Kainos Group Regulatory News (KNOS)

16 April 2020

Kainos Group plc

("Kainos" or "the Company")

Trading Update

Kainos Group plc, a leading provider of Digital Services and Platforms, today issues a trading update for the year ended 31 March 2020. 

Trading in the period continued with positive momentum and the Company expects results for the full year ending 31 March 2020 to be in line with current market consensus forecasts.

A clear focus on execution throughout the year has resulted in an excellent sales performance and a substantial backlog as the company enters FY21. The Company continued to generate cash from operations and has a robust balance sheet with no debt and a cash balance in excess of £40m. 

Kainos expects to announce results for the year ended 31 March 2020 on Tuesday 26 May 2020, in line with prior years' timetable.

COVID-19

Throughout the Coronavirus pandemic our priorities have been ensuring the wellbeing of our people and supporting our customers in these difficult times.

We invoked our response plan on 5 March, implementing home working for over 1,700 staff in a seamless fashion and without disruption to our customer projects. We are grateful for the active agreement of our customers in placing our people in the safest possible environment to provide on-going support for all our customer engagements.

Several of our customers are at the forefront of responding to Coronavirus and we are supporting their efforts: from COVID-19 amendments to the NHS App; supporting consular services for UK citizens living or stranded overseas; and to emergency passport applications for urgent and compassionate reasons.

In the current environment, digital access to essential services has become extremely important. We have therefore taken steps to offer, pro bono, the expertise of some of our most experienced colleagues to help key government departments, care providers and organisations provide digital services to those that need them most. Our people have engaged on these projects with enthusiasm, and we hope they have supported the phenomenal efforts of those serving on the health and social care frontlines.

Cost Containment

We anticipate that our customers in government and healthcare will likely be more robust than those in other sectors during this crisis. Nevertheless, we feel it is important to be prudent and manage the cost base, without limiting our longer-term growth prospects.

Therefore, Kainos is currently implementing several cost and cash containment measures, which include placing staff on furlough, pausing recruitment and reducing all non-essential expenditure, including deferment of the capital investment relating to the proposed new office in Belfast. These will result in significant cost savings on the prior year cost run-rate.

Given the backdrop, several measures have been taken in relation to remuneration to ensure further cost containment. Across the Group, pay increases have been deferred until 2021 and bonus schemes have been curtailed. Additionally, for a period of six months, effective 1 April 2020, the Executive Directors (CEO, CFO and SVP Business Development) have elected to take no salary or bonus, the remaining members of the executive team have reduced their compensation by 50% and the Non-Executive Board members have reduced their fees by 20%.

Cash

As at 31 March 2020, Kainos had cash deposits in excess of £40m and no debt.

Notwithstanding the security of this strong cash balance and the cost reduction measures already implemented, in order to preserve the Group's liquidity during this period, the Board considers it prudent to maintain flexibility on dividends at this stage.

Accordingly, the Board has decided it shall not declare a final dividend for FY20 but will take the opportunity to review this decision later in the year as the impact of COVID-19 becomes clearer.

Outlook

Kainos provides digital technology services and platforms critical to over 550 high-quality customers across the globe. Revenues from its end markets are increasingly diversified and mainly recurring or repeating in nature.

Whilst this provides confidence, and despite there being only limited impact to date, the Board believe that is too early to predict the duration or the severity of the economic disruption and any impact it will have on our customers.

The Board maintains confidence in its strategy, and believes that the Group has acted quickly and prudently to the uncertainty of the current situation, which will leave it well positioned when the economic impacts of the Coronavirus begin to recede.

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About Kainos

Kainos Group plc is a UK-headquartered provider of Digital Services and Digital Platforms.

The Group's Digital Services include full lifecycle development and support of customised Digital Services for government and commercial customers. Kainos is also the leading boutique partner for Workday, Inc. ('Workday') in Europe, responsible for implementing Workday's innovative Software-as-a-Service (SaaS) platform for enterprise customers.

The Group's Digital Platforms comprise specialised digital products in the mobile healthcare and automated testing arenas. Smart is an automated testing platform for Workday customers; Evolve Electronic Medical Records (EMR) is the market-leading product for the digitisation of patient notes in the Acute sector of the NHS.

Kainos has over 1,700 people across 12 offices in Europe and the USA.

Kainos is listed on the London Stock Exchange (LSE: KNOS). For further information, please visit www.kainos.com