Capita plc (CPI) Earnings Call Transcript & Summary

Good afternoon, and welcome to this webinar from Yellowstone Advisory. Today's company presenting is Capita, and we're delighted to have with us Adolfo Hernandez, the Chief Executive Officer; and Pablo Andres, the Chief Financial Officer, who will give an update on performance following the publication of the half year results. Before we start, I'd just like to go through a few points of admin. Hopefully, you can all see a poll on the screen. It will be really helpful if you could respond to that. And the format today is presentation followed by Q&A. [Operator Instructions] I'm just looking at the poll results, which I'll keep up a little bit longer, but we've roughly got about 3/4 of the people on the presentation today who are shareholders and 25%non-shareholders. So following that introduction, I'm now going to hand over to Adolfo Hernandez, to start today's presentation. And could I ask you, Stephanie to share the Capita presentation for today.

Good afternoon, everyone. Great to see you again after our last meeting back in March, you have seen, but probably by now. I think it's been another very busy period, extremely busy operationally, extremely busy in terms of media attention. But in the context of everything that we have to resolve and everything that we were set out to do, I think it's been a good period where we have made significant progress operationally and strategically, and we're the #1 operational priority being the resolution of the CSDS situation and our commitment to give the members the experience they deserve. It has been very important that the team that was working on that, which is what they've done over this period and the team that was working on the rest of the business, which is building that better Capita have succeeded in making progress in delivering a great service with massive SLAs of 90%, 94%, improving the efficiencies, developing our people and leveraging technology very deeply. As you can see on that slide, I'm not going to pick them all up. There is enough to report on across all of them. I think the important thing is that this is a snapshot. This is a snapshot of the journey we decided and we committed to start just over 2 years ago, right, which is we're going to build a better Capita that continues to do the great things that we do, providing the great service, we're providing for the fabric or society, but manage to do it better, manage to build more and leverage existing technology, be more efficient as a company, deliver better and then as a result, build a better company, a better company for our employees, a better company for our customers and also a better company for our shareholders. So as you can see, if I just sort of got a way around it. From a technology perspective, we have really reshaped our technology and innovation. I think this is now -- we are in a space where we have more repeatable capabilities across the business. We are leveraging AI at the core of many of those capabilities. We're leveraging our hyper scaler partners. And I think towards the end of 2025 and the beginning of 2026, the emphasis really pivoted from experimenting with this technology to really getting it into adoption. Adoption internally and adoption externally for our customers. And as you will see later on, we are really staying the use of all this innovation across our core operations. We're already seeing and we are sharing some significant productivity improvements. We're making better decisions faster. And ultimately, what matters the most, we are delivering a better service to our customers. And what is different is this is not about technology for technology's sake. This is technology that has to be deployed to deliver impact, has to deliver social value, and it has to deliver improvements in how our services are enjoyed. On the efficiency side, we reported in March that we have seen better execution with the GBP 150 million reduction. When we announced the sale of the call center we said this opens are the opportunities for further efficiencies. We're going to be a lighter business. We're going to be a sharper business, a simpler business that is going to command less overhead. We are going to be asking ourselves to be moving another GBP 40 million on top. And even though we only completed the transaction on Monday this week, I announced in March, completed -- announced on Monday, we've already been able to deliver GBP 80 million of that GBP 40 million. So from a delivery perspective, as I said at the beginning, we were clearly challenged with the CSPS contract. And I have gone about it right this time on the issues that we have with the data with the backlog with the systems, with the mismatch. But I think what is really, really important is that we have moved the system from the -- in a situation of having to deal with the crisis, focusing on dealing with urgent cases through the beginning of Q1 because that's what members really needed and then to adjust the functionality and building the automation so that we could move into a capacity phase, capacity defined as you get more cases out of the door than you get in the door and then you start progressively working down each of the backlog into a standardized normal backlog that this service used to run with acute