Kainos Share Discussion Threads

[someuwin] 16/3/2016 07:12

16 March 2016



Kainos Group plc



("Kainos" or "the Company")



Trading Update and transition to Evolve SaaS delivery model



Company performance in-line with expectations for year ending 31 March 2016



Kainos Group plc (LSE:KNOS), a leading UK-based provider of IT, consulting and software solutions, today issues a trading update for the year ending 31 March 2016. The Board expects results for the full year to be in-line with market expectations.



Current Trading

In the public sector, Kainos continues to see an improvement in market conditions. This is expected to result in a further gradual increase in opportunities across government departments such as the Ministry of Justice, where Kainos is providing support for an ambitious reform programme, and at the Office of National Statistics (ONS), where the Company has recently been awarded a new contract to work jointly with the client to provide comprehensive registers to improve the quality and cost effectiveness of the 2021 UK census. The Company remains optimistic around the increasing drive for digitisation in the NHS and other government departments and believes that its Digital Services and Evolve divisions are well-placed to benefit from these positive market dynamics.



Outside government, the Company is encouraged by opportunities in its Evolve and WorkSmart divisions, particularly in the US and mainland Europe, where it has established offices in Boston and Amsterdam. The Company's WorkSmart division is experiencing a growing pipeline of opportunities for both its services implementation business, largely centred in the UK and mainland Europe, and its SaaS-based automated testing product, Kainos Smart. At March 7, the Company had 56 customers using Kainos Smart, including Shire Pharmaceuticals and Mizuho Bank, and has recently won its first mainland European prime engagement contract in the Netherlands.



Transition to Evolve SaaS delivery model

In Evolve, customers are showing a significantly greater interest in a SaaS delivery model rather than in the perpetual licence model currently offered. Recent SaaS wins include InTouch Health, a leading provider of telehealth solutions, which as separately announced today signed a five-year agreement to deploy the Evolve Integrated Care SaaS platform to support telehealth applications in over 1,500 hospitals in the US and Europe, and the recently announced partnership with Cirdan Imaging Limited, a privately-owned supplier of medical diagnostic hardware and software, which in February licenced the Evolve SaaS product for five years. In a landmark deal in the UK, Kainos Evolve has also been selected as a preferred supplier to provide the Evolve Integrated Care platform to a major Clinical Commissioning Group (CCG).



Such SaaS contracts provide Kainos with greater revenue visibility and more durable, longer-term client relationships. To capitalise on these and similar opportunities, the Company plans to invest further in both product development and sales and marketing. These two initiatives, particularly the transition to SaaS, while improving the quality of Evolve's future earnings, are however likely to have a short-term impact on Evolve's revenue, profits and cash generation in the financial year ending 31 March 2017. The Directors believe this change to the Evolve delivery model is in the best interests of the Company in maximising Evolve's market penetration.



The Company has a strong balance sheet with strong reserves, no debt and strong cash generation, as well as a growing level of recurring revenue. Recruitment remains strong, with 39 people joining Kainos in January alone, and the Company's position rose for the sixth consecutive year to 37th place in the 'Sunday Times Best Companies to Work For'.



Investor/analyst event



Kainos will hold a Capital Markets Day for investors and analysts on Tuesday 19 April 2016 to explore in more detail the drivers of the Company's current and future success.



-ENDS-

[irishlass2] 15/3/2016 16:52

Hey, I am also going in July with Exodus Travel. My first time. Trekked the Amalfi Coast last year.

[cumbrian2] 15/3/2016 16:43

Irishlass2 - love the Picos and been many times. Favourite place to stay for 1/2 nights is ''the Oso'' hotel at Cosgaya - just down the road a couple of miles from from the cable car. Back there in July when hopefully KNOS will be much higher!!

[irishlass2] 15/3/2016 13:54

Too many holidays already booked - trekking the Picos Mountains in Spain, Gambia, Cape Verde and Sicily. Bought some more of these about a week ago, and just sitting and waiting for the big bucks. Also bought a few FCCN, to see if the turnaround continues.

[opodio] 15/3/2016 10:52

irish, are you buying more to pay for holiday in barbados? great buy sign by you last time

[irishlass2] 14/3/2016 22:20

Hopefully, we have hit bottom and start rising again.

[apad] 13/3/2016 22:04

EMIS current ratio 0.6 - explainable?
apad

[apad] 12/3/2016 14:53

An excellent comparison GHF.
I missed out on IDEA because of extreme prejudice about software only companies and the way they can (and do) book profits.
KNOS attracted my interest largely because of the management qualifications, history and involvement.
The January quote clinches it for the 'software ain't immune' contingent (me).
I am also irritated that I took notice of the orchestrated director buys.
Still, small beer for the moment.
apad
ps
Stellar valuation, but QTX is my ideal software company because it generates the data as well as processing it (cf TRCS).

