REG - Kainos Group plc - Full year Results
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RNS Number : 1156J Kainos Group plc 19 May 2025
19 May 2025
Full year results for the year ended 31 March 2025
Kainos Group plc 'Kainos' or the 'Group'
Kainos Group plc (KNOS), a UK-headquartered IT provider with expertise across
three divisions - Digital Services, Workday Services and Workday Products - is
pleased to announce its results for the year ended 31 March 2025.
Financial highlights
2025 2024 Change
Revenue £367.2m £382.4m -4%
Statutory profit before tax £48.6m £64.8m -25%
Adjusted pre-tax profit( 1 ) £65.6m £77.2m -15%
Diluted earnings per share 28.2p 38.6p -27%
Adjusted diluted earnings per share 38.3p 46.5p -18%
Total dividend per share 28.4p 27.3p +4%
Bookings £382.4m £424.5m -10%
Product Annual Recurring Revenue (ARR) £72.6m £60.5m +20%
Contracted backlog £368.2m £357.1m +3%
Cash( 2 ) £133.7m £126.0m +6%
Results in line with revised expectations, with strong growth in Workday
Products revenue more than offset by the tough trading environment in our two
services divisions
• Revenue decreased 4% (-4% organic, -3% ccy) to £367.2 million (2024:
£382.4 million).
• Adjusted pre-tax profit was 15% lower (-14% ccy) at £65.6 million,
including a £5.2 million investment to support our extended Workday
partnership (see Operational Highlights).
• Adjusted profit margin decreased to 18% (2024: 20%).
• Overall bookings fell 10% to £382.4 million (2024: £424.5 million),
although activity accelerated in the second half of the year (H1: £179.5
million; H2: £202.9 million).
• Year-end contracted backlog rose 3% to £368.2 million (2024: £357.1
million).
• Cash conversion of 112%( 3 ) (2024: 98%) contributed to a strong
year-end cash position((2)) of £133.7 million (2024: £126.0 million), after
completing £22.6 million of our £30.0 million share buyback programme.
• The share buyback programme completed on 9 May 2025 with a total of
3,993,382 shares bought back for consideration of £30.0 million.
• The Board announces intention to launch a further share buyback
programme of £30.0 million to be executed over the next six months.
Restructuring for growth: global workforce reduced by 7%
• In March, we made the difficult decision to reduce our workforce, with
190 people leaving Kainos as part of the organisational changes.
• The restructuring programme was driven by the need to create capacity
for investment in product development, AI, data, new partnerships, skills
development, targeted recruitment and carefully managed international
expansion.
• The workforce reduction resulted in restructuring costs of £8.4
million in FY25. Most affected colleagues had a leaving date of 4 April 2025.
• Approximately two-thirds of the estimated £19 million cost savings will
be reinvested in the areas outlined above, with the remainder allocated to
staff-related cost increases, including pay rises, higher UK National
Insurance contributions, and new hires.
Operational highlights
Workday-related products continued to grow strongly and now account for 19% of
Group revenue (2024: 15%). Our enhanced partnership with Workday underpins our
£100 million 2026 ARR target and our new 2030 target of £200 million
· Workday Products revenue was up 24% (26% organic, 26% ccy) to £71.3
million (2024: £57.3 million), with ARR increasing by 20% (23% ccy) to £72.6
million (2024: £60.5 million).
· Growth was driven by strong sales execution across the Smart product
suite and the continued success of our Employee Document Management (EDM)
product, launched in October 2023.
· Our new strategic partnership with Workday, announced in July 2024,
incentivises its global sales teams to introduce and co-sell both current and
future Kainos-developed Workday products.
· We continued to invest in our products and are on schedule to release
our fifth product in late 2025, which will help organisations understand and
address pay equality issues, with particular focus on the EU Pay Directive
that will be adopted by EU member states in 2026.
· During the year, we increased research & development investment
by 24% to £16.8 million (2024: £13.5 million), all of which was expensed in
the period. Sales & marketing spend also rose by 24% to £15.5 million
(2024: £12.5 million), including costs relating to the Built on Workday
partnership. The multi-year agreement represents an annual investment of £7.8
million, with £5.2 million recognised during FY25 following its activation in
July 2024.
Digital Services had a subdued year with customers delaying project-related
investment
· Digital Services revenue decreased by 7% to £197.2 million (2024:
£213.1 million).
· Public sector revenue declined by 9% to £125.5 million (2024: £138.2
million), reflecting the hiatus caused by the UK General Election and the
delays in the new government setting out its longer-term plans to save money
and increase efficiency through the continuing digitisation of government
services.
· Within the healthcare sector, revenue was up strongly, with 14%
growth to £50.6 million (2024: £44.2 million), driven by major digital and
data wins with NHS England and UKHSA, alongside continued growth across other
arm's-length bodies and devolved administrations.
· Commercial sector revenue continued to be affected by weak economic
conditions and was 32% lower at £21.0 million (2024: £30.8 million).
Softer market conditions and increased competition affected Workday Services
revenue, with opportunity for further international expansion into Asia
Pacific
· We are the leading pan-European Workday consulting specialist and the
eighth largest by certified consultant numbers globally. We have extended our
Workday Services activities to Asia Pacific, winning our first contracts in
Australia and New Zealand in the second half of the year.
· Despite continued strong win rates and high customer satisfaction,
lower contract volumes and values - alongside aggressive pricing in some areas
due to increased competition from new partners - resulted in a 12% decline in
revenue (-10% ccy) to £98.7 million (2024: £112.0 million), with bookings of
£84.6 million (2024: £116.5 million).
· On a like-for-like basis, revenue was 8% lower, after adjusting prior
year revenue for discontinued procurement consulting services associated with
Blackline Group, which we acquired in 2022. We ceased providing these services
in FY24.
We continue to benefit from our geographical breadth, with international
markets generating 41% of Group revenue (2024: 39%)
· International revenue was in line with last year at £149.9 million
(2024: £149.8 million).
· Our Workday Products and Workday Services divisions have
particularly strong international positions, collectively generating 81% of
their revenues from these customers (2024: 81%).
Excellent customer service drives customer satisfaction and retention
• Our customers continued to rate our services as 'excellent', with a Net
Promoter Score of 70(( 4 )) (2024: 58).
• Existing customers generated revenue of £299.4 million (2024: £345.8
million).
• Customer numbers increased to 1,094 (2024: 930)(( 5 )).
The commitment and engagement of our colleagues underpins our business
performance
• We have more than 2,800 people (2024: 2,995) across 20 countries, with
our employee retention remaining strong at 93% (2024: 93%).
• Engagement levels remain high, measuring 75% (2024: 78%) in our
internal surveys, and we were ranked 14(th) in Glassdoor's '50 Best Places To
Work in the UK', up from 32(nd) in 2024.
• As noted earlier, we recently completed a restructuring exercise that
directly affected 190 colleagues. We are now focused on internal efforts to
strengthen engagement across the organisation.
Continued growth in our AI business, with revenues growing 61%, as we help
customers harness the potential of AI
• Revenues for AI and related projects increased 61% to £41.1 million
(2024: £25.6 million) and now represent 21% of our Digital Services revenues.
• To date, we have delivered over 250 AI & Data projects across the
public, healthcare, and commercial sectors, including 88 in the period.
• Since 2018, Kainos has been the 5th largest supplier of AI to the UK
Public Sector, with over £61 million in awarded contracts.
• We now have more than 250 AI professionals across the organisation,
accelerating innovation and delivery for our customers.
• We launched a Microsoft AI Centre of Excellence to accelerate customer
adoption of AI, building on our Microsoft AI Partner of the Year recognition
and deep sector expertise.
• Kainos has 3 of the 20 AI solutions available on the Workday
Marketplace, reflecting our leadership in delivering trusted, Workday-approved
innovation.
Current trading and outlook
• Following a challenging first half of the financial year, we are
pleased to have delivered against our revised expectations, supported by an
improved final quarter performance which recorded low single-digit percentage
revenue growth.
• Looking ahead, we remain confident in the opportunities for digital
transformation, as public, healthcare, and commercial organisations
increasingly seek to harness technology - including AI - to improve services
for users while reducing the cost of delivery.
• While the long-term drivers in our market remain strong, and our
near-term performance is supported by a healthy pipeline, a significant
contracted backlog, and a strong balance sheet, we believe it is prudent to
maintain our cautious stance given continued volatility in the global
macroeconomic environment.
• In considering FY26, we expect the following:
- Continued momentum in Workday Products, driven by our Built on
Workday partnership, with significant progress towards our ARR milestones of
£100 million (2026) and £200 million (2030).
- Ongoing recovery in Digital Services, led by our public sector and
healthcare segments, with the upcoming UK Government Comprehensive Spending
Review announcement expected to influence the timing and pace of future
demand.
- In Workday Services, market-related pressures are easing, and we are
encouraged by signs of recovery and stronger international activity, including
recent wins in Australia and New Zealand.
• More generally, we continue to see opportunities in smaller but
faster-growing areas, including AI, data, low-code development and building
custom Workday applications through our Workday Extend capabilities.
Commenting on the results, Brendan Mooney said:
"Our results reflect a mixed year for Kainos, with strong growth in Workday
Products and in our healthcare sector, set against broader market challenges
in IT services - particularly in Workday Services and in the public and
commercial sectors of Digital Services.
We remain grateful for the trust our customers place in us to deliver their
critical transformation initiatives. The economic backdrop has affected them
and for many, the focus has been on maintaining investment in critical
transformation programmes. For others, it has led to reductions or delays in
technology expenditure as they navigate an ever-changing business
environment.
We delivered an improved business performance in the final quarter, where we
recorded low single-digit percentage revenue growth, which allows us to look
ahead with greater confidence, despite the ongoing volatility in the
macroeconomic environment.
We are excited about the opportunity for our Workday Products division.
Another year of excellent performance has positioned us strongly to meet our
initial ARR target of £100 million during 2026. We expect to launch our fifth
product in late 2025, designed to help organisations understand and address
pay equality issues with particular focus on the EU Pay Directive, which will
be adopted by EU member states in 2026. Additionally, and underpinned by our
Built on Workday partnership, we believe we can increase the frequency of new
product releases and make strong progress toward our ambitious goal of £200
million ARR in 2030.
