Outsourcing giant Serco announces 36% hike in profit

Business insists £400m worth of coronavirus related contracts accounted for less than 1% of increase in underlying trading profit
Peter Byrne/PA Wire/PA Images

By Jim Dunton

25 Feb 2021

Global outsourcing giant Serco notched up an underlying trading profit of £163m in 2020, a 36% increase on the previous year’s figure. Measured in pre-tax terms the uplift equates to an 89% hike.

But the firm, which is the main contractor for the NHS Test and Trace service, said Covid-19 related work had accounted for just 1% of its increase in underlying trading profit, with the remaining 35% coming from its normal busines operations.

Its full year results added that around three-quarters of its profit was generated outside of the UK. Global revenue for the year grew by 20% to £3.9bn. Serco’s pre-tax profit was up 89%, from £81m in 2019 to £153m in 2020.

Group chief executive Rupert Soames said that despite generating close to £400m in new revenue streams for the business, Covid-19 had caused disruption to some areas of Serco’s operations.

He confirmed that the firm would now pay shareholders a dividend for the first time since 2014. A planned payout was cancelled in April last year because the business was accepting financial help from the UK government and others around the world.

“We have refunded all employment and liquidity support paid to Serco by governments, with the exception of £12m in the USA, for which there is no mechanism for early repayment,” he said.

Serco said its repayments to the UK government included £2m of funding received through the Coronavirus Job Retention Scheme – also known as the furlough scheme – and that it had made ex-gratia payments totalling £5m to around 50,000 front-line staff.

Soames said that around 90% of the company’s 55,000 employees were unable to work remotely during the coronavirus crisis because they staffed prisons, hospitals, ships, or trains. 

“They have turned up each day to enable us to deliver our promise of supporting the delivery of public services; many have suffered loss, either of colleagues, friends or family, and still turned up for work,” he said.

“My respect and gratitude for them is unbound, and I want to extend our condolences to the families of those colleagues who have died from Covid-19 over the last year.”

Soames also used an interview on BBC Radio 4’s Today programme to defend the company’s NHS Test and Trace work,  after what he admitted had been a “bumpy start”.

“It is now a remarkable success and I acknowledge it has taken quite some time to get there,” he said.

“As of last week there are as many people being tested every week as we've vaccinated, about 2.5 million people a week.

“In the first week of January there were about 1 million people who were traced through the system.”

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