Kainos shares surge as annual profits rise 14%

Shares in Kainos jumped by a tenth on Monday after the Northern Ireland-based software group reported an increase in annual profits and hiked its dividend for the year to 31 March, as it announced the departure of its chair Tom Burnet.

Kainos reported an adjusted pre-tax profit of £77.2m, up 14% on the year before, helped by an improvement in the adjusted profit margin to 20% from 18%.

Revenues were up just 2% at £382.4m, as strong growth its Workday consulting-related products was held back by weaker sales in the larger Digital Services segment, as growth in public sector contracts were offset by reductions in healthcare and commercial sectors.

The company held a cash position at the year-end of £126m, up 16% on the year before, while the contracted backlog improved by 11% to £357.1m.

The final dividend was proposed at 19.1p, taking the total payout for the year to 27.3p, up 14% on the previous year, representing a distribution of 58% of adjusted profit after taxation compared with 56% previously.

Looking ahead, Kainos said it was maintaining a positive outlook, despite mixed forecasts across its end-markets.

"Despite the ongoing global economic uncertainty, we believe that our largest business areas, Workday Products, Workday Services and the public sector segment of Digital Services, will continue to be resilient and will offer substantial growth opportunities in both the near term and medium term," said chief executive Russell Sloan.

"We are well positioned within these markets, both locally and, increasingly, internationally, and we remain confident in our strategy."

In a separate statement, Kainos said that board chair Tom Burnet would complete his term on the board after the company's annual general meeting in September, and will be succeeded by current independent non-executive director Rosaleen Blair. Non-exec Andy Malpass is to also leave the company at the same time.

Sloan said: "Our AGM later this year will mark the completion of Tom and Andy's term on our board. Tom and Andy were both appointed non-executive directors at our IPO in 2015 and over the past nine years have been instrumental in establishing Kainos as a leading public company."

The stock was up 9.6% at 1,164p by 0828 BST.