TIDMKNOS
RNS Number : 2168G
Kainos Group plc
14 November 2022
14 November 2022
Kainos Group plc
( "Kainos" or the "Group")
Interim results for the six months ended 30 September 2022
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 2022 (H1 23).
Financial highlights
H1 23 H1 22 Change
===================================== ========== =========== =======
Revenue GBP179.8m GBP142.3m +26%
===================================== ========== =========== =======
Profit before tax GBP27.5m GBP24.8m +11%
===================================== ========== =========== =======
Adjusted pre-tax profit GBP34.0m GBP29.2m +16%
===================================== ========== =========== =======
Cash ( [1]) GBP97.1m GBP80.4m +21%
===================================== ========== =========== =======
Bookings GBP221.5m GBP187.4m +18%
===================================== ========== =========== =======
Product Annual Recurring Revenue
(ARR) GBP44.2m GBP28.0m +58%
===================================== ========== =========== =======
Contracted Backlog GBP307.9m GBP250.0m +23%
===================================== ========== =========== =======
Diluted earnings per share 17.4p 16.0p +9%
===================================== ========== =========== =======
Adjusted diluted earnings per share 22.0p 19.1p +15%
===================================== ========== =========== =======
Interim dividend 7.8p 7.1p +10%
===================================== ========== =========== =======
Operational highlights
Our strong business performance reflects robust underlying
market demand, high levels of customer engagement and the continued
commitment of our colleagues.
-- Revenue growth of 26% (23% in constant currency (ccy)) to
GBP179.8 million (H1 22: GBP142.3 million).
-- Adjusted pre-tax profit increased 16% (reduced 3% ccy) to
GBP34.0 million (H1 22: GBP29.2 million) as we invested an
additional GBP4.2 million in our Workday Products. This investment
represents an increase of 91%, with research & development
increased to GBP4.0m (H1 22: GBP2.7m) and investment in sales &
marketing increased to GBP4.8 million (H1 22: GBP1.9 million).
-- Bookings up 18% (16% ccy) to GBP221.5 million (H1 22: GBP187.4 million).
-- Contracted backlog growth of 23% to GBP307.9 million (H1 22: GBP250.0 million).
-- Period-end cash amounted to GBP97.1 million (H1 22: GBP80.4
million(1) ); with cash conversion at 70% (H1 22: 38%).
([1]) H1 22 cash includes treasury deposits of GBP18.0
million.
We continue our transition to a global business with over
one-third of revenues generated internationally.
-- Very strong international growth, up 53% to GBP61.0 million (H1 22: GBP39.9 million).
-- At IPO, international customers generated 6% of revenue.
Commercial sector customers now generate almost half our
revenues.
-- At IPO, commercial sector clients accounted for 25% of revenue.
-- Commercial revenues are up 46% to GBP86.3 million (H1 22:
GBP59.3 million), representing 48% of total revenue.
-- Public sector revenues are up 21% to GBP63.3 million (H1 22:
GBP52.3 million) or 35% of total revenue.
-- Healthcare revenues have reduced by 1% to GBP30.2 million (H1
22: GBP30.6 million), which is 17% of total revenue.
We continue to add to the talents of our global team.
-- The team has now grown to 2,920 people (H1 22: 2,438) an
increase of 20% and reflects strong recruitment in our core
markets.
-- We now have colleagues based in 22 countries.
-- Against the backdrop of a global shortage in digital skills,
our employee retention has reduced to 86 % (H1 22: 89%, FY22: 86%).
Our focus remains on being a great employer, as demonstrated by our
#38 placing in the 2022 Glassdoor, 'Best Places To Work in the UK'
rankings.
Excellent customer service drives customer satisfaction and
retention, underpinning revenue growth.
-- Customer approval rating( [2]) of Kainos remains high at 98 % (H1 22: 98%).
-- Existing customer revenue increased by 25 % to GBP 169.8
million (H1 22: GBP135.8 million) and represents 94% of revenue in
the six months.
-- Customer numbers increased to 779 (H1 22: 601), an increase of 30%.
We continue with our ambition to be a responsible
organisation.
-- Having retained our carbon neutral status for 2022, we remain
on track to achieve carbon net zero by 2025. As part of our
offsetting activity, we have supported reforestation projects in
Timor-Leste and Nicaragua (removal) and N(2) O destruction projects
in the US (avoidance).
(2) Data from all completed customer surveys in the period.
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.
In Digital Services, we continue to deliver significant digital
transformation programmes across public sector, healthcare and
commercial sector customers.
-- This extensive project portfolio has driven strong revenue
growth of 17% (17% in ccy) to GBP110.5 million (H1 22: GBP94.2
million).
-- Customer demand remains very high in the Public Sector and in
the Commercial Sector as digital transformation continues to be a
business priority.
-- As previously expected, the integration of NHSx and NHS
Digital organisations is causing some delays in the award of new
projects, although not disrupting ongoing projects.
We continue to be the leading pan-European Workday specialist
and we have been appointed a Phase 1 partner for the US market.
-- Our Workday Services recorded very strong revenue growth of
44% (36% ccy) to GBP48.4 million (H1 22: GBP33.6 million).
-- Focused on the opportunity in North America, we have
increased our presence and now have 363 colleagues (H1 22: 257)
based across USA, Canada and Argentina.
Our Workday-related products, Smart Test and Smart Audit,
achieved very strong growth and we have now launched Smart Shield.
We remain on track to achieve our target of GBP100 million Annual
Recurring Revenue (ARR) by 2026.
-- Workday Products revenues grew 45% (30% ccy) to GBP20.9
million (H1 22: GBP14.4 million); at the same time the ARR, at 30
September 2022, increased 58% (33% ccy) to GBP44.2 million (H1 22:
GBP28.0 million).
-- As noted earlier, we continue to invest in our Workday
Products, increasing our research & development to GBP4.0
million (H1 22: GBP2.7 million) and sales & marketing increased
to GBP4.8 million (H1 22: GBP1.9 million).
Commenting on the results, CEO Brendan Mooney said:
"As the Digital Transformation market enters its second decade,
it continues to grow in importance for organisations operating in
government, in healthcare and in the commercial sector.
This importance is translating into continued demand for the
work that we do for our customers, not just in the last six months
but also looking to the future. Despite the economic uncertainty,
there is an urgency from our customers about extending existing
projects and starting new projects.
We are grateful for the ongoing trust that our customers have
placed in Kainos, to help them drive their ambitious digital
transformation programmes as they change the ways they deliver
essential services to citizens, patients, customers, and
employees.
Our business is becoming increasingly resilient. We work with
over 750 organisations, many of whom are international in scale and
who operate across a range of industries including healthcare,
public sector, banking, insurance, pharmaceuticals and education.
From our UK base we have expanded globally, with over one-third of
our revenues now generated internationally.
Looking forward, we remain confident in our business as the
demand for our services has never been higher, our reputation for
delivery continues to flourish, while the scale and capability of
our organisation continues to grow at pace.
Underpinning that confidence is the quality and talents of our
colleagues. Their expertise, experience and energy have been the
driving force behind all that we have achieved. We share their
excitement about the future - the journey is just starting."
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
Kainos Group plc is a UK-headquartered IT provider with
expertise across three divisions - Digital Services, Workday
Services, and Workday Products.
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 provide better outcomes for users.
Our Workday Services division 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.
Our Workday Products division 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 350
customers globally to safeguard their Workday systems.
Our people are central to our success. We employ more than 2,900
people in 22 countries across Europe and the Americas.
We are listed on the London Stock Exchange (LSE: KNOS) and you
can discover more about us at www.kainos.com .