In Digital Services, following the election-related hiatus and a return to
modest growth in the second half of the year, our public sector business is
well positioned to benefit from the UK Government's continued focus on digital
transformation. Momentum in healthcare is expected to moderate following the
announcement regarding the disbanding of NHS England, while activity levels in
our commercial sector are anticipated to remain broadly consistent with the
past year.
In Workday Services, while demand remained subdued through the second half, we
believe that market-related pressures are beginning to moderate. As a result,
we are cautiously encouraged by early signs of recovery and increasing
activity across our international customer base, including recent wins in
Australia and New Zealand.
AI engagements with our customers continue to evolve rapidly, with
experimentation remaining a key theme throughout the year. We completed over
80 separate engagements, with larger projects primarily in the public sector -
reinforcing our position as the fifth-largest AI supplier to the UK public
sector by contract value since 2018, behind organisations such as Microsoft
and Palantir.
My final words - and my thanks - go to my colleagues. For many years, they
have continuously exhibited their expertise and ability and in recent weeks
have also shown great resilience, especially in the wake of the recent
restructuring. Thank you again for everything you do for Kainos."
For further information, please contact:
Kainos
via FTI Consulting LLP
Brendan Mooney, Chief Executive Officer
Richard McCann, Chief Financial Officer
Investec Bank
plc
+44 20 7597 5970
Patrick Robb / Nick Prowting /Ben Griffiths
FTI Consulting
LLP
+44 20 3727 1000
Dwight Burden / Kwaku Aning
About Kainos Group plc
Kainos Group plc is a UK-headquartered provider of sophisticated IT services
to major public sector, commercial and healthcare customers. Our shares are
listed on the London Stock Exchange (LSE: KNOS).
Our expertise spans three divisions: Digital Services, Workday Services and
Workday Products.
Digital Services
Our Digital Services customers face a range of business problems, including
the need to improve their customer service, reduce costs and increase
productivity. We help them to solve these problems by developing and
supporting custom digital service platforms. Our solutions enable customers
and their users to work smarter, faster and better, while ensuring the
platforms are secure, accessible and cost effective.
Workday Services
We are a respected partner to Workday Inc. in Europe and North America,
providing a comprehensive range of services to support customers deploying
Workday's Finance, HR and Planning products. Our experience in complex
deployments means we are trusted to launch, test, expand and support Workday
systems.
Workday Products
We have developed proprietary software products that complement Workday by
enhancing our customers' system security and compliance and improving their
document generation and storage. Over 550 global customers use one or more of
our products, with adoption growing rapidly.
Our people
Our people are central to our success. We have more than 2,800 people in 20
countries across Europe, Asia and the Americas.
Find out more
You can discover more about us at www.kainos.com (http://www.kainos.com) .
Definition of terms
We use the following definitions for our key metrics:
Active customer: a customer who has signed a contract with us within the last
three months or has generated revenue in the last six months.
Adjusted EBITDA: adjusted pre-tax profit excluding interest, tax, depreciation
of property, plant and equipment, and right-of-use assets, and amortisation of
intangible assets.
Adjusted earnings per share (basis and diluted): adjusted profit after tax
divided by the weighted average number of ordinary shares outstanding (basic)
or weighted average number of ordinary shares outstanding after adjustment for
the effects of all dilutive potential ordinary shares (diluted).
Adjusted pre-tax profit: profit before tax excluding the effect of share-based
payments expense, acquisition-related expenses including amortisation of
acquired intangible assets, deferred consideration (including post combination
remuneration expense) and restructuring costs incurred. Our adjusted results
in the prior period also exclude one-off gains recognised on sale of property,
plant and equipment, and changes in fair value of our investment property.
Adjusted profit margin: adjusted profit as a percentage of revenue for the
period.
Annual recurring revenue (ARR): the total of the annualised committed
subscription value contracted at the end of the reporting period.
Bookings: the total value of sales contracted during the period.
Carbon net zero: any CO(2) released into the atmosphere from a company's
entire value chain is reduced as much as possible and the rest is removed.
Carbon neutral: any CO(2) released into the atmosphere from a company's entire
value chain activities is balanced by an equivalent amount being removed.
Cash conversion: cash generated from operating activities as a percentage of
adjusted EBITDA.
Constant currency (ccy): excludes the effect of foreign currency exchange rate
fluctuations on period-on-period performance by translating the relevant prior
period figure at current period average exchange rates.
Contracted backlog: the value of contracted revenue that has yet to be
recognised.
Compound annual growth rate (CAGR): annual growth rate over a specified period
of time.
Existing customer revenue: total revenue recognised from customers in the
current period who were also customers in the preceding year.
International revenue: total revenue derived from locations outside of UK and
Ireland.
Net promoter score (NPS): a metric that organisations use to measure customer
loyalty toward their brand, product or service, which can range from -100 to
+100. Bain & Co, the creators of the metric, held that a score above 0 is
good; 20+ is favourable; 50+ is excellent and 80+ is world-class.
Net revenue retention (NRR): a metric that measures the percentage of revenue
retained from existing customers over a period of 12 months, including
upsells, downgrades, and churn.
Organic revenue: our revenue excluding revenue from acquisitions completed in
the current and comparative reporting periods.
Software as a service (SaaS): a software distribution model that delivers
application programmes over the internet, with users typically accessing the
programme through a web browser. Users pay an ongoing subscription to use the
software rather than purchasing it once and installing it.
Science Based Targets initiative (SBTi): a target for reducing greenhouse
gases and CO(2) emissions which is aligned with the global effort to limit
global warming to 1.5(O)C
Kainos at a glance
Our purpose
Our purpose is to help our customers with their most challenging projects and,
together with our partners, help them build the capability to succeed in the
digital age.
Our operating divisions
Digital Services
Our Digital Services division helps our customers to solve their business
problems by using technology, enabling them and their users to work smarter,
faster and better.
Digital Services engagements are often large, complex and critical for our
customers. We work collaboratively with them to create innovative and
transformative solutions that are secure, accessible, cost-effective and take
a user-first approach. We enable customers to utilise their data to drive
better decision-making, leverage the benefits of public cloud and,
increasingly, of AI.
In the public sector, we have delivered projects helping more than 60 million
users, while saving our customers hundreds of millions of pounds. Our projects
for customers such as HM Passport Office are part of the UK's national IT
infrastructure.
In the commercial sector, customers trust us to provide digital transformation
programmes that evolve their services, deliver efficiencies, increase their
capabilities and future-proof their businesses.
In healthcare, we help providers deliver a service that is faster, more
cost-effective and patient-centric.
We deliver services to over 120 customers, including the Open University, the
government of Ontario, Rolls Royce, the Crown Prosecution Service, Royal
London Asset Management and Arqiva.
Workday Services
Workday Services helps forward-thinking organisations to deploy Workday's
software, to organise their staff efficiently and support their financial
reporting requirements. These customers are often large and international,
which is why we have teams in 20 countries.
We provide a comprehensive range of services to support customers in their
adoption and utilisation of Workday's software suite. Our expertise spans
consulting, project management, integration and post-deployment services.
Kainos first engaged with Workday in 2009 and was appointed as a partner in
2011, making us one of the most experienced participants in Workday's partner
ecosystem. From the UK, we have grown to be the largest Workday partner in
Europe and our reach is now global, with 75% of our projects being undertaken
for clients in Central Europe and North America.
With over 500 customers worldwide, we are proud to work with organisations
such as Kion Group (Germany), Triumf (Canada), Novozymes (Denmark), Kone
(Finland), ASOS plc (UK), Takeaway.com (Netherlands), CoMade (Australia) and
Trintech (USA).
Workday Products
Our Workday Products help customers safeguard and improve their Workday
systems, complementing Workday's innovative Finance, HR and Planning suite.
We currently have four products, of which three sit within the Smart Suite:
· Smart Test (launched in 2014) is the leading platform for Workday
customers to automatically test and verify that their unique Workday
configuration is operating effectively.
· Smart Audit (2021) is a compliance-monitoring tool that allows
Workday customers to maintain operational security controls across their
Workday environments.
· Smart Shield (2022) is a data-masking tool that ensures sensitive
data remains controlled when Workday environments are made available to
broader internal or external teams.
Our most recent product, EDM (2023), improves the experience of generating and
storing documents inside Workday, while supporting an organisation's global
compliance requirements.
We are on schedule to release our fifth product in late 2025, which will help
organisations understand and address pay equality issues, with particular
focus on the EU Pay Directive which will be adopted by EU member states in
2026.
These tools are implemented as cloud-based Software as a Service (SaaS)
solutions and customers access them on a subscription basis.
Over 550 customers use at least one of our products, including AT&T
(USA), State of Oregon (USA), Booking.com (Netherlands), Whole Foods (USA)
and Netflix (USA).
In July 2024, we announced a unique strategic partnership with Workday, which
incentivises Workday's sales teams across North America, Europe and Asia
Pacific to introduce and co-sell our products.
Revenue by operating division
Digital Services: FY25 revenue: £197.2 million, 54% of Group total, five-year
growth: 5% CAGR.
Workday Services: FY25 revenue: £98.7 million, 27% of Group total, five-year
growth: 19% CAGR.
Workday Products: FY25 revenue: £71.3 million, 19% of Group total, five-year
growth: 31% CAGR.
Our people and customers
People
• Number of staff and contractors: 2,865 (2024: 2,995).
· Number of employed staff: 2,796 (2024: 2,953).
• Employee retention: 93% (2024: 93%).
• People by region:
· UK & Ireland (68%)
· Central Europe (15%)
· Americas (14%)
· Rest of World (3%)
• People by division:
· Digital Services (49%)
· Workday Services (24%)
· Workday Products (20%)
· Central Services (7%)
• 11 offices: Antwerp, Belfast, Birmingham, Buenos Aires, Derry, Dublin,
Gdańsk, Helsinki, Indianapolis, London and Toronto.
Customers
• Active customers: 1,094 (2024: 930).
• Net Promoter Score: 70 (2024: 58).
