commitments and further steps are underway
to strengthen our IT infrastructure.
Improving our internal controls
We continuously seek opportunities to enhance
our risk management and internal control
environment and introduce greater rigour and
standardisation in our processes and controls.
The Board recognises that Capita’s control
effectiveness remains highly dependent on
management intervention.
During the year, we initiated a controls
improvement programme, to document key
business processes and controls. Our Group
Internal Audit function will provide assurance over
control design as part of its annual audit plan.
The Board and the ARC do not underestimate
the work needed to ensure that robust internal
control and risk assessment frameworks are
embedded fully. Work will continue to be
undertaken throughout 2024 and 2025 to
enhance and improve the standardisation and
overall effectiveness of the Group’s internal
control framework. The status of the controls
improvement plan will continue to be monitored
at ARC.
Minimum control standards
Minimum control standards are the self-
assessment of financial controls undertaken by
the finance team to identify areas where control
improvements are required. Any material issues
are dealt with through mitigating activities to
ensure the effectiveness of the existing controls
over financial reporting.
During 2023, the finance function continued to
enhance the self-assessment process across
the whole organisation to obtain assurance over
the operation of key financial controls. Specific
improvements included additional checking
procedures to ensure the robustness of
assurance over the effectiveness of controls
and ensuring the scope of the minimum control
standards aligns with the latest documentation
of key risks and controls over financial reporting.
Key control questionnaire
Capita runs a key control questionnaire (KCQ)
process. The KCQ is an annual management
attestation process where business leaders testify
to the effectiveness of key controls and adherence
with group policies within their functions, divisions
or business units. The results from the KCQ
process inform the development of action plans
for control improvement during the subsequent
year. The KCQ reinforces accountability and
increases business leaders’ awareness of their
responsibilities in maintaining an effective control
environment. The status of KCQ corrective
actions arising from the exercise are monitored
by EREC throughout the year.
Risk management process
Our risk management framework (RMF) is defined
at a Group level with implementation and execution
owned within each of our functions, divisions and
business units. The RMF, which is mandated
throughout the Company, provides a consistent
approach to the identification, assessment,
monitoring and reporting of risks and opportunities.
The RMF also ensures that ownership and
responsibilities for managing risks are clearly
understood across the Group.
The functions, divisions and business unit teams
then work in collaboration with each other to
undertake a ‘top down, bottom up’ approach
to identify, assess and respond to risks faced
by Capita. The risk management process is
based on risk registers and risk reporting at
the established risk governance committees.
Key risks are documented in the risk registers
and have assigned risk owners who review
them regularly, and report on them on at least
a quarterly basis, as part of the risk reporting
process. The strength of existing controls is
evaluated to determine whether any further
mitigating actions are needed to manage the risk
level to within the risk appetite set by the Board.
A centrally coordinated risk and assurance
committee timetable enables timely flow of
risk information from business units to EREC,
and from EREC to the ARC. During 2023, our
risk management processes continued to
operate effectively.
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Risk management and internal control continued
The Board remains confident that our existing
governance frameworks and risk management
processes will ensure that risks, including any
emerging risks, continue to be identified and
dealt with effectively. While recognising the
improvement made over the last few years
associated with the simplification of the business,
the Board acknowledges that risk management
and mitigation is a continuous process and that it
is likely to take several years for all risk mitigation
actions to be fully effective.
At Capita, principal risks are considered over the
same three-year period as the viability statement.
They are listed below, and for each risk we
disclose key risk drivers, mitigating actions, and
intended future mitigations to manage the risk
and improve internal control.
Risk governance structure and assurance lines
Independent
assurance
Board
Executive Team and
risk committees
Divisional and business
unit management
Audit and Risk
Committee (ARC)
Risk, compliance
and governance
Local risk committees
Risk
oversight
Ownership and
management
of risk
Bottom
up
Top
down
3
Third line of defence
• Internal Audit reports directly
to the Board and ARC on the
effectiveness of governance,
internal control and risk
management, through an
independent risk-based
assurance programme
• Helps safeguard the first two lines
and recommend improvements as
the risk profile adapts and changes
2
Second line of defence
• Provides the policies, framework,
tools, techniques and support to
empower risk and internal control
to be managed by the first line
• Establishes monitoring controls,
provides oversight and regularly
evaluates the effectiveness of
the first line
• Promotes consistency of the key
objectives and management of
risk across the Group
1
First line of defence
• Includes senior leadership and
employees who, as part of their
core roles, identify and manage
keyrisks
• Equipped with the necessary
skills, knowledge and tools to
operate effectively and have the
relevant authority levels to embed
the policies and procedures
across the internal controls and
risk management frameworks
Emerging risks
The identification of emerging risks is carried out
by functions, divisions and business units using
a bottom-up approach, and the executive from a
top-down perspective. Regular reviews of risks,
including emerging risks and project/programme
risks, are included in risk and assurance
committees within Capita’s existing governance
structures. During the year, Capita identified an
emerging risk around our ability to procure, build
and implement solutions to improve future and
existing client propositions through the use of
generative artificial intelligence (gen AI).
We envisage that gen AI will create significant
competitive opportunities to the nature of
services Capita delivers to clients. The emerging
risks associated with this are acknowledged, and
further evaluation of the risk and the opportunities
this could bring are planned to be explored
in2024.
Our principal risk profile
Principal risks are defined as those risks that
we determine to be the most material which
can affect the performance, reputation and
operational resilience of our business. These
risks are owned and managed by a member of
the Executive Team who has accountability for
ensuring that the risk is effectively managed.
Assigning risk ownership at executive level also
ensures that an appropriate level of attention and
focus is applied in managing the principal risks.
We recognise that it is good practice to review
our principal risk profile regularly to ensure that
it remains relevant and in line with our strategic
objectives. In Q3 2023, Capita initiated a review
of its principal risk profile, which resulted in a
reduction in the number of principal risks from
13 to nine. During the course of 2024, we will
define the Group’s risk appetite in respect of
these newly defined principal risks.
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Risk management and internal control continued
Risk Executive risk owner(s) Risk category Risk trend
1. Profitable
growth
Divisional Executive Officers
(EOs)
Strategic Stable residual risk position. We continue to
bid for and win new contracts on appropriate
commercial terms.
2. Contract
performance
Divisional EOs Operational Stable residual risk position. We continue
to deliver services that are vital to the
success of our clients in line with
contractual commitments.
3. Innovation
Divisional EOs and
Chief Technology Officer
Strategic Stable residual risk position. We continue
to work on effectively managing existing
propositions and identifying opportunities
which will create new propositions for
our clients.
4. People
attraction
and retention
Chief People Officer People Improved residual risk position. We are now
more successful in attracting talented people
we need to succeed and have seen a
material decrease in our levels of attrition.
5. Financial
stability
Chief Financial Officer Financial Improved residual risk position. Following the
successful disposal of our Portfolio
businesses, the healthy funding position of
the Group’s main defined benefit pension
scheme, and the implementation of the cost
reduction programme to deliver £60m of
annualised cost savings from Q1 2024
underpinning our plan to generate positive
free cash flow in the medium term.
6. Cyber security
Chief Technology Officer Technology Stable residual risk position. There is
increased focus on improving our cyber
security posture to protect our systems
from future unauthorised access and use.
7. ESG
(environmental,
social and
governance)
Chief General Counsel and
Chief People Officer
Legal and
compliance
Stable residual risk position. We are
developing our net zero transition plans
to reduce our environmental impact and
supporting our clients and suppliers to do
the same.
8. Safety and
health
Chief General Counsel and
Divisional EOs
Legal and
compliance
Stable residual risk position. We continue to
protect the safety and health of all Capita’s
employees, and manage our duty of care to
them, the people we work with and those
affected by our acts and omissions.
9. Data
governance
and data
privacy
Chief General Counsel and
Chief Technology Officer
Legal and
compliance
Introduced as a new risk in 2023. Capita
holds significant amounts of employee and
client data, and additional resources will be
deployed to enhance our data governance
and data privacy controls.
• Inability to
renew contracts
• Non-competitive
pricing
• Lack of investment
and innovation
• Misalignment to
market requirement
• Inappropriate
commercial terms
in contracts
Integral to our growth strategy, this risk considers
the potential impact of failure to win new bids or
renew existing contracts on appropriate
commercial terms.
There is enhanced focus on leveraging digital
platforms and technology enabled solutions
to meet and enhance our value proposition.
Mitigating actions
• Market sector strategies and account plans
• Streamlined delivery capability
• Contract commercial review process
• Investment committees and digital strategy
• Business Development function, providing
market intelligence and horizon scanning
• Divisional performance reporting process
Future mitigation
• Enhanced sales governance process
• Acceleration of digital strategy
• Market sector strategies and account plans,
aligned to work being undertaken by external
strategy consultants.
• Effective framework exploitation
• Strengthen customer focus (including
customer centricity workstream and
customer advisory boards)
• Renewed focus on mid-range deals
• Re-baseline onerous contract terms
Principal risk Key risk drivers How we manage the risk
1. Profitable growth
Attract new
clients and retain
existing clients
on appropriate
commercial terms.
Executive owner:
Divisional EOs
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• Ineffective contract
management
• Lack of the capacity or
capability to deliver
contractual
expectations
• Ineffective service
mobilisation
• Inadequate supplier
management
• Aged, unstable
or unreliable
infrastructure
Clients and customers are at the heart of what
we do. Ensuring that we not only deliver services to
clients in line with contractual and legal obligations,
but going above and beyond is fundamental to
our strategy in ensuring that we remain as trusted
partners to our clients. There is constant focus on
enhancing customer engagement and improved
governance of contract lifecycle management.
Mitigating actions
• Contract management framework and
performance reviews
• Sales governance
• Robust lifecycle management and
programme delivery
• Supplier management framework
• Resilience and recovery plans
• Internal and external assurance
• Effective operational business resilience and
recovery plans
Future mitigation
• Contract monitoring and assurance
Principal risk Key risk drivers How we manage the risk
2. Contract
performance
Deliver services to
clients in line with
contractual and
legal obligations.
Executive owner:
Divisional EOs
Risk management and internal control continued
• Lack of clear strategy
and ownership
for innovation
• Lack of investment
in new technology
and capability
• Non-alignment with
technology trends
and developments
• Lack of capacity
and/or skill sets to
develop, scale and sell
innovative solutions
Innovation, the pursuit of new and groundbreaking
ideas, technologies and/or strategies inherently
involves venturing into uncharted territory which
may expose Capita to various risks such as the
possibility of failure, financial losses and negative
impacts on reputation and market position.
Timeliness of embracing appropriate technology
and aligning it to enhance customer experience
and value proposition is of the essence. The advent
of AI brings challenges as well as opportunities for
greater innovation.
Mitigating actions
• Divisional and client group strategy reviews
• Digital steering group and investment committees
• Intelligence hub which analyses market data
and government policy which directly drives
our strategy
• Dedicated consulting capability to influence and
align client solution requirements
Future mitigations
• Digital transformation strategy
• Glidepath on the approach to innovation, both
at divisional and Group level
• Aligning with technology trends and client
expectations
• Develop innovative products and services
delivering value addition to the client and
their business
• Investment in cloud and data analytics
Principal risk Key risk drivers How we manage the risk
3. Innovation
Innovate and
develop new
customer value
propositions with
speed and agility.
Executive owner:
Divisional EOs
Chief Technology
Officer
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• Development
opportunities and
career progression
that do not meet
the expectations
of colleagues
• Uncompetitive pay
and benefits
• External market
factors effecting the
availability of labour
Our people are our assets and we have been
successful in attracting the talented people we
need to succeed. In 2023, we have also seen
material improvements in our levels of attrition.
Moving forward, we are focusing on how we
engage and develop our people.
Mitigating actions
• Career path framework and succession process
• Global reward framework
• Global management and leadership academy,
performance and development process
• Monitor external labour market and trends
• Employee engagement survey
• Colleague performance reviews
Future mitigations
• Roll out remainder of the career path framework
to enable employees to plan and develop
their careers
• Continue to roll out pay and reward framework
across all countries to ensure that they
are competitive
• Complete design and implementation of
leadership essentials programme
• Continue to explore opportunities to utilise
offshore capability
Principal risk Key risk drivers How we manage the risk
4. People attraction
and retention
Attract, develop,
engage and retain
the right talent.
Executive owner:
Chief People Officer
Risk management and internal control continued
• Inaccurate (long
and short-term)
forecasting, business
planning and
connected cash
flow volatility
• Unexpected breach
of debt covenants
resulting in inability to
drawdown facilities/
refinance as required
• Restrictions in
current pension and
borrowing agreements
hindering/preventing
implementation of
desired corporate
strategy
• Inefficient cost base
• Significant unexpected
event(s)
The trading performance of the Group is outlined in
the Chief Financial Officer’s review. The Group’s
low levels of net debt, pension surplus, prudent
balance sheet management and focus on
improving free cash flow before business exits
all serve to mitigate the risk of financial instability.
Mitigating actions
• Contract review committee approval of key
contracts, monitoring of major contract risks
• Internal review and challenge of business plan
and reforecasting during the year
• Scenario modelling during business planning
• Prospective monitoring of direct cash flow and
covenant compliance
• Existence of insurance mitigates some events
• Ongoing reviews of business performance
Future mitigations
• Improve cash generation by delivering £60m of
annualised cost savings from Q1 2024
• Target a further £100m of annualised efficiencies
to be delivered by the middle of 2025
• Enhance the Group’s cash forecasting and
reporting processes
Principal risk Key risk drivers How we manage the risk
5. Financial stability
Maintain financial
stability and achieve
financial targets.
Executive owner:
Chief Financial
Officer
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Strategic report

• Sub-optimal identify,
protect, detect,
respond and
recover capability
(Cybersecurity’s
Five Functions as
defined by the National
Institute of Science
and Technology)
• External threat (tech
change, legal and
regulatory including
international,
geopolitical landscape)
• People (insider
threat, capacity and
capability, training
and awareness)
• Insufficient funding to
improve and maintain
security posture
• Third party and
partners’ inadequate
cyber and information
security posture
Cyber security is a key focus for Capita and
we continuously monitor and improve our cyber
posture to ensure our systems, networks and
programs are protected from unauthorised use
and access.
Mitigating actions
• Cyber security strategy and compliance
assessment framework
• Threat Intelligence function
• Cyber training and awareness
• Supplier information security due
diligence process
• Communication and education plan
supported with mandatory training
Future mitigations
• Security design governance framework
• Deliver against our National Institute of
Science and Technology improvement plan
• Deliver cyber security programme
• Standardise and enhance our security toolset
• Security operation centre improvement
Principal risk Key risk drivers How we manage the risk
6. Cyber security
Protect our
systems, networks
and programs from
unauthorised use
and access.
Executive owner:
Chief Technology
Officer
Risk management and internal control continued
• Non-compliance with
applicable regulations
and Capita policies
and standards
including but not
limited to: supplier
charter; Code of
Conduct; human
rights; environment;
anti-bribery and
corruption;
procurement; conflict
of interest; financial
crime; diversity and
inclusion; business
resilience; and incident
management
• Inadequate monitoring,
reporting and inability
to fully understand all
contractual obligations
• Changing regulatory
environment – eg new
ESG reporting
legislation
Capita is committed to being a responsible
organisation. This means a constant, Group-wide
focus on governance and how we can deliver
better for all our stakeholders – employees,
shareholders, clients, end-users and communities.
We are committed to transitioning to net zero by
2045, reducing our environmental impact and
supporting our clients and suppliers to do the
same.
Mitigating actions
• Responsible business principles, divisional action
plans, divisional delivery and compliance,
including annual external index ratings: EcoVadis,
Dow Jones Sustainability Index, Sustainalytics
• ESG governance process
• Net zero governance
• Supply chain management including
due diligence
• Human rights policies and procedures,
including our modern slavery statement
• Operational resilience and incident management
Future mitigations
• Develop divisional and functional net zero plans
to monitor and manage emissions
• Finalise and implement the responsible
business principles
• Develop and implement a plan to
manage regulatory changes to ESG
legislative environment
• Improve the due diligence framework to meet
the additional legislative requirements outside
the UK
• Develop a system/programme to measure
compliance with supplier charter on an
ongoing basis
Principal risk Key risk drivers How we manage the risk
7. ESG
Comply with
regulatory and
contractual
requirements to
drive a purpose
driven organisation
with the right focus
on governance.
Executive owners:
Chief General
Counsel and Chief
People Officer
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• Immature practical
approach and lack
of ownership and
accountability
across Capita
• Inadequate HSE
capability, capacity
and structure
• Inadequate incident
and near miss
reporting and analysis
• Lack of standardised
and reliable
health data
As a responsible employer we are committed to
the health, safety and wellbeing of our employees
and the people we work with.
Mitigating actions
• Assurance programme for wellbeing, HSE,
occupational health, and safeguarding
• Pan-Capita HSE team reporting lines,
structure, and capability/capacity review
• Health data collection and analysis
• Framework of safety and health policies,
standards and processes including
mandatory training
• Accidents, incidents, near misses and hazards
reporting along with divisional/Group incident
analysis/investigation and lessons learned
• Incident management in line with Group policies,
standards and procedures
Future mitigations
• Expand proactive occupational health
intervention programme in Capita UK
• Reconfigure reporting lines, structure,
and capacity of divisional HSE team
Principal risk Key risk drivers How we manage the risk
8. Safety and health
Protect the safety
and health of all
Capita’s employees
and manage our
duty of care to
them, the people we
work with and those
affected by our
acts and omissions.
Executive owners:
Chief General
Counsel and
Divisional EOs
Risk management and internal control continued
• Inconsistent
data governance
framework, practices
or technology to
manage data
• Lack of awareness of
regulatory (especially
data privacy)
obligations
• Lack of understanding
of what data we have,
where it is stored and
who owns it
Data is the lifeblood of Capita and a strategic
asset that we will manage to improve client value
and citizens’ lives, allow risk to be managed more
effectively, elevate trust with stakeholders, increase
growth, enable business efficiency, and enable
technological innovation and digital transformation.
Capita has appointed a Chief Data Officer to drive
transformation in this space in 2024.
Mitigating actions
• Data privacy policies, standards, procedures
and mandatory data privacy training
Future mitigations
• Implement data governance control framework
• Embed data privacy processes through the
allocation of appropriate resourcing by the
businesses and functions, in accordance with
already promulgated Group data privacy policy
and standards
Principal risk Key risk drivers How we manage the risk
9. Data governance
and data privacy
Manage our data
effectively (both
clients and Capita)
as a strategic
asset across
the organisation.
Executive owners:
Chief General
Counsel and Chief
Technology Officer
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Strategic report

Viability statement
Viability statement
In accordance with provision 31 of the UK
Corporate Governance Code 2018, the Board
has assessed the viability of the Group and
Parent Company over the three-year period
to 31 December 2026, aligned with the period
of the Group’s business planning process. The
Board believes that a three-year period provides
sufficient clarity to consider the Group and
Parent Company’s prospects and facilitates
the development of a robust base case set of
financial projections against which severe but
plausible downside scenario stress testing can
be conducted.
In its assessment of the Group’s viability,
the Board has considered the following:
• Adjusted revenue growth in 2023 of 1.3%.
• The cost reduction programmes being
implemented during 2024.
• The completion of the Portfolio non-core
business disposal programme in January 2024.
• The repayment of £113m of financial debt in
2023, with no further repayments scheduled
in 2024.
• The renewal of the revolving credit facility in
2023 until 31 December 2026 and the issuance
of £101.9m US private placement debt with a
mixture of three and five-year maturities.
• Agreement with the Trustees of the Group’s
main defined benefit pension scheme that
no further deficit recovery contributions are
required from the Group in 2025 and beyond.
The foregoing elements provide the backdrop
to the three-year business plan approved by the
Board in December 2023. The main assumptions
underpinning the base case financial projections
in the Group’s business plan are set out below:
• Further adjusted revenue growth beyond 2024
broadly in line with market trends in each of
the two core divisions.
• Operating profit margin expansion over the
business plan period reflecting the benefit
of operating leverage coupled with ongoing
efficiency delivery.
• Delivery of cost savings.
• A transition to positive free cash flow generation
reflecting the above assumptions and the
cessation of pension deficit contributions
with effect from 2025.
The most material assumptions, from a
viability assessment perspective, relate to
the continuation of adjusted revenue growth,
operating profit margin expansion, and delivery
of cost savings.
The three-year base case financial projections
were used to assess covenant compliance and
liquidity headroom under different scenarios. This
analysis included assessing the sensitivity of the
financial performance of the Group to changes in
trading conditions in line with those considered
in the severe but plausible downside case for
the going concern assessment and from the
crystallisation of specific risks including those
set out in the principal risks section of the 2023
Annual Report and Accounts (refer to section 1
of the consolidated financial statements).
The risks applied have not been probability
weighted but rather consider the impact should
each risk materialise by applying a ‘more likely
than not’ test. These wide-ranging risks are
unlikely to crystallise simultaneously and there
are mitigations under the direct control of the
Group, including reductions in capital investment,
substantially reducing (and/or removing in full)
bonus and incentive payments, and significantly
reducing discretionary spend, that can be actioned
to address a combination of risk crystallisations
that may occur under a severe but plausible
downside. These have been considered in
the Board’s viability assessment.
Reflecting the Board’s expectations of
improvingfinancial performance, as set out
above, and its confidence in the Group’s ability
torefinance maturing debt over the viability
assessment period, the Board has a reasonable
expectation that the Group and Parent Company
will be able to continue in operation and meet
their liabilities as they fall due over the period
of the viability assessment.
The strategic report was approved by the
Board and signed on behalf of the Board:
Claire Denton
Chief General Counsel and
Company Secretary
5 March 2024
Capita plc
Registered in England and Wales
No.2081330
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Strategic report

Corporate
governance
Corporate governance
66 Chairman’s report
68 Governance at a glance
70 Board of Directors
72 Corporate governance report
79 Nomination Committee report
84 ESG Committee report
87 Audit and Risk Committee report
96 Directors’ remuneration report
119 Directors’ report
Capita plc Annual Report and Accounts
65

Chairman’s report
Chairman’s report
Dear Shareholder,
On behalf of the Board, I am pleased to introduce
the Company’s corporate governance report for
the year ended 31 December 2023.
2023 was my first full year as Chairman, following
my appointment in May 2022.
Corporate governance
This corporate governance report sets out how
the Company has complied with the 2018 UK
Corporate Governance Code. It also aims to
explain the work and activities of the Board,
and the work of its committees.
Company purpose and culture, and
Board decision making
We recognise that the Board has ultimate
responsibility for ensuring an appropriate culture
is in place across Capita to underpin how the
business behaves towards all its stakeholders.
Our culture provides the foundation to deliver our
strategy for all stakeholders – our people, clients
and customers, suppliers and partners, investors,
and society. We fully understand our obligations
to consider the interest of all our stakeholders
when making decisions, but we recognise that in
certain instances the interests of our differing
stakeholders may conflict, presenting challenging
decisions for the Board and senior management.
During the year, principal issues for the Board’s
focus included: responding to the cyber incident
which occurred in late March; CEO succession
planning; the Company’s operational and
financial performance; and capital
allocationconsiderations.
David Lowden, Chairman
“ The Board strongly believes
that good governance is a
key part of the strength of
our business and that by
reviewing and monitoring
our existing practices
we can ensure that our
governance continues
toevolve and is aligned
toour business and
itsneeds”
The Board considered and approved actions to
improve the Company’s financial performance
and position, which is in the interests of all
stakeholders. This included the issuance of
the US private placement notes in July and the
extension of the maturity of the Group’s revolving
credit facility, improving the Group’s debt profile
and, in November, commencement of the
restructuring programme intended to deliver
£60m of annualised cost savings from Q12024.
The Board and the Audit and Risk Committee
spent considerable time during the year focusing
on the cyber incident, and the subsequent
acceleration of investment to improve further
the cyber maturity profile of the Group. In
addition, the Company undertook an extensive
organisational review and, as announced on 21
November 2023, commenced a consultation
programme expected to deliver cost savings of
£60m on an annualised basis from Q1 2024,
with approximately 900, principally indirect,
support function and overhead roles ‘at risk’
of redundancy. While the Board recognised
the impact on some of our colleagues, we
considered that this decision, which would
contribute to a more sustainable future for
Capita, was in the long-term interests of the
Company and our stakeholders as a whole.
Capita provided support to affected colleagues
during the initial consultation process, which
concluded in early 2024.
Our s172 statement, which details how the
Board considers the views of its stakeholders
and principal Board decisions during 2023, is
on pages 45 to 48.
Capita plc Annual Report and Accounts
66
Corporate governance

Chairman’s report continued
Board succession planning
and composition
Chief Executive Officer (CEO) successor
As announced on 31 July 2023, Jon Lewis
informed the Board in 2022, that he was
interested in exploring his future options,
including eventual retirement from Capita and
handover to a new CEO, once the business had
pivoted to growth and a potential successor had
been identified. Following these discussions, the
Board commenced a succession-planning process.
Jon stood down from his role as CEO and
from the Board on 17 January 2024, and was
succeeded by Adolfo Hernandez. Jon will remain
in the business until July to ensure an orderly
transition. Adolfo was chosen by the Board
after a rigorous selection process.
Prior to his appointment as CEO, Adolfo was the
Vice President of Amazon Web Services Global
Telecommunications business, which is focused
on enabling digital transformation to the cloud for
customers around the globe. During his 30-year
career in the technology sector, Adolfo has
achieved an excellent record in accelerating
revenue growth driven by digital services. We
were pleased to welcome Adolfo as our CEO
in January and believe that his experience and
skillset will be key to delivering our strategic
priorities. Further information on Adolfo’s skills
and experience are provided in his biography on
page 70 of this corporate governance report and
details of the selection process we followed are
provided in my Nomination Committee report
on pages 79 to 83.
On behalf of the Board, I would like to express
our sincere thanks to Jon and pay tribute to
his significant commitment and achievements
at Capita since he joined in December 2017,
including leading the successful transformation of
the Group. He has shown outstanding leadership
and determination in rebuilding Capita from the
ground up. Jon has refocused, strengthened and
returned the business to growth, while rebuilding
client trust and improving colleague engagement.
I also want to commend him for his leadership
throughout the period following the cyber incident,
during which Jon decided to delay his possible
retirement from Capita.
Non-executive directors
John Cresswell decided to step down from
the Board on 31 March 2023. On behalf of
the Board, I would like to thank John for his
commitment and valuable contribution to the
Board during his seven-year tenure as a director.
We welcomed Claire Miles to the Board as an
independent Non-Executive Director on 12 May
2023. Shortly after Claire’s appointment to the
Board, she was offered the position of chief
executive officer of Stagecoach, the UK’s largest
bus and coach operator. Due to Claire’s new
executive role, she informed the Board in
December that she would be unable to devote
the appropriate time to her role at Capita and
would therefore resign as a director. Claire
stepped down from the Board on 31 December
2023. The Board fully understood Claire’s
decision and recognises that each director needs
to have sufficient time to dedicate to their role.
The Nomination Committee considers other
commitments of our directors annually to ensure
that each director is able to allocate sufficient
time to Capita to discharge their responsibilities
and I discuss this with each director during my
one-to-one meetings with them. The Board does,
however, recognise that the ability of directors to
share their experiences and expertise from other
positions is of value to the Company.
The Board strongly believes that good
governance is a key part of the strength of our
business and that by reviewing and monitoring
our existing practices we can ensure that our
governance continues to evolve and is aligned
to our business and its needs. This includes
assessing our governance structure and, in
December 2023, having concluded the Portfolio
disposal programme and streamlined the Group,
culminating in just two divisions – Public Service
and Experience, the Board agreed that while
having an employee director on the Board had
been successful, this was not suitable for the
business going forward, and that instead the
Board should ensure that there is broader
engagement with colleagues. Consequently,
Janine Goodchild our Employee Non-Executive
Director stepped down from the Board on 31
December 2023. It is the intention of the Board
to increase its visibility with our wider workforce
and the Board has appointed Nneka Abulokwe
as the designated non-executive director to
engage with our workforce. In addition, individual
site visits will be arranged for our independent
non-executive directors to meet with colleagues.
On behalf of the Board, I would like to thank
Claire and Janine for their valuable contributions.
2024 AGM
Our AGM will be held on 21 May 2024. This
provides an opportunity for our shareholders to
meet with our directors and I hope you will be
able to attend.
Corporate governance and committee
reports
The following pages in this section consist of our
corporate governance and committee reports.
I hope that you will find these and the entire
Annual Report informative. The Board will be
pleased to receive any feedback you may have.
David Lowden
Chairman
5 March 2024
Capita plc Annual Report and Accounts
67
Corporate governance

Governance at a glance
Governance at a glance
The Board is collectively responsible for promoting Capita’s
long-term sustainable success, generating value for shareholders,
and contributing to wider society. To assist in providing effective
oversight and leadership, the Board has established the
following committees:
Governance highlights
During 2023 our governance framework supported our strategic delivery in a number
of ways, including:
Board oversight of the
completion of the Portfolio
disposal programme
Reviewing the remuneration policy for
executive directors to be proposed
to shareholders at the 2024
annualgeneralmeeting
Search and identification of new CEO
tosucceed Jon Lewis upon his retirement
andappointment of new Independent
Non-Executive Director
Reviewing the
Group’s capital
allocation policy
Reviewing
the results of
the triennial
pensionvaluation
Board focus on
the cyber incident
Reviewing and
approving
the supplier
charter
Conducting an
internal Board
and Committee
evaluation
Reviewing
the outcome of
the colleague
survey
Consideration and approval of
extension of revolving credit
facility and issuance of US
private placement notes
Capita Board
Group Audit and
Risk Committee
(ARC)
Nomination
Committee
(NomCo)
Remuneration
Committee
(RemCo)
Environmental,
Social and
Governance
Committee
(ESGCo)
Executive Team
The Group has an Executive Team to manage Capita’s business day to day. Further information on our governance
structure is available throughout this corporate governance report.
31 March 2023
John Cresswell
stepped
down as an
independentnon-
executive director
12 May 2023
Claire Miles was
appointed as an
independentnon-
executive director
31 July 2023
The Company
announced
the proposed
retirementofJon
Lewis as
CEOanda
Director, to be
succeeded by
AdolfoHernandez
31 December
2023
Claire Miles and
Janine Goodchild
stepped downfrom
the Board
17 January 2024
Jon Lewis stepped
down as CEO
and a Director,
succeeded by
Adolfo Hernandez
Board changes during 2023 and 2024 to date
Details of succession planning for the new CEO are provided in the Nomination Committee report on pages 79 to 83
Capita plc Annual Report and Accounts
68
Corporate governance

Governance at a glance continued
Board skills and experience
Director
Government
contracting
Regulated
businesses
Business
process
outsourcing Consulting
Account
management
Technology and/
or digital
Transformation
and strategy Cyber security Finance International Sustainability
David Lowden • • •
Adolfo Hernandez • • • • • • • • •
Tim Weller • • • • • • •
Nneka Abulokwe • • • • • • • • •
Neelam Dhawan • • • • • • • • •
Georgina Harvey • • • •
Brian McArthur-Muscroft • • • • • • • •
Independence (excluding Chairman) Tenures Gender representation in senior Board positions Gender diversity Ethnic diversity
Member
31/12/2023
Independent
%
Member
05/03/2024
Independent
% 31/12/2023 05/03/2024 31/12/2023 05/03/2024 31/12/2023 05/03/2024 31/12/2023 05/03/2024
Years No. Years No.
Chairman
62.5
Chairman
67
>4 2 >4 1 David Lowden, Chairman
Jon Lewis, CEO
Tim Weller, CFO
David Lowden, Chairman
Adolfo Hernandez, CEO
Tim Weller, CFO
4 Male
(44%)
4 Male
(57%)
7 White
(78%)
5 White
(71%)
CEO/CFO CEO/CFO 2–3 3 2–3 3 Georgina Harvey, Senior
Independent Director
Georgina Harvey, Senior
Independent Director
5 Female
(56%)
3 Female
(43%)
2 Persons of
colour (22%)
2 Persons of
colour (29%)
5 INEDs 4 INEDs 1–2 3 1–2 2
Employee
Director
<1 1 <1 1
1. Claire Miles resigned as a director on 31 December 2023.
2. Janine Goodchild resigned as employee director on 31 December 2023.
3. Adolfo Hernandez was appointed as Chief Executive Officer on 17 January 2024, following the retirement of Jon Lewis.
Board composition at 31 December 2023 and 5 March 2024 (the date of this report)
Capita plc Annual Report and Accounts
69
Corporate governance

David Lowden
Chairman
Appointed: January 2021 (Independent
Non-Executive Director); March 2021 (Senior
Independent Director); May 2022 (Chairman)
Independent at appointment: Yes
Key skills and experience: David is a
highly experienced non-executive director,
senior independent director and chair of UK
listed companies. He was formerly Chair of
PageGroup plc and Huntsworth plc, Senior
Independent Director at Berendsen, Chair of
the Audit and Risk Committee at William Hill,
Chair of the Audit Committee at Cable &
Wireless Worldwide plc and Chief Executive
of Taylor Nelson Sofres plc.
Other current appointments: Chairman
of Diploma plc; and Senior Independent
Director of Morgan Sindall plc.
Adolfo Hernandez
Chief Executive Officer
Appointed: January 2024
Key skills and experience: Adolfo has
c.30 years’ experience in the technology
sector, achieving an excellent record in
accelerating revenue growth driven by
digital services. Prior to joining Capita,
Adolfo was Vice President of Amazon Web
Services Global Telecommunications which
is focused on enabling digital transformation
to the cloud for customers across the globe.
Former positions include: CEO of SDL plc
(now part of RWS Group); and CEO of
Acision (now part of Mavenir).
Board responsibilities: managing and
developing Capita’s business to achieve
the Company’s strategic objectives.
External appointments: None.
Tim Weller
Chief Financial Officer
Appointed: May 2021
Key skills and experience: before joining
Capita, Tim was at G4S for five years as
its CFO and for three years before that as a
Non-Executive Director. He has many years’
experience as a CFO with Innogy, RWE
Thames Water, United Utilities, Cable &
Wireless Worldwide plc and Petrofac.
He qualified as a Chartered Accountant
at KPMG, becoming a partner in 1997. He
was a Non-Executive Director of The Carbon
Trust from June 2007 to September 2023.
Board responsibilities: overall control and
responsibility for all financial aspects of the
business’s strategy.
External appointments:
Independent Council Member of the
University of Exeter.
Georgina Harvey
Senior Independent Director
Appointed: October 2019
(Non-Executive Director); July 2022
(Senior Independent Director)
Key skills and experience: Georgina
has significant experience across highly
competitive consumer-facing markets and
of delivering successful transformational
change. Prior to her current roles, Georgina
was Managing Director of Regionals and
a member of the Executive Committee
of Trinity Mirror plc from 2005 to 2012.
Other current appointments:
Non- Executive Director of Superdry plc
and Britvic plc and a director of McColl’s
Retail Group plc.
Board of Directors
Chairman Executive Directors Independent Non-Executive Directors
Key to committees
Audit and Risk
A
Nomination
N
Remuneration
R
Committee chairEnvironmental, Social and Governance (ESG)
E
N E N R ENA
Capita plc Annual Report and Accounts
70
Corporate governance

Board members continued
Nneka Abulokwe OBE
Appointed: February 2022
Key skills and experience: Nneka has
significant experience of delivering large-
scale, high profile technology projects for
governments and private institutions globally.
She held senior and executive positions with
Logica (now CGI), Atos and Sopra Steria, in
a corporate career of more than 25 years,
before founding MicroMax Consulting,
where she is currently CEO. Nneka was
also an External Member of the University
of Cambridge Audit and Risk Committee.
Nneka was awarded an OBE in 2019 for
services to business.
Other current appointments: NED,
Davies Group; Director of MicroMax
Consulting Limited; Adviser, Cranfield
School of Management Advisory Board and
DoGood Africa. Member of Board of Visitors
of Oxford University Ashmolean Museum.
Neelam Dhawan
Appointed: March 2021
Key skills and experience: Neelam has
c.40 years experience in the IT industry,
where she held senior positions in Hewlett-
Packard, Microsoft, Compaq and IBM with
responsibility for a wide range of areas
including strategy, corporate development,
software engineering and offshoring. She
now advises multinationals on business and
technology transformation and, until recently
was an advisor to IBM, helping them
navigate through a business and talent
transformation in India. Until 2023 Neelam
was a director of Skylo Technologies Inc.
and a member of the Koninklijke Philips
NV Supervisory Board.
Other current appointments:
Non-Executive Director of ICICI Bank
Limited, Yatra Online Inc and Hindustan
Unilever Limited and Capillary Technologies.
Independent Non-Executive Directors
Brian McArthur-Muscroft
Appointed: June 2022
Key skills and experience: Brian
was formerly the Chief Financial Officer
of Qontigo, a financial intelligence and
investment management business. Prior to
this he was Group Chief Financial Officer at
Micro Focus International plc, a FTSE 100
global infrastructure software company.
Former roles include CFO at Paysafe Group
plc leading the business to a FTSE 250
listing in 2016 and Group FD at Telecity
Group plc. Prior to joining Capita he
was a Non-Executive Director at Robert
Walters plc. Brian holds a law degree and
qualified as a chartered accountant with
PricewaterhouseCoopers in London.
Other current appointments: Brian is the
Group CFO at IQ-EQ, a Global Investor
Services company.
Directors who served during 2023
John Cresswell stepped down from
the Board as Non-Executive Director
on 31 March 2023.
Claire Miles was appointed as a
Non-Executive Director on 12 May 2023
and stepped down from the Board on
31 December 2023.
Janine Goodchild stepped down from
the Board as Employee Non-Executive
Director on 31 December 2023.
R EN N RAAN RA
Capita plc Annual Report and Accounts
71
Corporate governance

How we apply the principles of the Code
Pages
Section 1: Board leadership and Company purpose
Chairman’s introduction 66 to 67
Strategic report 2 to 64
The role of the Board 73
Purpose and culture 4, 8 to 9
Stakeholder and colleague engagement 45 to 48
Section 2: Division of responsibilities
Board composition 75
Role of the Chairman, Senior Independent Director, Non-Executive Directors, and
Company Secretary
74
Time commitment, external appointments, independence and tenure 69, 73, 79
Section 3: Composition, succession and evaluation
Appointment to the Board and succession planning 79 to 83
Skills, experience, and knowledge of the Board 69
Board diversity 69
Board evaluation 76
Section 4: Audit risk and internal control
Auditor independence and effectiveness of the audit 92
Principal and emerging risks 59 to 63
Risk management activities 57 to 59
Fair, balanced, and understandable assessment 89
Viability statement 64
Section 5: Remuneration
Directors’ remuneration report 96 to 118
Directors’ remuneration policy 101 to 107
Engagement with stakeholders on remuneration 99 to 100
Corporate governance report
Corporate governance report
UK Corporate Governance Code compliance
Capita plc and its subsidiaries (the Group) are committed to maintaining high standards of corporate
governance. The UK Corporate Governance Code 2018 (the Code) applies to accounting periods
beginning on or after 1 January 2019 and is available from the Financial Reporting Council’s website,
www.frc.org.uk. The Code sets out the framework of governance for premium listed companies such
as Capita plc.
The Board and its Committees note the publication of the UK Corporate Governance Code 2024
(the 2024 Code) published on 22 January 2024, which will apply to accounting periods beginning on
or after 1 January 2025, other than Provision 29, which will apply to accounting periods beginning on
or after 1 January 2026. The Board has commenced a review of the amended provisions contained
within the 2024 Code.
Together with the Directors’ remuneration report on pages 96 to 118, this report sets out the Board’s
approach to governance and the work undertaken over the year. During 2023, we complied with all
relevant provisions set out in sections 1 to 5 of the Code except for Provision 24 which provides that
audit committees should comprise independent non-executive directors. Janine Goodchild who was a
member of the Audit and Risk Committee (ARC) during 2023 was a non-executive employee director
and was not considered as independent. However, the Board considered that the formal appointment
of Janine to ARC continued to demonstrate how the Group values diversity of perspective and that this
is considered more important than a purely compliance-driven approach to the Code. Janine stepped
down from the Board on 31 December 2023. Following Janine’s resignation, ARC comprises solely
independent non-executive directors.
Following Janine’s resignation, the Board has appointed Nneka Abulokwe as designated non-executive
director for colleague engagement, in compliance with Code Provision 5, and is also considering
wider engagement with colleagues. Further information is provided on page 67. Our new CEO,
Adolfo Hernandez, has commenced a series of breakfast meetings at different Capita locations to
meet with colleagues. In addition, Georgina Harvey, Remuneration Committee chair, has ongoing
colleague engagement in respect of executive remuneration and considers feedback from these
meetings which is shared with her fellow Committee members and the Board. Further details are
included in the Directors’ remuneration report on page 100.
Further information about how the Company has applied the principles of the Code is set out in this
corporate governance report. Key highlights of the Company’s compliance with the Code together
with cross references to other sections of the Annual Report are detailed in the table opposite.
Capita plc Annual Report and Accounts
72
Corporate governance

Corporate governance report continued
Governance structure and division of responsibilities
The Board
Role of the Board
The Board is responsible for promoting Capita’s long-term success. This is achieved through
effective governance and keeping the interests of stakeholders at the fore in decision making.
The Board establishes the Group’s purpose and values and sets the Group’s strategy, ensuring
alignment with our culture, and overseeing its implementation by management. The Board is
responsible for oversight of the Group’s governance, financial reporting, internal controls,
and risk management, including the Group’s risk appetite.
A full schedule of matters reserved for the Board’s decision is available in the Corporate
Governance section of the Company’s website at www.capita.com.
Board composition and election
Our Board currently comprises seven members: the Chair, the Chief Executive Officer (CEO), the
Chief Financial Officer (CFO) and four independent Non-Executive Directors who are experienced
individuals, drawn from a wide range of industries and backgrounds with the skills to promote
the long-term sustainable success of the Group.
Board composition is a deliberate balance of newer and longer-standing members and reflects
the ongoing review and refreshment of Board membership to ensure a balance of skills and
experience appropriate for the broad nature of Capita’s businesses. The experience and
breadth of tenure of the non-executive directors means the Board is well positioned to advise,
challenge, and support executive management as the Group progresses its growth strategy.
All Directors are appointed to the Board for an initial fixed three-year term, subject to
annual re-election by shareholders at the Company’s AGM. In accordance with the Code, all
Directors will retire and offer themselves for election or re-election at the 2024 AGM to be held
on 21 May 2024.
Board independence
Non-executive directors are required to be independent in character and judgement.
All relationships that may interfere materially with this judgement are disclosed as required
under the conflicts of interest policy, see page 120. The Board believes that each of the
non-executive directors has retained independence of character and judgement and has not
formed associations with management or others that may compromise their ability to exercise
independent judgement or act in the best interest of the Group. The employee non-executive
director was not considered as independent during 2023, given her status as an employee of
the Group.
The Code does not consider a chairman to be independent due to the unique position the role
holds in corporate governance. David Lowden met the independence criteria outlined in the
Code when he was appointed as the Group’s chairman in 2022. The Board is satisfied that
no conflict of interest for any director requires disclosure, see page 120.
Directors’ biographies, tenures, key skills and experience, and external appointments are set out
on pages 70 to 71.
The Board delegates certain matters to its four principal committees:
Nomination Committee
Chair: David Lowden
Audit and Risk
Committee
Chair: Brian McArthur-Muscroft
Remuneration
Committee
Chair: Georgina Harvey
ESG
Committee
Chair: David Lowden
Membership:
6
Chairman, 4 Independent
Non-Executive Directors +
CEO
• Reviews composition of
the Board.
• Recommends
appointments of
new directors.
• Ensures plans are
in place for orderly
succession to both
the Board and senior
management positions.
• Overseas development
of diverse pipeline
for succession.
Membership:
4
All Independent
Non-Executive Directors
• Reviews accounting
policies and contents
of financial reports.
• Monitors internal control
environment.
• Considers adequacy,
effectiveness, and scope
of external and internal
audit programme.
• Overseas relationship with
external auditor.
• Monitors risk profile and obtains
assurance that principal risks
have been properly identified
and appropriately managed.
Membership:
4
All Independent
Non-Executive Directors
• Sets remuneration
policy and principles
for Board and senior
management
remuneration.
• Approves incentive
design and setting
of targets.
• Approves executive
directors and senior
management
remuneration.
Membership:
3
Chairman and 2 Independent
Non-Executive Directors
• Oversees the development
of the Group’s ESG
strategy, monitoring its
performance in relation
to ESG matters.
• Considers the adequacy
of the Group’s ESG
policies and processes.
• Oversees and monitors
the Group’s progress
against its net zero
emissions strategy.
• Oversees and supports
stakeholder engagement
on ESG matters.
The Nomination
Committee report can be
found on pages 79 to83.
The Audit and Risk Committee
report can be found on
pages 87 to 95.
The Directors’
remuneration report
can be found on
pages 96 to118.
The ESG Committee
report can be found on
pages 84 to86.
Committee terms of reference are available on the Company’s website at
www.capita.com/about-capita/corporate-governance.
Executive Team
Chair: Adolfo Hernandez
The Executive Team is responsible for the execution of the
Company’s strategy and the day-to-day management of
thebusiness.
Disclosure Committee
The Disclosure Committee identifies and controls
inside information or information which could become
inside information and determines how and when that
information is disclosed in accordance with applicable
legal and regulatory requirements.
Supporting committees
The Executive Team operates a number of supporting committees that provide oversight on key business activities
and risk. These include the executive ethics and risk committee and the Capita investment review committee.
Capita plc Annual Report and Accounts
73
Corporate governance