Definition of terms
We use the following definitions for our key metrics:
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).
Annual Recurring Revenue (ARR): the value at the end of the
accounting period of the software and subscription recurring
revenue annualised.
Backlog: the value of contracted revenue that has yet to be
recognised.
Bookings: the total value of sales contracted during the
period.
Carbon net zero: any CO(2) , released into the atmosphere from a
company's entire value chain is reduced as much as possible and the
rest is removed.
Carbon neutral: any CO 2 released into the atmosphere from a
company's entire value chain activities is balanced by an
equivalent amount being removed.
Cash conversion: cash generated from operating activities as a
percentage of adjusted EBITDA.
Constant currency (ccy) : Excludes the effect of foreign
currency exchange rate fluctuations on year-on-year performance by
translating the relevant prior year figure at current year average
exchange rates.
Existing customer revenue : total revenue recognised from
customers in the current period who were also customers in the
preceding year.
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 ones.
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) - partnership between
Carbon Disclosure Project (CDP), the United Nations Global Compact,
World Resources Institute (WRI) and the World Wide Fund for Nature
(WWF) created to encourage companies to design clearly defined
emission reduction plans in line with the Paris agreement
goals.
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
Continued business momentum with widening opportunities
The level of digital transformation undertaken by ambitious
organisations continues to increase as the industry enters its
second decade. Our established track record in guiding and
supporting customers to deliver their large-scale digital
transformation programmes, as they respond to the changing demands
in their organisations, continues to provide the bedrock for our
own growth .
Our high levels of activity with our customers has translated
into an excellent set of results for the first six months of
FY23.
Revenue for the six months grew by 26% (23% ccy) to GBP179.8
million (H1 22: GBP142.3 million) with adjusted pre-tax profit([3])
increasing by 16% (reduced 3% ccy) to GBP34.0 million (H1 22:
GBP29.2 million). Adjusted pre-tax profit would have been c.GBP5.8
million lower under constant currency exchange rates; it would have
been c.GBP1.5 million higher if the two additional UK bank holidays
had not occurred.
In line with our previous guidance, we have increased investment
in our software products, with research & development
investment increased to GBP4.0 million (H1 22: GBP2.7 million) and
our product-related sales & marketing investment increased to
GBP4.8 million (H1 22: GBP1.9 million).
Our sales performance underlines our success in winning business
- extensions to existing contracts, additional projects placed by
existing customers and winning new customers. Bookings in the first
six months increased 18% (16% ccy) to GBP221.5 million (H1 22:
GBP187.4 million), which resulted in a 23% increase in the
contracted backlog to GBP307.9 million (H1 22: GBP250.0
million).
In response to this success, we have been undertaking
significant recruitment, with staff and contractor numbers
increasing by 20% to 2,920 (H1 22: 2,438). Employee engagement
remains high, as demonstrated by our many Sunday Times, 'Top 100
Best Companies to Work For' accreditations and our 2022, '50 Best
Places To Work in the UK' award from Glassdoor; and reflected in
our staff retention at 86% (H1 22: 89%).
Customer satisfaction remains high, with 98% (H1 22: 98%) of our
customers rating service as 'good' or better. This high level of
customer service underpins our long-term customer relationships,
with existing customers accounting for 94% of total revenue (H1 22:
95%). We currently have 779 active customers (H1 22: 601).
Significant progress has been made in widening our customer base
by sector and region. Following growth of 46%, commercial sector
customers now account for 48% of total revenue (H1 22: 42%), our
growing public sector customers represent 35% (H1 22: 37%) and 17%
of revenue is from healthcare customers (H1 22: 21%).
The proportion of revenue generated from customers outside the
UK and Ireland increased by 53% to GBP61.0 million (H1 22: GBP39.9
million) and is now 34% of total revenue (H1 22: 28%).
(3) The Financial Review section includes reconciliations
between adjusted pre-tax profit and profit before tax numbers.
As at 30 September 2022, we had a strong cash balance of GBP97.1
million (H1 22: GBP80.4 million including treasury deposits),
representing 70% cash conversion (H1 22: 38%).
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.
Revenues grew by 17% (17% ccy) to GBP110.5 million (H1 22:
GBP94.2 million). Bookings, at GBP117.0 million (H1 22: GBP125.9
million), registered a reduction of 7% (reduced 7% ccy), although
the prior six months included significant contracts with Defra, HM
Passport Office and DVSA which are due to renew in H2 23. In line
with bookings, our backlog decreased by 9% to GBP139.2 million (H1
22: GBP152.2 million).
With more opportunities in our addressable markets than we have
people to deliver them, we have been prioritising the work we
undertake. At the top of that list is our existing project and
customer commitments, followed by prioritising new engagements in
the commercial and healthcare sectors as we work towards a more
balanced sector coverage within the division. As a result of this
prioritisation, public sector now represents 56% of divisional
revenues (H1 22: 55%), healthcare 27% (H1 22: 32%) and commercial
sector 17% (H1 22: 13%).
Public sector
Our public sector customers have remained committed to their
digital transformation programmes and they remain ambitious in the
scope of services that they wish to digitise, which is underpinned
by a new digital transformation policy which outlines 50 of 75
services to be digitised by 2025. As a result, revenues increased
by 21% to GBP62.3 million (H1 22: GBP51.7 million).
Within central government, we continue to consolidate our strong
position across key accounts, securing new contracts to deliver
digital programmes in Companies House, Department for Environment
Food & Rural Affairs, Department for Transport, Driver and
Vehicle Standards Agency and Foreign Commonwealth & Development
Office. Beyond our existing accounts, we are also delivering
projects with new areas, in Defence (Defence Science &
Technology Laboratory - Artificial Intelligence Delivery Partner)
and Policing (Secure Policing HQ - Cloud Migration Partner).
Commercial sector
In the UK, the commercial sector expenditure on IT is over three
times that of the public sector. While this represents significant
opportunity, to increase our likelihood of success, we have
initially chosen to focus our activity on financial services
customers.
Like all large organisations post-pandemic, those within banking
and insurance are increasing their levels of investment in digital
transformation. This, coupled with our growing references in the
sector has driven a rapid increase in activity as we have helped
established customers like Concardis and New Ireland and new
customers such as IMCO, Danske Bank and Federated Hermes
Limited.
Reflecting these higher activity levels, our revenues increased
51% to GBP18.7 million (H1 22: GBP12.4 million).
Healthcare sector
Our healthcare revenues reduced by 2% to GBP29.5 million (H1 22:
GBP30.1 million).
We have enjoyed strong partnerships with both NHS Digital and
NHS X, who are merging to form NHS England's new Transformation
Directorate . As anticipated, there have been some delays in the
award of new projects as both organisations are integrated.
Most recently, our work has been a blend of providing ongoing
support to Covid-19 initiatives and, increasingly, to broader
healthcare provision and how technology can support the NHS with
its ambitious digital plans. In this regard, we have deployed the
NHS App with NHS Wales and we continue to assist in genomics
medicine with Genomics England and Our Future Health.
Workday Services review
Revenue for the six months grew by 44% (36% ccy) to GBP48.4
million (H1 22: GBP33.6 million); backlog increased by 136% to
GBP83.2 million (H1 22: GBP35.3 million); and bookings increased
125% (114% ccy) to GBP80.5 million (H1 22: GBP35.8 million).
The number of accredited Workday consultants at Kainos increased
by 30% to 732 (H1 22: 562).
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 40 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 in 2015 and into
the North American market in 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 46% of total
revenue (H1 22: 61%).