[nw99] 12/3/2016 12:06

180 on the chart still looks a buying opportunity

[hazl] 12/3/2016 11:25

Yes they are intending to privatise the NHS by stealth unfortunately,by bringing it to its knees.IMO

[glasshalfull] 12/3/2016 11:21

Hi APAD,

I continue to monitor KNOS. Quality outfit but the rating has always been on the high side IMHO.

KNOS were already known to me on IPO as a direct competitor of IDEA (Ideagen) via their Evolve EMR solution into the NHS, although the companies diverge into differing areas via their other divisions. So one cannot make direct comparisons. Should also mention that I have been invested in IDEA for 5 years or so.

Following KNOSs IPO I looked closely at their growth profile and compared ratings on both...should be on the respective threads. Conclusion (from memory) was that I felt IDEA had stronger earnings growth & was on a lower PEG. Both excellent cash generative businesses though.

Anyway, crux of this post is that IDEA have expanded their Growth, Risk & Compliance (GRC) Division which now accounts for 77% of turnover & has lowered their dependence on the Healthcare side.

On 26/01/2016 IDEA released their interims & mentioned,

"23% of Group revenue is derived from our Content and Clinical solutions. This area of the Group's operations continue to be impacted by delays in decision making within acute NHS trusts, typically around enterprise patient information opportunities. This is due to budgetary constraints at acute trust level as no additional technology fund has been made available for the current financial year to support the Government Paperless NHS strategy.

However, outlook for the business remains encouraging over the medium term as it is likely that the central technology fund will be reintroduced in 2016-2017, following which there will be a locally funded Sustainability and Transformation Plan (STP) which will focus on digital initiatives at acute trust level."

I also spoke to IDEAs management at length last month. They confirmed that there was no movement in the NHS at the current time. My understanding that the funding stream that was previously in existence for such enterprise deals has either been frozen or removed.

The last KNOS t/s was via their interim statement on 23/11/2015 & I'm therefore reticent to take a position at the current time despite Director buys which indicate confidence in the business. KNOS is currently on a high rating & therefore risk/reward also too high IMO should Evolve be experiencing similar difficulties in the short term.

Of course, Digital Services & Workday could be picking up any slack for KNOS, in similar fashion to IDEAs GRC Division, but on a prospective PER of 20 for year just ending & with only 8% growth factored in for 2017, I'd prefer to keep my powder dry for the timebeing.

KNOS are developing SaaS (Project Velocity) for Evolve which may be an opportune time to expand Internationally, especially if NHS budgets are currently frozen.

My take FWIW

Kid regards,
GHF

EDIT : Here's a story on the NHS Integrated Digital Care Fund referred to in my post above.

[apad] 12/3/2016 10:05

In an interview the CEO of TSTL said he had never known the NHS so difficult to sell to - clinicians being stopped doing good basic things by purchasing managers.
I think they will slow down everything they can.
I learned from POS that nobody can avoid the context.
Look forward to hearing your opinion in due course. eps at interim was 4.8 (cf 4.1) which puts it on a stellar rating, hence the price drift.
I don't know enough about the different sectors or the products yet - my holding was after a first analysis of PHD/QTX/KNOS to get me to learn more about the companies. Increased QTX/KNOS and took profit on PHD. Jury still out on KNOS and QTX has turned into a bloody rocket ship.
GLA
apad

[apad] 11/3/2016 17:37

Health market, dacian. I think I increased too soon. It is soggy.
apad

[sherylchan] 11/3/2016 16:43

any confirmation when the trading update is ?

[apad] 11/3/2016 10:23

I'm working on my cynic quotient, hazl.
Believed POS chairman up to the profit warning and didn't realise the meaning of the acronym.
apad

[hazl] 11/3/2016 09:48

Pays apad doesn't it? ))

[apad] 10/3/2016 21:37

Buy gold chains in the indian quarter. Not taxable and portable. The end of the world is nigh.
apad
ps
you're terribly cynical, hazl :-)

[hazl] 10/3/2016 21:21

ABSOLUTELY Apad it gave them the opportunity to blow their own trumpet and
reinforce the accolade of being voted one of the best places to work.
Separately,I think gold stocks should do well tomorrow.
IMO

[bamboo2] 10/3/2016 20:58

SP oversold. Nearly reached H&S target

[apad] 10/3/2016 20:31

The Kainos responses were the most interesting I thought, hazl.
apad
ps
that's a problem with all reviews of any sort. Doesn't make them valueless.