Serco Group plc

Serco reported 2025 revenue of GBP 4.9 billion, up 3% at constant currency, and underlying operating profit of GBP 272 million, up 1% at constant currency, with a 5.6% margin. Organic revenue growth was 1%, and return on invested capital was 26%. Full-year order intake was GBP 5.5 billion, with a book-to-bill of 114%, and year-end pipeline was GBP 12.1 billion. Cash flow was GBP 219 million with trading cash conversion of 112%; adjusted net debt was GBP 206 million, versus GBP 100 million last year. For 2026, management expects revenue of around GBP 5 billion, organic growth of 3%, underlying operating profit of around GBP 300 million, margin around 6%, free cash flow of around GBP 160 million, net finance costs of around GBP 52 million, and adjusted net debt of GBP 165 million. The board is recommending a full-year dividend of 4.5p per share, up 8%, and announced a further GBP 75 million share buyback.

Anthony Kirby framed 2025 as a year of disciplined execution and strategic sharpening, with Serco focusing more deliberately on the geographies and sectors where it believes it has the strongest advantage. He emphasized safe, sustainable, profitable growth, saying Defense is the biggest long-term opportunity and that the company is becoming more focused, more predictable and better positioned for long-term growth. His tone was confident and upbeat, repeatedly pointing to structural demand from geopolitics, migration and public-sector modernization.

Nigel Crossley highlighted broad-based financial progress, saying revenue rose to GBP 4.9 billion, underlying operating profit reached GBP 272 million, and margin stayed in the middle of the 5% to 6% target range at 5.6%. He said cash conversion was exceptional at 112%, free cash flow remained strong, and return on invested capital was 26%, while adjusted net debt rose to GBP 206 million mainly due to the GBP 245 million MT&S acquisition plus buybacks and dividends. He also said 2026 guidance implies margin at the top end of the medium-term range, with net finance costs around GBP 52 million and free cash flow around GBP 160 million.

Analysts focused on contract mobilization costs, competitive intensity in the U.K., migration model changes, the contract and M&A pipeline, MT&S integration, North America margin durability, U.S. market timing after the government slowdown, APAC recovery, and cash generation. Management said contract mobilization costs were elevated by about GBP 20 million in 2025, competition in the U.K. had not materially changed, and migration demand remains structurally strong even though hotel usage is being reduced. On MT&S, they said integration is going well and is creating early benefits, while in North America they expect margins to stay around 10% over time, helped by scale and contract mix.