Annual profits

Serco’s annual profits rise 21% to £216m thanks to Covid contracts | Serco

Serco has lamented ‘grossly unfair’ criticism of its role in the much-criticised NHS Covid-19 test and trace program as the outsourcing company reported a rise in full-year profits that could fund more than £100m in shareholder rewards.

The company said it won £700million in Covid-related contracts globally in 2021, bringing its total pandemic-related revenue to £1.1billion.

This includes around £623m of UK taxpayers’ funds, according to a National Audit Office report, for work including running a fifth of UK’s Covid testing sites and running call centers contact tracing.

Serco has become a focal point of public anger over the test and trace programme, which has been allocated a budget of £37billion, including £14billion spent in June last year , mainly for testing. Criticisms include allegations of poor performance by contract research staff working for the company’s contractors.

In a written statement, Serco chief executive Rupert Soames said “most of the criticism was grossly unfair and had little to do with the facts, but it was still disturbing for our colleagues to see their hard work challenged”.

But he gave investors better news, hailing the “exceptional” increase in revenue and profit from the company, which could fund more than £100million in shareholder rewards.

Annual revenue rose 14% to £4.4bn, with operating profit 21% higher than last year at £216m. Investors were entitled to a 72% increase in their full-year dividend, with a payout of 2.41p per share for the year worth £29m.

The company has promised to “continue on our path” of increasing shareholder returns, including through share buybacks worth up to £90million.

Soames, a grandson of Winston Churchill, said Covid contracts with the UK, Australia and other countries had “delivered a short-term boost to revenue and profit”. He added that the experience had “leaved a lasting legacy of a much more capable and efficient organization, strong customer relationships and reduced debt”.

Critics of Serco’s involvement in the government’s Covid response have pointed to its mixed record on public works, the use of contractors and an error in which it inadvertently revealed the email addresses of tracers. contract.

Soames said last year that most of the criticism was ideologically motivated. “There are people who, philosophically, don’t believe the private sector should be doing this stuff,” he said.

For the year to the end of March 2020, Angus Cockburn, then chief financial officer of Soames and Serco, earned £7.4m in wages, including £5.5m in bonuses.

The size of this year’s package, which will include the first year of the pandemic, is expected to be announced next month when the company releases its annual report.