Serco Group (SRP) H1 2026 earnings summary

Executive summary

• Delivered strong first-half performance in H1 2026 with revenue up 4% to £2.5bn and underlying operating profit up 9% at constant currency to £157m, achieving a decade-high margin of 6.2%.

• Margin improvement driven by disciplined execution, cost control, and operational excellence, with retention rates above 95% and a record pipeline of £12.8bn.

• Strategic focus on growth, competitiveness, and operational excellence, supported by sector simplification and increased use of technology and AI.

• Increased share buyback to £150m for the year, with £75m completed post-period end and interim dividend up 10% to 1.60p per share.

• Continued simplification of operating structure, combining Asia-Pacific and Middle East under single leadership.

Financial highlights

• Revenue increased 4% year-over-year to £2,508m; organic growth at 2%; underlying operating profit up 9% at constant currency to £157m; margin at 6.2%.

• Diluted underlying EPS up 6% to 10.17p; interim dividend up 10% to 1.60p per share.

• Free cash flow at £65m; trading cash conversion at 74%, on track for at least 80% for the full year.

• Adjusted net debt at £228m; leverage at 0.75x EBITDA, below target range.

• Underlying ROIC at 24.6%, up from 24.0% in H1 2025.

Outlook and guidance

• 2026 guidance unchanged: revenue ~£5.0bn, organic growth ~3%, underlying operating profit ~£300m.

• Free cash flow expected at ~£160m; adjusted net debt to end year at ~£240m.

• Margin outlook for 2026 at c.6.0%; net finance costs for 2026 expected at ~£50m.

• Full-year trading cash conversion expected to be at least 80%.

• Strong order book and pipeline provide good visibility and confidence in delivering full-year expectations.