• Revenue from existing customers: 82% (2024: 90%).
• Our customers by sector (revenue):
· Commercial sector: 52% (2024: 52%)
· Public sector: 34% (2024: 36%)
· Healthcare: 14% (2024: 12%)
• Our customers by region (revenue):
· UK & Ireland: 59% (2024: 61%)
· North America: 31% (2024: 28%)
· Central Europe: 9% (2024: 11%)
· Rest of World: 1% (2024: <1%)
CEO statement
A challenging year
Our financial results over the past year reflect a mixed performance for
Kainos - strong growth in some areas, alongside challenges in others. As a
result, we recorded our first declines in revenue and adjusted profit since
2009.
Overall, our revenues fell to £367.2 million, a decrease of 4%, and our
adjusted pre-tax profit declined by 15% to £65.6 million.
The most significant reductions were in the public sector segment of our
Digital Services division, reflecting the impact of the UK General Election in
July 2024; in the commercial sector of Digital Services, where we were
affected by weak economic conditions; and in our Workday Services division,
where a combination of a subdued economic environment and increased
competition led to lower revenues.
At the same time, we recorded strong growth in our software-focused Workday
Products division, which now accounts for 19% of our overall business,
alongside continued growth in the health sector segment of our Digital
Services division.
Encouragingly, we ended the year positively, recording low single-digit
sequential revenue growth in the final quarter. We look forward to sustaining
this growth in the year ahead.
Restructuring for growth
In March, we made the difficult decision to reduce our workforce, which
directly affected 190 of our colleagues - approximately 7% of our global team.
The decision was taken with careful consideration and with a clear focus on
the long-term growth opportunities for our business.
While we recognise the business necessity of this step, we also acknowledge
the significant impact it had on 190 colleagues and their families, and on the
friends and teammates they leave behind at Kainos. In recent weeks, we have
said goodbye to some very talented individuals who have played important roles
in our Company.
As CEO, I deeply regret that this was necessary.
However, I believe it was essential to create the capacity to invest in the
high-growth areas of our business - including product development, AI, data,
automation, new partnerships, skills development, targeted recruitment and
carefully managed international expansion.
We have a sense of urgency around these activities and have already mobilised
teams, particularly in early-stage opportunities in Cyber AI and Agentic AI.
Supporting our customers
The combination of our mixed business performance and a significant
restructuring could have diverted focus from the critical work of supporting
our customers. However, our teams continued commitment and professionalism
ensured that they continued to deliver successfully. This is reflected in our
Net Promoter Score increasing from 58 to 70 - a rating classified as
'excellent'.
During the year, we continued to support our existing customers - who account
for 82% of our work - while also acquiring new ones. Total customer numbers
increased from 930 to 1,094. We view this as an encouraging indicator of
future opportunity, underpinned by our strong track record of building
long-term, trusted relationships that often span multiple programmes of work
with our customers.
Our customers continue to actively experiment with AI, and we supported this
through 88 separate engagements over the year - averaging nearly two per week.
Our largest AI projects have been in the UK public sector, where we are the
fifth-largest AI supplier, and we are focused on replicating that success
across our healthcare and commercial client base.
Many of our customers are global organisations, and they continue to navigate
an economic landscape influenced by US tariffs and international responses,
which contribute to ongoing uncertainty. We expect this to remain a recurring
theme throughout 2025.
As their partners, our role is to support them as they respond to these
changing circumstances. For many, this will involve maintaining investment in
critical transformation programmes; for others, it may mean reducing
technology expenditure in response to shifting business priorities.
Changes for our customers will require us to be agile in how we manage our own
business. As a result, we have strengthened our internal processes to ensure
we can act quickly and effectively when needed.
Workday Products
Our standout performance came from Workday Products, with revenue increasing
by 24% to £71.3 million, as we made strong progress towards our initial ARR
target of £100 million by the end of 2026. We reached £72.6 million in ARR
at the end of March 2025.
We continued to invest in our product portfolio. In addition to advancing our
existing products, we remain on track to launch our fifth product at the end
of 2025, designed to help organisations understand and address pay equality
issues, with particular focus on the EU Pay Directive which will be adopted by
EU member states in 2026. During the year, our research & development
investment increased by 24% to £16.8 million, all of which was expensed in
the period.
We also deepened our relationship with Workday through our Built on Workday
agreement - a new strategic partnership announced in July 2024. This agreement
incentivises Workday's global sales teams to introduce and co-sell
Kainos-developed products. The multi-year agreement represents an annual
investment of £7.8 million, with £5.2 million recognised during FY25
following its activation in July 2024.
We believe this agreement will enhance our access to Workday's base of more
than 11,000 customers, reduce sales cycle times, and improve win rates. As we
continue to mobilise the partnership, we are confident it will be a
significant contributor toward our long-term target of achieving £200 million
in ARR by the end of 2030.
Digital Services
Our Digital Services division recorded a reduction in revenue of 7% to £197.2
million.
The largest reduction occurred in the public sector, reflecting the hiatus
caused by the UK General Election. This was accompanied by reductions in
project-related expenditure among our commercial sector clients. In contrast,
we recorded strong growth among our healthcare clients, primarily consisting
of departments, agencies and arm's-length bodies within the NHS.
Over the last months, the UK Government has published a series of papers -
most notably the 'State of Digital Government Review' - which highlight the
importance of digital transformation in driving public sector and public
service reform. Against this positive backdrop, we look forward to the
publication of the Comprehensive Spending Review, expected in spring 2025,
which will provide clarity on spending limits across all departments and allow
our customers to plan their digital transformation projects.
We continue to make excellent progress in expanding our Digital Services
activity in North America, primarily in Canada. Revenues from our engagements
in the region have grown to £8.9 million - an increase of 71%. While still a
modest share of our overall Digital Services revenue, the pace of progress is
highly encouraging.
Workday Services
We also experienced challenges in our Workday Services division, as softer
market conditions and increased competition affected our revenues, which
declined by 12% (8% on a like-for-like basis) to £98.7 million.
Most of our Workday Services customers operate in the commercial sector and
typically have a global footprint. As such, they are highly responsive to
changes in the economic environment and have actively managed their technology
investments in response. As a result, both the number and value of contracts
have been lower than in previous years.
In addition, the number of accredited Workday partners increased from
approximately 60 to over 100 during the year. This has led to more aggressive
pricing from some competitors as they seek to establish a presence in the
market.
While we expect some easing of these headwinds in the year ahead, we believe
our destiny remains in our own hands - drawing on our deep Workday experience,
strong delivery reputation, and innovation capability to differentiate
ourselves in this more competitive landscape.
Being a responsible business
We remain a carbon neutral organisation and, while we made further progress
during the year, we have not yet reached our goal of achieving carbon net
zero. Our carbon reduction programme continues to deliver results, with a
further 15% reduction in Scope 1, 2 and full Scope 3 emissions compared to
last year. Since the start of the programme in 2020, we have more than halved
our carbon intensity - from 7.3 to 3.3 tonnes of CO₂e per employee.
The tech industry continues to face a diversity challenge, with only 29% of UK
tech roles held by women. At Kainos, we are encouraged by our further
progress, with women now representing 36% of our workforce (2024: 35%). But
real change starts earlier, with just 3% of young women who currently consider
tech as their preferred career, which is why we are proud that 1,462 young
women, out of over 3,000 participants, took part in our outreach programmes
this year.
Board changes
At our AGM in September 2024, Tom Burnet and Andy Malpass completed their
terms as Non-Executive Directors on the Kainos Board, having most recently
served as Chair and Senior Independent Director, respectively. We extend our
sincere thanks to Tom and Andy for their significant contributions during
their time on the Board.
At the same meeting, Rosaleen Blair was appointed Chair of the Board, and
James Kidd was appointed Senior Independent Director.
In December 2024, Russell Sloan stepped down as CEO of Kainos. I would like to
place on record my thanks - and that of the entire Kainos team - for Russell's
leadership as CEO and his outstanding contribution over a 25-year career with
the Company.
Following the completion of Russell's term as CEO, I was appointed to succeed
him in the role.
An improving outlook, but caution remains
The broader economic environment remains uncertain, with volatility in global
trading arrangements providing an unwelcome backdrop to our plans for the year
ahead.
Despite this, we remain positive.
The UK Government continues to prioritise digital transformation and AI as a
way of improving public services and reducing delivery costs. The
election-related hiatus is now receding, and the upcoming Comprehensive
Spending Review is expected to provide greater clarity for departments around
future spending plans.
We are confident in our ability to improve our performance in the Workday
consulting marketplace, drawing on our significant product experience, strong
delivery reputation and innovation capability to differentiate ourselves in a
more competitive landscape. With renewed international expansion - most
notably in Australia and New Zealand - and increasing demand for
Workday-adjacent services, we see growth opportunities ahead in this market.
The established trajectory of our Workday Products division, underpinned by
the strength of our Built on Workday partnership, means we are on track to
achieve £100 million in ARR by the end of 2026. We look forward to launching
our fifth product later this year, designed to help customers address their
enhanced pay transparency requirements.
The potential for long-term growth across our market segments is clear, and we
are excited by the opportunities that lie ahead. As we move forward, we must
first navigate the short-term uncertainty created by the global economic
backdrop - but we do so from a position of strength, supported by a healthy
pipeline, a significant contracted backlog, and a strong balance sheet.
Thank-you
I would like to express my appreciation to our customers and colleagues for
their ongoing support.
We are grateful for the trust and confidence our customers continue to place
in Kainos, and thankful for the engagement and commitment our colleagues have
shown throughout the year.
Thank-you.
Brendan Mooney
Chief Executive Officer
Our Strategy
Our ambition is to be a global, independent company operating towards the
disruptive end of technology, that will thrive today and for generations. As
part of this ambition, we believe that we can achieve long-term growth in
revenue, adjusted pre-tax profit and cash flow. We therefore focus on dynamic,
higher-growth markets where the talents of our people shine brightest.
In building for the long-term, we:
· expect our international presence to continue to grow;
· prefer to grow organically and only acquire businesses in exceptional
circumstances, such as when we need to obtain unique skills; and
· aim to have a well-balanced business, which is not overly reliant on
any one customer, market, region or sector.
