The Directors present their Strategic report and financial statements for the year ended 31 December 2025.
Capita Pension Solutions Limited ('the Company') is a wholly owned subsidiary (directly held) of Capita plc. Capita plc, along with all its subsidiaries is hereafter referred to as 'the Group'. The Company operates within the Pension Solutions operating segment of the Group.
Review of the business
As shown in the Company's income statement on page 20, revenue has increased from £183.0m in 2024 to £191.5m in 2025 and operating profit has decreased from £26.2m in 2024 to £19.7m in 2025. The increase in revenue reflects continued organic growth across both pension administration and pension consulting businesses, supported by the go-live of a major administration contract in December 2025. The reduction in operating profit is primarily driven by reduced interest income due to lower UK interest rates.
The balance sheet on pages 21 to 22 of the financial statements shows the financial position at the year end. Net assets have increased from £192.5m in 2024 to £209.6m in 2025 primarily due to the profit after tax in the year of £17.1m.
During the year, the Company acquired the business and assets of actuarial function of Capita Life and Pension Regulated Services Limited, a fellow subsidiary under a business transfer agreement (BTA). This transfer was carried out to consolidate actuarial capabilities and further strengthen the integrated service offering across the insurance and pensions sectors.
In October 2025, the Information Commissioner’s Office (ICO) issued a penalty notice, requiring the Group to pay a penalty of £14m in relation to its cyber incident in March 2023, of which £6m was payable by the Company in November 2025.
As Capita plc is responsible for the information and cyber security framework for the Group, including for the Company, Capita plc paid the £6m penalty on behalf of the Company and confirmed that no repayment will be required. Accordingly, the settlement of the penalty by Capita plc was accounted for as a reimbursement in the income statement of the Company, offsetting the £6m penalty charge included in administrative expenses and resulting in no overall impact to the Company’s profit for the year.
In April 2026, the Company received notice that a pension administration contract would be early terminated which related to a renewal under revised terms and functionality, however the Company will continue the administration of the pension scheme until the point of transition to a new administrator, which is not expected to be any earlier than the end of 2026. Management continue to assess its financial impact however it is not considered material to the overall financial health of the Company.
Details of the amounts owed by/to its parent company and fellow subsidiary companies are shown in notes 10 and 12 to the financial statements.
Key financial performance indicators used by the Group on a consolidated basis include adjusted revenue, adjusted profit before tax, adjusted basic earnings per share, free cash flow excluding business exits, and gearing ratios. The Group manages its operations on an operating segment basis and as a consequence, some of these indicators are monitored separately at an operating segment level. The performance of the Pension Solutions operating segment of the Group is discussed in the Group’s Annual Report which does not form part of this report. The annual report and consolidated financial statements of Capita plc are available from its registered office at First Floor, 2 Kingdom Street, Paddington, London, England, W2 6BD, and on its website www.capita.com/investors.
Systems and procedures are in place to identify, assess and mitigate major business risks that could impact the Company. Monitoring exposure to risk and uncertainty is an integral part of the Company's structured management processes. The principal risks that the Company faces are operational risk, contract pricing, competition, regulatory and legislative impacts, recruitment and retention of staff and maintenance of reputation and strong supplier and customer relationships. Group risks are discussed in the Group's annual report which does not form part of this report.
Capital Adequacy
The Company is authorised and regulated by the Financial Conduct Authority and is directly owned by Capita plc. The Company is subject to the regulatory capital and liquidity requirements for investment firms in the FCA’s Prudential sourcebook for MiFID Investment Firms (MiFIDPRU) and is classified as a non-SNI MiFIDPRU firm. As part of the MiFIDPRU requirements the Company is required to complete an Internal Capital Adequacy Risk Assessment (ICARA).
Governance Arrangements
The Company's governance is led by a Board (the Board) consisting of a Chairman who is an independent non-executive director and other executive and non-executive board members. The governance also includes a number of Board committees/subcomittees, including:
Audit Committee
Capital & Risk Committee
Remuneration Committee
Risk & Compliance Committee (RACC)
CASS Oversight Committee
For the year ended 31 December 2025, the Company operated a Capital and Risk Committee, a Remuneration Committee and an Audit Committee to enable it to manage its obligations and risks. All three committees were chaired by a non-executive director and all members were non-executive. The Company is not required to have these committees under the requirements in MiFIDPRU but has determined that they are a useful addition to the firm’s governance arrangements.
Capita plc promotes Diversity and Inclusion across its businesses by way of mandatory training and via its Diversity and Inclusion Policy. Accordingly, the Company applies that policy to its business including its Board.
The Company's Board is ultimately responsible for the risk management regime, as well as ensuring that the governance and culture of the firm starts at the Board. This includes the segregation of duties in the organisation and the prevention of conflicts of interest. It is satisfied that the risk systems are adequate for Company's profile and strategy.
Systems and procedures are in place to identify, assess and mitigate major business risks that could impact the Company. Monitoring exposure to risk and uncertainty is an integral part of the Company’s structured management processes and is focused through the Risk and Compliance Committee, which itself is a subcommittee of the Board. The Risk and Compliance Committee meets at least ten times per year and receives formal reports from a range of functions within the business.
The Company is not risk averse but seeks to actively manage material risk to the business. Operational risk is the main category of risk faced by the Company. Whilst accepting that data security and fraud risks are inherent within business operations, The Company has zero tolerance for fraudulent or corrupt behaviour, with controls designed accordingly.
Whilst risk appetite is strategic and linked to business objectives, risk tolerance is operational and expressed in such a way that it can be linked to the same risk measures implemented by operational teams throughout the Company's business. The Company's Risk & Compliance team, who are independent of the business, provide ongoing challenge for the risk management process, as well as ensuring consistency with other parts of Capita.