service to members. And that's what we are committed to do and I'm glad that we're sort of moving along of the steps, and now we have seen moving from the sort of functionality to capacity and now being well in capacity and now working down the backlog and the stock that we have to deal with the flow of cases that come in, but also be able to get into stock of cases that have been built over many years. Just to remind ourselves that in spite this contract, and I don't want to believe that the problem is real and [indiscernible] apologize [indiscernible]. Despite all of this, the pensions business, if you exclude this, delivers at 94% KPI rates. That's extremely high if you look at the rest of our public sector business delivers over 90%. So it's very, very high and it sort of proves that this CSPS contract is certainly the exception and one that we are totally committed to overcome. Also on deliveries, it's important to move from cost cutting to growth, and we said in 2025, we have changed the engine. We have changed the policy. We have changed the go-to-market strategy. And we can see that it continues to work with contract value now over GBP 1 billion. So that's 15 percentile of what we have at the end of the year, and the unweighted pipeline continues to grow. So we're seeing that the pipeline grows, we're seeing that the total contract values continue to grow and we continue to improve our win rates, which is the ultimate test of what you're getting. And that, all of these deals, yes, admittedly many of them are multi-annual. Many of them will take a few months or quarters to move from signature on to revenue on profit, but we are filling the funnel with those new contracts that we're very, very excited about delivering for them. And then on the company side, we have stable, high employee engagement, which is super critical to do the transformation that we're doing. We couldn't be doing it without the great help, support and passion of our colleagues. We have continued to increase internal mobility. We do have a lot of really good talent, really well capable employees and we are helping them very good internal mobility to grow opportunities, but also helping them with increased data and AI literacy so that they can be upskilled, so that they can be effectively enhanced how they build that. So I'm really proud of the work that we are collectively doing and how they work day in and day out on delivering that better Capita. Obviously, we had a number of one-offs, very significant, very painful and I just want to make sure everyone that management remains absolutely focused on translating this operation of strategic progress that we're making into ultimately that financial set of results, totally committed to the expansion of the operating margin, totally committed to generation of free cash flow. But we strongly feel that after everything that has been done over the last couple of years, including this last period, we're getting one step closer and as you would see now when Pablo takes us through the numbers, we just -- we're just getting there, just been messy, a messy way to get there. But it was quite a complex situation that we were facing in a couple of years ago with outstanding historical issues with technical debt, outstanding issues with the ITO, we had many, many years of history of close [indiscernible] pension that needed to be addressed. We have to address the contact center underperformance. Now we have to address the situation on CSPS. But as a management team, we are and will continue to work through the CSPS until we have that great company that we're working so hard, so very hard as a team to build. So Pablo, maybe take us now through the numbers, and then I'll come back to give another update.

Perfect. Thank you, Adolfo. I'm going to canter through the numbers that have been available for a while. We'll pick up on the main themes, and then we will be able to have more time for Q&A. But at the end of the day, what the numbers are showing is we continue with revenue growth, and I will go into each division to speak in more detail. The operating margin has been mostly affected by the civil service pension scheme contract. And in terms of cash conversion broadly in line with what we would expect for this time of the year. So going into business by business, though public, which is the first one. And public has been growing by 2.4%. It's been very successful in terms of pipeline, having the biggest level of wins in H1 since 2021 and progressing really strongly. Operating margin, as you can see, remains around 8%, and this is despite of having done some accounting reallocations of central overhead costs that get allocated based on revenue profit and headcount and with the pensions business having gone from a profit to losses, where those costs have ended up here. What I'm trying to say with that is actually that the operating margin without any accounting and moving off costs would have even been 8.4%. So this business performing really well in terms of top line, in terms of 90% operational KPI performance as Adolfo said. And in terms of cash conversion, at the year-end, we said that we have had some tailwinds and that we were higher than expected in this business. And at the half year, what we are seeing is the tailwinds from the year-end