People
People are the fundamental component of our strategy. Our long-term success
depends on their talent, skill and motivation, and we aspire to provide them
with rewarding and fulfilling careers. We recruit high-calibre people from
school, college and industry, invest in developing their skills and careers,
and strive to be a great employer.
Progress in FY25 Priorities for FY26
• Employed 2,865 colleagues at the year-end (2024: 2,995), including 103 • Maintain high standards when recruiting new applicants.
early careers colleagues.
• Ongoing investment in skills and career development of all colleagues in
• Invested over 13,000 days (2024: over 12,000 days) of technical and Kainos.
skills development in our people.
• As a result of our lower trading performance, we reduced our workforce
by 190 people across functions and locations, to better match our capacity to
current customer demand.
• Continued to be ranked in the '50 Best Places to Work in the UK' by • Maintain our high levels of employee retention (achieve over 85%).
Glassdoor, increasing our ranking from 32(nd) to 14(th).
• Maintain or improve our scores for employee engagement, D&I and
• Continued to achieve high levels of employee engagement (75%) (2024: wellbeing.
78%), and high ratings for diversity and inclusion (D&I) (82%)(2024: 83%)
and wellbeing (74%) (2024: 77%).
• Involved over 3,000 young people and those from under-represented groups • Continue to inspire and educate young people and those from
in our outreach programmes (2024: over 2,200 young people). under-represented groups for potential careers in IT.
Customers
Consistently delivering for our customers helps us to build long-lasting,
mutually beneficial relationships that will see us thrive as a business. We
therefore focus on providing exemplary customer service, which underpins our
repeat revenues.
Progress in FY25 Priorities for FY26
• Invested in our customer relationship management system, IT service • Maintain high levels of customer satisfaction, including through
management to support service levels and self-service, and provided ongoing continued investment in training and developing our people.
training.
• Customer satisfaction level as measured by NPS was 70 (2024: 58), which • Actively monitor client satisfaction through regular surveys and using
is regarded as 'excellent'. NPS as the industry-standard metric. Ensure that we maintain high levels of
customer satisfaction.
Markets
Workday Products
Our focus is to:
• increase the number of Workday customers who use our software;
• ensure high levels of customer satisfaction driving strong NRR;
• invest in our existing products and develop additional products within
the Workday ecosystem; and
• continue to work with Workday to increase the scope and impact of our
Built on Workday partnership.
Progress in FY25 Priorities for FY26
• Revenues increased by 24% to £71.3 million (2024: £57.3 million). • Increase the total number of customers using our software.
• Customer numbers increased to over 550 (2024: 450+) with 198 customers • Increase the adoption of multiple products by each customer.
now using more than one of our products.
• Maintained a high level of NRR, driven by segment NPS of 93% (2024: • Maintain our high levels of customer satisfaction.
97%).
• Overall investment, spanning product development and sales & • Ensure that customer adoption and revenues reflect the strong increase
marketing, increased by 24% to £32.3 million (2024: £26.0 million). in investment.
• Agreed an enhanced strategic partnership with Workday, to promote our • Continue to work with Workday to increase product sales through our new
products through its sales teams. Built on Workday partnership.
• Progressed the development of our fifth product which will help • Develop and launch one new Workday product.
organisations understand and address pay equality issues, which we expect to
launch towards the end of 2025. • Consider the development of products for other platforms or extend our
existing products to other platforms.
Digital Services
Our focus is to:
• grow within the public and healthcare sectors, by engaging in
ambitious transformation projects across UK Government and the NHS;
• repeat our digital transformation success in the UK commercial sector;
and
• expand internationally, focused initially on Canada where we already
have an established Delivery team, have built business development expertise
and have an existing Workday Services and Products client base.
Progress in FY25 Priorities for FY26
• Public sector revenues decreased by 9% to £125.5 million (2024: £138.2 • Grow our business in both sectors, supporting existing clients and
million). projects, and adding new long-term clients.
• Healthcare revenues increased by 14% to £50.6 million (2024: £44.2
million).
• Commercial sector revenues reduced by 32% to £21.0 million (2024: • Focus on winning smaller engagements, where we can demonstrate our
£30.8 million). capabilities and start to build a valuable long-term customer relationship.
• Continued to build our team in Canada to support growth in this market, • Continue to build reputation and references in our target international
contributing to a 71% increase in revenue to £8.9 million (2024: £5.2 markets.
million).
• Continue to build in-region delivery capability, in line with success.
Workday Services
Our focus is to:
• grow in our established markets, as Workday continues to expand within
these markets;
• gain market share, by replacing incumbent providers to existing
Workday customers through a reputation for higher service levels; and
• expand internationally, establishing operations in countries with
large and growing numbers of Workday customers.
Progress in FY25 Progress in FY25
• Workday Services revenues decreased by 12% to £98.7 million (2024: • Support existing clients and projects, and add new long-term clients in
£112.0 million). line with capacity.
• Appointed by approximately 40 customers where earlier phases of the • Continue to excel in customer service.
project were undertaken by a different partner.
• International revenues fell by 13% to £74.4 million (2024: £85.6 • Continue to expand international revenues.
million).
• Increase footprint within Australia and New Zealand.
• Expanded into Australia and New Zealand markets, delivering first
projects. • Further expansion in APAC and evaluate expansion into LATAM market.
New opportunities
As noted in the previous section, we invest strongly in our Workday Products,
both in extending our existing products and developing new products. We also
look to develop new opportunities for the other areas of Kainos and have a
structured innovation process which helps us identify and promote new ideas
that have the potential to become sizeable revenue streams in the future.
Progress in FY25 Priorities for FY26
• In total, 23 ideas were evaluated, with 13 moving to the next stage of • Maintain idea generation and evaluation activity levels.
development (2024: 46 ideas evaluated and eight moved to next stage).
• Develop current next-stage ideas, seeking to create at least one viable
business opportunity.
Operational Review
Our overall performance
Revenue declined by 4% to £367.2 million in FY25 (2024: £382.4 million),
with strong growth in Workday Products and the Digital Services healthcare
sector more than offset by lower revenues in other parts of Digital Services
and in Workday Services. This reflects the impact of the UK General Election
in the public sector along with the subdued economic environment encouraging
customers to defer project-based expenditure.
Adjusted pre-tax profit was down by 15% (-14% ccy) to £65.6 million (2024:
£77.2 million) generating an 18% margin (2024: 20%). The margin reflected our
continued disciplined management of our costs and the growth in the
higher-margin Workday Products business, offset by lower contributions from
the services businesses and the impact of the additional investment we
announced in July 2024 to support our enhanced partnership with Workday (see
below).
Bookings in the year were 10% lower at £382.4 million (2024: £424.5
million). Our contracted backlog increased by 3% to £368.2 million (2024:
£357.1 million).
As previously guided, we have continued to invest to support the growth in our
software products. Research & development investment rose by 24% to £16.8
million (2024: £13.5 million) and our product-related sales & marketing
investment (including £5.2 million of Built on Workday partnership costs) was
£15.5 million, up 24% (2024: £12.5 million). The total investment in our
software products was £32.3 million (2024: £26.0 million), an increase of
24%.
We remain highly cash generative and delivered another robust cash
performance, with cash conversion in the year of 112% (2024: 98%). At 31 March
2025 we had a cash balance (including treasury deposits) of £133.7 million
(2024: £126.0 million), after completing £22.6 million of a £30.0 million
share buyback programme.
Workday Products performance
Workday Products had another strong year, with growth across all our products.
Revenue increased by 24% (26% organic, 26% ccy) to £71.3 million (2024:
£57.3 million).
In total, more than 550 customers (2024: over 450) now use our products, with
about 200 taking multiple products. We are continuing to improve our sales
execution and refining our customer value proposition for our Smart Suite
products (Smart Test, Smart Audit and Smart Shield), emphasising the cost
savings they can deliver as well as their control and compliance benefits.
EDM, which we released in October 2023, was our most successful product
launch.
Annual recurring revenue at the year-end was £72.6 million (2024: £60.5
million), up 20% (23% ccy). Our strong momentum and enhanced strategic
partnership with Workday (see below) make us confident of achieving our ARR
target of £100 million by the end of 2026 and our new target for 2030 of
£200 million. Our backlog at the year-end increased 17% to £148.7 million
(2024: £127.5 million).
Accelerating our growth through enhanced Workday partnership
In July 2024, we announced an enhanced partnership with Workday, which
incentivises Workday's sales teams across North America, Europe and Asia
Pacific to introduce and co-sell our products. This unique partnership gives
us an increased profile within Workday and supports its Built on Workday
program. Built on Workday uses the Workday Extend technology (see Workday
Services below) to enable partners to create apps and distribute them to
Workday's 11,000+ customers via the Workday Marketplace.
The multi-year agreement covers our Smart Audit, Smart Test and EDM products,
as well as future products that we will develop utilising Built on Workday. To
support the strategic partnership, we will incur the following additional
costs:
· payments to Workday of approximately £7.8 million per year (£5.2
million incurred in FY25);
· investment to expand our own global sales capability, to support
Workday's sales organisation; and
· investment to continue to develop Smart Test, Smart Audit and EDM, to
utilise the full power of Built on Workday.
While the mobilisation of the new partnership has taken slightly longer than
we expected, we started to see the first sales come through towards the end of
the financial year. We continue to expect revenue to build from FY26 and
Workday has shown significant commitment to making the partnership successful.
The partnership is the first of its kind and we expect that Workday will sign
further agreements with other product providers. This will help to grow the
market as a whole and further increase the attractions of Workday to
customers, since they will be able to extend its functionality to solve their
specific business issues through third-party products.
Product development
We continue to develop new Workday products and expect to launch our fifth in
late 2025. This product will help organisations understand and address pay
equality issues, with particular focus on the EU Pay Directive which will be
adopted by EU member states in 2026.
Digital Services performance
Our Digital Services division builds highly cost-effective solutions that make
public-facing services more accessible and easier to use for citizens,
patients and customers.