The Company follows Capita plc's policies in relation to the recruitment of members of the management body, including in respect of diversity. The number of directorships held by members of the management body in the year 2025, together with their knowledge, skills and experience was as follows;
Director Name | Number of Directorships held |
Christopher Clements | 7 |
Stuart Heatley (Resigned on 31 October 2025) | 3 |
Rosalind Altmann | 2 |
Andrew Darfoor | 7 |
Navid Sotoodeh (Appointed on 31 October 2025) | 2 |
The number of directors that exercised share options during the year is disclosed in Note 19.
The Directors all have numerous years of experience in order to manage the business effectively; not solely, but skills and experience include leadership, market, industry, strategic planning, risk management, governance, information technology, resource management and financial.
ICARA process and Own Funds requirement
The nature of activities pursued by the parent company (Capita plc) and the non-FS nature of these activities mean Capita plc is not subject to FCA capital adequacy requirements. The Company should however report on any financial control or capital and liquidity arrangements it has with Capita plc, and take into consideration the impact of these financial arrangements with respect to going concern.
The Company has completed an ICARA process, which is fully refreshed annually, and updated thereafter as risks change. All changes and the full annual refresh are signed off by the Board. Consequently, the Company has a detailed ICARA document setting out its structure, strategy, governance arrangements, capital position, quantified ‘Material Harms’, stress testing, reverse stress testing and a ‘last resort’ wind-down analysis. The ICARA also sets out the Own Funds Requirement, k-factor calculations and Fixed Overhead Requirement. Given the dynamic basis of linking strategy, risk appetite and capital, the ICARA is a living document and is subject to revisions. Any macroeconomic or external impact, any internal / control impact, any systemic / industry-focused impact feeds into material harms and stress test scenarios that model the financial aspects and influences the institutional responses the Company has to undertake.
The nature of activities, and the changing regulatory environment for financial services firms, that the Company is exposed to means these scenarios have to be ratified, stress-tested and changes reported back to the FCA on a periodic basis. The ICARA is also regularly reviewed for fit-for-purpose and any proposed amendments are brought to the Company's Capital and Risk Committee and approved before they are released to the FCA.
This process ensures that the Company always holds an appropriate level of capital and liquid resources to cover potential harms, ensuring it remains financially viable, can provide services through the economic cycle and if required would be able to complete an orderly wind-down without causing undue economic harm to consumers or to the integrity of the UK financial system.
The Company has developed a liquidity management framework to formalise the monitoring and control processes in place to ensure it has sufficient liquid resources to meet its liabilities as they come due. This risk is therefore considered to be minimal.
The liquid resources include bank deposits held with Barclays Bank plc as part of a cash pooling arrangement with other subsidiaries of Capita plc. As at 31 December 2025, the Company held £25m (2024: £19m) within ringfenced bank accounts held with NatWest Bank and Goldman Sachs Bank.
The firm’s regulatory disclosures under the MiFIDPRU rules have been reviewed and noted by the Board of the Company and is published annually.
Own funds
Equity as per Balance sheet as at 31 December 2025 is set out in the table below in £m:
Called up share capital | 30.1 |
Share premium | 86.2 |
Retained earnings and other reserves | 93.3 |
Deductible deferred tax assets | (1.7) |
Deductible goodwill & intangibles | (104.0) |
Deductible defined benefit asset | (0.1) |
| ----------- |
Own funds | 103.8 |
| ====== |
TIER I CAPITAL
Tier l Capital is comprised of share capital, share premium, retained earnings, less other regulatory deductions, which for the Company comprises of intangible assets and Deductible DTA. As at 31 December 2025 the Tier 1 capital is £103.8m.
TIER 2 CAPITAL
As at 31 December 2025 the Tier 2 capital is £nil.
OWN FUNDS REQUIREMENTS
The Company's regulatory requirements resulting from the FCA’s MiFIDPRU rules are that it must have a permanent minimum capital requirement of £150,000. The own funds requirement is the highest of the following:
• the permanent minimum capital requirement
• the fixed overheads requirement (FOR); or
• the K-Factor requirement plus business risk which is the total quantified impact of identified “material harms”
The FOR has been assessed as £39.9m for 2025 (2024: £37.2m).
The K-factor requirement is £2.1m, made up of:
i) The K-CMH has been assessed as £1.9m
ii) The K-COH has been assessed as £nil
iii) The K-AUM has been assessed as £0.2m
The business risk is identified as part of the risk management processes whereby the impact of material harms are quantified. Management have assessed that the business risk from material harms equates to £35.6m.
The Company has therefore identified the own funds requirement to be £39.9m being the higher of fixed overhead requirement of £39.9m and the total K- factor requirement of £2.1m plus the business risk of £35.6m.
Operational risk : Operational risk encapsulates a range of subsidiary risks including processing, outsourcing, IT systems, HR and fraud. For the purposes of the ICARA, financial reporting, regulatory and legal risks are also included under the operational risk heading. These risks are identified, assessed, monitored and reported by business managers through the Company’s risk management process.
Credit and residual risk : Credit risk is not considered to be significant for the Company. Credit exposure is limited to routine working capital related balances primarily with its key commercial partners. The Company does not employ credit risk mitigation techniques. Residual risk does not therefore apply.
Market and securitisation risk : The Company is not authorised to trade as principal and has no trading book. The Company has no foreign exchange risk. Securitisation risk is not applicable to the Company.
Liquidity risk : The Company has developed a liquidity management framework to formalise the monitoring and control processes in place to ensure that it has sufficient liquid resources to meet its liabilities as they come due. This risk is therefore considered to be minimal.
Insurance risk : Insurance risk refers to fluctuations in the timing, frequency and severity of insured events, relative to the expectations of the firm at the time of underwriting. Insurance risk can also refer to fluctuations in the timing and amount of claim settlements. Given the nature of the business, there is no insurance risk.
Interest rate risk : The Company has no material exposure to interest rate risk.
Business risk : Business risk, or procyclicality (the risk of deterioration in business or economic conditions requiring a firm to raise capital), is not believed to be significant in the Company due to the type of activities it is engaged in. The stress tests conducted on key economic indicators demonstrate a limited sensitivity to economic factors. A large part of the Company's expenses are of a variable nature and therefore, if there is a negative impact on the expected business volumes, the cost base would be capable of adjustment.
