5th Mar 2026 11:07
(Alliance News) - Serco Group PLC on Thursday reported higher annual profit, raised its dividend and announced a new GBP75 million share buyback.
The Hampshire, England-based government services outsourcing provider said revenue for 2025 rose 1.9% to GBP4.88 billion from GBP4.79 billion a year earlier.
Pretax profit more than doubled to GBP201.5 million from GBP97.0 million, reflecting the absence of a prior-year goodwill impairment charge of GBP114.5 million. Reported operating profit increased 89% to GBP246.3 million from GBP130.1 million.
Diluted earnings per share climbed to 14.07 pence from 4.10p. On an underlying basis, diluted EPS rose 1.6% to 16.93p from 16.67p.
Underlying operating profit edged down to GBP272 million, compared with GBP274 million in 2024, with a margin of 5.6%, in line with the company's medium-term target range of 5% to 6%.
Free cash flow totalled GBP219 million, ahead of previous guidance of around GBP170 million.
Serco proposed a final dividend of 3.05p per share, up 8.2% from 2.82p a year earlier, taking the total 2025 dividend to 4.50p per share, up from 4.16p.
The company also announced a new share buyback of up to GBP75 million, to begin on Monday and complete by July 31. This follows a GBP50 million buyback completed in 2025.
Chief Executive Anthony Kirby said: "In 2025, the group demonstrated significant strategic and operational progress. Our strong performance, as a trusted and mission-critical partner to governments globally, reflects the hard work and dedication of my global team of over 50,000 colleagues."
He added: "Our GBP5.5 billion order intake, of which around two-thirds was in defence, book-to-bill of 114%, and the highest pipeline in over a decade, demonstrate the strength of demand for Serco's critical services."
The order book increased 9% to GBP14.5 billion at the end of December from GBP13.3 billion a year earlier. The pipeline for new business rose 8% to GBP12.1 billion, the highest level in over a decade.
For 2026, Serco reiterated its guidance for revenue of around GBP5.0 billion and organic growth of around 3%.
Underlying operating profit is expected to be around GBP300 million, roughly 10% higher than in 2025, supported by contract ramp-ups and a full-year contribution from MT&S. The group expects its margin to rise to around 6.0%.
Free cash flow is forecast at around GBP160 million, with adjusted net debt expected to end 2026 at approximately GBP165 million after the new buyback.
Serco said it expects elevated geopolitical tension and policy complexity to persist in the near term but believes structural demand drivers across defence, justice and immigration, and citizen services remain supportive.
Shares in Serco were up 2.0% at 309.60 pence in London on Thursday morning.
By Eva Castanedo, Alliance News reporter
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