TIDMKNOS
RNS Number : 5050Z
Kainos Group plc
24 May 2021
Kainos Group plc
Kainos Group plc "Kainos" or the "Group"
Full year results for the year ended 31 March 2021
Kainos Group plc (KNOS), a leading IT provider, operating
through two specialist business divisions, Digital Services and its
Workday Practice, is pleased to announce its results for the year
ended 31 March 2021.
Financial highlights
2021 2020 Change
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Revenue GBP234.7m GBP178.8m +31%
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Statutory profit before tax GBP50.3m GBP23.2m +117%
=============================== ========== ========== =======
Adjusted pre-tax profit( [1]
) GBP57.1m GBP25.5m +124%
=============================== ========== ========== =======
Cash( [2] ) GBP80.9m GBP40.8m +98%
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Bookings GBP258.8m GBP243.6m +6%
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Software as a Service (SaaS)
bookings GBP41.8m GBP30.5m +37%
=============================== ========== ========== =======
Backlog( [3] ) GBP206.2m GBP180.0m +15%
=============================== ========== ========== =======
Adjusted diluted earnings per
share(1) (note 7) 36.8p 16.6p +122%
=============================== ========== ========== =======
Diluted earnings per share 32.1p 15.1p +113%
=============================== ========== ========== =======
Total dividend( [4] ) 28.2p 3.5p +706%
=============================== ========== ========== =======
Operational highlights
We have delivered a very strong business performance, reflecting
strong sector demand, the ongoing trust and support of our
customers and the dedication of our people. We have recorded our
11th consecutive year of growth, with strong financial metrics.
-- Revenue growth of 31% (28% organic) to GBP234.7 million (2020: GBP178.8 million).
-- Adjusted pre-tax profit increased 124% to GBP57.1 million (2020: GBP25.5 million).
-- Bookings up 6% to GBP258.8 million (2020: GBP243.6 million).
-- Contracted backlog growth of 15% to GBP206.2 million (2020: GBP180.0 million).
-- Highly cash generative with cash conversion( ([5]) () of 112%
(2020: 97%) and period-end net cash of GBP80.9 million (2020:
GBP40.8 million).
We continue to deliver on our ambition to be a responsible
business.
-- Customer approval rating( ([6]) () remains high at 98% (2020: 97%).
-- Strong recruitment has increased our staff numbers to 2,024
(2020: 1,715), with employee retention increasing to 92% (2020:
90%).
-- We have made significant progress in our climate action
programme, achieving carbon neutrality for the year.
Both of our operating divisions have delivered an excellent
performance.
-- Within Digital Services, we continue to support significant
ongoing digital transformation programmes across the public sector,
healthcare and in the commercial sector. This has driven very
strong revenue growth of 32% to GBP161.6 million (2020: GBP122.5
million).
-- Our Workday Practice continues to be the leading European
Workday specialist and we are building strongly in North America.
We have recorded very strong revenue growth of 30% (18% organic) to
GBP73.1 million (2020: GBP56.3 million). Within this, Smart
revenues increased by 27% to GBP24.2 million (2020: GBP19.1
million).
Our focus on revenue diversification has ensured that we have
built a robust and well-balanced business.
-- Overall, our revenues are: 45% Public Sector, 35% Commercial, 20% Healthcare.
-- International revenues are up 48% to GBP59.0 million (2020: GBP39.9 million).
-- Commercial revenues are up 29% to GBP81.1 million (2020: GBP63.1 million).
-- Healthcare revenues are up 106% to GBP48.1 million (2020: GBP23.3 million).
-- SaaS and software-related revenues are up 27% to GBP31.6 million (2020: GBP24.9 million).
Commenting on the results, CEO Brendan Mooney said:
"For the past 15 months we have been physically distant from our
colleagues and customers, but we have worked seamlessly together to
deliver critical systems.
Our work has included supporting the NHS response to Covid-19
and ensuring that our government and commercial clients continued
to provide essential services to citizens, customers and
employees.
Since 2010 we have been helping our customers drive digital
transformation. That trend has continued through the pandemic and
we have once again delivered a strong business performance.
We have maintained our high levels of customer satisfaction and
employee engagement; at the same time delivering record levels of
sales, revenue, adjusted pre-tax profit and cash.
We marked significant milestones through the year. We now have
over 500 customers and we employ over 2,000 talented colleagues;
and we have made significant progress in our climate action
programme, achieving carbon neutrality for the year.
Our performance has only been possible because of the trust and
support of our customers and the talents and hard work of our
colleagues. Once again, we have a deep sense of gratitude towards
our people and our clients."
(1) Adjusted measures are based on reported statutory profit
numbers excluding the effect of share-based payments and
acquisition-related expenses. Reconciliations between the reported
and adjusted measures are included in the Financial Review.
(2) Cash includes treasury deposits of GBP18.0 million.
(3) The value of contracted revenue that has yet to be
recognised.
(4) Total dividend for FY21 includes a special dividend of 6.7p
per share (paid Sept 2020), interim dividend 6.4p per share (paid
Dec 20)and proposed final dividend of 15.1p per share.
(5) Cash generated by operations as a percentage of EBITDA
(calculated as being adjusted pre-tax profit add back depreciation,
finance income and finance expense).
(6) Data from all completed customer surveys in the year. There
are five possible designations: 'Poor', 'Satisfactory', 'Good',
'Very Good' or 'Excellent'; the rating reflects the percentage of
customers that rate our performance 'Good' or better .
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/Ben Griffiths
Canaccord Genuity +44 20 7523 8000
Simon Bridges / Emma Gabriel
FTI Consulting LLP +44 20 3727 1000
Matt Dixon / Dwight Burden/Kwaku Aning
About Kainos Group plc
We are a UK-headquartered IT provider, operating through two
specialist business divisions, Digital Services and our Workday
Practice.
Our Digital Services division 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 that they provide better outcomes for users.
Our Workday Practice is focused on the deployment of Workday
Inc's Finance, HR and Planning software to leading organisations
across the public, commercial and healthcare sectors. We are one of
Workday's most respected partners, experienced in complex
deployment and integrations and trusted by our customers to launch,
test, expand and safeguard their Workday systems. We are also the
leader in automated testing of customers' unique Workday
configurations.
Our people are central to our success. We employ more than 2,000
people across 12 offices in Europe and North America.
Kainos is listed on the London Stock Exchange (LSE: KNOS).
For further information, please visit www.kainos.com
Kainos at a glance
We are a UK-headquartered IT provider, operating through two
specialist business divisions, Digital Services and our Workday
Practice.
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
FY21 revenue: GBP161.6 million, 69% of Group total, 5-year
growth: 24% CAGR.
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.
Working collaboratively with customers around the world, our
innovative and transformative solutions are secure, accessible,
cost-effective, and take a user-first approach. We leverage the
benefits of the public cloud and enable customers to utilise their
data to drive decision-making.
In the public sector, we have delivered projects helping more
than 60 million citizens, while saving our customers hundreds of
millions of pounds.
In the commercial sector, customers trust us to provide digital
transformation that evolves their services, delivers efficiencies,
increases their capabilities and future-proofs their
businesses.
In healthcare, we help providers deliver a service that is
faster, more cost-effective and patient-centric.
We deliver services to over 140 clients, including HM Land
Registry, the Department for Environment, Food and Rural Affairs
('Defra'), NHS Digital, Concardis (Germany) and New Day (UK).