Pension Obligation Risk : The Company participates in a number of defined contribution schemes and is also a participating employer in defined benefit pension schemes operated by the Capita group. In the unlikely event of the other participating employers being insolvent, the Company could be liable to settle the deficit on the fund. The Directors consider this risk to be remote. Note 18 of the financial statements provides additional information.
Concentration risk : The Company is not reliant on any single external commercial relationship and therefore the management do not believe the exposure to be material.
Group risk : It is not considered that there are any significant risks to the Company of being part of Capita plc, however the Company has assessed that the most significant risk relates to the reliance on group for providing certain services including access to the cashpool and IT services. Management have detailed plans in place to replicate or take over these services if necessary thus minimising the risk and have ringfenced cash available thus protecting liquidity.
Leverage risk : The Company currently has no external borrowing.
Our People
Why this relationship matters
Our colleagues are central to the delivery of the Group’s strategy, the embedding of a values-based culture, and the provision of high-quality products and services that meet client expectations.
Their key priorities and expectations
Colleagues’ priorities include opportunities for learning, development and career progression; a positive and inclusive workplace culture; fair and transparent pay and reward; support for health and wellbeing; flexible ways of working; and open, two-way communication with leadership, including clear visibility of strategy, change programmes and decision-making.
How we engaged
Regular all-employee communications, including leadership briefings and global townhalls
Employee focus groups and colleague network groups
Workforce engagement on pay at Capita
Ongoing engagement through management cascades, local action planning and "you said, we did" feedback mechanisms
Topics of engagement
Creating and sustaining an inclusive workplace
Culture, values and leadership behaviours
Health, safety and wellbeing
Speak Up arrangements and ethical culture
Directors’ remuneration and pay at Capita
Career development, internal mobility and the career path framework
Annual salary review and reward transparency
Outcomes and actions
The 2025 all-colleague survey reported an Employee Net Promoter Score (eNPS) of -22, representing an eleven-point improvement on the 2024 survey. While this indicates improving colleague sentiment, the Board recognises that overall survey indicators show engagement remains an area of focus. Survey insights have informed targeted action planning at Group, divisional and local levels.
During the year, the Group continued to progress its multi-year culture programme, building on foundations established in 2024 to rally, reset and embed Capita’s culture. This included the further mobilisation of more than 250 Culture Accelerators globally, mandated management and leadership development, and the embedding of refreshed Group values and the launch of an employee playbook to support consistent behaviours and ways of working. The Group also introduced Celebrate!, a recognition platform designed to reward and celebrate colleagues and reinforce behaviours aligned to Capita’s values across the organisation. Capita continued to strengthen its focus on inclusion and fair reward. Gender pay gap performance improved compared to the prior year, and the Group continued its voluntary disclosure of ethnicity pay gap data and, for the first time, disability pay gap data. Since reporting commenced in 2017, Capita has reduced its median gender pay gap by more than ten percentage points.
Engagement with colleagues on pay, progression and reward transparency was strengthened through dedicated workforce engagement sessions during the year promotion of the Speak Up policy continued across the organisation, reinforcing the Group’s commitment to ethical behaviour, openness and psychological safety.
Risks to stakeholder relationship
The ability to attract, retain and develop colleagues, with potential impacts on service quality and financial performance
The pace of cultural change and the effectiveness of embedding new behaviours and ways of working during transformation
Key metrics
Voluntary attrition, eNPS, employee engagement index and colleague survey completion level.
Clients and customers
Why this relationship matters
Clients and customers rely on Capita for the consistent and timely delivery of critical services. Capita’s reputation, contract performance and long-term success depend on meeting their service expectations and supporting effective transformation outcomes.
Their key priorities and expectations
High-quality service delivery; delivery of transformation projects within agreed timeframes; and responsible, ethical and sustainable business credentials.
How we engaged
Regular client meetings, monthly or quarterly business reviews and surveys
Through our customer advisory boards
Through our senior client partner programme which provides an experienced single point of contact for key clients and customers
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
Possible future services, market and client needs
Co-creation of client value propositions in collaboration with our hyperscaler partners, AWS, Salesforce, Microsoft and ServiceNow such as Databricks and Snowflake
Ongoing benefits of hybrid working, near and offshore 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 this relationship matters
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, Salesforce 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.
Their key priorities and expectations
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: 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
Supplier performance monitoring
Supplier charter commitments
Partnering opportunities
Joint development of AI powered customer service tools
Topics of engagement
New technology and gen AI 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 cyber security standards across partner ecosystems to safeguard stakeholders
Outcomes and actions
Our Supplier Charter, which is available on our website, remains central to Capita’s approach to supplier relationships and sets out the standards and behaviours expected of suppliers, including acting ethically, providing safe working conditions, treating workers with dignity and respect, and operating in an environmentally responsible manner. The Group seeks to work with suppliers and partners that share its values and support delivery of its purpose to create better outcomes.
As part of its responsible business commitments, Capita manages and monitors a range of supply chain-related metrics, including sustainability performance, spend with SMEs, VCSEs and diverse-owned businesses, and modern slavery risk.
During the year, procurement governance and risk management arrangements were strengthened through the introduction of enhanced supplier due diligence and a new supplier risk assessment framework, supported by a centralised supplier relationship management platform. These controls improve visibility across the supplier lifecycle and support the identification, monitoring and mitigation of risks relating to human rights, modern slavery, ethical conduct and regulatory compliance.
During 2025, 97% of Group suppliers were paid within 60 days.
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
Percentage of supplier payments made within agreed terms; SME spend allocation; and supplier diversity profile.
Society
Why this relationship matters
Capita is a provider of key services to government impacting a large proportion of the population.