unwinding and the investment on mobilization of contracts that we guided in March that was going to come through. Other than that, we expect to see strong cash conversion in this business by the end of the year and continue delivering. If we go to the next one, which is the pensions business, the pensions business is, as you can see on the chart below, is heavily affected by the impact of the civil service pension scheme contract. GBP 14 million directly and the collateral impact on other and consulting business that we have around GBP 3 million as redirected some of the resources to support on this contract. Other than that, the business has continued growing strongly. Not all of that growth of 24.7% related to the civil service. There's another around -- between the 5% and 10% of the growth is related to underlying growth of the business and the operating profit sees the impact of the civil service. Other than that, the business has continued performing well. Operating cash flow in this one at the year-end, we had a delayed milestone that came in late. But at the same time, in the first half, we have been invested -- investing in the technology solutions for the civil service pension scheme contract, but that investment has been offset by the tailwind of the delayed payment from December and some additional tailwinds of phasing of cash at the half year. Otherwise, when we guided in the results that we would expect a GBP 10 million deterioration between profit and cash, it's literally remaining to what we will see in the operating cash flow in this division related to the civil service pension scheme contract. This is 12% of the group revenue. If we look at the -- if we move on and then we look at liquidity and net debt, it's been a good first half for the group. We have been extending the RCF facility in a little bit of every year. This time, we had GBP 250 million RCF facility. We have a GBP 75 million bridge. We've put them together for GBP 325 million and we've put it in place for 3 years, plus two 1-year extensions attached to it, which gives a much more solid foundation, more sustainable, much more comfortable with that. In addition, we were able to actually renegotiate the covenant of the interest cover ratio from 4x to 3x that gives the group a much stronger position and has allowed us also to renegotiate the covenants with the U.S. private placement lenders to bring them to a lower place. It's also to mention that in July, we issued a further GBP 41 million notes of U.S. private placement notes that we have used to actually repay the GBP 84 million of maturities that we had in July. Net debt to EBITDA was 1.6x at the 30th of June, which reflects the cash outflows we have had from what I have been speaking about. Then on the next slide, I wanted to speak a little bit about the order book. And the reason for this is, I'm speaking about the biggest and best TCV in the H1 that we have had for many years. But then the question is always, but where can I see it and when is it going to land? And the challenge with this business is that the larger contracts tend to be a long process from winning to becoming revenue like the synergy contract we announced will become revenue in Q4 2027, even though we are already starting to mobilize. And I wanted to, therefore, show how from the pipeline we have had around 11% is expected in H2. We have one 14% in '27, 21% in '28 and the rest beyond. And I think that at the Capital Markets Day, I will focus on explaining how the pipeline is expected to convert so that people can understand better the revenue and how solid the revenue is in this company. But before we were waiting for them what I wanted also to make a point here is that of the GBP 900 million of revenue we have booked in H1, 76% of that revenue was in the order book and an extra GBP 100 million which is almost another 10% is related to recurrent framework agreements that we've got contracted for a while. So almost 5% is coming from recurrent solid signed contracts with customers and only 15% is specific wins that we have to deliver. As we look forward instead of awards, we will see eventually how capital starts every year with more than 2/3 -- well over 2/3 of revenue secured before we go into this year, which again supports the length of our contracts, how solid they are and the strength of our order book. Other than this one, we have a slide for the outlook. And on the outlook, basically, what we said is we expect to see revenue broadly overall flat. This is mostly driven by some losses from the public business that are expected to be seen through in the second half, given that most of that pipeline, we have won is not within 2027 but beyond. Operating margin is going to continue solid, in line with previous guidance. And with the impact of the civil service pension scheme contract, but with public, which is 80% of the business remaining strong. Free cash flow will be in line with the guidance we provided on the 9th of July with the impact of GBP 35 million to GBP 50 million related to the civil service pension scheme contract and strong performance in public service, I mentioned earlier, unless that will be the result of the free cash outflows for the group based on the one before and business exits. So other than that, I will hand back over to Adolfo.