Workday Practice
Our Workday Practice is closely linked to Workday Inc's software
suite, which includes cloud-based software for Human Capital
Management ("HCM"), Financial Management and Planning, enabling
enterprises to organise their staff efficiently and support their
financial reporting requirements.
Workday Services
FY21 revenue: GBP49.0 million, 21% of Group total, 5-year
growth: 49% CAGR.
In our Workday Services business, we provide consulting, project
management, integration and post-deployment services for Workday's
software suite. We work with clients globally and have an
exceptional relationship with Workday.
With over 100 international clients, we are proud to work with
Kion Group (Germany), ASOS plc (UK), Takeaway.com (Netherlands),
Match.com (USA), Raiffeisen Bank (Switzerland) and LKAB
(Sweden).
Smart
FY21 revenue: GBP24.2 million, 10% of Group total, 5-year
growth: 51% CAGR.
Smart is our proprietary software tool. It allows Workday
customers to automatically test and verify that their unique
Workday configuration is operating effectively, both during
implementation and in live operation. Smart is the leading
automated testing platform specifically designed for Workday and is
implemented as a cloud-based Software as a Service ("SaaS")
solution, on a subscription basis.
Over 240 clients use Smart, including Salesforce (USA), Whole
Foods (USA), Xero (New Zealand), Netflix (USA), CapitalOne (USA),
Blackberry (Canada), Primark (Ireland) and The Met (USA).
FY21 key statistics
People
-- Number of staff and contractors: 2,024 (2020: 1,715).
-- Employee retention: 92% (2020: 90%).
-- People by region: UK & Ireland (75%), Central Europe (18%), North America (7%).
-- Offices: (12) Amsterdam, Atlanta, Belfast, Birmingham,
Copenhagen, Denver, Derry, Gdansk, Hamburg, Indianapolis, London
and Toronto.
Customers
-- Active customers: 546 (2020: 465).
-- Customers rating our service as good or better: 98% (2020: 97%).
-- Revenue from existing customers: 85% (2020: 87%).
Financial
-- Revenue: GBP234.7 million (2020: GBP178.8 million).
-- Adjusted profit: GBP57.1 million (2020: GBP25.5 million).
-- Bookings: GBP258.8 million (2020: GBP243.6 million).
-- Contracted sales backlog: GBP206.2 million (2020: GBP180.0 million).
-- Revenue by sector: Public 45% (2020: 52%), Commercial 35%
(2020: 35%), Healthcare 20% (2020: 13%).
-- Revenue by region: UK & Ireland 75% (2020: 78%), North
America 16% (2020: 12%), Central Europe 8% (2020: 10%), Rest of
World 1% (2020: 0%).
CEO Statement
Living and working through a pandemic
When reflecting on the past 15 months, words cannot adequately
describe the remarkable way that everyone in Kainos has responded
to the personal and professional challenges of living and working
through a global pandemic.
The work that our teams have delivered in supporting the NHS
response to Covid-19 has been truly inspirational. As has been our
support for our government and commercial clients, ensuring that
they could continue to provide critical services to citizens,
customers and colleagues in an incredibly difficult
environment.
Our people have supported our customers superbly, while learning
to adapt to working from home and juggling the additional care
requirements imposed by the various lockdown measures. This too has
been inspirational.
We owe a special thanks to the colleagues we asked to go on
furlough in the early weeks of the pandemic. Their flexibility and
support amidst all the uncertainty provided us with the time to
make the right, considered, long-term decisions for everyone. We
were delighted to welcome back all those colleagues during the
summer of 2020; at the same time we repaid all the funds that we
received under the UK Government Job Retention Scheme.
A strong business performance
The pandemic has also demonstrated how important it is for
organisations to invest in their digital capabilities, both
internally and externally. Our customers have responded and
continue to prioritise their critical digital projects and place
their trust in us to help deliver these ambitious projects.
This trust, coupled with the talents and hard work of our
people, has once again generated a strong set of financial results,
with revenue increasing to GBP234.7 million, and adjusted pre-tax
profit increasing to GBP57.1 million. Our confidence in our
business is reflected in our high levels of recruitment - our total
workforce is now 2,024 people, an increase of 309 over the course
of the year.
While we take great satisfaction in our financial results, we
also recognise that our trading includes savings that we consider
non-recurring in nature - reduced travel, training and marketing
expenses. We expect that elements of this expenditure will return
to more typical levels in the future.
In our Digital Services division, we continue to deliver
significant programmes in partnership with the UK government and
with leading commercial and healthcare clients. As always, our
growth is a result of demand from both existing and new clients,
such as the Welsh Government, DVSA and Big Society Capital.
Internationally, our patience has been rewarded as we have signed
our first small projects for clients in both Canada and
Switzerland.
Our Workday Practice continues to help forward-thinking
organisations such as EMC Insurance, Warner Music and Blackberry
deploy Workday's innovative Software-as-a-Service (SaaS) platform
to support their people and finance requirements. We remain the
leading European partner within the Workday ecosystem and continue
to make significant progress in both Canada and the US.
Our early-stage investments have also made good progress. We
have signed major projects within our Data and Artificial
Intelligence practice; our Adaptive Planning acquisitions achieved
global recognition from Workday; our Workday Extend team has
established itself as one of the leading partners globally; and our
Intelligent Automation practice launched and secured its first
projects, all within a year. The pace of their progress highlights
the long-term growth opportunities in each of these areas.
Widening our responsibilities
Whilst we have become used to working physically distant from
our colleagues and our customers, there is also a greater sense of
unity and shared responsibility towards our communities and our
environment.
In response, we have increased the pace of our climate action.
We are proud to report that we are carbon-neutral for the year and
are on track to achieve carbon net-zero by 2025.
Equally, we are proud to have increased our support for
colleagues and their allies through our LGBTQ+, ethnic diversity,
women and neurodiverse employee network groups. While we
acknowledge our progress, it is more important to recognise that
there is still much to do to improve diversity within Kainos and in
the wider technology industry. We are committed to continued
progress.
Board changes
In January, we welcomed Rosaleen Blair, CBE as a Non-Executive
Director. Rosaleen is the Founder and Chair of Alexander Mann
Solutions (AMS), a pioneer in the global workforce solutions
industry with 4,500 employees operating in 90 countries.
Our AGM later this year will mark the completion of Chris
Cowan's term on our Board. Chris was appointed a Non-Executive
Director in 2015 and over the past six years has been instrumental
in establishing Kainos as a leading public company.
Our Executive Director, Paul Gannon, will also complete his term
on our Board and will not be standing for re-election at the AGM.
Paul will continue to act as a key member of the Executive Team.
Having joined Kainos in 1998, Paul has contributed to our success
from being a small, private company through to our life as an
international public company.
We are incredibly grateful for the energy, insight and guidance
that both Chris and Paul have brought to the business during their
time on our Board.
A strong outlook
Our digital transformation market has been growing strongly for
over a decade, with the pandemic accelerating the need for
organisations to invest in their digital capabilities. Our leading
position within the Digital Transformation and Workday markets
allow us to look confidently to the future.
Our confidence is strengthened with the progress of our
early-stage investments, which are already contributing significant
additional revenue streams. Similarly, our international expansion
is increasing our market size - this is an established trend within
our Workday Practice but we have also recorded success within our
Digital Services division, undertaking projects in Germany,
Switzerland and Canada.
The pandemic has demonstrated that our sector is resilient, but
it has also demonstrated that the future is unpredictable.
Notwithstanding our confidence, challenges remain. Countries and
customers are exiting lockdown at different speeds and with varying
degrees of success. The effects of the pandemic will linger for
many years and we need to remain vigilant.