(Claire Denton)
Claire is available to all directors and is responsible for ensuring
that all Board procedures are complied with. Claire has direct
access and responsibility to the chairs of the standing committees
and open access to all directors, and is secretary to the Board
and all its committees.
Claire meets regularly with the Chairman and committee chairs and
briefs them on areas of governance and committee requirements.
(Tim Weller)
The responsibility of this role includes:
• Supporting the CEO in developing the Group’s strategy
and its implementation;
• Representing the Group to external stakeholders;
• Ensuing that the Group has the appropriate financing
structure and internal controls over financial reporting; and
• Oversight of the following key functions: Finance, Investor
Relations, Internal Audit and Risk Management, Tax, Treasury,
Insurance and Commercial.
(David Lowden)
Leadership of the Board and ensuring its effectiveness on all
aspects of its roles. This includes:
• Ensuring there is effective communication between the
Board, management, shareholders, and the Group’s wider
stakeholders, while promoting a culture of openness and
constructive debate;
• Ensuring that the views of all stakeholders are taken into
consideration in the Board’s decisions;
• Promoting the highest standards of corporate governance;
• Setting the Board’s agenda and ensuring that adequate time
is available for discussion of all agenda items, in particular
strategic issues;
• Ensuring that directors receive accurate, timely and clear
information; and
• Overseeing the annual Board performance review and
addressing any actions.
(Georgina Harvey)
The responsibility of this role includes:
• Acting as a sounding board for the Chairman on
Board-related matters;
• Chairing meetings in the absence of the chairman;
• Acting as an intermediary for other directors when necessary;
• Leading the evaluation of the Chairman’s performance;
• Being available to shareholders who wish to discuss matters
which cannot be resolved otherwise; and
• Leading the search for a new Chair, when necessary.
(Georgina Harvey, Brian McArthur-Muscroft, Nneka Abulokwe
and Neelam Dhawan)
The responsibility of this role includes:
• Providing effective and constructive challenge to the Board;
• Scrutinising the performance of management in meeting
agreed goals and objectives and monitoring the reporting
of performance;
• Reviewing Group financial information and ensuring there are
effective systems of governance, risk management and internal
controls in place;
• Determining appropriate levels of remuneration of executive
directors; and
• Having a prime role in appointing executive directors, and in
succession planning.
Nneka Abulokwe has been appointed as the designated
non-executive director for colleague engagement.
Corporate governance report continued
Board leadership and roles
To ensure the Board performs effectively, there is a clear division of responsibilities between the leadership of the Board and the executive leadership:
(Adolfo Hernandez)
The role of CEO is separate from that of Chairman to ensure
that no one individual has unfettered powers of decision making.
The CEO has responsibility for:
• The day-to-day running of all aspects of the Group’s business;
• Developing and implementing the Group’s strategy;
• Ensuring the effective implementation of Board decisions;
• Leading the Group’s executive team; and
• Representing the Group to external stakeholders.
Chairman
Chief Executive Officer
Senior Independent Director
Chief Financial Officer
Independent Non-Executive Directors
Chief General Counsel & Company Secretary
Independent advice: All Board members have access to independent advice on any matters relating to their responsibilities as directors and as members of the various committees of the Board at the Group’sexpense.
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Corporate governance report continued
Board composition at:
1 January 2023 31 December 2023
5 March 2024
(the date of this report)
Chairman David Lowden
1
David Lowden David Lowden
Chief Executive Officer Jon Lewis
2
Jon Lewis
2
Adolfo Hernandez
2
Chief Financial Officer Tim Weller Tim Weller Tim Weller
Senior Independent Director Georgina Harvey Georgina Harvey Georgina Harvey
Independent
Non-Executive Director
Nneka Abulokwe Nneka Abulokwe Nneka Abulokwe
John Cresswell
3
– –
Neelam Dhawan Neelam Dhawan Neelam Dhawan
Brian McArthur-
Muscroft
Brian McArthur-
Muscroft
Brian McArthur-
Muscroft
– Claire Miles
4
–
Employee Director Janine Goodchild
5
Janine Goodchild –
1. David Lowden was independent on appointment as chairman in accordance with the Code.
2. Jon Lewis retired as CEO and a director on 17 January 2024, with Adolfo Hernandez appointed as CEO and a director
on that date.
3. John Cresswell retired as a director on 31 March 2023, having served seven years as a non-executive director.
4. Claire Miles was appointed as a non-executive director on 12 May 2023 and stepped down as a director on
31 December 2023 following her appointment as chief executive officer of Stagecoach. Claire advised the board that
due to her new executive position she did not consider that she would have sufficient time to dedicate to Capita to
appropriately perform her role as a director.
5. Janine Goodchild stepped down as Employee Director on 31 December 2023. Further information is provided on page 67.
6. Further information on these changes and the Company’s compliance with Code Provision 5 regarding the Board’s
engagement with colleagues is provided in the Nomination Committee report on pages 79 to 83.
Directors’ interests
The interests of directors and their immediate families, who served during the year in the shares of the
Company, together with details of executive directors’ share options, are contained in the Directors’
remuneration report set out on pages 96 to 118.
At no time during the year did any of the directors have a material interest in any significant contract
with the Company or any of its subsidiaries.
Board meetings and attendance.
During 2023, the Board held seven scheduled meetings. The Board also held an in-depth strategy
session in Leeds, England where Directors met with clients and colleagues. Additional ad hoc
meetings were held as required. In 2023, these included several meetings in relation to and following
the cyber incident on 31 March 2023 which was a principal focus for the Board. Meetings held
outside the normal schedule need to be flexible and are principally held by video conference.
Attendance of the directors at scheduled Board and committee meetings is shown below;
the maximum number of meetings a director could attend is in brackets.
Board
Audit and Risk
Committee
Remuneration
Committee
Nomination
Committee
ESG
Committee
David Lowden 7/(7) N/A N/A 4/(4) 6/(6)
Jon Lewis
1
7/(7) N/A N/A 1/(1) N/A
Tim Weller 7/(7) N/A N/A N/A N/A
Georgina Harvey
2
7/(7) 5/(5) 5/(5) 4/(4) 6/(6)
Brian McArthur-Muscroft
3
6/(7) 6/(6) 5/(5) 4/(4) N/A
Nneka Abulokwe 7/(7) N/A 5/(5) 4/(4) 6/(6)
John Cresswell
4
3/(3) 1/(1) N/A 0/(1) 3/(3)
Neelam Dhawan
5
7/(7) 6/(6) 4/(5) 4/(4) N/A
Janine Goodchild 7/(7) 6/(6) N/A N/A 6/(6)
Claire Miles
6
7/(7) 3/(4) N/A 1/(2) 2(3)
1. Jon Lewis recused himself from three Nomination Committee meetings during the year which considered succession
planning for the role of CEO.
2. Georgina Harvey was appointed as a member of the Audit and Risk Committee on 31 March 2023.
3. Brian McArthur-Muscroft was unable to attend one Board meeting due to a late change in the Board meeting schedule
which coincided with a prior business engagement.
4. John Cresswell stepped down from the Board and its Committees on 31 March 2023. He did not attend one Nomination
Committee meeting during the year, recusing himself as this dealt with the appointment of his successor.
5. Neelam Dhawan was unable to attend one Remuneration Committee meeting due to a change in meeting date which
conflicted with a prior business engagement.
6. Claire Miles joined the Board and the Remuneration, Audit and Risk, and ESG Committees on 12 May 2023. She was
unable to attend one Audit and Risk Committee, Nomination Committee and ESG Committee meeting due to a previous
business commitment which had been scheduled prior to her appointment as a director.
Any director’s absence from Board or committee meetings was previously agreed with the Chairman
of the Board or relevant committee and the CEO. Where possible the Chairman or committee chair
will contact the director who is unable to attend the meeting to obtain their comments on Board and
committee papers prior to the meeting. The Board and Committee agendas ensure that discussion
is focused on key strategic issues and responsibilities, as well as reviews of significant issues arising
during the year.
The chairman and non-executive directors held a closed session without management present at
the end of several scheduled 2023 Board meetings. Throughout the year, Directors also devoted
time to interviewing candidates for both executive and non-executive roles. The Chairman also held
one-to-one individual review sessions with each executive director and each non-executive director.
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Corporate governance report continued
Board effectiveness
The Board carries out effectiveness reviews annually.
The last external evaluation was undertaken by Independent Evaluation in 2021. Internal evaluations
were performed during 2022 and 2023 and it is expected that the 2024 evaluation will be undertaken
by an external party.
Key findings of the evaluation performed in 2022 are set out below together with actions taken
during2023:
Finding from 2022 evaluation Action in 2023
Strategy – although noting the regular presentations
from the chief executives (CEs) of Public Service and
Experience, additional focus was requested by the
Board on the divisions’ strategic focus on digital
solutions and margin improvements
During the year presentations to the Board from the
CEs of Public Service and Experience included
strategic focus on digital solutions and margin
improvements. The Board discussed and debated
these matters with the divisional CEs during Board
meetings and the annual strategy meeting.
Stakeholders – the Board noted that further
interaction with both clients and senior management
would bebeneficial.
During the year several members of the senior
management team below the Executive Team
level presented to the Board and/or its committees.
The Board also attended a site visit to Leeds in
September 2023, and met with all members of
the Experience senior leadership team, colleagues
working at call centres and clients.
The 2023 Board evaluation, and the evaluation of its committees, was undertaken internally by the
completion of a questionnaire by each director, followed by a one-to-one meeting with the Chairman.
The Board received a report from the Chairman on the outcome of the evaluation, including formal
recommendations which were discussed and approved by the Board. Committee feedback was
presented to the relevant committee chair. The Chairman was assisted in this process by Claire
Denton, Chief General Counsel and Company Secretary.
Overall, the performance of the Board and its committees was viewed positively with progress made
across many areas. Directors found Board and Committee meetings to be open and constructive.
The relationship with the executive was seen positively, with their addressing of key issues recognised
and their openness appreciated. The Board also considered its constitution and whether other options
should be considered in relation to the Board’s engagement with colleagues. Further information is
included on page 72.
The following four principal areas were identified for actions:
Principal areas identified for action
in the 2023 Board evaluation Proposed action in 2024
Stakeholders –
The Board requested:
• additional focus on client feedback.
• greater exposure of key supplier relationships.
• increased interaction with colleagues (see below).
The Executive Team will ensure that the Board
receives additional client feedback, and has
greater information on key supplier relationships
and increased interaction with colleagues.
Wider engagement with colleagues
• The Board agreed that following the streamlining
of the Group, the Board should have broader
engagement with colleagues to include site
visits by individual directors.
Site visits to various locations will be arranged
for directors during 2024, who will then provide
feedback to the Board.
Board meeting support –
The Board requested further improvement in the quality
of Board papers and formalisation of the process to
review previous key decisions made by the Board.
The Chairman has discussed these matters
with the Chief General Counsel and Company
Secretary and actions have been undertaken
to improve Board meeting support.
• The Board requested that the Company focused on
certain strategic matters for the future to achieve its
strategic priorities and improved financial performance.
Specific issues are being progressed by the
new CEO together with relevant members of
the Executive Team.
• The Board noted that the incoming CEO would
require appropriate support.
A full onboarding programme was developed
for Adolfo Hernandez who joined Capita as
CEO on 17 January 2024. Adolfo has met, or
will meet, with members of the Cabinet Office,
representatives of major clients, certain major
shareholders, senior management, and
colleagues including visiting Capita’s overseas
locations in India, South Africa, and Germany.
An update on the 2024 actions will be provided in the Company’s 2024 Annual Report.
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Corporate governance report continued
Governance and strategy
The Group recognises the contribution made by good governance to the Company’s success, and
changes made at both Board and Executive Team level demonstrate the importance of embedding
the right structures with the right people to deliver the Group’s strategy. The connection between
governance and delivery of strategy is reflected throughout this Annual Report.
In addition to their statutory duties, the directors must ensure that the Board focuses effectively
on all its accountabilities. The Board determines the strategic objectives and policies of the Group to
best support the delivery of long-term value, providing overall strategic direction within an appropriate
framework of rewards, incentives, and controls. The Board is collectively responsible for the success
of the Company and directors’ roles are set out above. Following presentations by executive and
divisional management, and a disciplined process of review and challenge by the Board, clear
decisions on policy or strategy are adopted, and the executive management are fully empowered
to implement those decisions.
Section 172 of the Companies Act 2006 requires directors to act in a way they consider, in good faith,
would be most likely to promote the success of the Company for the benefit of shareholders as a
whole. The Company’s s172 statement together with principal decisions of the Board during 2023
is on pages 45 to 48.
Stakeholder engagement
As highlighted by the Code, the Board recognises the importance of identifying its key stakeholders
and understanding their perspectives and values. Through regular dialogue and communication,
theBoard is mindful of all of Capita’s stakeholders when planning or making decisions of
strategicsignificance.
During 2023, the Board complied with Code Provision 5, engagement with the workforce, through its
Employee Director, Janine Goodchild, who was appointed to the Board on 1 June 2022. The Board
has valued Janine’s contribution. In December 2023, the Board agreed that while having an employee
director on the Board had been successful this was not suitable for the business going forward,
and that instead the Board should ensure that there is broader engagement with colleagues. In
this respect, the Board has appointed Nneka Abulokwe as designated non-executive director for
colleague engagement. In addition, it has been agreed that directors will visit different sites during
the year to meet with colleagues. Further information is provided on page 80. In September 2023,
the Board met with clients and spoke to colleagues in some of the call centres managed by Capita,
based in Leeds, on behalf of customers in the telecommunications sector. Photographs from this visit
are included in this report. Following his appointment as CEO on 17 January 2024, Adolfo Hernandez
has held a series of breakfast meetings with colleagues at various Capita locations.
There is an active engagement programme with the Company’s investors. The executive directors
meet regularly with institutional shareholders to discuss and obtain feedback on the business,
performance, strategy, capital structure and allocation and corporate governance, and address any
issues of concern. This is undertaken through a combination of roadshows, group or one-to-one
meetings and attendance at investor conferences. This engagement included presentations to
institutional shareholders and analysts following the release of the Group’s half and full-year results
(available on the Group’s website www.capita.com). Our Chairman, David Lowden, and Georgina
Harvey, Senior Independent Director, also met with a number of institutional shareholders during
theyear.
Topics discussed in investor meetings included the cyber incident, free cash flow generation,
remuneration structure, operating margin improvement and the nomination committee’s process
for appointment of the new CEO.
The investor relations team has day-to-day responsibility for managing investor communications and
always acts in close consultation with the Board. The Director of Investor Relations and representatives
from the Company’s brokers, Deutsche Numis and Barclays are invited to attend Board meetings
during the year to provide investor feedback. The Investor Relations team also arranged specific ESG
engagements with investors. All members of the Board, including the non-executive directors, receive
a report on any significant discussions with shareholders and anonymous feedback that follows the
annual and half-yearly presentations to investment analysts and institutional investors. Analysts reports
concerning Capita are circulated to the directors and the Board is kept informed of changes in the
share register.
At the 2023 AGM, all resolutions were passed, with every resolution receiving more than 95% of votes
cast in favour. The Board is grateful to shareholders for their continued support.
At the 2024 AGM the Company will be seeking approval of its directors’ remuneration policy.
In developing the policy, Georgina Harvey, chair of the Remuneration Committee, has engaged with
our major shareholders and key proxy advisory bodies. Further information is included in the Directors’
remuneration report on pages 99 to 107.
Further information on how the Board has engaged with its key stakeholder groups can be found on pages 45 to 48
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Corporate governance report continued
Annual general meeting
Shareholders are encouraged to attend the AGM. The 2024 AGM of the Company will be held at
Capita’s offices at 65 Gresham Street, London EC2V 7NQ on 21 May 2024. Details of the meeting
format and the resolutions to be proposed are set out in the Notice of Meeting, which will be sent to
shareholders with the 2023 Annual Report and includes notes explaining the business to be transacted.
The Notice of Meeting is also available on the Company’s website at www.capita.com.
The directors consider that each of the resolutions to be proposed to shareholders is in the best
interests of the Company and the shareholders as a whole and recommend that shareholders vote
in favour of all the resolutions.
The Chairman, Senior Independent Director and Committee chairs are expected to attend the 2024
AGM and will be available to answer any questions from shareholders.
Shareholder communications
In addition to the AGM, shareholders can access up-to-date information through the Group’s website
at www.capita.com. Shareholders can also view their holdings by using the Signal shares shareholder
portal, a service offered by Link Group, the Group’s registrar, at www.capitashares.co.uk. The Signal
shares portal is an online service enabling shareholders to easily access and maintain their shareholding
online. Shareholders can also contact Link by email at shareholderenquiries@linkgroup.co.uk. Link
also provides a telephone helpline, 0371 664 0300, calls are charged at the standard geographic
rate and will vary by provider. Calls outside the UK will be charged at the applicable international rate.
Lines are open between 9.00am and 5.30pm, Monday to Friday, excluding public holidays in England
and Wales.
Business relationships
Details regarding relationships with suppliers, clients and others, together with further cross
references, are provided in the engaging with our stakeholders section on pages 45 to 48.
Remuneration Committee
Details of the Remuneration Committee and its activities are given in the Directors’ remuneration
report on pages 96 to118.
Risk management and internal control
The Board monitors the Company’s risk management and internal control systems and carries
out an annual review of their effectiveness. The ARC report contains further details. The monitoring
and review includes all material controls, including financial, operational and compliance controls.
This process is regularly reviewed by the Board. The Group’s key internal control procedures are
fully documented within the strategic report on pages 57 to 59.
Furthermore, through the operation of the risk governance process, the directors confirm, for the
purposes of Provision 28 of the Code, that they have carried out a robust assessment of the emerging
and principal risks facing the Group, including those that would threaten its business model, future
performance, solvency or liquidity. A description of those principal risks, what procedures are in place
to identify emerging risks, and an explanation of how these are being managed or mitigated, is set out
on pages 58 to 63.
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Nomination Committee report
Nomination Committee report
Principal role and responsibilities
As set out in the terms of reference, which
are available on the Company’s website,
www.capita.com, the Nomination Committee
is responsible for a number of key matters,
including to:
• Identify and nominate appropriate candidates
for appointment to the Board, having due
regard to the provisions of the Code and, in
particular, the balance of skills, knowledge and
experience on the Board and the diversity of
itscomposition.
• Keep the structure and size of the Board, its
committees and the leadership requirements
of the Group under review and ensure that
plans are in place for orderly succession
and appointment to the Board.
Areas of focus in 2023
• Succession planning for the Chief
Executive Officer.
• Recruitment and appointment of an
independent non-executive director.
• Review of diversity and inclusion activities
and measures.
• Review of senior management talent
and Executive Team succession planning.
• Consideration of the contributions and
effectiveness of the Non-Executive Directors
seeking re-election at the 2023 AGM.
• Reviewing the constitution of the Board.
• Reviewing the skills and experience of
the directors and their other commitments.
David Lowden, Chair,
Nomination Committee
“ Board succession planning
has been an important
area of focus for the
Committee during 2023”
• Consider the independence, time commitment
and performance of the Non-Executive
Directors.
• Oversee development of a diverse pipeline
for succession to the Executive Team.
1
2
3
4
5
Nomination Committee time allocation
1. Board appointments
2. Employee director appointments
3. Succession planning
4. Diversity
5. Governance
The time allocation chart is provided for guidance only and other
matters were also considered by the committee.
23%
5%
51%
8%
13%
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Nomination Committee report continued
Dear Shareholder,
On behalf of the Nomination Committee (the Committee), I am pleased to present this report, which
describes how we carried out our responsibilities during 2023. The Committee met four times during
the year.
Board succession planning
Board succession planning has been an important area of focus for the Committee during 2023.
As noted in my introductory statement, Jon Lewis informed the Board during 2022 that he was
interested in exploring his future options, including eventual retirement from Capita. As Chair of the
Committee, and with the support of our Chief People Officer and my fellow Committee members,
I led the recruitment process for a new CEO, assisted by search firm Lygon Group. On 31 July 2023,
following the conclusion of the process, we were delighted to announce the appointment of Adolfo
Hernandez as Capita’s new CEO. Adolfo has an excellent track record in accelerating revenue growth
driven by digital services. Adolfo joined the Company as CEO and a Director of Capita on 17 January
2024, with Jon stepping down from the Board on that date. Jon will remain in the business until July
2024, to ensure an orderly transition. Further information on the appointment process is provided on
page 81.
During the year and following John Cresswell’s retirement from the Board on 31 March 2023, having
served as a director for more than seven years, the Committee recommended the appointment of
Claire Miles as an Independent Non-Executive Director. In our consideration of this appointment,
we concentrated on identifying candidates who would add to the collective skills, experience, and
diversity of the Board to improve our ability to support and challenge management as Capita
develops and evolves. Further information on the appointment process is provided on page 82.
Board changes
On 7 December 2023, the Company announced that Claire Miles would step down from the Board
on 31 December 2023. Claire’s decision followed her appointment as chief executive officer of
Stagecoach, Britain’s largest bus and coach operator on 4 October 2023. Claire advised the Board
that due to her new executive role she would be unable to dedicate sufficient time to enable her to
contribute to Capita appropriately. While disappointed that Claire was unable to remain on the Board,
the Committee understood Claire’s reasoning. The Committee itself annually assesses the external
commitments of each director to ensure that they have sufficient capacity to fulfil their obligations
to the Board and its committees and to ensure that no director is over-boarded.
Board composition
In December 2023, the Committee in conjunction with the Board, reviewed the Board’s constitution to
ensure that it continues to be appropriate. The Board concluded that while having employee directors
on the Board had been successful, this was not suitable for the business going forward, and that
instead the Board should ensure that there is broader engagement with colleagues. Consequently, it
was recommended to the Board that Janine Goodchild should step down as Employee Director and
member of the Board on 31 December 2023. The Board now constitutes seven directors, comprising
the Chairman, two Executive Directors (the CEO and the CFO) and four Independent Non-Executive
Directors, which the Board deems appropriate for the business. Following Janine’s resignation, and
on the recommendation of the Nomination Committee, the Board appointed Nneka Abulokwe as the
designated non-executive director for colleague engagement.
During 2023, we also reviewed the talent pipeline for the Executive Team and completed our annual
governance processes.
Further details of the Committee’s responsibilities and work undertaken by the Committee during
2023 are included in the Nomination Committee report. I hope you will find this informative.
David Lowden
Chair
Nomination Committee
5 March 2024
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Nomination Committee members
Member Member since
Date of retirement from
the Committee (if applicable)
David Lowden (Chair) 1 January 2021
Jon Lewis 1 July 2022 17 January 2024
Adolfo Hernandez 17 January 2024
Georgina Harvey 1 October 2019
Nneka Abulokwe 1 February 2022
John Cresswell 17 November 2015 31 March 2023
Neelam Dhawan 1 March 2021
Brian McArthur-Muscroft 1 June 2022
Claire Miles 12 May 2024 31 December 2023
Board changes
The appointment of our new CEO, Adolfo Hernandez, was a key area of focus for the Committee
during 2023. In addition, we continued to focus on the evolution of the Board and, prior to the
retirement of John Cresswell on 31 March 2023, identified a need for an additional Non-Executive
Director who was an accomplished, growth-oriented business executive and leader. Board
appointments are made on merit, taking account of the specific skills, experience, knowledge and
independence needed to ensure a rounded board. We seek to ensure a minimum of 40% female
representation on recruitment shortlists and, where appropriate, to include candidates who may
not have listed company experience but who possess suitable skills and qualities. We only engage
executive search firms that have signed up to the voluntary code of conduct on gender diversity
and best practice.
Nomination Committee report continued
Recruitment of the CEO
The Committee was assisted in the search for a new CEO, which was led by the Chairman, by the
search firm, Lygon Group, which has no connection to the Company or individual Directors. Lygon
Group was not engaged by the Company for any other purpose during 2023. The search process
was conducted as follows:
Development of a
candidate profile.
Selection and engagement
of an independent search
firm carried out via a
tender process.
The Nomination Committee
received presentations from
two search firms, following
which Lygon Group was
engaged by the Committee
to undertake the search.
A Board meeting was
convened to approve the
appointment and offer to
the preferred candidate,
Adolfo Hernandez.
The appointment of Adolfo
Hernandez was announced
on 31 July 2023, following
approval by the Board.
Adolfo joined Capita as
CEO and a Director on
17 January 2024.
A long-list of potential
candidates, identified by Lygon,
was reviewed by the Chairman
and Chief People Officer and
presented to the Committee.
The Committee also considered
whether there were any potential
internal candidates for the role.
The preferred candidate
met with all but one director,
following which the Nomination
Committee made a
recommendation to the Board.
A Remuneration Committee
meeting was convened to
approve the remuneration
package subject to Board
approval of the appointment.
A short list of candidates
was reviewed, with candidates
interviewed by the Chairman,
Chief People Officer and other
members of the Board including
the Senior Independent
Director and Chief Financial
Officer.
The preferred two candidates
met with other members of
the Committee.
First stage
Final stage
Second stage
Fifth stage
Third stage
Fourth stage
A detailed induction plan was created for Adolfo focusing on building his understanding of
the business.
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Nomination Committee report continued
Non-Executive Director appointment
To assist with the recruitment of a new Non-Executive Director, following John Cresswell’s decision
to retire, the Committee appointed search firm Spencer Stuart, which has no connection to the
Company or individual Directors. The Committee reviewed the skills matrix of the directors which
is updated annually, and a candidate profile was developed to address any identified gaps and to
complement the needs of the business and the Board as a whole. Spencer Stuart was not engaged
by the Company for any other purpose during the year. Having considered the shortlist, the Chair and
fellow committee members interviewed the preferred candidates and recommended the appointment
of Claire Miles to the Board for approval. The Committee further recommended that, on appointment
to the Board, Claire was appointed as a member of the Audit and Risk, Nomination and ESG Committees.
The appointment of both Adolfo and Claire involved a formal, rigorous, and transparent appointment
process based on merit and objective criteria, with due consideration being given to a broad range of
factors such as diversity of gender, social and ethnic backgrounds, cognitive and personal strengths,
and the Group’s future strategic direction.
Board of directors’ induction and training
All new directors are provided with a robust induction, tailored to suit their individual needs. This is
an invaluable step to not only support directors in meeting their statutory duties, but also gives them
a comprehensive introduction to the business and its strategic priorities.
Ongoing training and briefings are also given to all directors, including external courses as required. In
addition, all directors are required to undertake online training on the Company’s Code of Conduct
and cyber and information security awareness, which are also mandatory for all Group employees.
Induction case study – Claire Miles
Claire Miles was appointed to the Board on 12 May 2023. The Company Secretary assisted the
Chairman with the preparation and delivery of a tailored and comprehensive induction programme,
designed to give Claire a thorough overview and understanding of our business with a focus on the
Group’s strategy, and wider business objectives. The induction sessions, which were principally
virtual, provided Claire with an opportunity to meet with senior management and advisers and build
an understanding of the key areas of focus for the Board, its committees, and the Group. The
induction programme was complemented by the Board site visit to Leeds in September 2023,
which included presentations by members of the Experience senior management team, meetings
with clients and with the wider workforce.
After 17 April 2023 (the date of the announcement of Claire’s appointment)
Claire was provided with a comprehensive pre-read, including previous Board and relevant
Committee papers
12 May 2023
Claire was formally appointed to the Board, Audit and Risk, Nomination and ESG Committees
May/June 2023
Claire met with senior executive and functional heads (principally on a one-to-one basis) to
provide her with an understanding of the Group’s operations, culture, and values. This included
meetings with all members of the Executive Team, the Director of Investor Relations and the
Group Director of Financial Control
Meetings with the Director Internal Audit and Risk, the external auditor and external legal counsel
September 2023
Site visit in Leeds, meetings with clients and colleagues
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Diversity and inclusion
Capita’s diversity and inclusion policy is based on a commitment to creating an environment where
diversity is valued and respected. We believe that business success is a direct result of the experience
and quality of its people. Inherent within this approach is an acceptance and embracing of diversity in
all its forms and an endorsement that the entire workforce, including the Board, be representative of the
communities in which Capita operates. We have met the FCA’s target of 40% female representation
on the Board and with regards to ethnicity, at least one person of colour, in respect of accounting
periods beginning on or after 1 April 2022. Key aims of the policy are to ensure equality, diversity,
and inclusion in the workplace and to promote a culture where everyone is treated with respect and
dignity. Further information on actions taken to address diversity, inclusion and wellbeing across the
workforce is in the responsible business section on pages 32 to 37.
Disclosures required under the Financial Conduct Authority’s Listing Rule 9.8.6(9)
At 31 December 2023 (being the reference date selected by the Board for the purposes of this
disclosure), the Company complied, as detailed below, with the regulatory targets set out in Listing
Rule 9.8.6(9).
• The Board was 56% female (43% female at 5 March 2024, the date of this Annual Report,
following Claire Miles and Janine Goodchild stepping down from the Board on 31 December 2023);
• The Senior Independent Director (Georgina Harvey) is female; and
• The Board had two Directors from a minority ethnic background.
The Board continues to comply with Listing Rule 9.8.6(9) at 5 March 2024, the date of this report,
and it is expected that it will comply on 21 May 2024, the date of the Company’s 2024 Annual
General Meeting. Further details of the Company’s compliance with LR9.8.6(R) at 31 December 2023
and 5 March 2024 are provided on pages 36 and 69.
While Capita has exceeded the FCA’s 40% target for female representation at Board level, with female
representation among senior management and direct reports at 40% at 31 December 2023, the
Board recognises that there is still more to do throughout the organisation.
At 31 December 2023, female representation on the Board was 56% and among senior management
1
was 29%. At 31 December 2023, ethnically diverse representation on the Board and among senior
management
1
was 22% and 14% respectively. Further disclosures on our gender and ethnicity
diversity and how percentages are calculated and information collated is provided on page 36.
Succession planning and Board composition
A formal succession framework is in place for the Executive Team and the two management layers
beneath. The purpose of the framework is to apply a fair, objective and consistent methodology to
identify future potential career paths for individuals within the Group.
Structured development plans are implemented to support individuals in improving their skills and
experience. The depth of the framework means talent can be identified and nurtured at an early
stage, and combined with the approach to Board appointments, means the pool of possible future
candidates for Board roles is sufficiently wide and diverse.
Board evaluation
Details of the annual Board evaluation process are provided in the Chairman’s report on page 76.
Nomination Committee Report continued
1. The 2018 Code defines senior management as the Executive Team and the Group Company Secretary. Claire Denton,
Chief General Counsel and Company Secretary, is a member of Capita’s Executive Team.
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ESG Committee report
ESG Committee report
Overview
The ESG Committee (the Committee) met
six times during 2023. David Lowden acts
as ESG Committee chair. Other members of
the Committee are Georgina Harvey and Nneka
Abulokwe, Independent Non-Executive Directors.
John Cresswell and Janine Goodchild stepped
down from the committee on 31 March 2023 and
31 December 2023, respectively. Claire Miles
was appointed as a member of the Committee
on 12 May 2023 and stepped down on
31 December 2023 when she resigned
as adirector.
Activity in 2023
Net zero:
• Reviewed the Task Force on Climate-
related Financial Disclosures for inclusion
in the Capita 2022 Annual Report.
• Reviewed the Group’s net zero emissions
and draft low carbon transition plan.
Liaison with the Remuneration Committee
on ESG-related targets:
• Reviewed and recommended to the
Remuneration Committee ESG-related
bonus targets for 2023.
Approval of external ESG communications:
• Reviewed the our people and responsible
business sections of the 2022 Annual Report.
• Reviewed and approved the 2022
responsible business report for publication.
Policies and procedures:
• Reviewed and approved Capita’s supplier
charter and considered how net zero was
assessed and monitored within the Group’s
supply chain.
David Lowden, Chair,
ESG Committee
“ During the year, the
committee focused on
responsible business
challenges, and providing
additional strategic
oversight, accountability,
and guidance”
• Reviewed and approved the Company’s modern
slavery statement on behalf of the Board.
• Reviewed the Group’s Speak Up policy.
Strategy:
• Considered Capita’s responsible business strategy.
• Considered Capita’s ESG strategy and
governance structure.
• Considered stakeholder feedback from
shareholders, customers and regulators.
Our people:
• Received a presentation on Capita’s
safeguarding policy, including SafetyNet, a
Capita specific team and process designed to
support Capita’s most vulnerable colleagues.
• Received a presentation on diversity and
inclusion at Capita, including gender and
ethnicity pay gap reporting.
• Received feedback on the response to the
2023 employee surveys.
Governance
• Discussed the outcome of the annual evaluation
of the Committee.
• Reviewed the terms of reference of the Committee.
Responsibilities and activities
Key responsibilities
• Oversee the development of the Group’s
responsible business strategy and monitor its
performance in respect of ESG-related matters
on behalf of the Board.
• Oversee and monitor the Group’s progress
against its net zero strategy.
• Review diversity and inclusivity data and
approve the Group’s gender and ethnicity
pay gap report.
• Review and approve the Group’s modern
slavery statement.
1
2
3
4
5
ESG Committee time allocation
1. Governance/regulatory
2. Employee-related issues including diversity
and inclusion
3. Net zero
4. ESG-related bonus targets
5. Strategy
The time allocation chart is provided for guidance only and
other matters were also considered by the Committee.
34%
34%
13%
5%
13%
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ESG Committee report continued
The Committee considered the initiatives undertaken to improve this position, including our RISE
(reduce inequality strive for equality) programme and our EmbRACE employee network group, which
aims to address disparity of opportunity and support the progression of those who aspire to move
into their first manager role.
While pleased with the progress made within the Group on diversity and inclusion matters,
the Committee recognises that there is more work to be done. We are supportive of the update
report from the Parker Review, and our Executive Team is considering ethnicity targets for senior
management. This will remain a key area of focus. We will provide an update on progress made
in these areas in our 2024 report.
Wellbeing of our colleagues
The health, safety and wellbeing of all our colleagues is a priority for the Committee and the Company.
The Committee received a presentation from the Senior Medical Officer detailing Capita’s
safeguarding policy and our SafetyNet initiative, which continues to provide much needed expert
guidance to our human resources representatives and line managers supporting colleagues with
complex issues related to wellbeing, safeguarding or vulnerability.
ESG-related bonus targets
We worked closely during the year with the Remuneration Committee on ESG-related bonus targets,
both reviewing the outturn of the ESG-related targets included in the 2022 management bonus plan
and reviewing ESG targets for the 2023 management bonus plan, making recommendations to the
Remuneration Committee. These include traditional measures, such as employee engagement, as
well as targets that address broader societal concerns, such as climate change, consistent with the
Board’s responsibility to all stakeholders. Further details are provided in the Directors’ remuneration
report on pages 96 to 118.
Supplier charter
The Committee reviewed and approved Capita’s supplier charter. Our review included an in-depth
discussion on how our suppliers assess and manage the impact of their business during their
transition to net zero, particularly noting that there is often a disproportionate financial impact on
SMEs compared with our larger suppliers. We noted that Capita’s smaller suppliers may need more
support during the transition to achieve full net zero.
Dear shareholders,
I am pleased to present this report on the first full year of the Committee following its formation in
June 2022.
Role of the Committee
The Committee oversees Capita’s conduct as a responsible business. During the year, it focused
on responsible business challenges, and providing additional strategic oversight, accountability
and guidance.
Focus of the Committee
This Committee provides a forum within which all components of Capita’s responsible business
strategy can be considered on a regular basis. During the year, it focused on the following matters:
Diversity & inclusion
The Committee reviewed and approved the Group’s 2023 UK gender and ethnicity pay gap report.
2023 was the third consecutive year that Capita voluntarily published its ethnicity pay gap. We believe
that analysing diversity data and being transparent about the diversity of our workforce is an important
step in moving towards a fairer, more inclusive workplace.
The Committee was pleased to note that our gender pay gap had improved, with a 5% reduction
compared with 2022, the largest improvement since we commenced reporting on the gender pay
gap. This is the result of several years of work within Capita to increase the number of women working
in our senior leader roles. The committee recognises that there is more to do but is proud that our
global workforce comprises 50% of females. We were also proud to note that Capita was ranked
18 out of 400 on the Forbes global list of top employers for women.
We noted that our ethnicity pay gap increased during 2023. While high volumes of recruitment have
served to increase the representation of ethnic minority talent in our business, this has primarily been
in more junior and lower paid positions. Capita continues to focus on attracting diverse senior talent,
and most importantly, on growing, developing and promoting diverse talent from within.
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ESG Committee Report continued
Net zero target
In early 2024, the Committee considered and approved a proposal from management to update our
targets to become fully net zero by 2045. This recognised that a significant amount of our carbon
emissions originate from our supply chain and that by extending our target by ten years we have
additional time to engage with our suppliers and work with them to reduce their environmental impact.
Capita is currently working with the Science Based Target initiative (SBTi), the globally recognised
body for climate-related target setting, to validate our new targets.
As a Committee we have also approved a three-phased approach to full net zero, aiming to reach
operational net zero by 2030; operational and business travel net zero by 2035; and full net zero
by 2045.
Further details of our proposals which are subject to validation with the SBTi are detailed in the
Responsible business report on pages 40 to 42.
Other matters
During the year, the Committee also addressed a range of other strategic and current issues including
the results of our employee surveys, and discussed the initiatives that are being undertaken by Capita
in these areas. We considered and approved the Group’s modern slavery statement on behalf of the
Board and assessed our Speak Up policy, concluding that following its relaunch in 2022 the policy
was operating effectively.
Going forward and Committee chair
The Committee recognises the need for Capita to respond to a rapidly changing external environment
including the difficult economic environment, which impacts the way we operate.
In December 2023, we reviewed our refreshed responsible business principles to ensure that they
focus on the areas of greatest concern to the Group, including making sure that we have the
appropriate governance structure, reporting processes and risk management. During this review, the
Committee considered stakeholder views and feedback, including from shareholders, customers and
regulators.
Capita’s updated responsible business principles will be published later in 2024. We look forward to
reporting more on these matters and the progress made.
Following the appointment of Nneka Abulokwe as designated non-executive director for colleague
engagement, it was also proposed by the Nomination Committee that Nneka takes on the role of
ESG Committee chair on 6 March 2024, following the announcement of Capita’s 2023 full year
results. This is a natural evolution of the roles of our independent Non-Executive Directors, with Brian,
Georgina and Nneka acting as chairs of the Audit and Risk, Remuneration and ESG Committees
respectively. I will remain a member of this Committee.
David Lowden
Chair
ESG Committee
5 March 2024
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Audit and Risk Committee report
Audit and Risk Committee report
Overview
The Audit and Risk Committee’s (the
Committee’s) terms of reference set out in full the
role, responsibilities and authority of the
Committee and can be found on the Company’s
website at www.capita.com/about-capita/
corporate-governance. The terms of reference
are reviewed annually and updated asrequired.
Role and responsibilities
The Committee is responsible for carrying out
the audit functions as required by DTR 7.1.3R
and assists the Board in fulfilling its oversight
responsibilities in respect of the Company and the
Group. The Committee’s key responsibilities are:
Financial reporting
To review the reporting of financial and other
information to the Company’s shareholders and
to monitor the integrity of financial statements,
including the application of key judgements in
determining reported outcomes, to ensure
they are fair, balanced and understandable.
Brian McArthur-Muscroft, Chair,
Audit and Risk Committee
“ Following the decision
by the Board and the
Committee to focus on
optimising the existing
finance reporting systems,
further progress has been
made in improving the
Group risk and control
framework and
financialcontrols”
Risk management, internal control
and compliance
To review and assess the adequacy of systems
of internal control and risk management, and
monitor the risk profile of the business.
Internal audit
To approve the annual internal audit plan, review
the effectiveness of the internal audit function
and review all significant recommendations, and
ensure they are addressed in a timely manner.
External audit
To review the effectiveness and objectivity of the
external audit process, assess the independence
of the external auditor and ensure appropriate
policies and procedures are in place to protect
such independence.
Effectiveness
To report to the Board on how it has discharged
its responsibilities.
1
2
3
4
Audit and Risk Committee
time allocation
1. Risk management, internal control & compliance
2. Financial reporting (incl. external audit)
3. Private meetings with auditors
4. Governance
The time allocation chart is provided for guidance only and
other matters were also considered by the Committee.
51%
36%
8%
5%
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Audit and Risk Committee report continued
Risk and control framework
The Committee continued to fulfil its role of supporting the Board in its review of the integrity of the
Group’s financial reporting, monitoring the effectiveness of the Group’s system of risk management
and internal controls, and overseeing the activities of the Group’s internal audit function and its
external auditor.
As noted below, further progress was made in strengthening the Group’s controls. In addition, as in
the prior year, a key control questionnaire process was completed across the Group where business
leaders attested to compliance with key controls. This enables management to focus attention on
control areas that need improvement.
Further detail on the risk management and internal control environment is set out later in this report
onpages 94 and 95.
Controls improvement
Following the decision by the Board and the Committee to focus on optimising the existing finance
reporting systems, further progress has been made in improving the Group risk and control framework
and financial controls. These programmes have continued to focus on the simplification of finance
activities and controls, continuing to embed the enterprise risk management framework, and further
rationalisation of the overly complex legal structure. Key improvements in 2023 include: designing
standard access rights to key systems; documenting the key risks and controls over financial
reporting, considering significant fraud risks; and independent testing by Group Internal Audit of
the design effectiveness of those key financial controls. In addition, the legal entity rationalisation
programme progressed well during the year with the number of legal entities in the Group being
reduced by 50. At 1 January 2024, the Group had 130 legal entities compared with 369 in July 2018.
The rationalisation programme is ongoing, and the number of legal entities will be significantly
below 100 by the end of 2024. Further improvements to the Group risk and control framework are
planned for 2024, including obtaining assurance of management’s process of monitoring operating
effectiveness of key controls. In 2023 the Group’s controls activity has continued to be supported
by a Speak Up policy which facilitates whistleblowing across the Group with a function dedicated
to identifying, preventing and investigating where fraud concerns have been raised. This was
expanded to Switzerland and Germany in 2023, completing the rollout to all geographies.
The Board and the Committee also recognise the reforms to the UK Corporate Governance Code
announced in January 2024, specifically the requirement for a Board declaration regarding controls
from 2026. To date, activity has prioritised those areas which were known to be within the scope of
the code, specifically the identification, documentation, and testing of the design effectiveness of
controls over financial reporting and significant fraud risks. The Board and the Committee are now
considering the provisions of the revised code which will inform future control improvement activity.
Committee membership and attendance
The Committee comprises myself as chair, together with Neelam Dhawan, Georgina Harvey and
Nneka Abulokwe, independent non-executive directors.
During 2023 Janine Goodchild, employee non-executive director, was also a member of the
Committee. Although not considered independent under the UK Corporate Governance Code 2018
(Code), Janine brought valuable insights from the employee perspective into Committee discussions
and the Board considered that this was important from an employee engagement perspective. Janine
stepped down from the Board and the Committee on 31 December 2023, following a review of the
Board’s constitution by the Nomination Committee and the Board, during which it was agreed that,
although the employee director position had been successful, it would now be appropriate to adopt
a wider employment engagement strategy given the more streamlined Group. Further information is
provided on page 67.
John Cresswell stepped down as a director and member of the Committee on 31 March 2023.
I would like to thank John for his significant and valuable contribution to the Committee’s
deliberations. Georgina Harvey, Senior Independent Director and Remuneration Committee Chair was
appointed as a member of the Committee upon John’s departure. Claire Miles was appointed as a
director and a member of the Committee on 12 May 2023. Following the appointment of Claire the
Committee comprised five directors, with 80% of Committee members considered independent.
As part of her induction programme, Claire Miles met with Ian Griffiths, Audit Partner, KPMG, our
external auditor, Capita’s Group Director Financial Control and our Director Internal Audit and Risk.
Georgina Harvey was previously a member of the Committee from October 2019 until June 2022
when the Board reviewed Committee membership. However, following the retirement of John
Cresswell, it was decided to reappoint Georgina as a member of the Committee to ensure that the
Committee has the requisite skills and depth necessary to discharge its duties in accordance with its
terms of reference. Claire Miles stepped down from the Board and a member of the Committee on
31 December 2023, following her full-time appointment as chief executive officer of Stagecoach.
Further information is provided in the Nomination Committee report on page 80. Nneka Abulokwe was
appointed as a member of the Committee on 27 February 2024. From 1 January 2024, the
Committee has comprised solely of independent non-executive directors.
The Committee is required to include at least one financially qualified member, this requirement is
fulfilled by myself as a chartered accountant.
All other Committee members are considered financially literate given their qualifications and
experience. Neelam has held senior positions in Hewlett-Packard, Microsoft, Compaq and IBM
with responsibility for areas including strategy and corporate development. Georgina has significant
experience across highly competitive consumer-facing markets. She is currently a non-executive
director of Superdry plc and a member of its audit committee. Nneka is an adviser of Cranfield School
of Management Advisory Board and was formerly an external member of the audit and risk committee
of the University of Cambridge. Biographies of the directors, including their skills and experience are
on page 70 to 71.
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Audit and Risk Committee report continued
To encourage effective communication, in addition to the above members, the Chairman, CEO,
CFO, Chief General Counsel and Company Secretary, Group Director Financial Control and Group
Chief Accountant are invited to attend Committee meetings along with certain members of the senior
management team, the Director Internal Audit and Risk and representatives from KPMG, the Group’s
external auditor. The Head of Business Integrity provides a report at each meeting to update the
Committee on speak-up matters and related issues. Opportunity exists at the end of each Committee
meeting for the representatives of the internal and external audit teams to meet with the Committee in
the absence of management and both have access to the Committee should they wish to voice any
concerns outside formal meetings.
Committee performance was assessed as part of the annual Board evaluation, see page 76 for more
information. The Board is satisfied that the combined knowledge and experience of its members, both
during the year and currently is such that the Committee discharges its responsibilities in an effective,
informed and challenging manner and that, as a whole, the Committee has competence relevant to
the sector in which the Company operates. The Chief General Counsel and Company Secretary, or
their nominee, acts as Secretary to the Committee and is available to assist the members of the
Committee as required, ensuring that timely and accurate information is distributed accordingly.
How the Committee operates
The Committee has an annual forward agenda to cover the key events in the financial reporting cycle,
specific risk matters identified by the Committee and standing items that the Committee is required
to consider in accordance with its terms of reference. The annual agenda is supported by planning
meetings held in advance of the principal Committee meetings, led by me with the CFO, members
of the Group Finance team and the external auditor. I also meet on a regular basis and separately
with the CFO and Director Internal Audit and Risk. The purpose of these meetings is to identify key
issues impacting the business that may require consideration by the Committee. Reports are received
from Group functions, including risk and internal audit, as appropriate. The Group’s Chief Technology
Officer and/or the Chief Information Security Officer attend every Committee meeting to provide an
update on the Group’s cyber and IT resilience. The Head of Business Integrity also attends every
Committee meeting to provide an update on cases reported under the Group’s Speak Up policy.
Additional reports are provided as may be required. I report to the Board the key matters of
discussion and make any significant recommendations as necessary.
How the Committee discharged its roles and responsibilities in 2023
The Committee held six scheduled meetings during the year and attendance at each meeting is
shown on page 75. Meetings are planned around the Company’s financial calendar.
Financial reporting
Accounting judgements and significant accounting matters
As part of the process of monitoring the integrity of the financial information presented in the half-year
results and the Annual Report and Accounts, the Committee reviewed the key accounting policies and
judgements adopted by management to ensure that they were appropriate. The significant areas of
judgement identified by the Committee, in conjunction with management and the external auditor,
together with a number of areas that the Committee deemed significant in the context of the
financial statements, are set out on pages 90 to 92.
Fair, balanced and understandable
At the Board’s request, the Committee considered whether the half-year results and the Annual
Report and Accounts were fair, balanced and understandable, and whether the information provided
was sufficient for a reader of the statements to understand the Group’s position and performance,
business model and strategy. The Committee reviewed both the narrative and financial sections of the
reports to ensure they were consistent and gave a balanced view of the performance of the business in
the year and that appropriate weight was given to both positive and negative aspects. The Committee
also considered the use of alternative performance measures (APMs) and whether the APMs are
appropriate, including any changes to their definition in the period. The Committee also considered
whether the full-year announcement was presented clearly.
The Committee considered whether the Annual Report and Accounts enables readers to understand
the Company’s financial position and prospects, as well as assess its going concern status and
longer-term viability.
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Audit and Risk Committee report continued
Significant issues in relation to the financial statements considered by the Audit
and Risk Committee
Going concern and viability assessment
Matter considered
Consideration of the going concern assumption and viability of the Group and Parent Company is the
responsibility of the Board. The Committee conducted an assessment as part of its support role,
given the inherent judgements required to assist the Board in evaluating the resilience of the Group.
Action
The Committee considered the projections within the business plan, agreed by the Board in
December 2023, and the key assumptions underpinning the future cash flow and profit forecasts. The
Committee received reports from executive management and KPMG (as part of their standard
reporting to the Committee in the course of performing their duty as statutory auditor) concerning the
going concern and viability assessments, including the key risks identified. These included details on
the key assumptions, the forecasting process, the committed facilities available, and the mitigations
within direct control of the Group. The Committee also considered the risks identified and appraised
the severity and plausibility of these in setting the downside scenario (see section 1 to the
consolidated financial statements for details).
The Committee reviewed the disclosures presented in section 1 of the consolidated financial
statements together with the viability statement on page 64 to ensure there was sufficient detail
provided to explain the basis of preparation and the Board’s conclusion.
Outcome
The Committee is satisfied that the analysis presented by executive management and KPMG
provides enough detail to allow a robust assessment of relevant risks and mitigations to be
undertaken. This supported full discussion of the severe but plausible downsides and allowed the
Committee to recommend to the Board that the going concern assumption be applied and the
viability statement beapproved.
The Committee is satisfied that section 1 to the consolidated financial statements and the viability
statement on page 64 include proportionate disclosures to inform users of the assessments
undertaken by the Board.
Revenue and profit recognition
Matter considered
There is significant risk on long-term contracts related to revenue recognised from variations or scope
changes, where significant judgement is required to be exercised by management. There is a risk that
revenue may be recognised even though it is not probable that consideration will be collected, which
could be due to uncertainties over contractual terms and ongoing negotiations with clients.
Judgement is also required when customers request scope changes to determine if there is a
contract modification or a contract termination followed by a new contract. Contract terminations can
lead to the immediate recognition of any deferred income being held for recognition in future periods.
Action
The Committee received regular updates on all major contracts during the year and specifically
reviewed the material judgements as part of the half-year and year-end close process. The Committee
has also considered the recognition of onerous contract provisions, where appropriate, and the
lifetime profitability of contracts.
To aid the reader, the company has included a detailed explanation of the Group’s accounting for
long-term contracts (see note 2.1 to the consolidated financial statements).
Outcome
The revenue recognition policy includes disclosure of the significant judgements and estimates in
relation to its application and the Committee is satisfied that these have been properly disclosed.
The Committee is satisfied that the disclosures given within the accounts are sufficient to gain a
proper understanding of the methodology of accounting for revenue across the Group, including
the recognition of deferred income at the balance sheet date. The Committee reviewed the disclosure
and concluded that these provide information that is helpful to allow a fuller understanding of the
application of IFRS 15 to the Group’s contracts.
Contract fulfilment assets
Matter considered
Costs incurred to deliver a customer contract may be capitalised as contract fulfilment assets in
accordance with IFRS15. Judgements are involved in assessing whether the costs incurred on a
contract or an anticipated contract meet the capitalisation criteria as set out under the standard.
In addition, the amortisation of these assets involves estimation of the expected life of the contract,
and when a contract is in the early years post-inception and undergoing major transformation
activities, the contract fulfilment assets (CFAs) are at heightened risk of impairment. Judgements are
involved in assessing whether the costs incurred on a contract or an anticipated contract meet the
capitalisation criteria as set out under the standard.
Action
The Committee has considered and challenged the significant judgements and estimates involved in
determining the carrying value of CFAs.
As part of the review of all major contracts, the Committee has also considered the recoverability
ofCFAs.
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Audit and Risk Committee report continued
Outcome
The Committee is satisfied that appropriate judgements and estimates have been made in determining
the carrying value of CFAs and the extent of impairment of CFAs recognised in these statements is
appropriate. The Committee is satisfied that the accounting policy note provides sufficient clarity as
to the policy adopted and that the disclosures provide information to allow a reader to understand
the risks associated with different stages of a typical long-term Capita contract.
Impairment of Parent Company’s investment in subsidiaries, and recoverability of receivables from
subsidiary undertakings in the Parent Company
Matter considered
The Parent Company carries a material balance of investment in, and receivables from, subsidiaries in
its financial statements. The impairment and recoverability assessments require the application of
judgement concerning future prospects and forecasts.
Action
The Committee has reviewed the robustness of the impairment model and challenged the
appropriateness of assumptions used to calculate and determine the existence of impairment.
The Committee has also reviewed the robustness of the assessment of recoverability of receivables
from subsidiary undertakings in the parent company and challenged the appropriateness of
assumptions used to calculate and determine any provisions required.
Outcome
The Committee considered that any impairment of investment in subsidiaries, or any provision against
amounts receivable from subsidiaries, at the parent company level were appropriate and properly
accounted for.
The Committee acknowledged the gap between the net assets of the Parent Company and the
market capitalisation of the Company. The Committee gave consideration as to why this might be the
case and whether goodwill or assets on the Parent Company balance sheet may be impaired. The
factors considered included: the differing basis of valuations (including that third parties value the
services sector on income statement multiples versus long-term view using a discounted cash flow for
the basis of impairment testing under accounting standards), sum-of-the parts view and the multiples
achieved on recent disposals, general market assumptions of the sector which can ignore the liquidity
profile and specific risks of an entity, and other specific items which impact the market’s view of the
Group at the moment. Taking these points into consideration the Committee is comfortable that there
is no impairment in respect of the net assets of the Parent Company to be recognised at
31 December 2023, despite the continuing low market capitalisation of the Company.
Pensions
Matter considered
The measurement of the defined benefit liabilities in respect of defined benefit pension schemes
operated within the Group is a complex area, relying on assumptions on inflation, mortality, corporate
bond yields, expectations of returns on assets and several other key inputs. There is a risk that any
one of these could lead to misstatement of the Group’s liabilities in respect of pension obligations
andthe pension charge or movement recognised in the income statement or statement of
comprehensive income.
Action
The Committee reviewed the disclosure as presented in the accounts. The Committee also challenged
the key assumptions and reviewed the sensitivity to changes in some of the key assumptions on a
standalone basis as well as in the context of defined benefit schemes across other external benchmarks.
Outcome
The Committee is satisfied that the estimation of the Group’s pension liabilities and the narrative that
accompanies them gives the required level of information for a reader of the accounts to determine
the impact on the Group of its pension obligations.
Deferred tax assets
Matter considered
The Group carries significant deferred tax assets. The recoverability assessment requires the
application of judgement concerning future prospects and forecasts.
Action
The Committee reviewed the disclosure as presented in the accounts. The Committee also challenged
the key assumptions and reviewed the sensitivity to changes in some of the key assumptions on a
standalone basis as well as in the context of defined benefit schemes across other external benchmarks.
Outcome
The Committee is satisfied with the amount of deferred tax recognised in these financial statements.
The Committee is also satisfied that the assumptions, methodology and disclosure in note 2.6 to the
consolidated financial statements are sufficient to give the reader an understanding of the approach
taken and the sensitivities within the assumptions that could reasonably give rise to a material
derecognition of deferred tax.
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Costs related to the cyber incident
Matter considered
In March, the Group experienced a cyber incident which caused disruption to some client services. As
stated in the accounting policies, Capita separates its profit between adjusted and reported to provide
useful disclosure to aid the understanding of the performance of the Group. The costs arising from the
cyber incident have been excluded from the adjusted operating profit and adjusted profit before tax of
the Group. The Committee needs to ensure the complete identification, quantification and disclosure
in the financial statements of the costs arising from the cyber incident.
Action
The Committee considered the nature of the costs that management have disclosed as arising from
the cyber incident and the process put in place to ensure only those costs are excluded.
The Committee considered the appropriate presentation to apply for costs related to the cyber
incident which are presented as an adjustment to the reported results.
The Committee reviewed the contingent liability disclosure in note 6.2 to the consolidated
financial statements.
Outcome
The Committee concurs with management’s view that the presentation of the costs related to
the cyber incident as an adjustment to the reported results provides useful disclosure to aid the
understanding of the performance of the Group and agrees that the items excluded meet with the
stated policy for recognition. Note 2.4 to the consolidated financial statements sets out the nature of
the costs excluded, and the Committee is satisfied that this provides sufficient information to inform
a reader.
The Committee reviewed the disclosures within the contingent liability note. It was satisfied that the
disclosure provided proportionate detail to inform a reader.
Other issues considered in relation to the financial statements
Materiality
Materiality is important in determining the risk attached to any judgement. The Committee considers
the audit materiality set by the external auditor to ensure that the Committee is informed of individual
items above a certain threshold that are most likely to have an impact on the financial statements.
The Committee reviews the external auditor’s report and the individual items that breach the
materiality thresholds and assesses their relative impact on the reported statements. These are: income
statement, statement of comprehensive income; balance sheet; statement of changes in equity and
cash flow; as well as the notes to the accounts.
The Committee requests further clarification from the external auditor, the CFO and Director of Financial
Control as to the nature of these items and also their relative importance in the financial statements.
After having made such enquiries, the Committee is satisfied that materiality has been applied
correctly in the accounts.
Disclosure of information to the auditor
The directors who held office at the date of the approval of this directors’ report confirm that, so
far as they are each aware, there is no relevant audit information of which the Company’s auditor is
unaware; and each director has taken all steps that they ought to have taken as a director to make
themselves aware of any relevant audit information required for the audit and to establish that the
Company’s auditor is aware of that information.
Statutory auditor
The Committee provides a forum for reporting by the Group’s auditor (KPMG) and it advises the
Board on the appointment, independence and objectivity of the auditor and on fees earned for both
statutory audit and audit-related work. The Committee discusses the nature, scope and timing of the
statutory audit with the auditor and, in making a recommendation to the Board on auditor
reappointment, performs an annual, independent assessment of the auditor’s suitability, performance and
independence.
The external auditor attends meetings of the Committee and provides updates on statutory reporting,
audit-related services and fees, and ongoing audit items.
The auditor has the opportunity to raise concerns in private session with the Committee and
separately with the chair. Specifically, the Committee asks the auditor if discussion of business
performance in the strategic report is consistent with the auditor’s overall impression of Capita.
Any material discrepancies are discussed (refer to the independent auditor’s report).
Auditor independence
The Committee has a responsibility to put in place safeguards to auditor objectivity and independence
and the key measures are:
• The CFO monitors the independence of the auditor as part of the Group’s assessment of auditor
effectiveness and reports to the Committee accordingly.
• The CFO must approve all audit-related engagements – further details are set out in the section
below on audit-related services. The Committee reviews audit-related fees twice a year and
considers the implications for auditor objectivity and independence.
• The auditor must confirm its independence to the Committee every six months.
Ensuring conflicts of interest are avoided is a fundamental criterion in the selection of any third-party
auditor. Such conflicts may arise across public and private sector clients, and in key supplier
relationships. They are a key factor in the award process for an external audit assignment.
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Audit and Risk Committee report continued
Audit-related services and fees
The Company’s policy on auditor independence describes the services that may be procured from the
auditor, namely audit and audit-related services only. To avoid the perception of a conflict of interest,
the provision of non-audit services is not permitted. Audit-related services include those required
by laws and regulations, or where it is more practical for the external auditor to perform the service
(eg reporting accountant role related to certain public company transactions, and audit and other
assurance services related to public reporting on other information issued by Capita, such as reports
on information in the front of the annual reports not covered by the auditor’s report on the financial
statements). KPMG continues to perform the review of interim results which, although technically
classified as a non-audit service, relates closely to the audit.
Under the policy, which is reviewed annually, executive management has discretion to engage
the auditor for audit-related services but the nature of such assignments and associated fees
must be reported regularly to the Committee. All assignments require approval from the CFO.
Where executive management has any concern that a proposed assignment might threaten
the auditor’s independence, this is discussed with the Committee chair.
Total non-audit fees during the year were £0.5m and related to the review of interim results, ISAE
3402 assurance reporting on controls operating by a subsidiary, and ISAE 3000 assurance reporting
over non-financial metrics reported within the Annual Report and Accounts. Further details are
provided in note 2.3.2 to the consolidated financial statements.
External auditor performance
The Committee discussed regularly the performance of KPMG during the year and was satisfied that
the level of communication and reporting was appropriate. These discussions included a review of
the effectiveness and quality of the audit process, audit planning and a formal post-audit evaluation.
The formal evaluation comprises separate assessments by both management and the Committee of
the auditor’s role, activity and performance including:
• Calibre and risk profile of the audit firm;
• Audit governance, independence and objectivity;
• Audit scope and strategy;
• Audit team and relations with management and business; and
• Audit communications and resolution of audit issues.
Financial Reporting Council: audit quality inspections
Each year, the Audit Quality Review team (AQR) of the FRC issues a report that sets out the principal
findings arising from the audit quality inspections conducted in the previous calendar year across a
sample of audits for all major audit firms. The AQR’s objective is to monitor and promote improvements
in the quality of auditing. The report highlights improvements required to promote audit quality, and
areas of good practice. The FRC publishes separate reports on the individual firms, including KPMG.
The Committee received a presentation from the KPMG lead audit partner on the findings from the
FRC Audit Quality Inspection Report for KPMG.
FRC’s Audit Quality Review of the Capita 2022 audit by KPMG
During the year, the 2022 audit of Capita plc by KPMG was reviewed by the Audit Quality Review
(AQR) team. The FRC routinely monitors the quality of the audit work of certain UK audit firms through
inspections of sample audits and related procedures at individual audit firms. Certain matters were
identified relating to how KPMG evidenced its conclusions over the work performed in two specific
areas of the audit. The AQR also highlighted good practice observations in relation to KPMGs
challenge over going concern and the robust evaluation of the Company’s going concern assessment.
The Committee and KPMG have discussed the review findings and the agreed actions and are
satisfied with responses to be implemented by KPMG in the 2023 audit. Overall, the results of the
review raised no issues which cause doubt on the fundamental quality of Capita’s external audit
and the Committee remains satisfied with the efficiency and effectiveness of the external audit.
External auditor reappointment
Following a robust and rigorous audit tender process in 2018, the Committee and Board
recommended the reappointment of KPMG LLP as the Group’s auditor and this was approved
by shareholders at the 2019 AGM. KPMG was first appointed in 2010, initially as KPMG Audit plc.
The lead audit partner is rotated on a five-yearly basis. The current lead audit partner rotated onto the
audit following the completion of the 2021 audit in March 2022.There are no contractual obligations
which restrict the Committee’s choice of auditor.
Under the requirements of the Statutory Audit Services Order and the EU Audit Directive and Audit
Regulation, the provision of audit services should be retendered every 10 years. The complex nature
of the Group requires that a knowledge base is built up year on year by the incumbent to ensure that
the external audit is conducted with a proper understanding of the Group’s operations and the nature
of the risks that it faces. This is an important factor in ensuring audit quality. The Group has complied
with the provisions of the Statutory Audit Services Order.
A resolution to reappoint KPMG as the external auditor of the Company will be put forward at the
forthcoming annual general meeting. If approved, KPMG will hold office from the conclusion of this
meeting until the conclusion of the next general meeting at which accounts are laid before the
Company, and its remuneration will be determined by the Committee.
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Audit and Risk Committee report continued
Review of risk management and internal control
Responsibility for reviewing the effectiveness of the Group’s risk management and internal control
systems is delegated to the Committee by the Board. The principal risks and risk management
processes are set out on pages 57 to 63.
Effectiveness and efficiency of risk management
During the year, the Committee completed a robust assessment of the principal risks, including
deep-dive reviews on four of the Group’s principal risks. These reviews focused on principal risks
related to:
• Internal controls
• People, attraction and retention
• Securing new contracts and extending existing contracts
• Delivering our contractual obligations
The principal risk assessment also considered any emerging risks that would threaten Capita’s
business model, future performance, solvency or liquidity. The assessment process included regular
engagement with the Executive Team members accountable for the management of risk falling under
their remit. As part of each deep dive, the Committee reviewed existing controls and further risk
reduction actions to ensure they were valid and effective in reducing the overall risk level.
Principal risk refresh
Capita’s principal risks had remained relatively unchanged since 2019. In September 2023,
the Committee reviewed the principal risk profile, given that since 2019:
• Capita has changed its business operating model, reducing from six to two divisions.
• The global Covid-19 pandemic has led to new expectations as employees continue to work
from home.
• The geopolitical and political landscape has changed.
• Recession and macroeconomic uncertainty have led to customers wanting to spend less yet
continue to seek value for money.
• Global supply-chain challenges, social and technological changes.
The Committee’s review followed a detailed exercise by the Executive Team and members of their
senior leadership teams and discussion at the executive risk and ethics committee. Further
information is provided in the risk section on page 58 of the strategic report.
The Committee considered and challenged management’s assessment of the revised principal risks
and this matter was also discussed by the Board. Following this assessment the principal risks have
reduced from 13 to nine. The Committee will continue to receive ‘deep dives’ from management on
the nine principal risks.
The Committee received reports on the following themes during the year:
• Cyber and information security;
• IT resilience;
• Internal controls;
• Finance transformation
• Securing contracts and extending existing contracts;
• Risk of failing to deliver on our contractual obligations to our clients;
• Attracting, developing and retaining our people;
• Anti-bribery and corruption, including details of matters raised under the Group’s Speak Up policy;
• Data privacy; and
• The Group’s legal entity rationalisation programme.
Although cyber and information security was a standing item on the Committee’s agenda prior to
the cyber incident in late March 2023, the Committee has increased its scrutiny of this topic in the
wake of the incident. This will remain a principal focus of the Committee for the foreseeable future.
The Chief Technology Officer and/or the Chief Information Security Officer attend every Committee
meeting to provide an update on the Group’s cyber security maturity and receive robust challenge
from Committee members.
The enterprise risk management framework and control environment continues to be enhanced
and embedded across Capita in the revised operating model. The Committee concluded that risk
management processes and the system of internal controls were adequate and there were no
material weaknesses requiring specific disclosure. The Committee reported the conclusions to the
Board to support the annual confirmation that a robust assessment of the principal risks had been
carried out.
Effectiveness and efficiency of financial controls
Detail on the status of internal financial controls is in the internal control and risk management section
of this report and can be found on pages 57 to 63. As detailed on page 88 further improvements
to the Group risk and control framework, including financial controls were delivered during the year.
The Committee concluded that the Group risk and control framework, including financial controls
could be relied upon to be materially effective, noting that further improvements to the Group risk and
control framework are planned for 2024 to ensure that financial controls are appropriately efficient for
a Group of the scale and complexity of Capita.
Internal audit
The Group internal audit function has an administrative reporting line to the CFO and an independent
reporting line to me as Chair of the Committee. The function has in place a co-sourcing arrangement
which adds expertise and breadth to the work of the inhouse audit team. The function is led by the
Director Internal Audit and Risk who is also responsible for the Group’s non-regulated business risk
function. Regulated business risk is the responsibility of the CEO, Capita.
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Audit and Risk Committee report continued
The 2024 plan was approved by the Committee in December 2023. The plan focuses on the following
four areas: (i) risk-based cyclical audits of core ‘business-as-usual’ activities aligned to our principal
risks; (ii) advisory reviews (iii) progressive assurance and (iv) testing of key controls documented by
the functions as they strengthen their internal control framework.
Conducting cyclical audits over these risks and processes provides better insight into how risk is
being managed and provides comparison across business units. The plan is structured to be flexible;
to provide assurance over core ‘business as usual’ activities aligned to our principal risks; and, to offer
continued support for ongoing change activities.
Throughout the year, the Group internal audit function provides written reports to the Committee
on the work carried out to date and the in-flight work to be completed, together with oral updates.
An annual report is provided each year summarising the key matters arising. Reports set out controls
and process weaknesses identified during the work, together with any recommendations for action.
In all cases, management responded with appropriate actions to mitigate the associated risks.
The Committee reviews management’s response to the matters raised and ensures that any action
is commensurate with the level of risk identified. The Committee receives regular status updates
on identified actions and provides robust challenge.
As detailed in the 2022 Committee report, as a result of the consistent themes identified during
audits including a lack of defined policy and procedures over key processes, responsibilities and
accountabilities of roles not always clear and a lack of evidence to demonstrate monitoring and
reporting of control activity, a plan was presented and approved by the Committee during 2022 to
address these issues and further improve the Group’s financial controls framework. The Committee
received updates on the progress of this project at each Committee meeting and closely monitors
the progress of this project. Further information is detailed on page 88.
Through regular interaction between the Committee and the Director Internal Audit and Risk, as well
as reports received from the function, the Committee can assess and satisfy itself that the Group’s
provision of internal audit is effective.
Anti-bribery and corruption
Capita has a Group-wide anti-bribery and corruption policy, which complies with the Bribery Act
2010. Procedures are reviewed periodically to ensure continued effective compliance in Group
businesses around the world.
Code of Conduct and Speak Up
Capita’s Code of Conduct was refreshed in 2022, with the relaunch of the Group’s Speak Up policy.
Code of Conduct training is mandatory for all Group employees including Capita plc directors. The
Speak Up policy, provides a framework for concerns to be raised in a responsible and effective
manner. This ensures that concerns are addressed in a manner independent of a colleague’s
business area, and that concerns can be raised through a facility provided by an independent
third-party provider. Where concerns are raised, they are escalated to named contact points
within Capita for further assessment and investigation.
As part of the relaunch of the Speak Up policy in 2022 a 12-month Speak Up communication
plan was implemented to raise awareness of this policy and stimulate engagement with employees.
The number of reported cases has again increased during 2023 following this communication plan,
with significant progress being made in increasing the number of reported cases to a level more
representative of Capita’s size and its peers.
During 2023, members of the Business Integrity team visited some of Capita’s international
sites, including South Africa, to reinforce and embed the Speak Up policy in these businesses.
The Chief General Counsel and Company Secretary also attended some of these meetings via
video-conference. The Speak Up policy has also recently been introduced in Capita’s businesses
in Germany following a change in legislation.
While recognising the progress made the Committee recognises that the number of reported cases is
still low in certain geographies given the size of Capita and further communication will be undertaken.
This is an area of focus for the Committee, which receives a report from Capita’s Head of Business
Integrity and an update on the current level of reported cases at every meeting. Oversight of these
arrangements is a matter reserved to the Board and I provide regular updates on the operation of
the policy to the Board.
Brian McArthur-Muscroft
Chair
Audit and Risk Committee
5 March 2024
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Directors’ remuneration report
Directors’ remuneration report
This report is split into three sections:
• The annual statement summarises how
the committee discharged its roles and
responsibilities in respect of 2023 including
the review of the directors’ remuneration
policy and pay decisions for 2024.
• The directors’ remuneration policy (the policy)
presents the policy which remains largely
unchanged from that approved by shareholders
at the 2021 AGM and will be subject to a
binding shareholder vote at the 2024 AGM.
• The annual report on remuneration sets out
theremuneration arrangements and incentive
outcomes for the year under review and
explains how the policy will be operated
for2024.
Remuneration Committee
membership and attendance
All members of the committee are
independent non-executive directors. During
2023 the non-executive employee director
attended committee meetings by invitation,
rather than being a member of the committee.
From 1 January 2024, following the decision
to change the constitution of the Board, there
will no longer be a non-executive employee
director. The number of formal meetings held
and the attendance by each member is shown
in the table on page 75.
The committee also held informal discussions
as required. The Chief General Counsel and
Company Secretary acts as secretary to the
committee and is available to assist the
members of the committee as required,
ensuring that timely and accurate
information is distributed accordingly.
The committee’s terms of reference set out
therole, responsibilities and authority ofthe
committee and can be found on the Company’s
website at www.capita.com/investors. These
are normally reviewed and updated where
appropriate, on an annual basis.
Georgina Harvey, Chair,
Remuneration Committee
“ The Remuneration
Committee considers that
our remuneration policy
remains appropriate;
following the recent
appointment of our
new CEO this will be
kept under review”
The directors’ remuneration report (excluding the
policy) will be subject to an advisory shareholder
vote, and the policy will be subject to a binding
shareholder vote, at the 2024 AGM.
1
6
7
8
2
3
4
5
Remuneration Committee approximated time allocation
1. Governance
2. Executive director and executive team remuneration
3. Annual bonus plan
4. Long term incentives
5. Wider workforce/gender and ethnicity pay gap
6. Shareholder consultation/feedback
7. Policy review
8. Committee time only
7%
5%
33%
20%
6%
4%
23%
2%
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Directors’ remuneration report continued
Annual statement
Dear shareholder,
I am pleased to present the directors’ remuneration report for the year ended 31 December 2023.
The committee’s focus in 2023 has been centred on:
• Reviewing our current remuneration policy as approved by shareholders at the 2021 AGM:
considering the appropriate approach for 2024 and future years;
• Agreeing the remuneration arrangements in respect of Jon Lewis’s retirement as Chief Executive
Officer (CEO) and the appointment of Adolfo Hernandez as his successor; and
• Colleague wellbeing and development: embedding Capita pay principles, rolling out our career path
framework incorporating job sizing and market-informed job pay ranges to deliver transparency on
pay throughout the Group.
Details of the committee’s approach to remuneration in 2023, and the proposed implementation of
the policy for 2024, are set out below.
How the committee operates
The committee has an annual agenda covering the key planning and decision events in the annual
remuneration cycle. Each meeting is supported by an agenda setting discussion held in advance
with the committee Chair, Chief People Officer and Group Reward Director, to identify issues affecting
remuneration that may require consideration by the committee. Regular reports, including updates
on corporate governance and regulatory developments, are received from the committee’s adviser.
At each committee meeting the members may receive other reports and presentations covering
wider workforce arrangements which include the annual pay review, incentive scheme arrangements,
gender pay and ethnicity reporting, engagement on how executive remuneration aligns with wider
company pay policy, salary proposals for members of the senior team and approval of remuneration
packages for new members of the executive team.
During 2023, the ESG committee was responsible for making recommendations to the committee
in respect of setting and assessing ESG targets in the annual bonus.
Committee activities
The key workstreams of the committee during the year included:
• Reviewing the current policy and agreeing the approach for the policy to be put to shareholders
for approval at the 2024 AGM.
• Agreeing the remuneration arrangements in respect of Jon Lewis’s retirement as CEO and the
appointment of Adolfo Hernandez as his successor.
• Agreeing the vesting percentage in respect of the 2020 LTIP awards for the performance period
ended 31 December 2022.
• Agreeing annual bonus awards for the year ended 31 December 2022.
• Agreeing 2023 Restricted Share Award (RSA) levels.
• Agreeing the design and targets for the 2023 annual bonus.
• Determining the remuneration arrangements for senior management leavers/joiners.
• Consideration of executive pay arrangements and alignment with those for the wider workforce.
• Ongoing workforce engagement in respect of executive remuneration.
• Receiving progress updates in respect of the implementation of wider workforce strategy on pay
and progression (career path framework).
In addition, the committee has ensured that the remuneration policy (current and proposed) and
practices are consistent with the six factors set out in Provision 40 of the 2018 UK Corporate
Governance Code (the Code):
Clarity – our policy is well understood by our senior management team and has been clearly
articulated to our major shareholders and representative bodies (both on an ongoing basis and
during the detailed consultation exercise in respect of the policy review carried out during 2023).
Simplicity – the committee is mindful of the need to avoid overly complex remuneration structures,
which can be misunderstood and deliver unintended outcomes. A key objective of the committee
is toensure our executive remuneration policies and practices are straightforward to communicate
andoperate.
Risk – our policy has been designed to ensure that inappropriate risk taking is discouraged and will
not be rewarded via: (i) the balanced use of both short-term incentives and long-term share awards;
(ii) the significant role played by equity in our incentive plans (together with in employment and post
cessation shareholding guidelines); and (iii) malus/clawback provisions and the committee’s ability
to use discretion to adjust vesting levels.
Predictability – our incentive plans are subject to annual individual limits, with our share plans also
subject to a share dilution limit.
Proportionality – there is a clear link between individual awards, delivery of strategy and our long-term
performance through performance conditions or underpins applied to the annual bonus plan and RSAs.
In addition, the significant role played by incentive/at-risk pay, together with thestructure of the
executive directors’ service contracts, ensures that poor performance is notrewarded.
Alignment to culture – our executive pay policies are fully aligned to Capita’s culture, including
elements of fixed pay (executive director pension provision is aligned with the workforce) and through
the use of performance metrics that measure how we perform against our financial and non-financial
KPIs. RSAs further increase alignment to Capita’s responsible business strategy by offering a
narrower range of value outcomes.
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Directors’ remuneration report continued
Remuneration for 2023
A summary of the approach to remuneration in 2023 was as follows:
• There was no change in the base salary level for the CEO or the Chief Financial Officer (CFO) in 2023.
• The annual bonus operated in line with policy, with a maximum potential of 200% of salary for
the CEO and 175% of salary for the CFO. The bonus was based on revenue, profit before tax and
free cash flow (all equally weighted and totalling 80% of maximum bonus) and strategic/individual
objectives (totalling 20% of maximum bonus).
• RSAs were granted under the Capita Executive Plan in March 2023 at 150% of salary for the CEO
and 100% of salary for the CFO. Further details of the 2023 RSAs are set out in the annual report
on remuneration.
Annual bonus for 2023
Following a review of performance against the annual bonus targets, no annual bonuses were
awarded to the CEO and CFO in respect of the year ended 31 December 2023.
While revenue performance was between threshold and target, it was noted that revenue benefited
from certain non-trading items, the exclusion of which would have resulted in a below threshold
performance. PBT and free cash flow performance were below threshold.
In light of this financial performance, while progress was made against a number of the strategic/
individual objectives, management recommended to the committee that no management bonuses
should be paid for the year ended 31 December 2023 and the committee accepted this proposal.
Further details in respect of the annual bonus performance assessment are set out on pages 110
and 111.
2021 RSAs
The RSAs granted to Jon Lewis and Tim Weller in May 2021, which were due to vest in May 2024,
will lapse in full post year end following the application of the total shareholder return (TSR) underpin.
Total remuneration
The committee is satisfied that total remuneration awarded to the CEO and CFO in respect of 2023
(ie fixed pay only) was appropriate in the context of the shareholder and broader stakeholder experience.
Use of discretion
The committee retains the right to exercise discretion to override formulaic outcomes and ensure that
the level of bonus and/or share award payable is appropriate. It may also use its judgement to adjust
outcomes to ensure that any payments made reflect overall Company performance and stakeholder
experiences more generally. Where discretion is exercised, the rationale for this discretion will be fully
disclosed to shareholders in the relevant annual report. A summary of the discretion exercised by the
committee over the last four years, is set out below:
2020 2021 2022 2023
Annual bonus
In light of the impact of Covid-19, the annual bonus plan
was withdrawn for 2020 for the executive directors (plus
the executive committee and selected senior managers)
before the targets were agreed.
No committee discretion exercised. Annual bonus awards for the CEO and CFO for the year
ended 31 December 2022 were reduced from 69% to
60% of the maximum, see page 115 of the relevant
annual report.
No committee discretion exercised
(albeit it should be noted that the
committee accepted management’s
proposal not to pay an annual bonus
for 2023).
Share awards
2020 LTIP award levels were reduced by around 70%
compared with normal grant levels. In addition, and to
reflect underlying financial and operational performance,
the committee applied downward discretion when
assessing the vesting of the 2018 LTIP
2021 RSA levels were reduced from
the normal policy grant level by
around 17%.
The 2022 RSA level for the CEO was reduced from the
normal award level of 150% of salary to 100% of salary,
see page 116 of the relevant annual report.
No committee discretion exercised.
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Directors’ remuneration report continued
Board changes in 2023
On 31 July 2023 Capita announced Jon Lewis’s intention to retire. Jon Lewis stepped down as CEO
and an executive director on 17 January 2024 although he remains an employee until July 2024 to
ensure an orderly transition. Adolfo Hernandez was appointed CEO and executive director on
17 January 2024. The remuneration arrangements relating to Jon Lewis’s retirement and the
appointment of Adolfo Hernandez are set out on pages 114 and 115.
John Cresswell stepped down as a non-executive director on 31 March 2023. Claire Miles was
appointed as a non-executive director on 12 May 2023 although she stepped down from her role
on 31 December 2023 following her appointment as chief executive officer of Stagecoach. Janine
Goodchild stepped down as employee director on 31 December 2023.
Remuneration policy for 2024
As a result of the current policy (approved by shareholders at the 2021 AGM) reaching the end of
its three-year shareholder approved life, a new policy is required in 2024.
Following a review of Capita’s current policy to ensure it continues to support the business and
delivery of the business strategy at the current time, the committee’s main conclusion is that the
current policy should be rolled over at the 2024 AGM with minor changes. While the committee did
consider whether Capita should switch back from RSAs to Long Term Incentive Plan (LTIP) awards
from 2024, the committee concluded that 2024 feels premature for the following two reasons:
• The committee wishes to ensure that the new CEO has sufficient opportunity to provide his input
in respect of Capita’s strategy and how this impacts the policy structure, performance metrics and
targets following an appropriate period of time in the role; and
• Capita’s current share price volatility means that granting LTIP awards, which are typically double
RSA levels, will create dilution/share usage issues and increase the risk of windfall gains.
Major shareholders were consulted on the proposed approach towards the end of 2023 and
the majority confirmed support. The committee will keep the policy under review and should the
committee conclude that Capita should switch back from RSAs to LTIPs in the future, a new policy
would be taken to the relevant AGM following a shareholder consultation exercise with our
majorshareholders.
Implementing the policy for 2024
The committee’s intended approach to the implementation of the policy for 2024 is set out below.
Fixed remuneration: Adolfo Hernandez was appointed on a salary of £700,000 (ie lower than the
salary of Jon Lewis on retirement of £748,000). Jon Lewis and Tim Weller will not receive salary
increases in 2024. No changes will be made to benefit provision and executive directors will continue
to receive a workforce-aligned pension allowance (5% of salary) in line with other employees.
2024 annual bonus: The maximum potential will continue to operate at 200% (CEO) and 175% (CFO)
of salary based on 80% financial (based on sliding scale revenue, profit and cash flow targets) and
20% strategic (focussed on improvement in the customer net promoter score (cNPS) targets.
2024 RSAs: The 2024 RSAs to be granted to executive directors in 2024 will:
• be set at a maximum of 125% of salary for the new CEO (ie lower than the previous CEO’s 150%
salary award) and 100% of salary for the CFO;
• vest after three years from the grant date, subject to continued employment, satisfactory individual
performance and a positive assessment of performance against the underpins (including three-year
TSR to be positive). No shares can normally be sold until at least six years from grant, other than
those required to settle any taxes.
The actual number of shares under award will be determined just prior to the date of grant and details
will be set out in the RNS issued immediately following grant.
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Shareholder views
The committee engaged with our major shareholders and the main representative bodies towards the
end of 2023 and early 2024 in advance of the 2024 AGM. Our major shareholders confirmed that they
were supportive of the new proposed policy in respect of the committee’s conclusions. As such, no
changes were made to the proposals following consideration of the feedback received.
Employee engagement
In 2023, Jon Lewis regularly communicated with all employees, including on our 2022 financial results.
Employees are able to submit any questions about the Company, including in relation to the directors’
remuneration policy and report, pay and benefits, both online and during live employee briefings.
During 2023, the employee non-executive director attended committee meetings by invitation and
was therefore able to provide colleague perspective on remuneration to the Board.
Over the last couple of years, the committee has established a process of engaging with the
workforce on how executive remuneration aligns with wider company pay policy, in compliance
with the Code. The purpose and content of the sessions are clearly articulated and publicised to
encourage a wide range of attendees and questions. A session was held with the chairs and co-chairs
of the Capita employee network groups and members of the leadership council in mid-2023. In
addition, a further session was held with a cross-section of employees from different levels, divisions
and territories within the Capita Group in December 2023. Both sessions were chaired by Georgina
Harvey and covered: the work of the committee; executive pay in the UK; and at Capita how
executive remuneration is linked to performance; strategy on workforce pay and progression; and
how Capita executive pay policy links to wider Company pay policy including how each element of the
remuneration package cascades down the business and future pay strategy. These sessions provide
an opportunity for questions and answers and the provision of feedback is encouraged. Further
workforce engagement sessions will take place during 2024 following a similar structure.
Directors’ remuneration report continued
Concluding thoughts
The committee considers that our remuneration policy continues to remain appropriate and
was pleased with the level of support it received during the consultation exercise with our major
shareholders and the main representative bodies. That said, this will be kept under review given
the recent appointment of our new CEO.
I hope you find this report to be clear and helpful in understanding our remuneration practices and
that you will be supportive of the binding vote to approve the rollover of current policy and the
advisory vote to approve the annual report on remuneration.
Finally, I would like to thank our shareholders for their ongoing support.
Georgina Harvey
Chair
Remuneration Committee
5 March 2024
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Directors’ remuneration policy
This part of the remuneration report sets out our proposed remuneration policy which will be put
to shareholders for approval at the 2024 AGM. The information provided in this section of the
remuneration report is not subject to audit.
The proposed policy is a rollover of current policy with minor amendments and, subject to shareholder
approval, will take formal effect from the conclusion of the 2024 AGM. A summary of the changes
from the policy approved by shareholders at the 2021 AGM is as follows:
• Reflecting the new CEO’s 125% of salary RSA level (ie lower than the 150% of salary received by
Jon Lewis), the maximum RSA in the policy table has been reduced to 125% of salary. Connected
to this, the maximum variable remuneration for a new executive director appointment has been
reduced from 350% to 325% of salary in the Directors’ recruitment and promotions section;
• Enhancing the disclosure under the policy table in respect of committee discretion to make it clear
that, consistent with best practice, the committee retains absolute discretion to override formulaic
outcomes in the bonus, RSA and any other remuneration arrangements where relevant; and
• References to the employee non-executive director have been removed following the Board’s
decision that from 1 January 2024, the Board will constitute seven directors (comprising the
chairman, two executive directors, and four independent non-executive directors).
Responsibilities and activities of the Remuneration Committee
The committee is responsible for determining and agreeing with the Board the remuneration policy
for the executive directors, executive team members, and the Chief General Counsel and Company
Secretary role, including setting the overarching principles, parameters and governance framework
and determining each remuneration package. In addition, the committee reviews remuneration for
the wider workforce and related policies and the alignment of incentives and rewards with culture.
The committee also sets the Chairman’s fee.
In setting the remuneration policy for the executive directors, executive team members and the Chief
General Counsel and Company Secretary role, the committee ensures that the arrangements are
in the best interest of both the Group and its shareholders, by taking into account the following
generalprinciples:
• To ensure total remuneration packages are simple and fair in design so that they are valued
byparticipants.
• To ensure that total remuneration strongly reflects performance.
• To balance performance-related pay between: the achievement of financial performance objectives
and delivering sustainable performance; creating a clear connection between performance and
reward; and providing a focus on sustained improvements in profitability and returns.
• To provide a material proportion of remuneration in shares, allowing senior management to build a
significant shareholding in the business and, therefore, aligning management with shareholders’
interests and the Group’s performance, without encouraging excessive risk taking.
Consideration of shareholder views
The Company is committed to maintaining good communications with shareholders. It considers the
AGM to be an opportunity to communicate with shareholders, giving them the opportunity to raise any
issues or concerns they may have. In addition, the committee seeks to engage directly with major
shareholders and the main representative bodies, should any material changes be proposed to
thepolicy.
As detailed on pages 99 and 100, the committee consulted with major shareholders and shareholder
representatives on the proposal to rollover the current policy and the majority confirmed support.
Assuch, no changes were made to the proposed approach following consideration of the
feedbackreceived.
Consideration of our people
When determining executive director remuneration policy and practices, the committee reviews
workforce remuneration and related policies and the alignment of incentives and rewards with culture
to ensure that workforce pay and conditions are taken into account when setting the pay of executive
directors and senior management.
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Remuneration policy table
The following table sets out the key aspects of the policy.
Base salary
Purpose and link to strategy Operation Maximum opportunity Performance framework
To attract and retain talent by
ensuring base salaries are
sufficiently competitive.
Normally reviewed annually. The committee may award salary increases
at other times of the year if it considers it to be appropriate. The review
takes intoaccount:
• Salaries in similar companies and comparably-sized companies
• Remuneration policy
• Economic climate
• Market conditions
• Group performance
• The role and responsibility of the individual director
• Employee remuneration across the broader workforce.
There is no prescribed maximum monetary annual
increase to base salaries. Any annual increase in
salaries is at the discretion of the committee, taking
into account the factors stated in this table and the
following principles:
• Salaries would typically be increased at a rate
consistent with the average salary increase
(inpercentage of salary terms) for the
broader workforce.
• Larger increases may be considered appropriate
in certain circumstances (including, but not limited
to, a change in an individual’s responsibilities or in
the scale of their role or in the size and complexity
of the Group).
• Larger increases may also be considered
appropriate if a director has been initially
appointed to the Board at a lower than
typical salary.
Individual and business performance are considerations in
setting base salaries.
Benefits
Purpose and link to strategy Operation Maximum opportunity Performance framework
Designed to be consistent with
benefits available to employees
in the Group.
Benefits may include car allowance, private medical insurance, travel and
property hire. Executive directors can also participate in all-employee
shareplans.
The committee has discretion to add additional benefits which are not
currently provided, such as relocation expenses.
Benefit provision varies between different executive
directors. While there is no maximum level set by the
committee, benefits provision will be set at a level
the committee considers appropriate and be based
on individual circumstances.
Participation in the Company’s HMRC-approved
all-employee share plan will be limited by the
maximum level prescribed by HMRC.
Not performance-related.
Pension
Purpose and link to strategy Operation Maximum opportunity Performance framework
Consistent with benefits available
to employees in the Group.
Pension contributions are paid into the Group’s defined contribution
scheme and/or as a cash allowance.
5% of salary. Not performance-related.
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Annual bonus
Purpose and link to strategy Operation Maximum opportunity Performance framework
Performance measures are
selected to focus executives on
delivery of the Group’s business
plan for the financial year.
The bonus measures and targets are reviewed annually to ensure
that bonus opportunity and performance measures are appropriately
stretching and continue to support thebusiness plan.
Performance against targets is reviewed following completion of the final
accounts for the period under review.
50% of any bonus earned (net of tax) is normally delivered in shares
deferred for three years, with the remainder delivered in cash or deferred
shares at the executive director’s discretion.
An additional payment may be made at the time of vesting in respect
of dividends that would have accrued on deferred shares during the
deferralperiod.
Malus and clawback provisions apply to all annual bonus and deferred
bonus share awards for a period of up to three years after the
determination of the annual bonus.
200% of salary. Performance is normally measured over a one-year period
relative to challenging targets for selected measures of
Group financial, strategic and/or individual performance.
The majority of the bonus will be determined by
measure(s) of Group financial performance.
A sliding scale is set for each Group financial measure:
50% of the bonus will be paid at target performance,
increasing to 100% for maximum performance.
Any bonus payout is ultimately at the discretion of the
committee, and the amount of any bonus that would be
determined based on performance may be reduced if the
committee believes this better reflects the underlying
performance of Capita over the relevant period.
Restricted share awards
Purpose and link to strategy Operation Maximum opportunity Performance framework
Designed to reward and retain
executives over the longer term,
while aligning their interests with
those of shareholders.
To link reward to longer-term
performance.
To encourage share ownership.
Awards normally vest after three years from grant and, once vested,
shares may not normally be sold until at least six years from the grant
date (other than to pay relevant taxes).
Dividends or dividend equivalents may accrue over the vesting period and
any holding period but only to the extent awards vest.
Malus and clawback provisions apply to awards for a period up to the fifth
anniversary of grant.
125% of salary. Vesting will be subject to: (i) continued employment;
(ii) satisfactory personal performance during the relevant
vesting periods; and (iii) a positive assessment of
performance against one or more underpins.
In addition, the committee may reduce the extent to
which an award vests if it believes this better reflects the
underlying performance of Capita over the relevant period.
Shareholding guidelines
Purpose and link to strategy Operation Maximum opportunity Performance framework
To align interests of management
and shareholders and promote a
long-term approach to
performance and risk
management.
Shareholding guidelines require executive directors to reach a specified
shareholding. Executive directors are required to retain 100% of any
shares from deferred bonus awards, RSAs (or LTIPs as granted under the
previous policy) on vesting (net of tax) until the guideline level is achieved.
Post-cessation guidelines apply to share awards granted following the
2020 AGM. In determining the relevant number of shares to be retained
post cessation, shares acquired from own purchases, any buyout awards
and share awards granted prior to the 2020 AGM will not be counted.
In employment: 300% of salary (CEO); 200% of
salary (CFO).
Post cessation: 100% of the relevant guideline
between cessation and the second anniversary of
cessation (or the actual shareholding if the guideline
has not been met at cessation).
Not performance-related.
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Non-executive director (NED) fees
Purpose and link to strategy Operation Maximum opportunity Performance framework
Market competitive fees are set
to attract and retain non-
executive directors with the
required skills, experience and
knowledge so that the Board
can effectively carry out its
responsibilities.
Reviewed periodically by the Board. Fee levels set by reference to market
rates, taking into account the individual’s experience, responsibilities, time
commitment and pay decisions for the broader workforce. NED fees
comprise payment of an annual basic fee and additional fees for further
Board responsibilities such as:
• Senior independent director
• Audit and Risk Committee chair
• Remuneration Committee chair
• The Chairman of the Board receives an all-inclusive fee.
Additional fees/allowances may also be paid for intercontinental travel
for business purposes where appropriate. No NED participates in the
Group’s incentive arrangements or pension plan or receives any other
benefits other than where travel to the Company’s registered office is
recognised as a taxable benefit in which case a NED may receive
grossed-up costs of travel as a benefit.
As per the executive directors, there is no prescribed
maximum monetary annual increase. Fees are
limited to an aggregate annual sum of £1m
increased only to take account of the effect of
inflation as measured by the retail price index or
such index as the directors consider appropriate or
such other amount as the Company may by ordinary
resolution decide.
Not performance-related.
The annual bonus performance measures are Group financial, strategic or individual measures which are selected annually
to be consistent with key priorities for the Group.
Targets are normally set on sliding scales that take account of internal strategic planning and external market expectations
for the Company.
Only modest rewards are available for achieving threshold performance with maximum rewards requiring substantial
outperformance of challenging strategic plans approved at the start of each year.
The committee operates share-based arrangements for the executive directors in accordance with their respective scheme
rules, the Listing Rules and the HMRC rules where relevant. The committee, consistent with market practice and the
scheme rules, retains discretion over a number of areas relating to the operation and administration of the plans.
These include (but are not limited to) the following:
• Who participates
• The form in which the award is granted and settled (eg shares, nil cost options, cash)
• The timing of the grant of award and/or payment
• The size of an award (up to individual and plan limits) and/or a payment
• Discretion relating to the measurement of any performance target/underpin and pro-rating of awards in the event of
a ‘good leaver’ scenario or a change of control or restructuring of the Company
• Determination of whether or not a person is characterised as a good leaver (in addition to any specified categories)
for incentive plan purposes
• Adjustments required in certain circumstances (eg share capital variation, rights issues, demerger, corporate
restructuring, special dividends)
• The ability to vary or substitute any performance condition(s)/underpins if circumstances occur which cause it to
determine that the original condition(s) have ceased to be appropriate, provided that any such variation or waiver is
fair, reasonable and not materially less difficult to satisfy than the original condition (in its opinion). In the event that the
committee were to make an adjustment of this sort, a full explanation would be provided in the next remuneration report
In all cases, the committee retains absolute discretion to override formulaic outcomes in the bonus, RSA and any other
remuneration arrangements (eg to ensure that any payouts reflect underlying Company performance and the broader
stakeholder experience).
The committee reserves the right to make any remuneration payments and/or payments for loss of office (including
exercising any discretions available to it in connection with such payments) notwithstanding that they are not in line with
the policy set out above where the terms of the payment were agreed: (i) before the policy set out above came into effect,
provided that the terms of the payment were consistent with the shareholder-approved directors’ remuneration policy in
force at the time they were agreed; or (ii) at a time when the relevant individual was not a director of the Company and, in
the opinion of the committee, the payment was not in consideration for the individual becoming a director of the Company.
For these purposes payments includes the committee satisfying awards of variable remuneration and, in relation to
an award over shares, the terms of the payment are ‘agreed’ at the time the award is granted. The committee retains
discretion to make minor amendments to the policy set out in this policy report (for regulatory, exchange control, tax
or administrative purposes or to take account of a change in legislation) without obtaining shareholder approval for
thatamendment.
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Illustrations of the application of our remuneration policy
CEO remuneration chart
CFO remuneration chart
0
500
1000
1500
2000
2500
3000
3500
100%
46%
30%
25%
40%
29%
38%
25%
13%
22%32%
Minimum
£755
Target
£2,330
Maximum
£3,030
Maximum with share price growth
£3,468
Fixed pay Annual Bonus RSA Share price growth
0
500
1000
1500
2000
2500
3000
3500
100%
46%
30%
28%
40%
26%
34%
23%
12%
25%36%
Minimum
£592
Target
£1,614
Maximum
£2,091
Maximum with share price growth
£2,364
Fixed pay Annual Bonus RSA Share price growth
The scenarios in the above graphs for the newly appointed CEO and CFO are based on the following:
Minimum On-target Maximum Maximum with share price
Fixed pay • Base salary at 1 January 2024 (or appointment if later)
• Estimated value of benefits
• 5% of salary pension
Annual bonus
CEO max: 200% of salary
CFO max: 175% of salary 0% 50% of max 100% of max 100% of max
RSA
CEO max: 125% of salary
1
CFO max: 100% of salary
1
0% 100% of max 100% of max
100% of maximum
with a 50% share
price growth
assumption
on RSAs
1. This is the maximum award level permitted. The actual number of shares under award in 2024 will be determined just
prior to the date of grant. Except as stated above in relation to RSA, figures for share based awards do not include any
share price movements or any dividends or dividend equivalents.
Malus and clawback
Malus and clawback provisions apply to all incentive awards granted to executive directors. These
provisions permit the committee to reduce or recover bonus awards (including deferred shares) for
up to three years after the determination of the annual bonus and to reduce or recover RSA awards
(and LTIP awards granted under the previous policy) up to the fifth anniversary of grant. The potential
circumstances in which malus or clawback provisions can be applied include:
• material misstatement of a Group company’s financial results
• a participant deliberately misleads relevant parties regarding financial performance
• serious misconduct or conduct which causes significant financial loss
• overpayments due to material abnormal write-offs of an exceptional basis
• an error was made, or inaccurate or misleading information was used to determine the value of
anaward
• reputational damage
• material failure of risk management
• corporate failure or the occurrence of an insolvency event.
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Application of our remuneration policy
When determining executive director remuneration policy and practices, the committee reviews
workforce remuneration and related policies, and the alignment of incentives and rewards with culture.
Share awards are granted to senior management in order to encourage a high level of employee share
ownership, albeit remuneration is more heavily weighted towards long-term variable pay for executive
directors than other employees. This is to ensure that there is a clear link between the value created
for shareholders and the remuneration received by the executive directors. The committee did
not consult with employees formally in respect of the design of the policy, although the employee
non-executive director who attended the committee by invitation during 2023 was involved in
the committee’s discussions.
Directors’ recruitment and promotions
The committee takes into account the need to attract, retain and motivate the best person for each
position, while at the same time ensuring a close alignment between the interests of shareholders
andmanagement.
If a new executive director were to be appointed on a permanent basis, the committee would
seek to align their remuneration package with other executive directors in line with the policy table.
However, flexibility would be retained to make buyout awards or payments in respect of remuneration
arrangements and contractual terms forfeited on leaving a previous employer. In such circumstances,
the committee would look to replicate the arrangements being forfeited as closely as possible and,
in doing so, would take account of relevant factors including the nature of the remuneration and
contractual terms, performance conditions and the time over which they would have vested or
beenpaid.
If appropriate, a new appointee’s incentives in their year of joining may be subject to different targets
than for other executive directors. The committee may also agree that the Company will meet certain
relocation and incidental expenses, as it considers appropriate.
The maximum level of variable remuneration which may be granted (excluding awards to compensate
for remuneration arrangements and contractual terms forfeited on leaving the previous employer) to
new executive directors in the year of recruitment shall be limited to 325% of salary (the maximum
limit permitted within the policy table).
The initial notice period for a service contract may be up to 24 months, which is longer than that
stated in the policy of a 12-month notice period, provided it reduces to 12 months within a short
space of time.
For an internal appointment or an appointment following the Company’s acquisition of or merger with
another company, any incentive amount awarded in respect of a prior role may be allowed to vest on
its original terms, or adjusted as relevant to take into account the appointment. Any other ongoing
remuneration obligations or terms and conditions existing prior to appointment may continue.
The committee retains discretion to make appropriate remuneration decisions outside the standard
policy to meet the individual circumstances of recruitment when:
• An interim appointment is made to fill an executive director role on a short-term basis.
• Exceptional circumstances require that the Chairman or a non-executive director takes on
an executive function on a short-term basis.
In the event of the appointment of a new non-executive director, remuneration arrangements will
normally be in line with the structure set out in the policy table for non-executive directors. However,
the committee (or the Board as appropriate) may include any element listed in the policy table or any
other element which the committee considers is appropriate given the particular circumstances
excluding any variable elements, with due regard to the best interests of shareholders.
Directors’ service agreements and payments for loss of office
The committee regularly reviews the contractual terms of the service agreement to ensure these
reflect best practice.
The service contracts for executive directors are for an indefinite period and provide for a 12-month
notice period. They do not include provisions for predetermined compensation on termination that
exceed 12-months’ salary, pension and benefits. There are no arrangements in place between the
Company and its directors that provide for compensation for loss of office following a takeover bid.
Alldirectors are appointed subject to annual re-election at the annual general meeting.
In circumstances of termination on notice, the committee will determine an equitable compensation
package, having regard to the particular circumstances of the case. The committee reserves the
right to make payments in connection with a director’s cessation of office or employment where the
payments are made in good faith in discharge of an existing legal obligation (or by way of damages
for breach of such an obligation) or by way of a compromise or settlement of any claim arising in
connection with the cessation of a director’s office or employment. Any such payments may include,
but are not limited to, paying any fees for outplacement assistance and/or the director’s legal and/or
professional advice fees in connection with his cessation of office or employment. The committee has
discretion to require notice to be worked or to make payment in lieu of notice or to place the director
on garden leave for some or all of the notice period. Any payment in lieu of notice will be reduced for
any period of time worked post notice being given or received.
The annual bonus may be payable for a good leaver (as defined in the plan rules) in respect of the
period of the bonus plan year worked by the director; there is no provision for an amount in lieu of
bonus to be payable for any part of the notice period not worked. Bonus payments would normally
be paid at the normal payment date.
On cessation, an executive director’s share plan entitlements will be determined in accordance with
the rules of the relevant plan.
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Unvested deferred share awards will normally lapse on the earlier of notice being given/received and
cessation. However, the committee has discretion to allow awards to instead continue to vest in full
on the normal vesting date (or earlier at the discretion of the committee) for a good leaver (as defined
in the relevant plan rules).
In respect of RSAs/LTIPs, unvested awards will normally lapse on the earlier of notice being given/
received and cessation. However, the committee has discretion to allow awards to instead continue
to vest on the normal vesting date (or earlier at the discretion of the committee) to the extent any
performance conditions/underpins attached to the relevant award are satisfied at vesting. In such
cases awards will, other than in exceptional circumstances, be scaled back on a time pro-rated
basis and post-vesting holding periods would normally apply.
In the event of a change of control, all unvested LTIP awards/RSAs would (unless rolled over) vest,
tothe extent that any performance conditions/underpins attached to the relevant awards have
beenachieved. Awards would normally be subject to time pro-rating (unless the committee
determines otherwise).
Unvested deferred share awards would vest in the event of a change of control (unless rolled over).
Shares held within the share ownership plan will be removed from the plan or exchanged for
replacement shares in accordance with the scheme rules and HMRC guidelines.
Non-executive directors’ terms of engagement
Non-executive directors are appointed by letter of appointment for an initial period of three years.
Each appointment is terminable by three months’ notice on either side. At the end of the initial period,
the appointment may be renewed by mutual consent, subject to annual re-election at the AGM.
Inspection of service agreements/letters of appointment
The service agreements and non-executive directors’ letters of appointment are available for
inspection during normal business hours at the Company’s registered office, and available for
inspection at the AGM.
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Annual report on remuneration
Annual report on remuneration
This part of the remuneration report has been prepared in accordance with The Large and Medium
sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended) and paragraphs
9.8.6R and 9.8.8 of the Listing Rules. The annual report on remuneration will be put to an advisory
shareholder vote at the 2024 AGM. The information on pages 108 to 118 has been audited
asindicated.
FIT Remuneration LLP (FIT) was appointed by the committee during 2020 to provide independent
advice on executive remuneration matters. During the year, the committee received independent and
objective advice from FIT primarily on market practice, governance updates, the operation and review
of the remuneration policy, shareholder/proxy feedback on policy proposals, remuneration-related
disclosure within the accounts and the retirement of Jon Lewis and appointment of Adolfo Hernandez
as CEO. FIT’s fees were £123,106 (excluding VAT) during 2023 for its services (charged on a time
plus expenses basis). The fees were considered appropriate for the work undertaken. No other
services were provided to the Group by FIT.
FIT is a founding member of the Remuneration Consultants Group and, as such, operates voluntarily
under the code of conduct in relation to executive remuneration consulting in the UK. The committee
considers FIT’s advice on remuneration to be independent and objective, and there is no connection
with the Company or individual directors.
The committee also consulted with the CEO, CFO, the Chief People Officer and the Group
Reward Director to provide further information to the committee on the performance and proposed
remuneration for the executive directors and other senior management, but not in relation to their
ownremuneration.
The work of the committee is detailed in the annual statement.
Shareholder voting at the AGM
The 2023 directors’ remuneration report will be presented to shareholders at the 2024 AGM. At the
2023 AGM, the actual voting in respect of the ordinary resolution to approve the remuneration report
for the year ended 31 December 2022 is set out below together with the vote on the current
remuneration policy approved at the 2021 AGM.
Votes cast for Votes cast against Abstentions
1
Directors’ remuneration report, other than the part
containing the directors’ remuneration policy, for
the year ended 31 December 2022
1,120,642,451 43,174,795 92,205
96.29% 3.71%
Directors’ remuneration policy (2021 AGM)
1,254,719,423 37,105,242 108,597
97.13% 2.87%
1. A vote abstained is not a vote in law and is not counted in the calculation of the proportion of votes ‘for’ and ‘against’
aresolution.
Policy implementation for 2024
Details of the committee’s intended approach to the implementation of the policy for 2024 is set out in
the annual statement.
Fees for the Chairman, senior independent director and non-executive directors
A summary of the fees for 2024 which are unchanged from 2023 levels are as follows:
Annual fee from
1 January 2024
David Lowden, Chairman £290,000
Georgina Harvey, Senior Independent Director and Remuneration Committee Chair £85,500
Brian McArthur-Muscroft, Audit and Risk Committee Chair £75,000
Nneka Abulokwe £64,500
Neelam Dhawan £64,500
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Directors’ remuneration earned in 2023 – single-figure table (audited)
The table below summarises directors’ remuneration received in 2023 (with prior year comparators).
Base salary
and fees
£
Benefits
1
£
Pension
£
Annual bonus
£
LTIP
£
RSA
£
Total
remuneration
£
Total fixed
remuneration
£
Total variable
remuneration
£
David Lowden
2
2023 290,000 1,876 – – – – 291,876 291,876 –
2022 213,447 839 – – – – 214,286 214,286 –
Jon Lewis
3,4
2023 748,000 19,475 37,400 0 – 0 804,875 804,875 0
2022 748,000 17,986 37,400 897,600 98,978 – 1,799,964 803,386 996,578
Tim Weller
3,5
2023 545,000 17,703 27,250 0 – 0 589,953 589,953 0
2022 545,000 18,399 27,250 572,250 – – 1,162,899 590,649 572,250
Georgina Harvey
6
2023 85,500 567 – – – – 86,067 86,067 –
2022 80,250 – – – – – 80,250 80,250 –
Brian McArthur-Muscroft
7
2023 75,000 567 – – – – 75,567 75,567 –
2022 42,875 – – – – – 42,875 42,875 –
Nneka Abulokwe
8
2023 64,500 567 – – – – 65,067 65,067 –
2022 59,125 193 – – – – 59,318 59,318 –
Neelam Dhawan
9
2023 64,500 8,520 – – – – 73,020 73,020 –
2022 64,500 25,599 – – – – 90,099 90,099 –
Claire Miles
10
2023 40,897 311 – – – – 41,208 41,208 –
2022 – – – – – – – – –
Janine Goodchild
11
2023 64,500 1,021 – – – – 65,521 65,521 –
2022 32,250 – – – – – 32,250 32,250 –
Former Directors
Sir Ian Powell
12
2023 – – – – – – – – –
2022 128,951 16 – – – – 128,967 128,967 –
John Cresswell
13
2023 16,125 1,325 – – – – 17,450 17,450 –
2022 64,500 – – – – – 64,500 64,500 –
Matthew Lester
14
2023 – – – – – – – – –
2022 37,500 – – – – – 37,500 37,500 –
Lyndsay Browne
15
2023 – – – – – – – – –
2022 32,250 – – – – – 32,250 32,250 –
Joseph Murphy
15
2023 – – – – – – – – –
2022 32,250 – – – – – 32,250 32,250 –
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1. Benefits include all taxable benefits as defined by paragraph 11(1) of the regulations. This includes private medical
insurance, company car allowance, work travel and the value of matching share awards under the UK all-employee
share scheme.
2. David Lowden was appointed Chairman on 11 May 2022 following the stepping down of Sir Ian Powell as Chairman
and non-executive director on 10 May 2022. David stepped down from the position of senior independent director
on his appointment as Chairman. Fees for 2022 reflect the change in roles and are shown on a pro-rata basis.
3. Details of the performance assessment and vesting of the 2021 RSA awards held by Jon Lewis and Tim Weller are set
out on page 111. RSAs granted to the executive directors in April 2022 and March 2023 with performance underpins,
will be disclosed in the year ending just prior to the normal vesting date.
4. The 2020 LTIP awards have been restated in the table above in respect of the prior year from £66,986 (based on a
three-month average share price to 31 December 2022 of 25.23p) to £98,978 (based on a share price of 37.28p as
at 14 April 2023 (the working day prior to the 16 April 2023 vesting date).
5. The benefits figure for Tim Weller for 2022 includes an element of backdated car allowance (£1,342) which was
underpaid in 2021.
6. Georgina Harvey was appointed Senior Independent Director on 1 July 2022 following David Lowden’s appointment
as Chairman. Fees for 2022 reflect the change in role part way through the year.
7. Brian McArthur-Muscroft was appointed as a non-executive director on 1 June 2022 and replaced Matthew Lester as
Chair of the Audit and Risk Committee on 1 July 2022. Fees for 2022 are shown from 1 June 2022 to 31 December
2022 and reflect his appointment as chair of a committee from 1 July 2022.
8. Nneka Abulokwe was appointed as a non-executive director on 1 February 2022. Fees for 2022 are shown from
1 February 2022 to 31 December 2022.
9. Neelam Dhawan is based outside the UK and receives an allowance for physical attendance at a Board meeting.
This is shown in the benefits column.
10. Claire Miles was appointed as a non-executive director on 12 May 2023. Fees for 2023 are shown from 12 May 2023
to 31 December 2023.Claire stepped down from the Board on 31 December 2023 following her appointment as CEO
of Stagecoach. She was paid up to 6 January 2024 in line with the terms of the notice period in her service contract.
These fees will be included in the table in next years’ report.
11. Janine Goodchild was appointed as employee non-executive director on 1 July 2022. Fees for 2022 are shown from
1 July 2022 to 31 December 2022. In addition to her fee as an employee non-executive director, she received earnings
from the Group as an employee amounting to £51,213 for the year ended 31 December 2023. The figures for earnings
for 2022 are disclosed in footnote 9 of the single figure table in the 2022 report. Janine stepped down from the Board
on 31 December 2023.
12. Sir Ian Powell stepped down as Chairman and non-executive director on 10 May 2022. Fees for 2022 are shown from
1 January 2022 to 10 May 2022 and include an element of accrued holiday pay.
13. John Cresswell stepped down as a non-executive director on 31 March 2023. Fees for 2023 are shown from 1 January
2023 to 31 March 2023.
14. Matthew Lester stepped down as a non-executive director on 30 June 2022. Fees for 2022 are shown from 1 January
2022 to 30 June 2022.
15. Lyndsay Browne and Joseph Murphy stepped down as employee directors on 30 June 2022. Fees for 2022 are shown
from 1 January 2022 to 30 June 2022. The figures for earnings for 2022 are disclosed in footnote 16 of the single figure
table in the 2022 report.
Annual bonus for 2023 (audited)
The annual bonus for 2023 (200% of salary for the CEO and 175% of salary for the CFO) was based
on a combination of revenue, profit before tax (PBT) and free cash flow targets (equally weighted
and totalling 80% of maximum bonus) and strategic/individual objectives (20% of maximum bonus).
On a formulaic basis and as set out in the financial targets table below, actual revenue performance
would have resulted in a payout of 11% of the maximum 80% available for the financial measures
(equating to c.18% of salary for the CEO and c.15% of salary for the CFO). However, while revenue
performance was between threshold and target, it was noted that revenue benefited from certain
non-trading items, the exclusion of which would have resulted in a below threshold performance.
PBT and free cash flow performance were below threshold.
In light of financial performance, while progress was made against a number of the strategic/individual
objectives, management recommended to the committee that no management bonuses should be
paid for the year ended 31 December 2023 and the committee accepted this proposal.
Financial targets (80% of the bonus)
Weighting (%
of maximum
bonus)
Threshold target
(25% vests)
Target
(50% vests)
Stretch
(100% vests)
Actual
performance
1
Achievement
against financial
performance
weighting
Revenue 26.67% £2,609m £2,712m £2,848m £2,642m 33% of max
4
PBT 26.67% £58m £73m £87m £56m
2
0%
Free cash flow 26.67% £(90)m £(65)m £(40)m £(115)m 0%
3
Financial measures
bonus payout 80% 11% of max
4
1. The targets above have been adjusted to include Tascor which was previously held in Portfolio and has now been
moved to Public, and to exclude Healthcare Decisions, which has been moved to business exits.
2. In H1 2023 the Group changed its definition of free cash flow, excluding business exits to include the capital element of
finance lease payments and receipts. The above free cash flow targets have been adjusted to align with this.
3. Costs relating to the cyber incident and restructuring have been treated as exceptional in the calculation of
PBT performance.
4. Reduced to £nil following management’s recommendation to the committee that no management bonuses should be
paid for the year ended 31 December 2023.
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Directors’ remuneration report continued
Strategic/individual objectives (20% of the bonus)
The committee received regular performance updates during 2023 in respect of the strategic/
individual objectives and noted the strong progress made against a number of the strategic/individual
objectives set out below (including the growth, net zero and role-based measures). However, as a
result of management’s recommendation not to award bonuses for the year ended 31 December
2023, the committee did not formally assess the strategic targets post year end.
Objectives and weighting
(% of maximum bonus) Threshold Target Maximum
Customer (4%) – cNPS
Deliver improvement in customer
net promoter score (cNPS) for
Capita Group (excluding Portfolio)
by the end of 2023
Maintain score +4 point improvement +8 point improvement
Employee (4%) – Deliver
improvement in the employee
engagement index for Capita
Group by the end of 2023
Maintain the current
gap of 4% to the UK
2023 benchmark
Close the gap to the
UK 2023 benchmark
by 2%
Match the 2023 UK
benchmark
Growth (4%) – Conversion of new
business (both from existing and
new clients)
28% 33% 38%
Net zero (4%) – measured by
reference to the aggregate (sum
of the 2023 emissions for business
travel and energy/property (scope
1 and 2)) tonnes CO
2
reported and,
for target and stretch, supply
chain targets
Aggregate tonnes CO
2
reported is no more
than 5% higher
than the target
Aggregate tonnes CO
2
reported is as per the
agreed plan; and the
supply chain target (as
per the agreed plan) is
achieved or exceeded
Aggregate tonnes CO
2
reported is at least 5%
lower than target; and
the supply chain target
(as per the agreed
plan) is achieved
or exceeded
Cyber (4%) – Deliver improvement
in Capita’s cyber resilience posture
and maturity level during 2023
(CEO only)
Long-term financing (4%)
– Review Capita’s long-term
debt financing position (CFO only)
Restricted Share Awards due to vest in 2024 (audited)
RSAs were granted under the Capita Executive Plan in May 2021 as follows:
Name of director
Number of
shares awarded
Jon Lewis 2,169,100
Tim Weller 1,082,695
Vesting of the 2021 RSAs in May 2024, is subject to: (i) continued employment; (ii) satisfactory
personal performance during the relevant vesting periods; and (iii) a positive assessment of
performance against the following underpins:
• underpin 1: Capita’s TSR over the three years ended 31 December 2023 must be positive for any
RSAs granted to executive directors to vest; and
• underpin 2: the committee must be satisfied with the underlying performance of Capita and that
there have been no environmental, social or governance issues resulting in material reputational
damage. If this is not deemed to be met, the committee will consider a reduction to the final
vesting level of the RSAs (including to nil).
Given that Capita’s share price has fallen over the three years ended 31 December 2023 (ie TSR has
been negative), the 2021 RSAs lapsed in full post year end.
RSAs granted in 2023 (audited)
RSAs were granted under the Capita Executive Plan in March 2023 as follows:
Name of director
Number of
shares awarded
Face value
of RSA
Percentage
of salary
Jon Lewis 2,744,886 £1,122,000 150%
Tim Weller 1,333,300 £545,000 100%
Award levels reflect the continued operation of a TSR underpin for a third year in a row. RSAs will
normally vest after three years from grant subject to: (i) continued employment; (ii) satisfactory
personal performance during the relevant vesting periods; and (iii) a positive assessment of
performance against the following two underpins:
• underpin 1: Capita’s TSR over the three years ending 31 December 2025 must be positive for
any RSAs granted to executive directors to vest; and
• underpin 2: the committee must be satisfied with the underlying performance of Capita and that
there have been no environmental, social or governance issues resulting in material reputational
damage. If this is not deemed to be met, the committee will consider a reduction to the final
vesting level of the RSAs (including to nil).
Once vested, shares received may not normally be sold until at least six years from the grant date
(other than to pay relevant taxes).
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Directors’ remuneration report continued
Directors’ interests and shareholding guidelines (audited)
Executive directors are expected to hold 200% (300% for the CEO) of salary in shares in the Company. The guidelines include shares held beneficially and also shares within the deferred annual bonus (DAB)
plan that have been deferred over the three-year period, RSA awards which are not subject to performance conditions/performance underpins and share awards which have vested but not yet been exercised.
Any shares in the DAB, RSA awards which are not subject to performance conditions/performance underpins and vested but unexercised LTIP awards used for this are calculated net of tax. Share awards
that are subject to performance conditions are not included.
Beneficially
held interests at
31 December 2023
Beneficially
held interests at
31 December 2022
Interests in share
incentive schemes,
awarded without
performance conditions
at 31 December 2023
Interests in share
incentive schemes,
awarded without
performance conditions
at 31 December 2022
Interests in share
incentive schemes,
awarded subject
to performance
conditions/underpins at
31 December 2023
Interests in share
incentive schemes,
awarded subject to
performance conditions
at 31 December 2022
Interests in share
option schemes where
performance/vesting
conditions have been
met but not exercised at
31 December 2023
Interests in share option
schemes where
performance/vesting
conditions have been
met but not exercised at
31 December 2022
Percentage of
shareholding target
requirement at
31 December 2023
1
David Lowden 250,000 150,000 – – – – – – –
Jon Lewis 2,730,255 1,414,538 2,069,612 868,456 8,395,971 7,421,085 265,500 738,877 39%
Tim Weller 818,240 270,689 1,093,053 327,276 4,953,003 3,619,703 – – 28%
Georgina Harvey 6,000 6,000 – – – – – – –
Brian McArthur-Muscroft – – – – – – – – –
Nneka Abulokwe – – – – – – – – –
Neelam Dhawan – – – – – – – – –
Claire Miles
2
20,000 – – – – – – – –
Janine Goodchild
2
– – – – – – – – –
John Cresswell
3
65,500 65,500 – – – – – – –
1. Calculated using the closing share price on 29 December 2023 (22p), being the last working day of 2023.
2. Claire Miles and Janine Goodchild stepped down from the Board on 31 December 2023. Their beneficially held interests are shown as at that date.
3. John Cresswell’s beneficially held interests are shown at the date of his resignation on 31 March 2023.
Between the end of the 2023 financial year and 1 March 2024, Tim Weller acquired 1,642 shares under the Capita share ownership plan, increasing his beneficial interest in ordinary shares of the Company to
819,882. Although Capita does not have a formal policy on hedging shares, executive and non-executive directors attest annually they have not pledged any shares held in the Company.
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Share plans (audited)
DAB plan
A deferred award is the deferred element of an individual’s annual bonus. Any deferral is made
on agross basis into deferred shares or as a (net of tax) restricted share award. The deferred
shares areheld for a period of three years from the date of award. This part is not subject to
performance conditions.
Unvested DAB deferred/restricted awards at 31 December 2023
1
Name of director 2022 award
2
2023 awards
3
Total
Jon Lewis 868,456 1,201,156 2,069,612
Tim Weller 327,276 765,777 1,093,053
1. As a result of no bonus award for 2019 performance and no bonus operating for 2020, there were no deferred bonus
awards in 2020 or 2021.
2. The value of the 2022 deferred award granted on 25 March 2022 was included in the annual bonus value in the 2021
single-figure table (and is included in the comparative figures for 2021 in the table on page 111 of the 2022 report).
This award is due to vest on 25 March 2025.
3. The value of the 2023 deferred award granted on 5 April 2023 was included in the annual bonus value in the 2022
single-figure table (and is included in the comparative figures for 2022 in the table on page 109). This award is due
to vest on 5 April 2026.
Restricted share awards granted in 2021
Name of director 2021 award
Jon Lewis 2,169,100
Tim Weller 1,082,695
As set out on page 111, the TSR underpin for these awards has not been met. The awards therefore
lapsed in full post year end.
Unvested restricted share awards
Name of director 2022 award 2023 award
Jon Lewis 3,481,985 2,744,386
Tim Weller 2,537,008 1,333,300
There are no performance targets attached to the RSAs. However, vesting is subject to: (i) continued
employment; (ii) satisfactory personal performance during the relevant vesting periods; and (iii) a
positive assessment of performance against the following two underpins:
• underpin 1: Capita’s TSR over the three financial years ending prior to the relevant vesting date
must be positive for any RSAs granted to executive directors to vest; and
• underpin 2: the committee must be satisfied with the underlying performance of Capita and that
there have been no environmental, social or governance issues resulting in material reputational
damage. If this is not deemed to be met, the committee will consider a reduction to the final
vesting level of the RSAs (including to nil).
Satisfaction of options
When satisfying awards made under its share plans, the Company uses newly issued, treasury or
purchased shares as appropriate.
Dilution
All awards are made under plans that incorporate the overall dilution limit of 10% in 10 years.
The estimated dilution from existing awards, including executive and all-employee share awards,
was approximately 3.82% of the Company’s share capital at 31 December 2023.
Executive directors’ service agreements
Executive directors Date of joining the Company Notice period
Jon Lewis 1 December 2017 12 months
Tim Weller 12 May 2021 12 months
Non-executive directors’ terms of engagement
Non-executive directors Date of joining the Board Expiry date of current appointment
David Lowden 1 January 2021 9 May 2025
Georgina Harvey 1 October 2019 1 July 2025
Brian McArthur-Muscroft 1 June 2022 31 May 2025
Nneka Abulokwe 1 February 2022 31 January 2025
Neelam Dhawan 1 March 2021 28 February 2027
Claire Miles
1
12 May 2023 31 December 2023
John Cresswell
2
17 November 2015 31 March 2023
1. Claire Miles stepped down from the Board on 31 December 2023.
2. John Cresswell stepped down from the Board on 31 March 2023.
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Directors’ remuneration report continued
Board changes
Jon Lewis retired as CEO of Capita and stepped down from the Board on 17 January 2024 although
he remains an employee until July 2024 to ensure an orderly transition.
Post stepping down from the Board, Jon will continue to receive a base salary, pension and benefits
up to the end of his notice period in July 2024. Jon will not be eligible to participate in the Group
annual bonus plan for 2024 although he will be eligible to receive an annual bonus in relation to his
below Board employment, subject to achievement of performance targets, which will be pro-rated
to the date of cessation of employment (or commencement of garden leave if relevant). Jon will not
be entitled to future RSAs.
In respect of Jon’s share awards:
• Deferred Annual Bonus (DAB): 868,456 shares granted in 2022 in respect of the 2021 annual bonus
and 1,201,156 shares granted in 2023 in respect of the 2022 annual bonus will continue to vest at
the normal vesting dates.
• Long Term Incentive Plan (LTIP): 265,500 shares which vested under the 2020 LTIP will need to be
retained until the expiry of the relevant two year post vesting holding periods.
• Restricted Share Awards (RSAs): 3,481,985 shares granted under the 2022 RSA and 2,744,886
shares granted under the 2023 RSA will continue to vest on the normal vesting dates, subject to the
relevant performance underpins being met and reduced for time pro-rating. To the extent that any
RSAs vest in the future, reflecting the nature of Jon’s departure (ie a good leaver due to retirement
after the completion of his 12-month notice period) and consistent with provision 36 of the Code
and market practice, the net of tax shares will need to be retained for two years post vesting rather
than the three years applying to normal vestings.
For 24 months following cessation, Jon will be required to retain the lower of Capita plc shares equal
to 300% of base salary and actual shares held (excluding shares acquired from own purchases and
any shares received from awards granted prior to the 2020 AGM).
Jon will be reimbursed for legal fees in connection with his retirement.
Capita will make no payment to Jon by way of compensation for loss of office on retirement from
theBoard.
Appointment of Adolfo Hernandez
Adolfo Hernandez was appointed CEO and executive director on 17 January 2024 on a base salary of
£700,000 which is lower than that of his predecessor (£748,000). Adolfo’s annual bonus maximum is
200% of salary (pro-rated for 2024) which is subject to performance targets and deferral requirements
in line with policy. He will receive an RSA in 2024 up to a maximum of 125% (ie lower than his
predecessor at 150%). Benefits and pension are in line with policy which is unchanged in 2024.
As part of agreeing Adolfo Hernandez’s recruitment and in line with Capita’s policy, the committee
considered the value of share awards Adolfo would forfeit in order to join Capita. The committee was
satisfied that it would be fair and reasonable to compensate Adolfo Hernandez for part of his loss by
granting him an award over Company shares on the terms set out below, pursuant to Listing Rule
9.4.2(2) (the Buy-out Award).
The Buy-Out Award is expected to be granted to Adolfo Hernandez in March 2024 and will be a
conditional award over a maximum of c.12m shares that will vest in five tranches, subject to continued
service, as follows:
Tranche Shares under award Normal vesting date
1 2,509,709 15 July 2024
2 2,497,467 15 January 2025
3 1,897,585 15 July 2025
4 1,885,343 15 January 2026
5 3,256,501 15 July 2026
Total 12,046,605
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Directors’ remuneration report continued
Consistent with the awards forfeited, no performance conditions will apply and the vesting dates are
no earlier than the vesting dates of the forfeited share awards being compensated. Dividend equivalent
rights do not attach to the Buy-out Award. Clawback may be applied until the fifth anniversary of grant.
More broadly, the terms of the Capita Executive Plan 2021 apply to the Buy-out Award (such as
provisions relating to good leaver treatment, change of control treatment, malus and clawback and
adjustments), except as described below:
• The Buy-out Award is not pensionable and may not be settled with new issue or treasury shares.
• The individual and plan limits, and the restrictions relating to when grants may be made, in the
Capita Executive Plan 2021 do not apply to the Buy-out Award.
• The provisions relating to how award terms may be amended do not apply. However, the
Company confirms the number of shares under the Buy-out Award, the basis for determining
Adolfo Hernandez’s entitlement to shares and the terms relating to adjustment on any capitalisation
issue, rights issue or open offer, subdivision or consolidation or reduction of capital or any other
variation of capital of the Company will not be altered to Adolfo Hernandez’s advantage without
the prior approval of shareholders in a general meeting (except for minor amendments to benefit
administration, to take account of a change in legislation or to obtain or maintain favourable tax,
exchange control or regulatory treatment for Adolfo Hernandez or the Capita group).
Other Board changes
John Cresswell stepped down from the Board on 31 March 2023. No payments were made or
are payable outside of his normal annual fees up to cessation. Claire Miles stepped down from the
Board on 31 December 2023 following her appointment as CEO of Stagecoach. She was paid up to
6 January 2024 in line with the terms of the notice period in her service contract. These fees will be
included in next years’ report. Janine Goodchild stepped down from the Board as employee non-
executive director on 31 December 2023. No payments were made or are payable outside of her
normal annual fee up to cessation. She remains an employee and so continues to receive
remuneration from the Group in this respect.
Payments to former directors (audited)
No payments were made to former directors.
External appointments for executive directors
During the year Jon Lewis served as a non-executive director for Equinor ASA. He received and
retained fees of NOK854,594 for the period from 1 December 2022 to 30 November 2023. Tim
Weller was a non-executive director of The Carbon Trust until mid-September 2023 for which he
received £11,970 up to his resignation date. Tim was appointed as an independent council member
of the University of Exeter in August 2023 for which he receives no remuneration. The committee
considers that such roles can benefit Capita through broadening knowledge andexperience.
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Directors’ remuneration report continued
Percentage change in remuneration levels
The table below shows the change in base compensation, benefits and annual bonus for the Board directors in the 2020 to 2023 financial years (excluding directors who left Capita before 2022 details for
which are set out in previous remuneration reports), compared with the average for all employees of the Company (Capita plc):
2023 2022 2021 2020
Base
salary/fees
Taxable
benefits
13
Annual
bonus
Base
salary/fees
Taxable
benefits
13
Annual
bonus
Base
salary/fees
Taxable
benefits
13
Annual
bonus
Base
salary/fees
Taxable
benefits
13
Annual
bonus
Executive directors
1
Jon Lewis
2
0% 8.3% -100% 3.2% -4.5% 150% 14.3% 5.1% 100%
2
-12.5% -36.9% –
Tim Weller
3
0% -3.8% -100% 0% 23% 132% – – – – – –
Non-executive directors
1
David Lowden
4
0% 123.6% – 286.7% 100% – – – – – – –
Georgina Harvey
5
0% 100% – 14% – – 14.3% – – -12.5% – –
Brian McArthur-Muscroft
6
0% 100% – – – – – – – – – –
Nneka Abulokwe
6
0% 194% – – – – – – – – – –
Neelam Dhawan
7
0% -66.7% – 0% 540% – – – – – – –
Claire Miles
8
– – – – – – – – – – – –
Janine Goodchild
6
0% 100% – – – – – – – – – –
John Cresswell
9
0% 100% – 0% – – 14.3% – – -12.5% – –
Sir Ian Powell
10
– – – 0% 100% – 14.3% – – -12.5% -100% –
Matthew Lester
10
– – – 0% – – 13.9% – – -12.5% – –
Lyndsay Browne
11
– – – 0% – – 14.3% – – -12.5% – –
Joseph Murphy
11
– – – 0% – – 14.3% – – -12.5% – –
Employee population
12
5.6% 0.1% -100% 5% 7.4% 38.1% 2.8% 4.4% 123. 2% 5.5% 20.6% -35.2%
1. The percentage change shown for the directors is based on the single figure information disclosed on page 109. The increase in salary/fees shown as the comparative for 2021 is due to the voluntary reduction taken by executive and non-executive
directors in 2020 in response to Covid-19.
2. Jon Lewis did not receive a bonus in 2020 as the bonus plan was cancelled in response to Covid-19. The increase in 2021 is therefore shown as 100%. As no bonus was awarded in respect of the year ended 31 December 2023 the decrease is
shown as -100%.
3. Tim Weller was appointed to the Board on 12 May 2021. Comparative figures for 2021 are therefore unavailable. His salary, benefits and annual bonus for 2021 have been annualised to show an approximate percentage change between 2021
and 2022. The increase in benefits in 2022 is due to a backdated payment for car allowance (£1,342) which was underpaid in 2021. As no bonus was awarded in respect of the year ended 31 December 2023 the decrease is shown as -100%.
4. David Lowden was appointed Chairman in May 2022. His fee for 2022 has been annualised to show the percentage change between 2021 and 2022 following his change in role which has a significantly increased time commitment and associated
fee. His fee for 2023 reflects that there has been no change in his annual fee for the Chairmanship since 2022. David was appointed to the Board during 2021, comparative figures for 2021 are therefore unavailable.
5. Georgina Harvey was appointed Senior Independent Director in July 2022. Her fee for 2022 has been annualised to show the percentage change between 2021 and 2022 following her change in role. Her fee for 2023 reflects that there has been
no change in her annual fee for being a non-executive director, chair of the remuneration committee and Senior Independent Director since 2022.
6. Brian McArthur-Muscroft, Nneka Abulokwe and Janine Goodchild were appointed to the Board during 2022. Comparative figures for 2021 are therefore unavailable. Fees for 2022 have been annualised to show that there has been no increase in
their annual fee in 2023.
7. Neelam Dhawan was appointed to the Board during 2021. Comparative figures for 2021 are therefore unavailable. Her fee for 2021 has been annualised to show the percentage change since 2021.The increase in benefits in 2022 is due to
additional fees payable for physical attendance at board meetings as Neelam is based outside the UK. The reduction in benefits in 2023 is due to fewer meetings attended in person.
8. Claire Miles was appointed to the Board during 2023. Comparative figures for 2023 are therefore unavailable.
9. John Cresswell stepped down from the Board during 2023. For comparative purposes, his 2023 fees have been annualised to show the percentage change since 2022.
10. Sir Ian Powell and Matthew Lester stepped down from the Board during 2022. For comparative purposes, their 2022 fees have been annualised to show the percentage change between 2021 and 2022.
11. Lyndsay Browne and Joseph Murphy stepped down from the Board during 2022. For comparative purposes, their 2022 fees have been annualised to show the percentage change (in fees as a non-executive employee director) between 2021 and2022.
12. The employee population information shown is for UK employees employed in the Capita plc entity.
13. Taxable benefits were £0 in 2021 but £839 and £16 for David Lowden and Sir Ian Powell in 2022 respectively. The increases are therefore shown as 100%. Taxable benefits were £0 in 2022 but £567, £567 and £1,021 for Georgina Harvey, Brian
McArthur-Muscroft and Janine Goodchild in 2023 respectively. The increases are therefore shown as 100%.
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Directors’ remuneration report continued
CEO pay ratio
The table below compares the single total figure of remuneration for the CEO with that of the Group’s
employees who are paid at the 25
th
percentile (lower quartile), 50
th
percentile (median) and 75
th
percentile (upper quartile) of its UK employee population.
Year Method
25
th
percentile
pay ratio
50
th
percentile
pay ratio
75
th
percentile
pay ratio
2023 Option B 33:1 23:1 17:1
2022
1
Option B 78:1 57:1 37:1
2021
1
Option B 49:1 38:1 24:1
2020
1
Option B 61:1 44:1 29:1
2019 Option B 41:1 25:1 14:1
1. In accordance with the relevant disclosure regulations, the 2020, 2021 and 2022 CEO single figures and associated pay
ratios have been updated to reflect LTIP values based on the share prices at the relevant vesting dates.
The 2023 remuneration figures for the employee at each quartile were determined with reference
to the financial year ending 31 December 2023. Due to the complexity of Capita’s corporate and
workforce structure, Option B was used to calculate these figures. The committee believes that
this approach provides a fair representation of the CEO to employee pay ratios and is appropriate
in comparison to alternative methods, balancing the need for statistical accuracy with internal
operational constraints.
A full-time and full-year equivalent total pay and benefits figure for 2023 was calculated for each
quartile point employee using the single figure methodology. This was also sense checked against a
sample of employees with hourly pay rates either side of the identified individuals to ensure that the
appropriate representative employee was selected. No adjustments were made to the total pay and
benefits figures (other than the approximate up-rating of pay elements where appropriate to achieve
full-time and full-year equivalent values) and no components of pay have been omitted.
The table below sets out the 2023 full-time equivalent salary and total pay and benefits for the three
identified quartile point employees:
2023
25
th
percentile
(P25)
Median
(P50)
75
th
percentile
(P75)
Salary £23,112 £32,659 £46,592
Total pay and benefits £24,586 £34,292 £48,372
The committee recognises that the 2023 ratios are significantly lower than last year (c.55% decrease)
for the following reasons:
• No bonus was paid in respect of 2023 (this compares to an annual bonus award of £897,600
for 2022).
• No RSA will vest in 2024 (this compares to a value of £98,978 in respect of the 2020 LTIP which
vested in 2023).
The pay ratios have fluctuated since reporting commenced in 2019, primarily as a result of variability
in incentive outcomes for the CEO.
Capita is committed to offering its employees a competitive remuneration package. Base salaries
for employees, including our executive directors, are determined with reference to a range of factors
including market practice, experience and performance in role. Due to the nature of his role, the
CEO’s remuneration package has higher weighting on performance-related pay (including the annual
bonus and historical LTIP/current RSAs) compared to the majority of the workforce. This means
the pay ratios are likely to fluctuate depending on the outcomes of incentive plans in each year.
The committee also recognises that, due to the nature of the Company’s business and the flexibility
permitted within the regulations for identifying and calculating the total pay and benefits for employees,
the ratios reported above may not be comparable to those reported by other companies. For these
reasons, the committee considers that the median CEO pay ratio is representative of the
UKemployee base.
Gender pay gap reporting
The Company’s 2023 gender pay gap data will be available on the government website
https://gender-pay-gap.service.gov.uk from April 2024.
Relative importance of the spend on pay
The table below shows the spend on employee costs in the 2023 and 2022 financial years, compared
with dividends:
2023
£m
2022
£m
%
change
Employee costs 1,636.5 1,758.1 -6.9%
Dividends – – –
Capita plc Annual Report and Accounts
117
Corporate governance

