REG - Kainos Group plc - Interim Results
13/11/2023 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20231113:nRSM1582Ta&default-theme=true
RNS Number : 1582T Kainos Group plc 13 November 2023
13 November 2023
Kainos Group plc
("Kainos" or the "Group")
Interim results for the six months ended 30 September 2023
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 six months ended 30 September 2023
(H1 24).
Financial highlights
H1 24 H1 23 Change
Revenue £193.2m £179.8m +7%
Profit before tax £30.9m £27.5m +12%
Adjusted pre-tax profit £37.9m £34.0m +11%
Cash £113.0m £97.1m +16%
Bookings £201.9m £221.5m -9%
Product Annual Recurring Revenue (ARR) £55.4m £44.2m +25%
Contracted Backlog £326.9m £307.9m +6%
Diluted earnings per share 17.5p 17.4p +1%
Adjusted diluted earnings per share 22.1p 22.0p <1%
Interim dividend per share 8.2p 7.8p +5%
Operational highlights
Our key business areas continue to deliver strong growth and provide an
excellent foundation for future expansion.
· Within Digital Services, strong public sector revenue growth of 17%
was offset by the anticipated decrease in healthcare and project scope
reductions in some commercial sector engagements, with overall revenues at
£109.2 million (H1 23: £110.5 million).
· Our Workday Services division recorded strong revenue growth of 18%
(21% ccy), increasing to £57.3 million (H1 23: £48.4 million).
· Workday Products revenues grew 28% (24% organic, 31% ccy) to £26.7
million (H1 23: £20.9 million).
Our underlying business performance demonstrates disciplined execution against
the backdrop of macro-economic uncertainty.
· Revenue up 7% (7% organic, 8% ccy) to £193.2 million (H1 23:
£179.8 million).
· Adjusted pre-tax profit grew 11% (19% ccy) to £37.9 million (H1
23: £34.0 million), representing an adjusted profit percentage of 20% (H1 23:
19%).
· Overall bookings reduced by 9% to £201.9 million (H1 23: £221.5
million); we note that the comparative period included a 125% increase in
Workday Services bookings.
· Contracted backlog growth of 6% to £326.9 million (H1 23: £307.9
million).
· Period-end cash amounted to £113.0 million (H1 23: £97.1
million); with cash conversion at 82% (H1 23: 70%).
After a four-year succession plan, we completed a smooth transition at Board
level as Russell Sloan, a Kainos 24-year veteran, takes over as CEO.
· Prior to his appointment to CEO, Russell was the Head of the
Digital Services division.
· Rosaleen Blair, who joined the Board in January 2021, has assumed
the role of Deputy Chairperson and we are delighted to welcome James Kidd,
former Aveva CFO and CEO, to the Board.
· The appointment of Rosaleen and James are part of a planned
succession process, with Tom Burnet and Andy Malpass due to complete their
term as Non-Executive Directors in September 2024.
In Digital Services, we continue to deliver significant digital transformation
programmes across public sector, while there are further reductions in
healthcare.
· Strong growth in public sector was offset by anticipated lower
revenues in healthcare (H1 24: £20.4 million; H1 23: £29.5 million) and
reductions in scope for some commercial sector projects (H1 24: £15.8
million; H1 23: £18.7 million). This resulted in an overall reduction of 1%
(1% ccy) in revenues to £109.2 million (H1 23: £110.5 million).
We continue to be the leading pan-European Workday consulting specialist and
are a Phase 1 partner in both the US and Canadian markets.
· As noted, we recorded strong revenue growth of 18% (21% ccy) to
£57.3 million (H1 23: £48.4 million), of which the majority (77%) are
international revenues.
· The acquisition of the Blackline Group in early 2022 included a
standalone procurement consulting capability and we have decided to stop
providing these services during this financial year; the Workday Strategic
Sourcing activity remains unchanged(( 1 (#_ftn1) )).
Our Workday-related products delivered very strong growth and we remain on
track to achieve our target of £100 million ARR by 2026.
· Revenue growth was very strong at 28% (24% organic, 31% ccy), with
revenues now £26.7 million (H1 23: £20.9 million) and the associated ARR
increased by 25% to £55.4 million (H1 23: £44.2 million).
· In October 2023 we launched our latest product, Employee Document
Management (EDM), with nine clients already contracted.
· We continued to invest in our products, increasing research &
development expenditure by 48%, to £5.9 million (H1 23: £4.0 million) and
sales & marketing spend increased 23% to £5.9 million (H1 23: £4.8
million).
We continue to extend our footprint as a global business; almost 40% of our
revenues are now generated internationally.
· Very strong international growth, with revenues up 22% to £74.7
million (H1 23: £61.0 million), and now representing 39% of total revenue.
Commercial sector customers now generate over half our revenues.
· Commercial revenues are up 16% to £99.8 million (H1 23: £86.3
million), representing 51% of total revenue.
· Public sector revenues have increased 15% to £73.0 million (H1 23:
£63.3 million) or 38% of total revenue.
· Healthcare revenues, as previously forecast, have reduced by 32% to
£20.5 million (H1 23: £30.2 million), which is 11% of total revenue.
The commitment and engagement of our colleagues underpins our business
performance as we continue to grow a global, talented team.
· We have 3,139 people (H1 23: 2,920) based across 23 countries,
representing an increase of 8%, or 16% when considering the reduction in
contractors to 111 (H1 23: 303).
· Our employee retention improved to 92% (H1 23: 86%), and engagement
levels remain high, measuring 79% on our internal surveys, and we were again
awarded '50 Best Places To Work in the UK' by Glassdoor.
Excellent customer service drives customer satisfaction and retention,
supporting our revenue growth.
· Our customer approval rating remains high and we recorded a Net
Promoter Score of 62 (a score over 50 is viewed as 'excellent'((( 2 (#_ftn2)
)))).
· Existing customer revenue increased by 7% to £182.3 million (H1
23: £169.8 million) which represents a Net Revenue Retention of 107%.
· Customer numbers increased to 892 (H1 23: 779), an increase of
15%.
We are making rapid progress on our announced £10 million investment in
Generative AI to further enhance our leadership in Artificial Intelligence.
· Over the past ten years we have established a practice of 190+ Data
and AI specialists, delivering projects for clients that include Hello Fresh,
the Ministry of Defence and the United Nations.
· We are investing a further £10 million to accelerate the skills of
over 1,000 colleagues to ensure that they can responsibly harness Generative
AI for the benefit of our customers.
· During 2023 we have been supporting more than 25 clients assess and
explore the potential and implications of Generative AI, with two of these
projects moving from the exploration phase to deployment in production
environments.
We have retained our carbon neutral status for 2023 and we remain on track to
achieve carbon net zero by 2025.
· Having made substantive progress on our Scope 1, Scope 2 and
business travel-related emissions, our focus has moved to addressing the
emissions within our supply chain. Our supplier engagement plan will commence
during November.
We are maintaining a positive outlook as our key business segments are
positioned for further growth in the near-term
· Notwithstanding the global economic uncertainty, we believe that
our key business areas, Workday Products, Workday Services and public sector
Digital Services will continue to deliver growth, in both the near term and
medium term.
· We do not expect any further significant revenue reductions in the
healthcare and commercial sub-sectors of our Digital Services division and
that they are likely to return to growth in the near-to-medium term.
· We are well-positioned to deliver strong margin growth through the
year as we continue to benefit from our disciplined operational execution.
· We have a growing sense of excitement about some of our smaller,
high-growth activities, of which Workday Extend, Automation and Low Code,
international growth in Digital Services and, obviously, Data & AI are
showing significant promise.
Commenting on the results, CEO Russell Sloan said:
"Our latest results, the first after the recent CEO transition, are the
outcome of continued excellent performance where we have again delivered
strong growth.
We are grateful for the ongoing support and trust that our customers place in
Kainos to deliver their critical projects. Our customer satisfaction levels
are high, as is the level of continued business from our customers.
In the last six months, our Digital Services division has been fuelled by
public sector clients continuing to invest strongly in digital transformation
projects. Meanwhile, there has been strong growth in our Workday Services
division where we continue to be the leading Workday partner in Europe and are
enjoying a growing status in the US and Canada.
Progress within our Workday Products division continues to gain momentum. In
addition to our three established Smart Suite products, we are delighted to
have launched our latest product, Employee Document Management, which already
has nine international clients signed up. We are confident that we will have
further opportunities to develop new, innovative products as we continue to
help ambitious clients deploy Workday.
We have a well-diversified business with an increasing focus on our
international expansion, where growth continues to be very strong. In addition
to the global growth in our Workday divisions, we are now creating
opportunities for our Digital Services division to expand internationally,
especially into our impressive Workday customer base.
During this period we have maintained our focus on operational excellence
while at the same time building for the future, as we have grown our employee
base strongly while reducing our usage of third-party contractors.
This is a natural evolution as we rely on the ability, energy, and expertise
of our people to drive our success. Our high level of employee engagement, now
measured monthly, has resulted in improved retention which is amongst the
highest levels we have experienced in the last ten years.
As the result of many years of research, and then deployment of Artificial
Intelligence (AI) system, we have built a strong reputation as an AI leader in
the UK. The recent surge of interest in, and capabilities of, technologies
such as Generative AI, provide ongoing opportunity for us. These range from
helping our customers assess and safely explore the benefits and limitations
of these new models, to the internal deployment of assistive tools to increase
our own productivity.