More immediately, our thoughts are with our customers and our
colleagues. Distributed and remote working is now established as a
productive and effective way to support our customers. Our
colleagues prefer a blend of office-based and home-based
working.
We have no unique insight as to what a 'return to normal' will
mean but we believe that by responding to the feedback of our
people and our customers, we will be able to design an approach
that works for everyone.
A sense of gratitude
The number of lives that we touch as an organisation is vast. In
the past year, 60 million people have used a system or service that
we have delivered.
However, we think most often of the stakeholders that are
closest to us - our people, our customers, our communities and our
shareholders.
A review of the past year cannot be complete without recognising
the support, confidence and trust that everyone has placed in
Kainos.
It has been inspirational; and in return has inspired a deep
sense of gratitude within Kainos.
Brendan Mooney
Our Strategy
We are a growth-orientated business and while we are always
confident of growing our market share in subdued markets, we
naturally orientate towards higher growth, dynamic markets. It is
in these markets where the talents of our people shine the
brightest and opportunities for growth are the strongest.
Our ambition is to be a global, independent company operating
towards the disruptive end of technology, that will thrive not just
today, but for generations. In building for the long-term, we
aspire to provide our people with rewarding and fulfilling
careers.
As part of our ambition, we believe that we can achieve
sustained growth in terms of revenue, adjusted pre-tax profit and
cash flow.
We have, deliberately, developed from a national to an
international organisation, both internally and in the customers
and markets that we serve. We expect our international presence to
continue to expand in terms of locations, people and customers.
It is our preference to grow organically; we will undertake
acquisitions only in exceptional circumstances, for instance, where
we need to obtain unique skills.
We also look to ensure that we have a well-balanced business,
which is not overly reliant on any one customer, market or sector.
This occasionally requires us to prioritise smaller, early-stage
opportunities ahead of established market growth. We are
comfortable with taking this long-term view.
People
The fundamental component of our strategy is our people. Our
business is successful because of the talent, skill and motivation
of our colleagues as they deliver on commitments to internal and
external customers.
We will add to our existing talented workforce by recruiting
high calibre people from school, college and industry; and we will
continue to invest in developing their skills and careers and we
will continue to strive to be a great employer.
Customers
Our business model is based on the conviction that by delivering
consistently to our customers we will build long-lasting, mutually
beneficial relationships that will see us thrive as a business.
These relationships are built on our reputation for delivery and
exemplary customer service. By being responsive to and supportive
of our customers' complex and changing business needs, we reinforce
the strength of our relationships.
Therefore, 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.
Markets
Digital Services
Our focus is to:
-- continue to grow within the Public Sector and Healthcare,
being engaged in ambitious transformation projects across UK
Government and the NHS;
-- repeat our digital transformation success within the UK
commercial sector, with a bias towards financial services; and
-- expand internationally, focused initially within Germany and
Canada where we already have established delivery teams, have built
business development expertise and have an existing Workday
Practice client base.
Workday Practice
Our focus is to:
-- continue to grow in our existing, established markets as
Workday continues to expand within these markets;
-- gain market share, replacing incumbent providers to existing
Workday customers through a reputation for higher service
levels;
-- expand internationally, opening offices in countries with
large and growing numbers of Workday customers; and
-- extend Smart and develop other products within the Workday
ecosystem, where our blend of software skills and Workday
experience makes us uniquely positioned.
New opportunities
Our focus is to:
-- continue to invest in our Data and Artificial Intelligence
practice, building capability and creating an international, high
growth business;
-- support the early progress of our Intelligent Automation
practice, ensuring the foundations are in place to create a
significant long-term business; and
-- through our new business ideas process, identify and promote
ideas that have the potential to become sizeable revenue streams in
the future.
Operational review
Our people
We are clear that our success is driven by the ability, energy
and expertise of the people in Kainos; this past year has further
underlined that belief.
Over the course of the year, our headcount has grown by 309 to
2,024 people (2020: 1,715). Of our colleagues, 15% are contractors
(2020: 9%). By region, UK & Ireland increased to 1,541 people
(+283), Central Europe reduced to 341 people (-10) and North
America increased to 142 people (+36).
Our employee engagement levels remain high and in the past year
92% of our colleagues made the choice to stay and develop their
career in Kainos (2020: 90%). Once again, our people have voted us
into the Top 100 in the Sunday Times 'Best Companies to Work For'
survey and we continue to receive high approval ratings on
Glassdoor, the online career community.
The commitment of the people in Kainos through the pandemic has
been remarkable. In recognition of this, we implemented two
GBP1,000 'thank-you' payments to employees during the year, for a
total of GBP3.2 million.
Our customers
We believe that by delivering consistently to our customers we
build long-term relationships. This is a perspective shared by our
customers, who continue to have a very positive view of our
performance - 98% of respondents to our customer surveys rated our
service as 'good or above' (2020: 97%).
Existing customers continue to trust us to deliver their most
challenging projects and this is reflected in our revenues, with
85% of revenues coming from our existing clients (2020: 87%). We
have also gained new customers during the year, and we now work
with 546 customers (2020: 465).
From a sector perspective we have a well-diversified business,
with 45% of our revenues from public sector customers (2020: 52%),
35% from commercial organisations (2020: 35%) and 20% from
healthcare customers (2020: 13%).
Our international client base has also expanded and as a result
our international revenues have grown by 48% to GBP59.0 million
(2020: GBP39.9 million). Regionally, UK & Ireland accounts for
75% of our business (2020: 78%), North America for 16% (2020: 12%),
Central Europe for 8% (2020: 10%), with the rest of the world
representing 1% (2020: 0%).
Digital Services performance
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.
Revenues grew by 32% to GBP161.6 million (2020: GBP122.5
million), while our bookings reduced 7% to GBP157.7 million (2020:
GBP169.3 million), as the pandemic disrupted the normal contracting
cycle, with some contracts being signed after the close of our
financial year. As a result, our backlog decreased by 3% to
GBP119.4 million (2020: GBP123.5 million).
Public sector
Our public sector customers have remained committed to their
digital transformation programmes and these have continued at pace.
We have been impressed by how large departments have been able to
switch from an office-based environment to working effectively from
home.
Revenues increased by 18% to GBP102.2 million (2020: GBP86.4
million).
Within central government, we continue to consolidate a leading
position with our key customers, delivering several high-profile
digital programmes including the Passport Application service for
the Home Office and an EU Exit Imports programme for Defra. We have
also added new customers such as the National Crime Agency to
deliver new crime intelligence services using data science and
artificial intelligence.
Commercial sector
The early stages of the pandemic saw some of our commercial
sector clients pause or reduce some of their programmes. By the end
of the summer, however, customer confidence had returned, and our
performance returned to pre-pandemic activity levels.
Over the year, our revenues increased 3% to GBP15.7 million
(2020: GBP15.3 million). We have continued to assist our
established customers such as New Ireland Assurance, Concardis and
Early Disease Detection Research Project (EDDRP) as they increase
investment in digital transformation.
We have also recorded further international successes and have
been appointed to deliver projects for clients in Canada and
Switzerland. While these are small engagements, we are optimistic
that we will be awarded further projects during the course of next
year.
Healthcare sector
Our healthcare revenues increased by 111% to GBP43.7 million
(2020: GBP20.7 million).
We continue to enjoy strong partnerships with NHS Digital and
NHS X, and we have been heavily involved in supporting their
response to the challenges of Covid-19. This includes the Isolation
Note service from NHS Digital, NHS Home Testing and managing the
successful delivery of Health and Social Care Northern Ireland's
track and trace system.