Directors’ remuneration report continued
Performance graph and CEO pay
The following chart compares the value of an investment of £100 in the Company’s shares with
an investment of the same amount in the FTSE All-Share Index and the FTSE 350 Support Services
Index over the past 10 years, assuming that all dividend income is reinvested. The FTSE 350 Support
Services has been chosen as the appropriate comparator as Capita is a constituent of this index.
The total remuneration figures for the CEO for 2023 and the previous nine years are shown in the
table below based on the single-figure methodology.
The annual bonus payout and LTIP/RSA vesting percentage (in respect of the estimated/actual value
at vesting in respect of the year ending just prior to the vest date) are also shown for this year.
Year
CEO – single
figure of total
remuneration
Annual bonus
(vs max
opportunity)
Long-term
incentive (vs max
opportunity)
2023 £804,875 0% 0%
2022 £1,799,964 60% 15%
2021 £1,185,415 24.8% 12.5%
2020 £1,196,582 0% 60%
2019 £789,678 0% 0%
2018 £2,014,209 85% 0%
2017 £741,376 0% 0%
2016 £682,958 0% 0%
2015 £2,520,428 50% 71.4%
2014 £2,558,998 100% 67.2%
Note: the vesting percentages for the long-term incentives are averaged between the LTIP and
the DAB vesting rates for 2015. For 2014, this is the actual vesting for the LTIP as there is no DAB
maturity in 2014. Figures for 2014–2016 are based on remuneration for Andy Parker. Figures for 2017
are based on remuneration paid to Andy Parker as CEO until 15 September 2017, to Nick Greatorex
as interim CEO from 16 September 2017 to 30 November 2017, and to Jon Lewis as CEO from
1 December 2017. Where relevant, the CEO single figures have been updated to reflect the value
of the LTIPs based on the share price at the vesting date (rather than an estimate of the share price
atvesting).
Approval of the directors’ remuneration report
The directors’ remuneration report was approved by the Board on 5 March 2024.
Georgina Harvey
Chair
Remuneration Committee
5 March 2024
0
50
100
150
200
250
31 Dec
2023
31 Dec
2022
31 Dec
2021
31 Dec
2020
31 Dec
2019
31 Dec
2018
31 Dec
2017
31 Dec
2016
31 Dec
2015
31 Dec
2014
01 Jan
2014
FTSE 350 Support Services IndexCapita Group FTSE All Share Index
Total shareholder return rebased at 100
Source: Datastream (a LSEG product)
Capita plc Annual Report and Accounts
118
Corporate governance

Directors’ report
Directors’ report
The Directors present their report, together with the audited accounts for the 52 weeks ended 31 December 2023.
Group activities
Capita exists to create better outcomes for all its
stakeholders. Our business model is based upon
being a leading provider of business process
services driven by data, technology and people.
We deliver innovative solutions to simplify the
connections between businesses and customers,
and between government and citizens. We partner
with clients to transform their businesses and
services. A review of the development of the
Group and its business activities during the year
is contained in the strategic report on pages 1 to
64. The operational and financial performance of
its divisions are detailed on pages 14 to 21.
Results and dividends
The Group’s reported loss before tax amounted to
£(106.6m) from continued operations (2022 profit
before tax: £61.4m). As previously announced,
the directors do not recommend the payment of
a final dividend (2022: nil). The total dividend for
the year was nil (2022: nil). The employee benefit
trust, which holds shares for the purpose of
satisfying employee share scheme awards, has
waived its right to receive future dividends on
shares held within the trust.
Share capital
At 5 March 2024, the number of ordinary shares
of 2 1/15 p each in issue, fully paid up and
quoted on the London Stock Exchange is
detailed in the table below:
Number of shares
% of issued
share capital
Issued shares 1,701,273.523 100%
Treasury shares 0 0%
Total voting rights 1,701,273,523 100%
Employee Benefit
Trust (EBT) shares
1
16,762,775 1%
1. Shares held in the EBT are used for satisfying employee
share options.
During the year ended 31 December 2023,
17,000,000 new ordinary shares were issued.
These shares were allotted to the EBT in order
that the EBT can satisfy the exercise of options
pursuant to the Company’s share schemes.
Options exercised pursuant to the Company’s
share schemes were satisfied by the transfer of
9,496,440 shares from the EBT. No new ordinary
shares have been allotted under the Company’s
share option schemes since the end of the
financial year to the date of this report. 41,137
shares have been allotted under the Company’s
share option schemes since the end of the
financial year to the date of this report.
The share price at close on 29 December 2023
was 22p. The highest share price in the year
was 44.86p and the lowest was 15.28p.
The Company was authorised by shareholders at
the 2023 AGM to replace the existing authority
(as granted by shareholders at the Annual General
Meeting held on 10 May 2022) for Directors to allot
new shares that represent not more than one
third of the issued share capital of the Company.
No shares were allotted under that authority
during the financial year. The Company is seeking
to renew this authority at the forthcoming AGM,
within the limits set out in the notice of that
meeting. The Company is seeking to renew
the authority at the forthcoming AGM, within
the limits set out in the notice of that meeting
and in line with the recommendations of the
Pre-Emption Group.
On 11 May 2023, shareholders granted authority
for the Company to purchase up to 168,427,352
ordinary shares. This authority will expire at the
conclusion of the 2024 AGM and the Board will
seek approval to renew this authority at the 2024
AGM. No shares were purchased during 2023.
Rights and restrictions attaching
to shares
Under the Company’s Articles, holders of
ordinary shares are entitled to participate in the
receipt of dividends pro rata to their holding. The
Board may propose and pay an interim dividend
and recommend a final dividend in respect of any
accounting period out of the profits available for
distribution under English law. A final dividend
may be declared by the shareholders in general
meeting by ordinary resolution, but no dividend
may be declared in excess of the amount
recommended by the Board.
At any general meeting, a resolution put to vote
shall be decided on a poll, and every member who
is present in person or by proxy shall have one
vote for every share of which they are the holder.
No person holds securities in the Company
carrying special rights with regard to control
of the Company. The Company is not aware of
any agreements between holders of securities
that may result in restrictions on the transfer
of securities or on voting rights.
Restrictions on transfer of shares
The Company’s Articles allow directors, in
their absolute discretion, to refuse to register the
transfer of a share in certificated form unless the
instrument of transfer is lodged, duly stamped, at
the registered office of the Company, or at such
other place as the directors may appoint and
(except in the case of a transfer by a recognised
person where a certificate has not been issued
in respect of the share) is accompanied by the
certificate for the share to which it relates and
such other evidence as the directors may
reasonably require to show the right of the
transferor to make the transfer. They may also
refuse to register any such transfer where it is in
favour of more than four transferees or in respect
of more than one class of shares.
The directors may refuse to register a transfer of
a share in uncertificated form in any case where
the Company is entitled to refuse (or is exempted
from the requirement) under the Uncertificated
Securities Regulations to register the transfer.
Capita plc Annual Report and Accounts
119
Corporate governance

Directors’ report continued
Major shareholders
Information provided to the Company by major shareholders pursuant to the FCA’s Disclosure
Guidance and Transparency Rules (DTR) are published via a Regulatory Information Service.
At 31 December 2023, the Company had received notification of the following interests in voting
rights pursuant to Chapter 5 of the DTR.
Shareholder Number of shares
% of voting rights at
31 December 2023
Number of shares
direct
Number of shares
indirect
Schroders plc 323,226,980 19.00 – 323,226,980
RWC Asset Management LLP 272,035,310 15.99 272,035,310 –
Marathon Asset Management Limited 81,375,445 4.83 – 81,375,445
1. Percentages are shown as a percentage of the Company’s total voting rights as at the date the Company was notified of
the change in holding.
On 2 February 2024, notification in accordance with the DTRs was received from Schroders plc that it
held indirectly 323,598,246 shares, being 19.02% of voting rights.
At 5 March 2024, no further notifications had been received under the DTRs in relation to interests in
the Company’s shares.
Powers of directors
The business of the Company is managed by the directors who are subject to the provisions of the
Companies Act 2006, the Articles of the Company and any directions given by special resolution,
including the Company’s power to repurchase its own shares.
The Company’s Articles may only be amended by a special resolution of the Company’s shareholders.
Change of control
All the Company’s share schemes contain provisions in relation to a change of control. Outstanding
options and awards would normally vest and become exercisable on a change of control, subject to
the satisfaction of any performance conditions at that time.
Capita has borrowing facilities provided by banks
and has issued loan notes to financial investors.
The borrowing facilities contain change of control
provisions under which the banks may require
immediate repayment in full on a change of control
of Capita plc. The loan notes issued by Capita
contain similar change of control provisions which
are likely to require the Group to offer to prepay
the notes in full if there is a change in control
of Capita plc.
There are a number of significant client agreements
which contain provisions relating to change of
control, which in some cases could present a
right of termination of the contract.
Appointment, reappointment, and
retirement of directors
Directors are appointed and may be removed
in accordance with the Articles of Association
(Articles) of the Company and the provisions of
the Companies Act 2006. All directors are subject
to election at the first AGM after their appointment
and, in accordance with Provision 18 of the
Code, to annual re-election thereafter. A resolution
to elect or re-elect each director will therefore be
proposed at the AGM on 21 May 2024.
No person, other than a director retiring at the
meeting, shall be appointed or reappointed a
director of the Company at any general meeting
unless they are recommended by the directors.
No person, other than a director retiring at
a general meeting as set out above, shall be
appointed or reappointed unless between seven
and 35 days’ notice, executed by a member
qualified to vote on the appointment or
reappointment, has been given to the Company
of the intention to propose that person for
appointment or reappointment, together with
notice executed by that person of his/her
willingness to be appointed or reappointed.
Directors’ indemnities
As permitted by its Articles, the Company
has indemnified each director in respect of
certain liabilities and costs they might incur in the
execution of their duties as a director. Qualifying
third party indemnity provisions (as defined in
section 234 of the Companies Act 2006) were in
force during the year and continue to remain in
force. The directors’ indemnities will be available
for inspection at the AGM together with directors’
service contracts.
Conflicts of interests
Under the Companies Act 2006, directors are
under an obligation to avoid situations in which
their interests can or do conflict, or may possibly
conflict, with those of the Company. A policy and
procedures are in place for identifying, disclosing,
evaluating and managing conflicts so that Board
decisions are not compromised by a conflicted
director. The Company’s Articles give the Board
power to authorise matters that give rise to actual
or potential conflicts. Procedures are reviewed
annually to ensure they are operating effectively.
All conflicts of interest are reviewed annually by
the Board and included in year-end attestations
by the directors. None of the directors of the
Company has a material interest in any contract
with the Company or its subsidiary undertakings,
other than their contracts of employment.
Capita plc Annual Report and Accounts
120
Corporate governance

Directors’ report continued
Employment policies, employee
development and engagement
Information on the Group’s employment policies,
including for disabled persons, and information
on employee development, consultation and
engagement is included in the responsible
business sections on pages 32 to 37 and
the engaging with our stakeholders section
on page 45.
Political donations
The Group did not make any political donations
or incur any political expenditure during the year
(2022: nil).
Greenhouse gas emissions
Details of the Group’s greenhouse gas (GHG)
emissions, including metrics and methodology, are
set out on pages 40 to 42 of the strategic report.
Going concern and viability statement
The viability statement is detailed in full on
page 64. The directors have assessed the
viability of the Group over the three-year period
to 31 December 2026, taking into account the
Group’s current position and the potential impact
of the principal risks set out in the strategic
report. Based on this assessment, the directors
have a reasonable expectation that the Group
and Parent Company will be able to continue
in operation and meet their liabilities as they fall
due over the period of the viability assessment.
The Group’s business activities, together with
the factors likely to affect its future development,
performance and position are set out in the
strategic report on pages 2 to 64. The financial
position of the Group, its cash flows, liquidity
position and borrowing facilities are described
on pages 22 to 28. In addition, section 4 in
the financial statements on pages 193 to 206
includes the Group’s objectives, policies and
processes for managing its capital, its financial
risk management objectives, details of its financial
instruments and hedging activities, and its
exposures to credit risk and liquidity risk.
In determining the appropriate basis of preparation
of the financial statements for the year ending
31 December 2023, the directors are required
to consider whether the Group can continue in
operational existence for the foreseeable future,
being a period of at least 12 months from the
date of approval of the financial statements.
The Board monitors closely the Group’s funding
position throughout the year, including monitoring
compliance with covenants and available facilities
to ensure it has sufficient headroom to fund
operations. In addition, to support the going
concern assumption, the Board conducts a robust
assessment of the Group’s financial projections
for the foreseeable future, considering also the
committed facilities available to the Group. The
Board has considered risks to the projections
under a severe but plausible downside. This
includes the potential adverse financial impacts
resulting from the following risks: revenue growth
falling materially short of plan; operating profit
margin expansion not being achieved; targeted
cost savings delayed and/or not delivered;
additional inflationary cost impacts which
cannot be passed on to customers; unforeseen
operational issues leading to contract losses
and cash outflows, volatility in interest rates;
non-availability of the Group’s non-recourse
trade receivables financing facility; and
unexpected financial costs linked to incidents
such as data breaches and/or cyber-attacks.
The Board has considered the mitigations, under
the direct control of the Group, that could be
implemented to address the financial impact
should these risks materialise. These mitigations
include reductions or delays in capital investment,
and substantially reducing (or removing in full)
bonus and incentive payments. Taking these
mitigations into account, the Group’s financial
forecasts, in a severe but plausible downside
scenario, demonstrate sufficient liquidity
headroom and compliance with all debt
covenant measures throughout the going
concern period to 30 June 2025.
Reflecting the continued benefits from the
transformation programme delivered over the
last few years and the Portfolio non-core business
disposal programme completed in January 2024,
coupled with the Board’s ability to implement the
above mitigations should the severe but plausible
downside materialise, the Board has concluded
that the Group and Parent Company will continue
in operation and meet their liabilities as they fall
due over the period to 30 June 2025.
Accordingly, the directors have formed the
judgement that it is appropriate to prepare the
consolidated financial statements on the going
concern basis. The Board’s assessment is set
out in more detail in Section 1 of the consolidated
financial statements.
Read more in the auditor’s report on pages 125 to 146
Capita plc Annual Report and Accounts
121
Corporate governance

Directors’ report continued
Directors’ statement of disclosure of
information to the auditor
Each of the persons who is a director at the date
of approval of this Annual Report confirms that:
• so far as the Director is aware, there is no
relevant audit information of which the
Company’s auditor is unaware: and
• the Director has taken all the steps that he/she
ought to have taken as a Director in order to
make himself/herself aware of any relevant
audit information and to establish that the
Company’s auditor is aware of that information.
This confirmation is given and should be
interpreted in accordance with the provisions
of section 418 of the Companies Act 2006.
Anti-bribery and corruption
Capita has a Group-wide anti-bribery and
corruption policy, which complies with the
Bribery Act 2010. Procedures are reviewed
periodically to ensure continued effective
compliance in Group businesses around
theworld.
Election to apply FRS 101 – reduced
disclosure framework
The Parent Company continues to apply UK
GAAP in the preparation of its individual financial
statements in accordance with FRS 101 and
these are contained in section 7 of the financial
statements on pages 218 to 228. FRS 101
applies IFRS as adopted by the UK with certain
disclosure exemptions. No objections have been
received from shareholders.
Management report
For the purposes of Rule 4.1.5R(2) and Rule
4.1.8R of the DTRs, this directors’ report and
the strategic report on pages 1 to 64 comprise
the management report.
Strategic report
The Company is required to prepare a fair review
of the business of the Group during the financial
year ended 31 December 2023 and of the
position of the Group at the end of the financial
year, and a description of the principal risks and
uncertainties facing the Group (known as a
strategic report).
The purpose of the strategic report is to enable
shareholders to assess how the directors have
performed their duty under section 172 of the
Companies Act 2006 (duty to promote the
success of the Company). The Company has
chosen, in accordance with section 414C (11)
of the Companies Act 2006, and as noted in this
Directors’ report, to include certain matters in its
strategic report that would otherwise be required
to be disclosed in this Directors’ report.
The information that fulfils the requirements
of the strategic report can be found on pages
2 to 64, and includes an indication of future
likely developments in the Company, details of
important events and the Company’s business
goals, strategy and business model.
Additional disclosures
Other information that is relevant to the Directors’ report, and which is incorporated by reference into
this report, can be located as follows:
Pages
Events after the balance sheet date 217
Future developments 8 to 21
Research and development 22 to 28
Financial instruments and financial risk management 193 to 206
Greenhouse gas emissions 41 and 42
Corporate governance report, including the corporate governance statement as required by
Rule 7.2.1 of the Financial Conduct Authority’s Disclosure Guidance and Transparency Rules. 72 to 78
Colleague engagement 45
Stakeholder engagement 45 to 47
Section 172 statement 45 to 48
For the purposes of LR 9.8.4R, and 9.8.6R the following information is located as set out below:
Listing Rule Subject Pages
9.8.4 (1) Capitalisation of interest 201
9.8.4 (12–13) Shareholder waiver of dividends 119
9.8.6(8) Climate-related financial disclosures consistent with TCFD 41 to 44 50 to 56
Capita plc Annual Report and Accounts
122
Corporate governance

Directors’ report continued
Statement of Directors’ responsibilities
in respect of the annual report and the
financial statements
The directors are responsible for preparing the
Annual Report and Accounts and the Group
and parent Company financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare
Group and parent Company financial statements
for each financial year. Under that law they are
required to prepare the Group financial statements
in accordance with UK-adopted international
accounting standards and applicable law and have
elected to prepare the parent Company financial
statements in accordance with UK accounting
standards and applicable law, including FRS 101
Reduced Disclosure Framework.
Under company law the directors must not
approve the financial statements unless they are
satisfied that they give a true and fair view of the
state of affairs of the Group and Parent Company
and of the Group’s profit or loss for that period.
In preparing each of the Group and parent
Company financial statements, the directors
are required to:
• select suitable accounting policies and then
apply them consistently;
• make judgements and estimates that are
reasonable, relevant and reliable and, in
respect of the parent Company financial
statements only, prudent;
• for the Group financial statements,
state whether they have been prepared in
accordance with UK-adopted international
accounting standards;
• for the parent Company financial statements,
state whether applicable UK accounting
In accordance with Disclosure Guidance and
Transparency Rule (DTR) 4.1.16R, the financial
statements will form part of the annual financial
report prepared under DTR 4.1.17R and 4.1.18R.
The auditor’s report on these financial statements
provides no assurance over whether the annual
financial report has been prepared in accordance
with those requirements.
Responsibility statement of the directors in
respect of the annual financial report
We confirm that to the best of our knowledge:
• the financial statements, prepared in
accordance with the applicable set of
accounting standards, give a true and fair
view of the assets, liabilities, financial position
and profit or loss of the company and the
undertakings included in the consolidation
taken as a whole; and
• the strategic report includes a fair review
of the development and performance of the
business and the position of the issuer and
the undertakings included in the consolidation
taken as a whole, together with a description
of the principal risks and uncertainties that
they face.
We consider the annual report and accounts,
taken as a whole, is fair, balanced and
understandable and provides the information
necessary for shareholders to assess the
Group’s position and performance, business
model and strategy.
By order of the Board
Claire Denton
Chief General Counsel and Company Secretary
5 March 2024
standards have been followed, subject to any
material departures disclosed and explained
in the parent Company financial statements;
• assess the Group and parent Company’s
ability to continue as a going concern,
disclosing, as applicable, matters related
to going concern; and
• use the going concern basis of accounting
unless they either intend to liquidate the Group
or the Parent Company or to cease operations,
or have no realistic alternative but to do so.
The directors are responsible for keeping adequate
accounting records that are sufficient to show
and explain the parent Company’s transactions
and disclose with reasonable accuracy at any
time the financial position of the parent Company
and enable them to ensure that its financial
statements comply with the Companies Act
2006. They are responsible for such internal
control as they determine is necessary to enable
the preparation of financial statements that are
free from material misstatement, whether due to
fraud or error, and have general responsibility
for taking such steps as are reasonably open to
them to safeguard the assets of the Group and
to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the
directors are also responsible for preparing
a strategic report, Directors’ report, Directors’
remuneration report and corporate governance
statement that complies with that law and
those regulations.
The directors are responsible for the maintenance
and integrity of the corporate and financial
information included on the company’s website.
Legislation in the UK governing the preparation
and dissemination of financial statements may
differ from legislation in other jurisdictions.
Capita plc Annual Report and Accounts
123
Corporate governance