Despite the ongoing global economic uncertainty, we believe that in the
near-term and long-term, our business will sustainably deliver growth. The
efficiency and benefits that are derived from our products and services are
significant and attract investment within our customers. We are excited that
our talented colleagues will continue to drive change at pace and make a
positive impact on people's lives."
For further information, please contact:
Kainos
via FTI Consulting LLP
Russell Sloan, Chief Executive Officer
Richard McCann, Chief Financial Officer
Investec Bank
plc
+44 20 7597 5970
Patrick Robb / Ben Griffiths
FTI Consulting
LLP
+44 20 3727 1000
Matt Dixon / Dwight Burden / Kwaku Aning
About Kainos Group plc
Kainos Group plc is a UK-headquartered IT provider with expertise across three
divisions: Digital Services, Workday Services, and Workday Products.
· Digital Services develops and supports custom digital service
platforms for public sector, commercial, and healthcare customers. Our
solutions transform the delivery of these services, ensuring they are secure,
accessible, and cost-effective, and provide better outcomes for users.
· Workday Services specialises in the deployment of Workday, Inc.'s
Finance, HR and Planning products to leading organisations across Europe and
North America. We are one of Workday's most respected partners, experienced in
complex deployment and trusted by our customers to launch, test, expand, and
support their Workday systems.
· Workday Products develops products that complement Workday. Our Smart
product suite, including Smart Test (for automated testing), Smart Audit (for
compliance monitoring), and Smart Shield (for data masking), are used by more
than 400 customers globally to safeguard their Workday systems.
Our people are central to our success. We employ more than 3,100 people in 23
countries across Europe, Asia, and the Americas.
We are listed on the London Stock Exchange (LSE: KNOS) and 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 paid us to deliver a product or service
within the current financial year.
Adjusted EBITDA: calculated as being adjusted pre-tax profit excluding
interest, tax, depreciation of property, plant and equipment and right-of-use
assets, and amortisation of intangible assets.
Adjusted pre-tax profit: profit before tax excluding the effect of share-based
payment expense, acquisition-related expenses including amortisation of
acquired intangible assets and post-combination remuneration expense (relating
to contingent deferred consideration subject to future service
conditions). Our adjusted results in the period also exclude one-off gains
recognised on sale of property and changes in fair value of our investment
property.
Annual Recurring Revenue (ARR): the value at the end of the accounting period
of the software and subscription recurring revenue annualised.
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 CO2 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 year-on-year performance by translating the relevant prior
year figure at current year 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.
Net Promoter Score (NPS): a metric that organisations use to measure customer
loyalty toward their brand, product or service, and 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): is the percentage of recurring revenue from
existing customers we retained over the year. This considers increases or
reductions in customer spending and those customers where the engagement has
ended; it does not include revenue from new customers. NRR therefore shows how
our business could continue to grow solely from our current customer base
alone, without acquiring any new customers.
Organic revenue: our revenues excluding revenue from acquisitions completed in
the current and comparative reporting periods.
Software as a service (SaaS): is a software distribution model that delivers
application programs over the internet, with users typically accessing the
program through a web browser. Users pay an on-going 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.
Cautionary statement
This report has been prepared solely to provide additional information to
shareholders to assess the Group's strategies and the potential for those
strategies to succeed. It should not be relied on by any other party or for
any other purpose.
This report includes statements that are, or may be deemed to be,
"forward-looking statements". These statements are made by the Directors in
good faith based on the information available to them up to the time of their
approval of this report, but such statements should be treated with caution
due to the inherent uncertainties, including both economic and business risk
factors, underlying any such forward-looking information.
Group business review
Our overall performance
Our key business areas, Workday Services, Workday Products and public sector
within Digital Services, together 81% of revenue, continue to perform
strongly, even when measured against a strong comparative period (H1 23 total
revenue growth of 26%). Offsetting this growth, our healthcare revenues
continued their post-pandemic decline and we observed some reductions in
project scope for some commercial sector customers within Digital Services.
In total, revenue for the six months grew by 7% (7% organic, 8% ccy) to
£193.2 million (H1 23: £179.8 million) with adjusted pre-tax profit(( 3
(#_ftn3) )) increasing by 11% (19% ccy) to £37.9 million (H1 23: £34.0
million).
Our sales are a combination of extensions to existing contracts, new projects
placed by existing customers and winning new customers. Bookings in the first
six months were 9% lower at £201.9 million (H1 23: £221.5 million), noting
that in the comparative period, Workday Services recorded a 125% increase in
bookings. Our contracted backlog increased 6% to £326.9 million (H1 23:
£307.9 million).
In line with our previous guidance, we have increased investment in our
software products, now representing a total of £11.8 million. Research &
development investment increased to £5.9 million (H1 23: £4.0 million) and
our product-related sales & marketing investment increased to £5.9
million (H1 23: £4.8 million).
As at 30 September 2023, we had a strong cash balance of £113.0 million (H1
23: £97.1 million), representing 82% cash conversion (H1 23: 70%).
Our people
We are clear that our success is driven by the ability, energy and expertise
of the people in Kainos.
In the past twelve months, our headcount has grown by 219 to 3,139 people (H1
23: 2,920). Of our colleagues, 4% are contractors (H1 23: 10%). By region, UK
& Ireland increased to 2,153 people (+49), Central Europe increased to 477
people (+39) and the Americas increased to 413 people (+50). In Asia, the
number of people increased to 96 (+81) as we welcomed our new colleagues from
the RapidIT-Cloudbera acquisition.
Our employee engagement levels remain high. We now utilise Workday Peakon to
continuously assess employee engagement and have achieved a rating of 79%. For
the second consecutive year, we were awarded '50 Best Places To Work For in
the UK' by Glassdoor, the online career community.
In the past twelve months, 92% of our colleagues made the choice to stay and
develop their career within Kainos (H1 23: 86%). This improved retention is
partially as a result of our ongoing engagement efforts, but we also recognise
that there is increased job-changing caution within the sector.
Our customers
We believe that by delivering consistently to our customers we build long-term
relationships. The strength of our customer relationships is reflected in our
consistently high satisfaction scores. We have now migrated from our
proprietary customer satisfaction index to Net Promoter Score (NPS), and in
the last six months we achieved a NPS score of 62 (a score above 50 is viewed
as 'excellent').
Existing customers continue to trust us to deliver their most challenging
projects, and this is reflected in our revenues, with 94% of revenues coming
from our existing clients (H1 23: 94%). We have also gained new customers
during the first six months, and we now work with 892 customers (H1 23:
779).
From a sector perspective we have a well-diversified business, with 51% of our
revenues from commercial clients (H1 23: 48%), 38% from public sector
organisations (H1 23: 35%), and 11% from healthcare customers (H1 23: 17%).
Our international client base has also expanded and as a result our
international revenues have grown by 22% to £74.7 million (H1 23: £61.0
million). Regionally, UK & Ireland accounts for 61% of our business (H1
23: 66%), North America for 28% (H1 23: 25%), Central Europe for 11% (H1 23:
9%), with the rest of the world representing <1% (H1 23: <1%).
Digital Services review
Our Digital Services division builds solutions that are highly cost-effective
and make public-facing services more accessible and easier to use for the
citizen, patient and customer.
In the last six months performance has varied across sectors. Public sector
clients continued to invest strongly in digital transformation projects. In
contrast, and as anticipated, healthcare revenues declined, driven by
post-pandemic budget constraints and ongoing internal NHS reorganisation.
Within commercial sector we also recorded decreased revenue as some clients
reduced project expenditure.
As a result, Digital Services revenues reduced by 1% to £109.2 million (H1
23: £110.5 million). Bookings, at £118.8 million (H1 23: £117.0 million),
represented an increase of 2%, and contracted backlog increased by 7% to
£149.0 million (H1 23: £139.2 million).
Overall, public sector now represents 67% of divisional revenues (H1 23: 56%),
healthcare 19% (H1 23: 27%) and commercial sector 14% (H1 23: 17%).
Public sector
Our public sector customers remain committed to their digital transformation
programmes, the importance of which are underlined in the 2025 Roadmap
published by the Central Data & Digital Office(( 4 (#_ftn4) )) which aims
to create a more efficient digital government that provides better outcomes
for everyone. This continued digital adoption by government, and our success
in the market, has resulted in an increase in our revenues by 17% to £73.0
million (H1 23: £62.3 million).
We continue to support our long-standing customers, including the Ministry of
Justice, the Department of Food and Rural Affairs and HM Passport Office and
are assisting new customers such as the General Records Office, the Pensions
Regulator and National Highways as they progress their ambitious digital
programmes. We have been awarded places on new digital services frameworks
with Ministry of Defence, HM Revenue and Customs and the Financial Conduct
Authority.
Commercial sector
In the UK, the commercial sector expenditure on IT is over three times that of
the public sector. While this represents significant long-term opportunity, to
increase our likelihood of success, we have initially chosen to focus our
activity on financial services customers.
While our customers recognise the need to increase their levels of investment
in digital transformation, the uncertain economic backdrop has resulted in a
cautious approach to embarking upon major transformation programmes and
limiting the scope of some in-flight projects.