Okay. Thank you, Pablo. Just sort of first real quick summarize some of the additional dynamics. Pablo when over some of the numbers. I think you can see that the revenue growth, the strong win rate, the TCV performance in both divisions, right, continues to demonstrate that there is strength, there is momentum and the core of the business is moving in the right direction. If you look at the public sector, as you see, we have the best first half performance in several years. And we had a really good start to the second half with the TFL win GBP 425 million that we announced on Monday. On the pension side, similar story. Obviously, TCV grew disproportionally high over 100% growth of the TCV over last year and have a pretty high win rate of about 99%. I talked earlier on the intro just framing the performance in that business, the ability to deliver good service at 94% KPI. But obviously, there is a lot of work that needs to be done still on this CSPS as discussed. So I just keep reminding that, that business pension solution serves flawlessly 7 million scheme members, and this is something that we do well for a living. So we will get out of this challenge. So if we go to the next slide, you can see sort of some numerical update on the civil service scheme. I would just sort of try to capture these for those of you who are new. Obviously, we're working on it. Obviously, we have a service certification plan that has been worked together with a cabinet office. You've got the progress that's been made on yield health service, the quotes and then on payments. The focus, as I said earlier, which is making ensure that the historical improvement that we have already seen over the last few months continues into the future and that the capacity is used to ease into a more normalized service. That's probably little more I'd say at this stage in this. So let's move on to the change. I did refer earlier to -- this is a snapshot of the journey that we set out to do 2.5 years ago. The first part was to go and say, okay, where do we want to be? Where do we want to get to over the medium term? Where can Capita exceed, where can Capita win, where can Capital be successful. So we set out the goal to become the most AI-led and enabled business process service company that we're going to be able to help regulate the industries and the public sector deliver good value for money in these services at scale. That was the North Star. Together, we defined 3 stages, right, 3 different ways, not necessarily sequential. There is a big amounts of overlap, but at a given point in time, there's more emphasis in one of waves than the others. First wave, we were oversized, inefficient. We needed to cut cost, find a way to do what we were doing with less and doing it better and getting those efficiencies. So we talked earlier around the GBP 250 million plus GBP 40 million and that's sort of comprehensive realignment simplification, delayering and just making sure the company sort of became nimbler. And we could fund the rest of the journey. The second wave was about fixing the basics. What were we doing that we could do better and we should do better in terms of, okay, some of our innovation and how are we going to be deploying tech, how are we managing our people, where was our people strategy, how do we grow on work and optimize our operating model. Our operating model was the result of where the company had been for the past 10 years, it's a collection of different units. So we needed to sort of build something that was right and suitable for the future. And that sort of was the third phase. The third phase is seeding for the future, what do you do organizationally, what do you do in terms of capabilities, what type of people do you need to have, what type of culture do you want to build and just feel that sort of blueprint for the future so that you are relevant for, so you are successful and well fitted for the next decade. That's in the journey. Trust me, it feels like it's been the hell of a long journey, but we sort of only presented that journey 2 years and 2 months ago. And I think we are well underway. So on the next slide, please. I wanted to dwell a little bit more on the topic of simplification because I think this is sometimes overlooked. Not having so many divisions I think is critical. Simplification is one of the best possible ways to create value. We are a much focused, much more focused business now. We can deliver our vision. We've got the ability now to cross-sell much better. We've got a lot less overhead. We've got rid of some things that were getting on the way from us optimizing properly. We have now an easier to understand business. We have now an easy to run business. We've got our business now when we can get operational leverage, when we can get tech sharing. And over time, we believe that this more simple business will be easier to buy you. So a lot of the simplification work that has gone into the last couple of years will be setting us well. So let me just quickly go to the next slide because there, I wanted to have just a quick discussion on where we are with the government. There's been a change of government, another change of Prime Minister and government. And every time there is a change, there's a lot of questions about how that affect you. So first and foremost, we're super excited about the changes, the energy and the themes that the government is talking about in these early, early days, right? I think it's just very clear and it's been talked by everybody, the public sector needs to boost