Revenue and profits rise as Kainos positions for further growth

Digital service and platform provider Kainos Group described a “strong performance”, representing the ninth consecutive year of growth in revenue and adjusted pre-tax profit delivered organically in its preliminary results on Tuesday.

The London-listed firm said its “very strong” sales execution had continued to underpin further revenue growth, with that figure ahead 56% in the year ended 31 March, to £151.3m.

It said its adjusted pre-tax profit increased 52% to £23.3m.

Sales orders were ahead 31% at £171.7m, with the company reporting 10% growth in its contracted backlog to £122.2m.

The board said its strategy to diversify revenue had continued across a number of segments during the period, with international revenues up 44% to £29m.

Commercial revenues rose 42% to £40m, healthcare revenues were 42% higher at £21.4m, and software-as-a-service (SaaS) and software-related revenues were 6% higher at £16.9m.

Kainos said it saw “very strong” revenue growth in digital services, up 69% to £132.6m.

Operationally, it described “significant” ongoing engagements in the UK government's digital transformation programme, and added that it was experiencing further strengthening of its position as a leading European Workday specialist.

Its digital platforms business had continued to make progress against key milestones, with revenue growth there being 3% to £18.7m year-on-year.

New clients had boosted ‘smart’ revenues by 45% to £11.3m, while research and development expenditure narrowed to £4.3m from £4.9m year-on-year.

Kainos Group’s customer approval was rated as 'good' or better by 91% of customers, which was down from 99% in the prior financial year, as its headcount rose 26% to 1,470 people, with ongoing recruitment activity.

The board said the business remained “highly” cash generative, with strong underlying cash conversion of 100% - up from 96% - and period-end net cash rising to £42.5m from £29m year-on-year.

“In what is our ninth consecutive year of growth, I am pleased to report the strongest annual performance in that period, with significant increases in the number of people working in Kainos and in sales, revenue and adjusted pre-tax profit growth,” said Kainos Group chief executive officer Brendan Mooney.

“In Digital Transformation we continue to deliver significant programmes in partnership with UK government and with leading commercial and international clients.

“In what is now a familiar pattern, our growth is fuelled by demand from both existing and new clients.”

Mooney said that within Workday Implementation, the company had continued to be “the European partner of choice” for “forward-thinking” organisations that were choosing Workday's innovative SaaS platform to support their people and finance requirements.

“To support our growing international client base, we have opened offices in Paris and Toronto in 2019, alongside existing offices in Amsterdam, Copenhagen, Frankfurt, Gdansk and Atlanta.

“Smart, our market-leading SaaS platform for automated testing of the Workday suite, continues to win global brands as customers, adding Home Depot, Prudential and Vassar College during the year.

“As a group, our healthcare-related revenues have grown strongly, however Evolve, our market-leading Electronic Medical Records (EMR) solution for the NHS continues to experience the headwinds within the NHS funding landscape.”

Brendan Mooney added that as a group, Kainos remained focussed on providing “exceptional” careers for staff and “exceptional” digital products and services for customers.

“The group's pipeline of prospects continues to strengthen, and the board believes that the group is well-positioned for growth both in the short term and in the coming years.”