LONDON: British outsourcing company Capita said on Thursday that failures in delivering its flagship UK Civil Service Pension Scheme contract will reduce its annual adjusted operating profit by between £25 million and £40 million.
The company said the financial impact stems from operational shortcomings linked to the government contract.
Why Did the UK Government Withhold Payments?
Earlier this week, the UK government withheld £9.9 million in payments to Capita after the company failed to meet contractual deadlines.
Officials also said Capita had not delivered promised AI-driven technology improvements under the pension scheme contract.
The announcement triggered a sharp decline in the company’s share price.
What Is the Financial Impact on Capita?
Capita said the problems surrounding the pension contract are also expected to reduce its free cash flow by between £35 million and £50 million during the current financial year.
The company warned that the contract issues will continue to affect its financial performance throughout 2026.
What Does Capita Do?
Capita is one of the United Kingdom’s largest outsourcing firms, providing support services to both public and private sector organisations.
The company is now working to address the operational issues as it seeks to improve performance under the government pension contract.