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
54% of total revenue (H1 22: 39%).
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 Products review
Our Workday Products revenue increased 45% (30% ccy) to GBP20.9
million (H1 22: GBP14.4 million); the Annual Recurring Revenue was
GBP44.2 million (H1 22: GBP28.0 million), an increase of 58% (33%
ccy) and backlog increased 37% to GBP85.5 million (H1 22: GBP62.5
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 enables customers to further
increase the benefit that they can realise from their investment in
Workday.
In 2014, Kainos launched Smart Test which is used by
organisations to automatically verify their Workday configurations.
Smart Test currently consists of six modules: HCM, Security,
Financials, Payroll, Recruitment and Advanced Compensation, with a
seventh module for Workday Extend due to launch later this year .
In Workday's inaugural Innovation Awards, Smart Test came first in
the Product Innovation category. Smart Test is used by over 325
global enterprise customers, including Salesforce, Capital One and
Whole Foods.
Our second product, Smart Audit, became generally available in
August 2021 and has already been deployed to over 50 customers
including Chanel, Arcbest and QBE Insurance. Smart Audit is a
compliance monitoring tool that allows Workday customers to
maintain operational controls over 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.
In August 2022, we launched our third product, Smart Shield, a
data masking tool that can easily and seamlessly mask sensitive
data without impacting the Workday user experience. It ensures that
sensitive data remains controlled when Workday environments are
made available to broader internal or external teams, for instance,
during support and maintenance activities, or for on-going internal
Workday training and onboarding programs. Although just released,
Smart Shield is now used by 8 customers, including Match.com and
LKAB.
Workday Extend
Workday, Inc. has a Platform-as-a-Service offering known as
Workday Extend, which became generally available to customers in
May 2020. Kainos has been part of the Workday Extend early adopter
programme since 2017.
Workday Extend allows customers to build additional, specialised
functionality on the Workday platform to further enhance customers'
Workday deployment. As experts in Workday Extend, we have helped
organisations such as Universal Music Group, Groupon and Cardinal
Health build Workday Extend applications specific to their
requirements.
In addition to these services-based assignments, Workday Extend
provides the opportunity to build further products. During 2022 we
have built and deployed applications such as Employee Document
Management and Rewards & Recognition.
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 place to work. Our people tell us
when we get it right and tell us about the areas where we can
improve.
Historically we have used the Sunday Times 'Best Companies to
Work For' survey as an annual health check, creating a confidential
way for our colleagues to share their feedback, and having first
appeared in the Top 100 in 2012, we are delighted to still be there
in 2022. From 2023, we will be measuring our performance as an
employer through the Workday Peakon employee engagement tool, which
will allow us to solicit more detailed and frequent feedback from
all our colleagues.
We are focused on creating a workplace environment that people
want to join and then stay to develop their careers. During the
last six months, staff retention was 86% (H1 22: 89%) and on
Glassdoor, the website which hosts anonymous employee reviews of
global organisations, 81% of reviewers would recommend working at
Kainos.
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 20% to 2,920 people (H1 22:
2,438). In total, 10% of our colleagues are contractors (H1 22:
13%). By region, UK & Ireland increased to 2,104 people (+19%),
Central Europe grew to 453 people (+12%) and North and South
America increased to 363 people (+41%).
Included in these numbers are 168 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 provide
extensive internal and external training programmes. Reflecting the
increasingly global nature of our organisation, these programmes
are delivered virtually. The programmes remain in high demand and
we have delivered over 9,500 days of technical and behavioural
skills training during the last six months.
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 300 young people to participate in our virtual
Work Experience programmes (our target is 1,000 for the year);
similarly , we hosted 200 young people on our week-long virtual
CodeCamps.
To widen participation at university, we launched our Digital
Bursaries programme which over the next 3 years will support 80
young people who have historically been under-represented at
university.
Staff share incentive plan
The Group operates a Share Incentive Plan for all staff.
Including the annual awards made in December 2021 (259,200 shares
granted) a total of 3,173,320 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
In the near-term, we anticipate that demand for all our services
will remain high as the shift to digitisation has been
well-established for many years and which the pandemic has further
accelerated.
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 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 in the past eighteen months
provides confidence that we will deliver significant growth in the
years ahead.
We are similarly 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, up from c.$5 billion today.
In addition, we believe that we can outpace this rapid market
growth by continuing our international expansion, especially within
the US market, and by replacing other Workday partners in
engagements where they are under-serving 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. Our growth will
initially be determined by the product-market fit of our new
products, followed the penetration into the Workday client
base.
Financial review
In H1 23 we achieved revenue of GBP179.8 million (H1 22:
GBP142.3 million), representing an increase of 26% (23% ccy).
Digital Services revenue grew 17% (17% ccy) to GBP110.5 million (H1
22: GBP94.2 million) reflecting increased demand for digital
transformation primarily across the public and commercial sectors .
Workday Services revenue grew 44% (36% ccy) to GBP48.4 million (H1
22: GBP33.6 million), driven by growth in North America. Workday
Products revenue increased to GBP20.9 million (H1 22: GBP14.4
million), representing growth of 45% (30% ccy).
Overall gross margin was 46.6% (H1 22: 47.4%). Digital Services
margins decreased to 38.3% (H1 22: 39.8%) mainly due to the two
additional bank holidays in the period. Workday Services margins
decreased to 52.6% (H1 22: 56.7%), driven primarily by salary
inflation. Workday Products margins increased to 76.5% (H1 22:
75.3%).
Operating expenses
Operating expenses for the period increased by 35% to GBP56.8
million (H1 22: GBP42.2 million). The growth in operating expenses
is higher than revenue growth due to the increased investment in
our Workday products in both sales and product development, and
increased acquisition-related expenses , partly offset by foreign
exchange gains.
Investment in product development increased to GBP4.0 million
(H1 22: GBP2.7 million). All product development costs were
expensed in the period. Research and Development Expenditure Credit
(RDEC) grants recognised in the period totalled GBP0.8 million (H1
22: GBP0.9 million). The net value of RDEC receivable recognised in
the statement of financial position as at 30 September is GBP4.0
million (H1 22 GBP3.8 million).
Adjusted pre-tax profit increased by 16% (reduced 3% ccy) to
GBP34.0 million (H1 22: GBP29.2 million). Profit before tax
increased by 11% to GBP27.5 million (H1 22: GBP24.8 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
pre-tax profit, 'adjusted EBITDA' 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 are made to exclude
the effect of share-based payment expense, acquisition-related
expenses including amortisation of acquired intangible assets and
compensation for post-combination services.