We continue to deliver digital services for our established customers,
including Irish Life, Bank of Ireland and Nexi Group and we are helping new
customers including Royal London, Unum and Asda. In addition, we are providing
Data and AI services to existing Workday customers including GEA, Spencer
Stuart and Checkout.com.
Reflecting reduced activity levels, our revenues were 16% lower at £15.8
million (H1 23: £18.7 million).
Healthcare sector
We flagged in our May update that our NHS customers are experiencing
post-pandemic budget constraints, combined with the disruption of the ongoing
merger of the NHS England and NHS Digital organisations to form NHS England's
new Transformation Directorate.
As a result, our healthcare revenues have reduced to £20.4 million (H1 23:
£29.5 million), a decrease of 31%; further significant reductions are not
anticipated.
This year, our customers have included the Department for Health and Care
Wales, where we delivered their Patient App, Genomics England and Our Future
Health where we are helping to build the world's largest health research
study.
International expansion outside of UK and Ireland
With the UK as an early adopter of digital transformation, the opportunity
exists to replicate our home market success in international jurisdictions. In
Europe, our initial focus is primarily on commercial customers in Germany and
Switzerland, with organisations such as Hello Fresh, Nexi Group and GEA. In
North America, we are making progress across public sector, commercial sector
and the healthcare sector with organisations that include the Province of Nova
Scotia, WPP and SunLife Insurance.
Our international revenues are reported in the figures in the sectors listed
above, but for clarity, international revenues for the division have increased
by 40% to £5.9 million (H1 23: £4.2 million), representing 5% of total
Digital Services revenue (H1 23: 4%).
Workday Services review
Revenue for the six months recorded strong growth of 18% to £57.3 million (H1
23: £48.4 million), driven by the exceptional sales closure a year ago, which
reported an increase in bookings of 125%, to £80.5 million.
This same sales performance creates a challenging comparator and as a result
bookings at £53.1 million (H1 23: £80.5 million) represent a reduction of
34%. Similarly, the contracted backlog of £64.1 million (H1 23: £83.2
million) decreased by 23%.
The number of accredited Workday consultants at Kainos increased by 11% to 814
(H1 23: 732).
Having first engaged with Workday Inc. in 2011, we are now one of their most
experienced partners. We are the only specialist Workday partner headquartered
in the UK and one of only 54 partners globally accredited to implement
Workday's innovative SaaS platform. From our initial strong base in UK &
Ireland, we expanded internationally - into Northern and Central Europe from
2015 and into the North American market from 2018.
Within Europe, we are the leading Workday partner - this leadership position
is the result of high satisfaction levels within our customer base, coupled
with our geographic expansion in the region. Our European customers, including
those in the UK & Ireland, generated 49% of total revenue (H1 23: 46%).
A similar focus on customer success in our North American market has resulted
in our appointment, in mid-2022, as a Phase 1 Prime partner for the US market
- which remains the largest market globally for Workday Inc. Our North
American customers generated 51% of total revenue (H1 23: 54%).
In addition to the delivery of Workday for new customers, we are increasingly
involved in supporting customers already live on the Workday platform. We
describe this annuity-style revenue stream as Post Deployment Services.
Workday Extend
Alongside the typical consulting activities involved in deploying Workday's
SaaS platform, there is a growing opportunity linked to Workday Extend,
Workday's Platform-as-a-Service offering which became generally available in
May 2020. Kainos has been part of the Workday Extend early adopter programme
since 2017.
Workday Extend allows organisations to build additional, specialised
functionality on the Workday platform to further enhance customers' Workday
deployment. As experts and global leaders in Workday Extend, we have helped
more than 60 organisations including Home Depot, AES Corporation and Ferguson
Enterprises to build Workday Extend applications specific to their
requirements.
In addition to the paid-for consulting services activity, engaging with
clients on Workday Extend projects provides us with insight into common
challenges that clients experience, and the potential to build products that
are embedded inside Workday.
Blackline Group
In January 2022 we announced the acquisition of Blackline Group, a 50-person
specialist business that focused on both advisory services linked to Workday
Strategic Sourcing and standalone procurement consulting services.
On review of the standalone procurement consulting activity, and in discussion
with our colleagues and customers, we have decided to stop the provision of
these services during this financial year. This decision directly impacts 23
of our colleagues based in the US and four customer contracts; the services
that are being discontinued amounted to £3.6 million of revenue during the
first six months of FY24.
In light of this decision, we have recognised an amortisation charge of £2.6
million relating to the customer relationship intangible asset, a
restructuring cost of £0.4 million and all post combination remuneration.
Workday Products review
Our Workday Products revenue increased 28% (24% organic, 31% ccy) to £26.7
million (H1 23: £20.9 million); the Annual Recurring Revenue was £55.4
million (H1 23: £44.2 million), an increase of 25% and backlog increased 33%
to £113.8 million (H1 23: £85.5 million).
Workday is a comprehensive SaaS platform, but we have identified opportunities
to develop our own software products that are complementary to the platform
and that enable customers to further increase the benefit that they can
realise from their investment in Workday.
We have three products within the Smart Suite:
· Smart Test (launched in 2014), is used by organisations to
automatically verify their Workday configurations. Smart Test is used by over
350 global enterprise customers, including Salesforce, Capital One and Whole
Foods.
· Smart Audit (2021) has been deployed to over 70 customers including
Chanel, Arcbest and QBE Insurance. Smart Audit is a compliance monitoring tool
that allows Workday customers to maintain operational security controls across
their Workday environments. Our pre-built controls focus on safeguarding
against Segregation of Duties conflicts, providing robust Privileged Access
Controls and protecting Personal and Sensitive employee data.
· Smart Shield (2022) is a data-masking tool that easily and seamlessly
masks sensitive data without impacting the Workday user experience. It ensures
that data remains controlled when Workday environments are made available to
wider teams, for instance, during support and maintenance activities, or for
ongoing internal Workday training and onboarding programmes. Smart Shield is
now used by over 40 customers, including Match.com and LKAB.
In total, over 400 customers use one or more of our Smart Suite products.
In October 2023, our latest product, Employee Document Management (EDM),
became generally available. EDM utilises Workday Extend technology and helps
customers manage and simplify the full lifecycle of employee documents inside
Workday. In advance of the launch, we worked with a number of design partners
to ensure a fit-for-purpose solution for organisations using Workday HCM; we
have nine customers already contracted.
Launched during Workday's global customer event, Workday Rising in San
Francisco, we also received high levels of engagement from attendees and
generated a strong pipeline of prospects.
RapidIT-Cloudbera Acquisition
In June 2023 we completed the acquisition of RapidIT-Cloudbera, the creators
of Genie, a Workday-focused automated testing product, headquartered in
Atlanta, US, and employing 101 staff in the US and India.
Since the completion of the acquisition we have successfully combined our
testing and development teams, and have added the unique Genie functionality
to our Smart Test platform.
By the end of November, all customers that used Genie on a weekly basis will
have been successfully moved to the updated platform. The migration of the
remaining customers, those that use Genie for bi-annual Workday release
testing, is on track to complete in January 2024.
Our people
We believe that the future success of our organisation is dependent upon the
ability, skills and motivation of the people working in Kainos; and our People
Development Plan focuses on the key objectives of engagement, development,
retention and recruitment.
Our culture
Our ambition is to be a great employer. A key part of achieving that ambition
is for our people to tell us when we get it right and to tell us about the
areas where we can improve.
We use Workday Peakon, an intelligent listening platform that allows for
timely and immediate feedback, provides a holistic view of employee sentiment
and allows comparison against c. 350 leading global technology employers.
Peakon allows organisations to request feedback at any interval; we ask our
colleagues for feedback on a monthly basis. Based on feedback from our people,
our level of employee engagement remains high (79%), as are our ratings for
diversity and inclusion (83%) and wellbeing (77%).
We also continue to measure engagement through Glassdoor, the online career
community with over 59 million users that enables current and former employees
to provide feedback on companies. In September 2023, Kainos had an overall
approval rating of 84% and 86% of respondents would recommend working at
Kainos to a friend. In early 2023, we were once again designated to be in the
'50 Best Places to Work in the UK' annual Employee Choice awards from
Glassdoor, ranked #No. 39.
Recruitment
We work hard at retaining the talented people already in Kainos; we are also
very focused on recruiting new talented colleagues. Kainos continues to
attract strong interest in key recruitment markets, with several thousand
candidates applying each year to join Kainos.
Overall headcount increased by 8% to 3,139 people (H1 23: 2,920). In total, 4%
of our colleagues are contractors (H1 23: 10%). By region, UK & Ireland
increased to 2,153 people (+2%), Central Europe grew to 477 people (+9%) and
the Americas increased to 413 people (+14%). With the completion of the
RapidIT-Cloudbera acquisition, the number of colleagues in the Asia region
increased from 15 to 96 people.
Included in these numbers are 182 colleagues joining us from school,
university or via one of our academies, supporting those wishing to switch
careers.
Development
To support our colleagues in their skills development we invest heavily in
training and certifications for our people, with over 6,200 trainings days
completed in the past six months. We have a diverse curriculum of internal
courses (which we call 'Kainos MAP') and comprehensive self-study materials to
support external technical and professional qualifications and certifications.
While much of our efforts are aimed internally, supporting the career
development of our colleagues, we also remain committed to helping young and
under-represented people who are making their first career decisions.
