The boss of outsourcing giant Serco (SRP.L) has defended his business' work on the NHS Test and Trace scheme and the company reported surging profits.

Serco on Thursday said its revenues rose by 20% last year to £3.8bn ($5.4bn). Underlying profits soared by 36% to £163m. The company announced a dividend of 1.4p for the year, the first shareholder payout since 2014. Shares rose 4.3% in London.

The UK government called in Serco last year to help set up the country's Test and Trace programme for tracking cases of COVID-19 around the country. The programme has so far cost £22bn and has repeatedly failed to hit performance targets. Politicians and campaigners have heavily criticised Serco's role in Test and Trace.

Serco's chief executive Rupert Soames on Thursday defended his company's work, saying "much of the criticism was wildly unfair and bore little relationship to the facts."

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Speaking to BBC Radio 4's Today Programme, Soames said Test and Trace had a "bumpy start" but was now "a remarkable success," with 2.5m people being tested each week. Soames, the grandson of Winston Churchill, said the criticism had damaged morale among staff.

Serco provides 25% of all testing capacity and half of tracing capacity in Tier 3 areas of the UK. The contracts contributed £350m of revenue last year, which the company said was "material". Soames said the Test and Trace work had "lower margins than we would normally accept" but was "important" and a "privilege" to work on.

The company has repaid the £2m in furlough benefits claimed from the government earlier in the pandemic. Serco said it had also paid frontline staff special one-off benefits totalling £5m to reflect their work.

"My respect and gratitude for them is unbound, and I want to extend our condolences to the families of those colleagues who have died from Covid-19 over the last year," Soames said.

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