The Directors present their Strategic report and financial statements for the year ended 31 December 2024.
RE (Regional Enterprise) Limited ('the Company') is a wholly owned subsidiary (indirectly held) of Capita plc. Capita plc along with its subsidiaries are hereafter referred as 'the Group'. The Company operates within the Capita Public Service division of the Group.
As shown in the Company’s income statement on page 10, the Company's revenue has decreased from £5,472,328 in 2023 to £nil in 2024. The Company's operating profit has decreased from £126,635 in 2023 to £110,835 in 2024. The decrease in revenue is on account of the termination of the contract with Barnet Council in March 2023.
The balance sheet on page 11 of the financial statements shows the Company's financial position at the year end. Net assets have increased from £2,886,042 in 2023 to £3,356,350 in 2024 on account of profits earned by the Company during the year. Details of amounts owed by/to its parent company and fellow subsidiary companies are shown in notes 7,9 and to the financial statements.
Key financial performance indicators used by the Group are adjusted revenue, adjusted operating profit, adjusted operating margin, adjusted basic/diluted earnings per share, free cash flow excluding business exits, and gearing ratios. Capita plc and its subsidiaries manage their operations on an operating segment or divisional basis or at Group level and as a consequence, some of these indicators are monitored only at an operating segment, division or Group level. The performance of the Capita Public Service division of the Group is discussed in the Group’s annual report which does not form part of this report.
The Company is exposed to a wide range of risks that, should they materialise, could have a detrimental impact on financial performance, reputation or operational resilience. The Company’s risk management framework provides a consistent approach to the identification, assessment, monitoring and reporting of risks and opportunities. 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 half-yearly basis at divisional and functional risk governance committees, Executive risk and Ethics Committee and Audit and Risk Committee. The effectiveness of existing controls is evaluated by the Company to determine whether any further mitigating actions are needed to manage the risk level to within the risk appetite set by the Capita plc Board.
The principal risks for the Company are:
Cyber security
Protect our systems, networks and programs from unauthorised use and access.
Environment, social and governance
Comply with regulatory and contractual requirements to drive a purpose driven organisation with the right focus on governance.
Safety and health
Protect the safety, health and duty of care of all the Company’s employees, the people we work with and those affected by our acts and omissions.
Data governance and data privacy
Manage our data effectively (both clients and the Company's) as a strategic asset across the organisation.
As a subsidiary of Capita plc, the Company is subject to controls and risk governance techniques applied across all the Group's businesses. Details of the specific risk assessments and mitigating actions are outlined on pages 70-74 of the Group's 2024 Annual Report.
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 communications
Via Nneka Abulokwe, our designated non-executive director for colleague engagement who has visited businesses in the UK and South Africa
Employee focus groups and network groups
Workforce engagement on remuneration
Topics of engagement
Creating an inclusive workplace
Health and wellbeing
Speak Up policy
Directors’ remuneration and pay at Capita
Acting on survey feedback
The career path framework
Our cultural programme
Annual salary review
Outcomes and actions
The 2024 employee survey showed a decrease in the eNPS compared with 2023. Although disappointing, we recognise that this reflected the difficult decisions that the Company had to make during the year to ensure the long-terms sustainability and success of the Company, including the decision not to remain as a real living wage employer. Survey feedback was positive in relation to manager support and belonging with 80% of respondents stating that their manager helps them to succeed while 60% of respondents feel a sense of belonging 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.
We have mobilised a multi-year programme to rally, reset and embed our culture engaging over 250 Culture Accelerators globally to drive the change. Focused on bringing together our senior leadership team through the launch of our Leadership Playbook, mandating Management & Leadership development, refreshing our values to launch in Q2 2025 and creation of an employee playbook.
In October 2024, Capita was recognised by Forbes, as being one of the top companies for women for the second consecutive year, ranking at number 36 out of 400 global companies on the prestigious list.
Our 2024 gender pay gap figures showed improvement compared to 2023, resulting in a median of 14.91% (0.49% down from 15.40%) and a mean of 18.40% (0.39% down from 18.79%). Since we started reporting in 2017, we have reduced our gender pay gap by 10.39%, from 25.30% to 14.91%.
Moving Ahead, Capita’s mentoring programme, offers cross-company mentoring which aims to build a pipeline for talented individuals from under-represented backgrounds within the workplace. Capita was awarded ‘Most Dynamic Mentoring Organisation’ in 2023 and 2024 at the Inspired by Mentoring Awards in recognition of our commitment to mentoring.
We continued to promote our Speak Up policy throughout the organisation.
Risks to stakeholder relationship
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.
Clients and customers
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
Regular client meetings, monthly or quarterly business reviews 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 ongoing meetings with Divisional CEOs, Public Service and Experience
Topics of engagement
Current service delivery, continuous improvement initiatives and operational excellence
Transition and mobilisation of services
Capita’s digital and gen AI transformation capabilities, such as agent suite and Capita contact
Possible future services, market and client needs
Co-creation of client value propositions in collaboration with our hyperscaler partners, AWS, Salesforce, Microsoft and Service Now
Ongoing benefits of hybrid working, near and off-shore capabilities 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 and account plans 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.