Financial statements
Financial
statements
125 Independent auditor’s report
147 Consolidated financial statements
153 Notes to the consolidated
financial statements
218 Company financial statements
220 Notes to the Company
financial statements
229 Additional information
229 Shareholder information
230 Alternative performance
measures (APMs)
Capita plc Annual Report and Accounts
124

KPMG LLP’s Independent Auditor’s Report
KPMG LLP’s Independent Auditor’s Report
1. Our opinion is unmodified
In our opinion:
• the financial statements of Capita plc give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 December 2023, and of the Group’s loss for the year then ended;
• the Group financial statements have been properly prepared in accordance with UK-adopted international accounting standards;
• the Parent Company financial statements have been properly prepared in accordance with UK accounting standards, including FRS 101 Reduced Disclosure Framework; and
• the Group and Parent Company financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
What our opinion covers
We have audited the Group and Parent Company financial statements of Capita plc (“the Company”) for the year ended 31 December 2023 included in the Annual Report, which comprise:
Group (Capita plc and its subsidiaries) Parent Company (Capita plc)
The consolidated income statement, consolidated statement of comprehensive income, consolidated
balance sheet, consolidated statement of changes in equity, consolidated cash flow statement and
related notes, including the accounting policies in sections 1 to 6 to the Group financial statements.
The company balance sheet, company statement of changes in equity and the related notes, including
the accounting policies in section 7 to the Parent Company financial statements.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities are described below. We believe that the audit evidence we have
obtained is a sufficient and appropriate basis for our opinion. Our audit opinion and matters included in this report are consistent with those discussed and included in our reporting to the Group Audit and
Risk Committee (“ARC”).
We have fulfilled our ethical responsibilities under, and we remain independent of the Group in accordance with, UK ethical requirements including the FRC Ethical Standard as applied to listed public
interest entities.
To the members of Capita plc
Capita plc Annual Report and Accounts
125
Financial statements

KPMG LLP’s Independent Auditor’s Report continued
2. Overview of our audit
Factors driving our
view of risks
Going concern remains a Key audit matter. The Group continued its Portfolio disposal programme
during FY23, and completed it with the final disposal in January 2024. Refinancing of debt
also occurred in FY23. However, the Group generated a significant cash outflow in FY23, and
performance in FY24 is underpinned by a major restructuring programme to reduce costs and to
make the Group more efficient. Consistent with FY22, the risk is focused on the judgement taken
in reaching the conclusion of no material uncertainty, and the adequacy of the accompanying
disclosures.
There continues to be a significant difference between the Group’s market capitalisation
(based upon the share price at the reporting date, and adjusted for the fair value of net debt),
and the sum-of-the-parts recoverable amount of the CGUs of the Group, determined using the
FVLCOD method. In FY23, the significant risk associated with goodwill impairment is specific
to the Experience cash generating unit (“CGU”). In FY22, a risk also existed over certain of the
Portfolio CGUs which were subject to the Group’s disposal programme.
The risks associated with revenue recognition (focused upon variations or modifications for the
Group’s long-term contracts) and the capitalisation and recoverability of contract assets both
remain stable.
Following the cyber incident in March 2023, the identification, measurement and disclosure of
actual and potential costs has resulted in considerable audit effort. Whilst we do not consider this
a significant audit risk, due to the extent of procedures performed, we have included this as a new
Key audit matter for FY23.
For the Parent Company, recoverability of investments in, and amounts due from, its subsidiaries
remains a Key audit matter, owing to the materiality of these balances and the estimation
uncertainty of the underlying cash flow forecasts used to determine recoverable amount.
Key audit matters (“KAMs”) Vs FY22 Item
Going Concern
4.1
Impairment of Goodwill
4.2
Revenue Recognition
4.3
Capitalisation and Recoverability of contract assets
4.4
Identification, measurement, and disclosure of actual and
potential costs related to the cyber incident
4.5
Recoverability of the Parent Company’s investments in,
and amounts due from, its subsidiaries.
4.6
Audit committee
interaction
During the year, the ARC met 6 times. KPMG are invited to attend all ARC meetings and are provided with an opportunity to meet with the ARC in private sessions without the
Executive Directors being present. For each Key audit matter, we have set out communications with the ARC in section 4, including matters that required particular judgement for each.
The matters included in the Audit and Risk Committee Chair’s report on pages 90 to 92 are materially consistent with our observations of those meetings.
Our independence
We have fulfilled our ethical responsibilities under, and we remain independent of the Group in
accordance with, UK ethical requirements including the FRC Ethical Standard as applied to listed
public interest entities.
We have not performed any non-audit services during FY23 or subsequently which are prohibited
by the FRC Ethical Standard.
We were first appointed as auditor by the shareholders for the year ended 31 December 2010.
The period of total uninterrupted engagement is for the 14 financial years ended 31 December 2023.
The Group engagement partner is required to rotate every 5 years. As these are the second set
of the Group’s financial statements signed by Ian Griffiths, he will be required to rotate off after the
FY26 audit.
The average tenure of partners responsible for component audits as set out in section 7 is 4 years,
with the shortest being 2 and the longest being 5.
Total audit fee £5.4m
Audit related fees (including interim review) £0.3m
Other assurance services £0.2m
Non-audit fee as a % of total audit and audit related fee % 3.5%
Date first appointed 18 August 2010
Uninterrupted audit tenure 14 years
Next financial period which requires a rotation 2030
Tenure of Group engagement partner 2 years
Average tenure of component signing partners 4 years
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Financial statements

Materiality
(Item 6 below)
The scope of our work is influenced by our view of materiality and our assessed risk of
material misstatement.
We have determined overall materiality for the Group financial statements as a whole at £6.0m
(FY22: £6.0m) and for the Parent Company financial statements as a whole at £5.5m (FY22: £5.5m).
Consistent with FY22, we determined that Group revenue of £2,814.6m, normalised by excluding
revenue in relation to business exits of £172.5m, as disclosed in note 2.8, remains the benchmark
for the Group, of which it represents 0.23% (FY22: 0.21%). This reflects the continuing volatility in
profit before tax from continuing operations, with total revenues providing a more stable measure
year on year. Total revenue is also a significant focus for management and external stakeholders.
Materiality for the Parent Company financial statements was determined by reference to total
Company assets and represents 0.17% of the Company’s total assets (FY22: 0.15%).
Materiality levels used in our audit
Materiality levels used in our audit
FY22 £m FY23 £m
Group
GPM
HCM
PLC
LCM
AMPT
4.8
4.8
6.0
6.0
3.9
3.9
0.4
0.3
0.3
0.3
5.5
5.5
Group Group materiality
GPM Group performance materiality
HCM Highest component materiality
PLC Parent Company statutory materiality
LCM Lowest component materiality
AMPT Audit misstatement posting threshold
Group scope
(Item 7 below)
We have performed risk assessment and planning procedures to determine which of the Group’s
components are likely to include risks of material misstatement to the Group financial statements,
the type of procedures to be performed at these components and the extent of involvement
required from our component auditors around the world.
Of the Group’s components we subjected 13 (FY22: 15) to full scope audits and performed
specific risk-focused audit procedures over revenue on 1 component (FY22: 1).
The components within the scope of our work accounted for the percentages illustrated opposite.
In addition, we have performed Group level analysis on the remaining components to determine
whether further risks of material misstatement exist in those components.
We consider the scope of our audit, as communicated to the Audit and Risk Committee, to be
an appropriate basis for our audit opinion.
Coverage of Group financial statements
FY23 FY22
Total revenue 88% 81%
Total profits and losses 80% 79%
Total assets 92% 89%
The impact of
climate change
on our audit
We have considered the potential impacts of climate change on the financial statements as part of planning our audit. This included the business sectors the Group operates in, the
assets and liabilities the Group holds on its balance sheet, and the ways in which the Group maintains and develops its client relations and supplier engagement and manages its people.
As part of our audit, we have made enquiries of management to understand the extent of the potential impact of climate change risk on the Group’s financial statements. We have
performed a risk assessment of how the impact of climate change may affect the financial statements and our audit. Taking into account the nature of the Group’s operations, our
assessment is that the climate related risks to the Group’s business, strategy and future results did not have a significant impact on our Key audit matters.
We have also read the Board’s Task Force on Climate-related Financial Disclosure (“TCFD”) statement in the front half of the annual report and considered consistency with the financial
statements and our audit knowledge.
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Financial statements

3. Going concern, viability and principal risks and uncertainties
The directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the Group or the Parent Company or to cease their operations, and as they have concluded
that the Group’s and the Parent Company’s financial position means that this is realistic. They have also concluded that there are no material uncertainties that could cast significant doubt over their ability to
continue as a going concern from the date of approval of the financial statements to 30 June 2025 (“the going concern period”).
Going concern
An explanation of how we evaluated management’s assessment of going concern is set out in the related Key audit matter in section 4.1 of this report.
Our conclusions
Our conclusions based on those procedures described in section 4.1 of this report are:
• we consider that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate;
• we have not identified, and concur with the directors’ assessment that there is not, a material uncertainty related to events or conditions that, individually
or collectively, may cast significant doubt on the Group’s or Parent Company’s ability to continue as a going concern for the going concern period;
• we have nothing material to add or draw attention to in relation to the directors’ statement in section 1 to the financial statements on the use of the going
concern basis of accounting with no material uncertainties that may cast significant doubt over the Group and Parent Company’s use of that basis for the
going concern period; and
• The related statement under the Listing Rules set out on page 64 is materially consistent with the financial statements and our audit knowledge.
However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that
were reasonable at the time they were made, the above conclusions are not a guarantee that the Group or the Parent Company will continue in operation.
Summary of our conclusions
We found the directors’ use of the going
concern basis of accounting without any
material uncertainty for the Group and
Parent Company to be acceptable.
Disclosures of emerging and principal risks and longer-term viability
Our responsibility
We are required to perform procedures to identify whether there is a material inconsistency between the directors’ disclosures in respect of emerging and principal
risks and the viability statement, and the financial statements and our audit knowledge.
Based on those procedures, we have nothing material to add or draw attention to in relation to:
• the directors’ confirmation within the Corporate Governance statement on page 94 that they have carried out a robust assessment of the emerging and principal
risks facing the Group, including those that would threaten its business model, future performance, solvency and liquidity;
• the risk management and internal control disclosures describing these risks and how emerging risks are identified and explaining how they are being managed
and mitigated; and
• the directors’ explanation in the viability statement of how they have assessed the prospects of the Group, over what period they have done so and why they
considered that period to be appropriate, and their statement as to whether they have a reasonable expectation that the Group will be able to continue in
operation and meet its liabilities as they fall due over the period of their assessment, including any related disclosures drawing attention to any necessary
qualifications or assumptions.
We are also required to review the viability statement set out on page 64 under the Listing Rules.
Our work is limited to assessing these matters in the context of only the knowledge acquired during our financial statements audit. As we cannot predict all future
events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made,
the absence of anything to report on these statements is not a guarantee as to the Group’s and Parent Company’s longer-term viability.
Our reporting
We have nothing material to add or draw
attention to in relation to these disclosures.
We have concluded that these disclosures
are materially consistent with the financial
statements and our audit knowledge.
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Financial statements

4. Key audit matters
What we mean
Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial statements and include the most significant assessed risks of material
misstatement (whether or not due to fraud) identified by us, including those which had the greatest effect on:
• the overall audit strategy;
• the allocation of resources in the audit; and
• directing the efforts of the engagement team.
We include below the Key audit matters in decreasing order of audit significance together with our key audit procedures to address those matters and our findings from those procedures in order that the
Company’s members, as a body, may better understand the process by which we arrived at our audit opinion. These matters were addressed, and our findings are based on procedures undertaken, for
the purpose of our audit of the financial statements as a whole. We do not provide a separate opinion on these matters.
4.1 Going concern (group and parent company)
Financial Statement Elements Our assessment of risk vs FY22 Our findings
Going concern disclosures with no material
uncertainties – section 1 to the Group
financial statements
Our assessment is that the risk is similar
to FY22. The risk continues to be focused
on the judgement taken in reaching the
conclusion of no material uncertainty, and
adequacy of the accompanying disclosures.
FY23: We found the Group’s judgement that there was no material uncertainty to be disclosed,
to be balanced.
We found the going concern disclosure in section 1 without any material uncertainty to be
proportionate.
FY22: We found the Group’s judgement that there was no material uncertainty to be disclosed,
to be balanced.
We found the going concern disclosure in section 1 without any material uncertainty to
be proportionate.
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4.1 Going concern (group and parent company) continued
Description of the Key Audit Matter Our response to the risk
Subjective Judgement
The Group continued its Portfolio disposal
programme during FY23, and completed it with
the final disposal in January 2024, to generate
cash proceeds. The Group was also successful in
refinancing debt during FY23. However, the Group
generated a significant cash outflow in FY23, and
performance in FY24 is underpinned by a major
restructuring programme to reduce costs and to
make the Group more efficient. Consistent with
FY22, the risk is focused on the judgement taken in
reaching the conclusion of no material uncertainty.
Disclosure quality
The financial statements explain how the Board has
formed a judgement that it is appropriate to adopt
the going concern basis of preparation for the
Group and Parent Company.
That judgement is based on an evaluation of the
inherent risks to the Group’s and Parent Company’s
business model and how those risks might affect
the Group’s and Parent Company’s financial
resources or ability to continue operations from the
date of approval of these financial statements through
to 30 June 2025 (“the going concern period”).
The risks most likely to adversely affect the Group’s
and Parent Company’s available financial resources
over this period include, but are not limited to,
the following:
• An inability to achieve the growth targets in the
Group’s business plan.
• The inability to achieve, or delays related to,
cost savings following the announcement of
the Group’s restructuring programme.
We considered whether these risks could plausibly affect the liquidity or covenant compliance in the going concern period by assessing the directors’
sensitivities over the level of available financial resources and covenant thresholds indicated by the Group’s financial forecasts taking account of severe,
but plausible, adverse effects that could arise from these risks individually and collectively.
Our procedures to address the risk included:
Our sector experience: We assessed the projections and assumptions by reference to our knowledge of the business and general market conditions
including the potential risk of management bias. We critically assessed whether economic headwinds in particular inflation risks, have been sufficiently
factored in the forecast cash flows, along with the risks and uncertainties associated with the Group’s customers, suppliers and workforce.
We considered the risk factors as set out by the Board in the Principal Risks section of the annual report and accounts, and where relevant assessed
whether these were sufficiently taken into consideration in the projections prepared to support the base case and the downside risks applied.
Test of detail: We critically assessed the cash flow forecasts by considering the appropriateness of key assumptions used in preparing those
projections, with a specific focus on the revenue growth assumptions of cost savings derived from the Group’s restructuring programme. We evaluated
these via enquiries with each of the divisional Finance Directors, the Chief Executive Officer, and Chief Financial Officer, and inspected the Board’s plans
and associated papers. We benchmarked the key assumptions behind the cashflow forecasts to third party evidence, and growth vs economic forecasts
in relation to specific risks.
Historical comparisons: We assessed the ability of the Group to accurately forecast by comparing historical results to forecasts for key metrics.
We assessed the most recent years’ performance against budget, including sales growth and cost reductions and challenged the assumptions over
the going concern period based on historical performances.
Funding assessment: We read the Revolving Credit facility (“RCF”) agreement to understand the terms including covenant requirements and any
restrictions in the use of funds. We re-performed the key financial covenants calculations for 30 June 2024 and 2025 and 31 December 2024,
assessing compliance at these dates.
We considered the adjustments made in the adjusted EBITDA for the covenant calculations, considering the appropriateness compared to the loan
agreements and historical accepted practice with the current lenders. In addition, we inspected the correspondence between the Company and the
private placement lenders that set out the proposed items to be excluded in the adjusted EBITDA definition and compared these against the items
included in the covenant calculations.
Sensitivity analysis: We critically challenged the downside sensitivities to ensure that these represented severe but plausible scenarios based on
our knowledge of the business, the associated risk exposure and we considered the most recent trading results to form a holistic view of the Group.
Evaluating directors’ intent: We evaluated the achievability of the actions the directors consider they would take to improve the position should the risks
in the severe but plausible scenario materialise, which included reductions in discretionary spend and capex investment, taking into account the extent
to which the directors can control the timing and outcome of these. This included consideration of the nature and quantum of historical cost savings
delivered and the feasibility of implementing these over the going concern period.
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4.1 Going concern (group and parent company) continued
Description of the Key Audit Matter Our response to the risk
• Adverse impact from inflationary pressures, such
as interest rates.
• A significant unexpected downturn in
performance in one of the Group’s businesses.
There are also less predictable but realistic second
order impacts, such as business disruption in the
event of a cyber incident, or adverse changes in
UK government policy.
The risk for our audit was whether or not those
risks were such that they amounted to a material
uncertainty that may have cast significant doubt
about the ability to continue as a going concern.
Had they been such, then that fact would have
been required to have been disclosed.
Stress scenario: We also developed a more stressed scenario than the severe but plausible scenario prepared by the Directors. In this more stressed
scenario, we then assessed the plausibility of the additional mitigations identified by the Directors that could be taken to ensure that liquidity headroom
and covenant compliance is maintained throughout the going concern period in a more stressed scenario. Our assessment included consideration of
whether these mitigations were within the control of the Directors and could be implemented in the timeframe required.
Assessing transparency: We assessed whether the matters included in the going concern disclosure give a full and accurate description of the
directors’ assessment, including the judgements made, identified risks and mitigating actions.
Communications with Capita plc’s Audit and Risk Committee
Our discussions with and reporting to the Audit and Risk Committee included:
• Going concern period of assessment.
• Assessment of the level of refinancing risk faced by the Group.
• Assessment of the risk and potential mitigations in the downside case, including directors’ intent and the extent to which mitigating actions are within their control, should risks materialise.
• Assessment of historical forecasting accuracy and current performance.
Areas of particular auditor judgement
We identified the following as the areas of particular auditor judgement:
• The level of severity in the downside assumptions and if the proposed mitigations are executable and within control of the Group.
Our findings
We found the Group’s judgement that there was no material uncertainty to be disclosed, to be balanced (FY22: balanced).
We found the going concern disclosure in section 1 without any material uncertainty to be proportionate (FY22: proportionate).
4.2 Impairment of goodwill
Financial Statement Elements Our assessment of risk vs FY22 Our findings
FY23 FY22
Goodwill (Total as per
financial statements) £495.7m £605.9m
Risk remains as stable vs FY22 FY23: balanced
FY22: balanced
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4.2 Impairment of goodwill continued
Description of the Key Audit Matter Our response to the risk
Forecast-based valuation
We consider the carrying value of goodwill and goodwill
impairment to be a significant audit risk. This reflects the
inherent uncertainty involved in forecasting future cash flows,
which are the basis of the assessment of recoverability.
The focus of our procedures was the Experience CGU
(goodwill carrying value of £209.3m, FY22: £209.8m) as
this CGU was most sensitive to changes in the underlying
assumptions, such as planned revenue growth and the benefits
of the cost reduction programme not being achieved. In FY22,
a risk also existed over certain of the Portfolio CGUs which
were subject to the Group’s disposal programme.
In the current period the estimated recoverable amount was
measured using a fair value less costs of disposal (FVLCD)
methodology, which represented a change from the value in use
methodology applied previously. The appropriate application of
the methodology requirements for FVLCD and Value in Use to
determine the recoverable amount formed part of the risk.
Uncertainty in relation to the current macro-economic
environment and the execution risk associated with delivery of
cost savings from the ongoing cost restructuring programme
may further impact the Group’s activities and performance
and renders precise forecasting of the underlying
cashflows challenging.
There continues to be a significant difference between the
Group’s market capitalisation (based upon the share price at
the reporting date, and adjusted for the fair value of net debt),
and the sum-of-the-parts recoverable amount of the CGUs
of the Group, determined using the FVLCOD method.
The effect of these matters is that, as part of our risk
assessment for audit planning purposes, we determined that the
recoverable amount had a high degree of estimation uncertainty,
with a potential range of reasonable outcomes greater than our
materiality for the financial statements as a whole. In conducting
our final audit work, we concluded that reasonably possible
changes to the recoverable amount would not be expected
to result in material impairment.
We performed the tests below rather than seeking to rely on any of the Group’s controls because the nature of the balance is such that we
would expect to obtain audit evidence primarily through the detailed procedures described.
Our procedures to address the risk included:
Tests of detail: We tested the principles and integrity of the Group’s discounted cash flow model. We compared the cash flows used in
the impairment model to the output of the Group’s budgeting process and against the understanding we obtained about the business areas
through our audit and assessed if these cash flows were reasonable.
Historical comparison: We assessed the historical accuracy of the forecasts used in the Group’s impairment model by considering
actual performance against prior year budgets, recognising the impacts of the current macro-economic environment. We also assessed the
forecast revenue growth with reference to the most recent results for 2022 and 2023, and evaluated the assumed impact on future cashflows
from the ongoing cost restructuring programme.
Benchmarking assumptions: We used external data and our own internal valuation models to evaluate the key inputs and assumptions
for growth.
Sensitivity analysis: We performed sensitivity and break-even analyses for the key inputs and assumptions and identified those
cash-generating units we considered most sensitive to impairment.
Comparing valuations: As an overall stand-back test we compared the sum of the discounted cash flows to the Group’s market capitalisation
and assessed the rationale for the differences. We also compared the implied share price derived from the recoverable amount at the year
end to the Company’s share price throughout 2023 and assessed the reasonableness of the factors identified by the Board to explain
the differences.
Methodology implementation: We assessed the appropriateness of the methodology used in the current period, including consideration
of the estimate made in respect of costs of disposal, and whether the forecast benefits from future phases of the restructuring programme
qualified for inclusion in the value in use model.
Assessing transparency: We evaluated the adequacy of the disclosures related to the estimation uncertainty, judgements made and
assumptions over the recoverability of goodwill, assessing the level of detail included in the disclosures.
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4.2 Impairment of goodwill continued
Description of the Key Audit Matter Our response to the risk
Disclosure quality
The financial statements (note 3.4) disclose the key
assumptions underlying the goodwill impairment
calculation and the sensitivity of the calculation
to changes in these assumptions.
There is a risk that the disclosures presented are not
sufficient to explain the key assumptions that drive the
valuations, and the key sensitivities that the Board has
considered. This is particularly important given the current
uncertainty surrounding the macro-economic environment.
Communications with Capita plc’s Audit and Risk Committee
Our discussions with and reporting to the Audit and Risk Committee included:
• Our determination of whether a significant risk remains in 2023, and our conclusions on the appropriateness of the assumptions in the valuation models.
Areas of particular auditor judgement
We identified the following as the areas of particular auditor judgement:
• The cash flow forecasts, in particular those in respect of cost savings expected from the delivery of the restructuring programme, were deemed to be a significant assumption for the estimate.
• The determination of the basis to estimate the recoverable amount of the CGU.
• Adequacy of sensitivity disclosures and the assessment as to what would constitute a reasonably possible downside scenario for each CGU.
Our findings
We found the Group’s conclusion that there is no impairment of Experience CGU goodwill to be balanced (FY22: balanced).
We found the Group’s disclosures in the description of the assumptions and estimates to be proportionate (FY22 finding: proportionate) and disclosures of the sensitivity of the valuation of goodwill to
changes in those assumptions and estimates to be proportionate (FY22 finding: proportionate).
4.3 Revenue recognition
Financial Statement Elements Our assessment of risk vs FY22 Our findings
FY23 FY22
Long-term contractual revenue £2,104.0m £2,236.2m
Deferred Income £538.3m £640.7m
Risk remains stable vs FY22, reflecting
the volume and magnitude of contractual
changes in the period.
FY23: balanced
FY22: balanced
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4.3 Revenue recognition continued
Description of the Key Audit Matter Our response to the risk
Subjective Judgement
The Group has many complex and bespoke contract
arrangements which can span many years and involve the
provision of more than one performance obligation. These
long-term contracts are held within the Public Service and
Experience divisions of the Group.
Significant contract variations or modifications may give
rise to judgement as to the impact for revenue recognition.
These can arise throughout the year.
In the event of a full or partial termination, judgement arises
in determining the effective date to trigger re-profiling of
deferred income held, particularly where services are
being handed back or across to another provider.
Professional standards require us to make a rebuttable
presumption that the fraud risk associated with revenue
recognition is a significant risk. The incentive/pressures
on management to achieve bonus targets and/or market
consensus increase the risk of fraudulent revenue
recognition. The opportunity is considered to apply to
these long-term contracts, given the factors noted above.
Disclosure quality
There is a risk that the disclosures presented are not
sufficient to explain the revenue recognition accounting
policies to enable the users of the financial statements
to understand how key judgements are applied.
We performed the tests below rather than seeking to rely on any of the Group’s controls because the nature of the balance is such that we would
expect to obtain audit evidence primarily through the detailed procedures described.
Our procedures to address the risk included:
Tests of detail: We obtained and inspected a sample of the contractual agreements to understand the contract terms and conditions that
underpin the revenue and the profit recognition assumptions and to identify conditions under which variable revenue can arise. For the major
contracts selected through our scoping exercise, where relevant, we also assessed the accounting papers prepared by the Group that set out
the key judgements to apply.
Where contract negotiations are ongoing in relation to variable consideration, we made enquiries on the current status with those involved in the
discussions and by reference to the associated signed contract or any variation amendments. Where significant variable consideration had been
recognised, we obtained and inspected the contractual agreements to understand the contract terms and conditions that underpin the revenue
recognition assumptions. Where relevant we inspected correspondence with customers or other supporting documentation in relation to the
variations or scope change.
We identify contracts where there has been a significant modification, termination, or partial termination, through our inquiries with the Group, and
corroboration through our inspection of the contract models. We assessed the contract terms including any correspondence from the customer,
to challenge the effective date of the modification or termination. We also challenged the judgements applied as to whether, in the case of a
partial termination, any deferred income should be recognised immediately or spread forward by assessing the inter dependencies of the
performance obligations, and the initial contractual terms.
We challenged whether the key contract judgements made by the Board are appropriate based upon the underlying contractual terms and
evidence obtained.
Assessing transparency: We considered the disclosures in the financial statements to check that these were sufficient and provided
proportionate detail of the revenue and profit recognition policies and of the key judgements applied. This included an assessment of whether
notes 2.1 and 2.2 set out the impacts arising from the accounting policies applied in relation to the long-term contracts provided by the Group.
Communications with Capita plc’s Audit and Risk Committee
Our discussions with and reporting to the Audit and Risk Committee included:
• Assessment of judgements linked to contract modifications and estimates in the year.
• Adequacy of accompanying disclosures in respect to revenue recognition in notes 2.1 and 2.2 to the financial statements.
Areas of particular auditor judgement
We identified the following as the areas of particular auditor judgement:
• Timing of accounting for contract modifications and basis for revenue recognition applied across the long-term contract portfolio.
Our findings
In determining the treatment of revenue recognition, the Group has applied accounting policies based on the requirements of IFRS15. In applying these policies there is room for judgement and we found that
within that the Group’s judgement was balanced (FY22: balanced). We found the disclosures associated with the IFRS15 policies to be proportionate (FY22: proportionate).
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4.4 Capitalisation and recoverability of contract assets
Financial Statement Elements Our assessment of risk vs FY22 Our findings
FY23 FY22
Non-Current Contract
Fulfilment Assets (“CFA”) £257.0m £263.0m
Onerous Contract Provisions
(“OCP”) £43.3m £52.8m
The risk associated with capitalisation
and recoverability of contract assets
remains stable.
FY23: balanced
FY22: balanced
Description of the Key Audit Matter Our response to the risk
Accounting application
A contract fulfilment asset (“CFA”) is recorded for costs incurred on a contract
or an anticipated contract that generate or enhance the resources of an
entity that will be used in satisfying future obligations under the contract.
Subjective estimate
Note 2.1 sets out the outsourcing model operated by the Group and
explains how typically the early stages of a contract (‘pre-inflection’) will
reflect a period when the contract fulfilment assets are created as the
contract delivery is established. Judgement may be required in determining
whether the costs incurred are appropriate to be capitalised, and this leads
to a risk that costs may be incorrectly capitalised as a result of error or fraud.
A risk of fraud arises as there may be an incentive to capitalise items to
achieve bonus targets or market consensus.
Where a contract is not performing as expected, the costs capitalised may
not be recoverable and an impairment of the asset should be recorded.
Where no CFA has been recorded or the CFA has already been fully
impaired, there is also a risk that the contract may be onerous, and
an onerous contract provision (“OCP”) should be recorded.
The effect of these matters is that, as part of our risk assessment,
we determined that the recoverable amount of contract assets and
completeness and accuracy of the onerous contract provision have a
high degree of estimation uncertainty, with a potential range of possible
outcomes greater than our materiality for the financial statements as a whole.
Disclosure quality
There is a risk that the disclosures presented are not adequate to explain
the capitalisation criteria that are used to assess whether items of expense
should be recorded as a contract asset, or the key judgements applied in
assessment of contract lifetimes and any onerous contract provisions required.
We performed the tests below rather than seeking to rely on any of the Group’s controls because the nature of the balance is
such that we would expect to obtain audit evidence primarily through the detailed procedures described.
Our procedures to address the risk included:
Tests of detail: We tested on a sample basis the costs capitalised as CFAs by reference to the criteria set out in the Group’s
accounting policy. For the costs sampled we obtained third party support, or for internally generated time we obtained the
relevant costing rates and records, to support the basis of capitalisation.
We assessed on a sample basis the useful economic lives applied to the CFAs and evaluated the expected contract life by
reference to the contract terms or where appropriate any agreed extensions to the original contract.
Sensitivity analysis: We considered the assumptions within the business plans and lifetime assessments, checking that
onerous conditions had been recognised appropriately, particularly on contracts that have had a poor performance in the
current year and those contracts that are in a pre-inflection phase of transformation. We assessed any ongoing impact of
inflation on the key assumptions, together with any contract modifications agreed with the customer in response to the
economic environment, or more widely as part of commercial discussions.
In determining whether a CFA should be impaired or OCPs should be recorded, we assessed contract profitability forecasts
by analysing historic performance relative to contractual commitments over its full term. This included assessing critically the
assumptions over future costs including projected savings and the actions required to achieve these by comparison to historical
cost savings achieved on similar projects. Our assessment considered the levels of uncertainty contained in the forecasts, the
extent to which Company actions alone could mitigate risks and any dependencies on the customer or other third parties. This
assessment covered a sample of contracts including those identified by the Board as being high risk and comprising the major
contracts in a pre-inflection phase.
Assessing transparency: We considered the disclosures in the financial statements to assess whether these provided sufficient
detail of the criteria used to evaluate whether expenditure should be recorded as a CFA, and on judgements taken in respect of
recoverability of CFAs, and recognition and measurement of OCPs.
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4.4 Capitalisation and recoverability of contract assets continued
Communications with Capita plc’s Audit and Risk Committee
Our discussions with and reporting to the Audit and Risk Committee included:
• Assessment of judgements linked to contracts, potentially at risk of becoming onerous, or where an onerous contract provision is already held. This included consideration of recoverability of any CFA held.
• Adequacy of accompanying disclosures in respect to contract assets in notes 2.1 and 3.1.3 to the financial statements.
Areas of particular auditor judgement
We identified the following as the area of particular auditor judgement:
• Assessment of the need for onerous contract provision and/or CFA impairment for Major Contracts sensitive to forecast assumptions made in respect to remaining contract term.
Our findings
We found the assumptions and estimates used to assess the CFAs to be recognised, and to determine the need for any impairment of CFAs and recognition of OCPs, to be balanced (FY22: balanced).
We found that the Group’s disclosures in note 2.1 and 3.1.3 to be proportionate (FY22: proportionate).
4.5 Identification, measurement, and disclosure of actual and potential costs related to the cyber incident
Financial Statement Elements Our assessment of risk vs FY22 Our findings
FY23
Cyber incident expense disclosure
(Total as per financial statements) £25.3m
Newly identified risk for FY23 FY23: balanced
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4.5 Identification, measurement, and disclosure of actual and potential costs related to the cyber incident continued
Description of the Key Audit Matter Our response to the risk
Presentation appropriateness
The Group was subject to a major cyber incident in March
2023, and has incurred considerable cost associated with
investigating, rectifying and remediating the impacts of the
incident. The Directors determined that costs related to the
cyber incident should be excluded from adjusted results,
the reasoning behind this presentation is set out in section
2.4 of the financial statements.
The identification of items of expense that meet the Group’s
definition of being related to the cyber incident requires
judgement as to whether the expense fulfil the criteria
and principles that the Group established.
Disclosure quality
Judgement is required to assess whether actual or potential
claims, litigation or fines arising from regulatory oversight, or
from impacted parties, should be recognised as provisions
within the financial statements or warrant disclosing as
contingent liabilities.
Where the impact of any present obligations is not probable
but more likely than remote, or a probable obligation that
cannot be measured reliably, and thus no provision is
recorded, failure to adequately disclose the nature of these
circumstances within the financial statements may distort the
reader’s view as to the potential risks faced by the Group.
We do not consider the identification, measurement, and
disclosure of actual and potential costs related to the cyber
incident to be at a high risk of significant misstatement, or
to be subject to a significant level of judgement. However,
due to their materiality in the context of the financial
statements as a whole and the extent of audit effort devoted
to this area, this is considered to be one of the areas which
had the greatest effect on our overall Group audit.
We performed the tests below rather than seeking to rely on any of the Group’s controls because the nature of the balance is such that we would
expect to obtain audit evidence primarily through the detailed procedures described.
Our procedures to address the risk included:
Assessing principles: We examined the accounting policy implemented by the Group in respect of the determination of costs related to the
cyber incident for exclusion from adjusted results. We assessed the nature of the categories of expense included within the policy to determine
if they were related to the cyber incident.
Tests of detail: We tested on a sample basis the costs identified as related to the Cyber incident by reference to the criteria set out in the
Group’s accounting policy. For the costs sampled we obtained third party support for the cost and, based upon inspection of the support,
evaluated if the cost met the Group’s accounting policy for exclusion from the adjusted results.
Enquiry of lawyers: We enquired of both internal and external Counsel in respect of the status of interactions with regulatory authorities and
actual or potential claims from impacted parties.
Our cyber expertise: We used our own cyber security specialists to provide expert knowledge on assessing the initiatives that the Group has
taken to improve cyber security.
Assessing transparency: We assessed whether the basis of the adjusted financial information is clearly and accurately described and
consistently applied. We evaluated the adequacy of the Group’s contingent liability disclosures in the financial statements in accordance with
accounting standards.
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4.5 Identification, measurement, and disclosure of actual and potential costs related to the cyber incident continued
Communications with Capita plc’s Audit and Risk Committee
Our discussions with and reporting to the Audit and Risk Committee included:
• Our initial and updated risk assessment in respect of this matter.
• Assessment of the application of the Group’s accounting policy to identify costs related to the cyber incident for exclusion.
• Adequacy of accompanying disclosures in respect of contingent liabilities.
Areas of particular auditor judgement
We do not consider the identification, measurement, and disclosure of actual and potential costs related to the cyber incident to be at a high risk of significant misstatement, or to be subject to a significant
level of judgement.
Our findings
We found that the judgement taken in applying the Group’s accounting policy to classify certain items of expense as being related to the cyber incident to be balanced and disclosure of the items of expense
provided in the annual report and accounts taken as a whole to be proportionate. We found that section 6.2 provides proportionate disclosure of the contingent liabilities in respect of potential claims,
litigation or fines.
4.6 Recoverability of the parent company’s investment in, and amounts due from, its subsidiaries
Financial Statement Elements Our assessment of risk vs FY22 Our findings
FY23 FY22
Investment carrying value £996.0m £994.3m
Amounts due from subsidiaries £2,270.3m £2,559.2m
Risk is considered stable against FY22. FY23: proportionate
FY22: proportionate
Description of the Key Audit Matter Our response to the risk
Forecast-based assessment
The carrying amount of the Parent Company’s investment in, and
amounts due from, its subsidiaries represent 30.2% and 68.9%
(FY22: 27.3% and 70.4%) of its total assets respectively.
The risk of irrecoverability is focused upon certain investments
and amounts due from subsidiaries within the Experience division.
The estimated recoverable amount of these balances is subjective
due to the inherent uncertainty involved in forecasting future cash
flows, especially forecast revenue growth.
Uncertainty in relation to the current macro-economic environment
and the execution risk associated with delivery of cost savings from
the ongoing cost restructuring programme may further impact the
Group’s activities and performance and renders precise forecasting
of the underlying cashflows challenging.
We performed the tests below rather than seeking to rely on the Parent’s controls because the nature of the balance is such that we
would expect to obtain audit evidence primarily through the detailed procedures described.
Our procedures to address the risk included:
Tests of detail: For amounts due from subsidiaries, we first assessed if the counterparty was in default as demonstrated through
holding a net liability position. This was based upon the subsidiary’s balance sheet as utilised within the consolidation. For investments,
we assessed if there was an indicator of impairment by comparing the carrying amount with the subsidiary’s net assets within the
Group consolidation, being an approximation of its minimum recoverable amount. Where required, we then proceeded to assess
the probability of recovery based upon the entity level discounted cashflow forecasts and the recoverable amount of any indirect
subsidiaries. We assessed consistency with the cashflows utilised in the goodwill impairment, deferred tax and going concern models.
Historical comparison: For the balances identified as at greatest risk of irrecoverability, we assessed the historical accuracy of the
forecasts used by considering actual performance against prior year budgets, recognising the impacts of the current macro-economic
environment. We assessed the forecast revenue and EBITDA growth with reference to the most recent results for 2022 and 2023 and
evaluating the assumed impact on future cashflows from the ongoing cost restructuring programme.
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4.6 Recoverability of the parent company’s investment in, and amounts due from, its subsidiaries continued
Description of the Key Audit Matter Our response to the risk
The effect of these matters is that, as part of our risk
assessment for audit planning purposes, we determined
that the recoverable amount of the Parent Company’s
investment in, and amounts due from, its subsidiaries had
a high degree of estimation uncertainty, with a potential
range of reasonable outcomes greater than our materiality
for the financial statements as a whole. In conducting our
final audit work, we concluded that reasonably possible
changes to the recoverable amount would not be
expected to result in material impairment.
Disclosure quality
The financial statements (note 7.3.3) disclose the key
assumptions underlying the investment impairment
calculation and the sensitivity of the calculation to
changes in these assumptions.
There is a risk that the disclosures presented are not
sufficient to explain the key assumptions that drive the
valuations, and the key sensitivities that the Board has
considered. This is particularly important given the current
uncertainty surrounding the macro-economic environment.
Evaluating directors’ intent: We assessed the directors’ intention in respect of the recovery of intercompany debt and based the
recoverable amount on their intention of expected cashflows.
Sensitivity analysis: We performed sensitivity analyses for the key inputs and assumptions which included forecast revenue growth.
We considered the likelihood of such scenarios materialising and the impact this would have upon the recoverable amount.
Assessing transparency: We evaluated the adequacy of the disclosures related to the estimation uncertainty, judgements made and
assumptions over the recoverability of the Parent Company’s investment in, and amounts due from, its subsidiaries, checking that the
sensitivity disclosures provided enough detail and proportionate information to inform a reader of the accounts.
Communications with Capita plc’s Audit and Risk Committee
Our discussions with and reporting to the Audit and Risk Committee included:
• Assumptions taken in respect to cash flow forecasts, including forecast revenue growth assumption for certain investments.
• Assessment of the judgement taken in respect of the recoverability of intercompany receivables.
Areas of particular auditor judgement
We identified the following as the areas of particular auditor judgement:
• For investments where the recoverable amount was determined through the FVLCD basis, the revenue growth within the cash flow forecasts were deemed to be a significant assumption for the estimate.
Our findings
We found the Parent Company’s assessment of the recoverability of the investment in, and amounts due from, subsidiaries to be balanced (FY22: balanced). We found the Company’s disclosures of the
recoverability of investment held by the Parent Company in, and amounts due from, subsidiaries to be proportionate (FY22: proportionate).
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5. Our ability to detect irregularities, and our response
Fraud – identifying and responding to risks of material misstatement due to fraud
Fraud risk
assessment
To identify risks of material misstatement due to fraud (“fraud risks”) we assessed events or conditions that could indicate an incentive or pressure to commit fraud or provide an
opportunity to commit fraud.
Our risk assessment procedures included:
• Enquiring of Directors, the ARC, internal audit and inspection of the Group’s documented high-level policies and procedures to prevent and detect fraud, including the Group’s
channel for “whistleblowing”, as well as whether they have knowledge of any actual, suspected or alleged fraud;
• Reading Board and ARC meeting minutes;
• Considering remuneration incentive schemes and performance targets for management and Directors including the short and long-term incentive plans for management remuneration;
• Using analytical procedures to identify any unusual or unexpected relationships; and
• Using our own forensic specialists to assist us in identifying fraud risks. This included attending the Risk Assessment and Planning Discussion, with the engagement partner and
engagement key team members, and assisting with designing relevant audit procedures to respond to the identified fraud risks.
Risk communications
We communicated identified fraud risks throughout the audit team and remained alert to any indications of fraud throughout the audit. This included communication from the Group
audit team to component audit teams of relevant fraud risks identified at the Group level and requests to component audit teams to report to the Group audit team any instances of
fraud that could give rise to a material misstatement at Group level.
Fraud risks
As required by auditing standards, taking into account possible pressures to meet profit targets and market consensus and continued ongoing economic uncertainty, and using our
overall knowledge of the control environment, we perform procedures to address the risk of management override of controls and the risk of fraudulent revenue recognition, in particular:
• The risk that Group and component management may be in a position to make inappropriate accounting entries for long-term contracts; and
• The risk of bias in accounting estimates and judgements such as contract modifications and terminations.
Link to KAMs
We also identified fraud risks related to inappropriate capitalisation and recoverability of contract fulfilment assets. Further details in respect of inappropriate capitalisation and
recoverability of contract fulfilment assets are set out in section 4 of this report.
Procedures to
address fraud risks
We performed procedures including:
• Identifying journal entries and other adjustments to test for all full scope components, based on risk criteria specific to the component, and comparing the identified entries to
supporting documentation. These included where relevant, those posted by senior finance personnel and those posted to unusual accounts, including unexpected account
combinations of entries to revenue, expenses, cash and borrowings.
• Assessing whether the judgement made in accounting estimates are indicative of a potential bias, including those over revenue recognition, capitalisation and recoverability of
contract assets and impairment of goodwill.
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5. Our ability to detect irregularities, and our response continued
Laws and regulations – identifying and responding to risks of material misstatement relating to compliance with laws and regulations
Laws and regulations
risk assessment
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general commercial and sector experience,
through discussion with the Directors and other management (as required by auditing standards), and from inspection of the Group’s regulatory and legal correspondence; and
discussed with the Directors and other management the policies and procedures regarding compliance with laws and regulations.
As some of the Group’s subsidiaries are regulated, our assessment of risks involved gaining an understanding of the control environment including these entities’ procedures for
complying with regulatory requirements.
Risk communications
We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit. This included communication
from the Group audit team to component audit teams of relevant laws and regulations identified at the Group level, and a request for component auditors to report to the Group audit
team any instances of non-compliance with laws and regulations that could give rise to a material misstatement at Group level.
Direct laws context
and link to audit
The potential effect of these laws and regulations on the financial statements varies considerably. The Group is subject to laws and regulations that directly affect the financial
statements including financial reporting legislation (including related company legislation), distributable profits legislation, and taxation legislation and we assessed the extent of
compliance with these laws and regulations as part of our procedures on the related financial statement items.
Most significant
indirect law/regulation
areas
The Group is subject to many laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the financial statements,
for instance through the imposition of fines or litigation or the loss of some of the Group’s subsidiaries’ license to operate. We identified the following areas as those most likely to have
such an effect: health and safety, anti-bribery, data protection, employment law, regulatory capital and liquidity (in relation to the financial and regulated nature of certain of the Group’s
activities in the Life & Pensions and Employee Benefits sectors). Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to
enquiry of the Directors and other management and inspection of regulatory and legal correspondence, if any. Therefore, if a breach of operational regulations is not disclosed to us
or evident from relevant correspondence, an audit will not detect that breach.
Link to KAMs
We also identified a Key audit matter related to impact of the cyber incident, more specifically in regards to whether actual or potential claims, litigation or fines arising from regulatory
oversight, or from impacted parties, should be recognised as provisions within the financial statements or warrant disclosing as contingent liabilities. Further details are set out in
section 4 of this report.
Context
Context of the ability
of the audit to detect
fraud or breaches of
law or regulation
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we
have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations is from the events
and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. In addition, as with any audit,
there remained a higher risk of non-detection of fraud, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. Our audit
procedures are designed to detect material misstatement. We are not responsible for preventing non-compliance or fraud and cannot be expected to detect non-compliance with all
laws and regulations.
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6. Our determination of materiality
The scope of our audit was influenced by our application of materiality. We set quantitative thresholds and overlay qualitative considerations to help us determine the scope of our audit and the nature, timing
and extent of our procedures, and in evaluating the effect of misstatements, both individually and in the aggregate, on the financial statements as a whole.
£6.0m
FY22: £6.0m
Materiality for the
Group financial
statements as
a whole
What we mean
A quantitative reference for the purpose of planning and performing our audit.
Basis for determining materiality and judgements applied
Materiality for the Group financial statements as a whole was set at £6.0m (FY22: £6.0m). Consistent with FY22, this was determined with reference to a benchmark of Group revenue
of £2,814.6m, normalised by excluding revenue in relation to business exits of £172.5m, as disclosed in note 2.8. Use of total revenue as the benchmark reflects the continuing
volatility in profit before tax from continuing operations, with total revenues providing a more stable measure year on year. Total revenue is also a significant focus for management
and external stakeholders.
Our Group materiality of £6.0m was determined by applying a percentage to the normalised Group revenue. When using this benchmark, KPMG’s approach for listed entities
considers a guideline range 0.5% – 1% of the measure. In setting overall Group materiality, we applied a percentage of 0.23% (FY22: 0.21%) to the benchmark which is below
the lower end of the expected range. This acknowledges the low historic margin of the Group.
Materiality for the Parent Company financial statements was set at £5.5m (FY22: £5.5m), determined by reference to total Company assets and represents 0.17% of the Company’s
total assets (FY22: 0.15%).
£3.9m
(FY22: £3.9m)
Performance
materiality
What we mean
Our procedures on individual account balances and disclosures were performed to a lower threshold, performance materiality, so as to reduce to an acceptable level the risk that
individually immaterial misstatements in individual account balances add up to a material amount across the financial statements as a whole.
Basis for determining performance materiality and judgements applied
Performance materiality for the Group and the Parent Company was set at 65% (FY22: 65%) of materiality for the financial statements as a whole, which equates to £3.9m
(FY22: £3.9m) for the Group and £3.6m (FY22: £3.6m) for the Parent Company. We applied this percentage in our determination of performance materiality based on the number
and level of identified misstatements and control deficiencies during the prior period.
£0.3m
(FY22: £0.3m)
Audit misstatement
posting threshold
What we mean
This is the amount below which identified misstatements are considered to be clearly trivial from a quantitative point of view. We may become aware of misstatements below this
threshold which could alter the nature, timing and scope of our audit procedures, for example if we identify smaller misstatements which are indicators of fraud.
This is also the amount above which all misstatements identified are communicated to the ARC.
Basis for determining the audit misstatement posting threshold and judgements applied
We set our audit misstatement posting threshold at 5% (FY22: 5%) of our materiality for the Group financial statements. We also report to the ARC other identified misstatements that
warrant reporting on qualitative grounds.
The overall materiality for the Group financial statements of £6.0m (FY22: £6.0m) compares as follows to the main financial statement caption amounts:
Group revenue Group profit before tax Total Group assets
FY23 FY22 FY23 FY22 FY23 FY22
Financial statement caption £2,814.6m £3,014.6m £(106.6)m £61.4m £1,997.8m £2,552.6m
Group materiality as % of caption 0.21% 0.20% 5.63% 9.77% 0.30% 0.24%
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7. The scope of our audit
Group scope What we mean
How the Group audit team determined the procedures to be performed across the Group.
The Group has 165 (FY22: 209) reporting components. To determine the work performed at the reporting component level, we identified those components which we considered to be of
individual financial significance and those remaining components on which we required procedures to be performed to provide us with the evidence we required in order to conclude on
the Group financial statements as a whole.
We determined individually financially significant components as those contributing at least 7.5% (FY22: 7.5%) of total assets or 7.5% (FY22: 7.5%) of total revenue or 7.5% (FY22: 7.5%) of
the Group profit before tax. We selected total assets, total revenue, and profit before tax because these are the most representative of the relative size of the components. We identified 5
(FY22: 4) components as individually financially significant components and performed full scope audits on these components.
In addition to the individually financially significant components, we identified 3 (FY22: 3) components as significant, owing to significant risks of material misstatement affecting the Group
financial statements and performed full scope audits on these components.
In addition, to enable us to obtain sufficient appropriate audit evidence for the Group financial statements as a whole, we selected 6 (FY22:9) components on which to perform procedures.
Of these components, we performed full scope audits for 5 components (FY22: 8) and performed specific risk-focused audit procedures over revenue on 1 component (FY22: 1). The latter
was not financially significant enough to require a full scope audit for Group purposes, but did present specific individual risks that needed to be addressed.
The components within the scope of our work accounted for the following percentages of the Group’s results, with the prior year comparatives indicated in brackets:
Scope Number of components
Range of
materiality applied Group revenue
Total profits and losses
that made up Group PBT Total assets
Full scope audit 13 (15)
£5.5m – £0.3m
(£5.5m – £0.4m) 87% (81%) 78% (79%) 92% (89%)
Specified audit procedures 1 (1)
£3m
(£2m) 1% (N/A) 2% (N/A) N/A (N/A)
Total 14 (26) 88% (81%) 80% (79%) 92% (89%)
The remaining 12% (FY22: 19%) of total Group revenue, 20% (FY22: 21%) of total profits and losses that made up Group profit before tax and 8% (FY22: 11%) of total Group assets is
represented by 151 (FY22: 193) reporting components. For these components, we performed analysis at an aggregated Group level to re-examine our assessment that there were no
significant risks of material misstatement within these.
Full scope audits were performed by component auditors at 11 reporting components in the United Kingdom, Switzerland, and Germany, and by the Group audit team over 2 key components
in the United Kingdom, including the Parent Company (FY22: 13 in the United Kingdom, Switzerland, and Germany, and by the Group audit team over 2 key components in the United
Kingdom, including the Parent Company). Specified audit procedures were performed by the Group audit team in the United Kingdom (FY22: 1 in Guernsey).
The Group audit team has performed testing of IT Systems and certain controls in the shared service centre on behalf of the components and communicated the results of these procedures
to the component teams. This is because of the centralised systems and processes in place across the Group.
The Group team instructed component auditors as to the significant areas to be covered, including the relevant risks detailed above and the information to be reported back. The Group team
approved the component materialities, as detailed in the table above, having regard to the mix of size and risk profile of the Group across the components.
The scope of the audit work performed was predominantly substantive as we placed limited reliance upon the Group’s internal control over financial reporting.
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7. The scope of our audit continued
Group
audit team
oversight
What we mean
The extent of the Group audit team’s involvement in component audits.
In working with component auditors, we:
• Held planning calls with component audit teams to discuss the significant areas of the audit relevant to the components, including the Key audit matters of revenue recognition and
capitalisation and recoverability of contract assets
• Issued Group audit instructions to component auditors on the scope of their work, including specifying the minimum procedures to perform in their audit of Journals and long-term contracts
• Visited the UK component audit teams in-person as the audit progressed to understand and challenge the audit approach and organised frequent video conferences with the partners and
directors of the Group and component audit teams, including those based overseas. At these meetings the findings reported to the Group team were discussed in more detail, and any
further work required by the Group team was then performed by the component audit teams.
• Inspected the component audit teams’ key work papers (in person and/or using remote technology) to evaluate the quality of execution of the audits of the components with a particular
focus on work performed by the components on Group-level significant risks and Key audit matters.
8. Other information in the annual report
The directors are responsible for the other information presented in the Annual Report together with the financial statements. Our opinion on the financial statements does not cover the other information and,
accordingly, we do not express an audit opinion or, except as explicitly stated below, any form of assurance conclusion thereon.
All other information
Our responsibility
Our responsibility is to read the other information and, in doing so, consider whether, based on our
financial statements audit work, the information therein is materially misstated or inconsistent with
the financial statements or our audit knowledge.
Our reporting
Based solely on that work we have not identified material misstatements or inconsistencies in the
other information.
Strategic report and Directors’ report
Our responsibility and reporting
Based solely on our work on the other information described above we report to you as follows:
• we have not identified material misstatements in the strategic report and the directors’ report;
• in our opinion the information given in those reports for the financial year is consistent with the
financial statements; and
• in our opinion those reports have been prepared in accordance with the Companies Act 2006.
Directors’ Remuneration Report
Our responsibility
We are required to form an opinion as to whether the part of the Directors’ Remuneration Report to
be audited has been properly prepared in accordance with the Companies Act 2006.
Our reporting
In our opinion the part of the Directors’ Remuneration Report to be audited has been properly
prepared in accordance with the Companies Act 2006.
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8. Other information in the annual report continued
Corporate Governance disclosures
Our responsibility
We are required to perform procedures to identify whether there is a material inconsistency between
the financial statements and our audit knowledge, and:
• the directors’ statement that they consider that the annual report and financial statements taken
as a whole is fair, balanced and understandable, and provides the information necessary for
shareholders to assess the Group’s position and performance, business model and strategy;
• the section of the annual report describing the work of the Audit and Risk Committee, including
the significant issues that the Audit and Risk Committee considered in relation to the financial
statements, and how these issues were addressed; and
• the section of the annual report that describes the review of the effectiveness of the Group’s risk
management and internal control systems.
Our reporting
Based on those procedures, we have concluded that each of these disclosures is materially consistent
with the financial statements and our audit knowledge.
We are also required to review the part of the Corporate Governance Statement relating to the
Group’s compliance with the provisions of the UK Corporate Governance Code specified by the
Listing Rules for our review.
We have nothing to report in this respect.
Other matters on which we are required to report by exception
Our responsibility
Under the Companies Act 2006, we are required to report to you if, in our opinion:
• adequate accounting records have not been kept by the Parent Company, or returns adequate for
our audit have not been received from branches not visited by us; or
• the Parent Company financial statements and the part of the Directors’ Remuneration Report to be
audited are not in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Our reporting
We have nothing to report in these respects.
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9. Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set
out on page 123, the directors are responsible
for: the preparation of the financial statements
including being satisfied that they give a true and
fair view; such internal control as they determine
is necessary to enable the preparation of
financial statements that are free from material
misstatement, whether due to fraud or error;
assessing the Group and Parent Company’s
ability to continue as a going concern, disclosing,
as applicable, matters related to going concern;
and using the going concern basis of accounting
unless they either intend to liquidate the Group or
the Parent Company or to cease operations, or
have no realistic alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable
assurance about whether the financial statements
as a whole are free from material misstatement,
whether due to fraud or error, and to issue
our opinion in an auditor’s report. Reasonable
assurance is a high level of assurance, but
does not guarantee that an audit conducted
in accordance with ISAs (UK) will always
detect a material misstatement when it exists.
Misstatements can arise from fraud or error
and are considered material if, individually or in
aggregate, they could reasonably be expected to
influence the economic decisions of users taken
on the basis of the financial statements.
A fuller description of our responsibilities
is provided on the FRC’s website at
www.frc.org.uk/auditorsresponsibilities.
The Company is required to include these
financial statements in an annual financial
report prepared under Disclosure Guidance
and Transparency Rule 4.1.17R and 4.1.18R.
This auditor’s report provides no assurance
over whether the annual financial report has been
prepared in accordance with those requirements.
10. The purpose of our audit work and
to whom we owe our responsibilities
This report is made solely to the Company’s
members, as a body, in accordance with Chapter
3 of Part 16 of the Companies Act 2006 and
the terms of our engagement by the company.
Our audit work has been undertaken so that we
might state to the Company’s members those
matters we are required to state to them in an
auditor’s report, and the further matters we are
required to state to them in accordance with the
terms agreed with the Company, and for no other
purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility
to anyone other than the Company and the
Company’s members, as a body, for our audit
work, for this report, or for the opinions we
have formed.
Ian Griffiths
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
15 Canada Square
London
E14 5GL
5 March 2024
KPMG LLP’s Independent Auditor’s Report continued
Capita plc Annual Report and Accounts
146
Financial statements

Financial statements
Structure of the financial statements
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated cash flow statement
Notes to the consolidated financial statements
Section 1
Basis of preparation
Section 2
Results for the year
2.1 Contract accounting
2.2 Revenue including segmental revenue
2.3 Operating profit
2.4 Adjusted operating profit and adjusted profit before tax
2.5 Segmental information
2.6 Taxation
2.7 Earnings/(loss) per share
2.8 Business exits and assets held for sale
2.9 Cash flow information
Section 3
Operating assets and liabilities
3.1 Working capital
3.1.1 Trade and other receivables
3.1.2 Trade and other payables
3.1.3 Contract fulfilment assets
3.2 Property, plant and equipment
3.3 Intangible assets
3.4 Goodwill
3.5 Right-of-use assets
3.6 Provisions
Section 4
Capital structure and finance costs
4.1 Net debt, capital and capital management
4.2 Financial risk
4.3 Net finance costs
4.4 Leases
4.5 Financial instruments and the fair value hierarchy
4.6 Issued share capital
4.7 Group composition and non-controlling interests
Section 5
Employee benefits
5.1 Share-based payment plans
5.2 Pensions
5.3 Employee benefit expense
Section 6
Other supporting notes
6.1 Related-party transactions
6.2 Contingent liabilities
6.3 Post balance sheet events
Company financial statements
Section 7
7.1 Company balance sheet
7.2 Company statement of changes in equity
7.3 Notes to the Company financial statements
Additional information
Section 8
8.1 Shareholder information
8.2 Alternative performance measures
Financial statements
Capita plc Annual Report and Accounts
147
Financial statements

Consolidated financial statements
Revenue
2.2
2,814.6
3,014.6
Cost of sales
(2,222.5)
(2,298.6)
Gross profit
592.1
716.0
Administrative expenses
2.3, 2.4, 2.8
(644.1)
(795.6)
Operating loss
2.3, 2.4, 2.8
(52.0)
(79.6)
Share of results in associates and investment gains
—
5.8
Net finance expense
4.3
(52.2)
(31.7)
(Loss)/gain on disposal of businesses
2.8
(2.4)
166.9
(Loss)/profit before tax
2.4
(106.6)
61.4
Income tax (charge)/credit
2.6
(74.0)
14.6
Total (loss)/profit for the year
(180.6)
76.0
Owners of the Company
(178.1)
74.8
Non-controlling interests
4.7
(2.5)
1.2
(180.6)
76.0
Earnings per share
2.7
– basic
(10.60) p
4.47p
– diluted
(10.60) p
4.40p
Adjusted operating profit
2.4
106.5
78.0
Adjusted profit before tax
2.4
56.5
49.8
Adjusted basic earnings per share
2.7
1.70p
2.64p
Adjusted diluted earnings per share
2.7
1.70p
2.60p
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated income statement
for the year ended 31December 2023
Capita plc Annual Report and Accounts
148
Financial statements

Consolidated financial statements continued
Total (loss)/profit for the year
(180.6)
76.0
Actuarial loss on defined benefit pension schemes
5.2
(68.2)
(8.9)
Tax effect on defined benefit pension schemes
2.6
15.9
2.0
(Loss)/gain on fair value of investments
(0.1)
0.2
Exchange differences on translation of foreign operations
(2.9)
(0.6)
Exchange differences realised on business disposals
0.2
0.3
(Loss)/gain on cash flow hedges
4.2.4
(8.5)
11.5
Cash flow hedges recycled to the income statement
4.2.4
(2.0)
(5.1)
Tax effect on cash flow hedges
2.6
2.6
(1.6)
Other comprehensive expense for the year net of tax
(63.0)
(2.2)
Total comprehensive (expense)/income for the year net of tax
(243.6)
73.8
Owners of the Company
(241.0)
72.6
(2.6)
1.2
(243.6)
73.8
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated statement of comprehensive income
for the year ended 31December 2023
Capita plc Annual Report and Accounts
149
Financial statements

Consolidated financial statements continued
2023
Property, plant and equipment
3.2
80.0
101.1
Intangible assets
3.3
90.0
106.0
Goodwill
3.4
495.7
605.9
Right-of-use assets
3.5
208.5
249.5
Investments in associates
0.2
0.2
Contract fulfilment assets
3.1.3
257.0
263.0
Financial assets
4.5
97.2
118.2
Deferred tax assets
2.6
140.3
189.5
Employee benefits
5.2
32.7
42.7
Trade and other receivables
3.1.1
12.3
15.8
1,413.9
1,691.9
Financial assets
4.5
28.1
23.6
Income tax receivable
11.6
9.9
Disposal group assets held for sale
2.8.2
38.1
—
Trade and other receivables
3.1.1
350. 7
430.4
Cash
4.5.4
155.4
396.8
583.9
860.7
Total assets
1,997.8
2,552.6
Overdrafts
4.5.4
95.0
219.6
Trade and other payables
3.1.2
425.9
492.5
Disposal group liabilities held-for-sale
2.8.2
9.7
—
Income tax payable
1.3
—
Deferred income
2.2.3
501.3
585.1
Lease liabilities
4.4,4.5
51.1
55.6
Financial liabilities
4.5
10.8
84.6
Provisions
3.6
101.6
75.7
1,196.7
1,513.1
Trade and other payables
3.1.2
8.5
15.1
Deferred income
2.2.3
36.2
55. 6
Lease liabilities
4.4,4.5
312.3
341.9
Financial liabilities
4.5
267.5
212.6
Deferred tax liabilities
2.6
7.2
6.9
Provisions
3.6
48.6
51.6
Employee benefits
5.2
5.9
3.1
686.2
686.8
Total liabilities
1,882.9
2,199.9
Net assets
114.9
352.7
Share capital
4.6
35.2
34.8
Share premium
4.6
1,145.5
1,145.5
Employee benefit trust shares
4.6
(0.7)
(4.2)
Capital redemption reserve
1.8
1.8
Other reserves
(15.0)
(4.5)
Retained deficit
(1,053.8)
(843.2)
Equity attributable to owners of the Company
113.0
330.2
Non-controlling interests
4.7
1.9
22.5
Total equity
114.9
352.7
The accompanying notes are an integral part of these consolidated financial statements.
These consolidated financial statements were approved by the Board of directors on 5March 2024 and
signed on its behalf by:
Adolfo Hernandez Tim Weller
Chief Executive Officer Chief Financial Officer
Consolidated balance sheet
At 31December 2023
Capita plc Annual Report and Accounts
150
Financial statements

Consolidated financial statements continued
At 31December 2021
34.8
1,145.5
(8.0)
1.8
(890.6)
(9.0)
274.5
22.0
296.5
—
—
—
—
(21.7)
—
(21.7)
—
(21.7)
34.8
1,145.5
(8.0)
1.8
(912.3)
(9.0)
252.8
22.0
274.8
Profit for the year
—
—
—
—
74.8
—
74.8
1.2
76.0
Other comprehensive income/(expense)
—
—
—
—
(6.7)
4.5
(2.2)
—
(2.2)
Total comprehensive income for the year
—
—
—
—
68.1
4.5
72.6
1.2
73.8
Share-based payment net of tax effects (note2.6; note5.1)
—
—
—
—
5.4
—
5.4
—
5.4
Elimination of non-controlling interest on disposal of businesses (note 2.8.1)
—
—
—
—
—
—
—
(0.3)
(0.3)
Exercise of share options under employee long-term incentive plans (note4.6; note5.1)
—
—
3.8
—
(3.8)
—
—
—
—
—
—
—
—
—
—
—
(0.4)
(0.4)
Movement in put-options held by non-controlling interests
—
—
—
—
(0.6)
—
(0.6)
—
(0.6)
At 31December 2022
34.8
1,145.5
(4.2)
1.8
(843.2)
(4.5)
330.2
22.5
352.7
Loss for the year
—
—
—
—
(178.1)
—
(178.1)
(2.5)
(180.6)
Other comprehensive expense
—
—
—
—
(52.4)
(10.5)
(62.9)
(0.1)
(63.0)
Total comprehensive expense for the year
—
—
—
—
(230.5)
(10.5)
(241.0)
(2.6)
(243.6)
Share-based payment net of tax effects (note2.6; note5.1)
—
—
—
—
5.8
—
5.8
—
5.8
—
—
—
—
15.9
—
15.9
(15.9)
—
Purchase of non-controlling interest
—
—
—
—
1.4
—
1.4
(1.4)
—
Exercise of share options under employee long-term incentive plans (note4.6; note5.1)
—
—
3.9
—
(3.9)
—
—
—
—
Shares issued (note4.6)
0.4
—
(0.4)
—
—
—
—
—
—
—
—
—
—
—
—
—
(0.7)
(0.7)
Movement in put-options held by non-controlling interests
—
—
—
—
0.7
—
0.7
—
0.7
At 31December 2023
35.2
1,145.5
(0.7)
1.8
(1,053.8)
(15.0)
113.0
1.9
114.9
1
2
3
2
1. The Group initially applied the amendments to IAS37 on 1January 2022 and the cumulative effect of applying the amendments was recognised as an opening balance adjustment to retained earnings.
2. No dividends were declared, paid or proposed in 2023 or 2022 on the Parent Company’s ordinary shares.
3. During the current year it was identified that the non-controlling interest (NCI) proportion of a goodwill impairment charge, which was recognised in the year ended 31December 2018, had not been previously allocated within the result for that year attributable to NCI. The NCI proportion of
the impairment has been reclassified to the NCI reserve in the current year.
Share capital – The balance classified as share capital is the nominal proceeds on issue of the Parent
Company’s equity share capital, comprising 21/15 pence ordinary shares.
Share premium – The amount paid to the Parent Company by shareholders, in cash or other
consideration, over and above the nominal value of shares issued to them less issuance costs.
Employee benefit trust shares – Shares held in the employee benefit trust have no voting rights and no
entitlement to a dividend.
Capital redemption reserve – The Parent Company can redeem shares by repaying the market value to
shareholders, whereupon the shares are cancelled. Redemption must be from distributable profits. The
Capital redemption reserve represents the nominal value of the shares redeemed.
Retained deficit – Net (losses)/profits accumulated in the Group after dividends are paid.
Other reserves – This consists of the foreign currency translation reserve deficit of £11.2m (2022: £8.6m
deficit) and the cash flow hedging reserve deficit of £3.8m (2022: £4.1m surplus).
Non-controlling interests (NCI) – This represents equity in subsidiaries not attributable directly or
indirectly to the Parent Company.
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated statement of changes in equity
for the year ended 31December 2023
Capita plc Annual Report and Accounts
151
Financial statements