productivity in many areas. It lacks the in-house skills or the scale and then doing it with somebody and doing it leveraging AI and some of the new [indiscernible], which is probably the only valuable way to do this. But for these to be valuable, it has to be well embedded into the process. It has to be done with somebody that really understand the business process, that is supposed to be optimized. We've been doing this for 40 years. We are the #1 provider in the seats, so software and IT services category and BPS provider to the government. And we understand the public sector much better than any other tech company, and we understand how to leverage AI much better than any other business process outsource. So there is a sweep spot where Capita can and will help government run those transform services. And we believe that our deep public sector domain expertise apply to everyone of the areas. We probably be the single biggest differentiation that we talk. You can't sell a multi-decade experience when you run complex regulated end-to-end operations at scale easily. Either you have it or you don't have it. And we've done that and we derisk the path to get there and we're doing this on the days of a very good collection of long-duration contracts that we will be making. Next slide, please. So I wanted to talk to you about -- because I noticed a topic of AI and where are we and where is it going? So AI is just developing. This is early days. Now if anybody claims that they have the solution, and they know where this is going to be 5 years, I suspect they will be wrong. Even the largest and most valuable companies out there today, they are pivoting and they're changing. We've gone from the end of '23 chat [indiscernible] tools that were productized, then we move into, yes, we need to have agents towards the end of '24 and in '25 that I asked the agents need to be orchestrated. And a lot of this period narrative was people are less relevant. AI is going to wipe them all out. But now everybody, everybody circle back to the fact that not only you need to have a human in the loop but in many areas, particularly if it is governance intensive. You need to have a human in charge. And I think if you've been following us for the last couple of years, you will hear that I have been doing that for the last couple of years. This is a great unique opportunity for Capita. This is going to be AI empowering humans that are either in the loop or are in charge. And this is extremely relevant for us because that's what we do, having the people, having the expertise. And what we're doing now is enabling them with the AI and [indiscernible]. So that's the way the market has moved. I think if you go into the next thing that you see where our offerings have been moving, right, following the marketing or with the market right from June 2024 when we set out the strategy to our first agents being delivered and in production in the summer. And then what we did launching the ideation and top creation entity called the Catalyst Labs so that we could trap all of the ideas and bring them up to valuable ideas and then productize them and then deploy the use cases all the way into production and now we're close to 500 of them. If you look at the future and it is in the next slide, I think what it's going to show you is that we are going to be building heavily on these capabilities that we build. We have learned a ton, we learned about what works and what doesn't work. We have learned that success here is not about just tech. You could install tech and do nothing and nothing changes. You have to deploy tech, you have to look at the business process. You have to reimagine the business process. You have to change it. You have to train people. You have to give them tools and then you have to stay on, right? I mean when you stay on, that gives you a chance to iterate again and create a much better solution. So I think that the future of outsourcing is going to be more of a future of -- you are going to be -- we call it a forward deployed orchestrator. When you stay with a business service and you orchestrate the people the data and the agents that you need every point in time to deliver a better solution. But obviously, they are after the possible changes because there's too much innovation, the regulatory requirements change. So you stay and we aim to stay with these contracts and stay with these processes and sell our capable colleagues so that they stay and continue to orchestrate and improve the business service. The next slide just gives you a little bit more color on where this is paying off. This value proposition has value in market. This role is being understood and is transforming into a richer pipeline that continues to grow and a richer TCP book that continues to grow and our ability to win more deals on an 84% win rate, I think is made up of 82% of new scopes and then 100% win rate in opportunities that we tendered. We have had a number of significant wins and you can see there at the beginning of the first half of 2026. And we've also started the rest of 2026, the second half with significant win that we just announced on Monday. A think [indiscernible] I think we've won by the end of July, the same or slightly more than we've won in the whole of 2025 put together. [indiscernible]. And in terms of differentiation, right, which is where we go next, right, how do we keep that differentiation is I think is staying true to our motto, true to the position that we can, we will play in the market, which is staying close to the