Belfast tech group Kainos has reported higher profits despite a fall in revenue and bookings in the six months to September 30.
The IT company, which employs just over 3,000 people, recorded an adjusted pre-tax profit of £38.2 million in the first-half of its trading year, 1% higher than the same period last year.
Revenue was down 5% to £183.1m in the same period, with overall bookings falling by 11%.
Kainos previously warned its revenue was taking a hit in the current trading year due to a “tougher trading environment”.
The software firm said while its Workday products division is performing well, with revenue up 28%, its digital services business recorded an 11% fall in revenue.
The UK Government remains one of its biggest customers for its lucrative digital services division.
Three months into the new Labour government, Kainos said slow decision-making persists in London.
The company’s chief executive, Russell Sloan, said while recent UK election cycles typically concluded with a ramp up in government spending activity, particularly for digital transformation projects, he said that has not been the case under Labour to date.
“What we’re seeing this time around is a more pronounced delay around the decision making.
“It has been quite a while since Labour have been in power and running the country,” he said.
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“We’re being cautious at this stage in our outlook for the second half of the year and going into 2026 as well.
“There’s a spring multi-year spending review coming up. That should help give more clarity for the direction of travel and may unlock more decision making.”
He said Kainos still anticipate the new UK Government will invest heavily in technology, data and AI.
“It’s a question of when rather than if,” he added.
The recent trading update in early September saw the London-listed IT firm’s share price drop sharply, with the latest slump last week taking the share price to its lowest since June 2020.
But the higher profits on the back of what Kainos described as “disciplined execution and strong growth in higher margin products”, saw the markets respond on Monday morning.
The tech group also announced a 13% increase to its dividend for shareholders and revealed plans for a £30m share buyback programme, largely on the back of a 34% jump in its cash pile to £151.6m.
Mr Sloan said the move reflects both the confidence the board has in Kainos and fact they believe the company is currently under-valued on the stock exchange.
“We have been keeping it under review on how to return cash. We’re not a particularly acquisitive business,” said the CEO.
“Looking at our share price, we’re probably slightly under-valued at the moment, and we have a confidence in the business as we look forward.
“We think it’s a good use of our cash to buy back some shares.”
The Kainos boss also said the company expect the new hike in employer’s national insurance contributions will cost it £2.8m per year.
“It’s material,” said Mr Sloan. “But everybody is in the same boat with this.”