Since April, our Tech Outreach programmes have allowed over 900 young people
to participate in our virtual Work Experience programmes (our target is 1,800
for the year). Supporting these programmes, over 130 of our colleagues acted
as mentors for the participants.
In 2021 we launched our university-focused Digital Bursaries programme, with
our aim to widen participation for people from backgrounds that historically
have been under-represented at university. To date, 68 people have benefitted
from our programme.
Staff share incentive plan
The Group operates a Share Incentive Plan for all staff. Including the annual
awards made in November 2022 (447,620 shares granted) a total of 3,620,940
free shares have now been distributed to staff. In addition, the Group
operates Save as you earn (SAYE) schemes through which 3,536,677 options have
also been granted to staff.
Summary and outlook
Group outlook
Notwithstanding the global economic uncertainty that exists, we believe that
in the near-term, our key business areas, Workday Products, Workday Services
and public sector-focused digital services will continue to deliver growth.
The efficiency and cost reduction that the shift to digitisation can generate
is significant and continues to attract funding within organisations.
Over the medium-term, we remain well-placed to deliver further growth, as
detailed in the following sections.
Digital Services outlook
We remain extremely positive about the future of digitisation in the UK public
sector both immediately and over the long-term. We are confident that based
upon our strong reputation and successful track record, we are well positioned
to maintain a central role in this transformation drive.
A near-term general election features in our planning. This will be the fifth
election since the start of the digital reform of UK public services, which
commenced in 2009. After each election, successive governments have
demonstrated their commitment to the creation of better government services
for reduced costs. We expect this commitment to be reaffirmed following the
next election.
The digitisation pressures and opportunities within the commercial sector are
similar, and therefore the growth prospects for us are substantial in the
medium-term. In the short-term, that is, for the duration of the current
uncertain economic climate, we expect to see caution from organisations when
considering expenditure on large-scale projects, despite their often-rapid
return on investment.
After two consecutive periods of revenue decline, our healthcare sector
business has returned to growth. The case for greater use of technology in
healthcare provision has been well articulated, and we are positive about the
medium-term prospects, albeit that sentiment is tempered by the significant
funding challenges facing the NHS.
We are optimistic about the international opportunity, utilising the skills
and expertise gained as a leading digital transformation specialist in the UK
and focusing on international regions where we already have established
delivery teams, sales expertise and a strong Workday client base.
Workday Services outlook
Our strong performance provides further evidence of the strength of the
Workday market. With Workday's main competitors, Oracle and SAP, soon to mark
50 years in the ERP market, we believe that Workday's more innovative product
suite can continue to gain significant market share for many years to come.
This is reflected in Workday Inc's bold target of achieving $10 billion
revenue by 2026(( 5 (#_ftn5) )), up from c.$6.5 billion today.
In addition, we believe that we can outpace Workday's rapid growth by
continuing our international expansion, especially within the US market, and
by replacing other Workday partners in engagements where they are underserving
their customers.
Workday Products outlook
For our existing Workday products, our growth will be powered by the increase
in Workday clients and by higher penetration of our products into the Workday
client base.
We believe that we are well positioned to identify and develop additional
products for the Workday ecosystem, as demonstrated by the successful launch
of our latest product, Employee Document Management. In such circumstances,
our growth will initially be determined by the product-market fit of our new
products, followed by their penetration into the Workday client base.
Financial review
H1 24 was another period of strong financial performance.
In summary, we grew revenue by 7% (8% ccy) to £193.2 million (H1 23: £179.8
million). Digital Services revenue reduced by 1% to £109.2 million (H1 23:
£110.5 million), reflecting increased demand in the public sector, offset by
reductions in healthcare and commercial sectors. Workday Services revenue grew
18% (21% ccy) to £57.3 million (H1 23: £48.4 million) driven by growth in
both Europe and North America. Workday Products revenue increased to £26.7
million (H1 23: £20.9 million), representing growth of 28% (31% ccy) (H1 23:
30% ccy). The Group business review provides more information on our revenue
performance.
Our overall gross margin increased to 48.0% (H1 23: 46.6%). Digital Services'
gross margin decreased slightly to 37.7% (H1 23: 38.3%). Workday Services
margin increased to 54.8% (H1 23: 52.6%), driven by an increase in
utilisation. Workday Products margin decreased slightly to 75.7% (H1 23:
76.5%).
Operating expenses
Operating expenses increased by 13% to £63.9 million (H1 23: £56.8 million).
The growth in operating expenses is higher than revenue growth due to the
increased investment in Workday Products in both sales and product
development.
Our investment in product development increased to £5.9 million (H1 23: £4.0
million), all of which was expensed during the period. We recognised £1.8
million of Research & Development Expenditure Credit (RDEC) income during
the period (H1 23: £0.8 million).
Blackline acquisition
As noted in the Workday Services review, we have decided to stop the provision
of standalone procurement consulting services during this financial period.
Upon review of the remaining useful life of the customer relationship
intangible asset, recognised on acquisition of Blackline Group in January
2022, we accelerated the amortisation of this asset, recognising a total
amortisation charge of £2.6 million in the period. All post combination
remuneration has been fully recognised as at 30 September 2023. Restructuring
costs of £0.4 million have also been incurred.
Alternative performance measures
We use underlying results to manage the business and measure performance
day-to-day. We believe that 'adjusted profit before tax', 'adjusted EBITDA'
and 'adjusted diluted and basic earnings per share' better represent the
Group's underlying performance and make it easier to compare the Group's
performance between periods.
Our adjusted results exclude the effect of share-based payment expense,
acquisition-related expenses, including amortisation of acquired intangible
assets, and compensation for post-combination services. Our adjusted results
in the period also exclude one-off gains recognised on sale of property and
fair value remeasurement gain of our investment property.
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 in other entities.
The adjusted profit measures reconcile to the reported numbers as follows:
Adjusted profit measures
6 months to 6 months to 30 Sep 2022 12 months to 31 Mar 2023
30 Sep 2023 (£000s) (£000s)
(£000s)
Profit before tax 30,861 27,523 54,338
Share-based payment expense and related costs 2,896 2,697 6,346
Amortisation of acquired intangible assets 3,222 1,472 2,642
Increase in fair value of investment property and gain on sale of property (2,154) - -
Compensation for post-combination services 2,664 2,271 4,176
Acquisition-related expenses 363 58 57
Adjusted profit before tax 37,852 34,021 67,559
6 months to 6 months to 30 Sep 2022 12 months to 31 Mar 2023
30 Sep 2023 (£000s) (£000s)
(£000s)
Profit after tax 22,126 21,863 41,645
Share-based payment expense and related costs (net of associated taxes) 2,085 2,023 4,886
Amortisation of acquired intangible assets 2,372 1,472 2,642
Increase in fair value of investment property and gain on sale of property (1,616) - -
Compensation for post-combination services 2,528 2,271 4,176
Acquisition-related expenses 363 58 57
Adjusted profit after tax 27,858 27,687 53,406
Adjusted EBITDA
6 months to 6 months to 30 Sep 2022 12 months to 31 Mar 2023
30 Sep 2023 (£000s) (£000s)
(£000s)
Adjusted profit before tax 37,852 34,021 67,559
Depreciation of property, plant and equipment 1,276 1,105 2,249
Depreciation of right-of-use assets 433 638 1,163
Finance expense 76 28 71
Finance income (1,764) (356) (1,463)
Adjusted EBITDA 37,873 35,436 69,579
Adjusted profit before tax increased by 11% to £37.9 million (H1 23: £34.0
million). Profit before tax increased by 12% to £30.9 million (H1 23: £27.5
million).
Corporation tax charge
The total tax charge for the six months ended 30 September 2023 is £8.7
million (H1 23: £5.7 million). This tax charge equates to an effective tax
rate of 28% (H1 23: 21%).
The effective tax rate for the period is higher than the prior period due a
number of factors, including the increase of the UK corporation tax rate from
19% to 25% effective 1 April 2023, an increase in profits subject to tax at
higher overseas rates and acquisition related expenses incurred in the period
which are not deductible for tax.
The expected annual tax rate for the year to 31 March 2024 is 27% (31 March
2023: 21%).
Financial position
We continue to have a strong financial position with £113.0 million of cash
(H1 23: £97.1 million), no debt and net assets of £137.4 million (H1 23:
£117.3 million). The combined underlying net trade receivables and accrued
income balance decreased by 8% to £70.6 million (H1 23: £76.9 million).
During the period we completed the sale of property located in Belfast,
recognising a gain on disposal of £1.1 million. At 31 March 2023, the
carrying value of this property was £0.3 million and was recognised as assets
held for sale within current assets.
Within non-current assets, property, plant and equipment has increased to
£11.5 million (H1 23: £9.6 million) due mainly to property refurbishment
costs incurred. We have also entered into two property lease agreements in the
period, adding a total of £2.5 million to our right-of-use assets and
corresponding lease liabilities.
As noted within our Workday Products review, we completed the acquisition of
RapidIT-Cloudbera Inc. on 30(th) June 2023. The fair value of assets acquired
and liabilities assumed at acquisition date have been determined on a
provisional basis and are detailed further in note 15.
The final dividend for FY23 of £20.1 million has been included as a current
liability in these financial statements. This dividend was approved by
shareholders at the Annual General Meeting on 21 September 2023 and paid to
shareholders on 20 October 2023.