process, staying close to the people. If you look at the data from BCG, you will say 70% of the value, right, is going to be coming simply more to the people and the process. And only a small amount is going to be around the other -- under technology and that's what we're good at, and that's what we're saying in and not -- we couldn't afford, as you guys know very well, but we are not in the business of building anything that is in the right level of memory implementations, chips implementations or architectures or data centers or LLMs or other items or what they call it different machines or platforms. That is not our business. Our business is to see above that and evaluate what works best for what particular public service or regulated service, orchestrate it, put the governance around that, that is required to make sure that the data is used properly, that we know what agent has been created for what purpose, how do we manage an agent from the cradle to the grade. And ultimately that we look at the art of the possible to reimagine those processes and that we stay -- we don't hit and run, we stay, we manage, we improve and we manage and we keep improving. And there will be very few other players who will have the capabilities to do that. So very excited about the move, the position where we're in. And I think on the coming slide, you sort of see a more detailed view of what I call this forward deploy orchestrator that to me sort of depicts what the future outsourcing model looks like. It keeps some things from the old 40-year rollout sourcing, which is you observe business model, you deploy your teams back in the day, you would have done a lot of offshoring to low-cost locations. You would done a lot of labor arbitrage and then you just sort of manage the teams and you operate it. In this new world, it will respect some of the basics around observability of the business process, then you are going to be reimagining what you're going to build, you're going to be deploying those new tools in that. Then you are going to the orchestrating the people and the processes and the agents and one, I mean you're going to be operating. And then you're going to see that a lot of the staff, a lot of the steps will be machine free then but the most important one, right, is going to be the human review and action, and that will be based on the skills that people have built. So really excited about where the market is going. This is not a journey for 6 months or for 12 months and you're looking for everybody to get there, all of our customers to get there and all of our customers to start procuring in 2027 this way. That is not the case. But this is where the market is going, this is where the opportunity is going to be. It's not immediate, but this is the place to go to if you want to build a strong company for the next decade. And this is the place where we are committees and setting our future as we are starting to finish the lease of cleaning up that we need to do. So I'd like to, at this point, thank you for the patience and the support. I know it will continue to be a bumpy ride, it's just been a lot of fixing, it's a complex story. It's not linear. It has lot of ups and downs. They are not always easy to explain, but this is what it takes to take what we took on and to build what we were trying to build. So with this, let me pause here and change over to Q&A.

Thank you very much, Adolfo and Pablo for that presentation. And we are going to go into Q&A. [Operator Instructions] We have had a lot of questions come in ahead of time and quite naturally quite a few of them are on the civil service pension scheme. So it's an area where I'm going to start with. I'm also going to amalgamate some of those questions because they're quite similar. So Stephanie, do you want to, just before I start, stop sharing the screen so that individuals can see us here and Pablo, maybe you could turn your camera on. So the first question we have here is it's clear that the civil service pension scheme had many issues before Capita took it over, but Capita has contributed to a difficult situation. Does Mr. Hernandez have concerns that the severe days in payments to recipients could lead to either the contract being withdrawn or that capital may be the subject of litigation by those affected?

I fully understand why this question will be asked. My concern as the CEO now is to make sure we support the key intensions wholeheartedly, that they have access to the best and the brightest we have in the group, that they have access to the technology that they need, the automation that they need, the testing capability that they need, that we cover for them financially, and we do disproportionate high investments in there to solve the issue, right? We need to do that, and I need to marshal the resources of the whole company under way of everybody to just do what it takes to get this one right. Then there is another threat will start, which is what do we do with this? How much of it was it our fault? How much of it was somebody's fault? But right now, we are in the solution time. I think as everybody knows, this was a distressed service. It was a distressed service. It came the way it came. But right now, my attention and the attention of the vast maturity of my team is resolution.

There are naturally a couple of follow-up questions to that. So in view of the delays and negative publicity relating to the CSTS contracts and labor's announcement to in-source more, how do you see the public sector section developing over the next 12 to 24 months?

