Highlights

  • Capita finalizes exit from two legacy Life & Pensions contracts with Royal London.
  • Initial payment of 22.47 GBP may be converted into 5.67 million ordinary shares.
  • Migration over five years expected to generate 100 GBPm total cash outflow.

Capita plc (LSE:CPI) has reached a transition agreement with Royal London for the remaining two legacy closed book Life & Pensions contracts. These contracts are part of Capita’s Regulated Services segment within Capita Experience.

The closed book Life & Pensions business has been a complex part of the Group, and Capita has been seeking to exit it since 2023. Earlier agreements have been made for other contracts in this segment, which are in the process of being migrated.

Payment Structure
Under the new agreement, Capita will pay Royal London an initial 22.47 GBP. There is an option for either Capita or Royal London to settle this payment through the issuance of 5,670,909 ordinary shares, representing about 4.96% of Capita’s issued share capital. If exercised, the shares will be subject to customary lock-up arrangements during the migration period, which is expected to last five years.

In addition, Capita will make further payments towards Royal London’s costs, comprising three annual installments of 10 GBP each on the first, second, and third anniversaries following the completion of the migration. The migration is expected to be completed over five years.

Migration Costs
The two contracts will migrate back to Royal London, with each party covering its own associated migration costs. Based on these costs and prior agreements for other contracts in this business, Capita expects a free cash outflow of 20 GBP per year during the migration period, totaling 100 GBP over five years. The cash outflow is expected to be front-loaded.

Strategic Completion
The resolution of the remaining Life & Pensions contracts is part of Capita’s broader strategy to manage legacy operations and eliminate future cash outflows from this segment.

Share Price Snapshot
CPI was trading at GBX 396.50 per share as of 12 December 2025.