- Revenue Growth Achieved GBP 4.9 billion revenue in 2025, a 3% increase at constant currency, driven by the MT&S acquisition and organic growth.
- Order Intake Momentum Secured GBP 5.5 billion in orders with a 114% book-to-bill ratio, including GBP 3.5 billion in new Defence contracts.
- Cash Generation Generated GBP 219 million in cash flow (112% conversion) and announced a GBP 75 million share buyback alongside an 8% dividend increase.
- Regional Performance North America revenue rose 10% to GBP 1.46 billion (9% from MT&S), while Asia Pacific fell 18% due to contract exits and disposals.
- 2026 Guidance Targets GBP 5 billion revenue (3% organic growth) and GBP 300 million underlying profit, with a 6% margin at the top of the medium-term range.
Segmental Performance
The company's North America segment saw revenue increase by 10% to GBP 1.46 billion, driven by 4% organic growth and a 9% contribution from the MT&S acquisition. The U.K. and Europe segment also reported revenue growth of 6% to GBP 2.58 billion, driven by 5% organic growth. In contrast, the Asia Pacific segment saw revenue decline by 18% to GBP 655 million, primarily due to the exit from immigration contracts and the disposal of the Hong Kong business.
Guidance and Outlook
Serco's guidance for FY 2026 is largely unchanged, with expected revenue of around GBP 5 billion, representing organic growth of 3%. The company expects underlying operating profit to reach GBP 300 million, over 10% higher than the previous year, and a margin of around 6%. The company's valuation metrics indicate a P/E Ratio of 65.08 and a Dividend Yield of 1.15%. Analysts estimate revenue growth of 4.2% for the next year, suggesting a positive outlook for the company.
Valuation and Dividend
The company's current valuation metrics, including a P/E Ratio of 65.08 and an EV/EBITDA of 15.68, suggest that the market is pricing in a certain level of growth. The Dividend Yield of 1.15% is relatively modest, but the company's commitment to returning capital to shareholders is evident in the announced GBP 75 million share buyback. As Nigel Crossley mentioned, the company has focused on improving its debtors, knocking 20 days off its DSO and improving working capital by GBP 250 million over 5 years, which has contributed to its strong cash generation.