Outsourcer Serco is to hand £9 million in one-off payments to about 45,000 non-management staff as the firm lifted its profit guidance and dividend.

Shares in the company, which runs security, transport and immigration contracts, moved higher on Thursday after it posted a better-than-expected performance over the past six months despite staffing pressures.

Serco reported that revenues moved 1% higher to £2.18 billion for the half-year to June 30, compared with the same period last year.

It came despite the loss of significant revenues from Britain’s test and trace services, with the firm highlighting that it is set for a £480 million impact from lower demand for Covid-19 contracts over the current year.

Revenues for 2022 could dip slightly to £4.3 billion, compared with £4.4 billion last year, bosses added.

The group said work to keep a lid on costs helped secure a 6% increase in profits to £123 million over the latest six-month period.

However, profits are expected to be lower in the second half of 2022 due to higher costs, including higher spending on staff pay.

Rupert Soames, group chief executive, said: “As a result of the recent surge in inflation we are increasing pay faster than we budgeted and we will be distributing an additional £9 million in the coming weeks in one-off payments to all our colleagues outside management grades, recognising the pressure many people, particularly the lower paid, are under at this time.

“Increasing pay is one of the reasons why costs are expected to be higher, and profits lower, in the second half than in the first.”

He added that it has seen a reduction in vacancy levels from last year but highlighted that “staff turnover remains high in some contracts” and unpredictable absence levels related to the pandemic “mean that operational management of the business remains very demanding”.