Cash flow and cash conversion
Cash conversion, which is cash generated by operating activities as a
percentage of adjusted EBITDA, remained strong at 82% (H1 23: 70%).
Interim dividend
The Board has declared an interim dividend of 8.2 pence per share for H1 24
(H1 23: 7.8 pence). This will be paid on 15 December 2023 to shareholders on
the register at the close of business on 24 November 2023, with an ex-dividend
date of 23 November 2023.
Related party transactions
There have been no material changes in related party transactions from those
described in the last annual report.
Risks & Uncertainties
There are several potential risks and uncertainties which could have a
material impact on the Group's performance over the remaining six months of
the financial year and could cause actual results to differ materially from
forecast and historic results. These principal risks and uncertainties remain
consistent with the detailed description provided in pages 54 - 58 of the
Annual Report associated with the Group's Annual Results published on 21July
2023 (available on the Group's website www.kainos.com
(https://eur01.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.kainos.com%2F&data=04%7C01%7CM.Paul%40kainos.com%7Cf88a48f36eb84e5a6fb408d99494e8aa%7C7ed9bdc7964d4dc09084812b90e05c6d%7C0%7C0%7C637704189543670863%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C1000&sdata=ILhveiNiGWlSVQroj4uMseRe7HzPgnaEhijCAbFWF0s%3D&reserved=0)
).
Going concern
As further outlined in note 2 to the condensed consolidated financial
statements, the Directors are satisfied that the Group has sufficient
resources to continue in operation for the foreseeable future, a period of not
less than 12 months from the date of this report. Accordingly, they continue
to adopt the going concern basis in preparing the condensed consolidated
financial statements.
Condensed consolidated income statement for the six months ended 30 September 2023
Continuing operations Note 6 months to 6 months to 30 Sep 2022 12 months to
30 Sep 2023 (unaudited) 31 Mar 2023
(unaudited) (£000s) (audited)
(£000s) (£000s)
Revenue 5 193,249 179,775 374,807
Cost of sales 5 (100,457) (95,991) (197,652)
Gross profit 92,792 83,784 177,155
Operating expenses (63,941) (56,843) (124,597)
Impairment (loss)/gain (including amounts recovered) on trade receivables and (718) 254 388
accrued income
Increase in fair value of investment property 1,040 - -
Operating profit 29,173 27,195 52,946
Finance income 1,764 356 1,463
Finance expense (76) (28) (71)
Profit before tax 30,861 27,523 54,338
Income tax expense 6 (8,735) (5,660) (12,693)
Profit for the period 22,126 21,863 41,645
Consolidated statement of comprehensive income for the six months ended
30 September 2023
6 months to 6 months to 12 months to 31 Mar 2023
30 Sep 2023 30 Sep 2022 (audited)
(unaudited) (unaudited) (£000s)
(£000s) (£000s)
Profit for the period 22,126 21,863 41,645
Items that may be reclassified subsequently to profit or loss:
Foreign operations - foreign currency translation differences (540) 1,754 779
Total comprehensive income for the period 21,586 23,617 42,424
Earnings per share
Basic 8 17.8p 17.7p 33.6p
Diluted 8 17.5p 17.4p 33.1p
Condensed consolidated statement of financial position as at 30 September 2023
Note 30 Sep 2023 30 Sep 2022 31 Mar 2023
(unaudited) (unaudited) (audited)
(£000s) (£000s) (£000s)
Non-current assets
Goodwill 11 38,197 20,294 19,007
Other intangible assets 12 6,500 5,495 3,816
Property, plant and equipment 11,520 9,612 9,509
Investment property 6,200 5,160 5,160
Right-of-use assets 3,923 2,445 1,261
Investments in equity instruments 1,299 1,343 1,299
Deferred tax asset 4,444 5,444 3,103
72,083 49,793 43,155
Current assets
Trade and other receivables 9 40,623 38,137 38,970
Prepayments 4,190 4,381 3,656
Accrued income 38,358 41,990 38,808
Tax receivable - - 400
Cash and cash equivalents 16 113,045 97,064 108,302
Assets held for sale - - 310
196,216 181,572 190,446
Total assets 268,299 231,365 233,601
Current liabilities
Trade payables and accruals (44,529) (43,884) (52,348)
Dividend payable 7 (20,135) (18,740) -
Deferred income (40,860) (33,541) (37,087)
Current tax liabilities (5,145) (3,844) -
Lease liabilities (1,042) (893) (794)
Provisions (101) (421) (341)
Other tax and social security (14,746) (10,036) (12,068)
(126,558) (111,359) (102,638)
Non-current liabilities
Provisions (1,359) (1,026) (1,031)
Lease liabilities (3,015) (1,715) (585)
(4,374) (2,741) (1,616)
Total liabilities (130,932) (114,100) (104,254)
Net assets 137,367 117,265 129,347
Equity
Share capital 14 625 619 623
Share premium account 8,658 6,524 6,567
Capital reserve 3,548 3,548 3,548
Share-based payment reserve 27,980 19,152 23,394
Translation reserve 490 2,005 1,030
Retained earnings 96,066 85,417 94,185
Total equity 137,367 117,265 129,347
Condensed consolidated statement of changes in equity for the six months ended 30 September 2023
Share Share Capital Share-based Translation reserve Retained Total
capital premium reserve payment earnings equity
reserve
(£000s) (£000s) (£000s) (£000s) (£000s) (£000s) (£000s)
Balance at 31 March 2022 (audited) 619 6,433 3,548 15,171 251 81,668 107,690
Profit for the period - - - - - 21,863 21,863
Other comprehensive income - - - - 1,754 - 1,754
Total comprehensive income for the period - - - - 1,754 21,863 23,617
Equity settled share-based payment - - - 3,981 - - 3,981
Current tax for equity-settled share-based payments - - - - - 40 40
Deferred tax for equity-settled share-based payments - - - - - 586 586
Issue of share capital - share options exercised - 91 - - - - 91
Dividends - - - - - (18,740) (18,740)
Balance at 30 September 2022 (unaudited) 619 6,524 3,548 19,152 2,005 85,417 117,265
Profit for the period - - - - - 19,782 19,782
Other comprehensive income - - - - (975) - (975)
Total comprehensive income for the period - - - - (975) 19,782 18,807
Equity settled share-based payment - - - 4,242 - - 4,242
Current tax for equity-settled share-based payments - - - - - 197 197
Deferred tax for equity-settled share-based payments - - - - - (1,517) (1,517)
Issue of share capital - share options exercised 4 43 - - - - 47
Dividends - - - - - (9,694) (9,694)
Balance at 31 March 2023 (audited) 623 6,567 3,548 23,394 1,030 94,185 129,347
Profit for the period - - - - - 22,126 22,126
Other comprehensive income - - - - (540) - (540)
Total comprehensive income for the period - - - - (540) 22,126 21,586
Equity settled share-based payment - - - 4,586 - - 4,586
Current tax for equity-settled share-based payments - - - - - 326 326
Deferred tax for equity-settled share-based payments - - - - - (436) (436)
Issue of share capital - share options exercised 2 2,091 - - - - 2,093
Dividends - - - - - (20,135) (20,135)
Balance at 30 September 2023 (unaudited) 625 8,658 3,548 27,980 490 96,066 137,367
Consolidated statement of cash flows for the six months ended 30 September 2023
6 months to 6 months to 12 months to
30 Sep 2023 30 Sep 2022 31 Mar 2023
(unaudited) (unaudited) (audited)
(£000s) (£000s) (£000s)
Cash flows from operating activities
Profit for the period 22,126 21,863 41,645
Adjustments for:
Finance income (1,764) (356) (1,463)
Finance expense 76 28 71
Tax expense 8,735 5,660 12,693
Share-based payment expense 2,896 2,697 6,346
Depreciation of property, plant and equipment 1,276 1,105 2,249
Depreciation of right-of-use assets 433 638 1,163
Amortisation of intangible assets 3,222 1,472 2,642
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 1,365 1,716 3,200
Increase/(decrease) in provisions 88 (683) (758)
Operating cash flows before movements in working capital 36,299 34,140 67,788
Increase in trade and other receivables (2,127) (3,072) (3,380)
(Decrease)/increase in trade and other payables (3,156) (6,095) 8,076
Cash generated from operating activities 31,016 24,973 72,484
Income taxes paid (4,480) (4,171) (10,585)
Net cash from operating activities 26,536 20,802 61,899
Cash flows from investing activities
Interest received 1,764 356 1,463
Purchases of property, plant and equipment (3,287) (1,010) (2,499)
Proceeds from sale of property 1,424 - -
Acquisition of subsidiaries net of cash acquired (23,338) - -
Net cash used in investing activities (23,437) (654) (1,036)
Cash flows from financing activities
Dividends paid - - (28,434)
Interest paid (76) (28) (71)
Repayment of lease liabilities (424) (623) (1,075)
Proceeds on issue of shares 2,093 91 138
Net cash from/(used) in financing activities 1,593 (560) (29,442)
Net increase in cash and cash equivalents 4,692 19,588 31,421
Cash and cash equivalents at start of period 108,302 76,609 76,609
Effect of exchange rate fluctuations on cash held 51 867 272
Cash and cash equivalents at end of period 113,045 97,064 108,302
Notes to the condensed consolidated financial statements
1. Corporate information
Kainos Group plc ("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.