Consolidated financial statements continued
Cash generated from operations
2.9
8.7
117.8
Income tax paid
(7.5)
(7.9)
Interest received
6.2
5.0
Interest paid
(47.7)
(43.0)
Net cash (outflow)/inflow from operating activities
(40.3)
71.9
Purchase of property, plant and equipment
3.2
(28.8)
(20.6)
Purchase of intangible assets
3.3
(32.8)
(27.3)
Proceeds from sale of property, plant and equipment and
intangible assets
2.3, 3.2, 3.3
0.1
0.5
Additions to investments held at fair value through profit and
loss
—
(2.4)
Changes to investments at fair value through other
comprehensive income
(0.1)
0.2
Capital element of lease rental receipts
6.0
5.8
2.8.1
1.9
—
Total proceeds received from disposal of businesses, net of
disposal costs
2.8.1
96.8
463.4
2.8.1
(33.4)
(75.5)
Net cash inflow from investing activities
9.7
344.1
1
Dividends paid to non-controlling interests
(0.7)
(0.4)
Capital element of lease rental payments
2.9.3
(59.1)
(61.8)
Proceeds on issue of private placement loan notes
2.9.3
103.5
—
Cost of cross currency swaps
2.9.3
(1.6)
—
Repayment of private placement loan notes and other
finance
2.9.3
(121.5)
(237.4)
Proceeds from cross-currency interest rate swaps
2.9.3
8.5
10.1
Repayment of credit facilities
2.9.3
—
(46.0)
Debt financing arrangement costs
2.9.3
(5.4)
(5.2)
Net cash outflow from financing activities
(76.3)
(340.7)
(Decrease)/increase in cash and cash equivalents
(106.9)
75.3
Cash and cash equivalents at the beginning of the year
177.2
101.5
Effect of exchange rates on cash and cash equivalents
(2.7)
0.4
Cash and cash equivalents at 31 December
67.6
177.2
Cash
4.5.4
155.4
396.8
Overdrafts
4.5.4
(95.0)
(219.6)
and liabilities held for sale
2.8
7.2
—
Total
67.6
177.2
2.9
41.2
98.4
2.9
(115.5)
(42.4)
Consolidated cash flow statement
for the year ended 31December 2023
Capita plc Annual Report and Accounts
152
Financial statements

Notes to the consolidated financial statements
This section sets out the Group’s accounting policies relating to these consolidated financial statements
as a whole. Where an accounting policy is specific to one note, the policy is described in the note to
which it relates.
This section also includes details of new accounting standards, amendments and interpretations
including their effective dates and explanation on the expected impact to the financial position and
performance of the Group.
For ease of reference, this symbol has been used to denote any accounting policies included within the
notes to these consolidated financial statements:
Denotes accounting policies
These financial statements consolidate those of Capita plc (the Company or the Parent Company) and all of
its subsidiaries (the Group). Capita plc is a public limited company incorporated in England and Wales
whose shares are publicly traded. The principal activities of the Group are given in the strategic report on
pages 14 to 21.
These consolidated financial statements of Capita plc for the year ended 31 December 2023 were
authorised for issue in accordance with a resolution of the directors on 5 March 2024.
These consolidated financial statements are presented in British pounds sterling and all values are rounded
to the nearest tenth of a million (£m) except where otherwise indicated.
Statement of compliance
These consolidated financial statements have been prepared in accordance with UK-adopted International
Financial Reporting Standards (IFRSs) and the Disclosure and Transparency Rules of the UK's Financial
Conduct Authority.
Basis of consolidation
These consolidated financial statements comprise the financial statements of the Group at 31 December
each year. Subsidiaries are consolidated from the date on which control is transferred to the Group until
control is transferred out of the Group. Where there is a loss of control of a subsidiary, these consolidated
financial statements include the results for that part of the reporting year during which Capita plc had control
and the profit or loss on disposal is calculated as the difference between the fair value of the consideration
received and the carrying amount of the net assets (including goodwill) disposed of. Losses applicable to
the non-controlling interests in subsidiaries are attributed to the non-controlling interests even if that results
in the non-controlling interests having a deficit balance.
Investments in associates are accounted for using the equity method. Under the equity method, the
investment in the entity is stated as a one line item at cost plus the investor’s share of retained post-
acquisition profits or losses and other changes in net assets less any impairment.
Going concern
In determining the appropriate basis of preparation of the financial statements for the year ended
31 December 2023, the Board is required to consider whether the Group and Parent Company can continue
in operational existence for the foreseeable future. The Board has concluded that it is appropriate to adopt
the going concern basis, having undertaken a rigorous assessment of the financial forecasts, key
uncertainties, sensitivities, and mitigations as set out below.
Accounting standards require that ‘the foreseeable future’ for going concern assessment covers a period of
at least twelve months from the date of approval of these financial statements, although those standards do
not specify how far beyond twelve months a Board should consider. In its going concern assessment, the
Board has considered the period from the date of approval of these financial statements to 30 June 2025
(‘the going concern period’), which aligns with a period end and covenant test date for the Group, and has
also allowed the Board to assess the liquidity impact of the borrowings that mature in January 2025 and
April 2025 (refer to note 4.5.3 to the consolidated financial statements). There are no other debt maturities
in the period to 30 June 2025.
The base case financial forecasts used in the going concern assessment are derived from the 2024-2025
business plans as approved by the Board in December 2023.
The going concern assessment considers the Group’s sources and uses of liquidity and covenant
compliance throughout the period under review. The value of the Group’s committed revolving credit facility
(RCF) was £260.7m at 31 December 2023 having been extended to 31 December 2026. The original terms
of the RCF are substantially unchanged. The value was subsequently reduced to £250m on 23 January
2024 following receipt of proceeds from the disposal of the Group’s investment in Fera Science Limited.
In July the Group issued £101.9m equivalent of new private placement loan notes across three tranches:
£50m maturing 25 July 2026, USD45m maturing 25 July 2026 and USD23m maturing 25 July 2028, with an
average interest rate of 9.45%. The notes rank pari passu with the existing indebtedness of the Group and
includes financial covenants determined on the same basis as those under the existing private placement
loan notes.
Financial position at 31 December 2023
As detailed further in the Chief Financial Officer’s review in the strategic report, at 31 December 2023 the
Group had net debt of £545.5m (2022: £482.4m), net financial debt (pre-IFRS 16)
1
of £182.1m (2022:
£84.9m), available liquidity
1
of £282.3m (2022: £405.2m) and was in compliance with all debt covenants
(refer to note 4.1.2 to the consolidated financial statements).
Board assessment
Base case scenario
Under the base case scenario, the Group’s transformation programme and completion of the Portfolio non-
core business disposal programme in January 2024 has simplified and strengthened the business and
facilitates further efficiency savings enabling sustainable growth in revenue, profit and cash flow over the
medium term. When combined with available committed facilities, this allows the Group to manage
scheduled debt repayments. The most material sensitivities to the base case are the risk of not delivering
the planned revenue growth and efficiency savings following the announcement of the Group’s restructuring
programme.
The base case projections used for going concern assessment purposes reflect business disposals
completed up to the date of approval of these financial statements. The liquidity headroom assessment in
the base case projections reflects the Group’s existing committed financing facilities and debt redemptions
and does not reflect any potential future refinancing. The base case financial forecasts demonstrate liquidity
AP
Section 1: Basis of preparation
Capita plc Annual Report and Accounts
153
Financial statements

Notes to the consolidated financial statements continued
headroom and compliance with all debt covenant measures throughout the going concern period to 30 June
2025.
Severe but plausible downside scenario
In considering severe but plausible downside scenarios, the Board has taken account of the potential
adverse financial impacts resulting from the following risks:
• revenue growth falling materially short of plan;
• operating profit margin expansion not being achieved;
• targeted cost savings delayed or not delivered;
• additional inflationary cost impacts which cannot be passed on to customers;
• unforeseen operational issues leading to contract losses and cash outflows;
• volatility in interest rates;
• non-availability of the Group’s non-recourse trade receivables financing facility; and
• unexpected financial costs linked to incidents such as data breaches and/or cyber-attacks.
The likelihood of simultaneous crystallisation of the above risks is considered by the directors to be low.
Nevertheless in the event that simultaneous crystallisation were to occur, the Group would need to take
action to mitigate the risk of insufficient liquidity and covenant headroom. In its assessment of going
concern, the Board has considered the mitigations, under the direct control of the Group, that could be
implemented including reductions or delays in capital investment, and substantially reducing (or removing in
full) bonus and incentive payments. Taking these mitigations into account, the Group’s financial forecasts, in
a severe but plausible downside scenario, demonstrate sufficient liquidity headroom and compliance with all
debt covenant measures throughout the going concern period to 30 June 2025.
Adoption of going concern basis
Reflecting the continued benefits from the transformation programme delivered over the last few years and
the Portfolio non-core business disposal programme completed in January 2024, coupled with the Board's
ability to implement appropriate mitigations should the severe but plausible downside materialise, the Group
continues to adopt the going concern basis in preparing these consolidated financial statements. The Board
has concluded that the Group and Parent Company will be able to continue in operation and meet their
liabilities as they fall due over the period to 30 June 2025.
1.Refer to alternative performance measures in section 8.2 to the financial statements.
Foreign currency translation
The functional and presentation currency of Capita plc and its UK subsidiaries is the British pound sterling
(£). Transactions in foreign currencies are initially recorded at the functional currency exchange rate ruling
at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are
retranslated at the functional currency exchange rate ruling at the balance sheet date. All differences are
taken to the consolidated income statement with the exception of differences on foreign currency
borrowings that provide a hedge against a net investment in a foreign operation. These are taken directly to
equity until the disposal of the net investment, at which time they are recognised in the consolidated income
statement.
Tax charges and credits attributable to exchange differences on those borrowings are also taken directly to
equity. Non-monetary items that are measured at historical cost in a foreign currency are translated using
the exchange rate at the date of initial transaction. Non-monetary items measured at fair value in a foreign
currency are translated using the exchange rates at the date when the fair value was determined.
The functional currencies of overseas operations include the euro, Indian rupee, South African rand, Polish
zloty and the US dollar. At the balance sheet date, the assets and liabilities of the overseas operations are
retranslated into the presentation currency of Capita plc at the exchange rate ruling on the balance sheet
date and their income statements are translated using the weighted average exchange rate for the year.
The exchange differences arising on the retranslation are taken directly to a separate component of equity.
On disposal of a foreign operation, the deferred cumulative foreign currency translation difference
recognised in equity relating to that particular foreign operation is recognised in the consolidated income
statement.
Current versus non-current classification
The Group presents assets and liabilities in the balance sheet based on whether they are current or non-
current.
An asset is current when it is:
• Expected to be realised or intended to be sold or consumed in the normal operating cycle;
• Held primarily for the purpose of trading;
• Expected to be realised within twelve months after the balance sheet date; or
• Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least
twelve months after the balance sheet date.
All other assets are classified as non-current.
A liability is current when:
• It is expected to be settled in the normal operating cycle;
• It is held primarily for the purpose of trading;
• It is due to be settled within twelve months after the balance sheet date; or
• There is no unconditional right to defer the settlement of the liability for at least twelve months after the
balance sheet date.
All other liabilities are classified as non-current.
Section 1: Basis of preparation continued
Capita plc Annual Report and Accounts
154
Financial statements

Notes to the consolidated financial statements continued
Recoverable amount of non-current assets
At each balance sheet date, the Group assesses whether there is any indication that a non-current asset
may be impaired. Where an indicator of impairment exists, the Group makes a formal estimate of the
asset’s recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount, the
asset is considered impaired and is written down to its recoverable amount. The recoverable amount is the
higher of an asset’s, or cash-generating unit’s, fair value less costs to sell and its value in use, and is
determined for an individual asset, unless the asset does not generate cash inflows that are largely
independent of those from other assets or groups of assets.
Consideration of climate change
The impact of climate change has been considered in the preparation of these consolidated financial
statements across a number of areas, including our evaluation of the critical accounting estimates and
assumptions which are detailed below, consistent with the risks and opportunities set out in the strategic
report on pages 50 to 56. None of these risks had a material effect on the critical accounting estimates and
assumptions or on the consolidated financial statements of the Group.
The following areas were considered during the preparation of these consolidated financial statements:
• contract judgements made on the Group’s major contracts including contract fulfilment assets;
• going concern and viability of the Group over the relevant respective period;
• cash flow forecasts used in the impairment assessments of non-current assets including the Group’s
intangible assets such as customer contracts and goodwill;
• carrying value and useful economic lives of property, plant and equipment; and
• the valuation of assets held within the Group’s pension schemes.
As current legislation stands, there is currently no material short or medium-term
1
impact expected from
climate change on the Group.
The Group will continue to monitor it’s climate strategy and the impact that
policies or changes in legislation may have on the estimates the Group makes, and any subsequent impact
on assets and liabilities recognised and presented in its consolidated financial statements.
Significant accounting judgements, estimates and assumptions
The preparation of financial statements in accordance with generally accepted accounting principles
requires the directors to make judgements and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingencies at the date of the financial statements and the reported income
and expense during the presented periods. Although these judgements and assumptions are based on the
directors’ best knowledge of the amount, events or actions, actual results may differ.
As described in note 2.1, given the level of judgement and estimation involved in assessing the future
profitability of contracts, it is reasonably possible that outcomes within the next financial year may be
different from management’s assumptions and could require a material adjustment to the carrying amounts
of contract assets and, onerous contract provisions.
1. As defined in the Task Force on Climate-related Financial Disclosures section of the Strategic Report
Judgements
The key areas where significant accounting judgements have been made and which have the most
significant effect on the amounts recognised in the consolidated financial statements, are summarised
below and set out in more detail in the related note(s):
• Contract accounting (note 2.1):
– Revenue recognition;
• Capitalisation of contract fulfilment assets (note 3.1.3); and
• Adoption of the going concern basis of preparation (section 1).
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the balance
sheet date, which have a significant risk of causing material adjustment to the carrying amounts of assets
and liabilities within the next financial year, are summarised below and set out in more detail in the related
note. The Group based its assumptions and estimates on parameters available when the consolidated
financial statements were prepared.
Existing circumstances and assumptions about future developments, however, may change due to market
changes or circumstances arising that are beyond the control of the Group. Such changes are incorporated
into the assumptions when they occur:
• Contract accounting (note 2.1):
– Impairment of contract fulfilment assets;
– Customer and onerous contract provisions;
• Deferred tax asset recognition (note 2.6); and
• Measurement of defined benefit pension obligations (note 5.2).
For ease of reference, the symbols below have been used to denote significant accounting judgements and/
or significant accounting estimates and assumptions where they occur within the notes to these
consolidated financial statements:
Denotes significant accounting judgements
Denotes significant accounting estimates and assumptions
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Financial statements

Notes to the consolidated financial statements continued
New standards and interpretations adopted
The accounting policies adopted are consistent with those of the previous financial year. In addition, the
Group has adopted the new, and amendments to, standards listed below. These amendments were either
not applicable or not material to the Group or Parent Company.
International Accounting Standards (IAS/IFRS) Effective date
IFRS 17 Insurance Contracts and amendments to IFRS 17 Insurance Contracts 1 January 2023
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)
1 January 2023
Definition of Accounting Estimates (Amendments to IAS 8) 1 January 2023
Deferred Tax related to Assets and Liabilities arising from a Single Transaction
(Amendments to IAS 12) 1 January 2023
International Tax Reform - Pillar Two Model Rules (Amendments to IAS 12)
1 January 2023
New standards and interpretations not yet adopted
The International Accounting Standards Board (IASB) has issued the following standards, amendments and
interpretations with an effective date after the date of these consolidated financial statements. These are
effective for annual reporting periods beginning on or after the date indicated:
International Accounting Standards (IAS/IFRS) Effective date
Classification of liabilities as current or non-current and non-current liabilities with
Covenants - Amendments to IAS 1 1 January 2024
Lease Liability in a Sale and Leaseback - Amendments to IFRS 16
1 January 2024
Supplier Finance Arrangements - Amendments to IAS 7 and IFRS 7
1 January 2024
Lack of exchangeability - Amendments to IAS 21
1
1 January 2025
1. The effective date is based on the standard or amendment issued by the IASB and are still subject to adoption by the UK Endorsement
Board.
The Group is assessing the impact of these new standards and the Group’s financial reporting will be
presented in accordance with these standards from the effective date.
Section 1: Basis of preparation continued
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Financial statements

Notes to the consolidated financial statements continued
This section contains notes related to the financial
performance of the Group. These include:
2.1 Contract accounting
2.2 Revenue including segmental revenue
2.3 Operating profit
2.4 Adjusted operating profit and adjusted profit before tax
2.5 Segmental information
2.6 Taxation
2.7 Earnings/(loss) per share
2.8 Business exits and assets held for sale
2.9 Cash flow information
Denotes accounting policies
Denotes significant accounting judgements
Denotes significant accounting estimates and
assumptions
Key highlights
Reported revenue
£2,814.6m
(2022: £3,014.6m)
Reported loss before tax
£(106.6)m
(2022: profit £61.4m)
Adjusted revenue
1
Aim: Achieve long-term organic revenue growth
£2,642.1m
(2022: £2,609.0m)
Adjusted profit before tax
1
Aim: Achieve long-term growth in profit
£56.5m
(2022: profit £49.8m)
1. Definitions of the alternative performance measures and related Key Performance
Indicators (KPIs) can be found in section 8.2.
2. From 1January 2023 free cash flow excluding business exits is presented after deducting
the capital element of lease payments and receipts. Comparative amounts have been re-
presented. Refer to note 2.9.2.
Free cash flow
2
£(154.9)m
(2022: £(31.5)m)
Reported basic earnings/(loss) per share (EPS)
(10.60)p
(2022: 4.47p)
Free cash flow before business exits
1,2
Aim: Achieve sustainable, long-term positive
free cash flow growth generation
£(115.5)m
(2022: £(42.4)m)
Adjusted basic earnings per share (EPS)
1
Aim: Achieve long-term growth in EPS
1.70p
(2022: 2.64p)
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AP
Section 2: Results for the year
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Financial statements

Notes to the consolidated financial statements continued
In 2023 the Group’s adjusted revenue
1
increased year on year driven by underlying growth from contracts
such as the Personal Independence Payments contract in Capita Public Service, indexation and the one-off
benefit relating to a commercial settlement in the closed book Life & Pensions business in Capita
Experience, offset by the impact of a number of contract losses.
Adjusted profit before tax
1
improved year-on-year reflecting the revenue trends noted above, in particular
the commercial settlement in Capita Experience, and a reduction in bonuses and variable pay, offset by
increased financing costs.
The higher level of profit was offset by increased working capital outflows, increased capital expenditure
and spend following the cyber incident, resulting in free cash outflow before business exits
1
of £115.5m
(2022: £42.4m outflow).
The Group had additional cash outflow of £23.1m (2022:£19.5m inflow) arising from those businesses sold
in the year, and additional pension deficit payments triggered as a result of these disposals totalling £16.3m
(2022: £8.6m).
Revenue
Adjusted revenue
1
increased by 1.3% year-on-year as a result of the following:
• Capita Public Service: growth was underpinned by indexation, scope increases and improved trading on
a number of contracts including the Royal Navy Training contract and the Personal Independence
Payments contract. This was offset by contract hand-backs and losses in Local Public Services and non-
recurrence of the contract to provide laptops to teachers in Northern Ireland in 2022; and
• Capita Experience: growth was driven by improved international trading, indexation, and the one-off
benefit relating to a commercial settlement in the closed book Life & Pensions business, offset by
contract losses, primarily the loss of the Co-operative Bank contract.
For additional information, which does not form part of these consolidated financial statements, the Chief
Financial Officer’s review in the strategic report includes information in respect of the changes.
Profit before tax
The adjusted profit before tax
1
improved by £6.7m year-on-year to a profit of £56.5m as a result of the profit
impact of the following:
• Capita Public Service: the beneficial impact of indexation, the scope increases and improved trading on
a number of contracts discussed above, offset by the impact of contract exits in Local Public Service;
• Capita Experience: reflects the flow through of the revenue benefits noted previously, in particular the
closed book Life & Pensions contract settlement, as well as higher interest receipts in our pension
business offset by flow through of prior year contract losses in particular the Co-operative Bank and
continued attrition in the remaining Life & Pensions business; and
• Capita plc: impact of the reallocation of central costs previously allocated to Capita Portfolio to Capita plc
in 2022, increased financing cost and the non-recurrence of gains in investments in 2022.
Adjusted profit before tax
1
excludes a number of specific items so users of these consolidated financial
statements can more clearly understand the financial performance of the Group. Reported loss before tax
was £106.6m (2022: profit £61.4m). The year-on-year reduction has arisen from: a loss on business
disposals in 2023 compared with a gain in 2022; and, the costs of the cyber incident and the costs to deliver
the announced cost reduction programme. A reconciliation of the adjusted profit before tax
1
to reported loss
before tax is detailed in note2.4.
Reported operating loss for the year was £52.0m (2022: loss £79.6m). Details of items charged/credited in
arriving at the reported operating loss can be found in note2.3.
For additional information, which does not form part of these consolidated financial statements, the Chief
Financial Officer’s review in the strategic report includes information in respect of the changes.
Taxation
The adjusted income tax charge for the year was £31.1m (2022: £4.4m) including £30.4m of current tax
(2022: £6.4m). There is a current tax credit arising on pension deficit contributions recognised in other
comprehensive income (OCI) rather than the income statement. If the current tax that is flowing through
OCI is taken into account, the total current charge is more closely aligned to the current tax payable in
respect of the year.
The reported income tax charge of £74.0m on reported loss before tax of £106.6m (2022: reported income
tax credit of £14.6m on reported profit of £61.4m), differs from the standard UK weighted average
corporation tax rate of 23.5% (2022: 19.0%), primarily due to changes in the accounting estimate of
recognised deferred tax assets, unrecognised current year tax losses and non-deductible goodwill
impairment. The prior period credit reflected an increase in the recognised deferred tax asset.
Earnings per share
Adjusted earnings per share
1
reduced because the increase in adjusted profit before tax
1
was offset by the
increase in the adjusted income tax charge year on year as detailed above.
The reduction from reported earnings per share to a reported loss per share reflects the reduction in
reported profit before tax noted above, compounded by the swing from a reported income tax credit to an
income tax charge as noted above.
Dividend
The Board is not recommending the payment of a final dividend (2022: £nil). However, the Board
recognises the importance of dividend payments to investors in forming part of their total shareholder return
and will consider the payment of dividends when the Group is generating sufficient sustainable free cash
flow.
1. Definitions of the alternative performance measures and related Key Performance Indicators (KPIs) can be found in section 8.2.
Section 2: Results for the year continued
Capita plc Annual Report and Accounts
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Financial statements

Notes to the consolidated financial statements continued
Free cash flow before business exits
1
1,2
106.5
78.0
Add: depreciation/amortisation and impairment of property, plant and
equipment, right-of-use assets and intangible assets
108.1
126.4
Adjusted EBITDA
214.6
204.4
Working capital
(110.7)
(30.7)
Non-cash and other adjustments
(6.5)
(45.3)
97.4
128.4
45 %
63 %
Pension deficit contributions
(30.0)
(30.0)
Cyber incident
(20.1)
—
Cost reduction programme
(6.1)
—
41.2
98.4
Net capital expenditure
(58.9)
(38.0)
Interest/tax paid
(45.1)
(47.5)
Net capital lease payments
(52.7)
(55.3)
(115.5)
(42.4)
1
1
1
1
1,2
Adjusted operating cash conversion
1
decreased to 45% (2022: 63%), driven by:
• the reduction in working capital, which reflects the £28.0m benefit in 2022 of a step-up in the usage of the
Group’s non-recourse facilities in 2022 whereas in 2023 there was a £9.3m reduction in usage, a
reduction in the accrual for management bonuses and variable pay, and the non-cash nature of the
commercial settlement in the closed book Life & Pensions business in Experience; and
• the lower outflow related to provisions in 2023 reflected in the movement in non-cash and other
adjustments.
Cash generated from operations excluding business exits
1
reflects the above, the direct cash flow impact of
the cyber incident (£20.1m) announced previously. The £30.0m of pension deficit contributions are in
accordance with the deficit funding contribution schedule previously agreed with the scheme trustees as
part of the 2020 triennial valuation.
Free cash flow before business exits
1,2
for the year ended 31December 2023 was an outflow of £115.5m
(2022: outflow £42.4m). This reflects the reduction in cash generated from operations and increased capital
expenditure on technology across the Group.
1. Definitions of the alternative performance measures and related Key Performance Indicators (KPIs) can be found in section 8.2.
2. From 1January 2023 free cash flow and free cash flow excluding business exits are presented after deducting the capital element of lease
payments and receipts. Comparative amounts have been re-presented
Section 2: Results for the year continued
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Financial statements

Notes to the consolidated financial statements continued
2.1 Contract accounting
At 31 December 2023, the Group had the following results and balance sheet items related to long-term
contracts:
Long-term contractual revenue
2.2
2,104.0
Deferred income
537.5
640.7
Contract fulfilment assets (non-current)
3.1.3
257.0
263.0
Onerous contract provisions
43.3
52.8
Background
The Group operates diverse businesses. The majority of the Group’s revenue is from contracts greater than
two years in duration (long-term contractual), representing 75% of Group revenue in 2023 (2022: 74%).
These long-term contracts can be complex in nature given the breadth of solutions the Group offers and the
transformational activities involved. Typically, Capita takes a customer’s process and transforms it into a
more efficient and effective solution which is then operated for the customer. The outcome is a high quality
solution that addresses a customer’s needs and is delivered consistently over the life of the contract.
The Group recognises revenue on long-term contracts as the value is delivered to the customer, which is
generally evenly over the contract term, regardless of any restructuring and transformation activity required
to deliver the services to the customer. Capita will often incur greater costs during contract transformation
phases with costs diminishing over time as the target operating model is implemented and efficiencies
realised. This results in lower profits or losses in the early years of contracts and potentially higher profits in
later years as the transformation activities are successfully completed and the target operating model fully
implemented (the business as usual (BAU) phase). The inflection point is when the contract becomes
profitable.
Non-current contract fulfilment assets are recognised for those costs qualifying for capitalisation. The
utilisation of these assets is recognised over the contract term. The timing of cash receipts from customers
typically matches when the costs are incurred to transform, restructure and run the service. This results in
income being deferred and released when the Group delivers against its obligations to provide services and
solutions to its customers.
An example, showing the revenue, cost, profit and cash flow of a typical long-term contract lifecycle is as
follows:
Significant accounting estimates and assumptions
Due to the size and complexity of some of the Group’s contracts, there are significant judgements to be
applied, specifically in assessing: (i) the recoverability of non-current contract fulfilment assets; and (ii) the
completeness of the customer and onerous contract provisions. These judgements are dependent on
assessing the contract’s future profitability and give rise to a key source of estimation uncertainty. It is
possible that outcomes within the next financial year may be different from management’s assumptions and
could require a material adjustment to the carrying amounts of contract assets and onerous contract
provisions.
Significant accounting judgements
Significant judgement is exercised by management as to when to recognise revenue from variations or
scope changes on long-term contracts. There is a risk that revenue may be recognised even though it is not
probable that consideration will be collected, which could be due to uncertainties over contractual terms and
ongoing negotiations with clients. Judgement is also required when customers request scope changes to
determine if there is a contract modification or a contract termination followed by a new contract. Contract
terminations can lead to the immediate recognition of any deferred income being held for recognition in
future periods. Refer to note 2.2 for the Group’s accounting policies.
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Financial statements

Notes to the consolidated financial statements continued
2.1 Contract accounting continued
Assessing contract profitability
In assessing a contract’s future lifetime profitability, management must estimate forecast revenue and costs
to both transform and run the service over the remaining contract term. The ability to accurately forecast the
outcomes involves estimates in respect of: costs to be incurred; cost savings to be achieved; future
performance against any contract-specific key performance indicators (KPIs) that could trigger variable
consideration or service credits; outcome of any commercial negotiations; and impact of inflation on the cost
base and the indexation of revenue.
The level of uncertainty in the estimated future profitability of a contract is directly related to the stage in the
life-cycle of the contract and the complexity of the performance obligations. Contracts in the transformation
stage are considered to have a higher level of uncertainty because of:
• the ability to accurately estimate the costs to deliver the transformed process;
• the dependency on the customer to agree to the specifics of the transformation: for example, where they
are involved in certifying that the new process or, the new technical solution, designed by Capita meets
their specific requirements; and
• the assumptions made to forecast expected savings in the target operating model.
Those contracts which are in BAU tend to have a much lower level of uncertainty in estimating future
profitability.
Recoverability of non-current contract fulfilment assets and completeness of onerous contract provisions
Management first assesses whether contract assets are impaired and then further considers whether an
onerous contract exists. For half and full year reporting, the Audit and Risk Committee specifically reviews
the material judgements and estimates, and the overall approach to this assessment in respect of the
Group’s major contracts, including comparison against previous forecasts. Major contracts include those
that are material in size or risk to the Group’s results. An assessment of which contracts are major contracts
is performed twice a year, and to enable comparability the prior period amounts below are re-presented to
reflect the same scope as the current period. Other contracts are reported to the Audit and Risk Committee
as deemed appropriate. These contracts are collectively referred to as ‘major contracts’ in the remainder of
this note.
The major contracts contributed £1.1 billion (2022: £1.1 billion) or 42% (2022: 42%) of Group adjusted
revenue. Non-current contract fulfilment assets at 31 December 2023 were £257.0m (2022: £263.0m), of
which £125.1m (2022: £109.7m) relates to major contracts with ongoing transformational activities. The
remainder relates to contracts post transformation and includes non-major contracts.
The major contracts, both pre- and post-transformation, are rated according to their financial risk profile,
which is linked to the level of uncertainty over future assumptions. For those that are in the high and
medium rated risk categories the associated non-current contract fulfilment assets were, in aggregate,
£52.8m at 31 December 2023 (2022: £42.2m). The recoverability of these assets is dependent on no
significant adverse change in the key contract assumptions arising during the next financial year. The
balance of deferred income associated with these contracts was £109.5m at 31 December 2023 (2022:
£116.2m) and is forecast to be recognised as performance obligations continue to be delivered over the life
of the respective contracts. Onerous contract provisions associated with these contracts were £37.3m at
31 December 2023 (2022: £42.5m).
Following these reviews, and reviews of smaller contracts across the business, as outlined in note 3.1.3,
non-current contract fulfilment asset impairments of £3.4m (2022: £3.8m) were identified and recognised
within adjusted cost of sales, of which £nil (2022: £0.5m) relates to non-current contract fulfilment assets
added during the period, and net onerous contract provisions of £7.1m (2022: £1.7m) were identified and
recognised in adjusted cost of sales.
Given the quantum of the relevant contract assets and liabilities, and the nature of the estimates noted
above, management has concluded it is reasonably possible, that outcomes within the next financial year
may be different from management’s current assumptions and could require a material adjustment to the
carrying amounts of contract assets and onerous contract provisions. However, as noted above, £125.1m of
non-current contract fulfilment assets relates to major contracts with ongoing transformational activities;
and, £52.8m of non-current contract fulfilment assets and £37.3m of onerous contract provisions relate to
the highest and medium rated risk category. Due to the level of uncertainty, combination of variables and
timing across numerous contracts, it is not practical to provide a quantitative analysis of the aggregated
judgements that are applied, and management do not believe that disclosing a potential range of outcomes
on a consolidated basis would provide meaningful information to a user of the financial statements. Due to
commercial sensitivities, the Group does not specifically disclose the amounts involved in any individual
contract.
Certain major transformation contracts have key milestones during the next twelve months and an inability
to meet these key milestones could lead to reduced profitability and a risk of impairment of the associated
contract assets. These include contracts with the BBC, Transport for London, Department for Work and
Pensions and the City of London Police.
Additional information, which does not form part of these consolidated financial statements, on the results
and performance of the underlying divisions including the outlook on certain contracts is set out in the
divisional performance review in the strategic report.
Section 2: Results for the year continued
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Financial statements

Notes to the consolidated financial statements continued
2.2 Revenue including segmental revenue
Accounting policies
Revenue
The Group operates a diverse range of businesses and accordingly applies a variety of methods for
revenue recognition, based on the principles set out in IFRS 15 Revenue from Contracts with Customers.
The revenue and profits recognised in any period are based on the delivery of performance obligations and
an assessment of when control is transferred to the customer.
Revenue is recognised either when the performance obligation in the contract has been performed (‘point-
in-time’ recognition) or ‘over-time’ as control of the performance obligation is transferred to the customer.
For all contracts, the Group determines if the arrangement with a customer creates enforceable rights and
obligations. This assessment results in certain Master Service Agreements (MSA) or Frameworks not
meeting the definition of a contract under IFRS 15 and as such the individual call-off agreements, linked to
the MSA, are treated as individual contracts.
The Group enters into contracts which contain extension periods, where either the customer or both parties
can choose to extend the contract or there is an automatic annual renewal, and/or termination clauses that
could impact the actual duration of the contract. Judgement is applied to assess the impact that these
clauses have when determining the appropriate contract term. The term of the contract impacts both the
period over which revenue from performance obligations may be recognised and the period over which non-
current contract fulfilment assets and capitalised costs to obtain a contract are expensed.
For contracts with multiple components to be delivered such as transformation, transitions and the delivery
of outsourced services, management applies judgement to consider whether those promised goods and
services are:
(i) distinct – to be accounted for as separate performance obligations;
(ii) not distinct – to be combined with other promised goods or services until a bundle is identified that is
distinct; or,
(iii) part of a series of distinct goods and services that are substantially the same and have the same
pattern of transfer to the customer.
At a contract’s inception the total transaction price is estimated, being the amount to which the Group
expects to be entitled and has rights to under the contract. This includes an assessment of any variable
consideration where the Group’s performance may result in additional revenues based on the achievement
of agreed Key Performance Indicators (KPIs). Such amounts are only included based on the expected
value, or the most likely outcome method, and only to the extent that it is highly probable that no revenue
reversal will occur.
The transaction price does not include estimates of consideration resulting from change orders for
additional goods and services unless these are already agreed.
After the total transaction price is determined, the Group allocates this to the identified performance
obligations in proportion to their relative standalone selling prices and recognises revenue when (or while)
those performance obligations are satisfied.
The Group infrequently sells standard products with observable standalone prices due to the specialised
services required by customers, consequently the Group applies judgement to determine an appropriate
standalone selling price. More frequently, the Group sells customers bespoke solutions, and in these cases
the Group typically uses the expected cost-plus margin or a contractually stated price approach to estimate
the standalone selling price of each performance obligation.
The Group may offer price step downs during the life of a contract, but with no change to the underlying
scope of services to be delivered. In general, any such variable consideration, price step down or discount
is included in the total transaction price to be allocated across all performance obligations unless it relates
to only one performance obligation in a contract.
For each performance obligation to be recognised over-time, the Group applies a revenue recognition
method that faithfully depicts the Group’s performance in transferring control of the goods or services to the
customer. This decision requires assessment of the real nature of the goods or services that the Group has
promised to transfer to the customer. The Group applies the relevant output or input method consistently to
similar performance obligations in other contracts.
When using the output method, the Group recognises revenue on the basis of direct measurements of the
value to the customer of the goods and services transferred to date relative to the remaining goods and
services under the contract. This is a faithful depiction of the transfer of services since the service delivered
to the customer is unchanged. Where the output method is used, in particular for long-term service
contracts where the series guidance is applied, the Group often uses a method of time elapsed which
requires minimal estimation. Certain long-term contracts use output methods based upon estimations of:
user numbers; service activity levels; or fees collected.
When transfer of control is most closely aligned to Group efforts in delivering the service, the input method
is used to measure progress and revenue is recognised in direct proportion to costs incurred. This is a
faithful depiction of the transfer of services because costs (or other inputs) most accurately reflect the
incremental benefits received by the customer from efforts to date.
If performance obligations in a contract do not meet the over-time criteria, the Group recognises revenue at
a point-in-time when the service or good is delivered.
Contract modifications
The Group’s contracts are often amended for changes in contract specifications and requirements. Contract
modifications exist when the amendment either creates new, or changes existing, enforceable rights and
obligations. The effect of a contract modification on the transaction price and the Group’s measure of
progress for the performance obligation to which it relates, is recognised as an adjustment to revenue in
one of the following ways:
a) prospectively as an additional performance obligation (this is typically when new distinct goods or
services are provided on an existing contact);
b) prospectively as a termination of the existing contract and creation of a new contract;
c) as part of the original contract using a cumulative catch up (this is typically where the modification
changes the services provided to date); or,
d) as a combination of (b) and (c).
In respect of contracts for which the Group has decided there is a series of distinct goods and services that
are substantially the same and have the same pattern of transfer where revenue is recognised over-time,
the modification will always be treated under either (a) or (b); (d) may arise when a contract has a part-
termination and a modification of the remaining performance obligations.
AP
Section 2: Results for the year continued
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Financial statements

Notes to the consolidated financial statements continued
2.2 Revenue including segmental revenue continued
Judgement is applied in relation to the accounting for such modifications where the final terms or legal
contracts have not been agreed prior to the period end because management needs to determine if a
modification has been approved and if it either creates new, or changes existing, enforceable rights and
obligations of the parties. Depending upon the outcome of such negotiations, the timing and amount of
revenue recognised may be different in the relevant accounting periods. Modification and amendments to
contracts are undertaken through an agreed formal process. For example, if a change in scope has been
approved but the corresponding change in price is still being negotiated, management uses judgement to
estimate the change in total transaction price. Importantly, any variable consideration is only recognised to
the extent that it is highly probable that no revenue reversal will occur. For example, if pricing is subject to
indexation based on an external metric (such as the Consumer Price Index (CPI) or the Retail Price Index
(RPI)) then the revenue related to the indexation will only be recognised once the relevant indexation is
confirmed. Future indexation will not be recognised because it is not highly probable that a significant
reversal of an indexation adjustment will not occur.
Principal versus agent
The Group has arrangements with some of its customers whereby it needs to determine if it acts as a
principal or an agent because more than one party is involved in providing the goods and services to the
customer. The Group is a principal if it controls a promised good or service before transferring that good or
service to the customer. The Group is an agent if its role is to arrange for another entity to provide the
goods or services. Factors considered in making this assessment are most notably: the discretion the
Group has in establishing the price for the specified good or service; whether the Group has inventory risk;
and whether or not the Group is primarily responsible for fulfilling the promise to deliver the service or good.
This assessment of control requires judgement particularly in relation to certain service contracts. An
example is the provision of certain recruitment and learning services where the Group may be assessed to
be agent or principal dependent upon the facts and circumstances of the arrangement and the nature of the
services being delivered.
Where the Group is acting as a principal, revenue is recorded on a gross basis. Where the Group is acting
as an agent, revenue is recorded on a net basis, recognising only the commission or fee earned as
revenue.
Licences
Software licences delivered by the Group can either be right to access (active) or right to use (passive)
licences, which determines the timing of revenue recognition. The assessment of whether a licence is active
or passive involves judgement.
The key determinant of an active licence is whether or not the Group is required to undertake continuing
activities that significantly affect the licensed intellectual property (or the customer has a reasonable
expectation that it will do so) and the customer is, therefore, exposed to positive (or negative) impacts
resulting from those changes. Where the Group is responsible for any maintenance, continuing support,
updates and upgrades, then the sale of the initial software is not distinct. All other licences which have
significant standalone functionality are treated as passive licences.
When software upgrades are sold as part of the software licence agreement (ie software upgrades are
promised to the customer), the Group applies judgement to assess whether the software upgrades are
distinct from the licence (ie a separate performance obligation). If the upgrades are considered fundamental
to the ongoing use of the software by the customer, the upgrades are not considered distinct and not
accounted for as a separate performance obligation.
For each contract that includes a separate licence performance obligation, the Group considers all the facts
and circumstances in determining whether the licence revenue is recognised over-time (active) or at a point-
in-time (passive) from the go-live date of the licence.
Deferred and accrued income
The Group’s customer contracts include a diverse range of payment schedules dependent upon the nature
and type of goods and/or services being provided. This can include performance-based payments or
progress payments as well as regular monthly or quarterly payments for ongoing service delivery. Payments
for transactional goods and services may be at delivery date, in arrears or part payment in advance. The
long-term service contracts tend to have higher cash flows early in the contract to cover transformational
activities.
Where payments received are greater than the revenue recognised up to the balance sheet date, the Group
recognises a deferred income contract liability for this difference. Where payments received are less than
the revenue recognised up to the balance sheet date, the Group recognises an accrued contract income
asset for this difference.
At each balance sheet date, the Group assesses whether there is any indication that accrued contract
income assets may be impaired by considering whether or not any revenue reversal could occur. Where an
indicator of impairment exists, the Group makes a formal estimate of the asset’s recoverable amount.
Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired
and is written down to its recoverable amount.
Contract types
The Group disaggregates revenue from contracts with customers by contract type, because management
believe this best depicts how the nature, amount, timing, and uncertainty of the Group’s revenue and cash
flows are affected by economic factors. Categories are: long-term contractual – greater than two years;
short-term contractual – less than two years; and transactional. The years being measured from the service
commencement date.
Long-term contractual – greater than two years
The Group provides a range of services under contracts with a duration of more than two years. The nature
of contracts or performance obligations within this revenue type includes:
(i) long-term outsourced service arrangements in the public and private sectors; and
(ii) active software licence arrangements.
The majority of long-term contractual agreements form part of a series of distinct goods and services
because they are substantially the same service; and have the same pattern of transfer, since the series
constitutes services provided in distinct time increments (eg daily, monthly, quarterly or annually), and
therefore treats the series as one performance obligation.
Short-term contractual – less than two years
The nature of contracts or performance obligations within this revenue type includes:
(i) short-term outsourced service arrangements in the public and private sectors; and
(ii) software maintenance contracts.
Section 2: Results for the year continued
Capita plc Annual Report and Accounts
163
Financial statements

Notes to the consolidated financial statements continued
2.2 Revenue including segmental revenue continued
The Group has assessed that maintenance and support (ie on-call support, remote support) for software
licences is a performance obligation that can be considered capable of being distinct and separately
identifiable in a contract if the customer has a passive licence. These recurring services are substantially
the same because the nature of the promise is for the Group to ‘stand ready’ to perform maintenance and
support when required by the customer. Each day of ‘standing ready’ is distinct from each subsequent day
and is transferred in the same pattern to the customer.
Transactional (point-in-time) contracts
The Group delivers a range of goods or services in all reportable segments that are transactional services
for which revenue is recognised at the point-in-time when control of the goods or services has transferred to
the customer. This may be at the point of physical delivery of goods or services and acceptance by the
customer or when the customer obtains control of an asset or service in a contract with customer-specified
acceptance criteria.
The nature of contracts or performance obligations within this revenue type includes:
(i) provision of computing hardware goods;
(ii) passive software licence agreements;
(iii) commission received as agent from the sale of third-party software; and
(iv) fees received in relation to the delivery of professional services.
2.2.1 Segmental revenue
The Group’s operations are managed separately according to the nature of the services provided, with each
segment representing a strategic business division offering a different package of client services across the
markets the Group serves. Capita plc is a reconciling item and not an operating segment. A description of
the service provision for each segment can be found in the strategic report on pages 14 to 21. Inter-
segmental pricing is based on set criteria and is either charged on an arm's length basis or at cost.
The tables below present revenue for the Group’s business segments as reported to the Chief Operating
Decision Maker. The Group now comprises two divisions - Capita Public Service and Capita Experience -
following the completion of the Group’s exit of the non-core businesses in the Capita Portfolio division.
Comparative information has been re-presented to reflect businesses exited during 2023, and accordingly
the Capita Portfolio division is no longer disclosed as a division. Comparative information has also been re-
presented to reflect the move of businesses between segments during 2023 to enable comparability.
Adjusted revenue, excluding results from businesses exited in both years (adjusting items), was £2,642.1m
(2022: £2,609.0m), an increase of 1.3% (2022: increase 1.7%).
31 December 2023
Notes
Long-term contractual
1,206.6
875.9
2,082.5
21.5
2,104.0
Short-term contractual
195.9
288.4
484.3
19.1
503.4
Transactional (point-in-time)
56.1
19.2
75.3
131.9
207.2
Total segment revenue
1,458.6
1,183.5
2,642.1
172.5
2,814.6
Trading revenue
1,507.9
1,221.9
2,729.8
194.4
2,924.2
Inter-segment revenue
(49.3)
(38.4)
(87.7)
(21.9)
(109.6)
Total adjusted segment revenue
1,458.6
1,183.5
2,642.1
—
2,642.1
Business exits – trading
2.8
—
—
—
172.5
172.5
Total segment revenue
1,458.6
1,183.5
2,642.1
172.5
2,814.6
Long-term contractual
1,166.8
987.6
2,154.4
81.8
2,236.2
Short-term contractual
236.8
150.5
387.3
107.5
494.8
Transactional (point-in-time)
51.2
16.1
67.3
216.3
283.6
Total segment revenue
1,454.8
1,154.2
2,609.0
405.6
3,014.6
Trading revenue
1,497.0
1,194.4
2,691.4
490.0
3,181.4
Inter-segment revenue
(42.2)
(40.2)
(82.4)
(84.4)
(166.8)
Total adjusted segment revenue
1,454.8
1,154.2
2,609.0
—
2,609.0
Business exits – trading
2.8
—
—
—
405.6
405.6
Total segment revenue
1,454.8
1,154.2
2,609.0
405.6
3,014.6
Geographical location
The Group generates revenue largely in the UK and Europe. The table below presents revenue by
geographical location.
2023
2022
Revenue
2,526.0
282.5
6.1
2,814.6
2,731.2
270.8
12.6
3,014.6
Section 2: Results for the year continued
Capita plc Annual Report and Accounts
164
Financial statements

Notes to the consolidated financial statements continued
2.2 Revenue including segmental revenue continued
2.2.2 Order book
The tables below show the order book for each division, categorised into long-term contractual (contracts
with length greater than two years) and short-term contractual (contracts with length less than two years).
The length of the contract is calculated from the service commencement date. The figures represent the
aggregate amount of currently contracted transaction price allocated to the performance obligations that are
unsatisfied or partially unsatisfied. Revenue expected to be recognised upon satisfaction of these
performance obligations is as follows:
Long-term contractual
3,381.1
2,111.2
—
5,492.3
Short-term contractual
164.9
188.2
37.2
390.3
Total
3,546.0
2,299.4
37.2
5,882.6
Long-term contractual
2,916.7
2,465.3
201.9
5,583.9
68.3
61.4
91.6
221.3
Total
2,985.0
2,526.7
293.5
5,805.2
The table below shows the expected timing of revenue to be recognised from long-term contractual orders
at 31 December 2023:
< 1 year
765.2
574.2
1,339.4
1–5 years
2,155.6
1,378.5
3,534.1
> 5 years
460.3
158.5
618.8
Total
3,381.1
2,111.2
5,492.3
Prior year comparative information is not presented for the expected timing of revenue recognition because
it is a forward looking disclosure and therefore management does not believe that such disclosure provides
meaningful information to a user of the consolidated financial statements.
The order book represents the consideration that the Group will be entitled to receive from customers when
the Group satisfies its remaining performance obligations under the contracts. However, the total revenue
that will be earned by the Group will also include non-contracted volumetric revenue, future indexation
linked to an external metric, new wins, scope changes, and anticipated contract extensions. These
elements have been excluded from the above tables because they are not contracted. Additionally, revenue
from contract extensions is excluded from the order book unless they are pre-priced extensions whereby
the Group has a legally binding obligation to deliver the performance obligations during the extension
period. The total revenue related to pre-priced extensions included in the tables above amounted to
£513.8m (2022: £577.0m). The amounts presented do not include orders for which neither party has
performed, and each party has the unilateral right to terminate a wholly unperformed contract without
compensating the other party.
Of the £5.5 billion (2022: £5.6 billion) revenue to be earned on long-term contracts, £3.4 billion (2022: £4.2
billion) relates to major contracts. This amount excludes revenue that will be derived from frameworks
(transactional ‘point-in-time’ contracts), non-contracted volumetric revenue, non-contracted scope changes
and future unforeseen volume changes from these major contracts, which together are anticipated to
contribute an additional £0.6 billion (2022: £0.7 billion) of revenue to the Group over the life of these
contracts.
The Group performs various services for a number of UK Government ministerial departments and
considers these individual ministerial departments to be separate customers due to the limited economic
integration between each ministerial department. Revenues of £319.8m from one customer in the Capita
Public Service division represented more than 10% of the Group’s total revenues (2022: no customer
represented more than 10% of the Group’s total revenues)
In February 2024, the Group extended and expanded its contract with a major European telecoms provider.
The new contract is based on expected volumes, and therefore treated as a framework contract under IFRS
15. As a result, £365m included in the Capita Experience order book at 31 December 2023 relating to the
previous contract has been released. The new contract is expected to be worth up to £420m to 2030.
2.2.3 Deferred income
The Group’s deferred income balances solely relate to revenue from contracts with customers. Revenue
recognised in the reporting period that was included in the deferred income balance at the beginning of the
period was £599.0m (2022: £744.2.m).
Movements in the deferred income balances were driven by transactions entered into by the Group in the
normal course of business during the current and prior year, other than the accelerated revenue recognised
of £9.9m which primarily relates to an early termination of a contract in Capita Experience (2022: £nil).
Section 2: Results for the year continued
Capita plc Annual Report and Accounts
165
Financial statements

Notes to the consolidated financial statements continued
2.3 Operating profit
2.3.1 Items charged/(credited) to reported operating profit
Depreciation of property, plant and equipment
3.2
31.2
40.9
Depreciation of right-of-use assets
3.5
48.3
56.0
Impairment of property, plant and equipment
3.2
10.8
4.7
Impairment/(reversal of impairment) of right-of-use assets
3.5
15.7
(2.7)
Amortisation of intangible assets
3.3
29.3
41.5
Impairment of intangible assets
3.3
0.9
5.9
Impairment of goodwill
3.4
42.2
169.0
Impairment of disposal group assets held for sale
2.8
18.1
—
Loss on sale of property, plant and equipment and intangibles
2.9.1
0.7
3.5
Income from foreign exchange differences
5.1
6.9
Contract fulfilment asset utilisation, impairment and derecognition
3.1.3
84.5
85.7
Contract termination gains
6.0
—
fulfilment asset utilisation
9.8
—
Onerous contract provisions (net of additions and releases)
7.1
1.7
Contract termination gains: customer contracts usually contain provisions to compensate the Group for
exit costs and future profits in the event of early termination. During 2023, customer contract terminations in
Capita Experience, for customer convenience, led to associated exit fees being earned by Capita of £6.0m
(2022: nil) and recorded as income during the year.
The net of: accelerated deferred income unwind and contract fulfilment asset utilisation: during 2023
the Group recognised a gain of £9.8m (2022: no gains or losses) related to the net of accelerated deferred
income unwinds and non-current contract fulfilment asset utilisation. This primarily related to Capita
Experience where a contract was terminated earlier than planned.
Onerous contract provisions:
during 2023 the Group recognised a net loss of £7.1m related to onerous
contract provisions (refer to note 3.6) in Capita Experience (2022: £1.7m loss related to contracts in Capita
Experience).
2.3.2 Fees payable to auditors
The amounts included in the table below relate to fees payable to KPMG LLP and its associates:
statements
4.5
5.1
The audit of the financial statements of the Group’s subsidiary companies
0.9
1.0
Total audit and audit-related services
5.4
6.1
Other assurance services
0.2
—
Audit-related assurance services
0.3
1.6
Total non-audit services
0.5
1.6
Total audit and non-audit services
5.9
7.7
The non-audit fees in respect of 2023 related to the review of interim results, ISAE 3402 assurance
reporting on controls operated by a subsidiary, and ISAE 3000 assurance reporting over non-financial
metrics reported within the Annual Report and Accounts. In respect of 2022, the non-audit fees related to
the review of interim results, and services as reporting accountant for the disposal of Pay360 Limited.
Section 2: Results for the year continued
Capita plc Annual Report and Accounts
166
Financial statements

Notes to the consolidated financial statements continued
2.4 Adjusted operating profit and adjusted profit before tax
Accounting policies
IAS 1 Presentation of Financial Statements permits an entity to present additional information for specific
items to enable users to better assess the entity’s financial performance.
The Board has adopted a policy to disclose separately those items that it considers are outside the
underlying operating results for the particular year under review and against which the Group’s performance
is assessed internally. In the Board’s judgement, these need to be disclosed separately by virtue of their
nature, size and/or incidence, for users of the consolidated financial statements to obtain an understanding
of the financial information and the underlying performance of the Group. In general, the Board believes that
alternative performance measures (APMs) are useful for investors because they provide further clarity and
transparency of the Group’s financial performance and are closely monitored by management to evaluate
the Group’s operating performance to facilitate financial, strategic and operating decisions. Accordingly,
these items are also excluded from the discussion of divisional performance in the strategic report. This
policy is kept under review by the Board and the Audit and Risk Committee. Refer to Section 8.2 for further
details of the Group’s APMs.
The Board considers APMs to be helpful to the reader, but notes that APMs have certain limitations,
including the exclusion of significant recurring and non-recurring items, and may not be directly comparable
with similarly titled measures presented by other companies.
Those items excluded from the adjusted income statement are: business exits; amortisation and impairment
of acquired intangibles; impairment of goodwill; certain mark-to-market valuation changes that impact net
finance expense/income; the costs associated with the cyber incident in March 2023, and the costs
associated with the cost reduction programme announced in November 2023.
The items below are excluded from the adjusted results:
Reported
(52.0)
(79.6)
(106.6)
61.4
Amortisation and impairment of acquired intangibles
3.3
0.2
5.1
0.2
5.1
Impairment of goodwill
3.4
42.2
169.0
42.2
169.0
Net finance expense/(income)
4.3
—
—
2.2
(3.4)
Business exits
2.8
36.4
(16.5)
38.8
(182.3)
Cyber incident
25.3
Cost reduction programme
54.4
Adjusted
106.5
78.0
56.5
49.8
1. Adjusted operating profit increased by 36.5% (2022: increased 232.4%) and adjusted profit before tax increased by 13.5% (2022: increased
160.1%). Adjusted operating profit of £106.5m (2022: profit £78.0m) was generated on adjusted revenue of £2,642.1m (2022: £2,609.0m)
resulting in an adjusted operating margin of 4.0% (2022: 3.0%).
2. The tax charge on adjusted profit before tax is £31.1m (2022: £4.4m charge) resulting in adjusted profit after tax of £25.4m (2022: £45.4m
profit).
3. The adjusted operating profit and adjusted profit before tax for 2022 have been re-presented for the impact of business exits during 2023 and
the change in adjusting items. This has resulted in adjusted operating profit decreasing from £102.9m to £78.0m and adjusted profit before
tax decreasing from £73.8m to £49.8m
Amortisation and impairment of acquired intangible assets: the Group recognised acquired intangible
amortisation of £0.2m (2022: £5.1m). These charges are excluded from the adjusted results of the Group
because they are non-cash items generated from historical acquisition related activity. The charge is
included within administrative expenses.
Impairment of goodwill: the Group carries on its balance sheet significant balances related to goodwill.
Goodwill is subject to annual impairment testing and any impairment charges are reported separately
because they are non-cash items generated from historical acquisition related activity. The charge is
included within administrative expenses.
Net finance costs: net finance costs excluded from adjusted profits relate to movements in the mark-to-
market value of forward foreign exchange contracts to cover anticipated future costs and therefore have no
equivalent offsetting transaction in the accounting records, also refer to note 4.2.2.
Business exits: the trading result of businesses exited, or in the process of being exited, and the gain or
loss on disposals are excluded from the Group's adjusted results. Note 2.8 provides further detail regarding
which income statement line items are impacted by business exits.
Cyber incident: As detailed in the Chief Financial Officer's review, the Group has incurred exceptional
costs associated with the cyber incident. These costs comprise specialist professional fees, recovery and
remediation costs and investment to reinforce Capita’s cyber security environment. A charge of £25.3m has
been recognised in the year ended 31 December 2023, which excludes any potential insurance receipts
because they had not met the criteria for recognition. Please also refer to note 6.2 contingent liabilities. The
charge is included within administrative expenses.
Cost reduction programme: As detailed in the Chief Financial Officer’s review, the Group announced the
implementation of a significant cost reduction programme in November 2023. A charge of £54.4m has been
recognised in the year ended 31 December 2023 for the costs to deliver the cost reduction programme. This
includes redundancy and other costs of £23.3m to deliver a significant reduction in indirect support function
and overhead roles, and property related costs of £31.1m arising from the associated rationalisation of the
Group’s property estate with impairment of right-of-use assets and property, plant & equipment, and
provisions in respect of onerous property costs (refer to notes 3.2, 3.5 and 3.6). The charge is included
within administrative expenses.
Refer to note 2.9.1 for the cash flow impact of the above.
AP
Section 2: Results for the year continued
Capita plc Annual Report and Accounts
167
Financial statements

Notes to the consolidated financial statements continued
2.5 Segmental information
The Group’s operations are managed separately according to the nature of the services provided, with each segment representing a strategic business division offering a different package of client outcomes across the
markets the Group serves. Capita plc is a reconciling item and not an operating segment. A description of the services provided by each segment can be found in the strategic report on pages 14 to 21. The tables below
present profit for the Group’s business segments. The Group now comprises two divisions - Capita Public Service and Capita Experience - following the completion of the Group’s exit of the non-core businesses in the
Capita Portfolio division. For segmental reporting, the costs of the central functions have been allocated to the segments using appropriate drivers such as adjusted revenue, adjusted profit or headcount. Comparative
information has been re-presented to reflect businesses exited during 2023, and accordingly the Capita Portfolio division is now not disclosed as a division, and central functions’ costs that were allocated to Capita
Portfolio have been reallocated to the Capita plc segment. Comparative information has also be re-presented to reflect the move of businesses between segments during 2023 to enable comparability. Information on
segmental revenue can be found in note 2.2.
Year ended 31 December 2023
Year ended 31 December 2022
31 December 2023
Notes
89.3
50.9
(33.7)
106.5
—
106.5
93.7
35.7
(51.4)
78.0
—
78.0
(7.0)
(37.3)
(10.1)
—
(54.4)
(54.4)
—
—
—
—
—
—
(3.4)
(3.4)
39.7
39.7
Total trading result
82.3
13.6
(43.8)
106.5
(57.8)
48.7
93.7
35.7
(51.4)
78.0
39.7
117.7
—
(33.0)
(33.0)
—
(23.2)
(23.2)
—
(67.7)
(67.7)
—
(174.1)
(174.1)
Operating profit/(loss)
106.5
(158.5)
(52.0)
78.0
(157.6)
(79.6)
Interest income
4.3
8.7
8.9
Interest expense
4.3
(60.9)
(40.6)
Share of results in associates and investment gains
—
5.8
(Loss)/gain on business disposal
2.8
(2.4)
166.9
(Loss)/profit before tax
(106.6)
61.4
3.2
42.5
57.8
3.6
103.9
4.9
108.8
38.2
66.5
14.6
119.3
19.1
138.4
3.5
1.5
2.6
0.1
4.2
23.2
27.4
—
7.7
(0.6)
3.1.3
59.8
16.0
—
75.8
8.7
84.5
67.2
16.3
—
Onerous contract provisions
2.3
—
7.1
—
7.1
—
7.1
—
1.7
—
1.7
—
1.7
Geographical location
The table below presents the carrying amount of non-current assets (excluding deferred tax, financial assets and employee benefits) by the geographical location of those assets.
2023
2022
United
United
Non-current assets
1,112.6
14.1
17.0
1,143.7
1,320.9
11.7
8.9
1,341.5
Section 2: Results for the year continued
Capita plc Annual Report and Accounts
168
Financial statements

Notes to the consolidated financial statements continued
2.6 Taxation
Accounting policies
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the income
statement except to the extent that it relates to items recognised directly in equity or other comprehensive
income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax
rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in
respect of previous years.
Deferred tax is provided, using the liability method, on all temporary differences at the balance sheet date
between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred tax liabilities are recognised for all taxable temporary differences:
• except where the deferred tax liability arises from the initial recognition of goodwill;
• except where the deferred tax liability arises from the initial recognition of an asset or liability in a
transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; and
• in respect of taxable temporary differences associated with investments in subsidiaries, associates and
interests in joint ventures, except where the timing of the reversal of the temporary differences can be
controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the
extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the
deferred tax asset to be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when
the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the balance sheet date.
Significant accounting judgements and assumptions
Deferred tax assets are recognised for all deductible temporary differences, carry-forward of unused tax
assets and unused tax losses, to the extent that it is probable that taxable profit will be available against
which the deductible temporary differences and the carry-forward of unused tax assets and unused tax
losses can be utilised, except where the deferred tax asset relating to the deductible temporary difference
arises from the initial recognition of an asset or liability in a transaction that is not a business combination
and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss. This
involves an assessment of when those assets are likely to reverse, and a judgement as to whether or not
there will be sufficient taxable profits available to offset the assets when they do reverse. This requires
assumptions regarding future profitability and is therefore inherently uncertain. To the extent assumptions
regarding future profitability change, there may be an increase or decrease in the amounts recognised in
respect of deferred tax assets as well as in the amounts recognised during the year in which the change
occurs.
Sensitivities and additional information relating to deferred tax assets/liabilities are provided in note 2.6.2.
E
AP
Section 2: Results for the year continued
Capita plc Annual Report and Accounts
169
Financial statements

Notes to the consolidated financial statements continued
2.6 Taxation continued
2.6.1 Income tax charge
The reported income tax charge for the period is £74.0m on reported loss before tax of £106.6m (2022:
reported income tax credit of £14.6m on reported profit of £61.4m), and an adjusted income tax charge for
the period of £31.1m on adjusted profit before tax of £56.5m (2022: adjusted tax charge of £4.4m on
adjusted profit of £49.8m). The most significant reconciling items, explaining the difference from the
standard UK weighted average corporation tax rate of 23.5% for the period (2022: 19.0%) are changes in
the accounting estimate of recognised deferred tax assets, unrecognised current year tax losses carried
forward and non-deductible goodwill impairment.
The forecast future adjusted effective tax rates, before and assuming no material changes to tax laws in the
jurisdictions in which Capita operates, are expected to be broadly similar to the UK corporation tax rate, with
an increase for taxable profits in higher tax rate jurisdictions.
The major components of the income tax charge/(credit) are set out below:
2023
2022
Not
adjusted
adjusted
Current income tax charge/(credit)
26.2
26.4
(0.2)
14.0
7.6
6.4
Adjustment in respect of prior years
4.0
4.0
—
(1.2)
(1.2)
—
differences
43.9
0.8
43.1
(36.7)
(11.3)
(25.4)
balances
(0.4)
(0.4)
—
3.0
3.0
—
Adjustment in respect of prior years
0.3
0.3
—
6.3
6.3
—
Total charge/(credit)
74.0
31.1
42.9
(14.6)
4.4
(19.0)
1
1
1. To enable a like-for-like comparison of adjusted results, the 2022 comparatives have been re-presented to exclude the businesses classified
as business exits during 2023 from adjusted profit. Refer to note 2.8.
Deferred tax movement on cash flow hedges
(2.6)
1.6
pension schemes
3.3
5.2
Current income tax movement on defined benefit pension scheme contributions
(19.2)
(7.2)
Deferred tax movement in relation to share-based payments
(0.1)
—
Current income tax deduction on the exercise of share options
(0.2)
—
Total credit
(18.8)
(0.4)
The reconciliation between the total tax charge/(credit) and the accounting profit multiplied by the UK
weighted average corporation tax rate is as follows:
Total tax
Current tax
(Loss)/profit before tax
(106.6)
61.4
(106.6)
61.4
corporation tax rate of 23.5% (2022: 19.0%)
(25.1)
11.7
(25.1)
11.7
years
a
4.0
(1.2)
4.0
(1.2)
Adjustments in respect of deferred tax of prior years
b
0.3
6.3
—
—
adjusted
0.2
(2.3)
0.2
(2.3)
Non-deductible expenses – business exit
c*
4.9
2.3
4.9
2.3
Non-deductible expenses – specific items
1.7
—
1.7
—
Loss/(profit) on disposal of businesses
d*
0.6
(31.6)
0.6
(31.6)
Non-deductible goodwill impairment
e*
9.9
32.0
9.9
32.0
Difference in rate recognition of temporary differences
(0.4)
3.0
—
—
Tax provided on unremitted earnings
f
0.2
1.4
—
—
jurisdictions
g
(4.3)
0.5
(2.9)
0.5
note
2.6.2
82.0
(36.7)
—
—
Fixed asset temporary differences
—
—
5.7
6.8
Current tax impact on other temporary differences
—
—
(0.4)
(6.4)
Carry forward of losses in current period
h
—
—
31.6
1.0
(2022: 20.8%)
i
74.0
(14.6)
30.2
12.8
statement
74.0
(14.6)
30.2
12.8
* These £15.4m (2022: £2.7m) of reconciling items relate to the reported tax charge only, with no impact on the adjusted tax charge. Further
details are given below.
a The £4.0m prior year charge adjustment includes: (i) £0.2m for additional uncertain tax positions provided against; (ii) £0.3m credit which
has a corresponding impact within deferred tax of prior years; and (iii) a £4.1m charge to adjust for finalisation of submitted tax returns for
which there is no opposite deferred tax credit in relation to the temporary difference true-up because these are unrecognised.
b Adjustments in respect of deferred tax of prior years mainly relate to £0.3m of charges which have a corresponding impact within current
income tax of prior years.
c* Business exit: relates to non-deductible closure costs associated with the sale of entities. Refer to note 2.8 for further details.
d* Relates to the application of the tax exemption on accounting losses from the sale of entities. Refer to note 2.8.1 for further details.
e* Relates to the goodwill impairments as detailed further in note 3.4.
f Movement on the deferred tax liability recognised on the unremitted earnings of those subsidiaries affected by withholding taxes.
g Mainly relates to tax payable at lower rates, eg in the Isle of Man.
h Relates to the carry forward of tax losses in the current period, most of which arise in relation to adjusting items (cost reduction programme
and cyber incident) and deductible pension contributions in the period.
i The current tax charge of £30.2m (2022: £12.8m) results in an effective current tax rate of (28.3)%, which is different from the UK weighted
average statutory rate of tax of 23.5% predominantly due to: non-deductible goodwill impairment; and unrecognised losses carried
forward. The impact of differing overseas tax rates is covered in footnote g.
Section 2: Results for the year continued
Capita plc Annual Report and Accounts
170
Financial statements

Notes to the consolidated financial statements continued
2.6 Taxation continued
2.6.2 Deferred tax
A change to the main UK statutory corporation tax rate was substantively enacted on 24 May 2021. The
rate applicable from 1 April 2023 increased from 19% to 25%. The net UK deferred tax assets for the period
to 31 December 2023, and the prior period, have been calculated based on this rate.
Deferred tax relates to the following:
Fixed assets which qualify for tax relief
90.8
(1.2)
—
(2.4)
87.2
differences
10.5
(1.5)
2.6
(0.3)
11.3
Pension schemes
5.9
(0.6)
(3.3)
(0.2)
1.8
Share-based payments
1.3
0.1
0.1
—
1.5
81.4
(42.5)
—
(2.2)
36.7
189.9
(45.7)
(0.6)
(5.1)
138.5
Jurisdictional netting
(0.4)
1.8
Net deferred tax assets
189.5
(45.7)
(0.6)
(5.1)
140.3
Acquired intangibles
(0.2)
0.1
—
—
(0.1)
Contract fulfilment assets
(2.2)
2.0
—
—
(0.2)
Unremitted earnings
(4.9)
(0.2)
—
—
(5.1)
(7.3)
1.9
—
—
(5.4)
Jurisdictional netting
0.4
(1.8)
Net deferred tax liabilities
(6.9)
1.9
—
—
(7.2)
Net deferred tax
182.6
(43.8)
(0.6)
(5.1)
133.1
2
1
1. Mainly trading losses available to shelter future profits and deferred interest.
2. Other movements includes business disposals.
The main movement in the net deferred tax asset is the income statement tax charge arising on the change
in the accounting estimate of deferred tax.
For the purpose of recognising deferred tax on the pension scheme surplus, withholding tax at 35% would
apply for any surplus being refunded to the Group at the end of the life of the scheme. Corporation tax at
25% would apply for any surplus expected to unwind over the life of the scheme. Management have
concluded that the corporation tax rate should apply to the recognition of deferred tax on the pension
scheme surplus, reflecting the Group’s intention regarding the manner of recovery of the asset.
Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will be
available against which the assets can be utilised. The recoverability of deferred tax assets is supported by
the deferred tax liabilities against which the reversal can be offset and the expected level of future taxable
profits available to offset the assets when they reverse.
The recognition of deferred tax assets at 31 December 2023 has been based on the forecast accounting
profits in the 2024-2026 business plans (BP) approved by the Board. This is the same plan used to derive
forecast cash flows for the goodwill impairment test (refer to note 3.4). A long-term growth rate of 1.7%, as
used for impairment test purposes, has been applied to the years beyond 2026. A reducing probability
factor has also been applied to future profits for the potential decrease in reliability of forecasts extrapolated
for later years, such that profits beyond seven years of the balance sheet date have not been considered
probable for the purpose of assessing deferred tax asset recognition.
Unused tax losses make up the majority of the temporary differences available to be utilised in future
periods. These losses mainly arose due to the historic adoption of IFRS 15, previous Covid-19 related
downward pressures on profits and tax deductible restructuring costs, and in the current year due to tax
deductible cost reduction programme expenses, cyber costs and pension contributions. Based on the
forecast accounting profits, management have concluded that some of the deductible temporary differences
and unused tax losses are not recognisable due to uncertainty in their recoverability. Therefore, there is a
decrease in the amounts previously recognised in respect of deferred tax assets, along with further
unrecognised temporary differences arising during the year. The impact of this is a charge to the income
statement of £45.2m. This is included in the movement in unrecognised temporary differences of £82.0m in
the tax reconciliation table in section 2.6.1 above, which also includes unrecognised current year temporary
differences (mainly losses) of £36.8m. The reported income statement charge includes £45.5m change in
the deferred tax asset estimate due to the reduction in future taxable profits on disposal of taxable
subsidiaries, reflected in the tax arising on business exits (see Note 2.8).
Deferred tax asset recognition depends on the reliability of management’s forecasts and the assumptions
that underlie them. Management have considered the severe but plausible downsides applied to the base-
case projections for assessing going concern and viability, to gauge sensitivity and identify a reasonable
possible alternative result. This scenario identified a further potential reduction in recognised deferred tax
assets of approximately £16m.
Section 2: Results for the year continued
Capita plc Annual Report and Accounts
171
Financial statements