While the pandemic response continues to command much of the
attention of the NHS, increasingly the focus is turning to broader
healthcare provision and how technology can support its ambitious
digital plans. In this regard, we are delighted to be named on the
recently announced GBP800 million Digital Capability for Health
framework.
Digital Services outlook
We remain extremely positive about the future of digitisation in
the UK public sector and within the NHS, 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.
The digitisation pressures and opportunities within the
commercial sector are similar, and therefore the growth prospects
for us are substantial. Our progress, notwithstanding the impacts
of Covid-19, give us confidence that we will deliver significant
growth in the years ahead.
We are similarly optimistic about the international opportunity.
Our initial focus is primarily on commercial customers in Canada,
Germany and Switzerland, where we already have established delivery
teams, sales expertise and a Workday Practice client base.
Workday Practice performance
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 36 partners
globally, accredited to implement Workday's innovative SaaS
platform.
Revenue for the period grew by 30% to GBP73.1 million (2020:
GBP56.3 million) and backlog for the division increased by 53% to
GBP86.7 million (2020: GBP56.5 million). Bookings increased 36% to
GBP101.0 million (2020: GBP74.3 million), with a very strong
performance in the second half of our year.
The number of accredited Workday consultants at Kainos increased
by 9% to 416 (2020: 380).
Workday Services
Within Europe, we continue to consolidate our position as the
leading Workday partner. This leadership position is the result of
high satisfaction levels within our customer base, coupled with our
geographic expansion and consolidation within the partner
ecosystem.
Our international growth started in Europe in 2015 when we
opened our office in Amsterdam. We now have staff based across 13
European countries. Having entered the North American market in
2018, we now have 142 people based in the US and Canada (2020: 106
people).
There is an established trend of larger partners buying smaller
organisations( [7] ) , and we anticipate further transactions in
the future. The reduction in the number of partners provides
further growth opportunity.
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.
Revenue for the year grew by 32% to GBP49.0 million (2020:
GBP37.2 million); backlog increased by 62% to GBP34.9 million
(2020: GBP21.5 million); and despite slower decision-making by some
of our clients at the start of the pandemic, bookings for the year
increased 36% to GBP59.8 million (2020: GBP43.9 million).
Workday Adaptive Planning
In June 2018, Workday Inc. acquired Adaptive Insights for $1.6
billion. Adaptive Insight's Business Planning Cloud (now called
Workday Adaptive Planning) is a leading cloud-based platform that
allows organisations to modernise their business planning, by
providing budgeting, forecasting, reporting and analytics
capability. At the time of their acquisition, Adaptive Insights had
over 4,700 customers worldwide.
In our 2020 financial year, we completed the acquisition of
three leading Adaptive Insights consulting organisations: Formulate
(UK, 16 people), Implexa (Germany, 5 people) and IntuitiveTEK (USA,
38 people), creating one of the largest Adaptive Insights practices
globally. By acquiring these businesses, we have strengthened our
capabilities to sell, deliver and support Adaptive Planning
implementations.
(7) Recent transactions include the Ataraxis acquisition by HR
Path (2018). In 2019 Alight acquired the Workday-related business
elements of Wipro, for a reported $110 million (350 consultants).
In 2020, Accenture acquired US-focused Sierra-Cedar (275
consultants) and Cognizant completed the acquisition of
Collaborative Solutions (c.1,000 consultants).
In both 2020 and 2021, Workday named IntuitiveTek as Global
Solution Provider of the Year, with Formulate confirmed as EMEA
Solution Provider of the Year.
In total, the acquisitions contributed revenue of GBP7.8 million
(2020: GBP1.1 million) during the year.
Smart
Kainos has developed four Smart modules: HCM, Security,
Financials and Payroll. Smart is used by over 240 global customers,
including Capital One, Cardinal Health and General Dynamics to
automatically verify their Workday configurations.
Smart bookings increased 43% to GBP37.8 million (2020: GBP26.4
million). This strong sales performance resulted in revenue
increasing 27% to GBP24.2 million (2020: GBP19.1 million), of which
GBP21.0 million relates to SaaS subscriptions (2020: GBP15.4
million); the Annual Recurring Revenue at 31 March 2021 was GBP25.7
million (2020: GBP21.0 million), an increase of 23% and backlog
increased 48% to GBP51.8 million (2020: GBP35.0 million).
Workday Extend
Workday Inc. has a Platform-as-a-Service offering known as
Workday Extend, (previously Workday Cloud Platform) which became
generally available to customers in May 2020. Kainos has been part
of the Extend early adopter programme since 2017. While Workday
Extend is at an early stage it may offer new growth opportunities,
such as additional product ideas for Kainos or specialised
development services to other Workday customers and partners.
Workday Practice outlook
Our strong performance, despite the challenges of the pandemic,
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's bold goal of
achieving $10 billion revenue in the next five years, up from c.$4
billion today.
In addition, we believe that we can outpace this rapid market
growth by continuing our international expansion and by replacing
other Workday partners in engagements where they are under-serving
their customer.
For Smart and other products that we develop, our growth will be
powered by the increase in Workday clients and by higher
penetration of our products into the Workday client base.
New business ideas, innovation and research
Successful businesses continue to challenge themselves and we
are keen to improve our existing offerings, develop new business
ideas and assess business and technology concepts that are likely
to impact our clients in the future.
Including our product investment, our research and development
expenditure for the year amounted to GBP4.2 million (2020: GBP3.9
million), which was wholly expensed in the year.
New business ideas
We take the view that our people, who are often deeply engaged
with our customers, are best placed to identify new ideas. To
support them, we have created a process that is made up of two
phases, "Identify and Develop" and "New Business Investment".
Identify and develop
When someone has an idea, which can range from a novel approach
to solving customer problems to a potential partnership or a new
business offering, we support the investigation of the idea. This
includes exploring different aspects of the concept while making an
informed judgement of its early commercial potential. The
identification phase is typically an investment of up to 20 days,
with some external expenditure.
New business investment
Ideas that show real potential progress to the investment stage,
where the idea is presented to a panel composed of experienced
Kainos leaders and external entrepreneurs. Ideas that pass this
evaluation are given a formal investment package, typically
composed of development time, specialist recruitment and external
expenditure.
Our most recent graduate from this process is our Intelligent
Automation practice, launched in June 2020. Now a team of 12
people, including externally recruited experts, have seen us
undertake small, focused engagements for existing and new clients.
For example, we have provided the Information Commissioner's Office
(ICO) with a solution to automate their transaction entry process,
allowing officers to focus on the more complex. This will also
allow the current team of 30 officers handle the expected increase
in transactions, rising from 400 to 700 daily transactions.
We have every belief that our Intelligent Automation practice
will follow the success of our Data and Artificial Intelligence
practice, which will reach 100 people during this year.
External ideas
In addition to internally sourced ideas, we nurture
relationships with a broad network of entrepreneurial start-ups. We
mentor and support their leadership teams, to help increase the
success prospects for their business, but also with the aspiration
of being able to develop joint commercial opportunities.
Close-to-customer innovation
Technology continues to develop at pace and we look to
continuously improve our delivery approach for our customers. These
improvements reflect our most recent experience in delivering
projects, as well as using the improvements in the platforms from
Workday, Microsoft, AWS and other partners.
Within Digital Services, our continued investment makes us
leaders in cloud native software and data engineering, delivering
technology, practices and principles that enable our customers to
achieve long-term success with digital and data transformation. We
continue to develop our service design capabilities, leading on
human centred design, design thinking, user research and lean
product development.
