Its underlying 2021 trading profit of 229 million pounds ($308.28 million) surpassed a consensus of 223 million pounds, as acquisitions and a recovery in leisure and transport contracts also helped.
Serco, Mitie and other suppliers to Britain's COVID-19 test-and-trace programme have benefited from pandemic contracts over the past two years as they ran services such as security and cleaning at testing sites and quarantine hotels.
"Work supporting governments' response to COVID-19 lasted much longer than we expected at the start of 2021," said Chief Executive Officer Rupert Soames.
However, Britain in recent weeks has relaxed many remaining COVID-19 restrictions, with Prime Minister Boris Johnson saying this week he would end all curbs, including free universal testing, which would stop on April 1.
Serco, which kept its 2022 outlook unchanged, also increased its final dividend by 15% to 1.61 pence per share.
The company has been led by former British Prime Minister Winston Churchill's grandson Soames since 2014 and has contracts in the defence, transport, justice and immigration sectors.
Its London-listed shares gained about 1% in early trade, amid broader market weakness after Russian forces launched an invasion of Ukraine.
($1 = 0.7428 pounds)
(Reporting by Yadarisa Shabong and Pushkala Aripaka in Bengaluru; Editing by Subhranshu Sahu and Devika Syamnath)