Their key priorities and expectations
Social value; community engagement; diversity, equity and inclusion; climate change; data privacy and security, AI, business ethics; accreditations and benchmarking; and
cost-of-living pressures.
How we engaged
Membership of non-governmental organisations
Charitable and community partnerships
External accreditations and benchmarking
Working with our partners, clients and suppliers
Topics of engagement
Social value
Workplace inequalities
Diversity, equity & inclusion
Data privacy and security
AI and business ethics
Climate change
Community engagement
Section 172 statement (continued)
Outcomes and actions
Community engagement programme such as Social Shifters; Business in the Community’s Opening Doors campaign, a flagship initiative championing inclusive recruitment across UK workplaces. Listed on the Forbes Global list of top employers for women for the third consecutive year; our gender pay gap has improved by 11.10% since we began reporting. We achieved Onvero’s Gold Talent Inclusion and Diversity Evaluation (TIDE) Award, maintained a Disability Confident Employer (level 3) recognition across the Group and Armed Forces Covenant Gold Employer Recognition Award, received Carbon Disclosure Project (CDP) ranking of B, EcoVadis Committed badge and the Charities Trust’s Payroll Giving Platinum Quality Mark Award.
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, external indices performance such as EcoVadis.
On behalf of the board
The Directors present their Directors' report and financial statements for the year ended 31 December 2025.
The results for the year are set out on page 20.
No interim or final dividend was paid or proposed during the year (2024: £nil).
The Directors, who held office during the year and up to the date of signature of the financial statements were as follows:
KPMG LLP, having indicated its willingness to continue in office, will be deemed to be reappointed as auditor under section 487(2) of the Companies Act 2006.
The Company forms part of the Capita plc Group. Capita plc shares have a premium listing on the main market of the London stock exchange and Capita plc is subject to the requirements of the UK Corporate Governance Code 2024 (the 2024 Code) published by the Financial Reporting Council.
The Company did not apply a corporate governance code during the year because its governance arrangements form part of the wider Group’s governance arrangements and are integrated into the management of the Group as a whole. Further details of the Group’s compliance to the 2024 Code are provided on pages 96-103 of Capita plc’s 2025 Annual Report.
Group’s Executive Team ('ExT'), led by the Chief Executive Officer of Capita plc, oversees its governance arrangements. Information about ExT members is available on the Capita plc's website https://www.capita.com/about-us/our-leadership. Decisions made by the Capita plc board and its committees, or by the ExT and its committees, are cascaded through the Group where applicable and the management of each division, led by its Executive Officer, is responsible for their implementation among unregulated businesses in their division. Boards of directors of regulated entities within the Group have authority to make decisions autonomously, with risk committee oversight at a Group level. Quarterly performance reviews are conducted by the ExT with divisional management. These enable a two-way conversation to take place about business strategy, developments and performance. The Directors of the Company remain responsible for all decisions affecting the Company’s operation.
The Company adheres to the Capita Group Remuneration Policy and applies the Capita Group ‘Fair Pay Principles’ which underpin the approach to pay at all levels and within all parts of the Group.
In addition, the Company's Remuneration Policy sets out how it is committed to:
Following the FCA remuneration rules and operating consistent and proportionate remuneration arrangements.
Promote sound and effective risk management, and good alignment between risk and individual reward.
Not incentivise excessive risk taking or short-termism and are aligned with the long-term interests of all parties, including our customers and those of our clients.
Avoid conflicts of interest arising as a result of how we assess or reward performance and a person’s duty to always act in the best interests of customers.
The Fair Pay Principles set out requirements to ensure pay is:
Fair
Consistent
Transparent
Competitive
Clear; and
Recognises contribution
The full disclosure will be published on the Company's website.
The Company has its own Remuneration Committee. The membership of this consists of the two non-executive directors with the Company's Managing Director, Company's Head of Risk and Compliance, Capita Director of Risk & Compliance and HR Business Partner as attendees. The purpose of the Committee is to ensure that the Company adheres to the applicable regulatory and Group remuneration requirements and to ensure that all its staff are remunerated in a transparent and fair manner and in a way that does not encourage excessive risk taking. The Company does not employ external remuneration advisers and external consultants are not used to determine the remuneration policy.
Material Risk Takers
The Company has assessed which members of its staff are material risk takers (MRTs) as defined within the FCA’s SYSC 19G 5.3R rule. The total number of MRTs as at 31 December 2025 was 23. The types of staff identified as material risk takers are:
Member of the Board (Executive and Non-executive)
Members of the Senior Management Team
Heads of Control Functions (Risk & Compliance and Internal Audit)
All relevant staff are paid by basic salary, which is not dependent on company performance. There is also a Management Bonus Scheme which is linked to Group, Divisional and business unit performance as well as individual performance; the bonus scheme is discretionary. Pay and bonuses are linked to numerous factors including non-financial measures such as adherence to the Group’s values.
Accordingly, remuneration is made up of a fixed component (basic salary) and a variable component (annual bonus). As stated above the annual bonus is based on a number of factors. 80% of the maximum annual bonus opportunity is based on full year group financial performance objectives. 20% of maximum annual bonus opportunity is based on assessment of full year non-financial objectives and take into consideration the Group Values displayed to achieve the objectives. Any annual bonus is paid annually in cash only. It is not a policy of Capita Group to offer guaranteed variable remuneration. In the case of severance pay applying on exit, Capita Group applies Statutory Redundancy Pay rules and requirements in accordance with its Redundancy Policy.
The financial performance element is based on full year group financial performance objectives. This comprises Revenue, Profit Before Tax and Free Cash Flow which are equally weighted.
The non-financial element is based of a number of metrics. 3 metrics are set at Group or Divisional level and relate to:
cNPS (Client promoter score)
eNPS (employee promoter score)
Diversity & Inclusion
In addition, 2 personal metrics are included relating to supporting the Group’s socially responsible, environmental and sustainability aims and a role-specific objective. Separate from the Management Bonus Scheme there is a Sales Commission Scheme for the Client and Sales teams, and a Pension Consulting Incentive Scheme and the factors within this scheme are similarly split 80/20 as in the Management Bonus Scheme, with 80% based on the Company's financial performance and 20% linked to personal values-based objectives. Again, all payments are made in cash. There is also a discretionary share option scheme in operation where vesting cannot occur until after 3 years.
