Outsourcing giant Serco has seen its profits soar – bolstered by its controversial involvement in COVID-19 Test and Trace contracts and company takeovers.

The London-listed firm said its operating profit increased by 31% to £116m for the six months to June.

It comes after the company upgraded its profit guidance in June as it saw more demand than it previously expected from its contract to run some of the government’s Test and Trace services.

The company has also said it will pay an interim dividend of 0.8p per share following the hike in profit – the first payout to investors since 2014.

The firm’s balance sheet has been boosted by its acquisitions of US firm Whitney, Bradley & Brown and facilities and cleaning firm Facilities First Australia.

Serco, which operates a wide range of services including cleaning and air traffic control, said revenues leapt by 19% to £2.17bn for the past six months.

The company said around 17% of its revenues for the half-year were from work supporting government in its response to COVID-19.

In June, the group won a new contract worth up to £322m to continue running coronavirus testing sites for another year in the UK.

Serco’s chief executive Rupert Soames has previously insisted the impact of the COVID-19 pandemic on Serco’s profits was a “big fat zero”.

Speaking following release of the firm’s half year results, Mr Soames said: “Serco has grown very rapidly in the past two years, made possible by the investment we have made since 2014 in transforming our culture, systems and processes, regaining the trust of our customers, and building a strong and experienced management team.

“Over 60% of our profits now come from outside the UK, which reflects the success we have had in developing our businesses around the world.

“We now employ 83,000 people, which is around 21,000 more than we did a year ago.

“Notwithstanding this rapid expansion, we have delivered an extremely strong operational performance.”

Shares in the company were 0.2% lower during trading in London on Thursday.

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