Notes to the consolidated financial statements continued
2.6 Taxation continued
The Group has unrecognised tax losses and other temporary differences that are available for offset against
future taxable profits of the companies in which the losses or other temporary differences arose, but have
not been recognised because their recoverability is uncertain. The table below shows the amounts split
between UK and non-UK jurisdictions.
Tax losses
628.7
332.7
Other temporary timing differences
140.2
113.9
768.9
446.6
Tax losses
67.4
60.8
Other temporary timing differences
11.2
11.6
78.6
72.4
Total
847.5
519.0
The £328.5m increase in unrecognised tax losses and other temporary differences reflects the decrease in
the amounts previously recognised in respect of deferred tax assets, and unrecognised temporary
differences arising during the year due to tax deductible cost reduction programme expenses, cyber costs
and pension contributions.
Assets have no time expiry, but some losses are subject to specific loss restriction rules. £28.8m (2022:
£39.9m) of the losses were incurred by companies acquired by the Group and are not a result of the
Group’s trading performance.
Dividends received from subsidiaries are largely exempt from UK tax but may be subject to dividend
withholding taxes levied by the overseas tax jurisdictions in which the subsidiaries operate. The gross
temporary differences of those subsidiaries affected by such potential taxes is £48.4m (2022: £58.4m). A
deferred tax liability of £5.1m (2022: £4.9m) has been recognised on the unremitted earnings of those
subsidiaries affected by such potential taxes because the Group is able to control the timing of reversal and
it is anticipating dividends to be distributed. The earnings remitted during the year have resulted in a
reduction in the closing deferred tax liability.
2.6.3 Uncertain tax
positions
The Group files income tax returns in several jurisdictions and some of these returns are open to, or subject
to, tax authority audits or examinations. Tax returns contain matters that could be subject to differing
interpretations of applicable tax laws and regulations; and the resolution of tax positions, through
negotiations with relevant tax authorities or through litigation, can take several years. Tax uncertainties are
assessed throughout the year and specifically at the year-end with any associated provisions recognised
considering the specific circumstances of each risk, including the merits of technical aspects, previous
experience with tax authorities, recent tax law and if relevant, external specialist advice. The Group applies
judgement in quantifying uncertainties over income tax treatments in accordance with this criteria.
At 31 December 2023 the net income tax receivable of £10.3m is net of a £3.1m (2022: £2.9m) liability in
relation to uncertain tax positions. During 2023 the Group provided for tax on additional risks of £0.2m
(2022: £1.2m release).
Expiry under the statute of limitations, or conclusion of tax audits could result in a further release of the
provision in the next financial year. While it is difficult to predict the ultimate outcome in some cases, and
there are a range of different outcomes, the Group does not currently anticipate that there will be any
material impact on the Group’s financial position in the next financial year.
2.6.4 Global minimum tax
The Group is within the scope of the Pillar Two top-up tax that applies in the UK. The first period for which a
Pillar Two return will be required is the accounting period ending on 31 December 2024.
The Group has applied the mandatory exception to recognising and disclosing information about deferred
tax assets and liabilities related to Pillar Two income taxes.
The Group is in the process of the necessary analysis in preparation for complying with the Pillar Two
model rules for the accounting period ending on 31 December 2024. Based on the analysis derived from
information in respect of prior periods, the Group has identified potential exposure to Pillar Two top-up taxes
in Poland and Switzerland.
Since the stated jurisdictions either have a low tax rate and no material profits are expected for 2024; or, an
expected effective tax rate close to 15%; it is not expected that the Pillar Two top-up tax will have a material
impact on the Group tax liability.
2.6.5 Capita’s responsible approach to taxation
Capita has an open and positive working relationship with HMRC, has a designated customer compliance
manager, and is committed to prompt disclosure and transparency in all dealings with HMRC and overseas
tax authorities. The Group does not have a complex tax structure, and continues to progress well with its
legal entity rationalisation programme. Nor does it pursue aggressive tax avoidance activities. The Group
has a low-risk rating from HMRC, and has been awarded the Fair Tax Mark for its tax disclosures from 2018
to 2022. The Group has operations in a number of countries outside the UK. All such operations outside the
UK are trading operations and pay the appropriate local taxes on these activities. Further detail, regarding
Capita's tax strategy can be found on the Policies & Principles area of the Capita website (https://
www.capita.com/our-company/about-capita/policies-and-principles).
Section 2: Results for the year continued
Capita plc Annual Report and Accounts
172
Financial statements

Notes to the consolidated financial statements continued
2.7 Earnings/(loss) per share
Accounting policies
Basic earnings/(loss) per share are calculated by dividing net profit for the period attributable to ordinary
equity holders of the Parent Company by the weighted average number of ordinary shares outstanding
during the year.
Diluted earnings/(loss) per share are calculated by dividing the net (loss)/profit for the period attributable to
ordinary equity holders of the Parent Company by the weighted average number of ordinary shares
outstanding during the year plus the weighted average number of ordinary shares that would be issued on
the conversion of all the dilutive potential ordinary shares into ordinary shares.
2023
2022
pence
pence
– reported
(10.60)
4.47
– adjusted
1.70
2.64
– reported
(10.60)
4.40
– adjusted
1.70
2.60
The following tables show the earnings and share data used in the basic and diluted earnings/(loss) per
share calculations:
2023
2022
£m
£m
Reported (loss)/profit before tax for the period
(106.6)
61.4
(74.0)
14.6
Reported (loss)/profit for the period
(180.6)
76.0
Less: Non-controlling interest
2.5
(1.2)
Total (loss)/profit attributable to shareholders
(178.1)
74.8
Adjusted profit before tax
1
for the period
56.5
49.8
(31.1)
(4.4)
Adjusted profit for the period
25.4
45.4
Less: Non-controlling interest
3.1
(1.2)
Adjusted profit attributable to shareholders
28.5
44.2
1. Definitions of the alternative performance measures and related Key Performance Indicators (KPIs) can be found in section 8.2.
Trust shares) for basic earnings per share
1,680.9
1,671.7
Employee share options
—
30.0
Trust shares) adjusted for the effect of dilution
1,680.9
1,701.7
At 31 December 2023 35,795,731 (2022: nil) options were excluded from the diluted weighted average
number of ordinary shares calculation because their effect would have been anti-dilutive. Under IAS 33
Earnings per Share, potential ordinary shares are treated as dilutive when, and only when, their conversion
into ordinary shares would decrease earnings per share or increase loss per share from continuing
operations.
The earnings per share figures are calculated based on earnings attributable to ordinary equity holders of
the Parent Company, and therefore exclude non-controlling interest. The earnings per share is calculated
on a total reported and an adjusted basis. The earnings per share for business exits and specific items are
reconciling items between total reported and adjusted basic earnings per share.
There have been no other transactions involving ordinary shares or potential ordinary shares between the
balance sheet date and the date on which these consolidated financial statements were authorised for
issue.
AP
Section 2: Results for the year continued
Capita plc Annual Report and Accounts
173
Financial statements

Notes to the consolidated financial statements continued
2.8 Business exits and assets held for sale
Accounting policies
Business exits
Business exits are businesses that have been sold, exited during the period, or are in the process of being
sold or exited in accordance with the Group's strategy. None of these business exits meets the definition of
‘discontinued operations’ as stipulated by IFRS 5 Non-current Assets Held for Sale and Discontinued
Operations, which requires comparative financial information to be restated where the relative size of a
disposal or business closure is significant, which is normally understood to mean a reported segment.
However, the trading result of these businesses, non-trading expenses, and any gain/loss on disposal, have
been excluded from adjusted results. To enable a like-for-like comparison of adjusted results, the 2022
comparatives have been re-presented to exclude the businesses classified as business exits during 2023.
Assets held for sale
The Group classifies a non-current asset (or disposal group) as held for sale if its carrying amount will be
recovered principally through a sale transaction rather than continued use. For this to be the case, the asset
(or disposal group) must be available for immediate sale in its present condition subject only to terms that
are usual and customary for sales of such assets (or disposal groups) and its sale must be highly probable.
For the sale to be highly probable, the appropriate level of management must be committed to a plan to sell
the asset (or disposal group), and an active programme to locate a buyer and complete the plan must have
been initiated. Further, the asset (or disposal group) must be actively marketed for sale at a price that is
reasonable in relation to its current fair value, and, the sale should be expected to be completed within one
year from the date of classification.
Based on the above requirements, individual businesses will only reach the criteria to be treated as held for
sale when their disposal is seen to be highly probable, and expected to complete within the following twelve
months. At 31 December 2023 one business (the Group’s 75% shareholding in Fera Science Limited
(Fera)) was deemed to have met this threshold. At 31 December 2022 no disposals were deemed to have
met this threshold.
2023 business exits
Business exits at 31 December 2023 primarily comprised the following business disposals:
Business
Disposal completed on
Resourcing
31 May 2023
Security Watchdog
31 May 2023
PageOne
31 July 2023
Software
31 July 2023
Enforcement
31 July 2023
Travel
14 November 2023
Fera
17 January 2024
In addition to the above disposals, the Group decided to exit a business in Capita Public Service in the
second half of the year, and the trading result and non-trading expenses of this business have been
excluded from adjusted results.
2023
2022 (Re-presented)
Revenue
172.5
—
172.5
405.6
—
405.6
Cost of sales
(110.7)
—
(110.7)
(284.6)
—
(284.6)
Gross profit
61.8
—
61.8
121.0
—
121.0
Administrative expenses
(65.2)
(33.0)
(98.2)
(81.3)
(23.2)
(104.5)
Operating (loss)/profit
(3.4)
(33.0)
(36.4)
39.7
(23.2)
16.5
Net finance costs
—
—
—
(1.1)
—
(1.1)
(Loss)/gain on business disposal
—
(2.4)
(2.4)
—
166.9
166.9
(Loss)/profit before tax
(3.4)
(35.4)
(38.8)
38.6
143.7
182.3
Taxation
0.3
(43.9)
(43.6)
(7.3)
26.0
18.7
(Loss)/profit after tax
(3.1)
(79.3)
(82.4)
31.3
169.7
201.0
1
1. To enable a like-for-like comparison of adjusted results, the 2022 comparatives have been re-presented to include the businesses classified
as business exits during 2023.
Trading revenue and costs represent the current period trading performance of the above businesses up to
the point of being disposed or exited, and in the comparative period those businesses disposed of during
2022 (AMT Sybex, Secure Solutions and Services, Trustmarque, Speciality Insurance, Real estate and
infrastructure consultancy, Optima Legal Services, Pay360, and Capita Translation and Interpreting).
Trading expenses primarily comprise payroll costs of £121.0m (2022: £307.2m), information technology
costs of £18.5m (2022: £50.0m), and the de-recognition of non-current contract fulfilment assets on the
early termination of a customer contract within the business being exited in Capita Public Service of £8.2m
(2022: £nil).
Non-trading administrative expenses include: asset impairments of £25.4m (2022: £nil); disposal project
costs of £5.6m (2022: £14.4m); other costs including staff and redundancy costs of £2.6m (2022: £8.7m);
and, other income of £0.6m (2022: £nil). The asset impairments arising in 2023 include goodwill within
assets held for sale of £18.1m, property, plant and equipment of £7.1m (refer to note 3.2) and right-of-use-
assets of £0.2m (refer to note 3.5).
AP
Section 2: Results for the year continued
Capita plc Annual Report and Accounts
174
Financial statements

Notes to the consolidated financial statements continued
2.8 Business exits and assets held for sale continued
2.8.1 Disposals
During 2023 the Group disposed of six businesses: Resourcing, Security Watchdog, PageOne, Software,
Enforcement and Travel. During 2022 the Group disposed of eight businesses: AMT Sybex, Secure
Solutions and Services, Trustmarque, Speciality Insurance, Real estate and infrastructure consultancy,
Optima Legal Services, Pay360 and Capita Translation and Interpreting.
The (loss)/gain arising was determined as follows:
Property, plant and equipment 0.3 0.2
Intangible assets
8.6
20.4
Goodwill
3.2
178.3
Right-of-use assets
0.2
0.2
Income tax recoverable and deferred tax assets
0.8
7.6
Contract fulfilment assets
—
2.8
Trade and other receivables
78.6
136.6
Cash and cash equivalents
14.6
55.9
78.2
143.0
Trade and other payables
(36.6)
(127.0)
Deferred income
(3.9)
(38.6)
Lease liabilities
(0.2)
(0.3)
Capita group loan balances
(42.7)
(102.3)
Income tax payable and deferred tax liabilities
(1.1)
(0.7)
Provisions
—
(0.4)
(33.5)
(135.4)
Net identifiable assets sold
66.5
140.3
Non-controlling interests
—
(0.3)
66.5
140.0
received in cash
68.4
330.0
deferred receivable
11.4
10.5
Less: disposal costs
(15.5)
(33.3)
Net sales price
64.3
307.2
Realisation of cumulative currency translation difference
(0.2)
(0.3)
(Loss)/gain on disposal of businesses
(2.4)
166.9
1
2023
£m
2022
£m
The net cash inflow was determined as follows:
2023
£m
2022
£m
Net cash inflow
Proceeds received 68.4 330.0
Less disposal costs:
income statement charge (15.5) (33.3)
change in accrued disposal costs during the year (8.1) 9.9
Settlement of receivables due from disposed businesses:
Section 2: Results for the year continued
Capita plc Annual Report and Accounts
175
Financial statements

Notes to the consolidated financial statements continued
2.8 Business exits and assets held for sale continued
2.8.2 Disposal group assets and liabilities held for sale
At 31 December 2023, the Fera business was deemed to have met the threshold to be treated as held for
sale (2022: no disposals were deemed to have met the held for sale threshold).
Property, plant and equipment
5.1
—
Goodwill
15.0
—
Trade and other receivables
3.3
—
Accrued income
6.1
—
Prepayments
1.4
—
Cash and cash equivalents
7.2
—
Income tax receivable and deferred tax assets
—
—
Disposal group assets held for sale
38.1
—
Trade and other payables
2.1
—
Other taxes and social security
1.6
—
Accruals
1.8
—
Deferred income
3.6
—
Income tax payable and deferred tax liabilities
0.6
—
Disposal group liabilities held for sale
9.7
—
2.8.3 Business exit cash flows
Businesses exited and being exited had a cash generated from operations outflow of £16.2m (2022: cash
inflow of £28.0m).
Section 2: Results for the year continued
Capita plc Annual Report and Accounts
176
Financial statements

Notes to the consolidated financial statements continued
2.9 Cash flow information
Accounting policies
Cash and short-term deposits in the balance sheet comprise cash at bank and in-hand and short-term deposits with an original maturity of three months or less. In the consolidated cash flow statement, cash and cash
equivalents consist of cash and short-term deposits net of outstanding bank overdrafts and include cash and overdrafts within disposal group assets and liabilities held for sale. Cash at bank earns interest at fixed and
floating rates based on prevailing bank deposit rates.
2.9.1 Additional cash flow information
2023
2022
Reported
exits
1,2
£m
Reported operating loss
2.4
(52.0)
(52.0)
(79.6)
(79.6)
Less: business exit operating loss/(profit)
2.8
—
36.4
—
(16.5)
Total operating loss
(52.0)
(15.6)
(79.6)
(96.1)
3.5
79.5
78.1
96.9
93.8
Amortisation of intangible assets
3.3
29.3
26.0
41.5
30.6
Share-based payment expense
5.1
5.5
5.5
5.4
5.4
Employee benefits
5.2
7.7
7.7
9.0
9.0
Loss on sale of property, plant and equipment and
intangible assets
2.3
0.7
0.7
3.5
3.5
Amendments and early terminations of leases
3.0
3.0
(4.7)
(4.7)
Impairment of assets held for sale
18.1
—
—
—
Impairment of non-current assets
69.6
62.3
176.9
176.1
Movement in provisions
23.0
15.3
(42.1)
(48.5)
Pension deficit contributions
5.2
(46.3)
(30.0)
(38.6)
(30.0)
Other contributions into pension schemes
(9.2)
(9.2)
(10.0)
(10.0)
Trade and other receivables
(30.1)
(5.6)
(41.0)
37.0
Non-recourse trade receivables financing
(9.2)
(9.2)
28.0
28.0
Trade and other payables
(8.5)
(6.0)
84.8
20.9
VAT deferral
—
—
(14.9)
(14.9)
Deferred income
(77.4)
(81.8)
(116.0)
(122.0)
Contract fulfilment assets (non-current)
5.0
—
18.7
20.3
Cash generated from operations
8.7
41.2
117.8
98.4
1,2
2
2023
2022
Reported
exits
1,2
Income tax paid
(7.5)
(3.6)
(7.9)
(10.9)
Interest received
6.2
6.2
5.0
5.0
Interest paid
(47.7)
(47.7)
(43.0)
(41.6)
Net cash (outflow)/inflow from operating activities
(40.3)
(3.9)
71.9
50.9
Purchase of property, plant and equipment
3.2
(28.8)
(27.4)
(20.6)
(11.2)
Purchase of intangible assets
3.3
(32.8)
(31.6)
(27.3)
(27.3)
0.1
0.1
0.5
0.5
6.0
6.0
5.8
5.8
(59.1)
(58.7)
(61.8)
(61.1)
(154.9)
(115.5)
(31.5)
(42.4)
1,2
1. Definitions of the alternative performance measures and related Key Performance Indicators (KPIs) can be found in section 8.2.
2. From 1 January 2023 free cash flow and free cash flow excluding business exits are presented after deducting the capital element of lease
payments and receipts. Comparative amounts have been re-presented. Refer to note 2.9.2.
Cyber incident: In relation to the exceptional cyber incident costs referred to in note 2.4, the cash outflow
during the year ended 31 December 2023 was £20.1m and is included within free cash flow excluding
business exits, and cash generated from operations excluding business exits.
Cost reduction programme: In relation to the implementation of the cost reduction programme detailed in
note 2.4, the cash outflow during the year ended 31 December 2023 was £6.1m and is included within free
cash flow excluding business exits, and cash generated from operations excluding business exits. A further
outflow of approximately £21m associated with the programme announced in November 2023 is expected
in 2024.
AP
Section 2: Results for the year continued
Capita plc Annual Report and Accounts
177
Financial statements

Notes to the consolidated financial statements continued
2.9 Cash flow information continued
2.9.2 Free cash flow and cash generated from operations (alternative performance measures - refer
to section 8.2)
The Board considers free cash flow, and cash generated from operations excluding business exits, to be
alternative performance measures because these metrics provide a more representative measure of the
sustainable cash flow of the Group.
Following feedback from investors the Board has revised its definition of the free cash flow and free cash
flow excluding business exits alternative performance measures. From 1 January 2023, both these metrics
have been presented after deducting the capital element of lease payments and receipts, since this
provides a more relevant and comparable measure of the cash generated by the Group’s operations and
available to fund operations, capital expenditure, non-lease debt obligations, and potential shareholder
distributions. Comparative amounts have been re-presented.
These measures are analysed below:
Reported (including business exits)
(154.9)
(31.5)
8.7
117.8
Business exits
23.1
(19.5)
16.2
(28.0)
Pension deficit contributions triggered by
disposals
16.3
8.6
16.3
8.6
Excluding business exits
(115.5)
(42.4)
41.2
98.4
A reconciliation of net cash flow to movement in net debt is included in note 2.9.3.
Business exits: the cash flows of businesses exited, or in the process of being exited, and the proceeds
from disposals, are disclosed outside the adjusted results. The 2022 results have been re-presented for
those businesses exited, or in the process of being exited, during 2023 to enable comparability of the
adjusted results.
Pension deficit contributions triggered by disposals: the Trustee of the Group’s main defined benefit
pension scheme has agreed with the Group to accelerate the payment of future agreed deficit contributions
on a pound for pound basis in the event of disposal proceeds being used to fund mandatory prepayments of
debt. The disposal of Pay360 and Capita Translation and Interpreting in the second half of 2022 and
Resourcing in 2023 resulted in accelerated deficit contributions totalling £16.3m being paid into the Scheme
during 2023. Additionally, as a result of the Trustmarque disposal in March 2022, a further £14.5m of
accelerated deficit contributions is required by March 2024 (2022: Pension deficit contributions of £8.6m
triggered by: the disposal of the Trustmarque business which led to accelerated deficit contributions of
£5.9m; and the disposal of the Axelos business in 2021 which led to accelerated deficit contributions of
£2.7m).
Section 2: Results for the year continued
Capita plc Annual Report and Accounts
178
Financial statements

Notes to the consolidated financial statements continued
2.9 Cash flow information continued
2.9.3 Reconciliation of net cash flow to movement in net debt
Cash flow
movements
£m
Cash, cash equivalents and overdrafts
4.5.4
177.2
(106.9)
—
—
—
—
—
—
(2.7)
(2.7)
67.6
Private placement loan notes
(289.5)
17.5
—
3.7
—
—
—
—
1.3
5.0
(267.0)
Unamortised transaction costs on debt issuance
4.0
5.4
(4.9)
—
—
—
—
—
—
(4.9)
4.5
Carrying value of private placement loan notes
4.5
(285.5)
22.9
(4.9)
3.7
—
—
—
—
1.3
0.1
(262.5)
Cross-currency interest rate swaps
4.5
24.8
(6.9)
—
(4.3)
—
—
—
—
—
(4.3)
13.6
Fair value of private placement loan notes
(260.7)
16.0
(4.9)
(0.6)
—
—
—
—
1.3
(4.2)
(248.9)
Other finance
4.5
(0.7)
0.5
—
—
—
—
—
—
0.1
0.1
(0.1)
Lease liabilities
4.4
(397.5)
81.4
—
—
(22.3)
(17.2)
2.6
(11.9)
1.5
(47.3)
(363.4)
Total net liabilities from financing activities
(658.9)
97.9
(4.9)
(0.6)
(22.3)
(17.2)
2.6
(11.9)
2.9
(51.4)
(612.4)
Deferred consideration payable
4.5
(0.7)
—
—
—
—
—
—
—
—
—
(0.7)
Net debt
4.1.1
(482.4)
(9.0)
(4.9)
(0.6)
(22.3)
(17.2)
2.6
(11.9)
0.2
(54.1)
(545.5)
Cash, cash equivalents and overdrafts
4.5.4
101.5
75.3
—
—
—
—
—
—
0.4
0.4
177.2
Private placement loan notes
(513.4)
236.8
—
(6.9)
—
—
—
—
(6.0)
(12.9)
(289.5)
Unamortised discount on debt issuance
(2.1)
—
2.1
—
—
—
—
—
—
2.1
—
Unamortised transaction costs on debt issuance
2.6
5.2
(3.8)
—
—
—
—
—
—
(3.8)
4.0
Carrying value of private placement loan notes
4.5
(512.9)
242.0
(1.7)
(6.9)
—
—
—
—
(6.0)
(14.6)
(285.5)
Cross-currency interest rate swaps
4.5
28.0
(10.1)
—
6.9
—
—
—
—
—
6.9
24.8
Fair value of private placement loan notes
(484.9)
231.9
(1.7)
—
—
—
—
—
(6.0)
(7.7)
(260.7)
Other finance
4.5
(1.3)
0.6
—
—
—
—
—
—
—
—
(0.7)
Credit facilities
(46.0)
46.0
—
—
—
—
—
—
—
—
—
Lease liabilities
4.4
(448.4)
84.4
—
—
(22.5)
(15.3)
6.5
(0.3)
(1.9)
(33.5)
(397.5)
Total net liabilities from financing activities
(980.6)
362.9
(1.7)
—
(22.5)
(15.3)
6.5
(0.3)
(7.9)
(41.2)
(658.9)
Deferred consideration payable
4.5
(0.7)
—
—
—
—
—
—
—
—
—
(0.7)
Net debt
4.1.1
(879.8)
438.2
(1.7)
—
(22.5)
(15.3)
6.5
(0.3)
(7.5)
(40.8)
(482.4)
Overdrafts comprise the aggregate value of overdrawn bank account balances within the Group’s notional interest pooling arrangements. These aggregate overdrawn amounts are fully offset by surplus balances within
the same notional pooling arrangements.
At 31 December 2023, the Group’s £260.7m committed revolving credit facility was undrawn (31 December 2022: undrawn).
Section 2: Results for the year continued
Capita plc Annual Report and Accounts
179
Financial statements

Notes to the consolidated financial statements continued
This section shows the operating assets and liabilities used to
generate the Group’s trading performance. Liabilities relating
to the Group’s financing activities are contained in Section4.
Current tax and deferred tax assets and liabilities are shown in
note2.6. Deferred income is shown in note2.1.
3.1 Working capital
3.1.1 Trade and other receivables
3.1.2 Trade and other payables
3.1.3 Contract fulfilment assets (non-current)
3.2 Property, plant and equipment
3.3 Intangible assets
3.4 Goodwill
3.5 Right-of-use assets
3.6 Provisions
Denotes accounting policies
Denotes significant accounting judgements
Denotes significant accounting estimates and
assumptions
Key highlights
Working capital (current and
non-current):
3.1
(351.9)
(439.1)
87.2
Trade and other receivables
3.1.1
363.0
446.2
(83.2)
Trade and other payables
3.1.2
(434.4)
(507.6)
73.2
Deferred income
2.1
(537.5)
(640.7)
103.2
Contract fulfilment assets
3.1.3
257.0
263.0
(6.0)
Property, plant and equipment
3.2
80.0
101.1
(21.1)
Intangible assets
3.3
90.0
106.0
(16.0)
Goodwill
3.4
495.7
605.9
(110.2)
Right-of-use assets
3.5
208.5
249.5
(41.0)
Provisions
3.6
(150.2)
(127.3)
(22.9)
The decrease in trade and other receivables is primarily driven by a
reduction in accrued income (£40.8m), trade receivables (£23.1m),
other receivables (£9.2m) and prepayments (£6.4m). The reduction is
largely a result of the disposal of businesses during the year (£78.6m),
partly offset by an increase in current contract fulfilment assets
(£2.6m).
The Group uses non-recourse trade receivables financing, with
£35.2m of outstanding invoices sold under these facilities at
31December 2023 (2022: £44.4m).
The decline in trade and other payables was primarily driven by a
£79.9m decrease in the accruals, including the utilisation of the
furlough repayment accrual, a reduction in the accrual for
management bonuses and variable pay, and as a result of the disposal
of businesses during the year. This was partly offset by an increase in
trade payables (£29.3m).
The decrease in deferred income relates to contract lifecycles resulting
in deferred income utilisation and accelerated revenue recognised of
£9.9m, primarily relating to the early termination of a contract in Capita
Experience. This was partially offset by contracts in transformation
such as BBC TV Licencing and Transport for London.
Non-current contract fulfilment assets decreased as a result of
additions of £79.5m predominantly in Capita Public Service on
contracts in transformation, including TfL Networks and Royal Navy
training, being more than offset by utilisations of £68.8m, mainly within
Capita Public Service, derecognition of £12.3m and impairments of
£3.4m within Capita Experience.
Property, plant and equipment decreased due to depreciation and
impairment of £42.0m, including £7.1m of impairment on business
exits, being partially offset by £28.8m of additions, including
investment in technology across the Group.
Intangible assets decreased due to amortisation and impairment of
£30.2m and transfer to assets held for sale of £10.0m being only partly
offset by £32.8m of additions relating primarily to investment in
capitalised and purchased software.
Goodwill decreased primarily as a result of businesses sold in the year
(£3.2m), transfers to assets held for sale (£64.3m), and the impairment
of certain cash generating units in the Capita Portfolio division
(£42.2m) at the half year.
Right-of-use assets decreased due to depreciation and impairment of
£64.0m, with impairment primarily related to the properties exited as
part of the announced cost reduction programme. This has been
partially offset by additions of £17.2m.
The increase in provisions of £22.9m during the year was
predominantly due additions totalling £104.0m, with the largest
addition being in relation to the announced cost reduction programme
(£35.6m), along with increased claims and litigation provisions
(£29.9m), additional customer contract provisions (£16.5m) and
business exit provisions (£10.6m). This is partly offset by releases and
utilisations totalling £82.9m.
E
J
AP
Section 3: Operating assets and liabilities
Capita plc Annual Report and Accounts
180
Financial statements

Notes to the consolidated financial statements continued
3.1 Working capital
3.1.1 Trade and other receivables
Accounting policies
Trade receivables: Trade receivables are initially recognised at cost (being the same as fair value) and
subsequently at amortised cost less any provision for impairment, to ensure the amounts recognised
represent their recoverable amount.
Impairment: For trade receivables, the Group applies the simplified approach permitted by IFRS 9
Financial Instruments, resulting in trade receivables recognised and carried at original invoice amount less
an allowance for any uncollectible amounts based on expected credit losses. Where the carrying amount of
an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its
recoverable amount.
The Group monitors the level of trade receivables on a monthly basis, continually assessing the risk of
default by any counterparty. Each customer has an external credit score which determines the level of credit
provided.
Derecognition: A financial asset (or, where applicable, a part of a financial asset or part of a group of
similar financial assets) is derecognised (ie removed from the Group’s consolidated balance sheet) when (i)
the rights to receive the cash flows from the asset have expired; or, (ii) the Group has transferred its right to
receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full
without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Group has
transferred substantially all the risk and rewards of the asset; or, (b) the Group has neither transferred nor
retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
Trade receivables that are sold without recourse are derecognised at the point of sale when the risks and
rewards of the receivables have been fully transferred.
Accrued income: Accrued income in relation to contract assets is recognised when payments received
from customers are less than the revenue recognised by the balance sheet date.
Current
Non-current
Trade receivables
126.8
149.9
—
—
15.5
23.0
4.1
5.8
Other taxes and social security
2.3
9.6
1.0
—
13.3
10.7
—
—
Accrued income
138.3
179.1
—
—
Prepayments
54.5
58.1
7.2
10.0
350.7
430.4
12.3
15.8
1
2
1. Other receivables includes £0.3m (2022: £0.4m) of accrued interest on cross-currency interest rate swaps.
2. Refer to note 3.1.3 for non-current contract fulfilment assets.
Trade receivables are non-interest bearing and generally on 30-day terms.
The Group’s accrued income balances solely relate to revenue from contracts with customers. Movements
in the accrued income balances were driven by transactions entered into by the Group in the normal course
of business during the year.
Movements in the loss allowance made against receivables were as follows:
At 1 January
29.7
19.4
Utilised
(1.2)
(4.0)
Provided in the year
4.8
15.3
Released in the year
(25.6)
—
Business disposal
(1.1)
(1.0)
(1.1)
—
At 31 December
5.5
29.7
1
1. Transfers to disposal group assets held for sale in the year ended 31 December 2023 represent amounts transferred at 30 June 2023 and
subsequently sold during the second half of the year.
Not due
79.4
118.5
Overdue by less than three months
19.3
26.9
Overdue between three and six months
4.9
6.3
Overdue between six and twelve months
5.4
9.9
23.3
18.0
(5.5)
(29.7)
126.8
149.9
1
1
1. The increase in amounts overdue by more than twelve months and the decrease in the allowance for doubtful debts primarily relate to a
commercial settlement in the closed book Life & Pensions business which will not be received until a future date.
Under the simplified approach permitted by IFRS 9, all invoices six months or more past due are fully
provided for unless there is a specific confirmation from the customer that the invoice will be settled during
the following month, or there are specific circumstances such that recognition of a provision is not
appropriate. Additionally, any other invoices where the customer relationship manager has identified
significant financial problems which mean that customer is unlikely to pay the invoice in the near future are
also provided for. No material amounts receivable were renegotiated such that they were not past due at
the balance sheet date.
The Group trades only with third parties that are expected to be creditworthy. It is the Group’s policy that all
clients who wish to trade on credit terms are subject to credit verification procedures. The Group manages
its operations to avoid any excessive concentration of counterparty risk and the Group takes all reasonable
steps to seek assurance from the counterparties that they can fulfil their obligations. In addition, receivable
balances are monitored on an ongoing basis with the result that the Group’s exposure t
o credit loss remains
low.
AP
Section 3: Operating assets and liabilities continued
Capita plc Annual Report and Accounts
181
Financial statements

Notes to the consolidated financial statements continued
3.1 Working capital continued
Non-recourse trade receivable financing
The value of invoices sold under the UK non-recourse trade receivables financing 31 December 2023 was
£23.7m (2022: £36.9m). Additionally, in Germany the Group uses a non-recourse trade receivable financing
arrangement for two specific customer contracts, the value of invoices sold under that arrangement at
31 December 2023 was £11.5m (2022: £7.5m).
The cost of selling such invoices totalled £3.7m (2022: £0.8m) and was included in net finance expense in
the consolidated income statement (2022: administrative expenses).
3.1.2 Trade and other payables
Current
Non-current
Trade payables
164.2
134.9
0.1
0.1
Other payables
27.9
32.8
6.0
6.5
Other taxes and social security
74.4
85.6
—
6.0
Accruals
159.4
239.2
2.4
2.5
425.9
492.5
8.5
15.1
3.1.3 Contract fulfilment assets (non-current)
Accounting policies
The Group regularly incurs costs to deliver its outsourcing services in a more efficient way (often referred to
as ‘transformation’ costs). These costs may include process mapping and design, system development,
project management, hardware (generally within the scope of the Group’s accounting policy for property,
plant and equipment), software licence costs (generally within the scope of the Group’s accounting policy
for intangible assets), recruitment costs and training.
Contract fulfilment costs are divided into: (i) costs that give rise to an asset; and (ii) costs that are expensed
as incurred.
When determining the appropriate accounting treatment for such costs, the Group firstly considers any
other applicable standards. If those other standards preclude capitalisation of a particular cost, then an
asset is not recognised under IFRS 15 Revenue from Contracts with Customers.
If other standards are not applicable to contract fulfilment costs, the Group applies the following criteria
which, if met, result in capitalisation of costs that: (i) directly relate to a contract or to a specifically
identifiable anticipated contract; (ii) generate or enhance resources that will be used in satisfying (or in
continuing to satisfy) performance obligations in the future; and (iii) are expected to be recovered.
The Group has determined that, where the relevant specific criteria are met, the costs for (i) process
mapping and design; (ii) system development; and (iii) project management; are likely to qualify to be
capitalised as contract fulfilment assets.
The incremental costs of obtaining a contract with a customer are recognised as a contract fulfilment asset
if the Group expects to recover them. The Group incurs costs such as bid costs, legal fees to draft a
contract and sales commissions when it enters into a new contract.
The Group has determined that the following costs may be capitalised as contract fulfilment assets: (i) legal
fees to draft a contract after the Group has been selected as preferred supplier; and (ii) sales commissions
directly related to winning a specific contract.
Costs incurred prior to selection as preferred supplier are not capitalised but expensed when incurred.
Utilisation: The utilisation charge is included within cost of sales. The Group utilises non-current contract
fulfilment assets over the expected contract period on a systematic basis that mirrors the pattern in which
the Group transfers control of the service to the customer.
Derecognition: A non-current contract fulfilment asset is derecognised either when it is disposed of or
when no further economic benefits are expected to flow from its use or disposal.
Impairment: At each balance sheet date, the Group determines whether or not the non-current contract
fulfilment assets are impaired by comparing the carrying amount of the asset with the remaining amount of
consideration that the Group expects to receive less the costs that relate to providing services under the
relevant contract. In determining the estimated amount of consideration, the Group uses the same
principles as it does to determine the contract transaction price, except that any constraints used to reduce
the transaction price are removed for the impairment test.
Significant accounting judgements
Judgement is applied by the Group when determining what costs qualify to be capitalised, in particular when
considering whether these costs are incremental and when considering if costs generate or enhance
resources to be used to satisfy future performance obligations and whether costs are expected to be
recoverable. For example, the Group considers which type of sales commissions are incremental to the cost
of obtaining specific contracts and the point in time when the costs will be capitalised. See note 2.1 for
further information.
J
AP
Section 3: Operating assets and liabilities continued
Capita plc Annual Report and Accounts
182
Financial statements

Notes to the consolidated financial statements continued
3.1 Working capital continued
Movements in non-current contract fulfilment assets were as follows
1
:
At 1 January
263.0
286.7
—
(2.4)
263.0
284.3
Additions
79.5
67.1
(0.9)
—
Disposal of businesses
—
(2.8)
Impairment - included in adjusted profit
(3.3)
(3.8)
Impairment - included in business exits
(0.1)
—
Derecognition - included in adjusted profit
(4.1)
(0.4)
Derecognition - included in business exits
(8.2)
—
Utilisation - included in adjusted profit
(68.4)
(79.3)
Utilisation - included in business exits
(0.4)
(2.2)
Exchange movement
(0.1)
0.1
At 31 December
257.0
263.0
2
3
1. Refer to note 3.1.1 for current contract fulfilment assets.
2. The Group initially applied the amendments to IAS 37 at 1 January 2022 and the cumulative effect of applying the amendments was
recognised as an opening balance adjustment to retained earnings.
3. Transfers to disposal group assets held for sale in the year ended 31 December 2023 includes £0.9m that was transferred at 30 June 2023
and subsequently sold during the second half of the year.
Impairment: In 2023, the Group recognised an impairment of £3.4m (2022: £3.8m) in cost of sales, of
which, £nil (2022: £0.5m) relates to contract fulfilment assets added during the year.
Derecognition: In 2023, £12.3m (2022: £0.4m) was derecognised, primarily in relation to a contract in
Capita Public Service following the termination of a customer contract and the Group having no further use
for the assets (£8.2m). Subsequently the Group decided to exit the business this contract was within and
therefore the derecognition of the contract fulfilment asset has been included within business exits (refer to
note 2.8). In 2022 the derecognition related to a contract in Capita Experience where the scope of services
changed due to termination of contracts and the Group had no further use for the assets.
3.2 Property, plant and equipment
Accounting policies
Property, plant and equipment is stated at cost less accumulated depreciation and any impairment in value.
Depreciation: Depreciation is calculated on a straight-line basis over the estimated useful life of the asset,
as follows:
• Freehold buildings and long leasehold property – up to 50 years.
• Leasehold improvements – period of the lease.
• Plant and machinery – 3 to 10 years.
Impairment: The carrying values of property, plant and equipment are reviewed for impairment when
events or changes in circumstances indicate that the carrying value may not be recoverable. If any such
indication exists and where the carrying values exceed the estimated recoverable amount, the assets are
written down to their recoverable amount. The recoverable amount of property, plant and equipment is the
greater of net selling price and value-in-use. In assessing value-in-use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset. For an asset that does not generate largely
independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the
asset belongs. Impairment losses are disclosed as administrative expenses in the consolidated income
statement.
Derecognition: An item of property, plant and equipment is derecognised on disposal, or when no future
economic benefits are expected to arise from the continued use of the asset (retired). Any gain or loss
arising on derecognition of the asset, calculated as the difference between the net disposal proceeds and
the carrying value of the asset, is included in the consolidated income statement when the asset is
derecognised.
AP
Section 3: Operating assets and liabilities continued
Capita plc Annual Report and Accounts
183
Financial statements

Notes to the consolidated financial statements continued
3.2 Property, plant and equipment continued
2023
2022
At 1 January
96.0
146.5
242.5
99.6
169.1
268.7
Additions
10.4
18.4
28.8
7.7
12.9
20.6
Disposal of businesses
(0.4)
(0.6)
(1.0)
—
(0.4)
(0.4)
Disposals – included in adjusted profit
(1.0)
(4.7)
(5.7)
(9.0)
(7.4)
(16.4)
Disposals – included in business exits
—
—
—
(0.1)
—
(0.1)
(0.7)
(9.8)
(10.5)
—
—
—
Reclassifications to intangible assets
—
(1.2)
(1.2)
1.3
(1.8)
(0.5)
Asset retirements
(22.9)
(38.1)
(61.0)
(3.7)
(27.9)
(31.6)
Exchange movement
(0.4)
(1.6)
(2.0)
0.2
2.0
2.2
At 31 December
81.0
108.9
189.9
96.0
146.5
242.5
At 1 January
42.5
98.9
141.4
40.5
99.2
139.7
—
—
—
—
0.5
0.5
At 1 January 2022 on adoption of IAS 37
42.5
98.9
141.4
40.5
99.7
140.2
Depreciation charged - included in adjusted profit
9.0
20.8
29.8
10.0
28.4
38.4
Depreciation charged - included in business exits
0.1
1.3
1.4
0.1
2.4
2.5
Disposal of businesses
(0.3)
(0.4)
(0.7)
—
(0.2)
(0.2)
Disposals – included in adjusted profit
(1.0)
(4.4)
(5.4)
(7.3)
(6.9)
(14.2)
Impairment – included in adjusted profit
—
0.9
0.9
2.0
2.7
4.7
Impairment – excluded from adjusted profit
2.8
—
2.8
—
—
—
Impairment – included in business exits
7.1
—
7.1
—
—
—
(0.4)
(3.8)
(4.2)
—
—
—
Reclassifications to intangible assets
—
(0.6)
(0.6)
0.8
(0.8)
—
Asset retirements
(22.9)
(38.1)
(61.0)
(3.7)
(27.9)
(31.6)
Exchange movement
(0.5)
(1.1)
(1.6)
0.1
1.5
1.6
At 31 December
36.4
73.5
109.9
42.5
98.9
141.4
At 1 January
53.5
47.6
101.1
59.1
69.9
129.0
At 31 December
44.6
35.4
80.0
53.5
47.6
101.1
2
1
2
1. The Group initially applied the amendments to IAS 37 at 1 January 2022 and the cumulative effect of applying the amendments was recognised as an opening balance adjustment to retained earnings.
2. Transfers to disposal group assets held for sale in the year ended 31 December 2023 includes £1.2m that was transferred at 30 June 2023 and subsequently sold during the second half of the year.
At 31 December 2023, amounts contracted for but not provided in the financial statements for the acquisition of property, plant and equipment amounted to £1.4m (2022: £2.7m), relating to building improvements on
leased property.
As detailed in note 2.4, a charge of £54.4m has been recognised in 2023 for the costs to deliver the cost reduction programme. This includes property related costs of £31.1m arising from the associated rationalisation of
the Group’s property estate, which includes impairment of leasehold improvements of £2.8m. These costs have been excluded from adjusted profit.
Following the classification of a business as held for sale, a property leased by the Group and part occupied by the business being sold is no longer used by the Group. Following an impairment test, the property’s
leasehold improvements were impaired by £7.1m, along with an impairment of £0.2m of the right-of-use asset for this property (refer to note 3.5). Since the impairment was triggered by the disposal of a business, the
charge has been excluded from adjusted profit and included in business exits (refer to note 2.8).
Section 3: Operating assets and liabilities continued
Capita plc Annual Report and Accounts
184
Financial statements

Notes to the consolidated financial statements continued
3.3 Intangible assets
Accounting policies
Intangible assets acquired separately are capitalised at cost and those identified in a business acquisition
are capitalised at fair value at the date of acquisition. In the case of capitalised software development costs,
research expenditure is written off to the consolidated income statement when it is incurred. Development
expenditure is similarly written off until the Group is satisfied as to the technical, commercial and financial
viability of individual projects. Where this condition is satisfied, the development expenditure is capitalised
and amortised over the period during which the Group is expected to benefit.
Following initial recognition, the carrying amount of an intangible asset is its cost less accumulated
amortisation and impairment losses. The useful lives of intangible assets are assessed to be either finite or
indefinite. There were no indefinite-lived assets in 2023 or 2022.
Amortisation: Amortisation is charged on assets with finite lives. The amortisation method used reflects the
expected pattern of consumption of future economic benefits and generally amortised on a straight-line
basis, the amortisation periods used are as follows:
• Intangible assets acquired in business combinations – 1.5 to 20 years.
• Intangible assets purchased or internally capitalised – 3 to 20 years.
Impairment: Intangible assets with finite lives are only tested for impairment, either individually or at the
cash-generating unit level, when there is an indicator of impairment.
Derecognition: Intangible assets are derecognised upon disposal, or when no future economic benefits are
expected to arise from the continued use of the asset (retired). Any gain or loss arising on derecognition of
the asset, calculated as the difference between the net disposal proceeds and the carrying value of the
asset, is included in the consolidated income statement when the asset is derecognised.
The measurement of intangible assets other than goodwill in a business combination: on the
acquisition of a business, the identifiable intangible assets may include licences, customer lists and brands.
The fair value of these assets is determined by discounting estimated future net cash flows generated by
the asset because in most cases no active market for the assets exists and therefore no observable value
exists. The use of different assumptions for the expectations of future cash flows and the discount rate
would change the valuation of the intangible assets.
The assessment of costs capitalised as intangible assets to generate future economic benefits:
judgement is applied in assessing whether costs incurred, both internal and external, will generate future
economic benefits. Judgements and estimates are applied in determining the carrying value of the assets,
including assumptions made in respect of the status of the programme each asset relates to. Given the
level of judgement and estimation involved in assessing future cash flows, it is reasonably possible that
outcomes within the next financial year may be different from management’s assumptions and require an
adjustment to the carrying value of intangible assets, however any adjustment is not expected to be
material.
AP
Section 3: Operating assets and liabilities continued
Capita plc Annual Report and Accounts
185
Financial statements

Notes to the consolidated financial statements continued
3.3 Intangible assets continued
1
1
2023 2022
At 1 January
3.0
194.6
197.6
55.4
222.7
278.1
Disposal of businesses
—
(15.7)
(15.7)
—
(33.0)
(33.0)
Additions
—
32.8
32.8
—
27.3
27.3
Disposals – included in adjusted profit
—
(2.0)
(2.0)
—
(11.7)
(11.7)
Disposals – included in business exits
—
—
—
—
(0.5)
(0.5)
—
(15.3)
(15.3)
—
—
—
Reclassifications to property, plant and equipment
—
1.2
1.2
—
0.5
0.5
Asset retirements
—
(20.4)
(20.4)
(53.1)
(11.2)
(64.3)
Exchange movement
—
(0.2)
(0.2)
0.7
0.5
1.2
At 31 December
3.0
175.0
178.0
3.0
194.6
197.6
At 1 January
2.3
89.3
91.6
49.6
81.2
130.8
Amortisation charged in the year - included in adjusted profit
—
25.8
25.8
—
25.5
25.5
Amortisation charged in the year - excluded from adjusted profit
0.2
—
0.2
5.1
—
5.1
Amortisation charged in the year - included in business exits
—
3.3
3.3
—
10.9
10.9
Impairment – included in adjusted profit
—
0.9
0.9
—
5.1
5.1
Impairment – included in business exits
—
—
—
—
0.8
0.8
Disposal of businesses
—
(7.1)
(7.1)
—
(12.6)
(12.6)
Disposals – included in adjusted profit
—
(1.6)
(1.6)
—
(10.0)
(10.0)
Disposals – included in business exits
—
—
—
—
(0.5)
(0.5)
—
(5.3)
(5.3)
—
—
—
Reclassifications to property, plant and equipment
—
0.6
0.6
—
—
—
Asset retirements
—
(20.4)
(20.4)
(53.1)
(11.2)
(64.3)
Exchange movement
—
—
—
0.7
0.1
0.8
At 31 December
2.5
85.5
88.0
2.3
89.3
91.6
At 1 January
0.7
105.3
106.0
5.8
141.5
147.3
At 31 December
0.5
89.5
90.0
0.7
105.3
106.0
1. Transfers to disposal group assets held for sale in the year ended 31 December 2023 includes £9.9m that was transferred at 30 June 2023 and subsequently sold during the second half of the year.
Intangible assets acquired in business combinations comprise committed sales. Intangible assets capitalised or purchased include capitalised software development (net book value 2023: £75.6m; 2022: £90.9m) and
purchased software (net book value 2023: £13.9m; 2022: £14.4m).
Section 3: Operating assets and liabilities continued
Capita plc Annual Report and Accounts
186
Financial statements

Notes to the consolidated financial statements continued
3.4 Goodwill
Accounting policies
Following initial recognition, goodwill is stated at cost less any accumulated impairment losses. Goodwill is
reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the
carrying value may be impaired. Goodwill arising on acquisitions prior to 31 December 1997 remains set off
directly against reserves and does not get recycled through the consolidated income statement.
At the acquisition date, any goodwill acquired is allocated to the cash-generating units (CGU) which are
expected to benefit from the combination’s synergies. Impairment is determined by assessing the
recoverable amount of the CGU to which the goodwill relates. Where the recoverable amount of the CGU is
less than the carrying amount, an impairment loss is recognised. Where goodwill forms part of a CGU and
part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is
included in the carrying amount of the operation when determining the gain or loss on disposal of the
operation. Goodwill disposed of in these circumstances is measured on the basis of the relative values of
the operation disposed of and the portion of the CGU retained.
Acquisitions and disposals of non-controlling interests that do not result in a change of control are
accounted for as transactions with owners in their capacity as owners and therefore no goodwill is
recognised as a result of such transactions. The adjustments to non-controlling interests are based on a
proportionate amount of the net assets of the subsidiary. Any difference between the price paid or received
and the amount by which non-controlling interests are adjusted is recognised directly in equity and
attributed to the owners of the Parent company.
Prior to the adoption of IAS 27 Separate Financial Statements (Amended), goodwill was recognised on the
acquisition of non-controlling interests in a subsidiary, which represented the excess of the cost of the
additional investment over the carrying amount of the interest in the net assets acquired at the date of the
transaction.
Impairment of goodwill: the Group determines whether goodwill is impaired on an annual basis, or more
frequently if required, and this requires an estimation of the recoverable amount of the CGUs to which the
intangible assets are allocated utilising an estimation of future cash flows and choosing a suitable discount
rate.
At 1 January
1,423.3
1,676.8
Disposal of businesses
(199.6)
(255.0)
(149.0)
—
Exchange movement
(0.5)
1.5
At 31 December
1,074.2
1,423.3
At 1 January
817.4
725.1
Disposal of businesses
(196.4)
(76.7)
(84.7)
—
Impairment – excluded from adjusted profit
42.2
169.0
At 31 December
578.5
817.4
At 1 January
605.9
951.7
At 31 December
495.7
605.9
1
1
1. Transfers to disposal group assets held for sale in the year ended 31 December 2023 includes £49.3m that was transferred at 30 June 2023
and subsequently sold during the second half of the year.
AP
Section 3: Operating assets and liabilities continued
Capita plc Annual Report and Accounts
187
Financial statements

Notes to the consolidated financial statements continued
3.4 Goodwill continued
Cash-generating units
Reflecting the way management exercises oversight and monitors the Group’s performance, the lowest
level at which goodwill is monitored is at the divisional level for Capita Public Service and Capita
Experience, and at a sub-divisional level for Capita Portfolio. At 31 December 2023, following the disposal,
transfer to assets held for sale or transfer to another division of all the businesses that were under Capita
Portfolio, the Group has two remaining CGUs or groups of CGUs for the purpose of impairment testing of
goodwill.
Carrying amount of goodwill allocated to groups of CGUs:
Capita
Capita
Business
284.6
209.8
1.7
36.3
21.7
36.8
15.0
605.9
Reclassifications
1.8
—
—
—
(1.8)
—
—
—
Disposal of businesses
—
—
(1.7)
—
—
(1.5)
—
(3.2)
—
—
—
(36.3)
(13.0)
—
(15.0)
(64.3)
profit
—
—
—
—
(6.9)
(35.3)
—
(42.2)
Exchange movement
—
(0.5)
—
—
—
—
—
(0.5)
At 31 December
286.4
209.3
—
—
—
—
—
495.7
1
1. Transfers to disposal group assets held for sale in the year ended 31 December 2023 includes £49.3m that was transferred at 30 June 2023
and subsequently sold during the second half of the year.
Business exits
As set out in note 2.8, six businesses were fully disposed of during the year. Goodwill relating to all of these
businesses is included within the Group’s brought forward goodwill balances at 1 January 2023, and has
either been impaired during the course of the year, or derecognised as part of business disposals.
The Group’s shareholding in Fera Science Limited was deemed to have met the threshold to be treated as
held for sale at 31 December 2023, with goodwill relating to this business (Fera) reclassified to disposal
group assets held for sale.
One business within the Capita Public Service division met the criteria to be treated as a business exit at
31 December 2023, however there is no goodwill attributable to this business.
The impairment test
In undertaking the annual impairment review, the directors considered both internal and external sources of
information, and any observable indications that may suggest that the carrying value of goodwill may be
impaired. This included a comparison with the Group’s share price and market capitalisation.
The Group’s impairment test compares the carrying value of each CGU with its recoverable amount. The
recoverable amount of a CGU is the higher of fair value less cost of disposal, and its value in use. As the
Group implements the Group-wide cost reduction programme announced in November 2023 and referred to
in the strategic report and note 2.4, and continues to be committed to evaluating additional cost savings
opportunities, it has been determined that at 31 December 2023, fair value less costs of disposal will
generate the higher recoverable amount.
The valuation of CGUs under fair value less costs of disposal assumes that a third-party acquirer will
undertake a similar plan to derive similar benefits in the business going forward. The enterprise value of
each CGU is dependent on the successful implementation of the cost reduction programme.
Fair value less costs of disposal for each CGU has been estimated using discounted cash flows. The fair
value measurement was categorised as a Level-3 fair value based on the inputs in the valuation technique
used. The costs of disposal have been estimated based on the Groups’ significant disposals in recent
years.
At 30 June 2023, a goodwill impairment of £35.3m was recognised in respect of the Travel CGU. This
impairment arose primarily due to the expectation of acquirers factoring in additional investment and costs
required to run the businesses outside of the Group, and general macroeconomic conditions. The Travel
CGU was disposed of in the second half of 2023.
In addition, an impairment of £6.9m was recognised at 30 June 2023 in respect of a business in the
Business Solutions group of CGUs in Capita Portfolio. Since the disposal process for this business was less
far advanced, the recoverable amount of the CGU, being its value-in-use, was calculated based on
operating the business into perpetuity. The goodwill impairment arose primarily due to a negotiated exit of
an end customer, which negatively impacted the forecast financial performance of the business. In the
second half of 2023 this business was moved into the Capita Public Service division and CGU.
At 31 December 2023, the estimated recoverable amount of each remaining Group of CGUs exceeded its
respective carrying value. The key inputs to the calculations are described below, including changes in
market conditions.
Section 3: Operating assets and liabilities continued
Capita plc Annual Report and Accounts
188
Financial statements

Notes to the consolidated financial statements continued
3.4 Goodwill continued
Forecast cash flows
The cash flow projections prepared for the impairment test are derived from the 2024-2026 business plans
(BP) approved by the Board, which are prepared on a nominal basis. Key assumptions in the BP include the
delivery of planned revenue growth and the benefits that the cost reduction programme is anticipated to
deliver, in particular in the Capita Experience CGU given recent past performance.
The going concern severe but plausible downside scenarios have taken account of the potential adverse
financial impacts resulting from the following risks, which include the key assumptions noted above:
• revenue growth falling materially short of plan;
• operating profit margin expansion not being achieved;
• targeted cost savings delayed or not delivered;
• additional inflationary cost impacts which cannot be passed on to customers;
• unforeseen operational issues leading to contract losses and cash outflows; and
• unexpected financial costs linked to incidents such as data breaches and/or cyber-attacks.
As such, the below sensitivity analysis includes assessing the impact of these crystallising on the
impairment test performed.
Other than for movements in deferred income and contract fulfilment assets, cash flows are adjusted to
exclude working capital movements since the corresponding balances are not included in the CGU carrying
amount.
Allocation of central function costs
The Board has considered an appropriate methodology to apply when allocating central function costs. The
methodology applied for the 2023 impairment test was aligned to that applied in reporting segmental
performance (refer to note 2.5). The remaining Group related costs of Capita plc, which have not been
allocated as part of segmental reporting, are allocated to CGUs for impairment testing purposes based on
2024 forecast Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA).
Long-term growth rate
The long-term growth rate is based on economic growth forecasts by recognised bodies and this has been
applied to forecast cash flows for years four and five (2027 and 2028) and for the terminal period. The 2023
long-term growth rate is 1.7% (2022: 2.2%).
Discount rates
Management estimates discount rates using nominal pre-tax rates of comparator companies for each CGU
or group of CGUs. The discount rates reflect the latest market assumptions for the risk-free rate, the equity
risk premium and the net cost of debt, and which are all based on publicly available external sources.
The table below presents the pre-tax discount rates applied to the cash flows for 2023 and 2022.
2023
11.0 %
9 . 2 %
2022
11.8 %
10.4 %
Sensitivity analysis
The impairment testing as described is reliant on the reliability of management’s forecasts and the
assumptions that underlie them; and on the selection of the discount and growth rates to be applied. To
gauge the sensitivity of the result to a change in any one, or combination of the assumptions that underlie
the model, a number of scenarios were developed to identify the range of reasonably possible alternatives
and measure which CGUs are the most susceptible to an impairment should the assumptions used be
varied.
The sensitivity scenarios applied estimate potential impairments required (with all other variables being
equal) through: an increase in discount rate of 1%, or a decrease of 1% in the long-term growth rate (for the
terminal period) for the Group in total and each of the CGUs; or, through the severe but plausible downsides
applied to the base-case projections for assessing going concern and viability, without mitigations, for 2024
to 2026, and the long-term growth rate (1.7%) applied to the 2026 downside cash flows to generate
projected cash flows for 2027, 2028, and the terminal period. We have also considered the impact of all of
the scenarios together, which is also a reasonable possible alternative.
No potential impairments have been identified under any of these sensitivity scenarios, including the
combination sensitivity scenario.
Comparison to share price and market capitalisation
The company’s market capitalisation indicates an enterprise value that continues to be significantly less
than the Group’s sum-of-the-parts CGU valuation based upon the model prepared for impairment testing
purposes at 31 December 2023. The directors gave consideration as to why this might be the case and the
reasonableness of the assumptions used within the impairment model, and whether these points could
indicate additional indicators of impairment in respect of the Group’s goodwill balances.
The factors considered included: the differing basis of valuations (including that third parties value the
services sector on income statement multiples versus long-term view using a discounted cash flow for the
basis of impairment testing under accounting standards), sum-of-the-parts view and the multiples achieved
on recent disposals, general market assumptions of the sector which can ignore the liquidity profile and
specific risks of an entity, and other specific items impacting the market’s view of the Group at the moment.
Taking these points into consideration, the Board are comfortable that there is no impairment in respect of
goodwill to be recognised at 31 December 2023, despite the continuing low market capitalisation of the
Group.
Section 3: Operating assets and liabilities continued
Capita plc Annual Report and Accounts
189
Financial statements

Notes to the consolidated financial statements continued
3.5 Right-of-use assets
Accounting policies
At the inception of the lease, the Group recognises a right-of-use asset at cost, which comprises the present
value of minimum future lease payments determined at the inception of the lease. Right-of-use assets are
depreciated using the straight-line method over the shorter of estimated life or the lease term. Amendments
to lease terms resulting in a change in payments or the length of the lease results in an adjustment to the
right-of-use asset and corresponding lease liability. Right-of-use assets are reviewed for impairment when
events or changes in circumstances indicate the carrying value may not be fully recoverable.
Right-of-use assets exclude leases with low values and terms of twelve months or less. These leases are
expensed to the consolidated income statement when incurred.
Following the classification of a business as held for sale, a property leased by the Group and part occupied
by the business being sold is no longer used by the Group. The part of the leased property used by, and
sub-leased to, the business held for sale (£31.3m) has remained a right-of-use asset and the remainder of
the property (£0.2m) which is used by other third parties, was reclassified to investment property. The right-
of-use asset leased to the business held for sale will be transferred to lease receivables on completion of
the disposal in January 2024.
Following an impairment test, the investment property was written down to £nil and is included within the
property category in the table opposite. Since the impairment was triggered by the disposal of a business,
the charge has been included within business exits. Refer to note 2.8.
As detailed in note 2.4, a charge of £54.4m has been recognised in 2023 for the costs to deliver the cost
reduction programme. This includes property related costs of £31.0m arising from the associated
rationalisation of the Group’s property estate, which includes impairment of right-of-use assets of £13.1m.
These costs have been excluded from adjusted profit.
Other movements include amendments to existing leases.
At 1 January 2022
265.6
15.4
6.9
287.9
Addition of new leases
12.9
2.4
—
15.3
Depreciation charged - included in adjusted profit
(45.2)
(6.0)
(4.2)
(55.4)
Depreciation charged - included in business exits
(0.6)
—
—
(0.6)
Impairment - included in adjusted profit
2.4
—
0.3
2.7
Disposal of businesses
(0.2)
—
—
(0.2)
Disposals - included in adjusted profit
(6.2)
(1.6)
(0.5)
(8.3)
Disposals - included in business exits
(0.1)
—
—
(0.1)
Exchange movement
1.4
—
—
1.4
Other movements
7.0
0.4
(0.6)
6.8
At 31 December 2022
237.0
10.6
1.9
249.5
Addition of new leases
12.9
1.8
2.5
17.2
Depreciation charged - included in adjusted profit
(40.5)
(5.9)
(1.9)
(48.3)
Impairment - included in adjusted profit
(2.4)
—
—
(2.4)
Impairment - excluded from adjusted profit
(13.1)
—
—
(13.1)
Impairment - included in business exit
(0.2)
—
—
(0.2)
Transfer to disposal group assets held for sale
(1.0)
—
—
(1.0)
Disposal of businesses
(0.2)
—
—
(0.2)
Disposals - included in adjusted profit
(0.2)
(0.7)
(0.7)
(1.6)
Exchange movement
(1.9)
—
—
(1.9)
Other movements
9.7
0.1
0.7
10.5
At 31 December 2023
200.1
5.9
2.5
208.5
AP
Section 3: Operating assets and liabilities continued
Capita plc Annual Report and Accounts
190
Financial statements

Notes to the consolidated financial statements continued
3.6 Provisions
Accounting policies
Provisions are recognised when the Group has a present legal or constructive obligation arising from past
events, it is probable that cash will be paid to settle it, and the amount can be estimated reliably.
If the effect of the time value of money is material, provisions are discounted using the yield on government
bonds which have a similar timing and currency of cash flows to the provision being discounted. Where
required adjustments are made to the yields to reflect the risks specific to the cash flows being discounted.
The unwinding of the discount is recognised as a financing cost in the consolidated income statement.
The value of the provision is determined based on assumptions and estimates in relation to the amount,
timing and likelihood of actual cash flows, which are dependent on future events. Where no reliable basis of
estimation can be made, no provision is recorded. However, contingent liabilities disclosures are given
when there is a greater than remote probability of outflow of economic benefits. See note 6.2.
On an ongoing basis, management monitor provisions and their accurate estimation when compared to final
outcomes.
Denotes significant accounting estimates and assumptions
As detailed in note 2.1, in respect of onerous customer contract provisions, due to the level of uncertainty,
combination of variables and timing across numerous contracts, it is not practical to provide a quantitative
analysis of the aggregated estimates and assumptions that are applied, and management do not believe
that disclosing a potential range of outcomes on a consolidated basis would provide meaningful information
to a user of the financial statements. Due to commercial sensitivities, the Group does not specifically
disclose the amounts involved in any individual contract.
Provisions
The movements in provisions during the year are as follows:
At 1 January
—
10.7
17.0
18.7
73.5
7.4
127.3
Provisions in the year
35.6
10.6
29.9
3.9
16.5
7.5
104.0
Releases in the year
—
(3.3)
(3.5)
(6.3)
(12.3)
(2.7)
(28.1)
Utilisation
(6.1)
(10.2)
(2.8)
(7.4)
(21.4)
(6.9)
(54.8)
Discount unwind on
provisions
—
—
—
—
2.3
—
2.3
—
—
—
(0.5)
—
—
(0.5)
Reclassification between
categories
—
—
0.8
(0.6)
(0.1)
(0.1)
—
At 31 December
29.5
7.8
41.4
7.8
58.5
5.2
150.2
1
Current
101.6
75.7
Non-current
48.6
51.6
150.2
127.3
1. Transfers to disposal group assets held for sale in the year ended 31 December 2023 includes £0.5m that was transferred at 30 June 2023
and subsequently sold during the second half of the year
Cost reduction provision: The provision represents the cost of reducing headcount where communication
to affected employees has crystallised a valid expectation that roles are at risk and it is likely to unwind over
the next twelve months. Additionally, it relates to unavoidable running costs of leasehold properties, such as
insurance and security, and dilapidation provisions, where properties are exited as a result of the cost
reduction programme. These provisions are likely to unwind over periods of up to four years. Refer to note
2.4 for further details on the cost reduction programme.
Business exit provision: The provision relates to the cost of exiting businesses through disposal or
closure including professional fees related to business exits and the costs of separating the businesses
being disposed. These are likely to unwind over a period of one to four years.
Claims and litigation provision: The Group is exposed to claims and litigation proceedings arising in the
ordinary course of business. These matters are reassessed regularly and where obligations are probable
and estimable, provisions are made based on the Group’s best estimate of the expenditure to be incurred.
Due to the nature of these claims, the Group cannot give an estimate of the period over which this provision
will unwind.
AP
E
Section 3: Operating assets and liabilities continued
Capita plc Annual Report and Accounts
191
Financial statements

Notes to the consolidated financial statements continued
3.6 Provisions continued
Property provision: The provision relates to unavoidable running costs, such as insurance and security, of
leasehold property where the space is vacant or currently not planned to be used, and dilapidation costs, for
ongoing operations, and not the cost reduction programme detailed in note 2.4 (where such costs are
included in the cost reduction provision). The expectation is that this expenditure will be incurred over the
remaining periods of the leases which vary up to 23 years.
Customer contract provision: The provision includes onerous contract provisions in respect of customer
contracts where the costs of fulfilling a contract (both incremental and costs directly related to contract
activities) exceeds the economic benefits expected to be received under the contract, claims/obligations
associated with missed milestones in contractual obligations, and other potential exposures related to
contracts with customers. Customer contract life-time reviews are used to determine the value of an
onerous contract provision. The life-time contract review reflects the forecast of the best estimate of external
revenues and costs over the remaining contract term. These provisions are forecast to unwind over periods
of up to six years.
The customer contract provision includes £53.3m (2022: £59.7m) in respect of closed book Life & Pensions
contracts in Capita Experience. The closed books and contractual dynamics have led to onerous conditions
to service certain of these contracts. Management has been required to assess the likely length of these
contracts, given the pattern and experience of contract terminations while also recognising the evergreen
clauses (which potentially allow the customer to extend the contracts indefinitely until the run-off of the
underlying life and pension books is complete). Accordingly, the Group has, in prior years, provided for the
onerous contract conditions based on the best estimate of the remaining contract terms and the period and
likely costs to support the final handover of services. At 31 December 2023, the provision was increased to
provide cover for contracts to extend out to December 2028 (ie a five year rolling period).
Other provisions: Relates to provisions in respect of other potential exposures arising as a result of the
nature of some of the operations that the Group provides, including supplier audit and regulatory provisions.
These are likely to unwind over periods of up to five years.
Section 3: Operating assets and liabilities continued
Capita plc Annual Report and Accounts
192
Financial statements