Overall, Digital Services' revenue was 7% lower at £197.2 million (2024:
£213.1 million). Bookings declined by 11% to £202.0 million (2024: £228.1
million), while the contracted backlog rose 2% to £160.1 million (2024:
£156.6 million).
Public sector
Revenue from public sector customers was 9% lower at £125.5 million (2024:
£138.2 million), with the sector accounting for 64% of divisional revenue
(2024: 65%). The first half of the year was affected by the UK General
Election, which caused a hiatus in contract awards and delays in mobilising
projects. Since the Election, the new government has spent time determining
its spending priorities and the role digital transformation will play, and we
expect longer-term investment plans to be announced as part of the multi-year
spending review in Spring 2025.
Despite the difficult year, prospects in the public sector remain positive. In
January 2025, the government published its 'State of Digital Government
Review'. This showed that public services are still significantly
under-digitised and that full digitisation could realise savings and
productivity benefits of £45 billion a year, for example through process
simplification, using AI to automate tasks and the adoption of low-cost
digital channels. According to the review, this makes digitisation the most
powerful lever available to drive public sector and service reform. While the
government needs to overcome sizeable challenges to deliver all these
benefits, we are encouraged by the direction of travel.
During the year, we continued to support our long-standing customers including
the Ministry of Justice, the Department for Environment, Food & Rural
Affairs, the Driver and Vehicle Standards Agency, HM Passport Office, the
Department for Transport and the Ministry of Defence. We also began working
with new customers, including Network Rail, the Crown Prosecution Service,
Ofwat and University of Cambridge, as well as a new framework win with Queen's
University Belfast.
Healthcare sector
Our customers in this sector are mainly UK public health bodies. The business
had a good year, in part because NHS England began awarding larger programmes
of work to tender, after previous delays caused by its merger with NHS
Digital. Revenue from the sector was £50.6 million (2024: £44.2 million),
representing growth of 14% and accounting for 26% of Digital Services' revenue
in the year (2024: 21%).
During FY25, our customers included NHS England, the Department for Health and
Social Care, the UK Health Security Agency and the NHS Business Services
Authority. In March 2025, the government announced its intention to abolish
NHS England and take the health service in England back into direct government
control. This is expected to take place over a two-year period and is likely
to result in some disruption to the market during that time. The State of
Digital Government Review highlighted the significant need for digitisation in
the NHS, with many Trusts having substantial levels of legacy technology and
poor system reliability, which means digitisation will be a necessity as part
of health service reform.
Commercial sector
There is significant long-term potential for us in the UK commercial sector,
where IT expenditure is more than three times higher than the public sector.
However, demand from the commercial sector remained low in FY25, reflecting
the uncertain economic environment. Our commercial sector revenue was
therefore 32% lower at £21.0 million (2024: £30.8 million), representing 11%
of divisional revenue (2024: 14%).
We continue to deliver digital services for our established customers,
including Irish Life Assurance plc, Bank of Ireland, EasyJet and WPP, and we
are helping new customers including NFU Mutual, Just Group and Rolls Royce.
Looking forward, our intention is to be more agile and focus on securing
smaller pieces of work with commercial customers, so we can demonstrate our
credentials through successful delivery and build valuable long-term
relationships with them. We have had considerable success with this approach
in other sectors and believe it will better align with the market, with
customers looking to implement projects in phases rather than procuring a
major multi-phase project at the outset.
International
We see good prospects internationally and our strategy is to target countries
where we already have a presence and customer contacts through our Workday
Services division.
We continue to gain momentum in Canada, where the government is investing to
provide better digital services. We have built a local team to support our
growth, reflecting our strategy to scale our in-region delivery capability in
line with our success. Our customers in North America include the Province of
Nova Scotia and the government of Ontario in the public sector, and WPP in the
commercial sector.
International revenue for the division was £11.7 million (2024: £12.3
million), representing 6% of total Digital Services revenue (2024: 6%).
Workday Services performance
We are Workday's leading partner in Europe and a Phase 1 Prime partner in the
US, which is Workday's biggest market. At the end of the year, we had 809
accredited Workday consultants (2024: 798), ranking us eighth globally.
Workday Services revenue was 12% lower (-10% ccy) at £98.7 million (2024:
£112.0 million). In the prior financial year, we stopped providing
procurement consulting services previously offered by Blackline Group, which
we acquired in 2022. Adjusting FY24 revenue to exclude these services, revenue
in FY25 was 8% lower on a like-for-like basis.
Our performance in the year partly reflects an increased number of Workday
partners, with Workday adding new partners who often specialise in particular
sectors such as professional services. We have seen more aggressive pricing by
some competitors, as they look to establish themselves in the market. The
number and value of contracts in the market has also been lower than in
previous years, with much of Workday, Inc.'s growth coming from existing
customers, who are taking additional modules that do not need the same level
of consulting support to implement.
Sales bookings decreased by 27% to £84.6 million (2024: £116.5 million)
while our contracted backlog was £59.3 million (2024: £73.0 million).
Regionally, 51% of divisional revenue came from North American customers
(2024: 49%) and 49% from European customers (2024: 50%). We are building a
team in Australia to support growth in Asia Pacific and won our first
contracts in Australia and New Zealand in the second half of the year. We are
also looking at other opportunities for geographical expansion.
We continue to add non-Workday services that create value for our Workday
customers and broaden our revenue streams. For example, the partnership with
Pulsora we announced in FY25 will enable customers to extract data from their
Workday systems and use it to fulfil ESG reporting requirements.
Workday Extend
Workday Extend is Workday's Platform-as-a-Service offering. It allows
organisations to build specialised functionality on the Workday platform, to
further enhance customers' Workday deployment. Engaging with clients on
Workday Extend projects gives us insight into common challenges that they
experience and creates the potential to build further products that can be
part of the Built on Workday program. To date, we have helped more than 80
organisations to build Workday Extend applications. We also built our own EDM
product on Workday Extend.
We believe that we have the largest independent group of Extend skills
globally. We continue to upskill colleagues through our Extend Academy,
enabling them to carry out consulting projects for customers and to work on
product development for our Workday Products division.
Our customers
Consistently delivering for our customers is at the heart of our business. It
creates strong relationships, which in turn generate high levels of repeat
business, while our reputation for delivery also helps us to win new work.
We continued to perform strongly during the period, as reflected by:
· our NPS of 70 (2024: 58), maintaining our record of consistently high
customer satisfaction, with a score above 50 viewed as 'excellent';
· existing customers generating 82% of our revenue (2024: 90%), as they
continue to trust us to deliver for them; and
· further new customer wins, giving us 1,094 active customers at the
year-end (2024: 930).
Our business is well diversified across our sectors, with revenue coming from:
· commercial customers: 52% (2024: 52%);
· public sector customers: 34% (2024: 36%); and
· healthcare customers: 14% (2024: 12%).
Regionally, UK & Ireland accounts for 59% of our business (2024: 61%),
North America for 31% (2024: 28%), Central Europe for 9% (2024: 11%), and the
rest of the world representing 1% (2024: <1%). Total international revenue
was unchanged at £149.9 million (2024: £149.8 million).
Artificial intelligence
Our vision for AI is to guide and deliver responsible AI adoption and to solve
real-world problems. To date we have delivered more than 200 AI & Data
projects for public sector, healthcare and commercial customers, providing
end-to-end services ranging from strategy development to full-scale AI
deployment and data optimisation.
During the year, we won over 80 AI & Data contracts across all markets,
with clients including NHS England, the UK Health Security Agency, Homes
England, the Ministry of Defence, WPP, the National Highways Agency, Hodge
Bank, Mizuho Bank, Danske Bank, Irish Life and Control Risks. We also secured
a major AI consultancy engagement with the Crown Prosecution Service. Example
projects include providing AI solutions for the United Nations International
Organization for Migration, to support migration as a result of climate change
and to combat fraudulent passports being used to cross borders.
We now have more than 250 AI professionals across the organisation,
accelerating innovation and delivery for our customers. We launched a
Microsoft AI Centre of Excellence to accelerate customer adoption of AI,
building on our Microsoft AI Partner of the Year recognition and deep sector
expertise. Examples include AI-assisted document fraud for Government,
AI-assisted Inspections and Compliance for Food Safety and Public Health
agencies and AI-driven equity research for investment firms.
Our position as an AI leader is demonstrated through a series of significant
initiatives and achievements. We hosted and curated AI Con - the leading AI
conference - for the sixth year, welcoming over 400 attendees and featuring
the first live AI-powered panellist. Our thought leadership on AI regulation
was recognised in the UK Department for Science, Innovation and Technology's
Portfolio of AI Assurance Techniques. We were also awarded the National AI
Award for Government & Public Sector for our work with HM Land Registry,
where we developed a machine learning solution that automatically compares
documents in different formats and identifies discrepancies.
Our alliance strategy continues to strengthen. As a Microsoft Data & AI
Solution Partner, we have achieved three AI Advanced Specialisations and are
an established member of the Global Partner Advisory Council. We are a Premier
Tier AWS Partner (top 1% globally), hold the AWS Machine Learning specialist
competency and have developed AWS-approved Generative AI solutions, which are
soon to be available on the AWS Marketplace. Additionally, we are one of only
15 global early AI adopters for Workday, with three products already available
on the Workday AI Marketplace, all of which have attained the 'Responsible AI'
designation from Workday.
Finally, we are driving our own efficiency through AI. In addition to our
internal projects, including a Gen AI employee assistant, a pre-sales content
assistant and 'Juno' - our AI workshop facilitator - over half of our
development projects are using AI to accelerate delivery as we help more
customers adopt these emerging technologies.
Innovation, research and development
Successful businesses continue to challenge themselves. We are keen to improve
our existing offerings, develop new business ideas and assess business and
technology concepts that are likely to impact us or our clients in the future.
Our research & development expenditure for the year amounted to £16.8
million (2024: £13.5 million), an increase of 24%, all of which was fully
expensed.
Assessing the technologies of the future
Our R&D team's horizon scanning and strategic foresight help us to uncover
the upcoming trends and technologies to explore and exploit, both within the
business and with our customers. Examples include next-generation AI, which
explores topics such as Small Language Models, Agentic AI and Federated
Learning; sustainable computing, which investigates topics such as green
software, responsible computing and sustainable AI; and emerging
technology, which includes research into quantum computing, distributed
trust and spatial computing.