Yes. Excellent question. I think it's a question like I need to give you a wider answer because there's just no one single thing. You could be looking at the test, right, that the outsourcing test, that is now mandatory or will be mandatory from next year, everything above GBP 1 million, right? And I think that is good, right? As a tax payer, I think the government should check everything that we're doing. Are we doing it the right way? What is the right delivery channel? I think that's absolutely fine. What I think is there is a great amount of services that might just sort of end up being in-sourced, but I do believe that given the complexity of what we do, right, the very complex middle office and back office operations that we manage in public service at scale and with a lot of skill and a lot of experience where we can optimize the cost delivery. I would like to believe that the answer in most of those cases will be it is actually better to do with somebody who has the experience, the skills and the scales and it will be cheaper and it will be better value for money there. As we do these type of solutions, we're also going to be supporting out of the group growth initiative by the Prime Minister, right? We do hire regularly our people in the Northern England. We have thousands of our colleagues there. We have built a very good capability to build consortia, integrating SMEs, local SMEs that have expertise and this is something that we been doing there. Social value has been something that the company has done well and where we tend to score well because how we see that is becoming more important in the scoring system of the future, and we're doing a lot in terms of employability, a lot of jobs are in the U.K. So I'd like to believe a number of these things will be very favorable for us. The #10 North of relevering or whichever way you want to call it, fundamentally is going to translate on having political leaders in new centers and the buying centers are going to be well funded. They're going to be well funded. They have the right transpiration for improving the services of their other cities or towns or areas and we're going to have probably more funding than in some cases, experience doing employability services or assessment services or operational services. And that's an area where we feel a lot of reputation and a lot of capabilities. So I believe that will also help us expand our addressable market. Now we've got the AI news so cabinets and we've got this high priority of using AI and leveraging AI to drive public sector productivity, which again is something that is very core to what we are serving. And then there is the whole thing about buying British and helping. So in general, yes, every government has to take and make some decisions. But I think if I look at what it is, I think it represents a very good playing field for us to continue to work with them, helping them build a better Britain.

Specific question on some numbers here relating to the CSPS. So the CSPS cost an extra GBP 14.2 million in half 1. Is this same extra cost expected in the second half?

We haven't given specifically the split between H1 and H2. What we did say on our trading update in -- on the 9th of July is that in terms of P&L, the civil service was going to cost out of what we had expected a further GBP 25 million to EUR 40 million. So one can argue that almost half of it is already booked in H1.

Okay. Thank you, Pablo. Two more questions on the CSPS. What lessons have been learned and what measures put in place to ensure the implementation of the synergy contract will not suffer from similar operational shortcomings as has been the case in the execution of the CSPS contract?

I can understand the rational of the question. So it's not just only versus CMT. Synergies are very different things. Synergy is the managing of the backbone of HR and finance system for DWP, the government departments and it's a solution stack that is being built by IBM or Apple. So it's a very different thing than legacy super complex defined benefit administration with a lot of assistance that was already distressed. So they are 2 different worlds, right, and 2 different realities. But it's certainly, as underscored is when you're testing a system, you have to insist, one has to insist that a year transition and you get -- have to get access to the real data. You cannot test a system with synthetic data. So you have access to the real data, so when you build some capabilities and some automations, you're actually building it for the right data that you're going to inherit but definitely been there. We have what we've seen sort of doing tripartite when we are exiting contracts and we are running off. So right now, we're running off of the Army recruitment program, and we're doing a tripartite always with [indiscernible], the army and ourselves. We're rolling off each extensions and we do a tripartite there with DFE at TCS and ourselves. So I think having had those things are really important. There are a number of other operational reviews, lessons learned. There's a number of exercises, as you can imagine, we have undertaken and undertaking, and they would all feeding a resource of deal governance, Things have changed after remind everybody. This was a 2022, 2023 deal. It proceeds a lot of people, but we're still committed to just fix it, which is the most important thing that we own it now, and we will get it over the finish line.