Serco Group (SRP) H1 2026 earnings summary

Executive summary

• Delivered strong H1 2026 performance 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 improvements driven by disciplined execution, productivity gains, and cost control, 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.

• Share buyback increased to £150m for 2026, with £75m completed post-period end; interim dividend up 10% to 1.60p per share.

• Continued simplification of operating structure to drive efficiency and focus on higher-growth geographies.

Financial highlights

• Revenue rose 4% year-over-year to £2,508m, with 2% organic growth and strong Defence sector contribution.

• Underlying operating profit increased 9% at constant currency to £157m; margin improved to 6.2%.

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

• Free cash flow was £65m, with trading cash conversion at 74%.

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

Outlook and guidance

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

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

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

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

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