The adjusted profit measures are not defined performance
measures in UK-adopted International Accounting Standards. The
Group's definition may not be comparable with similarly titled
performance measures and disclosures in other entities. Adjusted
profit measures can be reconciled to the reported numbers as
follows:
Adjusted profit measures
6 months to 6 months to 12 months
30 Sep 2021 to 31 Mar
2022
30 Sep 2022 (GBP000s) (GBP000s)
(GBP000s)
========================================================= ============= ===========
Profit before tax 27,523 24,841 45,993
========================================== ============== ============= ===========
Share-based payment expense and related
costs 2,697 2,671 3,727
========================================== ============== ============= ===========
Amortisation of acquired intangible
assets 1,472 186 1,890
========================================== ============== ============= ===========
Compensation for post-combination
services 2,271 923 5,520
========================================== ============== ============= ===========
Acquisition-related expenses 58 584 1,641
========================================== ============== ============= ===========
Adjusted pre-tax profit 34,021 29,205 58,771
========================================== ============== ============= ===========
6 months to 6 months 12 months
to 30 Sep to 31 Mar
2021 2022
30 Sep 2022 (GBP000s) (GBP000s)
(GBP000s)
========================================================= =========== ===========
Profit after tax 21,863 19,987 35,768
========================================== ============== =========== ===========
Share-based payment expense and related
costs (net of associated taxes) 2,023 2,164 2,907
========================================== ============== =========== ===========
Amortisation of acquired intangible
assets 1,472 143 1,890
========================================== ============== =========== ===========
Compensation for post-combination
services 2,271 923 5,520
========================================== ============== =========== ===========
Acquisition-related expenses 58 584 1,641
========================================== ============== =========== ===========
Adjusted pre-tax profit 27,687 23,801 47,726
========================================== ============== =========== ===========
Adjusted EBITDA
6 months to 6 months 12 months
to 30 Sep to 31 Mar
2021 2022
30 Sep 2022 (GBP000s) (GBP000s)
(GBP000s)
===================================================== =========== ===========
Adjusted pre-tax profit 34,021 29,205 58,771
====================================== ============== =========== ===========
Depreciation of property, plant
and equipment 1,105 584 1,538
====================================== ============== =========== ===========
Depreciation of right-of-use assets 638 707 1,654
====================================== ============== =========== ===========
Finance expense 28 34 74
====================================== ============== =========== ===========
Finance income (356) (2) (52)
====================================== ============== =========== ===========
Adjusted EBITDA 35,436 30,528 61,985
====================================== ============== =========== ===========
Corporation tax charge
The effective tax rate for H1 23 was 21% (H1 22: 20% based on
the estimated average annual effective income tax rate). It is
marginally higher than the UK corporation tax rate of 19% due to
the inclusion of overseas tax rates in the calculation which are
higher than the UK tax rate.
Financial position
We continue to have a strong financial position with GBP97.1
million of cash (H1 22: GBP80.4 million cash and treasury
deposits), no debt and net assets of GBP117.3 million (H1 22:
GBP95.9 million). The combined underlying net trade receivables and
accrued income balance increased by 15% to GBP76.9 million (H1 22:
GBP67.0 million).
Property, plant and equipment decreased to GBP9.6 million at
period end (H1 22 GBP12.4 million). During the period, GBP5.2
million was transferred to investment property, reflecting our
intention to sell part of the site purchased in 2019 for the build
of our new office headquarters.
The final dividend for FY22 of GBP18.7 million has been included
as a current liability in these financial statements. This dividend
was approved by shareholders at the Annual General Meeting on 28
September 2022 and paid to shareholders on 28 October 2022.
Cash flow and cash conversion
Cash conversion, calculated by taking cash generated by
operations over adjusted EBITDA, increased in the period to 70% (H1
22: 38%) representing a return to more normalised levels for half
year reporting.
Interim dividend
The Board has declared an interim dividend of 7.8 pence per
share for H1 23 (H1 22: 7.1 pence). This will be paid on 16
December 2022 to shareholders on the register at the close of
business on 25 November 2022, with an ex-dividend date of 24
November 2022.
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 44 - 52 of the Annual Report
associated with the Group's Annual Results published on 28 July
2022 (available on the Group's website www.kainos.com ).
Regarding the Covid-19 global pandemic, we are in a monitoring
position, but do not consider there to be any substantial change in
impact to our business at this point. Kainos continues to operate
on a largely remote basis and looking to the future, will continue
to operate a blended way of working, incorporating remote working
with office and customer-based work. In the event of a winter
resurgence of the pandemic we will review our measures, continuing
to treat the safety of our people as a top priority.
The wider impact of the Russian invasion of Ukraine remains
uncertain, however we continue to monitor and plan to mitigate any
impact as outlined in the Annual Report.
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 2022
Continuing operations Note 6 months 6 months 12 months
to to 30 Sep to
2021
30 Sep 2022 (unaudited) 31 Mar 2022
(unaudited) (GBP000s) (audited)
(GBP000s) (GBP000s)
=================================== ===== ============= ============ ============
Revenue 5 179,775 142,253 302,632
=================================== ===== ============= ============ ============
Cost of sales 5 (95,991) (74,860) (162,386)
=================================== ===== ============= ============ ============
Gross profit 83,784 67,393 140,246
=================================== ==================== ============ ============
Operating expenses (56,843) (42,228) (93,625)
=================================== ===== ============= ============ ============
Impairment gain/(loss) (including
amounts recovered) on trade
receivables and accrued income 254 (292) (606)
=================================== ===== ============= ============ ============
Operating profit 27,195 24,873 46,015
=================================== ===== ============= ============ ============
Finance income 356 2 52
=================================== ===== ============= ============ ============
Finance expense (28) (34) (74)
=================================== ===== ============= ============ ============
Profit before tax 27,523 24,841 45,993
=================================== ===== ============= ============ ============
Income tax expense 6 (5,660) (4,854) (10,225)
=================================== ===== ============= ============ ============
Profit for the period 21,863 19,987 35,768
=================================== ===== ============= ============ ============
Consolidated statement of comprehensive income for the six
months ended
30 September 2022
6 months to 6 months 12 months
to to 31 Mar
2022
30 Sep 2022 30 Sep 2021 (audited)
(unaudited) (unaudited) (GBP000s)
(GBP000s) (GBP000s)
====================================== ============= ============ ==========
Profit for the period 21,863 19,987 35,768
====================================== ============= ============ ==========
Items that may be reclassified
subsequently to profit or loss:
------------- ------------ ----------
Foreign operations - foreign currency
translation differences 1,754 580 728
====================================== ============= ============ ==========
Total comprehensive income for
the period 23,617 20,567 36,496
====================================== ============= ============ ==========
Earnings per share
------------- ------------------------
Basic 8 17.7p 16.3p 29.1p
------------- ------------ ----------
Diluted 8 17.4p 16.0p 28.5p
------------- ------------ ----------
Condensed consolidated statement of financial position as at 30
September 2022
Note 30 Sep 2022 30 Sep 2021 31 Mar 2022
(unaudited) (unaudited) (audited)
(GBP000s) (GBP000s) (GBP000s)
================================== ===== ============= ============ =============
Non-current assets
================================== ===== ============= ============ =============
Goodwill 11 20,294 13,868 18,765
Other intangible assets 5,495 3,158 5,993
Property, plant and equipment 9,612 12,444 14,867
Investment property 12 5,160 - -
Right-of-use assets 2,445 3,468 3,166
Investments in equity instruments 1,343 1,379 1,343
Deferred tax asset 5,444 5,585 4,282
================================== ===== ============= ============ =============
49,793 39,902 48,416
================================== ===== ============= ============ =============
Current assets
================================== ===== ============= ============ =============
Trade and other receivables 9 38,137 43,186 38,358
Prepayments 4,381 2,654 4,377
Accrued income 41,990 28,093 39,462
Treasury deposits - 18,028 -
Cash and cash equivalents 97,064 62,413 76,609
================================== ===== ============= ============ =============
181,572 154,374 158,806
================================== ===== ============= ============ =============
Total assets 231,365 194,276 207,222
================================== ===== ============= ============ =============
Current liabilities
================================== ===== ============= ============ =============
Trade payables and accruals (43,884) (38,170) (49,199)
Dividend payable 7 (18,740) (18,645) -
Deferred income (33,541) (21,616) (30,966)
Current tax liabilities (3,844) (5,140) (1,959)
Lease liabilities (893) (1,280) (1,093)
Provisions (421) - (872)
Other tax and social security (10,036) (9,425) (11,917)
================================== ===== ============= ============ =============
(111,359) (94,276) (96,006)
================================== ===== ============= ============ =============
Non-current liabilities
----- ------------- ------------ -------------
Provisions (1,026) (2,196) (1,258)
Lease liabilities (1,715) (1,944) (2,268)