Workday Inc frequently releases software and functionality
updates for their platform and we ensure that these latest
developments are reflected in our delivery approach and
methodology. We also assess new modules, particularly Workday
Extend, which allows customers to add unique functionality to their
Workday system.
Innovation services
To support innovation across the organisation we have invested
in a dedicated Innovation Services team. The team's activities
include providing foresight, research into emerging technology,
interpreting developing trends and market insights, and supporting
the development of innovative ideas across the business.
Current areas of foresight and investigation include quantum
computing, ambient computing, fog and distributed systems for
Internet of Things and smart environments and places, and research
into the advances in machine learning and AI, such as reinforcement
learning.
The team is also responsible for our relationships with academic
research partners and leading industry organisations, such as the
Turing Institute, Digital Catapult, the Confederation of British
Industry and the Institution of Engineering and Technology as well
as working with our strategic partners on further-from-market
technology and research.
Financial review
2021 was a year of strong financial performance despite the
challenges presented by Covid-19. Kainos achieved revenue of
GBP234.7 million (2020: GBP178.8 million), representing an increase
of 31%. Digital Services revenue grew 32% to GBP161.6 million
(2020: GBP122.5 million), reflecting customers continuing to
prioritise digital transformation programmes in the NHS and public
sector. Workday Practice revenue grew by 30% (18% organic) to
GBP73.1 million (2020: GBP56.3 million) which was driven by 32%
growth in Workday Services to GBP49.0 million (2020: GBP37.2
million) and 27% growth in Smart to GBP24.2 million (2020: GBP19.1
million). The Workday Practice continues to benefit from its
international scale and ability to secure new consulting contracts
across our geographies.
Overall gross margin was 50.4 % (2020: 47.0%). Digital Services
margins increased to 44.6% (2020: 39.9%) mainly due to an increase
in utilisation and partly to a reduction in holidays taken by staff
and reduced travel costs. The margin has benefited from some
savings in the period that are considered non-recurring in nature.
Workday Practice margins increased to 63.3% (2020: 62.3%), also
driven mainly by an increase in utilisation.
Operating expenses
Operating expenses for the period increased by 15% to GBP68.2
million (2020: GBP59.3 million). Despite revenue increasing by 31%,
the growth in operating expenses has been lower due to reduced
expenditure on costs such as training, recruitment, facilities and
travel during the pandemic lockdown. Some of these savings are
non-recurring in nature. The timeframe for the rephasing of these
costs is dependent on the speed with which life returns to normal
post the pandemic.
At 31 March 2020, in light of the significant economic
uncertainty caused by the Covid-19 pandemic, the Group considered
there was increased credit risk notably in respect of clients in
vulnerable sectors and an impairment loss of GBP1.8 million was
recognised. For the current period, the impact of Covid-19
continues to be a significant consideration in the calculation of
the lifetime expected credit loss. Overall, the results for the
year ended 31 March 2021 reflect an impairment credit in relation
to trade receivables of GBP0.3 million. At 31 March 2021 the
carrying value of the loss allowance on trade receivables is GBP1.6
million (2020: GBP1.8 million).
Investment in product development increased to GBP4.2 million
(2020: GBP3.9 million). All product development costs were expensed
in the period. Research and Development Expenditure Credit (RDEC)
grants recognised in the period totalled GBP3.6 million (2020:
GBP1.9 million).
Alternative performance measures
The business is managed and measured on a day-to-day basis using
underlying results. The Directors believe that the 'adjusted profit
before tax' and the 'adjusted diluted and basic earnings per share'
measures presented are more representative of the underlying
performance of the Group and enable comparability between
periods.
To arrive at adjusted results, adjustments made include
acquisition expenses (including deferred consideration regarded as
post acquisition remuneration), amortisation related to acquired
intangible assets and share-based payments.
Adjusted pre-tax profit increased by 124% to GBP57.1 million
(2020: GBP25.5 million). Profit before tax
increased by 117% to GBP50.3 million (2020: GBP23.2 million).
The adjusted profit measures can be reconciled to the reported
statutory numbers
as follows:
2021 2020
(GBP000s) (GBP000s)
=========== ===========
Statutory profit before tax 50,341 23,150
============================================= =========== ===========
Share-based payments and related costs 4,513 2,100
============================================= =========== ===========
Acquisition-related expenses, including
amortisation of acquired intangible assets
and deferred consideration 2,219 266
============================================= =========== ===========
Adjusted profit before tax 57,073 25,516
============================================= =========== ===========
2021 2020
(GBP000s) (GBP000s)
================================================ =========== ===========
Statutory profit after tax 39,601 18,564
================================================ =========== ===========
Share-based payments and related costs
(net of associated taxes) 3,656 1,701
================================================ =========== ===========
Acquisition-related expenses, including
amortisation of acquired intangible assets
and deferred consideration (net of associated
taxes) 2,143 219
================================================ =========== ===========
Adjusted profit after tax 45,400 20,484
================================================ =========== ===========
Corporation tax charge
The effective tax rate for FY21 was 21% (2020: 20%), which is
higher than the UK tax rate of 19% due to the Group's geographic
mix of profits.
Financial position
The Group continues to have a strong financial position, with
GBP80.9 million of cash and treasury deposits (2020: GBP40.8
million), no debt and net assets of GBP87.6 million (2020: GBP59.2
million). The combined underlying trade receivables and accrued
income totalled GBP52.1 million (2020: GBP43.3 million).
Cash flow and cash conversion
The Group entered the period with a cash balance of GBP40.8
million and paid a special dividend of GBP8.2 million on 4
September 2020 and an interim dividend of GBP7.8 million on 18
December 2020.
Cash conversion, calculated by taking cash generated by
operations as a percentage of EBITDA( [8] ) , continued to be
strong at 112% (2020: 97%)
(8) EBITDA is calculated as adjusted pre-tax profit add back
depreciation, amortisation, finance income and finance expenses
Dividend
As part of the Covid-19 related cost reduction measures, the
Board elected not to declare a final dividend for the year ended 31
March 2020. In light of the Group's performance, during the period,
and following the repayment of the monies originally claimed under
the furlough schemes, a special dividend of 6.7 pence per share
(GBP8.2 million) was approved by the Board and paid on 4 September
2020 to shareholders on the register at the close of business on 7
August 2020.
Consistent with the guidance set out in our 2015 IPO Prospectus,
to date the Group has adopted a progressive dividend policy,
maximising shareholder return alongside retaining sufficient funds
to invest in long-term growth. Kainos has consistently been
profitable and has generated a strong cash balance. The proposed
final dividend, if approved by shareholders, will be 15.1p and
payable on 29 October 2021 to all shareholders on the Register of
Members on 1 October 2021, and with an ex-dividend date of 30
September 2021. This will make the total dividend (including the
special dividend) for the year 28.2p (2020: 3.5p) which will
represent a distribution of 76% of the adjusted profit after
taxation for the year (2020: 21%).
