Work on Britain’s cornavirus test and trace system has helped to boost first-half profits at Serco, but the outsourcing group is bracing for a drop in pandemic-related revenues.
Adjusted operating profits at the contractor climbed by 58 per cent to £123 million in the six months to the end of June, it said yesterday. They were lifted in part by its role running a fifth of Britain’s Covid-19 testing sites and supplying half the tracing system’s call-handlers.
Other new contracts, such as running Clarence Correctional Centre, which opened last year and will be Australia’s biggest prison, also have driven Serco’s profits. Two other acquisitions — of an Australian cleaning and facilities maintenance group and an American defence services firm — contributed a further £6 million.
Total revenues rose by 19 per cent to almost £2.2 billion, with pandemic-related work accounting for £365 million, mostly from its NHS test-and-trace services. However, Rupert Soames, Serco’s chief executive, said of test and trace: “Our guess is that volumes are going to start falling off sharply after the summer. Our assumption is that our revenues for Covid-related business will be substantially lower in the second half than they were in the first.”
Soames, 62, was brought in to revive Serco in 2014, when the company was fighting for survival after it overcharged the government for tagging criminals and botched public sector contacts. In February it announced its first dividend in seven years. It announced an interim shareholder payment of 0.8p a share yesterday. Its shares rose ¼p, or 0.2 per cent, to close at 140¾p yesterday.