================================== ===== ============= ============ =============
(2,741) (4,140) (3,526)
================================== ===== ============= ============ =============
Total liabilities (114,100) (98,416) (99,532)
================================== ===== ============= ============ =============
Net assets 117,265 95,860 107,690
================================== ===== ============= ============ =============
Equity
================================== ===== ============= ============ =============
Share capital 14 619 617 619
Share premium account 6,524 6,036 6,433
Capital reserve 3,548 2,261 3,548
Shares to be issued reserve - 1,286 -
Share-based payment reserve 19,152 10,754 15,171
Translation reserve 2,005 103 251
Retained earnings 85,417 74,803 81,668
================================== ===== ============= ============ =============
Total equity 117,265 95,860 107,690
================================== ===== ============= ============ =============
Condensed consolidated statement of changes in equity for the
six months ended 30 September 2022
Share Share Capital Shares Share-based Translation Retained Total
capital premium reserve to be payment reserve earnings equity
issued reserve
reserve (GBP000s)
(GBP000s) (GBP000s) (GBP000s)
(GBP000s) (GBP000s) (GBP000s) (GBP000s)
=========================== ========== ========== ============ =========== =========== ========== ==========
Balance at 31 March
2021
(audited) 614 5,737 662 - 9,083 (477) 71,989 87,608
======================= === ========== ========== ============ =========== =========== ========== ==========
Profit for the period - - - - - - 19,987 19,987
======================= === ========== ========== ============ =========== =========== ========== ==========
Other comprehensive
income - - - - - 580 - 580
======================= === ========== ========== ============ =========== =========== ========== ==========
Total comprehensive
income
for the period - - - - - 580 19,987 20,567
======================= === ========== ========== ============ =========== =========== ========== ==========
Equity settled
share-based
payment - - - - 1,671 - - 1,671
======================= === ========== ========== ============ =========== =========== ========== ==========
Current tax for
equity-settled
share-based payments - - - - - - 358 358
======================= === ========== ========== ============ =========== =========== ========== ==========
Deferred tax for
equity-settled
share-based payments - - - - - - 1,114 1,114
======================= === ========== ========== ============ =========== =========== ========== ==========
Issue of share capital
-
share options
exercised 3 1,898 - - - - - 1,901
======================= === ========== ========== ============ =========== =========== ========== ==========
Issue of shares as
purchase
consideration - - - 1,286 - - - 1,286
======================= === ========== ========== ============ =========== =========== ========== ==========
Reclassification
between
reserves([4]) - (1,599) 1,599 - - - - -
======================= === ========== ========== ============ =========== =========== ========== ==========
Dividends - - - - - - (18,645) (18,645)
======================= === ========== ========== ============ =========== =========== ========== ==========
Balance at 30 September
2021 (unaudited) 617 6,036 2,261 1,286 10,754 103 74,803 95,860
======================= === ========== ========== ============ =========== =========== ========== ==========
Profit for the period - - - - - 15,781 15,781
======================= === ========== ========== ============ =========== =========== ========== ==========
Other comprehensive
income - - - - - 148 - 148
======================= === ========== ========== ============ =========== =========== ========== ==========
Total comprehensive
income
for the period - - - - - 148 15,781 15,929
======================= === ========== ========== ============ =========== =========== ========== ==========
Equity settled
share-based
payment - - - - 4,417 - - 4,417
======================= === ========== ========== ============ =========== =========== ========== ==========
Current tax for
equity-settled
share-based payments - - - - - - 1,252 1,252
======================= === ========== ========== ============ =========== =========== ========== ==========
Deferred tax for
equity-settled
share-based payments - - - - - - (1,394) (1,394)
======================= === ========== ========== ============ =========== =========== ========== ==========
Issue of share capital
-
share options
exercised 2 397 1 - - - - 400
======================= === ========== ========== ============ =========== =========== ========== ==========
Issue of shares as
purchase
consideration - - 1,286 (1,286) - - - -
======================= === ========== ========== ============ =========== =========== ========== ==========
Dividends - - - - - - (8,774) (8,774)
======================= === ========== ========== ============ =========== =========== ========== ==========
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
======================= === ========== ========== ============ =========== =========== ========== ==========
Consolidated statement of cash flows for the six months ended 30
September 2022
6 months to 6 months 12 months
to to
30 Sep 2022 30 Sep 2021 31 Mar 2022
(unaudited) (unaudited) (audited)
(GBP000s) (GBP000s) (GBP000s)
====================== ====================== =============== =============
Cash flows from operating activities
=============================================== ============== ============= =============
Profit for the period 21,863 19,987 35,768
=============================================== ============== ============= ===============
Adjustments for:
=============================================== ============== ============= ===============
Finance income (356) (2) (52)
=============================================== ============== ============= ===============
Finance expense 28 34 74
=============================================== ============== ============= ===============
Tax expense 5,660 4,854 10,225
=============================================== ============== ============= ===============
Share-based payment expense 2,697 2,671 3,727
=============================================== ============== ============= ===============
Depreciation of property, plant and
equipment 1,105 584 1,538
=============================================== ============== ============= ===============
Depreciation of right-of-use assets 638 707 1,654
=============================================== ============== ============= ===============
Amortisation of intangible assets 1,472 186 1,890
=============================================== ============== ============= ===============
Loss on disposal of property, plant
and equipment - 5 8
=============================================== ============== ============= ===============
Post-acquisition remuneration settled
by shares 1,716 - 2,950
=============================================== ============== ============= ===============
(Decrease)/increase in provisions (683) 460 395
=============================================== ============== ============= ===============
Operating cash flows before movements
in working capital 34,140 29,486 58,177
=============================================== ============== ============= ===============
(Increase)/decrease in trade and other
receivables (3,072) (14,777) (22,996)
=============================================== ============== ============= ===============
(Decrease)/increase in trade and other
payables (6,095) (2,958) 16,571
=============================================== ============== ============= ===============
Cash generated from operating activities 24,973 11,751 51,752
=============================================== ============== ============= ===============
Income taxes paid (4,171) (2,646) (7,089)
=============================================== ============== ============= ===============
Net cash from operating activities 20,802 9,105 44,663
=============================================== ============== ============= ===============
Cash flows from investing activities
=============================================== ============== ============= ===============
Interest received 356 2 52
=============================================== ============== ============= =============
Purchases of property, plant and equipment (1,010) (2,464) (5,819)
=============================================== ============== ============= =============
Acquisition of other investments - (74) (74)
=============================================== ============== ============= =============
Amounts withdrawn/(placed) on treasury
deposit - - 18,028
=============================================== ============== ============= ===============
Acquisition of subsidiaries net of
cash acquired - (8,186) (16,768)
=============================================== ============== ============= =============
Net cash used in investing activities (654) (10,722) (4,581)
=============================================== ============== ============= =============
Cash flows from financing activities
=============================================== ============== ============= =============
Dividends paid - - (27,419)
=============================================== ============== ============= =============
Interest paid (28) (4) (74)
=============================================== ============== ============= =============
Repayment of lease liabilities (623) (852) (1,409)
=============================================== ============== ============= =============
Proceeds on issue of shares 91 1,901 2,301
=============================================== ============== ============= =============
Net cash (used)/from in financing
activities (560) 1,045 (26,601)
=============================================== ============== ============= =============
Net increase/(decrease) in cash and
cash equivalents 19,588 (572) 13,481
=============================================== ============== ============= =============
Cash and cash equivalents at start
of period 76,609 62,896 62,896
=============================================== ============== ============= =============
Effect of exchange rate fluctuations
on cash held 867 89 232
=============================================== ============== ============= =============
Cash and cash equivalents at end of
period 97,064 62,413 76,609
=============================================== ============== ============= =============
([4]) Premium on shares issued as consideration in FY20
reclassified from share premium account to capital reserve, in
accordance with the requirements of the Companies Act 2006,
S612.