Code Staff Remuneration
Senior management and members of staff whose actions have a material impact on the risk profile of the Company are classified as Code Staff.
The total fixed and variable remuneration, together with the number of beneficiaries, for the year ended 31 December 2025 was as follows:
| Executive and board | Senior management | Other code staff | Total code staff |
Number of staff | 6 | 14 | 2 | 22 |
| £m | £m | £m | £m |
Fixed remuneration - cash | 1.7 | 2.3 | 0.2 | 4.2 |
Fixed remuneration - shares | - | - | - | - |
Variable remuneration - cash | 0.3 | 0.6 | - | 0.9 |
Variable remuneration - shares | - | - | - | - |
| ----------- | ----------- | ----------- | ----------- |
Total remuneration | 2 | 2.9 | 0.2 | 5.1 |
| ====== | ====== | ====== | ====== |
Most members of the code staff provide services to other group companies. The remuneration disclosed includes their total remuneration and not that which is solely attributable to their services for the Company.
There were 23 code staffs during the year. Remuneration has been paid to 22 of them. The remaining individual, a contractual employee, has a distinct compensation structure.
The Directors are responsible for the maintenance and integrity of the Company website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
We have audited the financial statements of Capita Pension Solutions Limited ('the Company') for the year ended 31st December 2025 which comprise the Income Statement, Balance Sheet, Statement of changes in equity and related notes, including the accounting policies in note 1.
Basis for opinion
Going concern
The directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the Company or to cease its operations, and as they have concluded that the Company’s financial position means that this is realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt over its ability to continue as a going concern for at least a year from the date of approval of the financial statements (“the going concern period”).
We used our knowledge of the Company, its industry, and the general economic environment to identify the inherent risks to its business model and analysed how those risks might affect the Company’s financial resources or ability to continue operations over the going concern period. The risks that we considered most likely to adversely affect the Company’s available financial resources over this period were:
An inability to achieve business plan/targets, including revenue growth; and
Adverse impacts from unexpected contract losses.
We also considered less predictable but realistic second order impacts, such as business disruption, which could result in a rapid reduction of available financial resources.
Given the level of financial resources, and the risks inherent in the cash flows, our evaluation of the directors’ going concern assessment was of particular significance in our audit:
We considered whether these risks could plausibly affect liquidity in the going concern period by assessing the directors’ sensitivities over the level of available financial resources indicated by the Company’s financial forecasts taking account of severe, but plausible adverse effects that could arise from these risks individually and collectively. Our procedures also included:
Critically assessing assumptions in the base case and downside scenarios relevant to liquidity, in particular in relation to the risks stated above by comparing to economic forecasts/ historical trends in severe economic situations and overlaying knowledge of the entity's plans based on approved budgets and our knowledge of the entity and the sector in which it operates.
Assessing whether downside scenarios applied mutually consistent and severe assumptions in aggregate, using our assessment of the possible range of each key assumption and our knowledge of inter-dependencies.
We also compared past budgets to actual results to assess the directors' track record of budgeting accurately.
We evaluated the achievability of actions the directors consider they would take to improve the position should the risks materialise, taking into account the extent to which the directors can control the timing and outcome of these. We considered whether the going concern disclosure in note 1.1 to the financial statements gives a full and accurate description of the directors' assessment of going concern, including the identified risks, dependencies and related sensitivities.
Our conclusions based on this work:
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 Company's ability to continue as a going concern for the going concern period; and
we found the going concern disclosure in note 1.1 to be acceptable.
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 Company will continue in operation.
Fraud and breaches of laws and regulations - ability to detect
Identifying and responding to risks of material misstatement due to fraud
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 audit committee, internal audit, risk and compliance committee and inspection of policy documentation as to the Company’s high-level policies and procedures to prevent and detect fraud including the internal audit function, and the Company’s channel for “whistleblowing”, as well as whether they have knowledge of any actual, suspected or alleged fraud,
Reading Board and Committee meeting minutes,
Considering remuneration incentive schemes and performance targets for management, Directors including the Capita Group’s share option and long-term incentive schemes for management remuneration; and,
Using analytical procedures to identify any unusual or unexpected relationships.
We communicated identified fraud risks throughout the audit team and remained alert to any indications of fraud throughout the audit.
As required by auditing standards and taking into account possible pressures to meet profit and revenue targets, we perform procedures to address the risk of management override of controls and the risk of fraudulent revenue recognition, in particular:
the risk that management may be in a position to make inappropriate accounting entries; and,
the risk that revenue is understated through the overstatement of contract liabilities in respect of certain revenue streams.
We performed procedures including:
Identifying journal entries and other adjustments based on risk criteria and comparing the identified entries to supporting documentation. These included those posted by senior finance management and those posted to unusual accounts.
Challenging whether the revenue recognised is appropriate based on the underlying contractual terms and progress against performance obligations. This included inspection of a sample of contractual agreements to understand the contract terms and conditions that underpin the revenue, and the profit recognition assumptions and re-calculation of the deferred income balances held on significant contracts at year-end.
Identifying and responding to risks of material misstatement related to compliance with laws and regulations
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 and through discussion with the directors and other management (as required by auditing standards), and from inspection of the Company’s regulatory and legal correspondence and discussed with the directors and other management the policies and procedures regarding compliance with laws and regulations.
We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit.
As the Company is regulated, our assessment of risks involved gaining an understanding of the control environment including the entity’s procedures for complying with regulatory requirements. The potential effect of these laws and regulations on the financial statements varies considerably.
Firstly, the Company is subject to laws and regulations that directly affect the financial statements including financial reporting legislation (including related companies’ legislation), distributable profits legislation, pension 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.
