Outsourcing firm Serco improved its profit forecast thanks to still high revenues from its lucrative contract to operate parts of the government’s Covid-19 testing and traceability service.
The company said on Monday that its underlying business profit for 2021 will be £ 15million higher than previously thought, at around £ 200million. Shares rose 5% at the start of the trading day, making Serco the number one player in the FTSE 250.
Serco runs much of the largely privatized service, which is labeled NHS test and trace. It manages a quarter of the test sites and half of the “level 3” contact tracers, who are mainly responsible for telephoning the contacts of people who test positive.
The appointment of the outsourcing company to manage parts of the test and traceability system proved controversial. Labor leader Sir Keir Starmer has called Serco’s decision to pay investors a £ 17million dividend funded in part by profits from the pandemic as “scandalous”.
Serco also confirmed having passed on information to HM Revenue and Customs on the possible use of “mini umbrella companies”, structures which have been the subject of warnings for tax evasion. Serco has ordered suppliers to ensure they directly employ workers after the Guardian uncovers evidence of the structures through the test and traceability system.
In February, Serco admitted having “benefited” from the test and traceability contract. While the government allowed him to make lower than usual profits on this contract, the £ 350million in additional revenue offset the impact of the pandemic in other areas.
Serco chief executive Rupert Soames and chief financial officer Angus Cockburn received a salary of £ 7.4million for 2020, including bonuses worth £ 5.5million.
In a statement to the stock exchange on Monday, Serco said: “The strong performance we saw at the start of the year has continued. All of our four divisions negotiated online or ahead of their budgets during the first five months of the year.
“In the UK in particular, our test and trace contract volumes have remained high and we now believe that demand for these services is likely to continue for longer in the second half of the year than we anticipated. . “
Serco also announced that a joint venture with French energy company Engie had won another major government contract to manage 19,000 buildings at 200 sites for the UK Ministry of Defense. The contract will be worth more than £ 900million over seven years.