Serco to pay first dividend in seven years after profits double | Serco

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Serco is to pay a dividend for the first time in seven years after the outsourcing company, which is contracted to run the heavily criticised NHS Covid-19 test-and-trace programme, reported that its profits almost doubled in 2020.

The group has secured a series of taxpayer-funded contracts related to Covid, which it said had added £350m to revenues. It runs call centres and testing hubs for much of the £22bn test-and-trace scheme,

Serco played down the impact of pandemic contracts on its results, saying the work accounted for just 1% of underlying profits. It reported pre-tax profits of £153m last year, up from £80.7m in 2019, as revenues surged by a fifth to £3.9bn.

Rupert Soames, Serco’s chief executive, said the board had thought carefully about reinstating a dividend “in light of the current circumstances”. He said it was the right thing to do for investors, given that Serco has repaid all government employment and financial support and awarded a £100-a-person bonus to 50,000 frontline staff in recognition of the “intense pressure and extra work” during the pandemic.

“Dividends should normally be paid by companies – dividends, after all, are what pay people’s pensions,” Soames told BBC Radio 4’s Today programme. “It is fair that shareholders who over the last five years have come to the rescue of Serco and put in £800m of equity should be allowed a dividend.”

Rachel Reeves, the shadow Cabinet Office minister, criticised the decision to reward investors and decried the involvement of the private sector in the health service’s pandemic response.

“It will outrage taxpayers that their money, meant to fund a contact-tracing system that has never been up to scratch, is instead being paid to Serco shareholders via dividends,” she said. “[The government] should have done with contact tracing as they rightly did with the vaccine – place it in the hands of the NHS and our local communities.”

Soames defended the test-and-trace scheme, saying that while it had endured a “bumpy start”, such a system had “never been done before in the UK”.

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.”

Serco, which saw a more than 4% bump in its share price following the publication of its annual results, is one of five companies running Covid-19 testing sites and also provides call handlers on the NHS’s contact-tracing programme.

Last week it emerged that almost 4,000 Amazon workers were given the wrong coronavirus test results after a mistake by test and trace. Concerns have also been raised by some healthcare professionals about the use of outsourced, inexperienced call centre staff in roles better suited to clinically trained experts.

Last week Serco announced that it was expanding its defence business, buying the contractor Whitney, Bradley & Brown, which has clients including the US airforce, for £212m.

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Source: The Guardian
Keyword: Serco to pay first dividend in seven years after profits double | Serco

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