These condensed consolidated financial statements for the six months ended 30
September 2023 comprise the Company and its subsidiaries (together the
"Group"). The nature of the Group's operations and its principal activities
are set out in the Group business review.
These statements have not been audited but have been reviewed by the Group's
auditor pursuant to International Standard on Review Engagements (UK) 2410
"Review of Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Financial Reporting Council.
These condensed consolidated financial statements were approved for issue on
10 November 2023.
2. Basis of preparation
The condensed consolidated financial statements for the six months ended 30
September 2023 have been prepared in accordance with the Disclosure and
Transparency Rules of the Financial Conduct Authority and with IAS 34 "Interim
Financial Reporting" under UK-adopted International Accounting Standards and
should be read in conjunction with the Group's last annual consolidated
financial statements as at and for the year ended 31 March 2023 ('last annual
financial statements'). They do not include all of the information required
for a complete set of financial statements prepared in accordance with
UK-adopted International Accounting Standards and in conformity with the
requirements of the Companies Act 2006. However, selected explanatory notes
are included to explain events and transactions that are significant to an
understanding of the changes in the Group's financial position and performance
since the last annual financial statements.
These condensed consolidated financial statements do not constitute statutory
accounts of the Group within the meaning of Section 434 of the Companies Act
2006. The statutory accounts for the year ended 31 March 2023 have been filed
with the registrar of companies and can be found on the Group's website. The
auditor's report on those accounts was unqualified, did not contain an
emphasis of matter paragraph and did not contain any statement under Section
498(2) or (3) of the Companies Act 2006.
The annual statements of Kainos Group plc are prepared in accordance with
UK-adopted International Accounting Standards.
Going concern
Having reviewed the future plans and projections for our business and our
current financial position, the Directors believe that we are well placed to
manage our business risks successfully. We have adequate financial resources,
no borrowings, a good level of recurring revenue, and a broad spread of
customers.
At 31 March 2023, the Directors assessed the Group's viability over a longer
period to March 2026. The review included sensitivity analysis on the future
performance and solvency over three years and for the principal and emerging
risks facing the business in severe but reasonable scenarios.
In performing this assessment, our long-term strategy and focus, the growing
demand for our products and services, the increasing level of recurring
revenue and low customer attrition, the track record of strong cash generation
and a healthy cash balance with no debt from financial institutions were all
taken into consideration. Consideration was also given to the risks of
regional and political changes in our main markets.
Based on the results of this assessment, the Directors had a reasonable
expectation that should these risks, either all or in part manifest
themselves, the resulting adverse outcomes can be managed and mitigated such
that, the Group and Company will be able to continue in operation and meet
their liabilities as they fall due over the period of their assessment. In
doing so, we note that such future assessments are subject to a level of
uncertainty that increases with time and, therefore, future outcomes cannot be
guaranteed or predicted with certainty.
As a consequence of these factors and having reviewed the forecasts for the
coming year, the Directors have a reasonable expectation that we have adequate
resources to continue in operational existence for the foreseeable future, a
period of not less than 12 months from the date of this Interim Report. For
this reason, we continue to adopt the going concern basis of accounting in
preparing our financial statements.
3. Significant accounting policies
Except for as detailed below, the accounting policies, presentation and
methods of computation applied by the Group in these condensed consolidated
financial statements are the same as those applied in the Group's latest
audited annual consolidated financial statements for the year ended 31 March
2023. No newly introduced standard or amendments to standards had a material
impact on the condensed financial statements. The Group has not early adopted
any other standard, interpretation or amendment that has been issued but is
not yet effective.
Income tax
The policy for recognising and reassessing income taxes in the interim period
is consistent with that applied in the previous period as described in note 6.
4. Critical accounting judgements and key sources of estimation uncertainty
The preparation of interim financial statements requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities, income
and expense. Actual results may differ from these estimates.
In preparing these condensed consolidated financial statements, apart from as
detailed below, the significant judgements made by management in applying the
Group's accounting policies and key sources of estimation uncertainty were the
same as those applied to the statutory accounts for the year ended 31 March
2023.
RapidIT-Cloudbera Acquisition
The acquisition of RapidIT-Cloubdbera ("RIC") resulted in the purchase of a US
based entity ("RIC USA") and the transfer of over 70 staff from a company
registered in India ("RIC India") that was under the control of the majority
shareholders of RIC USA, to a newly formed company set up by Kainos ("Kainos
India"). The individuals transferring from RIC India worked solely under the
direction of RIC USA and the transfer of employment was completed within 5
business days of the incorporation of Kainos India. An amount was held in
escrow on acquisition date in accordance with the purchase agreement to
facilitate the transfer of employment to Kainos India. The amount payable to
the vendors would have been reduced had the number of employees joining Kainos
India fallen below a threshold. The amount was payable in full had Kainos
India not been incorporated within the 120-day period. There were no other
conditions required to be met to facilitate the release of this amount.
It is our view that the transfer of employees was solely to facilitate the
successful acquisition of the entire RIC business, was administrative in
nature and there was no substantive requirement for post-acquisition
services. As such, our accounting judgement is that the $6.0 million amount
initially held in escrow and paid in full by the date of these financial
statements, should be reflected as purchase consideration rather than
post-acquisition services.
5. Segment reporting
All our revenue for the six-month period to 30 September 2023 was derived from
continuing operations.
The Group's Executive Directors are considered to be the Chief Operating
Decision Maker ('CODM') of the Group. They use internal management reports to
assess both performance and strategy of the Group and the three specialist
business areas: Digital Services, Workday Services and Workday Products.
The following is an analysis of the Group's revenue and results by reportable
segment:
2023 Digital Services Workday Services Total
6 months to 30 September (unaudited) (£000s) (£000s) Workday (£000s)
Products
(£000s)
Revenue 109,209 57,294 26,746 193,249
Cost of sales (68,068) (25,886) (6,503) (100,457)
Gross profit 41,141 31,408 20,243 92,792
Direct expenses(() 6 (#_ftn6) ()) (12,359) (18,061) (13,657) (44,077)
Contribution 28,782 13,347 6,586 48,715
Central overheads(()(6)) (12,551)
Net finance expense 1,688
Adjusted profit before tax 37,852
Share-based payment expense and related costs (2,896)
Amortisation of acquired intangible assets (3,222)
Compensation for post-combination services (2,664)
Acquisition-related expenses (363)
Increase in fair value of investment property and gain on sale of property 2,154
Profit before tax 30,861
2022 Digital Services Workday Services Total
6 months to 30 September (unaudited) (£000s) (£000s) Workday (£000s)
Products
(£000s)
Revenue 110,472 48,363 20,940 179,775
Cost of sales (68,155) (22,913) (4,923) (95,991)
Gross profit 42,317 25,450 16,017 83,784
Direct expenses(()(6)) (12,516) (17,496) (9,950) (39,962)
Contribution 29,801 7,954 6,067 43,822
Central overheads(()(6)) (10,129)
Net finance expense 328
Adjusted profit before tax 34,021
Share-based payment expense and related costs (2,697)
Amortisation of acquired intangible assets (1,472)
Compensation for post-combination services (2,271)
Acquisition-related expenses (58)
Profit before tax 27,523
Digital Services Workday Services Total
(£000s) (£000s) (£000s)
2023 Workday
12 months to 31 March Products
(audited) (£000s)
Revenue 224,384 105,741 44,682 374,807
Cost of sales (138,798) (48,406) (10,448) (197,652)
Gross profit 85,586 57,335 34,234 177,155
Direct expenses((6)) (24,326) (36,439) (21,687) (82,452)
Contribution 61,260 20,896 12,547 94,703
Central overheads((6)) (28,536)
Net finance income 1,392
Adjusted profit before tax 67,559
Share-based payments expense and related costs (6,346)
Amortisation of acquired intangible assets (2,642)
Compensation for post-combination services (4,176)
Acquisition-related expenses (57)
Profit before tax 54,338
The Group's revenue from external customers by geographic location is detailed
below:
6 months to 6 months to 12 months to
30 Sep 2023 30 Sep 2022 31 Mar 2023
(unaudited) (unaudited) (audited)
(£000s) (£000s) (£000s)
United Kingdom & Ireland 118,528 118,721 242,787
North America 53,076 44,390 95,505
Central Europe 20,969 16,087 35,262
Rest of world 676 577 1,253
193,249 179,775 374,807
Disaggregation of the Group's revenue is presented in the following tables:
Digital Services Workday Services Workday Total
6 months to (£000s) (£000s) Products
30 September 2023 (unaudited) (£000s) (£000s)
Type of revenue
Services 105,727 54,320 1,196 161,243
Subscriptions - - 25,550 25,550
Third party & other 3,482 2,974 - 6,456
109,209 57,294 26,746 193,249
Digital Services Workday Services Workday Total
6 months to (£000s) (£000s) Products
30 September 2022 (unaudited) (£000s) (£000s)
Type of revenue
Services 107,026 45,262 861 153,149
Subscriptions - - 20,079 20,079
Third party & other 3,446 3,101 - 6,547
110,472 48,363 20,940 179,775
Digital Services Workday Services Workday Total
12 months to (£000s) (£000s) Products
31 March 2023 (audited) (£000s) (£000s)
Type of revenue
Services 217,490 98,961 1,625 318,076
Subscriptions - - 43,057 43,057
Third party & other 6,894 6,780 - 13,674
224,384 105,741 44,682 374,807
6 months to 6 months to 12 months to
30 Sep 2023 30 Sep 2022 31 Mar 2023 (audited)
(unaudited) (unaudited) (£000s)
(£000s) (£000s)
Digital Services
Public 72,979 62,276 136,951
Commercial 15,801 18,682 37,782
Healthcare 20,429 29,514 49,651
109,209 110,472 224,384
Workday Services
Public 15 83 167
Commercial 57,273 48,149 105,423
Healthcare 6 131 151
57,294 48,363 105,741
Workday Products
Public - 892 891
Commercial 26,705 19,471 43,171
Healthcare 41 577 620
26,746 20,940 44,682
Group
Public 72,994 63,251 138,009
Commercial 99,779 86,302 186,376
Healthcare 20,476 30,222 50,422
Total 193,249 179,775 374,807
6. Income tax expense
The estimate of the provision of income taxes which is determined in the
interim financial statements uses the estimated average annual effective
income tax rate applied to the profit before tax of the interim period,
adjusted for the tax effect of certain items recognised in full in the interim
period. As such, the effective tax rate in the interim financial statements
may differ from management's estimate of the effective tax rate for the annual
financial statements.