Smart Product Suite
We are making sustained investment in our Smart Suite, where we are leveraging
cutting-edge AI alongside Workday's Extend technology to drive operational
efficiencies for our customers. Our Smart Test platform now incorporates AI to
automate test scoping and creation, which allows for broader, deeper and more
efficient test coverage within Workday environments.
AI is also embedded in Smart Audit, where it increases the ability to swiftly
detect anomalous Workday configurations. This helps customers identify
potential vulnerabilities, allowing for more thorough and accelerated
automation of IT security and audit controls.
Employee Document Management for Workday
We are continuously enhancing EDM's capabilities to increase its value for
Workday customers across an expanding number of specific regional compliance
standards. We are utilising AI across multiple aspects of document management,
including automated document generation, intelligent document filing and
regulatory compliance tracking.
Launching new products for Workday
Alongside improvements to our current product portfolio, a key focus of our
R&D efforts is to identify and develop new products that streamline manual
processes within HR and Finance. As part of our Built on Workday partnership,
we are collaborating closely with Workday to align these developments with its
product roadmap. Our target is to introduce at least one new product every
year, each catering to distinct market needs. As noted above, we expect to
launch a product to support customers with pay transparency during FY26.
Our Innovation Services Team
Our Innovation Services Team utilises our innovation framework to support
customers and colleagues in the effective evaluation of solution feasibility,
when assessing an idea that solves an internal or customer-centric idea.
One of the framework's key elements is Spark & Scale, our programme to
incubate great ideas brought forward by our people. We are currently investing
in 14 ideas, ranging from using generative AI in the Policing and Justice
sector, to Low Code tools to drive business efficiencies.
Financial Review
FY25 was a period of challenging trading environments for our services
businesses - Digital Services and Workday Services but also continued strong
growth in our Workday Products division.
In aggregate, revenue for the period decreased by 4% (-3% ccy) to £367.2
million (2024: £382.4 million). Within this, we recorded continued strong
growth in Workday Products, with revenue in the period increased to £71.3
million (2024: £57.3 million), representing growth of 24% (26% ccy) (2024:
28%). This growth was more than offset by the tough trading environment for
our two services divisions. Digital Services revenue reduced by 7% to £197.2
million (2024: £213.1 million), due to lower demand across the public and
commercial sectors. Workday Services revenue reduced by 12% (-10% ccy) to
£98.7 million (2024: £112.0 million), in part due to a more competitive
market. In the prior financial year, we stopped providing procurement
consulting services previously offered by Blackline Group, which we acquired
in 2022. Adjusting FY24 revenue to exclude these services, Workday Services
revenue in the current period was 8% lower on a like-for-like basis. The Group
'Operational Review' provides more information on our revenue performance.
Our overall gross margin decreased to 47.9% (2024: 49.0%). Digital Services'
gross margin decreased to 36.4% (2024: 38.4%) driven by lower utilisation.
Workday Services gross margin decreased by 3% to 51.7% (2024: 54.7%) mainly
driven by rate pressure. Workday Products gross margin decreased to 74.4%
(2024: 77.1%) impacted by lower margins in our Employee Document Management
product, launched in FY24.
Operating expenses
Operating expenses (excluding restructuring costs) decreased by 2% to £125.6
million (2024: £128.4 million) reflecting disciplined cost management.
Restructuring costs of £8.4 million (2024: £Nil) were incurred during the
period. These costs relate to redundancy and severance costs incurred in the
delivery of cost reduction measures in the period. £3.0 million of the £8.4
million restructuring costs have been paid in FY25 and the remainder recorded
as a liability in the statement of financial position. £19.0 million of cost
savings are estimated to arise from the cost reduction measures which are
expected to be reinvested or offset in the areas outlined in the 'Financial
highlights' section.
As noted in our Workday Products review, we entered into an enhanced strategic
partnership agreement with Workday, Inc. in July 2024. Under the terms of this
agreement, annual fees of approximately £7.8 million are payable. A total
charge of £5.2 million (2024: £Nil) was recognised in the period since July
2024.
We continue to invest in product development, with expenditure increasing to
£16.8 million (2024: £13.5 million), all of which was expensed during the
period. We recognised £5.1 million of Research & Development Expenditure
Credit (RDEC) income during the period (2024: £5.2 million).
Alternative performance measures
We use several alternative performance measures to understand and monitor
day-to-day performance and to assist management's financial, strategic and
operating decisions.
We believe our adjusted measures are better indicators of trading performance,
assist comparison between periods and provide useful information for users of
the financial statements. The nature and type of items adjusted are also
similar to comparable companies.
Specifically we exclude the following items:
Costs directly attributable to acquisitions. This includes amortisation of
acquired intangible assets, deferred consideration including compensation for
post-combination services and acquisition-related expenses such as legal and
professional costs incurred mainly in the period of acquisition. These costs
are unique to each acquisition and can vary significantly between periods
depending on the timing and size of acquisitions, the nature of intangible
assets acquired and the structure of consideration. We do not therefore
consider these costs are reflective of underlying operations.
Share-based payment costs. Although share-based payment compensation is an
important aspect of the compensation of our employees, we believe it is useful
to exclude the share-based payments expense to better understand the
performance of our core business and to facilitate comparison of our results
to those of peer companies. Our arrangements consist of both equity-settled
and cash-settled schemes and the expense incurred will be influenced by
factors including the market value of our shares, forfeiture rates and
volatility, which are generally beyond our control and may not correlate to
the operation of the business.
Significant and non-recurring items. In the prior period we excluded gains
relating to the sale of property, plant and equipment and fair value movements
in investment property. In the current period we have excluded restructuring
costs incurred. We consider adjusting these costs provides more meaningful
period-to-period comparisons.
We adjust for the above items consistently across all our adjusted measures,
namely 'adjusted profit before tax', 'adjusted EBITDA', 'cash conversion' and
'adjusted diluted and basic earnings per share'.
The adjusted profit measures we use are not defined in UK-adopted
International Accounting Standards and our definitions may not be comparable
with similarly titled performance measures and disclosures by other entities.
As such, these measures should not be considered in isolation but as
supplementary information to the financial statements.
The adjusted profit measures reconcile to the reported numbers as follows:
Adjusted profit measures
2025 2024
(£000s) (£000s)
Profit before tax 48,640 64,772
Share-based payment expense and related costs 5,930 5,952
Amortisation of acquired intangible assets 836 4,190
Increase in fair value of investment property and gain on sale of property - (2,154)
Restructuring costs 8,411 -
Compensation for post-combination services 877 3,800
Acquisition-related expenses 948 626
Adjusted profit before tax 65,642 77,186
2025 2024
(£000s) (£000s)
Profit after tax 35,560 48,715
After tax impact of:
Share-based payments expense and related costs 4,335 4,464
Amortisation of acquired intangible assets 645 3,147
Increase in fair value of investment property and gain on sale of property - (1,894)
Restructuring costs 6,194 -
Compensation for post-combination services 877 3,746
Acquisition-related expenses 693 582
Adjusted profit after tax 48,304 58,760
Adjusted EBITDA
2025 2024
(£000s) (£000s)
Adjusted profit before tax 65,642 77,186
Depreciation of property, plant and equipment 3,381 2,886
Depreciation of right-of-use assets 1,277 1,152
Finance expense 333 334
Finance income (6,440) (4,336)
Adjusted EBITDA 64,193 77,222
Adjusted pre-tax profit decreased by 15% to £65.6 million (2024: £77.2
million). Profit before tax decreased by 25% to £48.6 million (2024: £64.8
million).
Corporation tax charge
The effective tax rate for the year was 27% (2024: 25%),which is higher than
the UK corporation tax rate, primarily due to the impact of higher tax rates
in the United States.
We envisage our future effective tax rates to be broadly in line with this
rate.
The year-end tax liability has reduced to £2.5 million (2024: £7.1 million)
due to an increase in advance payments made during the year.
Financial position
We continue to have a strong financial position with £133.7 million of cash
and treasury deposits (2024: £126.0 million), no debt and net assets of
£138.0 million (2024: £156.8 million).
The combined underlying net trade receivables and accrued income balance
decreased by 21% to £54.2 million (2024: £68.6 million), reflecting the
decrease in revenue in Digital Services and Workday Services and strong cash
collection. Trade payables and accruals have increased to £54.3 million
(2024: £50.1 million) due mainly to timing of receipt of some larger supplier
invoices at year-end.
As previously disclosed, we agreed to sell part of the site which was
purchased in FY20 for the development of the Group's future headquarters in
Belfast. We concluded the sale during the year, receiving proceeds of £6.2
million. The fair value of this investment property prior to disposal was
£6.2 million. As a result, no gain or loss relating to the disposal of this
property has been recognised in the period.
Cash flow and cash conversion
Cash conversion, which is cash generated by operating activities as a
percentage of adjusted EBITDA, was very strong at 112% (2024: 98%). Adjusting
for the impact of restructuring costs not paid at 31 March 2025, cash
conversion would be 103% .
Dividend
Our progressive dividend policy provides shareholder returns, while ensuring
we have sufficient funds to invest in long-term growth. The proposed final
dividend recommended by Directors is 19.1p and, if approved by shareholders,
will be paid on 24 October 2025 to shareholders on the register on 3 October
2025, with an ex-dividend date of 2 October 2025. This will make the total
dividend for the year 28.4p (2024: 27.3p) which will represent a distribution
of 73% of adjusted profit after taxation (2024: 58%).
Capital allocation policy
Kainos has a strong unlevered balance sheet and continues to generate
significant operating cash flow. The Board's main priorities when it comes to
our cash are to enhance the growth of the business, both organically and
through acquisition, and to reward shareholders through growth in earnings
alongside our progressive dividend policy, while retaining a robust capital
base.
