A desire to go digital is one thing that unites organisations both large and small. From ordering a pint in a pub via a phone app to calculating a tax return, plus a million more things, this is a multi-year transition that will separate winners from losers.

Among those thriving from this structural growth trend is Belfast-based Kainos (KNOS) which helps large organisations transition their processes and operations into the 21st Century digital world.

Kainos is one of the key IT expertise suppliers to UK Government departments, often writing bespoke tools and software services for the Cabinet Office, Home Office, Driver & Vehicle Licencing Agency (DVLA), Department for Transport, Land Registry and others.

The company is also one of 35 global accredited installation providers for Workday, the $37bn US human resources and financial planning software platform. Kainos provides implementation and testing for users of Workday enterprise management tools.

It also runs Evolve, an NHS IT system including things like electronic medical records that help streamline the service delivered to patients.

One of the real attractions of Kainos is this multi-paced, segmented model. It means as growth temporarily slows in one part of the business, the slack can be picked up elsewhere.

This has been illustrated over the past couple of years. While Evolve has been muddling along due to years of austerity cuts biting into NHS budgets and investment spending, other parts of the business have been progressing at a blistering pace.

In the year to 31 March 2019 its digital services drove revenue growth, up 69% to £132.6m, with momentum in both Workday implementation and on UK Government digital transformation despite parliamentary deadlock over Brexit concerns.

If politicians are to be believed we are on the cusp of some of the largest healthcare and public sector digital services investment ever. That’s really exciting for Kainos and could unleash huge opportunities that could make current earnings forecasts look far too cautious.

The high price-to-earnings multiple will worry some investors but we believe the premium is justified by Kainos’ high-quality track record and impressive cash dynamics. It has £42m on the books with no debt making the balance sheet as bulletproof as they come.

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