The Board is recommending a final dividend of 1.92p per share. Following the interim dividend of 0.94p, this results in a full year dividend of 2.86p, an increase of 19% compared to 2021, as Serco Group Plc continues on their path to reduce dividend cover progressively towards 3x over the coming years.
Other Financial Highlights:
- Revenue: grew by 2% to £4.5bn, despite Covid-related revenues reducing by £480m. Revenue excluding Covid and currency grew by 11%.
- Underlying Trading Profit: increased by 4% to £237m, a margin of 5.2%. Performance of international portfolio strong; three-quarters of Group UTP derived from outside the UK.
- Underlying Earnings Per Share: increased by 11%.
- Reported Earnings Per Share: prior year included recognition of £145m UK deferred tax asset.
- Free Cash Flow: above prior guidance at £159m, Underlying Trading Profit cash conversion of 97%.
- Adjusted Net Debt: increased by only £26m, after £120m returned to shareholders through dividends and share buyback, and acquisition funding of £26m; covenant leverage at the year-end of 0.8x EBITDA, similar to prior year.
- Order intake: at £4.2bn, book to bill of 93%. New business pipeline of £8.4bn strong and slightly up on H1.
- Order book: grew by 8% to £14.8bn.
- New £90m share buyback in 2023: continuing to return capital to shareholders as a result of strong trading and cash conversion consistent with capital allocation priorities.
- Unchanged revenue and profit guidance for 2023: Underlying Trading Profit expected to be similar to 2022 at around £235m.
- Strategy remains unchanged: execution focused on three value drivers; customers, colleagues and capabilities, to support growth across all divisions.
- Medium-term outlook: short-term growth profile influenced by Covid-related work dropping out and the impact of rebidding two of their largest contracts; medium-term growth targets unchanged at 4-6% revenue growth a year on average.