The total tax charge for the six months ended 30 September 2023 is £8.7
million (H1 23: £5.7 million). This tax charge equates to an effective tax
rate of 28% (H1 23: 21%).
The effective tax rate of 28% is higher than prior year (21%) due to the
following factors;
· The UK corporation tax rate increased to 25% (H1 23: 19%), effective
1 April 2023.
· Increased profits subject to tax at higher overseas rates.
· Acquisition related costs which are non-deductible for tax purposes
incurred during the period to 30 September 2023.
The expected annual tax rate for the year to 31 March 2024 is 27% (31 March
2023: 21%).
7. Dividends
The dividends declared and paid in the periods covered by these condensed
consolidated financial statements are detailed below:
6 months to 6 months to 30 Sep 2022 12 months to
30 Sep 2023 (unaudited) 31 Mar 2023
(unaudited) (£000s) (audited)
(£000s) (£000s)
Amounts recognised as distributions to equity holders in the period:
Final dividend for 2023 of 16.1p per share 20,135 - -
Interim dividend for 2023 of 7.8p per share - - 9,702
Final dividend for 2022 of 15.1p per share - 18,740 18,732
20,135 18,740 28,434
A final dividend of 16.1 pence per share for the year ended 31 March 2023 was
paid on 20 October 2023 to shareholders on the register at the close of
business on 29 September 2023, with an ex-dividend date of 28 September 2023.
This dividend was declared following approval by the shareholders of the
Company by ordinary resolution at the Company's Annual General Meeting on 21
September 2023 and a liability for payment of the dividend of £20.1 million
has therefore been recognised in these condensed consolidated financial
statements.
An interim dividend of 8.2 pence per share has been declared for the six
months to 30 September 2023 which amounts to £10.3 million. This will be paid
on 15 December 2023 to shareholders on the register at the close of business
on 24 November 2023, with an ex-dividend date of 23 November 2023. These
condensed consolidated financial statements do not reflect the interim
dividend payable.
8. 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.
6 months to 30 Sep 2023 6 months to 30 Sep 2022 12 months to 31 Mar 2023
(unaudited) (unaudited) (audited)
(£000s) (£000s) (£000s)
Profit for the period 22,126 21,863 41,645
Thousands Thousands Thousands
Issued ordinary shares at 1 April 124,628 124,078 124,078
Effect of shares held in trust (757) (760) (786)
Effect of share options vested and exercised 497 360 392
Effect of shares issued related to a business combination 86 - 18
Effect of shares issued related to free share awards - - 99
Weighted average number of ordinary shares 124,454 123,678 123,801
Basic earnings per share 17.8p 17.7p 33.6p
Diluted
The calculation of diluted EPS has been based on the following profit
attributable to ordinary shareholders and the weighted-average number of
ordinary shares outstanding after adjustments for the effects of all dilutive
potential ordinary shares.
6 months to 30 Sep 2023 6 months to 30 Sep 2022 12 months to 31 Mar 2023
(unaudited) (unaudited) (audited)
(£000s) (£000s) (£000s)
Profit for the period 22,126 21,863 41,645
Thousands Thousands Thousands
Weighted average number of ordinary shares (basic) 124,454 123,678 123,801
Effect of share options in issue 667 728 758
Effect of shares held in trust 757 760 786
Effect of potential shares to be issued related to a business combination 223 490 299
Weighted average number of ordinary shares (diluted) 126,101 125,656 125,644
Diluted earnings per share 17.5p 17.4p 33.1p
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 period during which the options were outstanding.
At 30 September 2023, 86,590 options (H1 23: 393,624) were excluded from the
diluted weighted average number of ordinary shares calculation because their
effect would have been anti-dilutive.
Adjusted
Adjusted basic and adjusted diluted earnings per share is calculated using the
adjusted profit for the period measure. The calculation of adjusted profit for
the period is detailed in the Financial review section of this report.
6 months to 6 months to 12 months to
30 Sep 2023 30 Sep 2022 31 Mar 2023
(unaudited) (unaudited) (unaudited)
(£000s) (£000s) (£000s)
Adjusted profit for the period 27,858 27,687 53,406
Thousands Thousands Thousands
Weighted average number of ordinary shares for the purposes of basic earnings 124,454 123,678 123,801
per share
Weighted average number of ordinary shares for the purposes of diluted 126,101 125,656 125,644
earnings per share
Adjusted basic earnings per share 22.4p 22.4p 43.1p
Adjusted diluted earnings per share 22.1p 22.0p 42.5p
9. Trade and other receivables
30 Sep 2023 30 Sep 2022 31 Mar 2023
(unaudited) (unaudited) (audited)
(£000s) (£000s) (£000s)
Trade receivables 32,277 34,868 35,693
Other receivables 8,346 3,269 3,277
40,623 38,137 38,970
10. Financial Instruments
The Directors consider that the carrying amount for all financial assets and
liabilities is a reasonable approximation of their fair value.
11. Goodwill
30 Sep 2023 30 Sep 2022 31 Mar 2023
(unaudited) (unaudited) (audited)
Cost (£000s) (£000s) (£000s)
1 April 19,007 18,765 18,765
Acquisitions through business combinations 18,629 - -
Effect of movement in exchange rates 561 1,529 242
At end of period 38,197 20,294 19,007
Accumulated impairment losses
At beginning and end of period - - -
Carrying amount
At end of period 38,197 20,294 19,007
At beginning of period 19,007 18,765 18,765
12. Intangible assets
30 Sep 2023 30 Sep 2022 31 Mar 2023
(unaudited) (unaudited) (audited)
Cost (£000s) (£000s) (£000s)
1 April 8,784 8,340 8,340
Acquisitions through business combinations 5,777 - -
Effect of movement in exchange rates 218 1,288 444
At end of period 14,779 9,628 8,784
Accumulated amortisation and impairment losses
1 April 4,968 2,347 2,347
Amortisation for the period 3,222 1,472 2,642
Effect of movement in exchange rates 89 314 (21)
At end of period 8,279 4,133 4,968
Carrying amount
At end of period 6,500 5,495 3,816
At beginning of period 3,816 5,993 5,993
The useful economic life of the customer relationship intangible asset,
recognised on the acquisition of Blackline Group, was reviewed during the
period. Previously assessed as seven years, the useful economic life was
reassessed as two years. The effect of the decrease in the useful economic
life resulted in an increase in the amortisation expense, included in
'operating expenses', during the period. A total amortisation charge of £2.6
million has been recognised in the period, which includes £2.3 million
accelerated amortisation as a result of this change.
13. Related party transactions
There have been no related party transactions during the six months to 30
September 2023 that have materially affected the financial position or
performance of the Group.
580 share options were exercised by Directors during the period (H1 23: nil).
The total gain arising on the exercise of options was £3,923.
All related party transactions are materially consistent with those disclosed
by the Group in its financial statements for the year ended 31 March 2023.
14. Issue of ordinary shares
During the six months ended 30 September 2023, the Group issued 386,596
ordinary shares (H1 23: 33,129 shares) due to the exercise of vested options.
The exercise price of options exercised in the period ranged from £0.005 per
share to £7.35 per share (H1 23: £0.005 to £7.35).
The Group issued 103,795 ordinary shares in respect of post-acquisition
remuneration (H1 23: nil).
All ordinary shares were issued with a nominal value of £0.005 each.
15. Acquisitions
On 30 June 2023, the Group acquired 100% of the share capital of US based
RapidIT-Cloudbera, Inc. ("RapidIT-Cloudbera").
Established in 2017, RapidIT-Cloudbera is the creator of Genie, a
Workday-focused automated testing product which has the ability to rapidly
auto-generate test cases, allowing customers to quickly launch their automated
testing efforts. Genie is used by over 100 organisations to streamline their
testing activity.
The skills and knowledge of the RapidIT-Cloudbera team will allow us to
accelerate our product development, increasing the functionality of our
market-leading automated testing product, Smart Test and enable us to quickly
bring new products to the market.
