Kainos: orderbook underpins future growth

Diversity aside, sales orders were the star metric within these results, jumping a whopping 38 per cent to £131m, buoyed by better software-as-a-service bookings. In turn, this meant that Kainos’s backlog – the value of contracted revenue yet to be recognised – shot up 45 per cent to £76.4m, laying the foundations for future growth.  

By business area, digital services saw revenue growth of 22 per cent to £78.6m. Here, the digital transformation segment works with central government departments including the Home Office and the Cabinet Office. Reassuringly, for now, bosses have not identified any Brexit-related repercussions for such programmes. Moreover, the group has also prioritised its commercial customer base; this expanded from 42 to 47.

Elsewhere in digital services, Kainos maintained its position as a leading Workday partner – signing 39 new clients against just 12 a year earlier. Workday provides cloud-based systems for human resources and financial management, and has become increasingly focused on the UK public sector.

The group’s smaller business, digital platforms, comprises three separate products – Smart Automated Testing, Evolve Electronic Medical Record and Evolve Integrated Care. The division saw relatively meagre revenue growth of 4 per cent to £15.9m. Both Evolve products faced NHS funding difficulties during the year, but – implying some improvement in the wider market – their combined sales orders rose from £7.8m to £10m. And the pipeline for Evolve IC looks strong, despite its progress in the US hitting a stumbling block when InTouchHealth cancelled its contract. The group must now accelerate talks with other US-based partners.

Broker Investec forecasts pre-tax profits of £17.4m and EPS of 11.6p for the year to March 2019, against £14.2m and 9.7p for FY2018.