Serco Group plc (LSE:SRP) reported revenue of £4.9bn for 2025, representing a 3% increase at constant currency. Underlying operating profit reached £272m, producing a margin of 5.6%. The group also delivered strong free cash flow of £219m and trading cash conversion of 112%, leaving leverage at a modest 0.7x.
Order intake during the year totalled £5.5bn, with roughly two-thirds linked to defence-related work. As a result, Serco’s order book expanded to £14.5bn. The company also increased its dividend by 8% and completed a £50m share buyback, while announcing a further £75m repurchase programme as it seeks to capitalise on rising demand from governments operating under fiscal constraints.
Management pointed to a bidding pipeline worth £12.1bn, which has more than doubled in North America. The group continues to pursue operational efficiency initiatives designed to lift operating margins toward 6% in 2026. Strategic portfolio adjustments are also underway in the Asia-Pacific region, including the disposal of its Hong Kong operations and the integration of MT&S into the wider business.
Serco reaffirmed its outlook for 2026, guiding toward approximately £5bn in revenue, around 3% organic growth and underlying operating profit of roughly £300m. The company believes that growth in defence contracts, the ramp-up of recently secured projects and ongoing productivity improvements will help sustain earnings and cash generation for both shareholders and government clients.
Overall prospects are supported by strong cash flow management and favourable technical indicators, while the latest earnings update signals continued growth momentum in several key segments. However, the relatively high price-to-earnings ratio suggests the stock may already reflect a portion of this optimism, limiting valuation upside.
More about Serco Group plc
Serco Group plc is an international provider of outsourcing and public service solutions focused on mission-critical work for governments. Its activities span sectors including defence, space, migration, justice, healthcare, mobility and citizen services. Through a workforce of more than 50,000 employees, the company delivers capabilities such as service design, advisory support, complex programme management, systems integration, case management and facilities management for public sector clients worldwide.
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