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Serco Group PLC on Thursday reported higher annual profit, raised its dividend and announced a new £75 million share buyback. The Hampshire, England-based government services outsourcing provider said revenue for 2025 rose 1.9% to £4.88 billion from £4.79 billion a year earlier. Pretax profit more than doubled to £201.5 million from £97.0 million, reflecting the absence of a prior-year goodwill impairment charge of £114.5 million. Reported operating profit increased 89% to £246.3 million from £130.1 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 £272 million, compared with £274 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 £219 million, ahead of previous guidance of around £170 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 £75 million, to begin on Monday and complete by July 31. This follows a £50 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 £5.5 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 £14.5 billion at the end of December from £13.3 billion a year earlier. The pipeline for new business rose 8% to £12.1 billion, the highest level in over a decade. For 2026, Serco reiterated its guidance for revenue of around £5.0 billion and organic growth of around 3%. Underlying operating profit is expected to be around £300 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 £160 million, with adjusted net debt expected to end 2026 at approximately £165 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. Copyright 2026 Alliance News Ltd. All Rights Reserved.
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