Consolidated income statement for the year ended 31 March
2021
Continuing operations Note 2021 2020
(GBP000s) (GBP000s)
========================================== ==== ========== ==========
Revenue 2 234,694 178,778
========================================== ==== ========== ==========
Cost of sales 2 (116,396) (94,817)
========================================== ==== ========== ==========
Gross profit 2 118,298 83,961
========================================== ==== ========== ==========
Operating expenses 3 (68,232) (59,278)
========================================== ==== ========== ==========
Impairment gains and losses (including
reversals of impairment losses) on trade
receivables 269 (1,840)
========================================== ==== ========== ==========
Operating profit 50,335 22,843
========================================== ==== ========== ==========
Finance income 84 368
Finance expense (78) (61)
========================================== ==== ========== ==========
Profit before tax 50,341 23,150
========================================== ==== ========== ==========
Taxation on ordinary activities 5 (10,740) (4,586)
========================================== ==== ========== ==========
Profit for the year 39,601 18,564
========================================== ==== ========== ==========
Earnings per share
Basic 732.5p 15.5p
----- -----
Diluted 732.1p 15.1p
----- -----
Consolidated statement of comprehensive income for the year
ended 31 March 2021
2021 2020
(GBP000s) (GBP000s)
============================================ === ========== ==========
Profit for the year 39,601 18,564
================================================= ========== ==========
Items that may be reclassified subsequently
to profit or loss:
--- ---------- ----------
Currency translation difference (1,132) 577
================================================= ========== ==========
Total comprehensive income for the year 38,469 19,141
================================================= ========== ==========
Consolidated statement of financial position as at 31 March
2021
Note 2021 2020
(GBP000s) (GBP000s)
================================ ==== ========== ==========
Non-current assets
================================ ==== ========== ==========
Goodwill 3,121 3,220
================================ ==== ========== ==========
Other intangible assets 3,288 3,989
================================ ==== ========== ==========
Property, plant and equipment 10,287 9,854
================================ ==== ========== ==========
Right-of-use assets 3,857 4,468
================================ ==== ========== ==========
Investments in financial assets 1,225 1,025
================================ ==== ========== ==========
Deferred tax asset 4,020 1,559
================================ ==== ========== ==========
25,798 24,115
================================ ==== ========== ==========
Current assets
================================ ==== ========== ==========
Trade and other receivables 8 36,609 29,269
================================ ==== ========== ==========
Prepayments 2,777 2,368
================================ ==== ========== ==========
Accrued income 18,354 16,883
================================ ==== ========== ==========
Treasury deposits 18,028 -
================================ ==== ========== ==========
Cash and cash equivalents 62,896 40,785
================================ ==== ========== ==========
138,664 89,305
================================ ==== ========== ==========
Total assets 164,462 113,420
================================ ==== ========== ==========
Current liabilities
================================ ==== ========== ==========
Trade creditors and accruals 9 (35,976) (23,599)
================================ ==== ========== ==========
Deferred income 9 (21,985) (13,752)
================================ ==== ========== ==========
Corporation tax 9 (2,863) (2,145)
================================ ==== ========== ==========
Lease liabilities 9 (1,249) (1,619)
================================ ==== ========== ==========
Other tax and social security 9 (10,652) (8,157)
================================ ==== ========== ==========
(72,725) (49,272)
================================ ==== ========== ==========
Non-current liabilities
================================ ==== ========== ==========
Other provisions (1,735) (2,528)
================================ ==== ========== ==========
Lease liabilities (2,394) (2,466)
================================ ==== ========== ==========
(4,129) (4,994)
================================ ==== ========== ==========
Total liabilities (76,854) (54,266)
================================ ==== ========== ==========
Net assets 87,608 59,154
================================ ==== ========== ==========
Equity
Share capital 614 610
================================ ==== ========== ==========
Share premium account 5,737 5,446
================================ ==== ========== ==========
Capital reserve 662 664
================================ ==== ========== ==========
Share-based payment reserve 9,083 5,610
================================ ==== ========== ==========
Translation reserve (477) 655
================================ ==== ========== ==========
Retained earnings 71,989 46,169
================================ ==== ========== ==========
Total equity 87,608 59,154
================================ ==== ========== ==========
These financial statements were approved by the Board of
Directors and authorised for issue on 21 May 2021. They were signed
on its behalf by:
Richard McCann
Director
21 May 2021
Consolidated statement of changes in equity for the year ended
31 March 2021
Share Share Capital Share-based Translation Retained Total
capital premium reserve payment reserve earnings equity
reserve
(GBP000s)
(GBP000s) (GBP000s) (GBP000s) (GBP000s) (GBP000s) (GBP000s)
====================== ========== ========== ========== =========== =========== ========== ==========
Balance at 31
March 2019 605 3,596 665 3,895 (210) 39,616 48,167
====================== ========== ========== ========== =========== =========== ========== ==========
Profit for the
year - - - - - 18,564 18,564
====================== ========== ========== ========== =========== =========== ========== ==========
Other comprehensive
income - - - - 577 - 577
====================== ========== ========== ========== =========== =========== ========== ==========
Total comprehensive
income for the
year - - - - 577 18,564 19,141
====================== ========== ========== ========== =========== =========== ========== ==========
Share-based payment
expense - - - 1,715 - - 1,715
====================== ========== ========== ========== =========== =========== ========== ==========
Adjustments in
respect of prior
periods - - - - 288 (288) -
====================== ========== ========== ========== =========== =========== ========== ==========
Current tax for
equity-settled
share-based payments - - - - - 541 541
====================== ========== ========== ========== =========== =========== ========== ==========
Deferred tax for
equity-settled
share-based payments - - - - - (117) (117)
====================== ========== ========== ========== =========== =========== ========== ==========
Issue of share
capital 5 1,850 (1) - - - 1,854
====================== ========== ========== ========== =========== =========== ========== ==========
Dividends - - - - - (12,147) (12,147)
====================== ========== ========== ========== =========== =========== ========== ==========
Balance at 31
March 2020 610 5,446 664 5,610 655 46,169 59,154
====================== ========== ========== ========== =========== =========== ========== ==========
Profit for the
year - - - - - 39,601 39,601
====================== ========== ========== ========== =========== =========== ========== ==========
Other comprehensive
income - - - - (1,132) - (1,132)
====================== ========== ========== ========== =========== =========== ========== ==========
Total comprehensive
income for the
year - - - - (1,132) 39,601 38,469
====================== ========== ========== ========== =========== =========== ========== ==========
Share-based payment
expense - - - 3,473 - - 3,473
====================== ========== ========== ========== =========== =========== ========== ==========
Current tax for
equity-settled
share-based payments - - - - - 441 441
====================== ========== ========== ========== =========== =========== ========== ==========
Deferred tax for
equity-settled
share-based payments - - - - - 1,804 1,804
====================== ========== ========== ========== =========== =========== ========== ==========
Issue of share
capital 4 291 (2) - - - 293
====================== ========== ========== ========== =========== =========== ========== ==========
Dividends - - - - - (16,026) (16,026)
====================== ========== ========== ========== =========== =========== ========== ==========
Balance at 31
March 2021 614 5,737 662 9,083 (477) 71,989 87,608
====================== ========== ========== ========== =========== =========== ========== ==========
Consolidated statement of cash flows for the year ended 31 March
2021
2021 2020
(GBP000s) (GBP000s)
=================================================== ======= === =========== ===========
Net cash from operating activities 59,941 24,231
================================================================= =========== ===========
Investing activities
================================================== === ======== =========== ===========
Interest received 84 368
================================================================= =========== ===========
Purchases of property, plant and equipment (1,468) (8,186)
================================================================= =========== ===========
Investment in financial assets (200) -
================================================================= =========== ===========
Amounts placed on treasury deposit (18,028) -
================================================================= =========== ===========
Acquisition of subsidiaries - (4,464)
================================================================= =========== ===========
Net cash used in investing activities (19,612) (12,282)
================================================================= =========== ===========
Financing activities
================================================== === ======== =========== ===========
Dividends paid (16,026) (12,147)
================================================================= =========== ===========
Interest paid (78) (61)
================================================================= =========== ===========
Repayment of lease liabilities (1,763) (1,716)
================================================================= =========== ===========
Proceeds on issue of shares 293 253
================================================================= =========== ===========
Net cash used in financing activities (17,574) (13,671)
================================================================= =========== ===========
Net increase/(decrease) in cash and cash
equivalents 22,755 (1,722)
================================================================= =========== ===========
Cash and cash equivalents at beginning
of year 40,785 42,488
================================================================= =========== ===========
Effects of foreign exchange rate changes (644) 19
================================================================= =========== ===========
Cash and cash equivalents at end of year 62,896 40,785
================================================================= =========== ===========
2021 2020
(GBP000s) (GBP000s)
============================================================ === =========== ===========
Profit for the year 39,601 18,564
============================================================ === =========== ===========
Adjustments for:
============================================================ === =========== ===========
Finance income (84) (368)
============================================================ === =========== ===========