Secondly, the Company is subject to many other 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 Company’s license to operate. We identified the following areas as those most likely to have such an effect: Health and Safety, Data Protection laws, Fraud, Corruption and Anti-bribery, Employment and Social Security law, Regulatory Capital and Liquidity, Money Laundering, Foreign Corrupt Practices Act, Environmental Protection laws, Contract Legislation, Competition Legislation & Price Fixing laws, and Market Abuse Regulation and certain aspects of company legislation recognising the financial and regulated nature of the Company’s activities and its legal form. 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.
For the cyber incident discussed in note 4, we assessed disclosures against our understanding from the penalty notice.
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.
Strategic report and directors' report
The directors are responsible for the strategic report and the directors’ report. Our opinion on the financial statements does not cover those reports and we do not express an audit opinion thereon.
Our responsibility is to read the strategic report and the directors’ report 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. Based solely on that work:
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 report have been prepared in accordance with the Companies Act 2006.
A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities.
The purpose of our audit work and to whom we owe our responsibilities
Capita Pension Solutions Limited is a private company limited by shares incorporated in England and Wales. The registered office is at First Floor, 2 Kingdom Street, Paddington, London, England, W2 6BD. The Company's principal activities and nature of its operations are disclosed in the Directors' report.
The financial statements are prepared under the historical cost basis except where stated otherwise and in accordance with applicable accounting standards.
Going concern
In determining the appropriate basis of preparation for the financial statements for the year ended 31 December 2025, the Company’s Directors (‘the Directors’) are required to consider whether the Company can continue in operational existence for the foreseeable future. The Directors have 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 the Directors should consider. In its going concern assessment, the Directors have considered the period from the date of approval of these financial statements to 30 April 2027 (‘the going concern period’).
Board assessment
Base case assessment
The financial forecasts used for the going concern assessment are derived from financial projections for 2026-2027 for the Company which have been subject to review and challenge by management and the Directors. The Directors have approved the projections. The base case financial forecasts demonstrate liquidity headroom throughout the going concern period to 30 April 2027.
The Directors have also considered the notional cash pooling arrangement with other subsidiaries of Capita plc (as disclosed in note 11) and the cross-guarantee the Company forms a part of in respect of the overdrafts of its fellow subsidiaries under the notional cash pool arrangements (as disclosed in note 20) when making the going concern assessment.
Severe but plausible downside scenario
In considering severe but plausible downside scenarios, the Directors have taken account of the potential adverse financial impacts resulting from the following risks:
Non-Achievement of Business plan/targets including revenue growth and cost saving initiatives
Reduction in staff productivity
Loss of contracts
Potential delays to significant projects
Repeat of COVID like pandemic impacts in operations; and
Any unexpected financial costs and penalties linked to incidents such as data breaches and/or cyber-attacks
In addition, the Directors have also considered the potential adverse financial impacts resulting from amounts held within cash pooling arrangements becoming unavailable and a change in the procurement of services currently provided by other Group entities.
In the severe but plausible downside scenario considered by the Directors as described above, the forecasts show that there would be sufficient cash available to the Company throughout the period of assessment to 30 April 2027.
Basis of preparation (continued)
Conclusion
As a result, the Directors believe that the Company is well placed to manage its business risks successfully. After making enquiries, the Directors have a reasonable expectation that the Company will continue in operation and meet its liabilities as they fall due over the period to 30 April 2027. Consequently, the annual report and financial statements have been prepared on the going concern basis.
The Company is authorised by the Financial Conduct Authority (FCA), resulting in a requirement to meet regulatory capital requirements for financial services firms (also known as ICARA).
The Company has a well-defined ICARA articulating minimum Own funds requirements and Company's assessment of all material risks and adequacy of total capital (CET 1, AT1 and Tier 2), together known as Own Funds Requirements. Given the dynamic basis of linking strategy, risk appetite and capital, the ICARA is a living document and is subject to revisions. Any macroeconomic or external impact, any internal / control impact, any systemic / industry-focused impact feeds into scenarios that model the financial aspects and influences the institutional responses, the Company has to undertake. The nature of activities, and the changing regulatory environment for financial services firms, that the Company is exposed to means these scenarios have to be ratified, stress-tested and changes reported back to the FCA on a periodic basis. The ICARA is also periodically reviewed for fit-for-purpose and any proposed amendments are brought to the Company's Capital and Risk Committee and approved before they are released to the FCA.
Under the FCA ICARA regulation, the Directors are required to model and put in place early warning indicators for reverse stress test scenarios which would lead to the possible need for an orderly wind down. To this end, the Directors have agreed with the Capita plc Board that the Directors of the Company will be informed of any events which would impact the financials and going concern of the Company, and in such circumstances possible rectifications would be sought to prevent a liquidity issue.
The Directors continue to work with the FCA to develop and ratify scenarios around events that may impact the Company's capital and liquidity position and stresses that require rearrangements of individual capital and liquidity positions with and outside of the Group. As such, monthly positions and forward-looking forecasts are shared with the FCA and any guidance variation is taken into consideration in developing future position.
The Company has established early warnings indicators of events that could affect going concern in line with FCA's expectations to factor in the most adverse scenarios resulting from external economic and internal Group stress events. The early warning indicators are not intended to be a static list, but one that will evolve in-line with Company's understanding of market and internal conditions and impacts on credit and liquidity and the FCA's position on credit and market liquidity. The Company's Directors are committed to review mitigation strategies to absorb shocks as they occur and accommodate positions seen by the FCA as pre-emptive.
The Company's ultimate parent company, Capita plc, includes the Company in its consolidated statements. The consolidated financial statements are prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and with UK-adopted International Financial Reporting Standards ('UK-IFRS') and the Disclosure and Transparency Rules of the UK's Financial Conduct Authority. These are available to the public and may be obtained from Capita plc’s website on https://www.capita.com/investors .