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 2022 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 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 11 November 2022.
2. Basis of preparation
The condensed consolidated financial statements for the six
months ended 30 September 2022 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 2022 ('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 2022 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. 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.
At 31 March 2022, the Directors assessed the Group's viability
over a longer period to March 2025. 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 at the date of this Interim Report, we remain optimistic that
we are well positioned to help public and private sector
organisations in their digital transformation initiatives. We have
a proportionally low fixed cost base which enables swift responses
to adverse economic conditions when required, further supported by
our strong cash position, low capital commitments and no
borrowings.
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 2022. 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.
Investment property
Investment property is initially measured at cost and
subsequently at fair value with any change therein recognised in
profit or loss. When the use of a property changes from
owner-occupied to investment property, the property is remeasured
to fair value and reclassified accordingly. Any gain arising on
this remeasurement is recognised in profit or loss to the extent
that it reverses a previous impairment loss on the specific
property, with any remaining gain recognised in OCI and presented
in the revaluation reserve.
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,
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 20 22.
5. Segment reporting
All our revenue for the six-month period to 30 September 2022
was derived from continuing operations.
During the period, we opted to amend our divisional reporting
structure both internally to our CODM (Executive Directors) and
publicly. In prior periods we reported results with respect to our
Digital Services and Workday Practice divisions. Due to the
continued growth of our Workday Services and Workday Products
businesses, we are now reporting these areas as separate operating
divisions. There is no change in reporting for our Digital Services
division.
Note 15 includes an analysis of current and prior period results
by reportable segment under both the current and previous reporting
structures for comparison purposes.
The tables below present the results for current and prior
periods in our current reporting structure.
2022 Workday
6 months to 30 September Workday Products
(unaudited) Digital Services Services Total
(GBP000s) (GBP000s) (GBP000s) (GBP000s)
================================== ================= =========== ============ ===========
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([5]) (12,516) (17,496) (9,950) (39,962)
================================== ================= =========== ============ ===========
Contribution 29,801 7,954 6,067 43,822
================================== ================= =========== ============ ===========
Central overheads( (5) (10,129)
================================== ================= =========== ========================
Net finance income 328
================================== ================= =========== ============ ===========
Adjusted pre-tax profit 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
================================== ================= =========== ========================
2021 Workday
6 months to 30 September Digital Workday Products
(unaudited) Services Services Total
(GBP000s) (GBP000s) (GBP000s) (GBP000s)
================================== =========== =========== =========== ===========
Revenue 94,189 33,647 14,417 142,253
================================== =========== =========== =========== ===========
Cost of sales (56,725) (14,573) (3,562) (74,860)
================================== =========== =========== =========== ===========
Gross profit 37,464 19,074 10,855 67,393
================================== =========== =========== =========== ===========
Direct expenses( (5) (10,653) (11,207) (6,109) (27,969)
================================== =========== =========== =========== ===========
Contribution 26,811 7,867 4,746 39,424
================================== =========== =========== =========== ===========
Central overheads( (5) (10,187)
================================== =========== =========== =========== ===========
Net finance expense (32)
================================== =========== =========== =========== ===========
Adjusted pre-tax profit 29,205
================================== =========== =========== =========== ===========
Share-based payment expense
and related costs (2,671)
================================== =========== =========== =========== ===========
Amortisation of acquired
intangible assets (186)
================================== =========== =========== =========== ===========
Compensation for post-combination
services (923)
================================== =========== =========== =========== ===========
Acquisition-related expenses (584)
================================== =========== =========== =========== ===========
Profit before tax 24,841
================================== =========== =========== =========== ===========
(5) Direct expenses plus central overheads plus share-based
payment expense and acquisition related expenses (including
amortisation of acquired intangible assets and compensation for
post-combination remuneration) equals the sum of operating expenses
plus impairment losses and reversals on trade receivables and
accrued income. Direct expenses are expenses that are directly
attributable to each division.
Workday
Digital Workday Products
Services Services Total
2022 (audited) (unaudited) (unaudited) (audited)
12 months to 31 March (GBP000s) (GBP000s) (GBP000s) (GBP000s)
================================== =========== ============= ============= ===========
Revenue 199,831 70,868 31,933 302,632
================================== =========== ============= ============= ===========
Cost of sales (122,430) (32,388) (7,568) (162,386)
================================== =========== ============= ============= ===========
Gross profit 77,401 38,480 24,365 140,246
================================== =========== ============= ============= ===========
Direct expenses (5) (21,723) (24,666) (12,932) (59,321)
================================== =========== ============= ============= ===========
Contribution 55,678 13,814 11,433 80,925
================================== =========== ============= ============= ===========
Central overheads(5) (22,132)
================================== =========== ============= ============= ===========
Net finance expense (22)
================================== =========== ============= ============= ===========
Adjusted pre-tax profit 58,771
================================== =========== ============= ============= ===========
Share-based payment expense
and related costs (3,727)
================================== =========== ============= ============= ===========
Amortisation of acquired
intangible assets (1,890)
================================== =========== ============= ============= ===========
Compensation for post-combination
services (5,520)
================================== =========== ============= ============= ===========
Acquisition-related expenses (1,641)
================================== =========== ============= ============= ===========
Profit before tax 45,993
================================== =========== ============= ============= ===========
The Group's revenue from external customers by geographic
location is detailed below:
6 months to 6 months 12 months
to to
30 Sep 2022 30 Sep 2021 31 Mar 2022
(unaudited) (unaudited) (audited)
(GBP000s) (GBP000s) (GBP000s)
=========================== ============= ============ ============
United Kingdom & Ireland 118,721 102,402 215,606
=========================== ============= ============ ============
North America 44,390 26,521 58,712
=========================== ============= ============ ============
Central Europe 16,087 12,623 27,125
=========================== ============= ============ ============
Rest of world 577 707 1,189
=========================== ============= ============ ============
179,775 142,253 302,632
=========================== ============= ============ ============
Disaggregation of the Group's revenue is presented in the
following tables:
Digital Workday Workday Total
6 months to Services Services Products
30 September 2022 (unaudited) (GBP000s) (GBP000s) (GBP000s) (GBP000s)
================================= ========== ========== ========== ==========
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 Workday Workday Total
6 months to Services Services Products
30 September 2021(unaudited) (GBP000s) (GBP000s) (GBP000s) (GBP000s)
================================= ========== ========== ========== ==========
Type of revenue
======================================================================================
Services 90,255 29,943 1,346 121,544
====================================== ========== ========== ========== ==========
Subscriptions - - 13,071 13,071
====================================== ========== ========== ========== ==========
Third party & other 3,934 3,704 - 7,638
====================================== ========== ========== ========== ==========
94,189 33,647 14,417 142,253
=== ================================ ========== ========== ========== ==========
Digital Workday Workday Total
12 months to Services Services Products
31 March 2022 (unaudited) (GBP000s) (GBP000s) (GBP000s) (GBP000s)
============================ ========== ========== ========== ==========
Type of revenue
==============================================================================
Services 192,662 64,475 2,990 260,127
============================== ========== ========== ========== ==========
Subscriptions - - 28,943 28,943
============================== ========== ========== ========== ==========
Third party & other 7,169 6,393 - 13,562
============================== ========== ========== ========== ==========
199,831 70,868 31,933 302,632
============================ ========== ========== ========== ==========
6 months 6 months to 12 months to
to
30 Sep 2022 30 Sep 2021 31 Mar 2022
(unaudited)
(unaudited) (unaudited) (GBP000s)
(GBP000s) (GBP000s)
================= ============= ============ =============
Digital Services
================= ============= ============ =============
Public 62,276 51,678 108,400
================= ============= ============ =============
Commercial 18,682 12,391 25,120
================= ============= ============ =============
Healthcare 29,514 30,120 66,311
================= ============= ============ =============
110,472 94,189 199,831
================= ============= ============ =============
Workday Services
================= ============= ============ =============
Public 83 388 1,311
================= ============= ============ =============
Commercial 48,149 33,017 68,948
================= ============= ============ =============
Healthcare 131 242 609
================= ============= ============ =============
48,363 33,647 7 0,868
================= ============= ============ =============
Workday Products
================= ============= ============ =============
Public 892 263 1,271
================= ============= ============ =============
Commercial 19,471 13,933 29,730
================= ============= ============ =============
Healthcare 577 221 9 32
================= ============= ============ =============
20,940 14,417 3 1,933
================= ============= ============ =============
Group
================= ============= ============ =============
Public 63,251 52,329 110,982
================= ============= ============ =============
Commercial 86,302 59,341 123,798
================= ============= ============ =============
Healthcare 30,222 30,583 67,852
================= ============= ============ =============
Total 179,775 142,253 302,632
================= ============= ============ =============
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. 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 2022
is GBP5.7 million (six months ended 30 September 2021: GBP4.9
million). This tax charge equates to an effective tax rate of 21%
(30 September 2021: 20%). The expected annual tax rate for the year
to 31 March 2023 is 21% (31 March 2022: 22%).
