Serco Group PLC on Thursday said it expected to continue to grow in 2024 as it announced a jump in profit and a new share buyback programme.

The Hampshire-based outsourcer said pretax profit jumped 26% to £247.0 million in 2023 from £196.8 million a year prior.

Revenue climbed 7.5% to £4.87 billion from £4.53 billion. Cost of sales increased 8.4% to £4.38 billion from £4.04 billion.

Serco reported a gain from exceptional operating items of £53.8 million, compared to a loss of £2.4 million in 2022.

The company declared a final dividend per share of 2.27 pence, up 18% from 1.92p. This brings the total dividend to 3.41p per share, up 19% from 2.86p.

Further, it announced a new £140 million share buyback programme.

Looking ahead, the company said: ‘Our medium-term targets remain unchanged. We expect to grow revenue at an average of 4-6% a year. Our focus on productivity and efficiency will help us increase our margins. At least 80% of our operating profit will be converted into cash.’

Serco continues to target revenue around £4.8 billion for 2024, a bit lower than the 2023 top-line. Further, it anticipated a decline in organic sales of 3%, but expects underlying operating profit to increase 4.4% to £260 million in 2024 from £249 million in 2023.

Serco updated its adjusted net debt guidance for 2024, now expecting it to increase to £175 million in 2024 from £109 million in 2023. Previous guidance from mid-December had adjusted net debt falling to £85 million in 2024. The new debt guidance reflects ‘a stronger outcome on free cash flow than expected in 2023,’ and the new share buyback programme Serco just announced.

Serco shares rose 6.1% to 190.20 pence each on Thursday morning in London.

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