Notes to the consolidated financial statements continued
This section outlines the Group’s capital structure and
financing costs. The Group defines its capital structure as its
cash and cash equivalents, non-current interest bearing loans
and borrowings and equity. The Group aims to manage its
capital structure to safeguard the Group’s ability to continue
as a going concern, so that it can continue to provide returns
to shareholders and benefits for other stakeholders. The
Group manages its capital structure to maintain a sustainable
mix of debt and equity that ensures that the Group can pursue
its strategy. The Group makes adjustments to its capital
structure in light of changes in economic conditions and
strategic operational risk. To maintain or adjust the capital
structure, the Group may return capital to shareholders
through dividends and share buy backs, sell assets, raise
additional equity, or arrange additional debt facilities.
4.1 Net debt, capital and capital management
4.2 Financial risk
4.3 Net finance costs
4.4 Leases
4.5 Financial instruments and the fair value hierarchy
4.6 Issued share capital
4.7 Group composition and non-controlling interests
Denotes accounting policies
Denotes significant accounting judgements
Denotes significant accounting estimates and
assumptions
Key highlights
Net financial debt to adjusted EBITDA
1
(both pre-IFRS 16)
Aim: Maintain the ratio of net financial debt to adjusted EBITDA
1
(both pre-IFRS16) at ≤1.0x times over the medium term
1.2x
(2022: 0.5x)
Available liquidity
1
£282.3m
(2022: £405.2m)
1. Details of all alternative performance measures and related Key Performance Indicators
(KPIs) can be found in section 8.2.
Capital strategy
The Group’s capital strategy is to build a strong and flexible balance
sheet, which supports the Group’s strategic objectives, the investment
needed to grow the business and allows for contributions required to
reduce pension liabilities.
The Board aims to maintain the ratio of net financial debt to adjusted
EBITDA, both on a pre-IFRS16 basis at ≤1.0x times over the medium
term.
Liquidity
Available liquidity
1
at 31December 2023 was £282.3m (2022:
£405.2m) and during 2023 net financial debt (pre-IFRS 16) increased
by £97.2m from £84.9m to £182.1m.
Liquidity remains a key area of focus, and in June 2023 the Group
extended its revolving credit facility (RCF) to 31December 2026 at
£284m, reducing to £250m by 1January 2025 as a consequence of
specified transactions. The RCF was not drawn upon at 31December
2023 and had a total committed value of £260.7m. This was
subsequently reduced to £250m on 23January 2024 following receipt
of proceeds from the Fera disposal (refer to note6.3).
A sustainability component has been included in the extended facility
that can adjust the margin by up to five basis points conditional upon
achieving agreed Environmental, Social and Governance (ESG) Key
Performance Indicators (KPIs). These KPIs are:
1. Scope1, Scope2 (market based), and Scope3 (business travel)
absolute emissions reduction.
2. Employee engagement index.
3. Gender diversity at senior management level.
Additionally, in July 2023 the Group issued £101.9m equivalent of new
private placement loan notes across three tranches: £50m maturing
25July 2026, USD45m maturing 25July 2026 and USD23m maturing
25July 2028.
The RCF extension and private placement loan note issuance are a
demonstration of debt providers' confidence in Capita and have
enabled the Group to extend significantly the average maturity of its
debt funding.
Net finance costs
Net finance costs increased by £20.5m to £52.2m (2022: £31.7m).
£6.8m of this change relates to movements in the value of non-
designated foreign exchange forward contracts, £2.3m to discount
unwind on provisions, and the remainder is attributable to the higher
interest rate environment and run-off of low-coupon debt.
E
J
AP
Section 4: Capital structure and financing costs
Capita plc Annual Report and Accounts
193
Financial statements

Notes to the consolidated financial statements continued
4.1 Net debt, capital and capital management
4.1.1 Net debt and capital
The components of the Group’s net debt and undrawn available liquidity are summarised below.
Cash and cash equivalents
4.5.4
(162.6)
(396.8)
234.2
Overdraft
4.5.4
95.0
219.6
(124.6)
Lease liabilities
4.4.1
363.4
397.5
(34.1)
4.5.2
262.5
285.5
(23.0)
Other finance
4.5.2
0.1
0.7
(0.6)
Cross currency interest rate swaps
4.5.2
(13.6)
(24.8)
11.2
Deferred consideration
4.5.2
0.7
0.7
—
Net debt
545.5
482.4
63.1
Undrawn available financing facilities
4.5.2b
260.7
288.4
(27.7)
Capital
806.2
770.8
35.4
1
1. Private loan notes include US dollar and British pound sterling private placement loan notes.
A reconciliation of net debt shown above to cash flow can be found in note 2.9.3.
The overdrafts are part of a notional cash pooling arrangements in which the balances are fully offset by
cash balances within the same arrangements.
During the year, USD and GBP private placement loan notes of £32.7m and £42.1m were repaid at maturity
in January 2023 and October 2023 respectively. The associated currency and interest rate swaps also
expired on these dates, such that the combined net cash outflow for these repayments was £66.3m.
Additionally, as a result of mandatory prepayment provisions related to disposal proceeds, £16.0m of Euro
private placement loan notes were repaid in February and March. The remaining £30.2m balance of these
Euro notes, originally due for payment in November 2027, were early settled in August.
4.1.2 Capital management
Capital management forms an important component of Board meetings, including reviews of forecast
gearing, key covenant tests, and the mix of funding sources, thereby ensuring sustainability and flexibility.
Shareholder returns are reviewed in accordance with the Group’s generation of sustainable free cash flow.
The Group’s capital management process ensures that it meets the financial covenants of its borrowing
arrangements. There are two separate sets of covenant tests underlying the Group’s financial instruments
with the key difference being the treatment of IFRS 16. Under the test for the bank facilities and US private
placement loan notes these covenants are based on maintaining minimum ratios associated with adjusted
net debt to adjusted EBITDA and annualised interest cover. There have been no breaches in the financial
covenants of any loans or borrowings during the reporting period.
The committed RCF provides the liquidity needed to cover the cash fluctuations of the business cycle,
allowing a buffer for contingencies.
Capita plc supports the obligations of its various regulated financial services businesses. The board of each
regulated firm is responsible for ensuring it has embedded capital management frameworks that ensure the
availability of adequate financial resources at all times, and all of them complied with all externally imposed
financial services regulatory capital requirements applicable to them.
In the UK, to provide working capital funding at an economically favourable rate versus the RCF, the Group
uses a non-recourse trade receivables financing, the value of invoices sold under this arrangement at
31 December 2023 was £23.7m (2022: £36.9m). Additionally, in Germany the Group uses a non-recourse
trade receivable financing arrangement for two specific customer contracts, the value of invoices sold under
that arrangement at 31 December 2023 was £11.5m (2022: £7.5m).
4.2 Financial risk
Financial risk management objectives and policies
The Group’s Board of directors has overall responsibility for the establishment and oversight of the Group’s
risk management framework, which is outlined on pages 57 to 63 of the strategic report. The Group’s
principal financial instruments comprise cash, bank loans, private placement loan notes, lease assets and
liabilities, and derivatives. The purpose of these is to fund and provide liquidity for the Group’s operations
and to manage its financial risks. The Group has various other financial instruments including trade
receivables and trade payables arising from its operations.
Derivatives comprise cross-currency interest rate swaps, and forward foreign currency contracts executed
with its relationship banks, all of which have investment grade credit ratings. The derivatives’ purpose is to
manage interest rate and currency risks arising from the Group’s operations and its sources of finance. It is
the Group’s policy that no speculative trading in financial instruments is undertaken.
The main risks arising from the Group’s financial instruments are liquidity risk, foreign currency risk, interest
rate risk, and credit risk. The Board periodically reviews and agrees policies for managing these risks, which
are summarised below.
Section 4: Capital structure and financing costs continued
Capita plc Annual Report and Accounts
194
Financial statements

Notes to the consolidated financial statements continued
4.2 Financial risk continued
4.2.1 Liquidity risk
The Group monitors the risk of a liquidity shortage through its business plan and liquidity cycle forecasts
and analysis, taking into consideration the maturity of the Group’s financial instruments, projected cash
flows from operations and an allowance for contingencies.
The Group’s policy is to hold cash and undrawn committed facilities at a level sufficient to fund the Group’s
operations and its medium-term plans. Multiple sources of funding are used to maintain a balance between
continuity of funding and flexibility without placing reliance on sources that are not contractually committed.
The Group’s committed bank facilities provide liquidity for the cash fluctuations of the business cycle and an
allowance for contingencies. In June 2023, the Group extended its RCF to 31 December 2026 at £284m,
reducing to £250m by 1 January 2025 as a consequence of specified transactions. As such at 31 December
2023 the RCF commitment had been reduced to £260.7m (2022: £288.4m) and was subsequently reduced
to £250.0m on 23 January 2024 following receipt of proceeds from the Fera disposal (refer to note 6.3).
The RCF was not drawn upon at 31 December 2023 (2022: undrawn).
The Group’s core funding is provided by private placement loan notes, and to mitigate the risk of needing to
refinance in challenging conditions, these have been arranged with a spread of maturities to July 2028.
The bank facilities and private placement loan notes all include provisions that would require repayment in
the event of a change of control, which are typical of these arrangements.
In February 2023, the Group executed a committed bridge facility with three of its relationship banks
providing additional liquidity from 1 January 2024. This was cancelled in July 2023.
The tables below summarise the maturity profile of the Group’s financial liabilities based on contractual
undiscounted cash flows. All balances are stated based on the prevailing foreign exchange rates and the
contractual interest rates at the balance sheet date.
Overdraft*
95.0
—
—
—
—
—
95.0
notes
—
88.0
119.1
45.3
18.1
—
270.5
Interest on loan notes
15.0
13.3
11.7
2.3
1.5
—
43.8
Lease liabilities
71.3
55.0
42.9
35.8
30.9
276.1
512.0
Deferred consideration
—
—
0.7
—
—
—
0.7
Put options of non-
controlling interests
8.5
—
—
—
—
—
8.5
interest rate swaps
1.2
1.2
1.2
—
—
—
3.6
currency swaps
5.0
5.0
5.0
1.7
1.7
—
18.4
Interest rate swaps
1.7
1.7
—
—
—
—
3.4
instruments
0.1
—
—
—
—
—
0.1
197.8
164.2
180.6
85.1
52.2
276.1
956.0
* The Group has a notional cash pool under which the bank may net cash balances with overdrafts held by other Group companies in the
arrangements. The overdraft balances shown are fully offset by credit balances in the same arrangement.
Overdraft*
219.6
—
—
—
—
—
219.6
notes
75.0
—
91.4
34.7
94.0
—
295.1
Interest on loan notes
9.6
7.9
6.2
4.5
2.6
—
30.8
Lease liabilities
76.1
64.9
49.0
39.7
33.6
296.7
560.0
Deferred consideration
—
—
—
—
0.7
—
0.7
Put options of non-
controlling interests
9.2
—
—
—
—
—
9.2
interest rate swaps
0.8
0.8
0.8
0.8
—
—
3.2
instruments
0.7
—
—
—
—
—
0.7
391.0
73.6
147.4
79.7
130.9
296.7
1,119.3
Section 4: Capital structure and financing costs continued
Capita plc Annual Report and Accounts
195
Financial statements

Notes to the consolidated financial statements continued
4.2 Financial risk continued
4.2.2 Foreign currency risk
The Group is not generally exposed to significant foreign currency transaction risk with two exceptions.
Firstly, services are provided by the Group’s operations in India, South Africa and Poland and incurred in
Indian rupee (INR), South African rand (ZAR) and Polish zloty (PLN). The Group seeks to mitigate the short
term effect of this exposure by entering into forward foreign exchange contracts to fix the British pounds
sterling (GBP) cost of highly probable transactions.
At 31 December 2023, the Group held forward foreign exchange contracts against forecast internal monthly
INR, ZAR and PLN costs expected in the periods up to and including December 2024, August 2028, and
December 2026 respectively. These forecast costs have been determined on the basis of the underlying
cash flows associated with the delivery of services under executed customer contracts.
Secondly, the Group holds foreign exchange forwards against committed costs relating to the purchase of
cloud software services in US dollars (USD) in the periods up to and including October 2028.
To maximise hedge effectiveness, forward foreign exchange contracts are executed with terms matching
the underlying cash flows.
The following table demonstrates the sensitivity of the Group’s profit before tax and equity to a 5%
strengthening/(weakening) in INR, ZAR, PLN, and USD exchange rates, assuming all other variables are
unchanged, that would arise from the resulting changes in the fair value of the Group’s forward exchange
contracts.
2023
2022
USD
0.6
4.8
—
0.8
INR
—
3.4
—
0.3
ZAR
0.5
3.8
1.8
—
PLN
—
0.2
0.1
—
4.2.3 Interest rate risk
The Group manages its interest rate exposure, which arises from the Group’s private placement loan notes,
cash, deposits and RCF drawings at variable interest rates through cross-currency interest rate swaps and
interest rate swaps. The cross currency interest rate swaps are designated in a mix of fair value and cash
flow hedges against the fair value changes of the private placement loan notes and variability in future cash
flows.
The net level of floating rate interest exposure is managed, to arrive at an acceptable overall interest rate
risk profile. The interest rate profile of the Group’s interest-bearing financial instruments was as follows:
loan notes
—
75.9
119.4
40.9
18.1
—
254.3
Cash in hand
(162.6)
—
—
—
—
—
(162.6)
Overdraft
95.0
—
—
—
—
—
95.0
loan notes
27.5
—
29.7
18.6
71.2
—
147.0
Cash in hand
(396.8)
—
—
—
—
—
(396.8)
Overdraft
219.6
—
—
—
—
—
219.6
loan notes
38.8
—
46.2
15.5
17.1
—
117.6
A sensitivity analysis to changes in interest rates shows that a 0.5% increase or decrease in interest rates,
assuming all other variables are held constant, results in a £nil (2022: £0.6m) increase or decrease to profit
before tax, and no impact on the Group’s equity.
Section 4: Capital structure and financing costs continued
Capita plc Annual Report and Accounts
196
Financial statements

Notes to the consolidated financial statements continued
4.2 Financial risk continued
4.2.4 Hedges
Fair value hedges
The Group’s fixed rate USD and GBP private placement loan notes are hedged through a combination of
cross-currency interest rate swaps. The cross-currency interest rate swaps hedge the exposure to changes
in the fair value of US dollar denominated loan notes. The loan notes and their corresponding swaps have
the same critical terms including nominal values and maturity dates.
The total loss in the year on the fair value hedges of £11.1m (2022: £3.2m loss) was equal to the loss on
the hedged items resulting in no net gain or loss in the income statement apart from hedge ineffectiveness
from credit risk and currency basis risk. This effect of hedge ineffectiveness resulted in a £1.0m credit
(2022: £0.2m debit) to the consolidated income statement, shown in net finance costs, note 4.3.
The impact of the hedged item and the related financial derivatives on the consolidated balance sheet at
31 December 2023 is as follows:
63.3
15.5
14.5
(0.9)
Private placement loan notes
262.5
13.6
Financial Liabilities
11.1
Cash flow hedges
The Group holds the following foreign exchange contracts to manage various exposures across its business
operations:
• non-deliverable forward foreign exchange contracts (NDFs), that are designated as hedges of the highly
probable transactions in INR of the Group’s Indian operations. The terms of the NDFs match the terms of
these commitments.
• foreign exchange forward contracts against committed costs relating to the purchase of cloud software
services in USD for the periods up to and including October 2028.
• foreign exchange forward contracts against committed costs to manage foreign exchange exposure on
services provided by the operations in South Africa, incurred in ZAR, and Poland incurred in PLN.
Additionally, during 2023 the Group executed currency and interest rate swaps to mitigate its foreign
exchange and interest rate exposure on the private placement loan notes.
risk
50.2
149.9
1.8
(3.6)
liabilities
(7.3)
rate risk
32.6
46.2
0.1
(0.6)
liabilities
(0.6)
risk
—
51.9
—
(1.2)
liabilities
(1.2)
82.8
248.0
1.9
(5.4)
(9.1)
The fair value of cash flow hedging instruments held at 31 December 2023 is shown in note 4.5.2.
Section 4: Capital structure and financing costs continued
Capita plc Annual Report and Accounts
197
Financial statements

Notes to the consolidated financial statements continued
4.2 Financial risk continued
The cash flow hedges have been assessed to be highly effective. The cash flow hedging reserve comprises
the effective portion of the cumulative net change in the fair value of the hedging instruments. The following
table provides an analysis of components of equity resulting from cash flow hedge accounting:
4.1
(0.7)
Change in fair value recognised in the consolidated statement of other
comprehensive income
(8.5)
11.5
4.2.5 Credit risk
The carrying values of the Group’s financial assets and contract assets represent its maximum credit
exposure.
The mark-to-market movement on derivatives includes the extent to which the fair value of these
instruments has been affected by the perceived change in the creditworthiness of the counterparties (ie the
expected credit losses) to those instruments and that of the Group itself (own credit risk). The Group is
comfortable that the risk attached to those counterparties is not significant and believes that the swaps
continue to act as an effective hedge against the movements in the fair value of the Group’s private
placement loan notes.
4.3 Net finance costs
The table below shows the composition of net finance costs, including those excluded from adjusted profit:
Interest on finance lease assets
(4.1)
(4.2)
Net interest income on defined benefit pension schemes
5.2
(2.7)
(3.6)
Total interest income
(8.7)
16.3
12.0
Bank loans and overdrafts
14.1
8.4
Cost of non-recourse trade receivables financing
3.1.1
3.7
—
Interest on finance lease liabilities
22.3
22.5
Discount unwind on provisions
3.6
2.3
—
Total interest expense
58.7
Net finance expense included in adjusted profit
50.0
34.0
Bank loans and overdrafts
—
Interest on finance lease liabilities
—
in mark-to-market value
3.2
4.2.4
(1.0)
0.2
Net finance expense/(income) excluded from adjusted profit
2.2
Total net finance expense
52.2
31.7
1
2
1. Private placement loan notes comprise US dollar and British pound sterling private placement loan notes, and the euro fixed rate bearer
notes which were repaid during 2023.
2. Fair value hedge ineffectiveness arises from changes in currency basis, and the movement in a provision for counterparty risk associated
with the swaps.
Section 4: Capital structure and financing costs continued
Capita plc Annual Report and Accounts
198
Financial statements

Notes to the consolidated financial statements continued
4.4 Leases
Accounting policies
The Group leases various assets, comprising land and buildings, equipment and motor vehicles.
The determination whether an arrangement is, or contains, a lease is based on whether the contract
conveys a right to control the use of an identified asset for a period of time in exchange for consideration.
The following sets out the Group’s lease accounting policy for all leases with the exception of leases with
low value and term of twelve months or less which are expensed to the consolidated income statement.
The Group as a lessee – Right-of-use assets and lease liabilities
The accounting policy for right-of-use assets is included in note 3.5.
The Group recognises lease liabilities where a lease contract exists and right-of-use assets representing the
right to use the underlying leased assets.
At the commencement of a lease, the Group recognises the lease liability measured at the present value of
the lease payments to be made over the lease term.
In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the
lease commencement date because the interest rate implicit in the lease is not readily determinable. After
the commencement date, the amount of the lease liability is increased to reflect the accretion of interest and
reduced for the lease payments made. The incremental borrowing rate is the rate of interest that the Group
would have to pay to borrow, over a similar term and with a similar security, the funds necessary to obtain
an asset of a similar value to the right-of-use asset in a similar economic environment. Incremental
borrowing rates are determined monthly and depend on the term, country, currency and commencement
date of the lease. The incremental borrowing rate is determined based on a series of inputs including: the
risk-free rate based on swap market data; a country-specific risk adjustment; a credit risk adjustment; and
an entity-specific adjustment where the entity risk profile is different to that of the Group.
The lease liability is subsequently remeasured (with a corresponding adjustment to the related right-of-use
asset) when there is a change in future lease payments due to a renegotiation or market rent review, a
change of an index or rate or a reassessment of the lease term.
Lease payments are apportioned between a finance charge and a reduction of the lease liability based on
the constant interest rate applied to the remaining balance of the liability. Interest expense is included within
net finance costs in the consolidated income statement.
Lease payments comprise fixed payments, including in-substance fixed payments such as service charges
and variable lease payments that depend on an index or a rate, initially measured using the minimum index
or rate at inception date. The payments also include any lease incentives and any penalty payments for
terminating the lease, if the lease term reflects the lessee exercising that option.
The lease term determined comprises the non-cancellable period of the lease contract. Periods covered by
an option to extend the lease are included if the Group has reasonable certainty that the option will be
exercised, and periods covered by an option to terminate are included if it is reasonably certain that this will
not be exercised.
The Group has elected to apply the practical expedient in IFRS 16 Leases paragraph 15 not to separate
non-lease components such as service charges from lease rental charges.
The Group as a lessor
When the Group acts as a lessor, it determines at lease commencement whether the lease is a finance
lease or an operating lease.
To classify each lease, the Group makes an overall assessment of whether the lease transfers to the lessee
all of the risks and rewards of ownership in relation to the underlying asset. If this is the case, then the lease
is a finance lease. If not, then it is an operating lease.
The Group acts as an intermediate lessor of property assets and equipment. When the Group is an
intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses
whether the sub-lease is a finance or operating lease in the context of the right-of-use asset arising from the
head lease.
In instances where the Group is the intermediate lessor and the sub-lease is classified as a finance lease,
the Group recognises a net investment in sub-leases for amounts recoverable from the sub-lessees while
derecognising the respective portion of the right-of-use asset. The lease liability is retained on the balance
sheet. The net investment in sub-leases is classified as current or non-current finance assets in the
consolidated balance sheet according to whether or not the amounts will be recovered within twelve months
of the balance sheet date. Finance income recognised in respect of net investment in sub-leases is
presented within net finance costs in the consolidated income statement and the capital element of lease
rental received is presented within investing activities in the consolidated cash flow statement.
The Group recognises lease payments received under operating leases as income on a straight-line basis
over the lease term. The Group accounts for finance leases as finance lease receivables, using an
incremental borrowing rate where the interest rate implicit in sub-lease is not easily determinable.
AP
Section 4: Capital structure and financing costs continued
Capita plc Annual Report and Accounts
199
Financial statements

Notes to the consolidated financial statements continued
4.4 Leases continued
4.4.1 The Group as a lessee
Lease liabilities
363.4
397.5
The lease liability includes £7.3m (2022: £5.0m) of future lease payments (undiscounted) for leases with
termination options that could be exercised but are recognised at full term. The potential future cash
outflows of £10.5m (2022: £13.2m) (undiscounted) have not been included in the lease liability because the
Group is reasonably certain that the leases will not be extended. The total cash outflow for leases was
£81.4m (2022: £84.4m) consisting of interest paid of £22.3m (2022: £22.6m) and capital element of £59.1m
(2022: £61.8m).
Right-of-use assets are disclosed in note 3.5, the maturity analysis of lease liabilities is included in
note 4.2.1 and interest expense in note 4.3.
4.4.2 The Group as a lessor
Lease receivables
70.3
76.3
The maturity analysis of lease receivables, including the undiscounted lease payments to be received, is as
follows:
Within 1 year
9.9
9.8
Between 1-2 years
8.2
9.7
Between 2-3 years
7.7
8.2
Between 3-4 years
4.0
7.7
Between 4-5 years
4.0
4.0
More than 5 years
65.5
70.2
Total undiscounted lease payments receivable
99.3
109.6
Unearned finance income
(29.0)
(33.3)
Net investment in lease receivables
70.3
76.3
At 1 January
76.3
82.1
Payments received
(10.1)
(10.0)
Interest accrued (see note 4.3)
4.1
4.2
At 31 December
70.3
76.3
The expenses related to short-term leases, leases of low-value assets and income from sub-leases are
immaterial and therefore there is no separate disclosure.
During 2020, the Group sublet a leased property. The sub-lease includes an option for the lessee to
terminate the lease earlier than the Group’s lease with its landlord. Management assessed it was
reasonably certain that the break clause will not be exercised and, accordingly, determined that the sub-
lease is a finance lease. This resulted in the recognition of a finance lease receivable. This judgement was
based on a number of factors as prescribed within IFRS 16 such as incentive to lessee, importance of the
location to the lessee’s operations, shorter non-cancellable period of the lease, and the lessee’s
modifications to, and customisation of, the property. At 31 December 2023, the lease receivable was
£66.3m and is included in the balance above.
Section 4: Capital structure and financing costs continued
Capita plc Annual Report and Accounts
200
Financial statements

Notes to the consolidated financial statements continued
4.5 Financial instruments and the fair value hierarchy
Accounting policies
Financial instruments – classification of financial instruments
The Group classifies its financial instruments in the following measurement categories:
• those to be measured subsequently at fair value, either through other comprehensive income (FVOCI) or
through profit or loss (FVPL); and
• those to be measured at amortised cost.
The classification depends on the Group’s business model for managing the financial assets and the
contractual terms of the cash flows.
Financial instruments – initial recognition
At initial recognition, the Group measures a financial instrument at its fair value plus, in the case of a
financial instrument not at FVPL, transaction costs that are directly attributable to the acquisition of the
financial instrument. Transaction costs of financial instruments carried at FVPL are expensed in the
consolidated income statement.
Financial instruments with embedded derivatives are considered in their entirety when determining whether
their cash flows are solely payment of principal and interest.
Purchases and sales of financial instruments are recognised on their trade date (ie the date the Group
commits to purchase or sell the instrument). Financial instruments are derecognised when the rights to
receive/pay cash flows from the financial instrument have expired or have been transferred such that the
Group has transferred substantially all risks and rewards of ownership.
Debt instruments
Debt instruments are initially recognised at fair value less directly attributable transaction costs and are
subsequently remeasured depending on the Group’s business model for managing the instrument and the
cash flow characteristics of the debt instrument. There are three measurement categories into which the
Group classifies its debt instruments:
• Amortised cost: instruments that are held for collection/payment of contractual cash flows are measured
at amortised cost where those cash flows represent solely payments of principal and interest. Interest
income/expense from these financial instruments is included in net finance costs using the effective
interest rate method.
• FVOCI: instruments that are held for collection/payment of contractual cash flows and for selling the
financial instrument are measured at FVOCI where the instrument’s cash flows represent solely
payments of principal and interest. Movements in the carrying amount are taken through consolidated
Other Comprehensive Income (OCI), except for the recognition of impairment gains or losses, interest
income and foreign exchange gains/losses, which are recognised in the consolidated income statement.
When the financial instrument is derecognised, the cumulative gain/loss previously recognised in OCI is
reclassified to the consolidated income statement and recognised in other gains/(losses).
• FVPL: instruments that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. A
gain/loss on a debt instrument that is measured at FVPL is recognised in the consolidated income
statement and presented within net finance costs.
The Group reclassifies debt instruments when, and only when, its business model for managing those
instruments changes.
Equity instruments
Investments in equity instruments are initially recognised at fair value and are subsequently remeasured at
fair value with the movement recognised through the consolidated income statement, except where an
election has been made for the movement to be recognised through OCI. An election can be made on initial
recognition of equity instruments that are neither held-for-trading or instruments acquired as part of a
business combination. Once an election has been made all movements in fair value, with the exception of
dividends, are presented through OCI and there is no subsequent reclassification of fair value gains/losses
to the consolidated income statement following the derecognition of the investment. Dividends from such
investments continue to be recognised in the consolidated income statement as other income when the
Group’s right to receive payment is established.
Impairment
The Group assesses, on a forward looking basis, the expected credit losses associated with its financial
instruments carried at amortised cost and FVOCI. The impairment methodology applied depends on
whether there has been a significant increase in credit risk.
Derivatives
Derivative financial instruments are initially recognised at fair value and are subsequently remeasured at fair
value at the end of each reporting period with the movement recognised through the consolidated income
statement, except where derivatives qualify for cash flow hedge accounting. The effective proportion of cash
flow hedges is recognised in OCI and presented in the hedging reserve within equity. The cumulative gain/
loss is subsequently reclassified to the consolidated income statement in the same period that the relevant
hedged transaction is realised.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that
necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part
of the cost of the respective assets. All other borrowing costs are expensed in the period they occur.
Borrowing costs consist of interest and other costs incurred in connection with the borrowing of funds.
4.5.1 Fair value hierarchy
The Group’s financial assets and liabilities are classified based on the following fair value hierarchy:
• Level-1: quoted (unadjusted) prices in active markets for identical assets or liabilities.
• Level-2: other techniques for which inputs that have a significant effect on the recorded fair value are
based on observable (directly or indirectly) market data. With the exception of current financial
instruments (which have a short maturity), the fair value of the Group’s level-2 financial instruments were
calculated by discounting the expected future cash flows at prevailing interest rates. The valuation
models incorporate various inputs including foreign exchange spot and forward rates and interest rate
curves. In the case of floating rate borrowings the nominal value approximates to fair value because
interest is set at floating rates where payments are reset to market values at intervals of less than one
year.
• Level-3: other techniques for which inputs that have a significant effect on the recorded fair value are not
based on observable market data.
Other financial instruments, where observable market data is not available, are carried at either amortised
cost or cost (undiscounted cash flows) as a reasonable approximation of fair value.
During the year ended 31 December 2023, there were no transfers between fair value levels.
AP
Section 4: Capital structure and financing costs continued
Capita plc Annual Report and Accounts
201
Financial statements

Notes to the consolidated financial statements continued
4.5 Financial instruments and the fair value hierarchy continued
4.5.2 Financial instruments and their fair value hierarchy classification
The following table analyses, by classification and category, the carrying value of the Group’s financial instruments and identifies the level of the fair value hierarchy for the instruments carried at fair value:
At 31 December 2023
Note
Lease receivables
4.4.2
n/a
—
—
—
70.3
70.3
6.3
64.0
Cash flow hedges – foreign exchange contracts
4.2.4
Level-2
—
—
1.8
—
1.8
1.4
0.4
Cash flow hedges – Interest rate swaps
4.2.4
Level-2
—
—
0.1
—
0.1
0.1
—
Non-designated foreign exchange forwards and swaps
Level-2
0.3
—
—
—
0.3
0.3
—
Cross-currency interest rate swaps
a
Level-2
—
—
14.5
—
14.5
—
14.5
Originated loans receivable
n/a
—
—
—
0.7
0.7
—
0.7
Financial assets at fair value through P&L
Level-3
16.9
—
—
—
16.9
—
16.9
Financial assets at fair value through OCI
Level-3
—
0.7
—
—
0.7
—
0.7
Deferred consideration receivable
n/a
—
—
—
20.0
20.0
20.0
—
17.2
0.7
16.4
91.0
125.3
28.1
97.2
n/a
—
—
—
155.4
155.4
155.4
—
Cash included within disposal group assets held for sale
2.8
n/a
—
—
—
7.2
7.2
7.2
—
Total financial assets
17.2
0.7
16.4
253.6
287.9
190.7
97.2
Private placement loan notes
a
n/a
—
—
—
262.5
262.5
—
262.5
Other finance
n/a
—
—
—
0.1
0.1
0.1
—
Cash flow hedges – foreign exchange contracts
4.2.4
Level-2
—
—
3.6
—
3.6
1.5
2.1
Cash flow hedges – currency swaps
4.2.4
Level-2
—
—
1.2
—
1.2
—
1.2
Cash flow hedges – interest rate swaps
4.2.4
Level-2
—
—
0.6
—
0.6
0.6
—
Non-designated foreign exchange forwards and swaps
Level-2
0.2
—
—
—
0.2
0.1
0.1
Cross-currency interest rate swaps
a
Level-2
—
—
0.9
—
0.9
—
0.9
Deferred consideration payable
n/a
—
—
—
0.7
0.7
—
0.7
Put options of non-controlling interests
c
Level-3
—
8.5
—
—
8.5
8.5
—
0.2
8.5
6.3
263.3
278.3
10.8
267.5
Overdrafts
4.5.4
n/a
—
—
—
95.0
95.0
95.0
—
Lease liabilities
4.4.1
n/a
—
—
—
363.4
363.4
51.1
312.3
Total financial liabilities
0.2
8.5
6.3
721.7
736.7
156.9
579.8
Derivatives
used for Amortised
Current
Non-
current
Section 4: Capital structure and financing costs continued
Financial statements

Notes to the consolidated financial statements continued
4.5 Financial instruments and the fair value hierarchy continued
Financial assets measured at amortised cost consist of cash, lease receivables, originated loans and
deferred consideration receivable. The carrying value of cash is a reasonable approximation of its fair value
due to the short-term nature of the instruments. Lease receivables, originated loans and deferred
consideration receivable are measured at amortised cost using the effective interest rate method. Included
in other investments are £0.7m (2022: £0.8m) of strategic investments in unlisted equity securities which
are not held-for-trading and the Group elected to recognise at Fair Value through Other Comprehensive
Income (FVOCI). During the period no dividends were received from, and no disposals were made of,
strategic investments.
The financial assets at Fair Value through Profit and Loss (FVPL) relate to the Group’s minority
shareholding in companies as part of Capita Scaling Partners. The assets are revalued when reliable
information on fair value becomes available, which is normally at each funding round.
Financial liabilities measured at amortised cost consist of loan notes, overdrafts, lease liabilities, credit
facilities and deferred consideration payable. With the exception of certain series within the fixed rate
private placement loan notes, the carrying value of financial liabilities are a reasonable approximation of
their fair value. This is because either the interest payable is close to market rates or the liability is short-
term in nature. The private placement loan note series, for which this approximation does not apply, are
those that are subject to longer term fixed rate of interest – these have an underlying carrying value of
£173.9m (2022: £144.9m) and a fair value of £166.3m (2022: £130.2m). Lease liabilities and deferred
consideration payable are measured at amortised cost using the effective interest rate method.
The Group’s key financial liabilities are set out below:
a. Private placement loan notes
The private placement loan notes were issued in USD and GBP. The Group manages its exposure to
foreign exchange and interest rate movements through cross-currency interest rate swaps, interest rate
swaps, and forward foreign exchange contracts.
b. Bank facilities
Details of the Group’s bank facilities are provided in the liquidity section above. At 31 December 2023, the
total value of committed facilities was £260.7m, of which none was drawn (2022: total facilities of £288.4m
of which none was drawn). The committed facilities were subsequently reduced to £250m on 23 January
2024 following receipt of proceeds from the Fera disposal (refer to note 6.3).
c. Put options of non-controlling interests
The liability at 31 December 2023 represents the present value of the cost to acquire the non-controlling
interest in Fera Science Limited. The option held by the non-controlling shareholder of Fera Science Limited
has been exercisable since April 2021. A sensitivity analysis assuming a 10% increase/decrease in the
earnings potential of the business results in a £0.9m increase/decrease in the valuation. The put option
expired without being exercised on completion of the sale of the Group’s shareholding in Fera Science
Limited on 17 January 2024 (refer to note 6.3), and the related liability was de-recognised. Upon inception
of the option agreements, management determined that changes in the carrying amount would be
recognised within equity. This has been applied consistently.
Section 4: Capital structure and financing costs continued
Capita plc Annual Report and Accounts
203
Financial statements

Notes to the consolidated financial statements continued
4.5 Financial instruments and the fair value hierarchy continued
At 31 December 2022
Note
Lease receivables
4.4.2
n/a
—
—
—
76.3
76.3
5.9
70.4
Cash flow hedges – foreign exchange contracts
4.2.4
Level-2
—
—
5.4
—
5.4
3.0
2.4
Non-designated foreign exchange forwards and swaps
Level-2
5.3
—
—
—
5.3
4.4
0.9
Cross-currency interest rate swaps
a
Level-2
—
—
25.8
—
25.8
8.3
17.5
Originated loans receivable
n/a
—
—
—
0.5
0.5
—
0.5
Financial assets at fair value through P&L
Level-3
17.2
—
—
—
17.2
—
17.2
Financial assets at fair value through OCI
Level-3
—
0.8
—
—
0.8
—
0.8
Deferred consideration receivable
n/a
—
—
—
10.5
10.5
2.0
8.5
22.5
0.8
31.2
87.3
141.8
23.6
118.2
Cash
4.5.4
n/a
—
—
—
396.8
396.8
396.8
—
Total financial assets
22.5
0.8
31.2
484.1
538.6
420.4
118.2
Private placement loan notes
a
n/a
—
—
—
285.5
285.5
74.6
210.9
Other finance
n/a
—
—
—
0.7
0.7
0.7
—
Non-designated foreign exchange forwards and swaps
Level-2
0.1
—
—
—
0.1
0.1
—
Cross-currency interest rate swaps
a
Level-2
—
—
1.0
—
1.0
—
1.0
Deferred consideration payable
n/a
—
—
—
0.7
0.7
—
0.7
Put options of non-controlling interests
c
Level-3
—
9.2
—
—
9.2
9.2
—
0.1
9.2
1.0
286.9
297.2
84.6
212.6
Overdrafts
4.5.4
n/a
—
—
—
219.6
219.6
219.6
—
Lease liabilities
4.4.1
n/a
—
—
—
397.5
397.5
55.6
341.9
Total financial liabilities
0.1
9.2
1.0
904.0
914.3
359.8
554.5
Section 4: Capital structure and financing costs continued
Capita plc Annual Report and Accounts
204
Financial statements

Notes to the consolidated financial statements continued
4.5 Financial instruments and the fair value hierarchy continued
The following table shows the movement from the opening balances to the closing balances for Level-3 fair
values.
At 1 January 2022
8.6
9.2
Change in put-options recognised in other comprehensive income
0.6
—
Additions
—
2.3
Reclassification from other investment categories
—
0.4
Gain in fair value recognised in income statement
—
5.9
Gain in fair value recognised in other comprehensive income
—
0.2
At 31 December 2022
9.2
18.0
Change in put-options recognised in other comprehensive income
(0.7)
—
Disposals
—
(0.3)
Loss in fair value recognised in other comprehensive income
—
(0.1)
At 31 December 2023
8.5
17.6
4.5.3 Borrowings
Details of the Group’s current RCF facility are shown in the above liquidity section (see note 4.5.2b).
Borrowing costs of £5.4m were capitalised in the year (2022: £5.2m). At 31 December 2023, the Group’s
private placement loan note series had a GBP equivalent underlying carrying value of £250.2m (2022:
£260.5m) (see note 4.5.2a) analysed as follows:
Maturity
Denomination
22 January 2025
GBP
3.540
7.4
22 April 2025
GBP
3.670
22.3
25 July 2026
GBP
9.350
50.0
27 October 2026
GBP
2.770
18.6
22 January 2027
GBP
3.580
23.8
Total GBP denominated
GBP
122.1
22 January 2025
USD
3.650
74.3
25 July 2026
USD
8.000
45.0
27 October 2026
USD
3.590
19.3
22 January 2027
USD
3.800
27.5
25 July 2028
USD
8.210
23.0
USD
189.1
1
1. USD denominated loan notes have a GBP equivalent underlying carrying value of £131.1m. The Group has entered into a combination of
cross currency and interest rate swaps to achieve a GBP fixed rate of interest. Further disclosure on the Group’s use of hedges is included in
note 4.2.
4.5.4 Cash, cash equivalents and overdrafts
The Group has a notional cash pool with its bank under which the bank is able to net overdrafts against
cash balances held by other Group companies within the same notional pool. The overdraft balances shown
below are fully offset by cash balances within the same notional pool. Since the pool is notional, the Group’s
gross cash and overdraft position is presented below:
Cash and cash equivalents
155.4
396.8
Overdrafts
(95.0)
(219.6)
60.4
177.2
held for sale
7.2
—
Total cash, cash equivalents and overdrafts
67.6
177.2
Of total cash, cash equivalents and overdrafts, £46.0m (2022: £60.4m) is restricted cash, which includes
cash required to be held under FCA regulations, cash held in foreign bank accounts, and cash represented
by non-controlling interests.
Section 4: Capital structure and financing costs continued
Capita plc Annual Report and Accounts
205
Financial statements

Notes to the consolidated financial statements continued
4.6 Issued share capital
Ordinary shares of 2 1/15p each
At 1 January
1,684.1
1,684.1
34.8
34.8
Issue of share capital
17.0
At 31 December
1,701.1
1,684.1
35.2
34.8
Ordinary shares of 2 1/15p each
At 1 January
1,145.5
1,145.5
At 31 December
1,145.5
1,145.5
At 1 January
9.3
18.1
(4.2)
(8.0)
Shares purchased
17.0
—
(0.4)
—
Issued on exercise of share options
(9.5)
(8.8)
3.9
3.8
At 31 December
16.8
9.3
(0.7)
(4.2)
The Group will use shares held in the Employee Benefit Trust (EBT) shares to satisfy future requirements
for shares under the Group’s share option and long-term incentive plans. On 2 June 2023, 17m ordinary
2 1/15 pence shares (2022: nil) were allotted to the EBT for an aggregate nominal value of £351,332 to
satisfy exercises under the Group’s share plans. The total consideration received in respect of these shares
was £351,332. During the year, 9,496,440 (2022: 8,770,217) shares with a value of £3.9m (2022: £3.8m)
were transferred out of the EBT to satisfy exercises under the Group's share option and long-term incentive
plans. The total consideration received in respect of these shares was £nil (2022: £nil).
The Group has an unexpired authority to repurchase up to 9.9% of its issued share capital.
4.7 Group composition and non-controlling interests
The Group’s subsidiaries are listed in notes 7.3.3 and 7.3.16 of the Parent Company financial statements on
pages 221, 222 and 225 to 228.
The Group holds a majority of the voting rights in all of its subsidiaries and the directors have determined
that, other than the entity commented on below, in each case the Group exercises de facto control.
On 23 September 2014, the Secretary of State for the Department for Energy and Climate Change granted
Smart DCC Limited (DCC), a wholly-owned subsidiary of the Group, a licence to establish and manage the
smart metering communications infrastructure, governed by the Smart Energy Code. Each year the Group
reassess whether it has control over DCC as required under IFRS 10 Consolidated Financial Statements.
The Group’s ability to control the relevant activities of DCC is restricted by DCC’s operating licence. The
power that the Group has over DCC’s relevant activities by virtue of owning it is limited (given the
restrictions in the licence). That power is held by the board of DCC where the Group has minority
representation in compliance with the licence. Consequently, the Group has not consolidated DCC in its
Group financial statements. The disclosure of related party transactions with DCC is included in note 6.1.
Section 4: Capital structure and financing costs continued
Capita plc Annual Report and Accounts
206
Financial statements

Notes to the consolidated financial statements continued
This section details employee related items that are not
explained elsewhere in the financial statements.
5.1 Share-based payment plans
5.2 Pensions
5.3 Employee benefit expense
Denotes accounting policies
Denotes significant accounting judgements
Denotes significant accounting estimates and
assumptions
Key highlights
Additional funding into
the defined benefit schemes
£46.3m
(2022: £38.6m)
Net defined benefit pension accounting surplus
£26.8m
(2022: surplus £39.6m)
Employee benefit expense
£1,636.5m
(2022: £1,758.1m)
Defined benefit obligation
(1,178.3)
(1,136.1)
(42.2)
Fair value of plan assets
1,205.1
1,175.7
29.4
Net defined pension asset after
effect of asset ceiling limit
26.8
39.6
(12.8)
The net defined benefit pension position on an accounting basis
remained a net asset but reduced slightly by 31December 2023.
The main reasons for the movement in the net defined benefit pension
position are (i) the decrease in the yields available on corporate bonds
(used to value the pension obligation); (ii) assets returning less than
expected over the period; and (iii) these were partially offset by the
deficit funding contributions (£46.3m) paid into the Group’s main
defined benefit scheme (HPS) (formerly known as CPLAS) (plus
£0.5m deficit funding contribution in respect of other schemes). The
schemes are highly sensitive to the change in discount rates (with a
0.5% pa change resulting in an approximate £89.8m impact) and
change in future inflation expectations (with a 0.5% pa change
resulting in an approximate £48.1m impact).
The valuation of liabilities for funding purposes differs from the
valuation for accounting purposes due to the different requirements.
Management estimate that at 31December 2023 the surplus of the
HPS scheme was around £81m on a funding basis (ie the funding
assumption principles adopted for the full actuarial valuation at
31March 2023), compared to a surplus of £29m on an accounting
basis.
E
J
AP
Section 5: Employee benefits
Capita plc Annual Report and Accounts
207
Financial statements

Notes to the consolidated financial statements continued
5.1 Share-based payment plans
The Group operates a number of executive and employee equity-settled share schemes.
Accounting policies
The fair value of the equity instrument granted under these schemes is measured at grant date and is
recognised as an expense over the vesting period, which ends on the date on which the relevant employees
become fully entitled to the award. Fair value is determined using an option pricing model, only taking into
account vesting conditions linked to the price of the shares of the Company (market conditions).
No expense is recognised for awards that do not ultimately vest as a result of not meeting performance or
service conditions. Where all service and performance vesting conditions have been met, the awards are
treated as vesting, irrespective of whether or not the market condition is satisfied, since market conditions
were reflected in the fair value of the equity instruments.
At each balance sheet date before vesting, the cumulative expense is calculated, representing the extent to
which the vesting period has expired and management’s best estimate of the achievement or otherwise of
non-market conditions, the number of equity instruments that will ultimately vest or, in the case of an
instrument subject to a market condition, be treated as vesting as described above. The movement in
cumulative expense since the previous balance sheet date is recognised in the consolidated income
statement, with a corresponding adjustment to equity.
Where the terms of an award are modified or a new award is designated as replacing a cancelled or settled
award, the cost based on the original award terms continues to be recognised over the original vesting
period adjusted for the incremental fair value of any modification ie the difference between the fair value of
the original award and the fair value of the modified award, both as measured on the date of the
modification. No reduction is recognised if this difference is negative.
Where an award is cancelled, it is treated as if it had vested on the date of cancellation, and any cost not
yet recognised in the consolidated income statement for the award is expensed immediately. Any
compensation paid up to the fair value of the award at the cancellation or settlement date is deducted from
equity, with any excess over the fair value being treated as an expense in the consolidated income
statement.
The expense recognised for share-based payments (before tax) in respect of employee services received
during the year to 31 December 2023 was £5.5m (2022: £5.4m), all of which arises from equity-settled
share based payment transactions. Details of the schemes are as follows:
Deferred annual bonus plan
This scheme is applicable to executive directors. Under this scheme, awards are made annually consisting
of only deferred shares, which are linked to the payout under the annual bonus scheme (details of which are
contained in the directors’ remuneration report on page 96 to 118).
The value of deferred shares is determined by the pay-out under the annual bonus scheme: half of the
annual bonus is paid in cash and the remainder is deferred into shares under the deferred annual bonus
plan or the Capita executive plan. Directors have the option to defer up to 100% of their annual bonus into
deferred shares or net bonus into a restricted share award. The deferred/restricted shares are held for a
period of three years from the date of award, during which they are not forfeitable, except in the case of
dismissal for gross misconduct.
The weighted average share price of options at the date of exercise in 2023 was £0.33 (2022: £0.22). The
weighted average share price during the year was £0.26 (2022: £0.26).
The total cash value of the deferred shares awarded during the year was £0.7m (2022: £0.2m).
Long-term incentive plans (LTIPs)
The structure of the Group’s LTIP schemes was approved at the Company’s Annual General Meeting
(AGM) in 2017. From 2021, no new awards will be granted under the LTIP with the final awards under the
scheme (the 2020 grant) having vested in April 2023.
The 2020 award was split into three equal tranches that vested on the first, second and third anniversary of
the grant date. The first tranche in 2020 was subject to a retention element which would vest in full on each
annual vesting date, with the remaining 50% subject to a performance condition of net debt. Threshold
vesting (25%) was dependent on net debt falling to £872m, target vesting (50%) was dependent on net debt
falling to £822m and maximum vesting (100%) was dependent on net debt being below £772m. Tranches 2
and 3 were subject to the retention element only apart from the CEO’s award which was subject to relative
Total Shareholder Return (TSR) and responsible business scorecard measures.
Details of the 2020 LTIP award outturn and vesting levels for executive directors are set out in the 2022
directors’ remuneration report, on page 115 of the 2022 Annual Report.
All of the above awards are subject to a performance underpin assessment of the underlying financial and
operational performance of Capita over the performance period.
AP
Section 5: Employee benefits continued
Capita plc Annual Report and Accounts
208
Financial statements

Notes to the consolidated financial statements continued
5.1 Share-based payment plans continued
Capita Executive Plan 2021
The Capita Executive Plan was approved by shareholders at the 2021 AGM. Under this plan, restricted
share awards (RSAs) are granted to executives.
With the exception of the executive directors, RSAs granted in 2021, 2022 and 2023 are split into three
equal tranches that vest on the first, second and third anniversary of the grant date. The awards are not
subject to specific performance conditions, however there is a general underpin regarding Remuneration
Committee satisfaction with underlying financial and operational performance of Capita over the
performance period.
Details of the Capita Executive Plan RSAs made to executive directors and the associated underpins are
set out in the directors’ remuneration report, on page 111.
Outstanding at 1 January
41.7
46.4
Awarded during the year
16.6
28.5
Exercised
(9.5)
(8.8)
Lapses
(7.6)
(24.4)
Outstanding at 31 December
41.2
41.7
Exercisable at 31 December
—
—
The weighted average remaining contractual life of the above shares outstanding at 31 December 2023 was
1.1 years (2022: 1.3 years).
All schemes
The fair value of the options granted/awarded during the year was £0.38 per share (2022: £0.22 per share).
None of the existing option schemes have exercise prices.
The fair value for current share scheme issues is effectively the market price of a Capita share at the date of
grant. Accordingly, no assumptions have been disclosed.
The expected life of the options is based on historical data and is not necessarily indicative of exercise
patterns that may occur. The expected volatility reflects the assumption that the historical volatility is
indicative of future trends, which may also not necessarily be the actual outcome.
5.2 Pensions
Accounting policies
Defined contribution pension schemes
The Group maintains a number of defined contribution pension schemes and for these schemes the Group
has no further payment obligations once the contributions have been paid. The contributions are recognised
as an employee benefit expense in the consolidated income statement when the related service is provided
and as they fall due.
Defined benefit pension schemes
In addition, the Group operates two defined benefit pension schemes and participates in a number of other
defined benefit pension schemes, all of which require contributions to be made to separate trustee-
administered funds. The costs of providing benefits under these schemes are determined separately for
each scheme using the projected unit credit method, which attributes entitlement to benefits to the current
period (to determine current service cost) and to the current and prior periods (to determine the present
value of the defined benefit obligation) and is based on actuarial advice. Past service costs are recognised
immediately in the consolidated income statement.
When a settlement (eliminating all obligations for benefits already accrued) or a curtailment (reducing future
obligations as a result of a material reduction in the scheme membership or a reduction in future
entitlement) occurs, the obligation and related plan assets are remeasured using current actuarial
assumptions and the resultant gain/loss recognised in the consolidated income statement during the period
in which the settlement or curtailment occurs.
Remeasurements of the net defined benefit asset/liability, which comprise actuarial gains and losses, the
return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are
recognised immediately in other comprehensive income and will not be reclassified to the consolidated
income statement. The Group generally determines the net interest expense/income on the net defined
benefit asset/liability for the year by applying the discount rate used to measure the defined benefit
obligation at the beginning of the year to the then net defined benefit asset/liability, taking into account any
changes in the net defined benefit asset/liability during the year as a result of contributions and benefit
payments. However, due consideration is given to events which require the net interest expense/income on
the net defined benefit asset/liability to be remeasured over the course of the year.
Current and past service costs are charged to operating profit while the net interest cost is included within
net finance costs.
The net asset/(liability) in the consolidated balance sheet with respect to the defined benefit pension
schemes comprises the total for each scheme, or group of schemes, of the present value of the defined
benefit obligation (using a discount rate based on high quality corporate bonds), less the fair value of assets
out of which the obligations are to be settled directly. The policy to determine fair value of assets is detailed
in the note below. Where applicable the value of a net pension benefit asset is restricted to the present
value of any amount the Group expects to recover by way of refunds or reductions in the future
contributions.
AP
Section 5: Employee benefits continued
Capita plc Annual Report and Accounts
209
Financial statements

Notes to the consolidated financial statements continued
5.2 Pensions continued
Significant accounting estimates and assumptions
Measurement of defined benefit obligations – the accounting cost of these benefits and the present value of
pension liabilities involve judgements about uncertain events including such factors as the life expectancy of
members, the salary progression of current employees, price inflation and the discount rate used to
calculate the net present value of the future pension payments. The Group uses estimates for all of these
factors in determining the pension costs and liabilities incorporated in the consolidated financial statements.
The assumptions reflect historical experience and judgement regarding future expectations.
The Group continued to set Retail Price Inflation (RPI) in accordance with the market break-even
expectations less an inflation risk premium, which has remained at 0.25% pa. For Consumer Price Inflation
(CPI), the Group reduced the assumed difference between RPI and CPI to an average of 0.60% pa.
Short-term inflation expectations continued to remain high due to the global economic recovery from the
initial phase of Covid-19, combined with supply constraints in certain sectors such as energy. Current
inflation levels continue to be higher than recent norms. This will have an impact on pension increases that
are linked to inflation and this impact, where applicable, has been reflected in the disclosures. It should be
noted that a material proportion of pension increases are capped (at different levels, but the main cap is
5.0% pa) with some caps applying annually and others applying over a period of years.
The impact of Covid-19 on the effects of future life expectancy continues to be uncertain. The pandemic is
likely to have an impact on the setting of appropriate life expectancy assumptions and models for future
improvements will need to consider whether the experiences since 2020 are a short-term phenomenon, and
if the pandemic will influence future mortality in other ways. For example, the pressure on health services
may mean that progress against other causes of death such as cancer is slower than previously expected,
meaning an assumption of a lower rate of mortality improvements might be appropriate. Alternatively, the
surviving population may be in better health than those dying from Covid-19, meaning that it might be
expected that the remaining members live slightly longer. In June 2023, the Continuous Mortality
Investigation (CMI) published a new model (CMI 2022) that includes population experience up to 2022. This
latest version of the model could be heavily impacted by Covid-19 with the core version of the model placing
a 25% weighting on 2022 experienced data and a 0% weighting on both 2020 and 2021 experienced data.
The core version of the model reflects the fact that 2022 excess deaths remain higher than pre-Covid levels.
The Group is aware of the 2023 high court case that considered the validity of deeds where no Section 37
certificate (confirming that the minimum level of benefits had not been breached) was attached to the deed;
and further understands that the case is being appealed with judgement expected in 2024. The HPS
Trustee Board has received legal advice regarding this matter, which is to await the outcome of the appeal
and any Government intervention prior to assessing what, if any, impact there might be on the scheme. The
Group considers this approach reasonable and appropriate.
Pension expense included in the consolidated income statement
Defined contribution scheme
51.7
55.2
Current service cost
2.5
4.4
Administration costs
4.4
3.9
Past service cost
0.6
0.6
Termination benefits
0.2
—
Effect of settlements
—
0.1
Interest cost
(2.7)
(3.6)
Total defined benefit schemes
5.0
5.4
statement
56.7
60.6
At 31 December 2023, retirement obligations were disclosed in relation to eight (2022: nine) defined benefit
pension schemes.
The Group’s main defined benefit scheme (HPS)
The Group’s main defined benefit scheme closed to future accrual for most members in 2017 (with around
175 members continuing to accrue benefits – out of a total membership of around 16,500 members). Details
of the HPS and other schemes net surplus/(deficit) position are given at the bottom of the table below which
shows the movements from the opening to the closing balance of the net defined benefit asset/(liability).
Events occurred in the HPS that have led to its income statement being remeasured during the year.
Responsibility for the operation and governance of the HPS lies with a corporate Trustee which is
independent of the Group. The Trustee Board is required by law to act in the interest of the HPS’s
beneficiaries in accordance with the rules of the HPS and relevant legislation (which includes the Pension
Schemes Act 1993, the Pensions Act 1995 and the Pensions Act 2004). The nature of the relationship
between the Group and the Trustee Board is also governed by the rules of the HPS and relevant legislation.
The Trustee Board is chaired by an independent Trustee.
The assets of the HPS are held in a separate fund (administered by the Trustee Board) to meet long-term
pension liabilities to beneficiaries. The Trustee Board invest the assets in accordance with its Statement of
Investment Principles, which is regularly reviewed. The Trustee Board has delegated its investment strategy
decisions to a fiduciary manager, however, the Trustee Board maintains overall oversight of the investment
strategy.
A full actuarial valuation of the scheme is carried out every three years by an independent actuary for the
Trustee Board, with the last full actuarial valuation carried out at 31 March 2023. The purpose of that
valuation is to design a funding plan to ensure that the HPS has sufficient assets available to meet future
benefit payments, based on assumptions agreed between the Trustee Board and the Group. The 31 March
2023 actuarial valuation showed a funding surplus of £51.4m (31 March 2020: £182.2m deficit). This
equates to a funding level of 105% (31 March 2020: 89%).
E
Section 5: Employee benefits continued
Capita plc Annual Report and Accounts
210
Financial statements

Notes to the consolidated financial statements continued
5.2 Pensions continued
Given the funding position of the HPS, the Group and the Trustee Board agreed that no further deficit
recovery contributions from the Group are required other than those already committed
1
as part of the
31 March 2020 actuarial valuation. In accordance with the schedule of contributions put in place following
the 31 March 2020 actuarial valuation, the Group has paid £30m of regular deficit contributions during 2023
and £16.3m of accelerated deficit funding contributions and other contributions triggered by the disposal of
certain businesses in the second half of 2022 and 2023. The Group will pay a further £21m of contributions
in 2024, with no further deficit contributions in 2025 and beyond.
The next full actuarial valuation is due to be carried out with an effective date of 31 March 2026 and as part
of that valuation the contribution requirements will be reviewed, and if necessary, amended. For the
purpose of these accounts, an independent qualified actuary projected the results of the 31 March 2023
actuarial valuation to 31 December 2023 taking account of the relevant accounting requirements.
Approximate funding updates are produced at each scheme anniversary when a full actuarial valuation is
not being undertaken. The next funding update is scheduled to be as at 31 March 2024.
The valuation of liabilities for funding purposes (the actuarial valuation) differs from the valuation for
accounting purposes (which is shown in these financial statements) due to different assumptions used and
different market conditions at the different valuation dates (the effective date for the actuarial valuation of
the HPS is 31 March). The assumptions used for funding purposes are scheme specific and allow for an
appropriate amount of prudence, with the discount rate being based on the actual assets of the pension
scheme. While for accounting purposes the assumptions are determined on a best estimate basis in
accordance with IAS 19 Employee Benefits, with the discount rate being based on the yields available on
high quality corporate bonds of appropriate currencies and terms. Management estimate that at
31 December 2023 the net assets of the HPS scheme were around £50m higher on a funding basis (ie the
funding assumption principles adopted for the full actuarial valuation at 31 March 2023) than on an
accounting basis.
The Group contributed £52.5m to the HPS during 2023. This includes the ongoing cost of benefit accrual,
contributions towards running the pension scheme, deficit contribution (including those accelerated on a
pound for pound basis due to disposal proceeds being used to fund mandatory prepayments of debt) and
other contributions as a result of disposal activities.
In addition, during 2023, the £5.0m held in escrow was released to HPS.
1. These include additional, non-statutory, contributions to meet a secondary funding target with the objective of having sufficient assets to
invest in a portfolio of low-risk assets with a low dependency covenant that will generate income to pay members’ benefits as they fall due.
Other defined benefit schemes
The total employer contributions to the ‘Other’ schemes during 2023 were £3m.
Other UK schemes
• Three segregated sections in an industry-wide scheme under which defined benefits are not continuing to
accrue. The latest full actuarial valuations (at 31 December 2021) showed that one of these sections was
in surplus and therefore no deficit contributions were required. One section showed a small deficit
resulting in the Group being required to pay £28,000 during 2025. The third section showed a deficit of
£3.45m resulting in the Group being required to pay £0.8m pa until 2026. The next actuarial valuations
are due as at 31 December 2024 and as part of those valuations the contribution requirements will be
reviewed, and if necessary, amended. There is no cross subsidy with other employer sections.
• Participation in a non-associated multi-employer scheme under which defined benefits are not continuing
to accrue. The latest full actuarial valuation (at 30 September 2020) resulted in the Group being required
to pay deficit contributions of initially £0.4m pa (which increase by 5.5% pa) until 2028. The next full
actuarial valuation is being carried out with an effective date of 30 September 2023 and as part of that
valuation the contribution requirements will be reviewed, and if necessary, amended. If the Group were to
cease to be a participating employer in this scheme there would be an exit debt payable. At
30 September 2022, this was estimated at £6.0m.
Overseas defined benefit schemes
The Group is responsible for an Irish defined benefit scheme which is classed as a cross-border scheme
where the beneficiaries of the scheme have their liabilities, and the trustees hold assets, denominated in
euro. The scheme is governed under UK regulations and subject to further requirements applying to cross-
border schemes. There are two segregated sections in the scheme. The latest full actuarial valuation (at
31 March 2023) showed a funding surplus for both the main section and the other section, and
consequently, no deficit contributions are required for either section. There are no members left accruing
benefits.
The Group is also responsible for two Swiss schemes that provide defined contribution benefits but with
certain guarantees (and are therefore reported as defined benefit schemes under IAS 19). They are
administered and governed through collective foundations which are separate legal entities. Benefits are
continuing to accrue in these schemes.
Additional defined benefit schemes
There are a further 36 (2022: 46) defined benefit pension arrangements in which various Capita businesses
participated during 2023. Of these arrangements 32 (2022: 41) relate to participation in funded and
unfunded public sector schemes (referred to as Admitted Body Arrangements), however, contractual
protections are in place allowing actuarial and investment risk to be passed to the end customer via
recoveries for contributions paid. The nature of these arrangements vary from contract to contract but
typically allow for the majority of contributions payable to the schemes in excess of an initial rate agreed at
the inception to be recovered from the end customer, as well as exit payments (for funded schemes)
payable to the schemes at the cessation of the contract, such that the Group’s net exposure to actuarial and
investment risk is immaterial.
Approximately £10m of employer contributions were paid into these 36 schemes during 2023.
Section 5: Employee benefits continued
Capita plc Annual Report and Accounts
211
Financial statements

Notes to the consolidated financial statements continued
5.2 Pensions continued
Risks associated with the Group’s pension schemes
The defined benefit pension schemes expose the Group to various risks, with the key risks set out below:
Investment risk: the schemes invest in a wide range of assets with a view to provide long-term investment
returns at particular levels. There is a risk that investment returns are lower than expected which, in
isolation, could result in a worsening of the funding position of the schemes.
Interest rate risk: the IAS 19 discount rate is derived based on the yields available on good quality
corporate bonds of suitable duration. If these yields decrease then, in isolation, this would increase the
value placed on the IAS 19 obligation and result in a worsening of the funding position of the schemes.
Inflation risk: the liabilities of the schemes are linked to future levels of inflation. If future inflation is higher
than expected then this would result in the cost of providing the benefits increasing and thereby worsening
the funding position of the schemes.
Longevity risk: if members live longer than expected, then pensions will be paid for a longer time which will
increase the value placed on the liabilities and therefore worsen the funding position of the schemes.
Environmental Social and Governance (ESG) risk: ESG risk relates to these issues having a detrimental
impact on financial returns. The fiduciary manager has policies in place to reduce this risk, although there is
a higher risk in older externally held assets.
To manage these risks, the Group and the trustees carry out regular assessments of them. For HPS, the
main defined benefit scheme, the following actions have been taken:
• The HPS Trustee Board has entered into two bulk annuity contracts with an insurer in respect of a small
number of high individual liability pensioner members with total value included in the assets at
31 December 2023 of £47.0m (2022: £50.1m).
• The HPS Trustee Board has entered into a Liability Driven Investment programme. The level of risk that
is managed by this programme is set by various market-related and funding trigger points.
Together, these actions have led to the Trustee Board hedging (interest rate and inflation) a high proportion
of the HPS’s liabilities. At 31 December 2023 HPS’s liabilities measured on the Trustee Board’s long-term
funding basis were broadly fully hedged.
The hedging aims to match the value of the assets to the movement in liabilities (on a funding basis) arising
from changes in market expectations of future inflation rates and future gilt yields. This is to help protect and
reduce volatility in funding valuations which are used to determine the cash contribution requirements to the
scheme. Since these accounting disclosures use the yields available on corporate bonds to determine the
accounting liabilities, the hedging may not have the same impact for accounting purposes as they do for a
funding valuation. Credit spreads (the difference between the yields available on long-dated corporate
bonds and long-dated government bonds) narrowed during the year meaning that the hedge had a different
impact on the funding position of the scheme and the accounting disclosures at the year-ends (the funding
position on the accounting basis worsened slightly while the funding position on the funding basis improved
slightly).
To illustrate how sensitive the value of the defined benefit obligations is to different market conditions, the
table below shows what the resulting defined benefit obligation would be if the assumptions were changed
as shown (assuming all other assumptions remain constant):
Base defined benefit obligation
1,178.3
0.5% pa decrease in discount rate
1,268.1
0.5% pa increase in salary increases
1,179.7
0.5% pa increase in inflation (and related assumption, eg salary and pension increases)
1,226.4
1 year increase in life expectancy
1,213.0
Section 5: Employee benefits continued
Capita plc Annual Report and Accounts
212
Financial statements

Notes to the consolidated financial statements continued
5.2 Pensions continued
Assets and liabilities
Under IAS 19, pension scheme assets must be valued at their fair value at the balance sheet date. The
scheme assets are made up of quoted and unquoted investments, and asset valuations have been sourced
from the respective scheme’s investment managers and custodians, based on their pricing sources and
methodologies. Unquoted investments require more judgement because their values are not directly
observable. The assumptions used in valuing unquoted investments are affected by current market
conditions which could result in changes in fair value after the measurement date.
For the main asset categories:
• Equities listed on recognised stock exchanges are valued at closing bid prices.
• Bonds are measured using a combination of broker quotes and pricing models making assumptions for
credit and market risks and market yield curves.
• Properties are valued on the basis of an open market value or are valued using models based on
discounted cash flow techniques.
• Assets in investment funds are valued at fair value which is typically the net asset value provided by the
investment manager.
• Certain unlisted investments are valued using a model based valuation such as discounted cash flow.
• The value of bulk annuity contracts has been assessed by discounting the projected cash flows payable
under the contracts (projected by an actuary, consistent with the terms of the contract) and is equal to the
corresponding liability calculated by reference to the IAS 19 assumptions.
The assets and liabilities of all of the defined benefit pension schemes (excluding additional voluntary
contributions) at 31 December are:
2023
2022
Unquoted
*
Unquoted
*
– UK
0.1
3.0
3.1
0.2
2.5
2.7
– Overseas
1.5
34.3
35.8
2.0
24.8
26.8
– Private
0.1
—
0.1
0.2
—
0.2
1.7
37.3
39.0
2.4
27.3
29.7
2023
2022
Unquoted
*
Unquoted
*
– UK Government
538.5
1.2
539.7
482.0
—
482.0
– UK Corporate
0.1
45.7
45.8
0.4
11.6
12.0
– Overseas Government
9.8
11.9
21.7
10.1
11.4
21.5
– Overseas Corporate
0.3
211.7
212.0
0.9
101.0
101.9
– Emerging Markets
0.4
2.7
3.1
0.5
27.3
27.8
– Private Debt
—
110.5
110.5
—
134.5
134.5
– Secured Loans
—
—
—
—
39.8
39.8
549.1
383.7
932.8
493.9
325.6
819.5
Property
2.2
45.8
48.0
2.6
88.2
90.8
Infrastructure
1.0
—
1.0
1.5
—
1.5
Credit Funds
1.6
—
1.6
2.7
—
2.7
Hedge Funds
—
1.1
1.1
—
2.1
2.1
Absolute Return Funds
0.2
—
0.2
0.1
—
0.1
Insurance Contracts
—
69.7
69.7
—
71.4
71.4
Cash
81.3
20.4
101.7
34.3
133.2
167.5
Other
4.4
5.6
10.0
(8.5)
(1.1)
(9.6)
90.7
142.6
233.3
32.7
293.8
326.5
Total
641.5
563.6
1,205.1
529.0
646.7
(before effect of asset ceiling limit)
(1,178.3)
(1,136.0)
(before effect of asset ceiling limit)
26.8
39.7
Effect of asset ceiling limit
—
(0.1)
(after effect of asset ceiling limit)
(1,178.3)
(1,136.1)
(after effect of asset ceiling limit)
26.8
39.6
* Some investments are in funds which are in themselves not traded in active markets.
Section 5: Employee benefits continued
Capita plc Annual Report and Accounts
213
Financial statements