Suppliers and partners
Why they are important
At Capita, our suppliers and partners including leading hyperscalers, play a pivotal role in delivering our purpose. By collaborating with organisations that share our values, we maintain high standards, ensure operational excellence, and achieve outcomes aligned with our social, economic, and environmental commitments. Our partnerships, particularly with hyperscalers including AWS, Microsoft, and ServiceNow, enhance our ability to innovate and deliver cutting-edge digital solutions.
We will continually review our supply base to ensure it delivers better outcomes for customers while addressing the need to reduce supply chain complexity and improve service quality.
What matters to them
Transparent and fair procurement processes
Collaboration on joint initiatives that drive innovation and foster long-term partnerships
Reliable and timely payment terms
Shared commitment to sustainability, resilience, and compliance with Science-Based Targets (SBTs) backed approach to net zero
Provision of a safe working environment for anyone affected by Capita businesses while upholding the highest standards of ethical conduct in all endeavours
Partnering with diverse suppliers that bring innovation, disruptive technologies and positively impact local communities
Maintaining availability, integrity and confidentiality of our business relationships and the systems that support them, remaining resilient through periods of disruption
How we engaged
Strategic collaboration with hyperscalers: including regular engagement with AWS, Microsoft and ServiceNow focused on co-creating solutions for Capita’s clients, integrating advanced AI and cloud capabilities into our offerings
Innovation forums: by conducting joint workshops with hyperscalers to align on product roadmaps and explore new technologies that enhance the customer experience
Performance reviews: by ongoing performance assessments to ensure value delivery and alignment with Capita’s strategic goals
Sustainability partnerships: collaborating with hyperscalers to assess and mitigate the environmental impact of cloud-based operations, contributing to the reduction of Capita’s Scope 3 carbon footprint
Engagement reviews: regular supplier meetings, ensuring openness throughout the source to procure process complete with in-life feedback questionnaires and risk assessments
Topics of engagement
New technology and GenAI offerings suitable for both Capita and Capita-customer use
Supplier payments
Sourcing requirements and bid opportunities
Supplier performance monitoring
Supplier charter commitments
Partnering opportunities
Joint development of AI powered customer service tools
Deployment of cloud-native platforms to modernise public and private sector operations
Commitment to sustainability, including carbon footprint transparency and initiatives to meet net zero goals
Enhancing cybersecurity standards across partner ecosystems to safeguard stakeholders
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. We want to work with suppliers and supply chain partners that share our values and help us deliver our purpose, to create better outcomes. This includes the provision of safe working conditions, treating workers with dignity and respect, acting ethically and being environmentally responsible.
As part of our commitments as a responsible business, Capita manages and monitors a variety of supply chain related metrics including sustainability, spend with SMEs, VCSE’s and diverse-owned businesses and modern slavery risk.
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.
Risks to stakeholder relationship
Evolving regulatory and environmental requirements
Maintaining shared commitments to transparency and sustainability
Maintaining resilience in the supply chain and partner ecosystems
Key metrics
90% of supplier payments within agreed terms; SME spend allocation; and supplier diversity profile.
Society
Why they are important
Capita is a provider of key services to government impacting a large proportion of the population.
What matters to them
Social mobility; youth skills and jobs; community engagement; 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
Community engagement
Section 172 (continued)
Outcomes and actions
Youth and employability programme such as Social Shifters; ranked 36 on the Forbes Global list of top employers for women; our pay gap has improved by 10.39% since we began reporting, awarded Employer’s Network for Equality and Inclusion, achieved a silver Tidemark, Armed Forces Covenant Gold Employer Recognition Award and an A CDP (Carbon Disclosure Project) score as a bronze medal by EcoVadis for Capita plc.
On behalf of the Board
The Directors present their Directors' report and financial statements for the year ended 31 December 2024.
The results for the year are set out on page 10.
No interim or final dividend was paid or proposed during the year (2023: £nil).
The Directors, who held office during the year and up to the date of signature of the financial statements were as follows:
There are no significant events which have occurred after the reporting period.
The Directors are responsible for preparing the Strategic report, the Directors’ report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law they have elected to prepare the financial statements in accordance with United Kingdom ('UK') accounting standards and applicable law (UK Generally Accepted Accounting Practice), 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 Company and of its profit or loss for that period. In preparing these financial statements, the Directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and estimates that are reasonable and prudent;
state whether applicable UK accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;
assess the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and
as explained in the note 1.1 of the financial statements, the Directors do not believe the going concern basis to be appropriate and these financial statements are not prepared on that basis.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the 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 Company and to prevent and detect fraud and other irregularities.
The members have not required the Company to obtain an audit of its financial statements for the year in question in accordance with section 476.
RE (Regional Enterprise) Limited is a private company limited by shares incorporated in England and Wales.
In determining the appropriate basis of preparation for the financial statements for the year ended 31 December 2024, the Company’s Directors (‘the Directors’) are required to consider whether the Company can continue in operational existence for the foreseeable future, being a period of at least 12 months following the approval of these accounts.
