Serco ups profit forecast as ‘test and trace’ work soars

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Serco PLC (LON:SRP) raised its profit estimate for this year as it now expects a larger contribution from the UK government’s controversial Coronavirus (COVID-19) ‘test and trace’ programme.


In a statement, Serco said volumes on both its testing and tracing contracts had continued to be strong and demand will continue into the second half, which is longer than previously anticipated.


As a consequence, Serco said it was raising its forecast for underlying trading profit in 2021 by GBP15mln, to around GBP200mln.


The UK’s ‘test and trace’ system has been heavily criticised for being ineffective, especially when compared with the performance of similar schemes in other countries.


Serco runs testing sites for the NHS and contract tracers who phone contacts of people who have tested positive.


The decision to pay a dividend while acknowledging it had benefited from test-and-trace work has also been heavily criticised.


Elsewhere, Serco said Vivo, a 50/50 joint venture with energy firm Engie, had won a GBP900mln three-year contract from the Ministry of Defence to maintain military bases and buildings in the south-west of England and the Midlands.


VIVO won the contracts for two of the four regions being tendered under Lot 3 of the Future Defence Infrastructure Services (FDIS) programme.


Additional project work is likely to be worth a further GBP2.5bn over the initial seven-year term, Serco added.


Under the contract, VIVO will maintain more than 200 sites and around 19,000 MOD buildings.


Shares rose 5% to 14.2p.


— adds share price —

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