On 24 May 2021, the UK Finance Act 2021 was substantively
enacted, increasing the corporate tax rate to 25% effective from 1
April 2023. Deferred tax balances have to be measured using the tax
rates that have been substantively enacted and that are expected to
apply to the period when the asset is realised, or the liability is
settled.
7. Dividends
The dividends declared and paid in the periods covered by these
condensed consolidated financial statements are detailed below:
6 months 6 months 12 months
to to 30 Sep to
2021
30 Sep 2022 (unaudited) 31 Mar 2022
(unaudited) (GBP000s) (audited)
(GBP000s) (GBP000s)
==================================== ============= ============ ============
Amounts recognised as distributions
to equity holders in the period:
==================================== ============= ============ ============
Final dividend for 2022 of 15.1p
per share 18,740 - -
==================================== ============= ============ ============
Interim dividend for 2022 of 7.1p
per share - - 8,774
==================================== ============= ============ ============
Final dividend for 2021 of 15.1p
per share - 18,645 18,645
==================================== ============= ============ ============
18,740 18,645 27,419
==================================== ============= ============ ============
A final dividend of 15.1 pence per share for the year ending 31
March 2022 was paid on 28 October 2022 to shareholders on the
register at the close of business on 7 October 2022, with an
ex-dividend date of 6 October 2022. This dividend was declared
following approval by the shareholders of the Company by ordinary
resolution at the Company's Annual General Meeting on 28 September
2022 and a liability for payment of the dividend of GBP18.7 million
has therefore been recognised in these condensed consolidated
financial statements.
An interim dividend of 7.8 pence per share has been declared for
the six months to 30 September 2022 which amounts to GBP9.7
million. This will be paid on 16 December 2022 to shareholders on
the register at the close of business on 25 November 2022, with an
ex-dividend date of 24 November 2022. 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 6 months to 12 months
to 30 Sep 30 Sep 2021 to 31 Mar
2022 2022
(unaudited) (unaudited) (audited)
(GBP000s) (GBP000s) (GBP000s)
============= ======================== ==============
Profit for the period 21,863 19,987 35,768
======================================== ============= ============ ==========
Thousands Thousands Thousands
======================================== ============= ============ ==========
Issued ordinary shares at 1 April 124,078 122,785 122,785
======================================== ============= ============ ==========
Effect of shares held in trust (760) (914) (863)
======================================== ============= ============ ==========
Effect of share options vested and
exercised 360 478 802
======================================== ============= ============ ==========
Effect of shares issued related
to a business combination - 11 31
======================================== ============= ============ ==========
Effect of shares issued related
to free share awards - - 49
======================================== ============= ============ ==========
Weighted average number of ordinary
shares 123,678 122,360 122,804
======================================== ============= ============ ==========
Basic earnings per share 17.7p 16.3p 29.1p
======================================== ============= ============ ==========
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 6 months to 12 months
to 30 Sep 30 Sep 2021 to 31 Mar
2022 2022
(unaudited) (unaudited) (audited)
(GBP000s) (GBP000s) (GBP000s)
============= ======================== =============
Profit for the period 21,863 19,987 35,768
======================================= ============= ============ ==========
Thousands Thousands Thousands
======================================= ============= ============ ==========
Weighted average number of ordinary
shares (basic) 123,678 122,360 122,804
======================================= ============= ============ ==========
Effect of share options in issue 728 1,324 1,256
======================================= ============= ============ ==========
Effect of shares held in trust 760 914 863
======================================= ============= ============ ==========
Effect of potential shares to
be issued related to a business
combination 490 - 410
======================================= ============= ============ ==========
Weighted average number of ordinary
shares (diluted) 125,656 124,598 125,333
======================================= ============= ============ ==========
Diluted earnings per share 17.4p 16.0p 28.5p
======================================= ============= ============ ==========
Adjusted
Adjusted basic and adjusted diluted earnings per share is
calculated using the adjusted profit for the period measure.
6 months to 6 months 12 months
to to
30 Sep 2022 30 Sep 2021 31 Mar 2022
(unaudited) (unaudited) (audited)
(GBP000s) (GBP000s) (GBP000s)
============= ======================== =============
Profit for the period 21,863 19,987 35,768
======================================= ============= ============ ============
Share-based payment expense
(net of associated taxes) 2,023 2,164 2,907
======================================= ============= ============ ============
Amortisation of acquired intangible
assets 1,472 143 1,890
======================================= ============= ============ ============
Compensation for post-combination
services 2,271 923 5,520
======================================= ============= ============ ============
Acquisition-related expenses 58 584 1,641
======================================= ============= ============ ============
Adjusted profit for the period 27,687 23,801 47,726
======================================= ============= ============ ============
Thousands Thousands Thousands
======================================= ============= ============ ============
Weighted average number of ordinary
shares for the purposes of basic
earnings per share 123,678 122,360 122,804
======================================= ============= ============ ============
Weighted average number of ordinary
shares for the purposes of diluted
earnings per share 125,656 124,598 125,333
======================================= ============= ============ ============
Adjusted basic earnings per
share 22.4p 19.5p 38.9p
======================================= ============= ============ ============
Adjusted diluted earnings per
share 22.0p 19.1p 38.1p
======================================= ============= ============ ============
9. Trade and other receivables
30 Sep 30 Sep 2021 31 Mar 2022
2022
(unaudited) (unaudited) (audited)
(GBP000s) (GBP000s) (GBP000s)
================== ============== ============ ===========
Trade receivables 34,868 38,929 35,228
=================== ============= ============ ===========
Other receivables 3,269 4,257 3,130
=================== ============= ============ ===========
38,137 43,186 38,358
=================== ============= ============ ===========
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 30 Sep 2021 31 Mar 2022
2022
(unaudited) (unaudited) (audited)
Cost (GBP000s) (GBP000s) (GBP000s)
=========================================== ============== ============ ===========
1 April 18,765 3,121 3,121
============================================ ============= ============ ===========
Acquisitions through business combinations - 10,817 15,633
============================================ ============= ============ ===========
Effect of movement in exchange rates 1,529 (70) 11
============================================ ============= ============ ===========
At end of period 20,294 13,868 18,765
============================================ ============= ============ ===========
Accumulated impairment losses
============================================ ============= ============ ===========
At beginning and end of period - - -
============================================ ============= ============ ===========
Carrying amount
============================================ ============= ============ ===========
At end of period 20,294 13,868 18,765
============================================ ============= ============ ===========
At beginning of period 18,765 3,121 3,121
============================================ ============= ============ ===========
12. Investment property
During the period, GBP5.2 million was transferred from property,
plant and equipment to investment property, reflecting our
intention to sell part of the site purchased in 2019 for the build
of our new office headquarters. Immediately before the transfer,
the Group internally remeasured the relevant portion of the site to
fair value with no gain or loss arising. Our policy for accounting
for investment property is disclosed in note 3.