The principal activity of the Company ceased on 31 March 2023 when the Company’s contract with Barnet Council terminated. The Directors have therefore prepared the financial statements on the basis that the Company is no longer a going concern.
The financial statements have been prepared on a non-going concern basis as at 31 December 2024. As a consequence, the Directors have considered the adjustments required to prepare the financial statement on a non-going concern basis. The expected realisable and settlement values for current assets and liabilities are not considered to be materially different from their carrying value at the balance sheet date. Therefore, the Directors have considered that no further adjustments are required as a result of preparing the financial statements on a non-going concern basis.
At contract inception the total transaction price is estimated, being the amount to which the Company expects to be entitled and has rights to under the present contract. This includes an assessment of any variable consideration where the Company's performance may result in additional revenues based on the achievement of agreed 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 agreed.
Once the total transaction price is determined, the Company allocates this to the identified performance obligations in proportion to their relative stand-alone selling prices and recognises revenue when (or as) those performance obligations are satisfied. The Company infrequently sells standard products with observable standalone prices due to the specialised services required by customers and therefore the Company applies judgement to determine an appropriate standalone selling price. More frequently, the Company sells a customer bespoke solution, and in these cases the Company typically uses the expected cost-plus margin or a contractually stated price approach to estimate the standalone selling price of each performance obligation.
The Company 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 the contract.
For each performance obligation, the Company determines if revenue will be recognised over time or at a point in time. Where the Company recognises revenue over time for long term contracts, this is in general due to the Company performing and the customer simultaneously receiving and consuming the benefits provided over the life of the contract.
For each performance obligation to be recognised over time, the Company applies a revenue recognition method that faithfully depicts the Company’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 Company has promised to transfer to the customer. The Company applies the relevant output or input method consistently to similar performance obligations in other contracts.
When using the output method, the Company 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. Where the output method is used, for long term service contracts where the series guidance is applied, the Company often uses a method of time elapsed which requires minimal estimation. Certain long-term contracts use output methods based upon estimation of user numbers, service activity levels or fees collected.
When transfer of control is most closely aligned to the Company's 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 Company recognises revenue at a point in time when the service or good is delivered.
Short-term contractual - less than two years
The nature of contracts or performance obligations categorised within this revenue type is diverse and includes short term outsourced service arrangements in the public and private sectors.
Transactional (Point in time) contracts
The Company delivers a range of goods or services 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 and acceptance by a 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 categorised within this revenue type is diverse and includes fees received in relation to delivery of professional services.
Contract modifications
The effect of a contract modification on the transaction price and the Company’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 separate contract;
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; or
d) as a combination of (b) and (c).
For contracts for which the Company 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.
The facts and circumstances of any contract modification are considered individually as the types of modifications will vary contract by contract and may result in different accounting outcomes.
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 as management need 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 via 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 use their judgement to estimate the change to the total transaction price. Importantly any variable consideration is only recognised to the extent that it is highly probably that no revenue reversal will occur.
Principal vs agent
The Company 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 Company is a principal if it controls a promised good or service before transferring that good or service to the customer. The Company 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 Company has in establishing the price for the specified good or service; whether the Company has inventory risk; and whether or not the Company is primarily responsible for fulfilling the promise to deliver the service or good.
This assessment of control requires judgement in particular in relation to certain service contracts. An example is the provision of certain recruitment and learning services where the Company 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 Company is acting as a principal, revenue is recorded on a gross basis. Where the Company is acting as an agent, revenue is recorded at a net amount reflecting the margin earned.
Deferred and accrued income
The Company’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 and 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.
Where payments made are greater than the revenue recognised at the period end date, the Company recognises a deferred income contract liability for this difference. Where payments made are less than the revenue recognised at the period end date, the Company recognises an accrued income contract asset for this difference.
The charge for the year can be reconciled to the profit per the income statement as follows:
A change to the main UK corporation tax rate was substantively enacted on 24 May 2021. The rate applicable from 1 April 2023 increases from 19% to 25%. The deferred tax asset at 31 December 2024 has been calculated based on the 25% rate.
In accordance with the stated accounting policy for taxation in note 1.6 to the financial statements, the utilisation and recognition of a deferred tax asset is dependent on the existence of sufficient future taxable profits. As at 31 December 2024, based on forecast profits, the Company has concluded in line with the stated policy that no deferred tax asset should be recognised in respect of tax losses of £2,110,252 (2023: £2,497,433).
Amounts due from Group companies are repayable on demand.
Amounts due to Group companies are repayable on demand.
The deferred income balances solely relates to revenue from contracts with customers. Movements in the deferred income balances were driven by transactions entered into by the Company within the normal course of business in the year.
The average monthly number of employees (including directors) year were:
Their aggregate remuneration comprised:
All directors are paid by other companies within the Capita Group. The Company has not paid any fees or other remuneration to the Group based Directors related to the directorship role they provided to the Company as a part of their Group-wide executive management role. The Company has estimated that allocation of the qualifying services that these Group based Directors provided to the Company is inconsequential.