In these financial statements, the Company has applied the disclosure exemptions available under FRS 101 in respect of the following disclosures:
A cash flow statement and related notes;
Comparative period reconciliations for share capital, tangible fixed assets and intangible assets;
Disclosures in respect of transactions with wholly owned subsidiaries;
Disclosures in respect of capital management;
The effects of new but not yet effective IFRSs;
Certain disclosures as required by IFRS 15 Revenue from Contracts with Customers;
Disclosures in respect of the compensation of key management personnel; and
Disclosures as required by IFRS 16 Leases.
Since the consolidated financial statements of Capita plc include equivalent disclosures, the Company has also taken the disclosure exemptions under FRS 101 available in respect of the following disclosure:
Certain disclosures required by IFRS 2 Share Based-Payment in respect of Group settled share based
payments;
Certain disclosures required by IAS 36 Impairment of Assets in respect of the impairment of goodwill;
Certain disclosures required by IFRS 7 Financial Instrument Disclosures.
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, in particular 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 estimations 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.
Contract modifications
The Company’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 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).
In respect of 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 because 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. In these cases 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 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 its judgement to estimate the change to the 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 such as the Retail Price Index ('RPI')) then revenue related to the indexation will only be recognised after 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.
Contract fulfilment costs
Contract fulfilment costs are divided into: (i) costs that give rise to an asset; and (ii) costs that are expensed when incurred.
In determining the appropriate accounting treatment for such costs, the Company 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.
If other standards are not applicable to contract fulfilment costs, the Company 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 Company 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 Company expects to recover them. The Company incurs costs such as bid costs, legal fees to draft a contract and sales commissions when it enters into a new contract.
The Company has determined that the following costs may be capitalised as contract fulfilment assets: (i) legal fees to draft a contract after the Company 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 Company utilises contract fulfilment assets over the expected contract period using a systematic basis that mirrors the pattern in which the Company transfers control of the goods and service to the customer.
Derecognition
A 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 reporting date, the Company determines whether or not the contract fulfilment assets are impaired by comparing the carrying amount of the asset with the remaining amount of consideration that the Company expects to receive less the costs that relate to providing services under the relevant contract. In determining the estimated amount of consideration, the Company 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.
Principal versus 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.
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 on a net basis, recognising only the commission or fee earned as revenue.
Licenses
Software licences delivered by the Company are right to access (‘active’) licences, which determines the timing of revenue recognition. The assessment of whether a licence is active involves judgement.
The key determinant of an active license is whether or not the Company 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 Company is responsible for any maintenance, continuing support, updates and upgrade, the sale of the initial software is not distinct.
When software upgrades are sold as part of the software licence agreement (i.e. software upgrades are promised to the customer), the Company applies judgement to assess whether the software upgrade is distinct from the licence (i.e. 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 Company 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 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. 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 Company 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 Company recognises an accrued contract income asset for this difference.
At each balance sheet date, the Company 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 Company 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 Company disaggregates revenue from contracts with customers by contract type, because management believe this best depicts how the nature, amount, timing, and uncertainty of the Company’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 Company 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 license arrangements.
The majority of long-term contractual contracts 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 (e.g., daily, monthly, quarterly or annually services) 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 include 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 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 include fees received in relation to delivery of professional services.
Management is required to determine the recoverability of contract related assets within property, plant and equipment, intangible assets as well as contract fulfilment assets, capitalised costs to obtain a contract, accrued income and trade receivables. At each reporting date, the Company determines whether or not the contract fulfilment assets and capitalised costs to obtain a contract are impaired by comparing the carrying amount of the asset to the remaining amount of consideration that the Company expects to receive less the costs that relate to providing services under the relevant contract. In determining the estimated amount of consideration, the Company uses the same principles as it does to determine the contract transaction price, except that any constraints used to reduce the transaction price will be removed for the impairment test.
Where the relevant contracts or specific performance obligations are demonstrating marginal profitability or other indicators of impairment, judgement is required in ascertaining whether or not the future economic benefits from these contracts are sufficient to recover these assets. In performing this impairment assessment, management is required to make an assessment of the costs to complete the contract.
The ability to accurately forecast such costs involves estimates around cost savings to be achieved over time, anticipated profitability of the contract, as well as future performance against any contract-specific KPIs that could trigger variable consideration, or service credits. Where a contract is anticipated to make a loss, these judgements are also relevant in determining whether or not an onerous contract provision is required and how this is to be measured.
Intangible assets are valued at cost less accumulated amortisation and impairment. The amortisation method used reflects the expected pattern of consumption of future economic benefits and is generally amortised on a straight-line basis over asset's estimated useful life, which is typically 5 to 10 years. In the case of capitalised software development costs, research expenditure is written-off to the income statement in the period in which it is incurred.
Development expenditure is written-off in the same way unless and until the Company is satisfied with the technical, commercial and financial viability of individual projects. In these cases, the development expenditure is capitalised and amortised over the period during which the Company is expected to benefit.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, and whenever there is an indication that the assets may be impaired.
The Company 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.
The Company classifies all other liabilities as non-current.
Provision
The Company applies judgement in measuring and recognising provisions related to pending litigation or other outstanding claims subject to negotiated settlement, mediation and arbitration. Judgement is necessary in assessing the likelihood that a pending claim will succeed, or a liability will arise, and to quantify the possible range of the financial settlement. Refer note 14 for further details.
The reconciliation between tax charge and the accounting profit multiplied by the UK corporation tax rate for the years ended 31 December 2025 and 2024 is as follows:
Other movements relate to lease terminations during the year.
The additions during the year primarily relate to new contract wins.
In preparing these financial statements, the Company undertook a review to identify indicators of impairment of contract fulfilment assets. The Company determined whether or not the contract fulfilment assets were impaired by comparing the carrying amount of the assets to the remaining amount of consideration that the entity expects to receive less the costs that relate to providing services under the relevant contract. In determining the estimated amount of consideration, the entity used the same principles as it does to determine the contract transaction price, except that any constraints used to reduce the transaction price were removed for the impairment test.