13. Related party transactions
There have been no related party transactions during the six
months to 30 September 2022 that have materially affected the
financial position or performance of the Group.
No Directors exercised share options during the period (H1 22:
one Director exercised 35,036 share options with a gain arising on
the exercise of GBP0.6 million).
All related party transactions are materially consistent with
those disclosed by the Group in its financial statements for the
year ended 31 March 2022.
14. Issue of ordinary shares
During the six months ended 30 September 2022, the Group issued
33,129 ordinary shares due to the exercise of vested options. The
exercise price of options exercised in the period ranged from
GBP0.005 per share to GBP7.35 per share.
All ordinary shares were issued with a nominal value of GBP0.005
each.
15. Impact of change in segmental reporting
As described in note 5, during the period the Group implemented
a change in how it reports the results from its underlying business
operations. The tables below present the results for periods ending
30 September 2021, 31 March 2022 and 30 September 2022 in the
current segmental reporting structure and as per the previous
reporting structure for comparison purposes.
Current segmental
2022 Digital Services Workday
Services
6 months to 30 September (GBP'000s) (GBP000s) Workday Total
Products
(unaudited) (GBP000s) (GBP'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 (12,516) (17,496) (9,950) (39,962)
=========================== ================= =========== =========== =============
Contribution 29,801 7,954 6,067 43,822
=========================== ================= =========== =========== =============
Central overheads (10,129)
=========================== ================= =========== =========== =============
Net finance income 328
=========================== ================= =========== =========== =============
Adjusted pre-tax profit 34,021
=========================== ================= =========== =========== =============
Previous segmental
2022 Digital Workday
6 months to 30 September Services Practice Total
(unaudited) (GBP'000s) (GBP000s) (GBP'000s)
=========================== ============ =========== =============
Revenue 110,472 69,303 179,775
=========================== ============ =========== =============
Cost of sales (68,155) (27,836) (95,991)
=========================== ============ =========== =============
Gross profit 42,317 41,467 83,784
=========================== ============ =========== =============
Direct expenses (12,516) (27,446) (39,962)
=========================== ============ =========== =============
Contribution 29,801 14,021 43,822
=========================== ============ =========== =============
Central overheads (10,129)
=========================== ============ =========== =============
Net finance income 328
=========================== ============ =========== =============
Adjusted pre-tax profit 34,021
=========================== ============ =========== =============
Current segmental
2021 Digital Workday
Services Services
6 months to 30 September (GBP'000s) (GBP000s) Workday Total
Products
(unaudited) (GBP000s) (GBP'000s)
=========================== ============ =========== =========== =============
Revenue 94,189 33,647 14,417 142,253
=========================== ============ =========== =========== =============
Cost of sales (56,725) (14,573) (3,562) (74,860)
=========================== ============ =========== =========== =============
Gross profit 37,464 19,074 10,855 67,393
=========================== ============ =========== =========== =============
Direct expenses (10,653) (11,207) (6,109) (27,969)
=========================== ============ =========== =========== =============
Contribution 26,811 7,867 4,746 39,424
=========================== ============ =========== =========== =============
Central overheads (10,187)
=========================== ============ =========== =========== =============
Net finance expense (32)
=========================== ============ =========== =========== =============
Adjusted pre-tax profit 29,205
=========================== ============ =========== =========== =============
Previous segmental
2021 Digital Services
6 months to 30 September (GBP'000s) Workday Total
Practice
(unaudited) (GBP000s) (GBP'000s)
=========================== === ================= =========== =============
Revenue 94,189 48,064 142,253
================================ ================= =========== =============
Cost of sales (56,725) (18,135) (74,860)
================================ ================= =========== =============
Gross profit 37,464 29,929 67,393
================================ ================= =========== =============
Direct expenses (10,653) (17,316) (27,969)
================================ ================= =========== =============
Contribution 26,811 12,613 39,424
================================ ================= =========== =============
Central overheads (10,187)
================================ ================= =========== =============
Net finance expense (32)
================================ ================= =========== =============
Adjusted pre-tax profit 29,205
================================ ================= =========== =============
Current segmental
2022 Digital Workday
Services Services
12 months to 31 March (GBP'000s) (GBP000s) Workday Total
Products
(unaudited) (GBP000s) (GBP'000s)
======================== ============ =========== =========== =============
Revenue 199,831 70,868 31,933 302,632
======================== ============ =========== =========== =============
Cost of sales (122,430) (32,388) (7,568) (162,386)
======================== ============ =========== =========== =============
Gross profit 77,401 38,480 24,365 140,246
======================== ============ =========== =========== =============
Direct expenses (21,723) (24,666) (12,932) (59,321)
======================== ============ =========== =========== =============
Contribution 55,678 13,814 11,433 80,925
======================== ============ =========== =========== =============
Central overheads (22,132)
======================== ============ =========== =========== =============
Net finance expense (22)
======================== ============ =========== =========== =============
Adjusted pre-tax profit 58,771
======================== ============ =========== =========== =============
Previous segmental
2022 Digital Services
12 months to 31 March (GBP'000s) Workday Total
Practice
(audited) (GBP000s) (GBP'000s)
======================== === ================= =========== =============
Revenue 199,831 102,801 302,632
============================= ================= =========== =============
Cost of sales (122,430) (39,956) (162,386)
============================= ================= =========== =============
Gross profit 77,401 62,845 140,246
============================= ================= =========== =============
Direct expenses (21,723) (37,598) (59,321)
============================= ================= =========== =============
Contribution 55,678 25,247 80,925
============================= ================= =========== =============
Central overheads (22,132)
============================= ================= =========== =============
Net finance expense (22)
============================= ================= =========== =============
Adjusted pre-tax profit 58,771
============================= ================= =========== =============
16. Subsequent events
Subsequent to 30 September 2022, the Company paid the final
dividend of GBP18.7 million in respect of the year ended 31 March
2022, declared at the Annual General Meeting on 28 September 2022,
to shareholders on 28 October 2022, 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 2022 ("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
11 November 2022
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
2022 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 2022 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 2022 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 11 November 2022
Chartered Accountants
The Soloist Building
1 Lanyon Place
Belfast
BT1 3LP
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END
IR BKDBQCBDDBDD
(END) Dow Jones Newswires
November 14, 2022 02:00 ET (07:00 GMT)
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