From 30 June 2023, RapidIT-Cloudbera has contributed revenue of £0.8 million
and £0.1 million loss for the period. If the acquisition had occurred on 1
April 2023, management estimates that consolidated revenue for the six months
ended 30 September 2023 would have been £193.9 million and consolidated
profit for the period would have been £22.0 million.
The following table summarises the recognised amounts of assets and
liabilities assumed at the acquisition date. Due to the close proximity of the
acquisition date and the reporting date, the finalisation of the fair value of
the assets acquired and liabilities assumed at the acquisition date, including
fair value of intangible assets and any associated deferred tax, has not been
finalised at the reporting date. Accordingly, the amounts in the table below
have been determined on a provisional basis and amounts including goodwill are
subject to change following completion of the fair value assessment.
Provisional
Fair value
(unaudited)
(£000s)
Cash and cash equivalents 340
Trade and other receivables 281
Intangible assets 5,777
Trade and other payables (1,349)
Fair value of net identifiable assets 5,049
Goodwill 18,629
Total consideration 23,678
(unaudited)
Satisfied by: (£000s)
Cash 23,678
Total consideration 23,678
(unaudited)
(£000s)
Cash consideration 23,678
Less cash and equivalents acquired (340)
Net cash outflow 23,338
Goodwill
Goodwill has arisen on the acquisition and reflects the future economic
benefits arising from assets that are not capable of being identified
individually and recognised as separate assets and is pending finalisation of
the fair value of the assets acquired and liabilities assumed at the
acquisition date. The goodwill reflects the skilled and assembled workforce of
the acquired entity and the anticipated profitability and synergistic benefits
arising from the combination. None of the goodwill recognised is expected to
be deductible for tax purposes.
Acquisition related costs
The Group incurred acquisition related costs of £0.4 million on legal and due
diligence costs. These costs have been included in operating expenses.
Compensation for post-combination services
In respect of all acquisitions of the Group, additional compensation for
post-combination services of up to £7.4 million (H1 23: £9.2 million) will
be payable in future periods to March 2026, subject to future service
conditions being met. Amounts relating to compensation for post-combination
services are recognised as an expense over the service period. During the
period, a charge of £2.7 million (H1 23: £2.3 million) has been recognised
for compensation for post-combination services in operating expenses. Of this
amount £1.4 million (H1 23: £1.8 million) relates to share-based payment
arrangements and has been credited to equity.
16. Cash and cash equivalents
In connection with the Group's insurance arrangements, the Group has an
insurance cell within a protected cell company. To satisfy regulatory
requirements, £2.5 million (H1 23: nil), included within cash and cash
equivalents, must be kept by the Group in a bank account. The Group has full
access to this bank account and funds can be withdrawn without penalty.
17. Subsequent events
Subsequent to 30 September 2023, the Company paid the final dividend of £20.1
million in respect of the year ended 31 March 2023, declared at the Annual
General Meeting on 21 September 2023, to shareholders on 20 October 2023, as
detailed in note 7.
Statement of Directors responsibilities
The Directors are responsible for preparing the half-yearly financial report
in accordance with the Disclosure Guidance and Transparency Rules ("the DTR")
of the UK's Financial Conduct Authority ("the UK FCA").
In preparing the condensed set of consolidated financial statements included
within the half-yearly financial report, the Directors are required to:
· prepare and present the condensed set of consolidated financial
statements in accordance with IAS 34 Interim Financial Reporting as adopted in
the UK and the DTR of the UK FCA;
· ensure the condensed set of consolidated financial statements has
adequate disclosures;
· select and apply appropriate accounting policies;
· make accounting estimates that are reasonable in the circumstances;
and
· assess the entity's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the entity or to cease operations, or have no realistic alternative
but to do so.
The Directors are responsible for designing, implementing and maintaining such
internal controls as they determine is necessary to enable the preparation of
the condensed set of consolidated financial statements that is free from
material misstatement whether due to fraud or error.
We confirm that to the best of our knowledge:
(1) the condensed set of consolidated financial statements included within
the half-yearly financial report of Kainos Group plc for the six months ended
30 September 2023 ("the interim financial information") which comprises the
condensed consolidated income statement, the consolidated statement of
comprehensive income, the condensed consolidated statement of financial
position, the condensed consolidated statement of changes in equity, the
consolidated statement of cash flows and the related explanatory notes, have
been presented and prepared in accordance with IAS 34, Interim Financial
Reporting, as adopted for use in the UK, and the DTR of the UK FCA.
(2) The interim financial information presented, as required by the DTR of
the UK FCA, includes:
a. an indication of important events that have occurred during the first six
months of the financial year, and their impact on the condensed set of
consolidated financial statements;
b. a description of the principal risks and uncertainties for the remaining
six months of the financial year;
c. related parties' transactions that have taken place in the first six
months of the current financial year and that have materially affected the
financial position or the performance of the enterprise during that period;
and
d. any changes in the related parties' transactions described in the last
annual report that could have a material effect on the financial position or
performance of the enterprise in the first six months of the current financial
year.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Entity's website.
Legislation in the UK governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
On behalf of the Board
Richard McCann
Chief Financial Officer/Chief Operating Officer
10 November 2023
Independent Review Report to Kainos Group plc ("the Entity").
Conclusion
We have been engaged by the Entity to review the Entity's condensed set of
consolidated financial statements in the half-yearly financial report for the
six months ended 30 September 2023 which comprises the condensed consolidated
statement of comprehensive income, the condensed consolidated statement of
financial position, the condensed consolidated statement of changes in equity,
the consolidated statement of cash flows a summary of significant accounting
policies and other explanatory notes.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of consolidated financial statements in the
half-yearly financial report for the six months ended 30 September 2023 is not
prepared, in all material respects in accordance with International Accounting
Standard 34 Interim Financial Reporting ("IAS 34") as contained in the UK
adopted International Accounting Standards and the Disclosure Guidance and
Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the
UK FCA").
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410 Review of Interim Financial Information Performed by the
Independent Auditor of the Entity ("ISRE (UK) 2410") issued for use in the UK.
A review of interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit
opinion.
We read the other information contained in the half-yearly financial report to
identify material inconsistencies with the information in the condensed set of
consolidated financial statements and to identify any information that is
apparently materially incorrect based on, or materially inconsistent with, the
knowledge acquired by us in the course of performing the review. If we become
aware of any apparent material misstatements or inconsistencies, we consider
the implications for our report.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention that causes us to believe that the directors
have inappropriately adopted the going concern basis of accounting, or that
the directors have identified material uncertainties relating to going concern
that have not been appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410. However, future events or conditions may cause the Entity to
cease to continue as a going concern, and the above conclusions are not a
guarantee that the Entity will continue in operation.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
half-yearly financial report in accordance with the DTR of the UK FCA.
The directors are responsible for preparing the condensed set of consolidated
financial statements included in the half-yearly financial report in
accordance with IAS 34 as adopted for use in the UK.
As disclosed in note 2, the annual financial statements of the Entity for the
period ended 31 March 2023 are prepared in accordance with UK-adopted
International Accounting Standards.
In preparing the condensed set of consolidated financial statements, the
directors are responsible for assessing the Entity's ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors either intend
to liquidate the Entity or to cease operations, or have no realistic
alternative but to do so.
Our responsibility
Our responsibility is to express to the Entity a conclusion on the condensed
set of consolidated financial statements in the half-yearly financial report
based on our review.
Our conclusion, including our conclusions relating to going concern, are based
on procedures that are less extensive than audit procedures, as described in
the Basis for conclusion section of this report.
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the Entity in accordance with the terms of our
engagement to assist the Entity in meeting the requirements of the DTR of the
UK FCA. Our review has been undertaken so that we might state to the Entity
those matters we are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Entity for our review work, for this
report, or for the conclusions we have reached.
KPMG
10 November 2023
Chartered Accountants
The Soloist Building
1 Lanyon Place
Belfast
BT1 3LP
(#_ftnref1) (( 1 )) Further detail, including associated expenses recognised
in the period, is contained within the Workday Services review on Page 13.
(#_ftnref2) ((( 2 ))) During this reporting period we moved from a
proprietary, five-point rating system ('Poor', 'Satisfactory', 'Good', 'Very
Good' or 'Excellent') to the established industry measure, Net Promoter Score.
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.
(#_ftnref3) ((( 3 ))) The Financial review section includes reconciliations
between adjusted pre-tax profit and profit before tax numbers.
(#_ftnref4) (() 4 ()) The report can be accessed via GOV.UK, or by using this
link
(https://www.gov.uk/government/publications/roadmap-for-digital-and-data-2022-to-2025/transforming-for-a-digital-future-2022-to-2025-roadmap-for-digital-and-data)
.
(#_ftnref5) (( 5 )) Workday, Inc.
(#_ftnref6) (( 6 )) Direct expenses plus central overheads plus balances below
adjusted profit equals the sum of operating expenses plus impairment losses
and reversals on trade receivables and accrued income and fair value movements
on investment property. Direct expenses are expenses that are directly
attributable to each division.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR NKBBBDBDDBDDRecent news on Kainos
See all newsREG - Kainos Group plc - Total Voting Rights
AnnouncementREG - Kainos Group plc - Year-end Trading Update
AnnouncementREG - Kainos Group plc - Holding(s) in Company
AnnouncementREG - Kainos Group plc - Total Voting Rights
AnnouncementREG - Kainos Group plc - Holding(s) in Company
Announcement