Serco boss: Pandemic proves importance of private and public sector co-operation
The coronavirus pandemic has shown how strong the government and private sector can be when they work together, the boss of Serco, which is running the NHS Test and Trace service, has said.
Speaking to CityAM, Rupert Soames defended the much-maligned system, saying that after some initial challenges it was now a “world-beating” programme.
He was speaking as the FTSE 250 outsourcer posted a 36 per cent in profit for the past financial year, leading it to reinstate its dividend.
“The thing that stands out from me from the pandemic is just how effective the private sector and government can be when they work together”, he said.
He cited the vaccine programme, a collaboration between the public sector and firms like Astrazeneca, and the Nightingale hospitals, as examples of this, as well as the Test and Trace programme.
“If you look at Test and Trace, the combination of the government setting up the laboratories and private companies setting up the testing has actually built the biggest single country system of its kind in the world”, Soames added.
“A number of mistakes and misjudgements were made at the start because we were learning as we went along, but six months later it’s going really well – the figures are amazing.”
He said that in the first week of January, 2.5m people were tested for Covid-19, while a further million were traced through the system.
Soames also defended the company’s decision to reinstate a 1.4p dividend, which had come under fire from Rachel Reeves, the former shadow chancellor of the Duchy of Lancaster.
Having pulled its payout last year, Serco decided to reimpose it – but only after the firm had paid back all the financial support it received from the government.
It also paid each of its 50,000 staff – many of whom work in hospitals and other frontline service jobs – £100 as a thank you for their efforts.
In addition, Covid contracts only made up around one per cent of the outsourcer’s profits, and were worth around £400m in revenue, he said.
“Shareholders have rescued Serco with £850m since I arrived at the firm. They deserve a dividend”, he said.
Investors welcomed the news, with shares rising 4.6 per cent today.
Serco set for further growth after bumper year
The decision to reinstate the payout was the icing on the cake for Serco after an impressive set of full year results.
Revenue picked up 20 per cent to hit £3.9bn, while profit increased 36 per cent to £163m, it said.
Looking forward, Serco increased its profit guidance for the coming year to £175m. Revenue for 2021 is now expected to come in at £4.2bn.
It said that growth would be driven by its hefty order book, with the firm having bid for $3bn worth of contracts in the US alone, Soames said.
Today’s figures also come just a week after Serco announced that it had bought US defence firm Whitney, Bradley & Brown (WBB) for $295m.
The acquisition increases the FTSE 250 company’s presence in the defence sector, which has been a key growth area in recent years.