Notes to the consolidated financial statements continued
5.2 Pensions continued
The HPS Trustee Board invests in Liability Driven Investments (LDIs) as part of a risk hedging strategy. The
aim of the strategy is to match the value of the assets to the movement in liabilities (on a funding basis)
arising from changes in market expectations of future inflation rates and future gilt yields. To achieve this,
LDIs invest in a variety of instruments including gilts, synthetic gilts (combination of repurchase agreement,
reverse repurchase agreements and total return swaps) and cash. In the table above, the LDI at
31 December 2023 (approximately £546.3m) has been mapped as 95.4% Quoted UK Government Bonds,
1.5% Quoted Overseas Government Bonds, 2.3% Quoted Cash and 0.8% Quoted Other.
The assets do not include any directly owned financial instruments issued by the Group.
Within the Private Debt allocation above, approximately £79.0m relates to adjusted lagged valuations at
31 December 2023. In arriving at this figure, allowance has been made for broad market movements and
distributions between 30 September 2023 (the most recent valuation of these assets) and 31 December
2023.
In accordance with the HPS Trustee Board’s focus on financially material considerations, it is acknowledged
that Environment, Social and Governance (ESG) factors can impact security prices. The HPS Trustee
Board has discussed their views on ESG factors, and considered the Group’s perspective, and developed
responsible investment beliefs. These can be found in the HPS’s Statement of Investment Principles (on its
website at https://www.horizonpensionscheme.com/library).
IFRIC 14
The Group has considered the impact of IFRIC 14 IAS 19 - The Limit on a Defined Benefit Asset, Minimum
Funding Requirements and their Interaction on the various schemes (in relation to either recognising a
surplus or allowing for the impact of any funding commitments made) and has concluded, based on its
interpretation of the rules for each of the schemes, that IFRIC 14 would not affect the balance sheet position
at this reporting date for any of the schemes. For clarity the HPS, the Group’s main defined benefit scheme,
IFRIC 14 would not limit the surplus or increase the deficits shown at the reporting date because the Group
has an unconditional right to a refund assuming the gradual settlement of the scheme liabilities over time
until all members have left the scheme.
Reconciliation of retirement benefits
Explanation of constituents of the consolidated income statement.
The cost of providing the retirement benefits during the year is broken down as follows, with due
consideration being made for events which require the income statement to be re-measured over the
course of the year:
• Service cost is the cost to the Group of future benefits earned by contributing members over the current
financial period.
• Past service cost represents the change in the present value of scheme liabilities in the current period in
relation to prior years’ service.
• Administration costs are those entailed by the pension schemes over the current period.
• Interest expense/(income) is made up of the interest on pension liabilities and assets over the current
period generally based on the discount rate adopted at the start of the period. An allowance for interest
on the asset ceiling is recognised where applicable as at 31 December 2023 and 31 December 2022.
• Termination benefits are employee benefits payable as a result of either: (a) the Group’s decision to
terminate an employee’s employment before the normal retirement date; or (b) an employee’s decision to
accept an offer of benefits in exchange for the termination of employment.
Section 5: Employee benefits continued
Capita plc Annual Report and Accounts
214
Financial statements

Notes to the consolidated financial statements continued
5.2 Pensions continued
All schemes are partly or wholly funded, and the following table shows the components of the movements
from the opening to the closing balances for the net defined benefit asset:
Defined benefit obligation
Fair value of plan assets
Net defined benefit asset
At 1 January
(1,136.1)
(1,791.5)
1,175.7
1,797.3
39.6
5.8
Current service cost
(2.5)
(4.4)
—
—
(2.5)
(4.4)
Administration costs
(4.4)
(3.9)
—
—
(4.4)
(3.9)
Past service cost
(0.6)
(0.6)
—
—
(0.6)
(0.6)
Termination benefits
(0.2)
—
—
—
(0.2)
—
Effect of settlements
—
0.1
—
(0.2)
—
(0.1)
Interest income/(expense)*
(53.4)
(44.0)
56.1
47.6
2.7
3.6
income statement
(61.1)
(52.8)
56.1
47.4
(5.0)
(5.4)
Included in other comprehensive
income:
– demographic assumptions
6.9
6.8
—
—
6.9
6.8
– financial assumptions
(28.5)
706.1
—
—
(28.5)
706.1
– experience adjustments
(6.9)
(50.4)
—
—
(6.9)
(50.4)
minimum liability
—
2.3
—
—
—
2.3
interest
—
—
(39.7)
(673.7)
(39.7)
(673.7)
Sub-total in other
comprehensive income
(28.5)
664.8
(39.7)
(673.7)
(68.2)
(8.9)
Employer contributions
—
(0.2)
60.5
48.7
60.5
48.5
Contributions by employees
(2.1)
(1.7)
2.1
1.7
—
—
Benefits paid
50.4
47.8
(50.4)
(47.8)
—
—
in other comprehensive income
(0.9)
(2.5)
0.8
2.1
(0.1)
(0.4)
At 31 December
(1,178.3)
(1,136.1)
1,205.1
1,175.7
26.8
39.6
Defined benefit obligation
Fair value of plan assets
Net defined benefit asset
HPS
(1,125.0)
(1,087.0)
1,154.4
1,126.3
29.4
39.3
Other schemes
(15.8)
(15.2)
19.1
18.6
3.3
3.4
(1,140.8)
(1,102.2)
1,173.5
1,144.9
32.7
42.7
Other schemes
(37.5)
(33.9)
31.6
30.8
(5.9)
(3.1)
(37.5)
(33.9)
31.6
30.8
(5.9)
(3.1)
At 31 December
(1,178.3)
(1,136.1)
1,205.1
1,175.7
26.8
39.6
* Includes impact of asset ceiling on net interest of £nil in 2023 (2022: £0.1m).
Of the total pension cost of £5.0m (2022: £5.4m), £3.3m (2022: £5.1m) was included in cost of sales, £4.4m
(2022: £3.9m) was included in administrative expenses, and £2.7m of net interest income (2022: £3.6m of
net interest income) was included in net finance costs.
Breakdown of liabilities for the HPS
Information about the defined benefit obligation for the HPS:
%
Duration (years)
%
Duration (years)
2023
2023
2022
2022
Active members
5
17.1
6
16.9
Deferred members
54
18.3
59
18.0
Pensioners
41
10.8
35
10.6
Total percentage / average duration
100
15.1
100
15.5
Duration is a weighted average of when benefits are expected to be paid from a pension scheme. It is
sensitive to the interest rate used to calculate it. The increase in yields in recent years has acted to reduce
the duration of the HPS (because less weight is placed on the pension cash flows stretching far out into the
future).
Section 5: Employee benefits continued
Capita plc Annual Report and Accounts
215
Financial statements

Notes to the consolidated financial statements continued
5.2 Pensions continued
Financial and demographic assumptions
Main assumptions
1
:
Rate of price inflation – RPI
3.05
3.15
Rate of price inflation – CPI
2.45
2.50
Rate of salary increase
3.05
3.15
Rate of increase of pensions in payment
2
:
– RPI inflation capped at 5% per annum
3.00
3.05
– RPI inflation capped at 2.5% per annum
2.15
2.15
– CPI inflation capped at 5% per annum
2.45
2.50
Discount rate
4.55
4.75
Expected take up maximum available tax free cash
85.00
85.00
1. Different assumptions apply to non-UK schemes, for example: the discount rate for the Irish Schemes is 3.7% pa, and for the Swiss
schemes it is 1.5% pa in 2023.
2. There are other levels of pension increase which apply to particular periods of membership.
The average future life expectancy from age 65 (in years) for mortality tables used to determine scheme
liabilities for the various different schemes at 31 December 2023 and 31 December 2022 are as follows:
Male
Female
2023
2022
2023
2022
21.9
22.4
23.9
24.3
Other Schemes
21.0 to 22.9
21.1 to 22.7
23.4 to 24.6
23.7 to 24.5
1
Male
Female
2023
2022
2023
2022
22.6
22.3
25.2
25.2
Other Schemes
22.2 to 25.1
22.3 to 25.0
24.9 to 26.6
25.2 to 26.5
1
1. The assumptions used for the HPS are tailored for each member. The assumptions adopted make allowance for an increase in the longevity
in the future (CMI 2022 core model Sk=7.0) with a long-term rate of improvement of 1.25% pa, an ‘A’ parameter of 0.25% for both males and
females and no weighting applied to 2020 and 2021 data, 25% weighting on 2022 data). The rate for members currently aged 65 is derived
from the pensioner membership and the rate for members reaching age 65 in 20 years' time is derived from non-pensioner membership.
5.3 Employee benefit expense
Wages and salaries
1,431.0
1,536.1
Social security costs
140.6
152.4
Pension costs
59.4
64.2
Share-based payments
5.1
5.5
5.4
1,636.5
1,758.1
During 2021, the Group furloughed employees unable to work as a result of the Covid-19 pandemic, and
applied to the Coronavirus Job Retention Scheme (CJRS) operated by the UK Government. Amounts
received under CJRS were treated as a government grant. In May 2022, the Group announced its intention
to repay the amounts received in 2021 under CJRS at the end of the Group's publicly stated disposal
programme and no later than the end of June 2023, accordingly £4.9m was accrued in 2022 and repaid in
June 2023.
The aggregate amount of directors’ remuneration (salary, bonus and benefits) is shown on page 109 of the
directors’ remuneration report.
Sales
380
598
Administration
2,405
3,093
Operations
45,104
47,509
47,889
51,200
Section 5: Employee benefits continued
Capita plc Annual Report and Accounts
216
Financial statements

Notes to the consolidated financial statements continued
This section includes disclosures of those items that are not explained elsewhere in the
financial statements.
6.1 Related-party transactions
6.2 Contingent liabilities
6.3 Post balance sheet events
Denotes accounting policies
6.1 Related-party transactions
Compensation of key management personnel
Short-term employment benefits
7.6
7.6
Pension
0.1
—
Share-based payments
1.7
2.2
9.4
9.8
Gains on share options exercised in the year by Capita plc executive directors were £nil (2022: £119,102)
and by key management personnel £252,312 (2022: £396,621), totalling £252,312 (2022: £515,723).
During the year, the Group rendered administrative services to Smart DCC Limited (DCC), a wholly-owned
subsidiary which is not consolidated (refer to note 4.7). The Group received £119.2m (2022: £112.0m) of
revenue for these services and at the balance sheet date had receivables of £9.0m (2022: £9.2m) from
DCC. The services are procured by DCC on an arm’s length basis under the DCC licence. The services are
subject to review by Ofgem to ensure that all costs are economically and efficiently incurred by DCC.
HPS (Capita’s main defined benefit pension scheme) is a related party of the Group. Transactions with the
Scheme are disclosed in note 5.2.
6.2 Contingent liabilities
Contingent liabilities represent potential future cash outflows which are either not probable or cannot be
measured reliably.
The Group has provided, through the normal course of its business, performance bonds and bank
guarantees of £22.5m (2022: £34.0m). At 31 December 2023 there was an additional guarantee of £15m in
relation to the disposed Travel businesses, which has since reduced to £9.5m in January 2024. Capita plc’s
exposure is counter-indemnified by Clarity Travel Limited.
The Group is reviewing its position in respect of a number of its closed book Life & Pensions contracts. The
outcomes and timing of this review, which are uncertain, could result in no change to the current position,
the continuation of contracts with amended terms or the termination of contracts. If an operation is
terminated, the Group may incur associated costs, accelerate the recognition of deferred income or the
impairment of contract assets.
Following the cyber incident in March 2023 detailed in the Chief Executive Officer’s Review, Capita has
been working closely with all appropriate regulatory authorities and with customers, suppliers and
employees to notify those affected and take any remaining necessary steps to address the incident. At the
date of approval of these consolidated financial statements, we remain in dialogue with the Information
Commissioner’s Office (ICO) and are responding to their information requests. While we anticipate that
there will be further additional requests as part of ICO’s review, no formal action has been taken by the ICO
in connection with the cyber incident and there have been no preliminary findings regarding fault that could
lead to any potential regulatory penalty. The Group has received notification of potential claims for damages
by or on behalf of individuals whose data may have been exfiltrated as part of the incident. At the date of
approval of these consolidated financial statements, the Group has received no substantive claims in
relation to the cyber incident. Whether any such claims will be received is uncertain, but the Group will
vigorously defend any such claims and, at the date of approval of these financial statements, it is not
possible to reliably estimate the potential value of any potential future claim or penalty against the Group.
The Group’s entities are parties to legal actions and claims which arise in the normal course of business.
The Group needs to apply judgement in determining the merit of litigation against it and the chances of a
claim successfully being made. It needs to determine the likelihood of an outflow of economic benefits
occurring and whether there is a need to disclose a contingent liability or whether a provision might be
required due to the probability assessment.
At any time there are a number of claims or notifications that need to be assessed across the Group. The
disparate nature of the Group’s entities heightens the risk that not all potential claims are known at any point
in time.
6.3 Post balance sheet events
The following events occurred after 31 December 2023, and before the approval of these consolidated
financial statements, but have not resulted in adjustment to the 2023 financial results:
Disposal of Fera
The disposal of the Group’s 75% shareholding in Fera Science Limited (Fera) to a fund managed by
Bridgepoint Development Capital completed on 17 January 2024.
Cash proceeds of £62m were received on completion, which included the settlement of intercompany
balances owed by Fera to the Group of £0.1m. Net assets of c.£28m were disposed of on completion,
alongside the derecognition of non-controlling interests of c.£9m. Total costs of disposal are estimated to be
c.£9m, of which £3.5m were recognised in 2022 and 2023.
Contract with major European telecoms provider
In February 2024, the Group extended and expanded its contract with a major European telecoms provider.
The new contract is based on expected volumes, and therefore treated as a framework contract under IFRS
15. As a result, £365m included in the Capita Experience order book at 31 December 2023 relating to the
previous contract has been released. The new contract is expected to be worth up to £420m to 2030.
AP
Section 6: Other supporting notes
Capita plc Annual Report and Accounts
217
Financial statements

Company financial statements
This section presents the company only financial statements for Capita plc (the Company).
7.1 Company balance sheet
7.2 Company statement of changes in equity
7.3 Notes to the Company financial statements
Denotes accounting policies
Denotes significant accounting judgements
Denotes significant accounting estimates and assumptions
7.1 Company balance sheet
Non-current assets
Property, plant and equipment 7.3.2 0.6 0.8
Investments 7.3.3 996.0 994.3
Financial assets 7.3.4 14.9 20.8
Deferred tax assets 7.3.5 11.8 11.2
Amounts receivable from subsidiary companies 7.3.6 56.4 64.4
1,079.7 1,091.5
Current assets
Financial assets 7.3.4 1.2 15.7
Income tax receivable — 33.6
Trade and other receivables 7.3.7 2.1 1.6
Amounts receivable from subsidiary companies 7.3.6 2,213.9 2,494.8
2,217.2 2,545.7
Total assets 3,296.9 3,637.2
Notes
2023
£m
2022
£m
Current liabilities
Overdrafts 53.2 14.6
Trade and other payables 7.3.8 10.0 9.6
Amounts payable to subsidiary companies 7.3.6 1,810.4 2,302.7
Accruals and deferred income 15.6 16.6
Financial liabilities 7.3.4 1.6 0.1
Income tax payable 16.1 —
Provisions 7.3.9 4.2 4.8
1,911.1 2,348.4
Non-current liabilities
Trade and other payables 7.3.8 0.3 —
Borrowings 7.3.10 99.5 44.2
Financial liabilities 7.3.4 4.3 1.0
104.1 45.2
Total liabilities 2,015.2 2,393.6
Net assets 1,281.7 1,243.6
Capital and reserves
Issued share capital 7.3.11 35.2 34.8
Employee benefit trust shares 7.3.11 (0.7) (4.2)
Share premium 7.3.11 1,145.5 1,145.5
Capital redemption reserve 1.8 1.8
Merger reserve 44.6 44.6
Cash flow hedging reserve (2.0) —
Retained earnings 57.3 21.1
Total equity 1,281.7 1,243.6
Notes
2023
£m
2022
£m
The Company’s profit after taxation was £34.3m (2022: £55.1m loss).
The accompanying notes form part of these financial statements.
These financial statements were approved by the Board of directors on 5March 2024 and signed on its
behalf by:
Adolfo Hernandez Tim Weller
Chief Executive Officer
Chief Financial Officer
Company registered number: 02081330
E
J
AP
Section 7: Company financial statements
Capita plc Annual Report and Accounts
218
Financial statements

Company financial statements continued
7.2 Company statement of changes in equity
Share
capital
£m
Employee
benefit trust
shares
£m
Share
premium
£m
Capital
redemption
reserve
£m
Merger
reserve
£m
Cash flow
hedging
reserve
£m
Retained
earnings
£m
Total
£m
At 1 January 2022 34.8 (8.0) 1,145.5 1.8 44.6 (0.7) 74.6 1,292.6
Loss for the year — — — — — — (55.1) (55.1)
Other comprehensive income — — — — — 0.7 — 0.7
Total comprehensive expense for the year — — — — — 0.7 (55.1) (54.4)
Exercise of share options under employee long-term incentive plans — 3.8 — — — — (3.8) —
Share-based payment net of tax effects — — — — — — 5.4 5.4
At 1January 2023 34.8 (4.2) 1,145.5 1.8 44.6 — 21.1 1,243.6
Profit for the year — — — — — — 34.3 34.3
Other comprehensive expense — — — — — (2.0) — (2.0)
Total comprehensive income for the year — — — — — (2.0) 34.3 32.3
Shares issued (note4.6) 0.4 (0.4) — — — — — —
Exercise of share options under employee long-term incentive plans (note4.6; note5.1) — 3.9 — — — — (3.9) —
Share-based payment net of tax effects (note2.6; note5.1) — — — — — — 5.8 5.8
At 31December 2023 35.2 (0.7) 1,145.5 1.8 44.6 (2.0) 57.3 1,281.7
The directors did not declare a dividend in 2023 or 2022.
Share capital – The balance classified as share capital is the nominal proceeds on issue of the Company’s equity share capital, comprising 21/15 pence ordinary shares.
Employee benefit trust shares – Shares held in the employee benefit trust have no voting rights and no entitlement to a dividend.
Share premium – The amount paid to the Company by shareholders, in cash or other consideration, over and above the nominal value of shares issued tothem less issuance costs.
Capital redemption reserve – The Company can redeem shares by repaying the market value to shareholders, whereupon the shares are cancelled. Redemption must be from distributable profits. The Capital
redemption reserve represents the nominal value of the shares redeemed.
Merger reserve
– The merger reserve arose from the adoption of the exemption under section131 of the Companies Act1985 not to set up a share premium account in respect of shares issued for the acquisition of
entities. The amounts attributed to the shares issued for these acquisitions that exceeded their nominal value was transferred to the merger reserve.
Cash flow hedging reserves – This reserve records the portion of the gain or loss on hedging instruments that are determined to be an effective cash flow hedge.
Retained earnings – Net profits/(losses) accumulated in the Company after dividends are paid.
The accompanying notes are an integral part of these financial statements.
Section 7: Company financial statements continued
Capita plc Annual Report and Accounts
219
Financial statements

Company financial statements continued
7.3 Notes to the Company financial statements
7.3.1 Accounting policies
Accounting policies
Basis of preparation
In preparing these financial statements, the Company applies the recognition, measurement and disclosure
requirements of UK-adopted international Financial Reporting Standards (IFRSs), but makes amendments
where necessary to comply with the Companies Act2006 and has set out below where advantage of the
FRS101 disclosure exemptions has been taken.
The financial statements have been prepared in accordance with Financial Reporting Standard101
Reduced Disclosure Framework (FRS101) as issued by the Financial Reporting Council. The Company
has not presented its own income statement as permitted by Section408 of the Companies Act2006.
As permitted by FRS101, the Company has taken advantage of the disclosure exemptions available in
relation to share based payments, financial instruments, capital management, the presentation of
comparative information in respect of certain assets, the presentation of a cash-flow statement, standards
not yet effective, impairment of assets and related party transactions.
The financial statements have been prepared on the historical cost basis and on the going concern basis,
except for the revaluation of certain financial instruments. Historical cost is generally based on the fair value
of the consideration given in exchange for the goods and services. The principal accounting policies
adopted are the same as those set out in Sections1 to 6 of the consolidated financial statements, except as
noted below.
(a) Investments in subsidiaries
The Company has investments in subsidiaries which are shown at cost, less provisions for impairment.
Investments in subsidiaries are reviewed for impairment annually or more frequently if events or changes in
circumstances indicate that the carrying value may be impaired.
The Company determines whether investments in subsidiaries are impaired based on impairment
indicators. If an indicator is identified, an impairment test is performed. This involves estimation of the
enterprise value of the investee which is determined based on the greater of discounted future cash flows at
a suitable discount rate or through the recoverable value of the investments held by the investee company.
The Company also assesses whether there are indicators to reverse previously recognised impairment
losses. Reversals of impairment are only recognised where there has been a change in the estimates used
to determine the investment’s recoverable amount since the last impairment loss was recognised.
(b) Pension schemes
The Company participates in a defined contribution pension scheme where contributions are charged to the
income statement in the year in which they are due. The scheme is funded and the payment of contributions
is made to a separately administered trust fund. The assets of the scheme are held separately from the
Company. The Company remits monthly pension contributions to Capita Business Services Ltd, a
subsidiary company, which pays the Group liability centrally. Any unpaid contributions at the year-end are
accrued in the accounts of that company.
The Company ceased to employ any active members in the Group’s main defined benefit pension scheme
in November 2022. This meant a Section75 debt (which is a statutory debt due from a participating
employer to the trustees of a multi-employer defined benefit pension scheme which is in deficit) became
due. However, the Trustee Board of the defined benefit pension scheme agreed that the pension liabilities
attributable to the Company could be transferred to Capita Business Services Ltd (the Principal Employer of
the defined benefit pension scheme), which eliminates the Section75 debt due from the Company. This
Flexible Apportionment Arrangement was finalised in 2023 and consequently, the Company is no longer a
formal participating employer in the defined benefit pension scheme.
Note5.2 of the Group’s consolidated financial statements sets out more detail about the Group’s pension
obligations.
(c) Share-based payments
Subsidiary companies of the Company reimburse the Company through the intercompany account for
charges attributable to their employees participating in the Company’s share option schemes.
(d) Amounts receivable from and/or payable to subsidiary companies
The amounts receivable from and/or payable to subsidiary companies are shown at cost plus accrued
interest less any provision for impairment. Amounts receivable from subsidiary companies are reviewed for
impairment annually or more frequently if events or changes in circumstances indicate that the carrying
value may be impaired. The Company determines whether amounts receivable from subsidiary companies
are impaired by considering if there is an indicator of increased credit risk. The key assumption considered
is the probability of a subsidiary company going into default at the balance sheet date.
The definition of default used by the Company is that the counterparty is in a net liability position. In this
case credit risk at the balance sheet date is captured by the definition of default and the probability of
default occurring on the next day (reflecting the contractual period of an on-demand loan). The policy is to
assess the net asset/liability position of each investee and then to conclude on the probability of default, and
quantum of any impairment, by reference to the future discounted cash flows. The key assumptions
underpinning these cash flows are set out in note 7.3.3. With the contractual arrangements either based on
repayment on-demand or fixed term loan the future credit risk had a very limited impact on the calculation of
expected credit losses at the balance sheet date.
The cash shortfalls arising when an amount receivable from a subsidiary company is in default are
assessed by discounting the expected future cash flows at the original effective interest rate of the
instrument. Where it is expected that the principal and all associated interest can be recovered at some
point in the future, no material expected credit loss is recognised.
AP
Section 7: Company financial statements continued
Capita plc Annual Report and Accounts
220
Financial statements

Company financial statements continued
7.3.2 Property, plant and equipment
Short-term
leasehold
improvements
£m
Equipment right-
of-use asset
£m
Total
£m
Cost
At 1January 2023 1.4 0.4 1.8
Asset retirements (0.1) (0.4) (0.5)
At 31December 2023 1.3 — 1.3
Depreciation
At 1January 2023 0.6 0.4 1.0
Charge for the year 0.2 — 0.2
Asset retirements (0.1) (0.4) (0.5)
At 31December 2023 0.7 — 0.7
Net book value:
At 1 January 2023 0.8 — 0.8
At 31December 2023 0.6 — 0.6
7.3.3 Investments
Shares in
subsidiary
undertakings
£m
Net book value
At 1January 2023 994.3
Net impairment reversal
1
1.7
At 31December 2023 996.0
1. During the year ended 31December 2023, Capita plc impaired its investments in Capita Financial Services Holdings Limited by £0.6m and
reversed impairment in Capita Life & Pensions Services Limited by £2.0m, Capita Group Insurance PCC Limited by £0.2m and Capita
Employee Benefits Holdings Limited by £0.1m.
Direct investments Registered office
Proportion of
nominal value
of issued
shares held
by the
Company
Capita Pension Solutions Limited
2
65 Gresham Street, London, England, EC2V 7NQ 100 %
Capita Legal Services Limited
1
65 Gresham Street, London, England, EC2V 7NQ 100 %
Capita Employee Benefits Holdings
Limited
1
65 Gresham Street, London, England, EC2V 7NQ 100 %
Capita Financial Services Holdings
Limited
1
65 Gresham Street, London, England, EC2V 7NQ 100 %
Capita Group Insurance PCC Limited
3
Dorey Court, Admiral Park, St. Peter Port,
Guernsey, GY1 4AT, Guernsey
100 %
Capita Holdings Limited
1
65 Gresham Street, London, England, EC2V 7NQ 100 %
Capita International Limited
2
65 Gresham Street, London, England, EC2V 7NQ 100 %
Capita Life & Pensions Regulated
Services Limited
2
65 Gresham Street, London, England, EC2V 7NQ 100 %
Capita International Retirement Benefit
Scheme Trustees Limited
4
65 Gresham Street, London, England, EC2V 7NQ 100 %
Capita Ireland Limited
2
Unit B, West Cork Business & Technology Park,
Clonakilty, Co. Cork, Republic of Ireland, P85
YH98
100 %
Capita Life & Pensions Services
Limited
2
65 Gresham Street, London, England, EC2V 7NQ 100 %
Capita Shared Services Limited
5
65 Gresham Street, London, England, EC2V 7NQ 100 %
1. Investing holding company
2. Outsourcing services company
3. Insurance captive
4. Trustee company for the pension schemes
5. Internal services company
Section 7: Company financial statements continued
Capita plc Annual Report and Accounts
221
Financial statements

Company financial statements continued
7.3.3 Investments continued
Certain subsidiaries of the Group have opted to take advantage of a statutory exemption from having an
audit in respect of their individual statutory accounts. Strict criteria must be met for this exemption to be
taken and the exemption has been agreed to by the directors of those subsidiary entities.
Listed in note7.3.16 to the Company’s financial statements are subsidiaries controlled and consolidated by
the Group, where the directors have taken advantage of the exemption from having an audit of the entities’
individual statutory accounts for the year ended 31December 2023 in accordance with Section479A of the
Companies Act2006.
To facilitate the adoption of this exemption, Capita plc, the parent company of the subsidiaries concerned,
undertakes to provide a guarantee under Section479C of the Companies Act2006 in respect of those
subsidiaries. Details of all indirect subsidiaries, as required under Section409 of the Companies Act2006,
are reported in note7.3.16 to the Company’s financial statements.
The Company considered whether there was an indicator of impairment in investments in subsidiaries at
31December 2023, and due to the Company’s market capitalisation being below the carrying value of the
Company’s net assets, concluded a trigger existed and performed an impairment test.
The impairment test
The recoverable amount has been determined using fair value less costs of disposal. For non-trading
subsidiaries this is based on the net asset value of the entity as at 31 December 2023, which is considered
to not be materially different to the fair value derived by other means. For all other entities, recoverable
amount is estimated on a discounted cash flow basis. Recoverable amounts will also factor in the the
recoverable amount of an entity’s direct and indirect subsidiaries.
For discounted cash flow calculations, the cash flow projections used for the impairment test are derived
from the 2024-2026 business plans approved by the Board of Directors. Key assumptions in the BP include
the delivery of planned revenue growth and the benefits that the cost reduction programme is anticipated to
deliver. The enterprise value is then calculated based on the present value of estimated future cash flows
discounted at the current market rate of return.
The long-term growth rate is based on economic growth forecasts by recognised bodies and this has been
applied to the forecast cash flows for the terminal period. The 2023 long-term growth rate is 1.7% (2022:
2.2%).
Management estimates discount rates using pre-tax rates that reflect the latest market assumptions for the
risk-free rate, the equity risk premium and the cost of debt, which are all based on publicly available external
sources.
The table below presents the pre-tax discount rates applied to the cash flows for 2023 and 2022.
Capita Public
Service
Capita
Experience
2023 11.0 % 9 . 2 %
2022 11.8 % 10.4 %
At 31December 2023, an impairment reversal of £1.7m (2022 impairment charge: £7.0m) arose from the
impairment test performed.
Sensitivity analysis
The impairment testing as described is reliant on the accuracy of management’s forecasts and the
assumptions that underlie them; and on the selection of the discount and growth rates to be applied. To
gauge the sensitivity of the result to a change in any one, or combination of the assumptions that underlie
the model, a number of scenarios were developed to identify the range of reasonably possible alternatives
and measure which investments are the most susceptible to an impairment should the assumptions used be
varied. This sensitivity analysis is only applicable to those investments which have not already been fully
impaired.
The sensitivity scenarios applied estimate potential additional impairments required (with all other variables
being equal) through: an increase in discount rate of 1%, or a decrease of 1% in the long-term growth rate
(for the terminal period) for each of the investments; or, through the severe but plausible downsides applied
to the base-case projections for assessing going concern and viability, without mitigations, for 2024 to 2026,
and the long-term growth rate (1.7%) applied to the 2026 downside cash flows to generate projected cash
flows for 2027, 2028, and the terminal period. We have also considered the impact of all of the scenarios
together, which is also a reasonable possible alternative.
No additional impairments have been identified under any of the sensitivity scenarios, including the
combination sensitivity scenario.
Management continues to monitor closely the performance of all investments in subsidiaries and consider
the impact of any changes to the key assumptions.
7.3.4 Financial instruments
Financial assets
2023
£m
Financial liabilities
2023
£m
Financial assets
2022
£m
Financial liabilities
2022
£m
Cash flow hedges — 1.2 — —
Non-designated foreign exchange forwards
and swaps 1.6 3.8 10.7 0.1
Cross-currency interest rate swaps 14.5 0.9 25.8 1.0
16.1 5.9 36.5 1.1
Analysed as:
Current 1.2 1.6 15.7 0.1
Non-current 14.9 4.3 20.8 1.0
16.1 5.9 36.5 1.1
Section 7: Company financial statements continued
Capita plc Annual Report and Accounts
222
Financial statements

Company financial statements continued
7.3.5 Deferred tax
2023
£m
2022
£m
Deferred tax included in the balance sheet is as follows:
Accelerated capital allowances 3.8 3.9
Tax losses 1.0 1.0
Other short-term timing differences 7.0 6.3
11.8 11.2
7.3.6 Amounts receivable from and/or payable to subsidiary companies
Current Non-current
2023
£m
2022
£m
2023
£m
2022
£m
Amounts receivable from subsidiary
companies 2,213.9 2,494.8 56.4 64.4
Amounts due within one year are repayable on demand along with any accrued interest. Amounts due after
more than one year is a fixed term loan. The expected credit loss provision against amounts receivable from
subsidiary companies is immaterial.
Current Non-current
2023
£m
2022
£m
2023
£m
2022
£m
Amounts payable to subsidiary companies
1,810.4 2,302.7 — —
Amounts payable to subsidiary companies are repayable on demand together with any accrued interest.
7.3.7 Trade and other receivables
Current Non-current
2023
£m
2022
£m
2023
£m
2022
£m
Other debtors 0.3 1.1 — —
Other taxes and social security 1.3 0.1 — —
Prepayments 0.5 0.4 — —
2.1 1.6 — —
7.3.8 Trade and other payables
Current Non-current
2023
£m
2022
£m
2023
£m
2022
£m
Trade creditors 9.6 8.9 — —
Other creditors 0.4 0.7 0.3 —
10.0 9.6 0.3 —
7.3.9 Provisions
2023
£m
2022
£m
At 1January 4.8 8.2
Provisions in the year — 1.6
Releases in the year (0.6) (1.2)
Utilisation — (3.8)
At 31December 4.2 4.8
The majority of the provisions relate to the claims and litigation provisions of £4.0m. Further detail on these
provisions can be found in note3.6 to the Group’s consolidated financial statements.
Section 7: Company financial statements continued
Capita plc Annual Report and Accounts
223
Financial statements

Company financial statements continued
7.3.10 Borrowings
2023
£m
2022
£m
Private placement loan notes - principal 103.4 47.3
Unamortised discount on debt issuance — (1.6)
Unamortised transaction costs on debt issuance (3.9) (1.5)
Total borrowings 99.5 44.2
Maturity analysis is as follows:
In more than 1 years but not more than 5 years 99.5 —
Falling due after more than 5 years — 44.2
Total borrowings 99.5 44.2
The Company issued guaranteed unsecured private placement loan notes as follows:
Interest rate
(%)
Amounts
(m) Maturity
Private placement loan notes 8.000 USD 45.0 25 July 2026
Private placement loan notes 9.350 GBP 50.0 25 July 2026
Private placement loan notes 8.210 USD 23.0 25 July 2028
In June 2023, the Company extended the RCF to 31December 2026 at £284m, reducing to £250m by
1January 2025 as a consequence of specified transactions. As such at 31December 2023 the RCF
commitment had been reduced to £260.7m (2022: £288.4m) and was subsequently reduced to £250.0m on
23January 2024 following receipt of proceeds from the Fera disposal (refer to note6.3 of the consolidated
financial statements).The RCF was not drawn upon at 31December 2023 (2022: undrawn).
Further detail on these facilities can be found in note4.2 to the Group’s consolidated financial statements.
7.3.11 Share capital
Disclosures about the share capital, share premium, and employee benefit trust shares of the Company
have been included in note4.6 to the Group’s consolidated financial statements.
7.3.12 Contingent liabilities
The Group has provided, through the normal course of its business, performance bonds and bank
guarantees totalling £22.5m of which the Parent Company has provided £3.3m (2022: £34.0m; Parent
Company £3.3m). At 31December 2023 there was an additional guarantee of £15m in relation to the
disposed Travel businesses, which has since reduced to £9.5m in January 2024. Capita plc’s exposure is
counter-indemnified by Clarity Travel Limited.
7.3.13 Related-party transactions
In the following, amounts for purchases and sales are for transactions invoiced during the year inclusive of
VAT where applicable. All transactions are undertaken at arm’s length prices.
During the year, the Company sold goods/services in the normal course of business to Entrust Support
Services Limited for £0.1m (2022: £1.2m). The Company purchased goods/services in the normal course of
business from Entrust Support Services Limited for £1.2m (2022: £0.4m). At the balance sheet date, the net
amount receivable from Entrust Support Services Limited was £nil (2022: £nil).
Capita Glamorgan Consultancy Limited was sold on 22 September 2022. From 1January 2022 to
22September 2022, the Company sold goods/services in the normal course of business to Capita
Glamorgan Consultancy Limited for £0.1m.
During the year, the Company sold goods/services in the normal course of business to Fera Science
Limited for £0.3m (2022: £0.7m). The Company purchased goods/services in the normal course of business
from Fera Science Limited for £nil (2022: £0.1m). At the balance sheet date, the net amount receivable from
Fera Science Limited was £nil (2022: £nil).
7.3.14 Pension costs
The Company operates a defined contribution pension scheme. The pension charge for this scheme for the
year was £0.6m (2022: £1.5m).
7.3.15 Share-based payments
The Company operates several share-based payment plans and details of the schemes are disclosed in
note5.1 of the Group’s consolidated financial statements.
The Group consolidated income statement recognised an expense for share-based payments in respect of
employee services received during the year to 31December 2023 of £5.5m (2022: £5.4m), all of which
arose from equity-settled share-based payment transactions. After recharging subsidiary companies for
their participation in these transactions, the total Company expense in its income statement in respect of
share-based payments was £3.1m (2022: £3.0m).
Section 7: Company financial statements continued
Capita plc Annual Report and Accounts
224
Financial statements

Company financial statements continued
7.3.16 Related companies
The stated address relates to the place of incorporation of the entity, which is the same as its tax residence in all cases other than Capita Group Insurance PCC Limited which is incorporated in Guernsey, but which is tax
resident in the UK.
Unless otherwise indicated, all shareholdings are owned indirectly by the company and represent 100% of the issued share capital of the subsidiary. Dormant companies are marked (D).
Akinika Debt Recovery Limited
7
£1.00 Ordinary
Akinika Limited
7
£1.00 Ordinary
Akinika UK Limited (in liquidation)
1
£1.00 Ordinary
Artificial Labs Ltd
2
● £0.000025 Ordinary
Brightwave Enterprises Limited
(in liquidation)
1
£1.00 Ordinary
Brightwave Holdings Limited
(in liquidation)
1
£1.00 Ordinary
Brightwave Limited
(in liquidation)
1
£1.00 Ordinary
Capita (210568) Limited
26
€0.0012 Ordinary
Capita (Polska) Spółka z ograniczoną odpowiedzialnością
12
PLZ50.00 Ordinary
Capita (South Africa) (Pty) Limited
10
ZAR1.00 Ordinary
Capita (USA) Holdings Inc.
9
US$1.00 Ordinary
Capita Birmingham Limited
7
£1.00 Ordinary
Capita Business Services Ltd
7
£1.00 Ordinary
Capita Business Support Services Ireland Limited
26
€1.00 Ordinary
Capita Corporate Director Limited (D)
7
£1.00 Ordinary
Capita Customer Management Limited
7
£1.00 Ordinary
Capita Customer Services (Germany) GmbH
23
€1.00 Ordinary
Capita Customer Services AG
16
CHF1.00 Ordinary
Capita Customer Solutions (UK) Limited
7
£1.00 Ordinary
Capita Customer Solutions Limited
26
€1.00 Ordinary
Capita Cyprus Holdings Limited
25
£1.00 Ordinary
Capita Dubai Limited
7
£1.00 Ordinary
Capita Employee Benefits (Consulting) Limited
7
£1.00 Ordinary
Capita Employee Benefits Holdings Limited
(D)
7
* £1.00 Ordinary
Capita Energie Services GmbH
18
► €1.00 Ordinary
Capita ESS Holdings Limited
(in liquidation)
1
£1.00 Ordinary
Capita Financial Services Holdings Limited
7
* £1.00 Ordinary
Capita Gas Registration and Ancillary Services Limited
(in liquidation)
1
£1.00 Ordinary
Capita GMPS Trustees Limited (D)
7
£1.00 Ordinary
Capita Group Insurance PCC Limited
20
* £1.00 CG1
£1.00 CIC2
£1.00 Ordinary
Company name Share class
Capita Group Secretary Limited (D)
7
£1.00 Ordinary
Capita HCH Limited
7
£1.00 Ordinary
Capita Health and Wellbeing Limited
7
£1.00 Ordinary
Capita Health Holdings Limited
7
£1.00 Ordinary
Capita Holdings Limited
7
* £1.00 Ordinary
Capita India Private Limited
22
INR10.00 Ordinary
Capita Insurance Services Group Limited
(in liquidation)
1
£1.00 Ordinary
Capita Insurance Services Holdings Limited
7
£1.00 Ordinary
Capita Insurance Services Limited
7
£1.00 Ordinary
Capita International Limited
7
* £1.00 Ordinary
Capita International Retirement Benefit Scheme Trustees Limited (D)
7
* £1.00 Ordinary
Capita Ireland Limited
26
* €1.00 Ordinary
Capita IT Services (BSF) Limited
7
£1.00 Ordinary
Capita IT Services Holdings Limited
7
£1.00 Ordinary
Capita IT Services Limited
21
£1.00 Ordinary
Capita Justice & Secure Services Holdings Limited
7
£1.00 Ordinary
Capita Learning Limited (in liquidation)
1
£1.00 Ordinary
Capita Legal Services Limited
7
* £1.00 Ordinary
Capita Life & Pensions Regulated Services Limited
7
* £1.00 Ordinary
Capita Life & Pensions Services Limited
7
* £1.00 Ordinary
Capita Life and Pensions International Limited
7
£1.00 Ordinary
Capita Life and Pensions Services (Isle of Man) Limited
(D)
19
£1.00 Ordinary
Capita Managed IT Solutions Limited
14
£1.00 Ordinary
Capita Mclarens Limited (in liquidation)
11
£1.00 Ordinary
Capita Mortgage Administration Limited
7
£1.00 Ordinary
Capita Mortgage Software Solutions Limited
7
£1.00 Ordinary
Capita Norman + Dawbarn Limited (in liquidation)
4
□ NGN1.00 Ordinary
Capita Offshore Services Private Limited (in liquidation)
22
INR10.00 Ordinary
Capita One Limited
7
£1.00 Ordinary
Capita Pension Solutions Limited
7
* £1.00 Ordinary
Company name Share class
Section 7: Company financial statements continued
Capita plc Annual Report and Accounts
225
Financial statements

Company financial statements continued
7.3.16 Related companies continued
Capita Property and Infrastructure (Structures) Limited
7
£1.00 Ordinary
Capita Property and Infrastructure Consultants LLC (in liquidation)
3 ♦
AED1,000.00 Ordinary
Capita Property and Infrastructure Holdings Limited
7
£1.00 Ordinary
Capita Property and Infrastructure International Holdings Limited (D)
7
£1.00 Ordinary
Capita Property and Infrastructure International Limited (D)
7
£1.00 Ordinary
Capita Property and Infrastructure Limited
7
£1.00 Ordinary
Capita Retail Financial Services Limited
7
£1.00 Ordinary
Capita Scotland General Partner (Pension) Limited
(in liquidation)
11
£1.00 Ordinary
Capita Secure Information Solutions Limited
7
£1.00 Ordinary
Capita Shared Services Limited
7
* £1.00 Ordinary
Capita Southampton Limited
7
£1.00 Ordinary
Capita Symonds (Asia) Limited (D)
7
£1.00 Ordinary
Capita Symonds Saudi Arabia Limited (D)
15
▲ N/A
Capita West GmbH
23
€25,000.00 Ordinary
Clinical Solutions Acquisition Limited
(D)
7
£1.00 Ordinary
Clinical Solutions Finance Limited
7
£1.00 Ordinary
Clinical Solutions Holdings Limited (D)
7
£1.00 Ordinary
Clinical Solutions International Limited
7
£1.00 Ordinary
Clinical Solutions IP Limited
(D)
7
£1.00 Ordinary
Computerland UK Limited
7
£1.00 Ordinary
Contact Associates Limited
7
£1.00 Ordinary
CPLAS Trustees Limited (D)
7
£1.00 Ordinary
Cymbio Limited (in liquidation)
1
£1.00 Ordinary
Daisy Updata Communications Limited
17
▲ £1.00 Ordinary B
Debt Solutions (Holdings) Limited
7
£1.00 Ordinary
Dragonfly Technology Solutions Ltd
7
○ £0.000001 Ordinary
£0.000001 A Ordinary
DSTBTD LIMITED
28
< £0.001 Ordinary
Duke 2021 Topco Limited
6
> £1.00 B Ordinary
E.B. Consultants Limited (D)
7
£1.00 Ordinary
Electra-Net (UK) Limited
9
£1.00 Ordinary
Electra-Net Group Limited (in liquidation)
1
£1.00 Ordinary
Electra-Net Holdings Limited (in liquidation)
1
£1.00 Ordinary
Company name Share class
Entrust Support Services Limited
24
▼ £1.00 Ordinary X
Euristix (Holdings) Limited
(in liquidation)
1
£1.00 Ordinary
Euristix Limited
(in liquidation)
1
£1.00 Ordinary
Fera Science Limited
7 ■
£1.00 Ordinary B
Fire Service College Limited
7
£1.00 Ordinary
FirstAssist Services Limited
(in liquidation)
1
£1.00 Ordinary
Full Circle Contact Centre Services (Proprietary) Limited
10
ZAR0.01 Ordinary
Grosvenor Career Services Limited (D)
7
£1.00 Ordinary
Level Financial Technology Limited
5
◙ £0.001 Ordinary
Liberty Printers (AR And RF Reddin) Limited (in liquidation)
1
£1.00 Ordinary
Market Mortgage Limited
7
◄ £0.001 Ordinary
Metacharge Limited (in liquidation)
1
£1.00 Ordinary
Octal Business Solutions Limited
(in liquidation)
1
£1.00 Ordinary
RE (Regional Enterprise) Limited
7
£1.00 Ordinary
Retain International (Holdings) Limited
(D)
7
£1.00 Ordinary
Retain International Limited (D)
7
£1.00 Ordinary
SBJ Benefit Consultants Limited (D)
7
£1.00 Ordinary
SBJ Professional Trustees Limited (D)
7
£1.00 Ordinary
SDP Regeneration Services 2 Limited (in liquidation)
1
£1.00 Ordinary
Smart DCC Limited
7
£1.00 Ordinary
Tascor E & D Services Limited
7
£1.00 Ordinary
Tascor Services Limited
7
£1.00 Ordinary
TELAG AG
13
CHF1,000.00 Ordinary
The G2G3 Group Ltd.
(in liquidation)
11
£1.00 Ordinary
ThirtyThree APAC Limited (D)
8
HKD1.00 Ordinary
Updata Infrastructure (UK) Limited
7
£1.00 Ordinary
Updata Infrastructure 2012 Limited
(in liquidation)
1
£1.00 Ordinary
Urban Vision Partnership Limited
9
► £1.00 Ordinary B
Ventura (India) Private Limited
27
INR10.00 Ordinary
Ventura (UK) India Limited
7
£1.00 Ordinary
Voice Marketing Limited
7
£1.00 Ordinary
Western Mortgage Services Limited
7
£1.00 Ordinary
Woolf Limited
7
£1.00 Ordinary
Company name Share class
Section 7: Company financial statements continued
Capita plc Annual Report and Accounts
226
Financial statements

Company financial statements continued
7.3.16 Related companies continued
Footnotes
* Companies directly held by Capita plc.
> Shareholdings owned indirectly by the company and represent 0.28% of the issued share capital of subsidiary.
< Shareholdings owned indirectly by the company and represent 9.14% of the issued share capital of subsidiary.
● Shareholdings owned indirectly by the company and represent 4.62% of the issued share capital of subsidiary.
○ Shareholdings owned indirectly by the company and represent 8.87% of the issued share capital of subsidiary.
♦ Shareholdings owned indirectly by the company and represent 49% of the issued share capital of subsidiary.
▲ Shareholdings owned indirectly by the company and represent 50% of the issued share capital of subsidiary.
►
Shareholdings owned indirectly by the company and represent 50.1% of the issued share capital of subsidiary.
▼ Shareholdings owned indirectly by the company and represent 51% of the issued share capital of subsidiary.
◄ Shareholdings owned indirectly by the company and represent 48.29% of the issued share capital of subsidiary.
■ Shareholdings owned indirectly by the company and represent 75% of the issued share capital of subsidiary.
□
Shareholdings owned indirectly by the company and represent 97.3% of the issued share capital of subsidiary.
◙ Shareholdings owned indirectly by the company and represent 23.61% of the issued share capital of subsidiary.
Registered office address
1. 1 More London Place, London, SE1 2AF, England
2. 10 Bow Lane, London, EC4M 9AL, England
3. 1004 Bin Hamoodah Building, Khalifa St., PO Box 113 740, Abu Dhabi, United Arab Emirates
4. 10th Floor, UBA House, No 57, Marina Street, Lagos Island, Lagos, Nigeria
5. 160 Eureka Park Upper Pemberton, Kennington, Ashford, England, TN25 4AZ
6. 22 Grenville Street, St Helier, JE4 8PX, Jersey
7. 65 Gresham Street, London, EC2V 7NQ, England
8. 803 Manning House, 38 Queen's Road Central, Hong Kong
9. 850 New Burton Road, Suite 201, Dover, DE, 19904, United States
10.8th Floor, Union Castle Building, 55 St Georges Mall, Cape Town, Western Cape, 8001, South Africa
11.Atria One, 144 Morrison Street, Edinburgh, EH3 8EX, United Kingdom
12.Centrum Biurowe Lubicz ul. Lubicz 23, 31-503 Krakow, Polska
13.Hardturmstrasse 101, Zürich, 8005, Switzerland
14.Hillview House, 61 Church Road, Newtownabbey, Co Antrim, BT36 7LQ, Northern Ireland
15.King Abdul Aziz Street, PO Box 7052, Dammam, Saudi Arabia
16.Konstanzerstrasse 17, Tägerwilen, 8274, Switzerland
17.Lindred House, 20 Lindred Road, Brierfield, Nelson, Lancashire, BB9 5SR, United Kingdom
18.Nassauer Ring 39-41, Krefeld, 47803, Germany
19.PO Box 227, Peveril Buildings, Peveril Square, Douglas, Isle of Man, IM99 1RZ
20.PO Box 33, Dorey Court, Admiral Park, St. Peter Port, Guernsey, GY1 4AT
21.Pavilion Building Ellismuir Way, Tannochside Park, Uddingston, Glasgow, G71 5PW, United Kingdom
22.Plant 6, Gate No. 2, Godrej and Boyce Complex, LBS Marg, Pirojshahnagar, Vikhroli (West), Mumbai, 400079, India
23.Rudower Chaussee 4, Berlin, 12489, Germany
24.The Riverway Centre, Riverway, Stafford, ST16 3TH, United Kingdom
25.Themistokli Dervi 3, Julia House, Nicosia, 1066, Cyprus
26.Unit B, West Cork Business & Technology Park, Clonakilty, Co. Cork, P85 YH98
27.Upper Ground Level, Level 1, Level 2, & Level 3, Tower B1, Margapatta City SEZ, Margapatta City, Hadapsar, Pune, 411013, India
28.Wsm, Connect House 133-137 Alexandra Road Wimbledon, London, SW19 7JY, United Kingdom
Section 7: Company financial statements continued
Capita plc Annual Report and Accounts
227
Financial statements

Company financial statements continued
7.3.16 Related companies continued
Listed below are subsidiaries controlled and consolidated by the Group, where the directors have taken the exemption from having an audit of its financial statements for the year ended 31December 2023. This
exemption is taken in accordance with Section479A of the Companies Act2006.
Akinika Debt Recovery Limited 01242485
Akinika Limited 01613010
Capita Customer Solutions (UK) Limited 07886341
Capita Dubai Limited 10908066
Capita Employee Benefits Holdings Limited 06722404
Capita Financial Services Holdings Limited 10016286
Capita HCH Limited 02384029
Capita Health Holdings Limited 06413394
Capita Insurance Services Holdings Limited 06041965
Capita Insurance Services Limited 01396443
Capita International Limited 02683437
Capita International Retirement Benefit Scheme Trustees Limited 02328910
Capita IT Services Holdings Limited 06002593
Capita IT Services Limited SC045439
Capita Justice & Secure Services Holdings Limited 04746912
Capita Life and Pensions International Limited 05952054
Capita Life and Pensions Services Limited 04359665
Capita Managed IT Solutions Limited NI032979
Capita Mortgage Administration Limited 02042968
Capita Mortgage Software Solutions Limited 01855353
Capita Property and Infrastructure Limited 02018542
Company name Company registration
Capita Property and Infrastructure (Structures) Limited 02082106
Capita Property and Infrastructure Holdings Limited 03840627
Capita Property and Infrastructure International Holdings Limited 03860653
Capita Property and Infrastructure International Limited 02752154
Capita Retail Financial Services Limited 05296886
Capita Secure Information Solutions Limited 01593831
Computerland UK Limited 02275625
Contact Associates Limited 05601393
Debt Solutions (Holdings) Limited 03673307
E.B. Consultants Limited 01106104
Electra-Net (UK) Limited 03419833
Fire Service College Limited 08102633
Grosvenor Career Services Limited 03119327
RE (Regional Enterprise) Limited 08615172
Retain International (Holdings) Limited 07871708
Retain International Limited 03061744
Tascor E & D Services Limited 09980217
Tascor Services Limited 02057887
Urban Vision Partnership Limited 05292634
Ventura (UK) India Limited 05131185
Woolf Limited 01564535
Company name Company registration
Section 7: Company financial statements continued
Capita plc Annual Report and Accounts
228
Financial statements

Additional information
In this section
8.1 Shareholder information
8.2 Alternative performance measures
8.1 Shareholder information
In this section we have provided you with some key information to
manage your shareholding in Capita plc.
Useful websites
Capita (www.capita.com/investors)
Our corporate site is our main external communication channel where
we showcase our services, solutions and innovations from across the
Group. It also contains an investor section, where institutional and
private shareholders can access the latest announcements, financial
and statutory information and reports.
Shareholder portal (www.capitashares.co.uk)
Capita’s register of shareholders is maintained by Link Group. Our
shareholder portal is a secure online site where you can manage your
shareholding quickly and easily. You can manage many aspects, such
as viewing your holding, updating contact details, managing dividend
payments, requesting to receive shareholder communications by email
and registering. To register you will need your investor code, which
can be found on your share certificate or dividend confirmation.
e-communications
Help us communicate with you in a greener, more efficient and cost-
effective way by switching from postal to email communications, which
means that we will notify you by email every time a new shareholder
communication has been placed on the Capita website.
Registering for e-communications is straightforward. Go to our
shareholder portal www.capitashares.co.uk.
Managing your shareholding
We aim to communicate effectively with our shareholders, via our
website www.capita.com/investors. Shareholders who have questions
relating to the Group’s business or wish to receive further hard copies
of annual reports should contact Capita’s investor relations team on
+44-(0)772-016-9269 or email: IRTeam@capita.com.
If you have any queries about your shareholding or dividend payments
please contact the Company’s registrar, Link Group:
Link Group
10th Floor Central Square
29 Wellington Street
Leeds
LS1 4DL
Email: enquiries@linkgroup.co.uk
Tel: +44-(0)371-664-0300 (Calls are charged at the standard
geographic rate and will vary by provider. Calls outside the United
Kingdom are charged at the applicable international rate.)
Lines are open 9.00am to 5.30pm, Monday to Friday excluding public
holidays in England and Wales.
Company contact details
Registered office
Capita plc
65 Gresham Street
London EC2V 7NQ
Tel: 020-7799-1525
Registered in England and Wales with registration number: 02081330
Investor Relations
IRTeam@capita.com
Director of Investor Relations – Helen Parris
Company Secretariat
secretariat@capita.com
Chief General Counsel and Group Company Secretary – Claire
Denton
Company advisers
Independent auditor
KPMG LLP
Corporate brokers
Barclays Bank plc
Numis Securities Limited
Bankers
Barclays Bank plc
Lloyds Bank plc
National Westminster Bank plc
Citibank, N.A., London Branch
Standard Chartered Bank
Bank of China Limited, London Branch
ING Bank N.V., London Branch
Goldman Sachs International Bank
Corporate communications
Brunswick
Registrars
Link Group
Section 8: Additional information
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Additional information continued
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8.2 Alternative performance measures
The Group presents various alternative performance measures (APMs) because internally the performance of the Group is reported and measured on this basis. This includes Key Performance Indicators (KPIs) such as
adjusted revenue, adjusted profit before tax, adjusted basic/diluted earnings per share, free cash flow excluding business exits, and gearing ratios. In general, the Board believes that the APMs are useful for investors
because they provide further clarity and transparency of the Group’s financial performance and are closely monitored by management to evaluate the Group’s operating performance to facilitate financial, strategic and
operating decisions.
These APMs should not be viewed as a complete picture of the Group’s financial performance which is presented in the reported results. The exclusion of certain items may result in a more favourable view when costs
such as acquired intangible amortisation, costs relating to the cyber incident in March 2023, expenses associated with the cost reduction programme announced in November 2023 and impairments of goodwill are
excluded. These measures may not be comparable when reviewing similar measures reported by other companies.
APM Closest equivalent IFRS measure Definition, Purpose and Reconciliation
Income statement
Adjusted revenue Revenue Calculated as revenue less any revenue relating to businesses that have been sold, or exited during the year or prior year; or, are in the process of being sold, or exited.
This measure of revenue is used internally in respect of the Group’s continuing business (being the Group’s continuing activities, which exclude business exits) and the Board
believes it is a good indication of ongoing performance.
The table below shows a reconciliation between reported and adjusted revenue, as well as adjusted revenue growth:
2023 2022
Reported revenue per the income statement
£2,814.6m £3,014.6m
Deduct: business exits (note 2.2.1)
(£172.5m) (£405.6m)
Adjusted revenue
£2,642.1m £2,609.0m
Adjusted revenue growth
1.3 % 1.7 %
Adjusted operating profit Operating profit Calculated as reported operating profit excluding items determined by the Board to be outside underlying operations. These items are detailed in note 2.4.
A reconciliation of reported to adjusted operating profit is provided in note 2.4.
Adjusted operating profit margin Operating profit margin Calculated as the adjusted operating profit divided by adjusted revenue.
This measure is an indicator of the Group’s operating efficiency.
The table below shows the components, and calculation, of adjusted operating profit margin:
2023 2022
Adjusted revenue
a
£2,642.1m £2,609.0m
Adjusted operating profit (note 2.4)
b
£106.5m £78.0m
Adjusted operating profit margin
b/a
4.0 % 3.0 %
Adjusted EBITDA No direct equivalent Calculated as adjusted operating profit for the last twelve months before: depreciation, amortisation and impairment of property, plant and equipment, intangible assets and right-
of-use assets; net finance costs; and the share of results in associates and investment gains (other than those already excluded from adjusted operating profit).
The directors believe that adjusted Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) is a useful measure for investors because it is closely monitored by
management to evaluate Group and divisional operating performance.
This measure has been calculated pre and post the impact of IFRS16 to enable investors to understand the impact of the Group’s lease portfolio on adjusted EBITDA.
The table below shows the calculation of adjusted EBITDA:
Post IFRS16 Pre IFRS16
2023 2022 2023 2022
Adjusted profit before tax
£56.5m £49.8m £57.0m £55.0m
Add back: adjusted net finance costs (note 4.3)
£50.0m £34.0m £31.8m £15.7m
Add back: adjusted depreciation and impairment of property, plant and equipment (note 3.2)
£30.7m £43.1m £30.7m £43.1m
Add back: depreciation and impairment of right-of-use assets (note 3.5)
£50.7m £52.7m £—m £—m
Add back: adjusted amortisation and impairment of intangibles (note 3.3)
£26.7m £30.6m £26.7m £30.6m
Remove: share of results in associates and investment gains (income statement)
£—m (£5.8m) £—m (£5.8m)
Adjusted EBITDA
£214.6m £204.4m £146.2m £138.6m
Adjusted EBITDA margin
8.1 % 7.8 % 5.5 % 5.3 %
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New APM in the year Definition updated in the year Comparatives re-presented
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Additional information continued
8.2 Alternative performance measures continued
APM Closest equivalent IFRS measure Definition, Purpose and Reconciliation
Income statement continued
Adjusted profit/(loss) before tax Profit/(loss) before tax Calculated as profit or loss before tax excluding the items detailed in note2.4, which includes: business exits (trading results, non-trading expenses, and any gain/(loss) on
business disposal); acquired intangible amortisation; impairment of goodwill and acquired intangibles; costs of the cyber incident in March 2023; and expenses associated with
the cost reduction programme announced in November 2023.
A reconciliation of reported to adjusted profit before tax is provided in note 2.4.
Adjusted profit/(loss) after tax Profit/(loss) after tax Calculated as the above adjusted profit or loss before tax, less the tax credit or expense on adjusted profit or loss.
The table below shows a reconciliation:
2023 2022
Adjusted profit before tax (note 2.4)
£56.5m
£49.8m
Tax on adjusted profit (note 2.6.1)
(£31.1m)
(£4.4m)
Adjusted profit after tax
£25.4m £45.4m
Adjusted basic earnings per share Basic earnings per share Calculated as the adjusted profit or loss for the year after tax less non-controlling interests divided by the weighted average number of ordinary shares outstanding during the
year.
The Board believes that this provides an indication of basic earnings per share of the Group on adjusted profit after tax.
For the calculation of adjusted basic earnings per share refer to note 2.7.
Adjusted diluted earnings per
share
Diluted earnings per share Calculated as the adjusted profit or loss for the year after tax less non-controlling interests divided by the weighted average number of ordinary shares outstanding during the
period plus the weighted average number of ordinary shares that would have been issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.
The Board believes that this provides an indication of diluted earnings per share of the Group on adjusted profit after tax.
For the calculation of adjusted diluted earnings per share refer to note 2.7.
Cash flows and net debt
Cash flows generated/(used) by
operations excluding business
exits
Cash generated/(used) by
operations
Calculated as the cash flows generated from operations excluding the items detailed in note2.9.2 which includes: business exits (trading results, non-trading expenses) and
pension deficit contributions which have been triggered by disposals.
A reconciliation of reported to cash generated/(used) by operations excluding business exits is provided in note2.9.2.
Free cash flow and free cash flow
excluding business exits
Net cash flows from
operating activities
Free cash flow is calculated as cash generated from operations after: capital expenditure; income tax and interest; and, the proceeds from the sale of property, plant and
equipment and intangible assets; and the capital element of lease payments and receipts. Free cash flow excluding business exits has the same calculation but is excluding the
impact of business exits.
Free cash flow and free cash flow excluding business exits are measures used to show how effective the Group is at generating cash and the Board believes they are useful for
investors and management to measure whether the Group is generating sufficient cash flow to fund operations, capital expenditure, non-lease debt obligations, and dividends.
A reconciliation of net cash flows from operating activities to free cash flow and free cash flow excluding business exits and a reconciliation of free cash flow to free cash flow
excluding business exits are provided in note 2.9.2.
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Additional information continued
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8.2 Alternative performance measures continued
APM Closest equivalent IFRS measure Definition, Purpose and Reconciliation
Cash flows and net debt continued
Operating cash flow and
operating cash conversion
No direct equivalent Calculated as operating cash flow excluding business exits divided by adjusted EBITDA.
The Board believes that this measure is useful for investors because it is closely monitored by management to evaluate the Group’s operating performance and to make financial,
strategic and operating decisions
Reported Excluding business exits
2023 2022 2023 2022
EBITDA
a £144.5m £235.7m £214.6m £204.4m
Add back: EBITDA element of cyber incident and cost reduction programme
£63.8m £—m £—m £—m
Working capital (note 2.9)
(£120.2m) (£40.4m) (£102.6m) (£30.7m)
Add back: Working capital element of cyber incident and cost reduction programme
(£8.1m) £—m (£8.1m) £—m
Non-cash and other adjustments (note 2.9)
£30.7m (£38.9m) £23.0m
(£45.3m)
Add back: Non-cash element of cyber incident and cost reduction programme (note 3.6)
(£29.5m)
£—m
(£29.5m)
£—m
Operating cash flow
b £81.2m £156.4m £97.4m £128.4m
Operating cash conversion
b/a 56.2 % 66.4 % 45.4 % 62.8 %
Available liquidity No direct equivalent Calculated as the sum of any undrawn committed facilities and the net cash, cash equivalents net of overdrafts, less any restricted cash. Restricted cash is defined as any cash
required to be held under FCA regulations, cash held in foreign bank accounts, and cash represented by non-controlling interests.
2023 2022
Revolving credit facility (RCF) (note 4.5.2b)
£260.7m £288.4m
Less: drawing on committed facilities (note 4.5.2b)
— —
Undrawn committed facilities
£260.7m
£288.4m
Cash and cash equivalents net of overdrafts (note 4.5.4)
£67.6m £177.2m
Less: restricted cash (note 4.5.4)
(£46.0m) (£60.4m)
Available liquidity
£282.3m £405.2m
Net debt Borrowings, cash, derivatives,
lease liabilities and deferred
consideration
Calculated as the net of the Group’s: cash, cash equivalents and overdrafts; private placement loan notes; other finance; currency and interest rate swaps; lease liabilities; and
deferred consideration.
The Board believes that net debt enables investors to see the economic effect of debt, related hedges and cash and cash equivalents in total and shows the indebtedness of the Group.
The calculation of net debt is provided in notes 2.9.3 and 4.1.1
Net financial debt (pre-
IFRS 16)
No direct equivalent Calculated as the sum of the Group’s: cash, cash equivalents and overdrafts; the fair value of the Group’s private placement loan notes; other finance; and deferred consideration.
The Board believes that this measure of net debt allows investors to see the Group's net debt position excluding its IFRS 16 lease liabilities.
2023 2022
Net debt (note 4.1.1)
£545.5m £482.4m
Remove: IFRS16 impact (note 4.4)
(£363.4m) (£397.5m)
Net financial debt (pre-IFRS 16)
£182.1m £84.9m
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Additional information continued
8.2 Alternative performance measures continued
APM Closest equivalent IFRS measure Definition, Purpose and Reconciliation
Cash flows and net debt continued
Gearing: net debt to
adjusted EBITDA ratio
No direct equivalent This ratio is calculated as net financial debt (pre-IFRS 16) divided by adjusted EBITDA over a rolling twelve month period including business exits not yet completed at the balance
sheet date.
The Board believes that this ratio is useful because it shows how significant net debt is relative to adjusted EBITDA.
This measure has been calculated including and excluding the impact of IFRS16 on EBITDA and net debt because the Board believes this provides useful information to enable
investors to understand the impact of the Group’s lease portfolio on its gearing ratio.
The table below shows the components, and calculation, of the net debt / net financial debt (pre-IFRS 16) to adjusted EBITDA ratio:
Post IFRS 16 Pre IFRS 16
2023 2022
1
2023 2022
1
Adjusted EBITDA
£214.6m £238.8m £146.2m £172.3m
EBITDA in respect of business exits not yet completed
£8.2m £1.3m £8.2m £1.3m
Adjusted EBITDA (including business exits not yet completed)
£222.8m £240.1m £154.4m £173.6m
Net debt / net financial debt (pre-IFRS 16)
£545.5m £482.4m £182.1m £84.9m
Net debt / net financial debt (pre-IFRS 16) to adjusted EBITDA ratio
2.4x 2.0x 1.2x 0.5x
Gearing including Fera
proceeds: net debt to
adjusted EBITDA ratio
No direct equivalent This ratio is calculated in the same way as gearing above but includes the net proceeds received from the disposal of the Fera business in January 2024.
The Board believes that this ratio is useful because it shows that the gearing ratio would have been below the medium term aim of 1.0x had the proceeds from the disposal of the
Fera business been received in December 2023 when the sale was agreed.
Pre IFRS 16
2023
Adjusted EBITDA a
£146.2m
Net financial debt b
£182.1m
Cash proceeds received in January on disposal of Fera (note 6.3)
£61.9m
Cash held by Fera at 31 December 23 (note 2.8)
(£7.2m)
Cash disposal costs expected in 2024 related to Fera disposal
(£4.6m)
Net proceeds received from Fera disposal in January 2024
c £50.1m
Net financial debt including net proceeds received in January 2024
d = b-c £132.0m
Net financial debt including net proceeds received to adjusted EBITDA ratio
d/a 0.9x
1. To ensure consistent presentation of the ratios between years, the 2022 comparatives have not been restated.
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