Finance expense 78 61
============================================================ === =========== ===========
Income tax expense 10,740 4,586
============================================================ === =========== ===========
Share-based payment expense 4,513 2,100
============================================================ === =========== ===========
Depreciation of property, plant and equipment 921 1,310
============================================================ === =========== ===========
Depreciation of right-of-use assets 1,786 1,884
============================================================ === =========== ===========
Amortisation of intangible assets 383 56
============================================================ === =========== ===========
Loss on disposal of property, plant and equipment 114 -
============================================================ === =========== ===========
Deferred consideration settled by shares 760 -
============================================================ === =========== ===========
(Decrease)/increase in provisions (793) 243
============================================================ === =========== ===========
Operating cash flows before movements in working
capital 58,019 28,436
============================================================ === =========== ===========
Increase in trade and other receivables (9,262) (3,612)
============================================================ === =========== ===========
Increase in trade and other payables 18,397 2,749
============================================================ === =========== ===========
Cash generated by operations 67,154 27,573
============================================================ === =========== ===========
Income taxes paid (7,213) (3,342)
============================================================ === =========== ===========
Net cash from operating activities 59,941 24,231
============================================================ === =========== ===========
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 financial statements are presented in Pounds Sterling and
rounded to the nearest thousand. The consolidated financial
statements consolidate those of the Company and its subsidiaries
(together "Kainos", or "the Group").
The financial information set out in this document does not
constitute full statutory financial statements but has been derived
from the Group financial statements for the year ended 31 March
2021. The financial information does not constitute statutory
accounts within the meaning of sections 435(1) and (2) of the
Companies Act 2006 or contain sufficient information to comply with
the disclosure requirements of International Financial Reporting
Standards ("IFRS").
This financial information was authorised for issue by the
Directors on 21 May 2021.
2. Segment reporting
All of the Group's revenue during the year to 31 March 2021 was
derived from continuing operations. Kainos is structured into two
operating divisions: Digital Services and the Workday Practice.
The following is an analysis of the Group's revenue and results
by reportable segment:
2021 Digital Workday
Services Practice Consolidated
12 months to 31 March (GBP000s) (GBP000s) (GBP000s)
======================== ========== ========== ============
Revenue 161,572 73,122 234,694
======================== ========== ========== ============
Cost of sales (89,578) (26,818) (116,396)
======================== ========== ========== ============
Gross profit 71,994 46,304 118,298
======================== ========== ========== ============
Direct expenses(9) (16,419) (27,366) (43,785)
======================== ========== ========== ============
Contribution 55,575 18,938 74,513
======================== ========== ========== ============
Central overheads(9) (17,446)
======================== ========== ========== ============
Finance income/expense 6
======================== ========== ========== ============
Adjusted pre-tax profit 57,073
======================== ========== ========== ============
2020 Workday
Digital Services Practice Consolidated
12 months to 31 March (GBP000s) (GBP000s) (GBP000s)
========================= ================= ========== ========================
Revenue 122,500 56,278 178,778
========================= ================= ========== ========================
Cost of sales (73,580) (21,237) (94,817)
========================= ================= ========== ========================
Gross profit 48,920 35,041 83,961
========================= ================= ========== ========================
Direct expenses( [9] ) (15,158) (23,053) (38,211)
========================= ================= ========== ========================
Contribution 33,762 11,988 45,750
========================= ================= ========== ========================
Central overheads(9) (20,541)
========================= ================= ========== ========================
Finance income/expense 307
========================= ================= ========== ========================
Adjusted pre-tax profit 25,516
========================= ================= ========== ========================
2021 2020
(GBP000s) (GBP000s)
======================================================== ========== ==========
Adjusted pre-tax profit 57,073 25,516
======================================================== ========== ==========
Share-based payments (4,513) (2,100)
======================================================== ========== ==========
Acquisition related expenses including amortisation
of acquired intangible assets and deferred
consideration (2,219) (266)
======================================================== ========== ==========
Profit before tax 50,341 23,150
======================================================== ========== ==========
The Group's revenue from external customers by geographic
location is detailed below:
2021 2020
(GBP000s) (GBP000s)
============= ============= ========== ==========
United Kingdom & Ireland 175,710 138,906
============================ ========== ==========
North America 38,099 21,530
============================ ========== ==========
Central Europe 19,631 17,490
============================ ========== ==========
Rest of world 1,254 852
============================ ========== ==========
234,694 178,788
============================ ========== ==========
(9) Direct expenses plus central overheads less share-based
payments and acquisition related expenses equals the sum of
operating expenses plus impairment gains & losses.
Disaggregation of the Group's revenue is presented in the
following tables:
2021 2020
Digital Services (GBP000s) (GBP000s)
================== === ========== ==========
Public 102,180 86,430
======================= ========== ==========
Commercial 15,653 15,341
======================= ========== ==========
Healthcare 43,739 20,729
======================= ========== ==========
161,572 122,500
======================= ========== ==========
Workday Practice
======================= ========== ==========
Public 3,314 5,925
======================= ========== ==========
Commercial 65,428 47,746
======================= ========== ==========
Healthcare 4,380 2,607
73,122 56,278
========== ==========
Total 234,694 178,788
======================= ========== ==========
Revenue for the Workday Practice can also be analysed as
follows:
2021 2020
(GBP000s) (GBP000s)
================= ========== ==========
Workday Practice
================= ========== ==========
Workday Services 48,972 37,213
================= ========== ==========
Smart 24,150 19,065
================= ========== ==========
73,122 56,278
================= ========== ==========
3. Profit for the year
Profit for the year has been arrived at after
charging/(crediting):
2021 2020
(GBP000s) (GBP000s)
======================== ======================= ========== ==========
Total staff costs 125,962 94,456
================================================= ========== ==========
Government grants (2,193) 26
================================================= ========== ==========
Research and development costs 4,162 3,863
================================================= ========== ==========
Research and Development Expenditure Credit (3,643) (1,866)
================================================= ========== ==========
Depreciation of property, plant and equipment 921 1,310
================================================= ========== ==========
Depreciation of right-of-use assets 1,786 1,884
================================================= ========== ==========
Net foreign exchange (gain)/loss (128) 509
================================================= ========== ==========
Amortisation of acquired intangibles 383 56
================================================= ========== ==========
The analysis of auditor's remuneration is as follows:
2021 2020
(GBP000s) (GBP000s)
================================================================================= ========== ==========
Fees payable to the Group's auditor for the audit of the Group's annual accounts 72 65
================================================================================= ========== ==========
Fees payable to the Group's auditor for the audit of subsidiaries 38 42
================================================================================= ========== ==========
Total audit fees 110 107
================================================================================= ========== ==========
Fees payable to the Group's auditor for other services to the Group:
================================================================================= ========== ==========
Review of interim report 17 20
================================================================================= ========== ==========
Other audit related services - -
================================================================================= ========== ==========
Total audit related fees 127 127
================================================================================= ========== ==========
Non-audit fees - -
================================================================================= ========== ==========
Total audit and non-audit fees 127 127
================================================================================= ========== ==========
Total % of non-audit fees 0% 0%
================================================================================= ========== ==========
4. Staff numbers
The average number of employees during the year was:
2021 2020
Number Number
=============== ======= =======
Technical 1,283 1,189
================ ======= =======
Administration 190 163
================ ======= =======
Sales 111 72
================ ======= =======
1,584 1,424
================ ======= =======
The number of employees at 31 March 2021 was:
2021 2020
Number Number
=============== ======= =======
Technical 1,399 1,311
================ ======= =======
Administration 206 179
================ ======= =======
Sales 120 79
================ ======= =======
1,725 1,569
================ ======= =======
5. Taxation on ordinary activities
6. 2021 2020
(GBP000s) (GBP000s)
==================== =================== ========== ==========
Corporation tax:
========================================= ========== ==========
Current year (UK) 9,233 3,917
========================================= ========== ==========
Current year (overseas) 2,433 1,238
========================================= ========== ==========
Adjustments in respect of prior years (47) (45)
========================================= ========== ==========
11,619 5,110
========================================= ========== ==========
Deferred tax: (879) (524)
========================================= ========== ==========
10,740 4,586
========================================= ========== ==========
UK corporation tax has been calculated at 19% (2020: 19%) of the
estimated taxable profit for the year, the prevailing rate at the
balance sheet date. Taxation for other jurisdictions is calculated
at the rates prevailing in the respective jurisdictions. The
effective tax rate for 2021 was 21% (2020: 20%).