Where there is surplus cash over and above that needed to fund organic and
inorganic growth, the Board will consider additional one-off returns of
capital to shareholders. We launched a £30.0 million share buyback programme
on 8 November 2025, to be executed over a period of six months. The programme
completed on 9 May 2025 with a total of 3,993,382 shares having been bought
back for consideration of £30.0 million. Any shares purchased as part of this
programme are subsequently cancelled.
After applying the Board's capital allocation framework, we are announcing our
intention to launch a further share buyback programme of £30 million to be
executed over the next six months (see separate announcement).
The Board will continue to keep its capital allocation policy and further
distributions to shareholders under review, with consideration of other
potential uses of capital that may drive value for shareholders over the
medium-term.
Consolidated income statement for the year ended 31 March 2025
Continuing operations Note 2025 2024
(£000s) (£000s)
Revenue 2 367,246 382,393
Cost of sales 2 (191,337) (195,079)
Gross profit 2 175,909 187,314
Operating expenses
Restructuring costs (8,411) -
Other operating expenses (125,643) (128,411)
Total operating expenses (134,054) (128,411)
Impairment gain/(loss) (including amounts recovered) on trade receivables and 678 (287)
accrued income
Gain on disposal of property, plant and equipment - 1,114
Increase in fair value of investment property - 1,040
Operating profit 3 42,533 60,770
Finance income 6,440 4,336
Finance expense (333) (334)
Profit before tax 48,640 64,772
Income tax expense 5 (13,080) (16,057)
Profit for the year 35,560 48,715
Consolidated statement of comprehensive income for the year ended 31 March
2025
2025 2024
(£000s) (£000s)
Profit for the year 35,560 48,715
Items that may be reclassified subsequently to profit or loss:
Foreign operations - foreign currency translation differences (1,595) (1,065)
Total comprehensive income for the year 33,965 47,650
Earnings per share
Basic 7 28.4p 39.0p
Diluted 7 28.2p 38.6p
Consolidated statement of financial position as at 31 March 2025
Note 2025 2024
(£000s) (£000s)
Non-current assets
Goodwill 37,313 38,203
Other intangible assets 4,239 5,208
Investment property - 6,200
Property, plant and equipment 12,145 12,285
Right-of-use assets 4,718 5,216
Investments in equity instruments 1,299 1,299
Deferred tax asset 4,911 5,147
64,625 73,558
Current assets
Trade and other receivables 8 38,520 41,832
Prepayments 8 7,553 4,268
Accrued income 8 22,673 33,225
Cash and cash equivalents 128,288 121,558
Treasury deposits 5,399 4,403
202,433 205,286
Total assets 267,058 278,844
Current liabilities
Trade payables and accruals 9 (54,269) (50,062)
Deferred income 9 (46,358) (44,954)
Current tax liabilities 9 (2,526) (7,069)
Other tax and social security 9 (11,452) (10,135)
Lease liabilities (1,246) (1,015)
Provisions 10 (5,388) -
(121,239) (113,235)
Non-current liabilities
Provisions 10 (1,546) (1,542)
Deferred tax liability (1,976) (2,371)
Lease liabilities (4,312) (4,883)
(7,834) (8,796)
Total liabilities (129,073) (122,031)
Net assets 137,985 156,813
Equity
Share capital 618 629
Share premium account 9,481 9,419
3,5623
Other reserves 3,562 3,548
Share-based payment reserve 36,907 31,228
Shares held to be cancelled (1,431) -
Translation reserve (1,630) (35)
Retained earnings 90,478 112,024
Total equity 137,985 156,813
These financial statements were approved by the Board of Directors and
authorised for issue on 16 May 2025. They were signed on its behalf by:
Richard McCann
Director
16 May 2025
Consolidated statement of changes in equity for the year ended 31 March 2025
Share Shares held Share Other Share-based Translation reserve Retained Total
capital to be premium reserves payment earnings equity
cancelled( 6 ) (£000s) (£000s) reserve (£000s) (£000s) (£000s)
(£000s) (£000s) (£000s)
Balance at 31 March 2023 623 - 6,567 3,548 23,394 1,030 94,185 129,347
Profit for the year - - - - - - 48,715 48,715
Other comprehensive income - - - - - (1,065) - (1,065)
Total comprehensive income for the year - - - - - (1,065) 48,715 47,650
Equity-settled share-based payment - - - - 7,834 - - 7,834
Current tax for equity-settled share-based payments - - - - - - 514 514
Deferred tax for equity-settled share-based payments - - - - - - (968) (968)
Issue of share capital - share options exercised 6 - 2,852 - - - - 2,858
Dividends - - - - - - (30,422) (30,422)
Balance at 31 March 2024 629 - 9,419 3,548 31,228 (35) 112,024 156,813
Profit for the year - - - - - - 35,560 35,560
Other comprehensive income - - - - - (1,595) - (1,595)
Total comprehensive income for the year - - - - - (1,595) 35,560 33,965
Equity-settled share-based payment - - - - 5,679 - - 5,679
Current tax for equity-settled share-based payments - - - - - - 21 21
Deferred tax for equity-settled share-based payments - - - - - - (25) (25)
Issue of share capital - share options exercised 3 - 62 - - - - 65
Share buyback programme - (22,785) - - - - - (22,785)
Shares cancelled (14) 21,354 - 14 - - (21,354) -
Dividends - - - - - - (35,748) (35,748)
Balance at 31 March 2025 618 (1,431) 9,481 3,562 36,907( 7 ) (1,630) 90,478 137,985
Consolidated statement of cash flows for the year ended 31 March 2025
Note 2025 2024
(£000s) (£000s)
Cash flows from operating activities
Profit for the year 35,560 48,715
Adjustments for:
Finance income (6,440) (4,336)
Finance expense 333 334
Tax expense 5 13,080 16,057
Share-based payment expense 5,930 5,952
Depreciation of property, plant and equipment 3,381 2,886
Depreciation of right-of-use assets 1,277 1,152
Amortisation of intangible assets 836 4,190
Gain on disposal of property, plant and equipment - (1,114)
Increase in fair value of investment property - (1,040)
Post-acquisition remuneration settled by shares - 1,501
Increase in provisions 5,392 170
Operating cash flows before movements in working capital 59,349 74,467
Decrease in trade and other receivables 10,912 2,337
Increase/(decrease) in trade and other payables 1,513 (1,336)
Cash generated from operating activities 71,774 75,468
Income taxes paid (12,967) (6,454)
Net cash from operating activities 58,807 69,014
Cash flows from investing activities
Interest received 6,027 4,336
Purchases of property, plant and equipment (3,369) (5,662)
Proceeds from sale of property, plant and equipment - 1,484
Proceeds from sale of investment property 6,200 -
Amounts placed on treasury deposit (996) (4,403)
Acquisition of subsidiaries net of cash acquired - (22,908)
Net cash from/(used) in investing activities 7,862 (27,153)
Cash flows from financing activities
Dividends paid 6 (35,748) (30,422)
Share buyback programme (22,552) -
Interest paid (333) (334)
Repayment of lease liabilities (1,121) (466)
Proceeds on issue of shares 65 2,858
Net cash used in financing activities (59,689) (28,364)
Net increase in cash and cash equivalents 6,980 13,497
Cash and cash equivalents at beginning of year 121,558 108,302
Effect of exchange rate fluctuations on cash held (250) (241)
Cash and cash equivalents at end of year 128,288 121,558
Notes to the consolidated financial information
1. General information and basis of preparation
Kainos Group plc ('the Company') is a public company limited by shares
incorporated in the United Kingdom under the Companies Act 2006 and is
registered in England and Wales (company registration number 09579188), having
its registered office at 21 Farringdon Road, 2nd Floor, London EC1M 3HA. The
Company is listed on the London Stock Exchange.
The Group financial statements consolidate those of the Company and its
subsidiaries (together referred to as the 'Group').
The Group financial statements have been prepared and approved by the
Directors in accordance with UK-adopted International Accounting Standards
('UK-Adopted IFRS'). The financial statements are presented in Pounds
Sterling, generally rounded to the nearest thousand.
The financial information set out in this document does not constitute the
statutory accounts of the Group for the years ended 31 March 2025 or 31 March
2024 but is derived from those accounts. Statutory accounts for the year ended
31 March 2024 have been delivered to the registrar of companies, and those for
2025 will be delivered in due course. The auditor has reported on those
accounts; their reports were (i) unqualified, (ii) did not include a reference
to any matters to which the auditor drew attention by way of emphasis without
qualifying their report and (iii) did not contain a statement under section
498 (2) or (3) of the Companies Act 2006.
This financial information was authorised for issue by the Directors on 16 May
2025.
