LONDON (ShareCast) - (Sharecast News) - IT services provider Kainos has raised its interim dividend and announced a new share buyback programme despite a double-digit decline in first-half profits due to increased investment and higher labour costs.
Kainos, which specialises as a pan-European Workday consulting specialist, reported a solid 7% year-on-year increase in revenues over the six months to 30 September to £196.1m.

Bookings were 27% higher at £227.9m which it put down to a strong performance across all three divisions, creating "excellent revenue visibility for the remainder of the year".

Workday Products revenue rose 14% to £39.2m, while Workday Services revenues rose 4% to £53.4m. Meanwhile, the larger Digital Services division grew its top line by 6% to £103.5m, helped by a jump in revenues in the healthcare arm.

Despite the solid turnover growth, adjusted pre-tax profit dropped by 16% to £32m, as the adjusted profit margin slumped to 16% from 21%, partly due to investments to support the Workday partnership, increased National Insurance costs and the use of contractors and third-party suppliers to provide short-term delivery capacity.

Nevertheless, Kainos was still able to increase its first-half dividend payment to 9.8p per share, up 5% over last year. The company also announced the launch of a £30m share buyback plan which will start when the current repurchase programme ends next week.

Looking ahead, Kainos said it expects full-year adjusted pre-tax profit to be in line with current consensus forecasts.

"This was a positive six months for Kainos, underpinned by our success in securing several new contracts with new and existing customers. This positions us for accelerated growth in the second half, with each of our divisions set to increase revenue," said chief executive Brendan Mooney.

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