In the 2021 budget, the UK government announced that the main
rate of corporation tax will increase to 25% from April 2023. As
this increased rate was not substantially enacted at the balance
sheet date it has not had an impact on deferred tax assets and
liabilities. We do not consider that the future rate change will
have a material impact on deferred tax balances.
The Group's tax charge can be reconciled to the profit in the
income statement as follows:
2021 2020
(GBP000s) (GBP000s)
======================== ======================= ========== ==========
Profit before tax on continuing operations 50,341 23,150
================================================= ========== ==========
Tax at the UK corporation tax rate of 19%
(2020: 19%) 9,565 4,399
================================================= ========== ==========
Non-deductible expenses 544 67
================================================= ========== ==========
Non-taxable income (60) (9)
================================================= ========== ==========
Effect of foreign exchange on consolidation (65) 61
================================================= ========== ==========
Effect of non-UK tax rates 803 64
================================================= ========== ==========
Adjustments to tax charge in respect of prior
years (47) 14
================================================= ========== ==========
Change in UK tax rates - (10)
================================================= ========== ==========
Tax expense for the year 10,740 4,586
================================================= ========== ==========
In addition to the amount charged to the statement of
comprehensive income, the following amounts relating to tax have
been recognised directly in equity.
2021 2020
(GBP000s) (GBP000s)
======================= ====================== ========== ==========
Current tax
=============================================== ========== ==========
Permanent element of stock option deduction 441 541
=============================================== ========== ==========
Deferred tax
=============================================== ========== ==========
Adjustments in respect of previous periods - 10
=============================================== ========== ==========
Deferred tax on stock option 1,804 (127)
=============================================== ========== ==========
Total tax recognised directly in equity 2,245 424
=============================================== ========== ==========
6. Dividend
2021 2020
(GBP000s) (GBP000s)
============================ =========================== =========== ==========
Amounts recognised as distributions to equity holders
in the year:
========================================================== ========== ==========
Interim dividend for 2021 of 6.4p per share 7,831 -
========================================================== ========== ==========
Special dividend paid September 2020 of 6.7p per
share 8,195 -
========================================================== ========== ==========
Interim dividend for 2020 of 3.5p per share - 4,252
========================================================== ========== ==========
Final dividend for 2019 of 6.5p per share - 7,895
========================================================== ========== ==========
16,026 12,147
========================================================== ========== ==========
The proposed final dividend is subject to approval by
shareholders at the Annual General Meeting and has not been
included as a liability in these financial statements. The proposed
final dividend, if approved by shareholders, will be 15.1p and
payable on 29 October 2021 to all shareholders on the Register of
Members on 1 October 2021, and with an ex-dividend date of 30
September 2021.
7. Earnings per share
Basic earnings per share is calculated by dividing the profit
attributable to ordinary shareholders of the parent company by the
weighted average number of ordinary
shares in issue during the period.
2021 2020
(GBP000s) (GBP000s)
=========================================== === ==========
Profit for the year 39,601 18,564
================================================ ========== ==========
Thousands Thousands
================================================ ========== ==========
Weighted average number of ordinary shares
for the purposes of basic earnings per
share 121,898 120,112
============================================ ============== ==========
Effect of dilutive potential ordinary
shares from share options 1,528 2,957
============================================ ============== ==========
Weighted average number of ordinary shares
for the purposes of diluted earnings per
share 123,426 123,069
============================================ ============== ==========
Basic earnings per share 32.5p 15.5p
============================================ ============== ==========
Diluted earnings per share 32.1p 15.1p
============================================ ============== ==========
Adjusted basic earnings per share is calculated by dividing the
profit attributable
to ordinary equity holders of the parent company, excluding
share-based payments (including associated taxes) and
acquisition-related expenses by the weighted average number of
ordinary shares in issue during the period.
2021 2020
(GBP000s) (GBP000s)
====================== ====================== ==========
Profit for the year 39,601 18,564
============================================== ========== ==========
Share-based payments (including associated
taxes) 3,656 1,701
============================================== ========== ==========
Acquisition-related expenses (including
associated taxes) 2,143 219
============================================== ========== ==========
Adjusted profit for the year 45,400 20,484
============================================== ========== ==========
Thousands Thousands
============================================== ========== ==========
Weighted average number of ordinary shares
for the purposes of basic earnings per
share 121,898 120,112
============================================== ========== ==========
Effect of dilutive potential ordinary
shares from share options 1,528 2,957
============================================== ========== ==========
Weighted average number of ordinary shares
for the purposes of diluted earnings
per share 123,426 123,069
============================================== ========== ==========
Adjusted basic earnings per share 37.2p 17.1p
============================================== ========== ==========
Adjusted diluted earnings per share 36.8p 16.6p
============================================== ========== ==========
8. Trade and other receivables
2021 2020
(GBP000s) (GBP000s)
========== ========= ==========
Trade receivables 35,290 28,294
===================== ========== ==========
Loss allowance (1,551) (1,840)
===================== ========== ==========
33,739 26,454
===================== ========== ==========
Other receivables 2,870 2,815
===================== ========== ==========
36,609 29,269
===================== ========== ==========
9. Trade and other payables
2021 2020
(GBP000s) (GBP000s)
================ =============== ==========
Trade creditors and accruals 35,976 23,599
================================= ========== ==========
Lease liabilities 1,249 1,619
================================= ========== ==========
Deferred income 21,985 13,752
================================= ========== ==========
Corporation tax 2,863 2,145
================================= ========== ==========
Other tax and social security 10,652 8,157
================================= ========== ==========
72,725 49,272
================================= ========== ==========
.
.
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