Kainos surges on £30m buyback, higher interims

Shares in Kainos surged on Monday after the software group unveiled a £30m share buyback as it reported a rise in interim profit on the back of an 18% rise in recurring revenue, although it remained cautious on full-year prospects.

Pre-tax profit for the six months to September 30 rose 11% to £34.2m. Overall revenue was down 5% to £183m, but product annual recurring revenue rose to £65m from £55.4m and the contracted backlog increased 8% to £354.1m. Shares in the company gained 8%.

"Our services businesses faced a tougher environment in the first half of the year in a generally soft market, and we remain cautious about our prospects for the remainder of the year,” said chief executive Russel Sloan.

“However, we continue to generate robust levels of profitability and looking to the medium term and beyond, we continue to see substantial growth opportunities across all our core markets.”

Kainos last month cut its full-year revenue outlook reflecting poor macro-economic conditions and delayed decision making by the new UK Labour government.

“We expect the majority of the revenue reduction (along with the impact of the additional investment to support our products partnership with Workday) to flow through to lower adjusted profit before tax,” it added on Monday.

Reporting by Frank Prenesti for Sharecast.com