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Wednesday 14 October 2020

Kainos ups expectations again

LogoUK-based provider of digital services and platforms Kainos has this morning issued a short statement declaring that it “expect results for the full year ending 31 March 2021 to be materially ahead of current consensus of revenue and significantly ahead of adjusted profit forecasts”. The announcement follows less than three months after its previous and upbeat unscheduled trading update (see here).

Demand from its core UK Public Sector vertical, which accounts for over 60% of total revenues, is reported to be robust. Indeed, the company was recently awarded a two-year £7m contract by NHS Digital to develop, deliver and run of the digital elements of the COVID-19 Testing Service. Kainos also continues to lead the way on the Government’s Digital Outcomes and Specialists framework through its work with Defra, HMCTS and HM Land Registry. Furthermore, the company’s rapidly expanding Workday practice, which last year grew by 66%, is described as continuing to benefit from its international scale and an ability to secure new consulting contracts.

From a bottom line perspective, trading through the period has been accompanied by several one-off efficiencies for Kainos. These include increased utilisation and reductions in recruitment, training and travel expenditure.  Although the majority of these gains are both non-recurring in nature and will reduce over time, they are having a significant, positive impact on FY21 profitability.

Not surprisingly, Kainos shares are up 26% in early trading this morning taking the price to more than double its value at the beginning of its current financial year. The company’s H121 results will be published in less than five weeks’ time when we should better view of just how good today’s good news is.

Posted by: Duncan Aitchison

Tags: publicsector   systemsintegration   digital   tradingupdate  

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