In line with our accounting policy, as set out in note 1.4, if a contract or specific performance obligation exhibited marginal profitability or other indicators of impairment, judgement was applied to ascertain whether or not the future economic benefits from these contracts were sufficient to recover these assets. In performing this impairment assessment, management is required to make an assessment of the costs to complete the contract. The ability to accurately forecast such costs involves estimates around cost savings to be achieved over time, anticipated profitability of the contract, as well as future performance against any contract-specific key performance indicators that could trigger variable consideration, or service credits.
Amounts due from group companies are repayable on demand. These are not chargeable to interest except for amounts due from Capita plc, on which interest is charged as per the prevailing Bank of England rates.
Cash at bank includes deposits of £67.7m held with Barclays Bank plc which is part of a cash pooling arrangement with other subsidiaries of Capita plc and £25.0m within ringfenced bank accounts held with NatWest Bank and Goldman Sachs Bank.
Lease liabilities are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:
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. Revenue recognised in the reporting period that was included in the deferred income balance at the beginning of the period was £28.5m (2024: £17.4m).
The average monthly number of employees (including directors) during the year were:
Their aggregate remuneration comprised:
Other Defined Benefit Schemes
The Company has a small number of employees who are members of two separate and segregated sections of the Industry-Wide Coal Staff Superannuation Scheme (a defined benefit pension scheme) and who are continuing to accrue benefits.
There are contractual protections in place to limit the financial risk to the Company of participating in one of these sections and the other section is very small and immaterial in the context of these accounts and so in light of this they are reported on a defined contribution basis recognising a cost equal to its contributions payable over the period. The pension charge in respect of this scheme is included in the pension charge for all the defined benefit schemes shown above.
The Company has its own segregated section in a cross-border defined benefit pension scheme operated by the Group (“CEB section of Capita International Retirement Benefit Scheme” (“CEB section of CIRBS”)). The beneficiaries of this scheme have their benefits, and the trustees hold assets, denominated in euros. The scheme is governed under UK regulations and subject to the further requirements applying to cross border schemes.
Details of CEB section of CIRBS scheme are as follows:-
| Defined benefit obligations | Fair value of plan assets | Net defined benefit asset | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | ||||||||||||
£m | £m | £m | £m | £m | £m | |||||||||||||
Balance at 1 January | (0.1) | (0.1) | 0.2 | 0.2 | 0.1 | 0.1 | ||||||||||||
| -------- | -------- | -------- | -------- | -------- | -------- | ||||||||||||
Included in the income statement: Past service cost including curtailments |
- |
- |
- |
- |
- |
- | ||||||||||||
| -------- | -------- | -------- | -------- | -------- | -------- | ||||||||||||
Sub-total in income statement | - | - | - | - | - | - | ||||||||||||
| -------- | -------- | -------- | -------- | -------- | -------- | ||||||||||||
Included in other comprehensive income: Remeasurements loss/(gain): Actuarial loss/(gain) arising from: - financial assumptions |
- |
- |
- |
- |
- |
- | ||||||||||||
Return on plan assets excluding interest | - | - | - | - | - | - | ||||||||||||
| -------- | -------- | -------- | -------- | -------- | -------- | ||||||||||||
Sub-total in other comprehensive income | - | - | - | - | - | - | ||||||||||||
Employer contributions | - | - | - | - | - | - | ||||||||||||
Exchange differences | - | - | - | - | - | - | ||||||||||||
| -------- | -------- | -------- | -------- | -------- | -------- | ||||||||||||
Balance at 31 December | (0.1) | (0.1) | 0.2 | 0.2 | 0.1 | 0.1 | ||||||||||||
| ===== | ===== | ===== | ===== | ===== | ===== | ||||||||||||
| 2025 | 2024 |
Main assumptions: | % | % |
Inflation | 2.00 | 2.00 |
Discount rate | 4.50 | 3.60 |
The average future life expectancy from age 65 (in years) for mortality tables used to determine scheme liabilities for the CEB section of CIRBS at 31 December 2025 and 31 December 2024 are as follows:
Member currently aged 65 (current life expectancy) | Member currently aged 45 (life expectancy at 65) | ||||||
Male | Female | Male | Female | ||||
2025 | 2024 | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 |
22.2 | 21.9 | 24.0 | 24.0 | 22.8 | 22.6 | 25.3 | 25.3 |
The fair value of scheme assets at the reporting period end was as follows:
| 2025 Quoted £m | 2024 Quoted £m |
Debt instruments | 0.1 | 0.2 |
Five Directors are paid by the Company (2024: Four) for qualifying services provided by these Directors on the Company's affairs, Directors’ remuneration has been allocated to the Company during the period of their directorship. The Directors of the Company were also reimbursed for the expenses incurred by them whilst performing business responsibilities.
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to Three (2024 - Two).
The number of directors who exercised share options during the year was Two (2024 - Two).
The number of directors who are entitled to receive shares under long term incentive schemes during the year was Two (2024 - Two).
During the year, the business and assets related to the actuarial business were transferred into the Company from a fellow subsidiary company within the Group by way of Business Transfer Agreement (“BTA”) in order to consolidate actuarial capabilities and enhance integrated service offering across the insurance and pensions sectors. As both transferor and transferee entity for this BTA were ultimately controlled by Capita plc, these are deemed to be business combinations under common control, with an accounting policy choice made as detailed in note 1.15. The following table shows the gross assets and gross liabilities assumed as part of BTA, and the consideration paid by the Company:
Name of company | Date of transfer | Asset (£’m) | Liability (£’m) | Consideration* (£’m) |
Capita Life & Pensions Regulated Services Limited | 1-June-25 | 0.5 | (0.1) | 0.4 |
|
| ----------- | ----------- | ----------- |
Total |
| 0.5 | (0.1) | 0.4 |
|
| ====== | ====== | ====== |
*Consideration was settled via intercompany loan.