BELFAST IT services group Kainos endured a difficult day on the markets on Monday, with its share value taking a hit on the back of its latest financial results.
Despite reporting 7% increase in revenue to £193 million and an 11% rise in its adjusted pre-tax profit to £38m for the six months ending September 30, the share price of Kainos Group PLC was down by around 25% for the day on Monday evening, falling to its lowest price since mid-2020.
The first set of financial results since Russell Sloan replaced Brendan Mooney as chief executive of Kainos in late September contained a number of green indicators and a largely positive outlook.
But the markets appeared to respond to a number of dips in certain areas of the business, including a 32% year-on-year drop in healthcare-related revenue, which fell to £20.5m for the first half (H1).
The Belfast-based firm said it was driven by post-pandemic budget constraints and ongoing internal NHS reorganisation.
Russell Sloan said revenue from healthcare had spiked during the pandemic, and was still around double pre-covid levels.
Read more:
- Kainos secure £75m Home Office contract just days after appointing new CEO
- Kainos to submit plans for student accommodation with redrafted Belfast office scheme
- Incoming Kainos CEO planning for a subtle and seamless succession
Monday’s H1 results also revealed a 9% year-on-year decrease in bookings.
Kainos also said it compared to its first half results last year, where bookings related to its Workday services had rocketed by 125%.
“To me it’s another impressive performance,” said the new CEO.
“The three growth engines that we have in the business are all reporting very strong growth and that’s on top of a difficult comparator last year, where we were talking about 26% growth.
“It’s useful to look at the positives under the covers as well. The profit margins are now up to 20%, which is really getting to best in class.
“We have record levels of backlog of £327m, and one of the most pleasing things for me is the progress towards our target of £100m annual recurring revenue (ARR) for our Workday products.
“We finished the half year at more than £55m, so we’re firmly over the half-way mark.”
Cash levels were up 16% on last year to £113m, while Kainos’ employee retention rate hit a ten-year high of £92%.
The latest results show the Belfast-based group’s global workforce growing to 3,139 people across 23 countries, representing an 8% increase on last year.
In the same period, Kainos reduced the number of contractors it uses from 303 to 111.
Meanwhile, Mr Sloan confirmed that following a period of public consultation, Kainos has now formally submitted a full planning application to build its new headquarters on Belfast’s Dublin Road.
Around 60% of the former Movie House Cinema site, currently occupied by the Trademarket food village, will be developed into student accommodation by Queen’s University, following a £6.2m deal.