2. Segment reporting
The following is an analysis of the Group's revenue and results by reportable
segment:
2025 Workday Products
12 months to 31 March Digital Workday Services (£000s) Consolidated
Services (£000s)
(£000s) (£000s)
Revenue 197,173 98,725 71,348 367,246
Cost of sales (125,438) (47,647) (18,252) (191,337)
Gross profit 71,735 51,078 53,096 175,909
Direct expenses( 8 ) (21,546) (33,491) (33,615) (88,652)
Contribution 50,189 17,587 19,481 87,257
Depreciation of property, plant and equipment (3,381)
Central overheads((8)) (24,341)
Net finance income 6,107
Adjusted pre-tax profit 65,642
Share-based payments expense and related costs (5,930)
Amortisation of acquired intangible assets (836)
Compensation for post-combination remuneration (877)
Acquisition-related expenses (948)
Restructuring costs (8,411)
Profit before tax 48,640
2024 Workday Products
12 months to 31 March Digital Workday Services (£000s) Consolidated
Services (£000s)
(£000s) (£000s)
Revenue 213,097 112,044 57,252 382,393
Cost of sales (131,280) (50,717) (13,082) (195,079)
Gross profit 81,817 61,327 44,170 187,314
Direct expenses((8)) (20,778) (35,889) (28,280) (84,947)
Contribution 61,039 25,438 15,890 102,367
Central overheads((8)) (29,183)
Net finance income 4,002
Adjusted pre-tax profit 77,186
Share-based payments expense and related costs (5,952)
Amortisation of acquired intangible assets (4,190)
Compensation for post-combination remuneration (3,800)
Acquisition-related expenses (626)
Increase in fair value of investment property and gain on sale of property 2,154
Profit before tax 64,772
The Group's revenue from external customers by primary geographic region is
detailed below:
2025 2024
(£000s)
(£000s)
United Kingdom & Ireland 217,374 232,557
Americas 114,392 106,990
Central Europe 33,710 41,433
Rest of world 1,770 1,413
367,246 382,393
Disaggregation of revenue by type
Digital Workday Workday
Services Services Products Total
2025 2025 2025 2025
(£000s) (£000s) (£000s) (£000s)
Type of revenue
Services 188,451 95,047 4,061 287,559
Subscriptions - - 67,287 67,287
Third party and other 8,722 3,678 - 12,400
197,173 98,725 71,348 367,246
Total
Digital Workday Workday 2024
Services Services Products
2024 2024 2024
(£000s) (£000s) (£000s) (£000s)
Type of revenue
Services 204,950 105,428 2,430 312,808
Subscriptions - - 54,822 54,822
Third party and other 8,147 6,616 - 14,763
213,097 112,044 57,252 382,393
Disaggregation of revenue by sector
Digital Services 2025 2024
(£000s) (£000s)
Public 125,502 138,168
Commercial 21,030 30,749
Healthcare 50,641 44,180
197,173 213,097
Workday Services
Public 35 89
Commercial 98,575 111,949
Healthcare 115 6
98,725 112,044
Workday Products
Public - -
Commercial 71,267 57,170
Healthcare 81 82
71,348 57,252
Group
Public 125,537 138,257
Commercial 190,872 199,868
Healthcare 50,837 44,268
Total 367,246 382,393
3. Profit for the year
Profit for the year has been arrived at after charging/(crediting):
2025 2024
(£000s) (£000s)
Total staff costs 259,119 261,430
Government grants (793) (2,070)
Research and development expensed as incurred 16,818 13,493
Research and Development Expenditure Credit (5,073) (5,161)
Depreciation of property, plant and equipment 3,381 2,886
Depreciation of right-of-use assets 1,277 1,152
Gain on disposal of property, plant and equipment - (1,173)
Net foreign exchange loss 461 553
Amortisation of acquired intangibles 836 4,190
4. Staff numbers
The average number of employees during the year was:
2025 2024
Number Number
Technical 2,410 2,354
Administration 310 331
Sales 233 258
2,953 2,943
5. Tax expense
The following tax was recognised in recognised in the income statement:
2025 2024
(£000s) (£000s)
Current tax expense:
Current year (UK) 9,909 12,201
Current year (overseas) 4,070 6,456
Adjustments in respect of prior years (635) (444)
13,344 18,213
Deferred tax
Origination and reversal of temporary differences (1,277) (1,439)
Adjustments in respect of prior years 1,013 (717)
(264) (2,156)
Total tax expense 13,080 16,057
In addition to the amount charged to the statement of comprehensive income,
the following amounts relating to tax have been recognised directly in equity
in relation to share-based payments:
2025 2024
(£000s) (£000s)
Current tax
Permanent element of share-based payment deduction 21 514
Deferred tax
Deferred tax on share-based payments (25) (968)
Total tax recognised directly in equity (4) (454)
UK corporation tax has been calculated at 25% (2024: 25%) of the estimated
taxable profit for the year, reflecting the statutory rate in effect at the
balance sheet date.
Taxation in other jurisdictions is determined based on the applicable rates
prevailing in those respective regions.
The effective tax rate for the year is 27%, which is higher than the UK
corporation tax rate, primarily due to the impact of higher tax rates in the
United States.
We envisage our future effective tax rates to be broadly in line with this
rate.
The Group's tax charge can be reconciled to the profit in the income statement
and effective tax rate as follows:
2025 2024
(£000s) (£000s)
Profit before tax on continuing operations 48,640 64,772
Tax at the UK corporation tax rate of 25% (2024: 25%) 12,160 16,193
Expenses not deductible for tax purposes 662 1,333
Tax exempt income (357) (428)
Effect of tax rates in foreign jurisdictions 237 120
Adjustments to tax charge in respect of prior years 378 (1,161)
Tax expense for the year 13,080 16,057
Effective tax rate 27% 25%
6. Dividend
2025 2024
(£000s) (£000s)
Amounts recognised as distributions to equity holders in the period:
Interim dividend for 2025 of 9.3p per share 11,721 -
Final dividend for 2024 of 19.1p per share 24,027 -
Interim dividend for 2024 of 8.2p per share - 10,287
Final dividend for 2023 of 16.1p per share - 20,135
35,748 30,422
The Board has proposed a final dividend in respect of the year ended 31 March
2025 subject to approval by shareholders at the Annual General Meeting. This
dividend has not been recognised as a liability in these financial statements
and there are no tax consequences. The proposed final dividend, if approved by
shareholders, will be 19.1 per share (£23.6) million in total) and payable on
24 October 2025 to all shareholders on the Register of Members on 3 October
2025, and with an ex-dividend date of 2 October 2025.
7. Earnings per share
Basic
The calculation of basic earnings per share (EPS) has been based on the
following profit attributable to ordinary shareholders and weighted average
number of ordinary shares outstanding.
2025 2024
(£000s) (£000s)
Profit attributable to ordinary shareholders 35,560 48,715
Thousands Thousands
Issued ordinary shares at 1 April 125,788 124,628
Effect of shares held in trust (882) (790)
Effect of share options vested and exercised 418 711
Effect of shares issued related to a business combination 58 113
Effect of shares issued related to free share awards 122 109
Effect of share buyback programme (468) -
Weighted average number of ordinary shares at 31 March 125,036 124,771
Basic earnings per share 28.4p 39.0p
Diluted
The calculation of diluted EPS has been based on the following profit
attributable to ordinary shareholders and weighted-average number of ordinary
shares outstanding after adjustment for the effects of all dilutive potential
ordinary shares.
2025 2024
(£000s) (£000s)
Profit attributable to ordinary shareholders 35,560 48,715
Thousands Thousands
Weighted average number of ordinary shares (basic) 125,036 124,771
Effect of share options in issue 228 626
Effect of shares held in trust 882 790
Effect of potential shares to be issued related to a business combination - 138
Weighted average number of ordinary shares (diluted) at 31 March 126,146 126,325
Diluted earnings per share 28.2p 38.6p
The average market value of the Company's shares for the purpose of
calculating the dilutive effect of share options was based on quoted market
prices for the year during which the options were outstanding.
At 31 March 2025 1,344,201 options (2024: 181,451) were excluded from the
diluted weighted average number of ordinary shares calculation because their
effect would have been anti-dilutive.
Adjusted (unaudited)
Adjusted basic and adjusted diluted earnings per share is calculated using the
adjusted profit for the year measure. The calculation of adjusted profit for
the year is detailed in the Financial Review section of the this Report.
2025 2024
(£000s) (£000s)
Adjusted profit for the year 48,304 58,760
Thousands Thousands
Weighted average number of ordinary shares for the purposes of basic earnings 125,036 124,771
per share
Weighted average number of ordinary shares for the purposes of diluted 126,146 126,325
earnings per share
Adjusted basic earnings per share 38.6p 47.1p
Adjusted diluted earnings per share 38.3p 46.5p
8. Trade and other receivables
2025 2024
(£000s) (£000s)
Trade receivables 31,481 35,368
Other receivables 7,039 6,464
38,520 41,832
Prepayments 7,553 4,268
Accrued income 22,673 33,225
68,746 79,325
9. Trade and other payables
2025 2024
(£000s) (£000s)
Trade payables and accruals 54,269 50,062
Deferred income 46,358 44,954
Current tax liabilities 2,526 7,069
Other tax and social security 11,452 10,135
114,605 112,220
10. Provisions
Other provisions are analysed as follows:
2025 2024
(£000s) (£000s)
Restructuring provision 5,388 -
Property-related provision 1,546 1,542
6,934 1,542
2025 2024
(£000s) (£000s)
Current 5,388 -
Non-current 1,546 1,542
6,934 1,542
Restructuring Property Total
related related
(£000s) (£000s) (£000s)
At 1 April 2024 - 1,542 1,542
Additional provision in the year 8,411 4 8,415
Utilisation of provision (3,023) - (3,023)
At 31 March 2025 5,388 1,546 6,934
Restructuring
The restructuring provision comprises redundancy and severance costs incurred
in the delivery of cost reduction measures. Total restructuring costs incurred
in FY25 were £8.4 million, of which £3.0 million was settled in the year.
The provision is expected to be fully utilised in FY26.
11. Subsequent events
The Company bought back, for cancellation, 1,054,544 ordinary shares at a cost
of £7.4 million between 1 April 2025 and 9 May 2025.
Furthermore, on 19 May 2025, the Board of Directors approved the commencement
of a £30 million share buyback programme to be executed over a period of six
months. The sole purpose of the programme is to reduce the Company's share
capital, and any shares purchased for this purpose will be cancelled.
There have been no other material events subsequent to year end that would
require adjustment or disclosure in these financial statements.
(#_ftnref1) 1 The Financial Review section reconciles adjusted and statutory
profit measures. See also the definition of terms section for more information
on adjusted measures and other key terms and metrics used in this report.
(#_ftnref2) 2 Includes £5.4 million (2024: £4.4 million) of treasury
deposits which do not meet the definition of cash and cash equivalents.
(#_ftnref3) 3 Excluding the impact of restructuring costs, cash conversion
is 103%.
(#_ftnref4) 4 See the definition of terms for more information on how Net
Promoter Score is calculated.
(#_ftnref5) 5 We refined the definition of an active customer during the
period (see the definition of terms) and customer numbers at the period end
are therefore not directly comparable to prior periods.
(#_ftnref6) 6 Shares purchased as part of the share buyback programme due to
be cancelled.
(#_ftnref7) 7 £25.4 million relates to exercised or lapsed options or fully
vested free share awards and is considered distributable.
(#_ftnref8) 8 Direct expenses plus central overheads (including
depreciation) plus balances below adjusted profit equals the sum of operating
expenses plus impairment gain/(loss) and reversals on trade receivables and
accrued income. Direct expenses are expenses that are directly attributable to
each division.
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