Serco’s annual profits surge 21% to £216m on back on Covid contracts
Serco bemoaned “wildly unfair” criticism of its role in the much-criticised NHS Covid-19 test-and-trace scheme, as the outsourcing firm reported increased full-year profits that could fund more than £100m in shareholder rewards.
The company said it had won £700m in Covid-related contracts worldwide in 2021, taking its total pandemic-related income to £1.1bn.
This includes about £623m of UK taxpayers’ funds, according to a National Audit Office report, for work including managing a fifth of the UK’s Covid testing sites and operating contact-tracing call centres.
Serco has become a focal point of public ire about the test-and-trace scheme, which was allocated a budget of £37bn, with £14bn spent by June last year, mostly on testing. Criticisms include allegations of poor performance by contract-tracing staff working for the company’s subcontractors.
In a written statement, Serco’s chief executive, Rupert Soames, said “much of the criticism was wildly unfair and bore little relationship to the facts, but it was still unsettling to our colleagues to see their hard work being called into question”.
But he gave investors better news, hailing the company’s “outstanding” increase in revenues and profits, which could fund more than £100m in rewards for shareholders.
Annual revenues were up 14% to £4.4bn, with operating profit 21% higher than last year at £216m. Investors were treated to a 72% increase in their full-year dividend, with their 2.41p-per-share payout for the year worth £29m.
The company promised to “continue on our path” of increasing returns to shareholders, including through share buybacks to a value of up to £90m.
Soames, a grandson of Winston Churchill, said Covid contracts with the UK, Australia and other countries had “provided a short-term uplift to revenues and profits”. He added that the experience had “left an enduring legacy of a much more capable and efficient organisation, strong customer relationships, and lower debt”.
Critics of Serco’s involvement in the government’s Covid response have pointed to its mixed record on public works, the use of subcontractors and a blunder in which it inadvertently revealed the email addresses of contract tracers.
Soames said last year that much of the criticism was motivated by ideology. “There are some people who philosophically do not believe the private sector should be doing this sort of thing,” he said.
For the year to the end of March 2020, Soames and Serco’s then chief financial officer, Angus Cockburn, earned £7.4m in pay, 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 publishes its annual report.